<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 29, 1996.
FILE NO. 33-52784
FILE NO. 811-7244
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 9 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 10 /X/
REMBRANDT FUNDS(R)
(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 JOHN H. GRADY, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, N.W.
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, D.C. 20036
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
-----
on [date] pursuant to paragraph (b)
-----
x 60 days after filing pursuant to paragraph (a)
-----
on [date] pursuant to paragraph (a); or
-----
75 days after filing pursuant to paragraph (a) of Rule 485
-----
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of units of beneficial interest is being registered
by this Registration Statement. Registrant's Rule 24f-2 Notice for fiscal year
ended December 31, 1995 was filed on February 21, 1996.
<PAGE>
REMBRANDT FUNDS(R)
POST-EFFECTIVE AMENDMENT NO. 9
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PART A -
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives and
Investment Policies; General Investment
Policies; Risk Factors; Fundamental Policies;
Investment Limitations; General Information
--The Trust
Item 5. Management of the Trust General Information--Trustees of the Trust;
The Advisor; The Administrator; The
Transfer Agent; The Distributor
Item 6. Capital Stock and Other Securities General Information--Voting Rights; General
Information--Shareholder Inquiries; General
Information--Dividends; Taxes
Item 7. Purchase of Securities Being Offered Purchase of Shares; Eligibility of Reduced
Sales Charge
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART B -
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Description of Permitted Investments;
Investment Limitations; Non-Fundamental Policies
Item 14. Management of the Registrant Trustees and Officers of the Trust; The
Administrator
Item 15. Control Persons and Principal Holders Trustees and Officers of the Trust
of Securities
Item 16. Investment Advisory and Other Services The Advisor; The Administrator; The
Distributor; Experts
Item 17. Brokerage Allocation Fund Transactions; Trading Practices and
Brokerage
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing Purchase and Redemption of Shares;
of Securities Being Offered 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 Statements
</TABLE>
-2-
<PAGE>
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
-3-
<PAGE>
REMBRANDT FUNDS (R)
Investment Advisor: LASALLE STREET CAPITAL MANAGEMENT,
LTD.
REMBRANDT FUNDS (R) (the "Trust") is a mutual fund that offers a convenient
means of investing in one or more professionally managed portfolios of
securities. This Prospectus relates to the Trust Class shares and Investor
Class shares of the following Funds:
Equity Funds Fixed Income Funds
. VALUE FUND . FIXED INCOME FUND
. GROWTH FUND . INTERMEDIATE GOVERNMENT FIXED INCOME
. SMALL CAP FUND FUND
. INTERNATIONAL EQUITY FUND . TAX-EXEMPT FIXED INCOME FUND
. TRANSEUROPE FUND . GLOBAL FIXED INCOME FUND
. ASIAN TIGERS FUND . LIMITED VOLATILITY FIXED INCOME FUND
Money Market Funds
Balanced Fund . TREASURY MONEY MARKET FUND
. BALANCED FUND . GOVERNMENT MONEY MARKET FUND
. MONEY MARKET FUND
. TAX-EXEMPT MONEY MARKET FUND
Trust Class shares of the Trust are offered primarily to institutional
investors, including customers of LaSalle National Trust, N.A. its affiliates
and correspondents, for the investment of their own funds or funds for which
they act in a fiduciary, agency or custodial capacity.
Investor Class shares are offered primarily to individuals and institutional
accounts for which LaSalle National Trust, N.A. does not act in a fiduciary,
agency or custodial capacity. Investors in the Trust Class shares and investors
in the Investor Class shares are referred to hereinafter as "Shareholders."
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, INCLUDING LASALLE NATIONAL TRUST, N.A. OR ANY OF ITS
AFFILIATES OR CORRESPONDENTS, INCLUDING LASALLE NATIONAL CORPORATION. THE
TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN THE TRUST'S SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
AN INVESTMENT IN ANY OF THE MONEY MARKET FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT ANY MONEY
MARKET FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
SHARE.
This Prospectus sets forth concisely the information about the Trust that a
prospective investor should know before investing. Investors are advised to
read this Prospectus and retain it for future reference. A Statement of
Additional Information dated April 29, 1996, has been filed with the Securities
and Exchange Commission (the "SEC") and is available without charge by calling
1-800-443-4725. 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.
April 29, 1996
<PAGE>
SUMMARY
Rembrandt Funds (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. The following summary provides basic information about the Trust
Class shares and the Investor Class shares of the following Funds: VALUE FUND,
GROWTH FUND, SMALL CAP FUND, INTERNATIONAL EQUITY FUND, TRANSEUROPE FUND, ASIAN
TIGERS FUND (collectively, the "Equity Funds"), BALANCED FUND (the "Balanced
Fund"), FIXED INCOME FUND, INTERMEDIATE GOVERNMENT FIXED INCOME FUND, TAX-
EXEMPT FIXED INCOME FUND, GLOBAL FIXED INCOME FUND, LIMITED VOLATILITY FIXED
INCOME FUND, (collectively, the "Fixed Income Funds"), TREASURY MONEY MARKET
FUND, GOVERNMENT MONEY MARKET FUND, MONEY MARKET FUND AND TAX-EXEMPT MONEY
MARKET FUND (collectively, the "Money Market Funds" and, together with the
Equity Funds, the Balanced Fund and the Fixed Income Funds, the "Funds"). This
summary is qualified in its entirety by reference to the more detailed
information provided elsewhere in this Prospectus and in the Statement of
Additional Information.
WHAT ARE THE INVESTMENT OBJECTIVES?
EQUITY AND BALANCED FUNDS: The GROWTH FUND and SMALL CAP FUND both seek a high
level of total return primarily through capital appreciation. The VALUE FUND,
INTERNATIONAL EQUITY FUND and TRANSEUROPE FUND all seek a high level of total
return through capital appreciation and current income. The ASIAN TIGERS FUND
seeks to achieve capital appreciation through investments within the economies
of the Far East, with the exception of Japan. The BALANCED FUND seeks to obtain
a favorable total rate of return through current income and capital
appreciation consistent with preservation of capital, derived from investing in
a portfolio comprised of fixed income and equity securities.
FIXED INCOME FUNDS: The FIXED INCOME FUND (formerly Taxable Fixed Income Fund)
seeks a high level of total return relative to funds with like investment
objectives from income and, to a lesser degree, capital appreciation derived
from investing in a portfolio consisting primarily of quality intermediate- and
long-term fixed income securities. The INTERMEDIATE GOVERNMENT FIXED INCOME
FUND (formerly Short/Intermediate Government Fixed Income Fund) seeks a high
level of total return relative to funds with like investment objectives,
consistent with preservation of capital, from income and, to a lesser degree,
capital appreciation, derived from investing in a portfolio consisting
primarily of short- and intermediate-term U.S. Government securities. The TAX-
EXEMPT FIXED INCOME FUND seeks a high level of total return, relative to funds
with like investment objectives, consistent with preservation of capital, from
income derived from investing in a portfolio consisting primarily of securities
that are exempt from federal income tax and not subject to taxation as a
preference item for purposes of the federal alternative minimum tax. The GLOBAL
FIXED INCOME FUND seeks a high level of total return, relative to funds with
like objectives, measured in U.S. dollar terms, from income and capital
appreciation derived from investing in a portfolio consisting of quality fixed
income securities denominated in foreign currencies. The LIMITED VOLATILITY
FIXED INCOME FUND seeks a high level of current income, consistent with
relative stability of principal, derived from investing in a portfolio
consisting primarily of short- and intermediate-term fixed income securities.
MONEY MARKET FUNDS: The TREASURY MONEY MARKET FUND seeks to preserve principal
value and maintain a high degree of liquidity while providing current income.
The GOVERNMENT MONEY MARKET FUND and the MONEY MARKET FUND seek to provide as
high a level of current income as is consistent with preservation of capital
and liquidity. The TAX-EXEMPT MONEY MARKET FUND seeks to preserve principal
value and maintain a high degree of liquidity while providing current income
exempt from federal income taxes. See "Investment Objectives and Policies."
The investment policies of each Fund entail certain risks and considerations of
which an investor should be aware. There can be no assurance that a Fund will
achieve its investment objective.
WHAT ARE THE PERMITTED INVESTMENTS AND RISK FACTORS?
EQUITY AND BALANCED FUNDS: The VALUE FUND, GROWTH FUND and SMALL CAP FUND each
will invest at least 65% of their assets in common stocks. The INTERNATIONAL
EQUITY FUND will invest at least 65% of its assets in equity securities and
securities of issuers in at least three countries other than the U.S. The
TRANSEUROPE FUND will invest
2
<PAGE>
in the equity securities of European issuers. The ASIAN TIGERS FUND will invest
in equity securities traded on recognized stock exchanges in the countries of
Asia (with the exception of Japan). The BALANCED FUND will invest at least 80%
of its assets in equity securities and fixed income securities with at least
25% of its assets invested in fixed income senior securities.
FIXED INCOME FUNDS: The FIXED INCOME FUND will invest at least 65% of its
assets in debt securities. The INTERMEDIATE GOVERNMENT FIXED INCOME FUND will
invest 100% of its assets in U.S. Government securities. The TAX-EXEMPT FIXED
INCOME FUND will invest at least 80% of its assets in fixed income securities
the interest on which is exempt from federal income tax and not subject to
taxation as a preference item for purposes of the federal alternative minimum
tax. The GLOBAL FIXED INCOME FUND will invest at least 65% of its assets in
fixed income securities of issuers in at least three countries, one of which
may include the U.S. The LIMITED VOLATILITY FIXED INCOME FUND will invest at
least 65% of its assets in taxable fixed income obligations and will maintain a
weighted average maturity of less than six years.
MONEY MARKET FUNDS: The TREASURY MONEY MARKET FUND will invest exclusively in
U.S. Treasury obligations. The GOVERNMENT MONEY MARKET FUND will invest
exclusively in U.S. Treasury obligations and securities issued or guaranteed by
the U.S. Government and its agencies and instrumentalities. The MONEY MARKET
FUND (formerly Taxable Money Market Fund) will invest exclusively in high
quality money market instruments. The TAX-EXEMPT MONEY MARKET FUND will invest
in eligible securities issued by or on behalf of the states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities. At least 80% of the net
assets of the TAX-EXEMPT MONEY MARKET FUND will be invested in securities
exempt from federal income tax and not included as a preference item under the
federal alternative minimum tax. See "Investment Objectives and Policies" and
"Description of Permitted Investments and Risk Factors."
Values of equity securities may be affected by the financial markets as well as
by developments impacting specific issuers. Values of fixed income securities
tend to vary inversely with interest rates and may be affected by other market
and economic factors as well. The INTERNATIONAL EQUITY, TRANSEUROPE, ASIAN
TIGERS AND GLOBAL FIXED INCOME FUNDS will, and certain other Funds may, invest
in securities of foreign issuers. Securities of foreign issuers are subject to
certain risks not typically associated with domestic securities, including,
among other risks, changes in currency rates and in exchange control
regulations, costs in connection with conversions between various currencies,
limited publicly available information regarding foreign issuers, lack of
uniformity in accounting, auditing and financial standards and requirements,
greater securities market volatility, less liquidity of securities, less
government supervision and regulation of securities markets, withholding taxes
and changes in taxes on income on securities, and possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits.
Each of these investment strategies involves specific risks which are described
under "General Investment Policies," "Risk Factors" and "Description of
Permitted Investments and Risk Factors" and in the Statement of Additional
Information.
WHO IS THE ADVISOR? LaSalle Street Capital Management, Ltd. serves as the
Advisor to the Trust. ABN AMRO-NSM International Funds Management B.V. serves
as the investment sub-advisor to the INTERNATIONAL EQUITY FUND, TRANSEUROPE
FUND, ASIAN TIGERS FUND AND GLOBAL FIXED INCOME FUND pursuant to a Sub-Advisory
Agreement with the Advisor. See "The Advisor" and "The Sub-Advisor."
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
Administrator and shareholder servicing agent of the Trust. See "The
Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent."
WHO IS THE DISTRIBUTOR? Rembrandt(R) Financial Services Company serves as
distributor of the Trust's shares. See "The Distributor."
3
<PAGE>
HOW DO I PURCHASE AND REDEEM SHARES? Purchases and redemptions of shares may be
made through the Transfer Agent on days on which the New York Stock Exchange is
open for business ("Business Days"). However, shares may not be purchased or
redeemed by Federal Reserve wire on federal holidays restricting wire
transfers. A purchase order for shares of the Equity, Balanced and Fixed Income
Funds will be effective as of the Business Day received by the Transfer Agent
if the Transfer Agent receives an order prior to 4:00 p.m., Eastern time on
such Business Day. A purchase order for Investor Class shares of the Equity,
Balanced and Fixed Income Funds will be effective as of the Business Day
received by the Transfer Agent if the Transfer Agent receives a purchase order
and payment before 4:00 p.m., Eastern time on such Business Day.
The purchase price for Trust Class shares of the Equity, Balanced and Fixed
Income Funds is the net asset value per share determined as of the end of the
day the order is effective. The purchase price for Investor Class shares of the
Equity, Balanced and Fixed Income Funds is the net asset value per share
determined as of the end of the day the order is effective, plus a maximum
sales charge of up to 4.50%. The redemption price for all shares of the Equity,
Balanced and Fixed Income Funds is the net asset value per share determined as
of the end of the day the order is effective. Redemption orders must be placed
prior to 4:00 p.m., Eastern time on any Business Day for the order to be
accepted that day.
A purchase order for shares of the Money Market Funds will be effective as of
the Business Day received by the Transfer Agent if the Transfer Agent receives
an order and payment prior to 1 p.m., Eastern time. The purchase and redemption
price for shares of the Money Market Funds is the net asset value per share
determined as of the end of the day the order is effective. Redemption orders
must be placed prior to 1 p.m., Eastern time on any Business Day for the order
to be accepted that day. See "Purchase of Shares" and "Redemption of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income (not
including capital gains) of each of the Equity, Balanced and Fixed Income Funds
is distributed in the form of periodic dividends. Substantially all of the net
investment income (not including capital gains) of each of the Money Market
Funds is distributed in the form of daily dividends. Any 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."
4
<PAGE>
EXPENSE SUMMARY
ANNUAL OPERATING EXPENSES TRUST CLASS
(As a percentage of average net assets)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY/BALANCED FUNDS
- ----------------------------------------------------------------------------------
SMALL INT'L TRANS ASIAN
VALUE GROWTH CAP EQUITY EUROPE TIGERS BALANCED
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees.................. .80% .80% .80% 1.00% 1.00% 1.00% .70%
Other Expenses(1)(2)........... .25% .22% .30% .38% .52% .52% .22%
- ----------------------------------------------------------------------------------
Total Operating Expenses(1).... 1.05% 1.02% 1.10% 1.38% 1.52% 1.52% .92%
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
</TABLE>
(1) The Administrator has waived, on a voluntary basis, a portion of its fee
from the International Equity and Asian Tigers Funds. The Administrator
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waivers Other Expenses and Total Operating
Expenses respectively would be as follows: International Equity Fund (.38%
and 1.68%) and Asian Tigers Fund (.60% and 1.60%). See "The
Administrator."
(2) "Other Expenses" for the TransEurope Fund is based on estimated amounts
for the current fiscal year.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
- ------------------------------------------------------------------------------------------
INTERMEDIATE LIMITED
GOVERNMENT TAX-EXEMPT GLOBAL VOLATILITY
FIXED INCOME FIXED INCOME FIXED INCOME FIXED INCOME FIXED INCOME
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fees
(after fee waivers, if
applicable)(1)......... .51% .51% .48% .80% .50%
Other Expenses(2)(3).... .23% .22% .27% .30% .24%
- ------------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers, if
applicable)(1)(2)...... .74% .73% .75% 1.10% .74%
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
(1) The Advisor has waived, on a voluntary basis, a portion of its fee from
each Fund except the Global Fixed Income Fund. The Advisor reserves the
right to terminate its waivers at any time in its sole discretion. Absent
such waivers, Advisory Fees and Total Operating Expenses respectively for
the other Funds would be as follows: Fixed Income Fund (.60% and .84%),
Intermediate Government Fixed Income Fund (.60% and .83%), Tax-Exempt
Fixed Income (.60% and .87%), and Limited Volatility Fixed Income (.60%
and .84%). See "The Advisor."
(2) The Administrator has waived, on a voluntary basis, a portion of its fee
from the Fixed Income, Intermediate Government Fixed Income and Global
Fixed Income Funds. The Administrator reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waivers, Other
Expenses and Total Operating Expenses respectively would be as follows:
Fixed Income (.24% and .84%), Intermediate Government Fixed Income (.23%
and .83%) and Global Fixed Income (.36% and 1.16%). See "The
Administrator."
(3) "Other Expenses" for the Limited Volatility Fixed Income Fund is based on
estimated amounts for the current fiscal year.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET FUNDS
- -------------------------------------------------------------------------------
TREASURY GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisory Fees (after fee waivers, if
applicable)(1).......................... .20% .20% .21% .20%
Other Expenses(2)........................ .24% .22% .20% .21%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers, if applicable)(1)(2)........... .44% .42% .41% .41%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) The Advisor has waived, on a voluntary basis, a portion of its fee from
each Fund except the Government Money Market Fund. The Advisor reserves
the right to terminate its waivers at any time in its sole discretion.
Absent such waivers Advisory Fees and Total Operating Expenses
respectively for the other Funds would be as follows: Treasury Money
Market Fund (.35% and .59%), Money Market Fund (.35% and .56%) and Tax-
Exempt Money Market Fund (.35% and .56%). Additional information may be
found under "The Advisor" and "The Administrator."
(2) The Administrator has waived, on a voluntary basis, a portion of its fee
from the Money Market Fund. The Administrator reserves the right to
terminate its waiver at any time in its sole discretion. Absent such
waivers, Other Expenses and Total Operating Expenses respectively for the
Money Market Fund would be .21% and .56%. See "The Administrator."
5
<PAGE>
EXAMPLE________________________________________________________TRUST CLASS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment assuming (1) 5% annual return
and (2) redemption at the end of each time
period:
Value Fund...................................... $11 $33 $58 $128
Growth Fund..................................... 10 32 56 125
Small Cap Fund.................................. 11 35 61 134
International Equity Fund....................... 14 44 76 166
TransEurope Fund................................ 15 48 83 181
Asian Tigers Fund............................... 15 48 83 181
Balanced Fund................................... 9 29 51 113
Fixed Income Fund............................... 8 24 41 92
Intermediate Government Fixed Income Fund....... 7 23 41 91
Tax-Exempt Fixed Income Fund.................... 8 24 42 93
Global Fixed Income Fund........................ 11 35 61 134
Limited Volatility Fixed Income Fund............ 8 24 41 92
Treasury Money Market Fund...................... 5 14 25 55
Government Money Market Fund.................... 4 13 24 53
Money Market Fund............................... 4 13 23 52
Tax-Exempt Money Market Fund.................... 4 13 23 52
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE IS BASED UPON TOTAL OPERATING EXPENSES, EXCEPT WITH RESPECT TO THE
TRANSEUROPE FUND AND LIMITED VOLATILITY FIXED INCOME FUND FOR WHICH IT IS
BASED ON ESTIMATED EXPENSES, FOR THE CURRENT FISCAL YEAR. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES
MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is to
assist the investor in understanding the various costs and expenses that may
be directly or indirectly borne by investors in the Trust Class shares Funds.
A person who purchases shares through a financial institution may be charged
separate fees by the financial institution. See "The Advisor," "The
Administrator" and "The Distributor."
6
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES INVESTOR CLASS
(As a percentage of offering price)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases................................. 4.50%
Redemption Fee(*)......................................................... None
- --------------------------------------------------------------------------------
</TABLE>
(*) A charge, currently $10.00, is imposed on wires of redemption proceeds.
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
SMALL INT'L TRANS ASIAN
VALUE GROWTH CAP EQUITY EUROPE TIGERS BALANCED
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees.................. .80% .80% .80% 1.00% 1.00% 1.00% .70%
12b-1 Fees..................... .25% .25% .25% .25% .25% .25% .25%
Other Expenses(1)(2)........... .25% .22% .30% .38% .52% .52% .22%
- --------------------------------------------------------------------------------
Total Operating Expenses....... 1.30% 1.27% 1.35% 1.63% 1.77% 1.77% 1.17%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The Administrator has waived, on a voluntary basis, a portion of its fee
from the International Equity and Asian Tigers Funds. The Administrator
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waivers Other Expenses and Total Operating
Expenses respectively would be as follows: International Equity Fund (.38%
and 1.63%) and Asian Tigers Fund (.60% and 1.85%). Additional information
may be found under "The Administrator."
(2)"Other Expenses" for the TransEurope Fund is based on estimated amounts for
the current fiscal year.
<TABLE>
<CAPTION>
INTERMEDIATE GLOBAL LIMITED
FIXED GOVERNMENT TAX-EXEMPT FIXED VOLATILITY
INCOME FIXED INCOME FIXED INCOME INCOME FIXED INCOME
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fees (after fee
waivers, if
applicable)(1)........... .50% .51% .48% .80% .50%
12b-1 Fees................ .25% .25% .25% .25% .25%
Other Expenses(2)......... .24% .23% .27% .30% .24%
- -------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers if
applicable)(1)(2)(3)..... .99% .98% 1.00% 1.35% .99%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) The Advisor has waived on a voluntary basis a portion of its fee from each
Fund except the Global Fixed Income Fund. The Advisor reserves the right
to terminate its waiver at any time in its sole discretion. Absent the
waivers, Advisory Fees and Total Operating Expenses respectively for the
other Funds would be as follows: Fixed Income (.60% and 1.09%),
Intermediate Government Fixed Income Fund (.60% and 1.08%), Tax-Exempt
Fixed Income (.60% and 1.02%) and Limited Volatility Fixed Income (.60%
and 1.09%). See "The Advisor".
(2) The Administrator has waived, on a voluntary basis, a portion of its fee
from the Fixed Income, Intermediate Government Fixed Income and Global
Fixed Income Funds. The Administrator reserves the right to terminate its
waiver at any time in its sole discretion. Absent such waivers, Other
Expenses and Total Operating Expenses respectively would be as follows:
Fixed Income (.23% and 1.09%), Intermediate Government Fixed Income (.22%
and 1.08%) and Global Fixed Income (.36% and 1.41%). See "The
Administrator."
(3) "Other Expenses" for the Limited Volatility Fixed Income Fund is based on
estimated amounts for the current fiscal year.
MONEY MARKET FUNDS
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
TREASURY GOVERNMENT TAX-EXEMPT
MONEY MONEY MONEY MONEY
MARKET MARKET MARKET MARKET
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Advisory Fees (after fee waivers, if
applicable)(1).......................... .20% .20% .21% .20%
12b-1 Fees............................... .25% .25% .25% .25%
Other Expenses(2)........................ .24% .22% .20% .21%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers, if applicable)(1)(2)........... .69% .67% .66% .66%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
(1) The Advisor has waived, on a voluntary basis, a portion of its fees from
each Fund except the Government Money Market Fund. The Advisor reserves
the right to terminate its waiver at any time in its sole discretion.
Absent such waivers Advisory Fees and Total Operating Expenses
respectively would be as follows: Treasury Money Market Fund (.35% and
.84%), Money Market Fund (.35% and .81%) and Tax-Exempt Money Market Fund
(.35% and .81%).
(2) The Administrator has waived, on a voluntary basis, a portion of its fee
from the Money Market Fund. The Administrator reserves the right to
terminate its waiver at any time in its sole discretion. Absent such
waivers, Other Expenses and Total Operating Expenses respectively for the
Money Market Fund would be .21% and .81%. See "The Administrator."
7
<PAGE>
EXAMPLE_____________________________________________________INVESTOR CLASS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment assuming (1) imposition of the
maximum sales charge; (2) 5% annual return and
(3) redemption at the end of each time period:
Value Fund...................................... $58 $84 $113 $195
Growth Fund..................................... 57 93 112 191
Small Cap Fund.................................. 58 86 116 200
International Equity Fund....................... 61 94 130 230
TransEurope Fund................................ 62 98 137 244
Asian Tigers Fund............................... 62 98 137 244
Balanced Fund................................... 56 80 106 181
Fixed Income Fund............................... 55 75 97 161
Intermediate Government Fixed Income Fund....... 55 75 97 160
Tax-Exempt Fixed Income Fund.................... 55 75 98 162
Global Fixed Income Fund........................ 58 86 116 200
Limited Volatility Fixed Income Fund............ 55 75 97 161
Treasury Money Market Fund...................... 7 22 38 86
Government Money Market Fund.................... 7 21 37 83
Money Market Fund............................... 7 21 37 82
Tax-Exempt Money Market Fund.................... 7 21 37 82
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE IS BASED ON TOTAL OPERATING EXPENSES, EXCEPT FOR THE TRANSEUROPE
FUND AND LIMITED VOLATILITY FIXED INCOME FUND FOR WHICH IT IS BASED ON
ESTIMATED EXPENSES, FOR THE CURRENT FISCAL YEAR. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN. The purpose of this table is to assist the
investor in understanding the various costs and expenses that may be directly
or indirectly borne by investors in the Investor Class shares of the Funds. A
person who purchases shares through a financial institution may be charged
separate fees by the financial institution. See "The Advisor," "The
Administrator" and "The Distributor."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Purchase of Shares," "Redemption of
Shares" and "Eligibility For Reduced Sales Charge."
Long-term Shareholders in the Investor Class Shares of the Funds (other than
the Money Market Funds) may eventually pay more than the economic equivalent
of the maximum front-end sales charge otherwise permitted by the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
8
<PAGE>
FINANCIAL HIGHLIGHTS
The following information has been audited by Ernst & Young LLP, the Trust's
independent auditors, as indicated in their report dated January 26, 1996 on
the Trust's financial statements as of December 31, 1995 included in the
Trust's Statement of Additional Information under "Financial Information."
This table should be read in conjunction with the Trust's financial statements
and related notes thereto. As of December 31, 1995, the TransEurope Fund and
Limited Volatility Fixed Income Fund had not yet commenced operations.
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
RATIO OF
NET NET RATIO OF
REALIZED INVESTMENT EXPENSES
AND DISTRI- NET RATIO OF INCOME/ TO
NET NET UNREALIZED BUTIONS ASSET NET EXPENSES LOSS AVERAGE
ASSET INVEST- GAINS DIVIDENDS FROM VALUE ASSETS TO TO NET
VALUE MENT (LOSSES) FROM NET REALIZED END END OF AVERAGE AVERAGE ASSETS
BEGINNING INCOME/ ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD LOSS SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS ASSETS WAIVERS)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE FUND
----------
TRUST CLASS
Year Ended
12/31/95 $ 9.79 $ 0.34 $ 2.74 $(0.35) $(0.26) $12.26 32.02 % $131,243 1.05% 3.07 % 1.05%
12/31/94 $10.30 $ 0.35 $(0.35) $(0.34) $(0.17) $ 9.79 0.00 % $ 61,557 1.06% 3.45 % 1.06%
12/31/93(1) $10.00 $ 0.28 $ 0.38 $(0.28) $(0.08) $10.30 6.73 % $ 54,340 1.10% 2.85 % 1.10%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.80 $ 0.32 $ 2.74 $(0.32) $(0.26) $12.28 31.72 %* $ 1,497 1.33% 2.79 % 1.33%
12/31/94 $10.30 $ 0.31 $(0.33) $(0.31) $(0.17) $ 9.80 (0.21)%* $ 731 1.37% 3.13 % 1.37%
12/31/93(2) $10.41 $ 0.21 $(0.03) $(0.21) $(0.08) $10.30 1.95 %* $ 435 1.48% 2.51 % 8.99%
GROWTH FUND
-----------
TRUST CLASS
Year Ended
12/31/95 $ 9.73 $ 0.16 $ 2.88 $(0.16) $(1.00) $11.61 31.60 % $ 78,216 1.02% 1.37 % 1.02%
12/31/94 $10.21 $ 0.16 $(0.36) $(0.16) $(0.12) $ 9.73 (2.05)% $ 82,710 1.02% 1.58 % 1.03%
12/31/93(1) $10.00 $ 0.17 $ 0.33 $(0.17) $(0.12) $10.21 5.07 % $ 98,581 1.06% 1.70 % 1.07%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.74 $ 0.12 $ 2.89 $(0.13) $(1.00) $11.62 31.29 %* $ 2,681 1.31% 1.10 % 1.31%
12/31/94 $10.23 $ 0.13 $(0.37) $(0.13) $(0.12) $ 9.74 (2.42)%* $ 1,530 1.33% 1.30 % 1.33%
12/31/93(3) $10.44 $ 0.10 $(0.08) $(0.11) $(0.12) $10.23 (0.23)%* $ 840 1.43% 1.24 % 6.55%
SMALL CAP FUND
--------------
TRUST CLASS
Year Ended
12/31/95 $ 9.57 $ 0.02 $ 3.05 $(0.02) $(0.16) $12.46 32.13 % $ 23,844 1.10% 0.18 % 1.10%
12/31/94 $10.24 $ 0.03 $(0.67) $(0.03) $ 0.00 $ 9.57 (6.27)% $ 31,527 1.06% 0.27 % 1.06%
12/31/93(1) $10.00 $ 0.04 $ 0.24 $(0.04) $ 0.00 $10.24 2.82 % $ 53,357 1.09% 0.40 % 1.10%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.58 $(0.01) $ 3.05 $ 0.00 $(0.16) $12.46 31.73 %* $ 553 1.39% (0.08)% 1.39%
12/31/94 $10.25 $ 0.00 $(0.67) $ 0.00 $ 0.00 $ 9.58 (6.54)%* $ 294 1.38% 0.02 % 1.38%
12/31/93(4) $ 9.51 $ 0.00 $ 0.75 $(0.01) $ 0.00 $10.25 10.55 %* $ 124 1.57% (0.10)% 33.84%
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME/
LOSS
TO
AVERAGE
NET
ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
VALUE FUND
----------
TRUST CLASS
Year Ended
12/31/95 3.07 % 37%
12/31/94 3.45 % 38%
12/31/93(1) 2.85 % 40%
INVESTOR CLASS
Year Ended
12/31/95 2.79 % 37%
12/31/94 3.13 % 38%
12/31/93(2) (5.00)% 40%
GROWTH FUND
-----------
TRUST CLASS
Year Ended
12/31/95 1.37 % 71%
12/31/94 1.57 % 68%
12/31/93(1) 1.69 % 82%
INVESTOR CLASS
Year Ended
12/31/95 1.10 % 71%
12/31/94 1.30 % 68%
12/31/93(3) (3.88)% 82%
SMALL CAP FUND
--------------
TRUST CLASS
Year Ended
12/31/95 0.18 % 142%
12/31/94 0.27 % 43%
12/31/93(1) 0.39 % 27%
INVESTOR CLASS
Year Ended
12/31/95 (0.08)% 142%
12/31/94 0.02 % 43%
12/31/93(4) (32.37)% 27%
</TABLE>
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on March 26, 1993. All ratios and total returns for
the period have been annualized.
3. Commenced operations on March 8, 1993. All ratios and total returns for the
period have been annualized.
4. Commenced operations on April 12, 1993. All ratios and total returns for
the period have been annualized.
* Sales load is not included in total return.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF
NET NET RATIO OF
REALIZED INVESTMENT EXPENSES
AND DISTRI- NET RATIO OF INCOME/ TO
NET NET UNREALIZED BUTIONS ASSET NET EXPENSES LOSS AVERAGE
ASSET INVEST- GAINS DIVIDENDS FROM VALUE ASSETS TO TO NET
VALUE MENT (LOSSES) FROM NET REALIZED END END OF AVERAGE AVERAGE ASSETS
BEGINNING INCOME/ ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD LOSS SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS ASSETS WAIVERS)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY FUND
-------------------------
TRUST CLASS
Year Ended
12/31/95 $13.00 $ 0.07 $ 1.75 $(0.06) $(0.20) $14.56 14.03 % $77,519 1.38% 0.70 % 1.38%
12/31/94 $12.59 $ 0.02 $ 0.40 $ 0.00 $(0.01) $13.00 3.32 % $41,324 1.43% 0.21 % 1.46%
12/31/93(1) $10.00 $ 0.00 $ 2.63 $ 0.00 $(0.04) $12.59 26.55 % $23,457 1.64% 0.03 % 1.64%
INVESTOR CLASS
Year Ended
12/31/95 $12.96 $ 0.05 $ 1.73 $(0.02) $(0.20) $14.52 13.79 %* $ 1,686 1.68% 0.42 % 1.68%
12/31/94 $12.58 $ 0.02 $ 0.37 $ 0.00 $(0.01) $12.96 3.08 %* $ 1,179 1.73% 0.03 % 2.22%
12/31/93(2) $10.93 $(0.01) $ 1.70 $ 0.00 $(0.04) $12.58 23.52 %* $ 321 1.92% (0.38)% 20.12%
ASIAN TIGERS FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 $ 9.47 $ 0.12 $ 0.98 $(0.12) $ 0.00 $10.45 11.61 % $23,145 1.52% 1.38 % 1.60%
12/31/94(3) $10.00 $ 0.03 $(0.53) $(0.02) $(0.01) $ 9.47 (5.07)% $17,860 1.60% 0.45 % 1.71%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.47 $ 0.11 $ 0.95 $(0.09) $ 0.00 $10.44 11.18 %* $ 733 1.81% 1.05 % 1.88%
12/31/94(4) $10.00 $ 0.01 $(0.53) $ 0.00 $(0.01) $ 9.47 (5.37)%* $ 705 1.90% 0.15 % 2.75%
BALANCED FUND
-------------
TRUST CLASS
Year Ended
12/31/95 $ 9.53 $ 0.39 $ 1.65 $(0.39) $(0.43) $10.75 21.85 % $49,899 0.92% 3.74 % 0.92%
12/31/94 $10.04 $ 0.30 $(0.50) $(0.30) $(0.01) $ 9.53 (2.11)% $72,086 0.94% 3.11 % 0.94%
12/31/93(1) $10.00 $ 0.29 $ 0.39 $(0.29) $(0.35) $10.04 7.09 % $58,510 0.97% 2.88 % 0.97%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.53 $ 0.34 $ 1.67 $(0.36) $(0.43) $10.75 21.52 %* $ 3,949 1.22% 3.36 % 1.22%
12/31/94 $10.03 $ 0.27 $(0.49) $(0.27) $(0.01) $ 9.53 (2.29)%* $ 2,894 1.24% 2.86 % 1.34%
12/31/93(5) $10.28 $ 0.20 $ 0.12 $(0.22) $(0.35) $10.03 4.07 %* $ 1,265 1.30% 2.30 % 5.06%
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME/
LOSS
TO
AVERAGE
NET
ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INTERNATIONAL EQUITY FUND
-------------------------
TRUST CLASS
Year Ended
12/31/95 0.70 % 11%
12/31/94 0.18 % 6%
12/31/93(1) 0.03 % 13%
INVESTOR CLASS
Year Ended
12/31/95 0.42 % 11%
12/31/94 (0.46)% 6%
12/31/93(2) (18.58)% 13%
ASIAN TIGERS FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 1.30 % 28%
12/31/94(3) 0.34 % 13%
INVESTOR CLASS
Year Ended
12/31/95 0.98 % 28%
12/31/94(4) (0.70)% 13%
BALANCED FUND
-------------
TRUST CLASS
Year Ended
12/31/95 3.74 % 85%
12/31/94 3.11 % 85%
12/31/93(1) 2.88 % 126%
INVESTOR CLASS
Year Ended
12/31/95 3.36 % 85%
12/31/94 2.76 % 85%
12/31/93(5) (1.46)% 126%
</TABLE>
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on April 12, 1993. All ratios and total returns for the
period have been annualized.
3. Commenced operations on January 3, 1994. All ratios and total returns for
the period have been annualized.
4. Commenced operations on January 12, 1994. All ratios and total returns for
the period have been annualized.
5. Commenced operations on March 9, 1993. All ratios and total returns for the
period have been annualized.
* Sales load is not included in total return.
10
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NET RATIO OF RATIO OF
REALIZED NET EXPENSES
AND DISTRI- NET RATIO OF INVESTMENT TO
UNREALIZED BUTIONS ASSET NET EXPENSES INCOME AVERAGE
NET ASSET NET GAINS DIVIDENDS FROM VALUE ASSETS TO TO NET
VALUE INVEST- (LOSSES) FROM NET REALIZED END END OF AVERAGE AVERAGE ASSETS
BEGINNING MENT ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS ASSETS WAIVERS)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FIXED INCOME FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 $ 9.30 $0.59 $ 1.02 $(0.59) $ 0.00 $10.32 17.75 % $125,653 0.74% 5.97% 0.84%
12/31/94 $10.23 $0.54 $(0.93) $(0.54) $ 0.00 $ 9.30 (3.82)% $ 92,402 0.72% 5.45% 0.82%
12/31/93(1) $10.00 $0.47 $ 0.50 $(0.47) $(0.27) $10.23 9.92 % $131,002 0.77% 4.60% 0.87%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.32 $0.55 $ 1.04 $(0.56) $ 0.00 $10.35 17.40 %* $ 646 0.99% 5.72% 1.09%
12/31/94 $10.24 $0.50 $(0.90) $(0.52) $ 0.00 $ 9.32 (3.97)%* $ 442 0.98% 5.38% 1.08%
12/31/93(2) $10.30 $0.35 $ 0.23 $(0.37) $(0.27) $10.24 7.44 %* $ 86 1.06% 4.08% 42.44%
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
TRUST CLASS
Year Ended
12/31/95 $ 9.33 $0.54 $ 0.73 $(0.54) $ 0.00 $10.06 13.86 % $ 73,466 0.73% 5.48% 0.83%
12/31/94 $10.08 $0.47 $(0.75) $(0.47) $ 0.00 $ 9.33 (2.78)% $ 91,002 0.74% 4.88% 0.84%
12/31/93(1) $10.00 $0.41 $ 0.18 $(0.41) $(0.10) $10.08 6.04 % $104,826 0.76% 4.15% 0.86%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.32 $0.49 $ 0.76 $(0.52) $ 0.00 $10.05 13.59 %* $ 2,946 0.98% 5.18% 1.08%
12/31/94 $10.07 $0.43 $(0.73) $(0.45) $ 0.00 $ 9.32 (3.03)%* $ 1,133 1.02% 5.05% 1.12%
12/31/93(3) $10.21 $0.28 $(0.02) $(0.30) $(0.10) $10.07 3.42 %* $ 46 1.04% 3.85% 77.08%
TAX-EXEMPT FIXED INCOME FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 $ 9.26 $0.48 $ 0.94 $(0.48) $ 0.00 $10.20 15.67 % $ 50,079 0.75% 4.84% 0.87%
12/31/94 $10.23 $0.44 $(0.94) $(0.44) $(0.03) $ 9.26 (4.93)% $ 53,588 0.71% 4.54% 0.84%
12/31/93(1) $10.00 $0.42 $ 0.42 $(0.42) $(0.19) $10.23 8.64 % $ 67,162 0.75% 4.17% 0.85%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.24 $0.43 $ 0.97 $(0.46) $ 0.00 $10.18 15.43 %* $ 1,131 1.00% 4.59% 1.12%
12/31/94 $10.22 $0.40 $(0.93) $(0.42) $(0.03) $ 9.24 (5.27)%* $ 1,059 0.97% 4.35% 1.10%
12/31/93(4) $10.29 $0.32 $ 0.14 $(0.34) $(0.19) $10.22 5.73 %* $ 428 1.05% 3.88% 11.86%
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME/
LOSS
TO
AVERAGE
NET
ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FIXED INCOME FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 5.87 % 59%
12/31/94 5.35 % 126%
12/31/93(1) 4.50 % 163%
INVESTOR CLASS
Year Ended
12/31/95 5.62 % 59%
12/31/94 5.28 % 126%
12/31/93(2) (37.30)% 163%
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
TRUST CLASS
Year Ended
12/31/95 5.38 % 115%
12/31/94 4.78 % 124%
12/31/93(1) 4.05 % 81%
INVESTOR CLASS
Year Ended
12/31/95 5.08 % 115%
12/31/94 4.95 % 124%
12/31/93(3) (72.19)% 81%
TAX-EXEMPT FIXED INCOME FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 4.72 % 129%
12/31/94 4.41 % 146%
12/31/93(1) 4.07 % 149%
INVESTOR CLASS
Year Ended
12/31/95 4.47 % 129%
12/31/94 4.22 % 146%
12/31/93(4) (6.93)% 149%
</TABLE>
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on March 12, 1993. All ratios and total returns for the
period have been annualized.
3. Commenced operations on April 12, 1993. All ratios and total returns for the
period have been annualized.
4. Commenced operations on March 9, 1993. All ratios and total returns for the
period have been annualized.
* Sales load is not included in total return.
11
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NET RATIO OF RATIO OF
REALIZED NET EXPENSES
AND DISTRI- NET RATIO OF INVESTMENT TO
NET UNREALIZED BUTIONS ASSET NET EXPENSES INCOME AVERAGE
ASSET NET GAINS DIVIDENDS FROM VALUE ASSETS TO TO NET
VALUE INVEST- (LOSSES) FROM NET REALIZED END END OF AVERAGE AVERAGE ASSETS
BEGINNING MENT ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS ASSETS WAIVERS)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GLOBAL FIXED INCOME FUND
------------------------
TRUST CLASS
Year Ended
12/31/95 $ 9.54 $0.62 $ 1.38 $(0.96) $ 0.00 $10.58 20.99% $ 17,433 1.10% 5.86% 1.16%
12/31/94 $10.43 $0.56 $(0.72) $(0.55) $(0.18) $ 9.54 (1.47)% $ 15,021 1.16% 5.09% 1.22%
12/31/93(1) $10.00 $0.54 $ 0.94 $(0.64) $(0.41) $10.43 16.33 % $ 16,488 1.21% 5.95% 1.21%
INVESTOR CLASS
Year Ended
12/31/95 $ 9.53 $0.52 $ 1.45 $(0.94) $ 0.00 $10.56 20.68%* $ 125 1.35% 5.57% 1.41%
12/31/94 $10.42 $0.46 $(0.64) $(0.53) $(0.18) $ 9.53 (1.71)%* $ 87 1.41% 5.03% 7.54%
12/31/93(2) $10.88 $0.40 $ 0.12 $(0.57) $(0.41) $10.42 6.61 %* $ 17 1.56% 5.85% 319.45%
TREASURY MONEY MARKET FUND
--------------------------
TRUST CLASS
Year Ended
12/31/95 $ 1.00 $0.05 $ 0.00 $(0.05) $ 0.00 $ 1.00 5.28% $110,475 0.44% 5.16% 0.59%
12/31/94 $ 1.00 $0.04 $ 0.00 $(0.04) $ 0.00 $ 1.00 3.58% $111,545 0.45% 3.50% 0.61%
12/31/93(3) $ 1.00 $0.03 $ 0.00 $(0.03) $ 0.00 $ 1.00 2.56% $108,495 0.47% 2.53% 0.62%
INVESTOR CLASS
Year Ended
12/31/95 $ 1.00 $0.05 $ 0.00 $(0.05) $ 0.00 $ 1.00 5.02% $ 7,931 0.69% 4.89% 0.84%
12/31/94 $ 1.00 $0.03 $ 0.00 $(0.03) $ 0.00 $ 1.00 3.32% $ 3,231 0.70% 3.52% 0.86%
12/31/93(4) $ 1.00 $0.02 $ 0.00 $(0.02) $ 0.00 $ 1.00 2.29% $ 1,347 0.75% 2.28% 5.23%
GOVERNMENT MONEY MARKET FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 $ 1.00 $0.05 $ 0.00 $(0.05) $ 0.00 $ 1.00 5.59% $207,615 0.42% 5.45% 0.42%
12/31/94 $ 1.00 $0.04 $ 0.00 $(0.04) $ 0.00 $ 1.00 3.89% $157,140 0.42% 3.81% 0.42%
12/31/93(3) $ 1.00 $0.03 $ 0.00 $(0.03) $ 0.00 $ 1.00 3.00% $159,401 0.45% 2.92% 0.45%
INVESTOR CLASS
Year Ended
12/31/95 $ 1.00 $0.05 $ 0.00 $ 0.05 $ 0.00 $ 1.00 5.33% $ 3,002 0.67% 5.18% 0.67%
12/31/94 $ 1.00 $0.04 $ 0.00 $(0.04) $ 0.00 $ 1.00 3.63% $ 2,739 0.67% 3.62% 0.67%
12/31/93(5) $ 1.00 $0.02 $ 0.00 $(0.02) $ 0.00 $ 1.00 2.78% $ 1,814 0.72% 2.69% 2.37%
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME/
LOSS
TO
AVERAGE
NET
ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GLOBAL FIXED INCOME FUND
------------------------
TRUST CLASS
Year Ended
12/31/95 5.80 % 105%
12/31/94 5.03 % 138%
12/31/93(1) 5.95 % 146%
INVESTOR CLASS
Year Ended
12/31/95 5.51 % 105%
12/31/94 (1.10)% 138%
12/31/93(2) (312.04)% 146%
TREASURY MONEY MARKET FUND
--------------------------
TRUST CLASS
Year Ended
12/31/95 5.01 % N/A
12/31/94 3.34 % N/A
12/31/93(3) 2.38 % N/A
INVESTOR CLASS
Year Ended
12/31/95 4.74 % N/A
12/31/94 3.36 % N/A
12/31/93(4) (2.20)% N/A
GOVERNMENT MONEY MARKET FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 5.45 % N/A
12/31/94 3.81 % N/A
12/31/93(3) 2.92 % N/A
INVESTOR CLASS
Year Ended
12/31/95 5.18 % N/A
12/31/94 3.62 % N/A
12/31/93(5) 1.04 % N/A
</TABLE>
1. Commenced operations on February 7, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on April 26, 1993. All ratios and total returns for the
period have been annualized.
3. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
4. Commenced operations on March 25, 1993. All ratios and total returns for the
period have been annualized.
5. Commenced operations on April 22, 1993. All ratios and total returns for the
period have been annualized.
* Sales load is not included in total return.
12
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF
NET
INVESTMENT
NET RATIO OF RATIO OF INCOME/
REALIZED NET EXPENSES LOSS
AND DISTRI- NET RATIO OF INVESTMENT TO TO
NET UNREALIZED BUTIONS ASSET NET EXPENSES INCOME AVERAGE AVERAGE
ASSET NET GAINS DIVIDENDS FROM VALUE ASSETS TO TO NET NET
VALUE INVEST- (LOSSES) FROM NET REALIZED END END OF AVERAGE AVERAGE ASSETS ASSETS
BEGINNING MENT ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING (EXCLUDING
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD RETURN (000) ASSETS ASSETS WAIVERS) WAIVERS)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 $1.00 $0.06 $0.00 $(0.06) $0.00 $1.00 5.64% $475,688 0.41% 5.50% 0.56% 5.35 %
12/31/94 $1.00 $0.04 $0.00 $(0.04) $0.00 $1.00 3.97% $460,583 0.41% 3.93% 0.56% 3.78 %
12/31/93(1) $1.00 $0.03 $0.00 $(0.03) $0.00 $1.00 3.01% $367,110 0.46% 2.92% 0.61% 2.77 %
INVESTOR CLASS
Year Ended
12/31/95 $1.00 $0.05 $0.00 $(0.05) $0.00 $1.00 5.38% $ 1,358 0.66% 5.22% 0.81% 5.07 %
12/31/94 $1.00 $0.04 $0.00 $(0.04) $0.00 $1.00 3.71% $ 605 0.66% 4.13% 0.81% 3.98 %
12/31/93(2) $1.00 $0.02 $0.00 $(0.02) $0.00 $1.00 2.76% $ 118 0.72% 2.69% 10.48% (7.09)%
TAX-EXEMPT MONEY MARKET FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 $1.00 $0.03 $0.00 $(0.03) $0.00 $1.00 3.49% $167,945 0.41% 3.44% 0.56% 3.29 %
12/31/94 $1.00 $0.02 $0.00 $(0.02) $0.00 $1.00 2.50% $161,054 0.43% 2.52% 0.59% 2.36 %
12/31/93(1) $1.00 $0.02 $0.00 $(0.02) $0.00 $1.00 1.98% $116,000 0.45% 1.97% 0.60% 1.82 %
INVESTOR CLASS
Year Ended
12/31/95 $1.00 $0.03 $0.00 $(0.03) $0.00 $1.00 3.24% $ 3,244 0.66% 3.19% 0.81% 3.04 %
12/31/94 $1.00 $0.02 $0.00 $(0.02) $0.00 $1.00 2.24% $ 4,204 0.68% 2.31% 0.84% 2.15 %
12/31/93(3) $1.00 $0.01 $0.00 $(0.01) $0.00 $1.00 1.65% $ 1,394 0.74% 1.81% 4.88% (2.33)%
<CAPTION>
PORTFOLIO
TURNOVER
RATE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
MONEY MARKET FUND
-----------------
TRUST CLASS
Year Ended
12/31/95 N/A
12/31/94 N/A
12/31/93(1) N/A
INVESTOR CLASS
Year Ended
12/31/95 N/A
12/31/94 N/A
12/31/93(2) N/A
TAX-EXEMPT MONEY MARKET FUND
----------------------------
TRUST CLASS
Year Ended
12/31/95 N/A
12/31/94 N/A
12/31/93(1) N/A
INVESTOR CLASS
Year Ended
12/31/95 N/A
12/31/94 N/A
12/31/93(3) N/A
</TABLE>
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on March 31, 1993. All ratios and total returns for the
period have been annualized.
3. Commenced operations on April 13, 1993. All ratios and total returns for the
period have been annualized.
13
<PAGE>
THE TRUST
REMBRANDT FUNDS (R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in the Funds through two
separate classes, the Trust Class and the Investor Class, which provide for
variations in sales charges, distribution costs, voting rights and dividends.
Except for these differences between classes, each share of each Fund
represents an undivided, proportionate interest in that Fund. Each Fund is a
diversified mutual fund, except for the Global Fixed Income Fund, which is non-
diversified. Additional information pertaining to the Trust may be obtained
from the Trust's Distributor, Rembrandt (R) Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania, 19087-1658, or by calling 1-800-443-
4725.
INVESTMENT OBJECTIVES AND POLICIES
VALUE FUND
The Value Fund seeks a high level of total return through capital appreciation
and current income.
The Value Fund will invest at least 65% of its assets in U.S. common stocks
that the Advisor believes are undervalued and present the opportunity to
increase shareholder value. The Value Fund will invest in common stocks that
are traded on a national securities exchange or are actively traded in the
over-the-counter market and that: (i) are priced below their intrinsic value as
determined by the Advisor's dividend discount model; (ii) have consistently
paid dividends; and (iii) are issued by companies that the Advisor believes are
financially sound.
Any remaining assets of the Fund may be invested in: (i) warrants to purchase
common stocks; (ii) debt securities convertible into common stocks rated in the
highest four rating categories by a nationally recognized statistical rating
organization ("NRSRO") or determined by the Advisor to be of comparable quality
at the time of purchase; (iii) preferred stock convertible into common stocks;
and (iv) U.S. dollar denominated equity securities of foreign issuers
(including sponsored American Depositary Receipts ("ADRs")). The Fund will
invest in securities of foreign issuers only if they are listed on national
securities exchanges or actively traded in the over-the-counter market.
GROWTH FUND
The Growth Fund seeks a high level of total return primarily through capital
appreciation.
The Growth Fund will invest at least 65% of its assets in the common stock of
corporations of any size with, in the Advisor's opinion, strong prospects for
appreciation through growth in earnings. The Growth Fund invests primarily in
common stocks that: (i) are traded on a national securities exchange or are
actively traded in the over-the-counter market and have an average trading
volume of more than $1 million per day; (ii) have sales and earnings growth
rates that exceed the growth rate of the Gross Domestic Product; and (iii)
maintain a positive return on equity and total assets.
Any remaining Fund assets may be invested in: (i) warrants to purchase common
stocks; (ii) debt securities convertible into common stocks; (iii) preferred
stock convertible into common stocks; and (iv) U.S. dollar denominated equity
securities of foreign issuers (including sponsored ADRs). The Fund will invest
in securities of foreign issuers only if they are listed on national securities
exchanges or actively traded in the over-the-counter market.
SMALL CAP FUND
The Small Cap Fund seeks a high level of total return primarily through capital
appreciation.
The Small Cap Fund will invest at least 65% of its assets in the common stocks
of corporations with smaller capitalization levels that the Advisor believes
have strong prospects for appreciation through growth in earnings. The
Advisor's emphasis will be on a diversified portfolio of common stocks of
companies with aggregate market capitalization of less than $1 billion. In
selecting stocks for the portfolio, factors reviewed will include sales and
earnings growth rates and the strength of the issuer's balance sheets.
14
<PAGE>
Because the Fund invests primarily in common stocks of smaller capitalization
corporations, the Fund's shares may fluctuate in value more than most equity
securities, and thus may be more suitable for long-term investors who can bear
the risk of short-term fluctuations.
Any remaining Fund assets may be invested in: (i) warrants to purchase common
stocks; (ii) debt securities convertible into common stocks; (iii) preferred
stock convertible into common stocks; and (iv) U.S. dollar denominated equity
securities of foreign issuers (including sponsored ADRs). The Fund will invest
in equity securities of foreign issuers that satisfy in substance the criteria
for investing in smaller capitalization stocks set forth above. The Fund will
invest in equity securities of foreign issuers only if they are listed on
national securities exchanges or actively traded in the over-the-counter
market.
INTERNATIONAL EQUITY FUND
The International Equity Fund seeks a high level of total return through
capital appreciation and current income.
The International Equity Fund will invest at least 65% in value of its assets
in equity securities of issuers in at least three countries other than the U.S.
While the Fund is not subject to any requirement to spread its investments
among more than three countries other than the U.S., it currently intends to
spread its investments among countries to reduce currency risk. Investments
will be made primarily in common stocks of companies of any size domiciled in
developed countries, but may be made in the securities of companies domiciled
in developing countries as well. Although the Fund intends to invest primarily
in securities listed on national stock exchanges, it will also invest in
securities actively traded in over-the-counter markets. Securities of companies
in developing countries may pose liquidity risks.
Any remaining Fund assets will be invested in common stocks of closed-end
management investment companies that invest primarily in international common
stocks, stocks of U.S. issuers listed on national securities exchanges or
actively traded in the over-the-counter market, convertible securities of U.S.
issuers whether or not they are listed on national securities exchanges and
money market instruments.
TRANSEUROPE FUND
The TransEurope Fund seeks a high level of total return through capital
appreciation and current income.
The TransEurope Fund will invest as fully as feasible (and at least 65% of its
assets) in the equity securities of European issuers located in Germany,
France, Switzerland, Belgium, Italy, Spain, the Netherlands, Finland, Sweden,
Denmark, Norway and the United Kingdom. Investments may also be made in the
equity securities of issuers located in the smaller and emerging markets of
Europe, such as Spain and Finland. The Fund may also invest in the equity
securities of issuers in the following Eastern European countries: Poland,
Hungary, the Czech Republic and Slovakia. Emerging markets are subject to
special risks not associated with domestic markets. See "Certain Risk Factors."
The Fund's remaining assets will be invested in money market instruments of
European issuers. The Fund will invest in options and futures for hedging
purposes only.
ASIAN TIGERS FUND
The Asian Tigers Fund seeks to achieve capital appreciation.
The Asian Tigers Fund will invest primarily in equity securities which are
traded on recognized stock exchanges of the countries of Asia and in equity
securities of companies organized under the laws of an Asian country. The Fund
may also invest in sponsored ADRs of Asian issuers that are traded on stock
exchanges in the United States. The Fund does not intend to invest in
securities which are principally traded in markets in Japan or in companies
organized under the laws of Japan.
15
<PAGE>
Under normal circumstances at least 65% of the total assets of the Fund will be
invested in equity securities of Asian countries. The Fund will make such
investments in some or all of the following countries: China, Hong Kong,
Singapore, Malaysia, Thailand, the Philippines and Indonesia. The Fund may also
invest in common stocks traded on markets in Taiwan, South Korea, India,
Pakistan, Sri Lanka, and may invest up to 5% of its assets in other developing
markets. There is no requirement that the Fund, at any given time, invest in
any or all of the countries listed above or in any other Asian countries. The
Fund has no set policy for allocating investments among the several Asian
countries. Allocation of investments among the various countries will depend on
the relative attractiveness of the stocks of issuers in the respective
countries. Government regulation and restrictions in many of the countries of
interest may limit the amount, mode, and extent of investment in companies of
such countries.
Any of the Fund's remaining assets will be invested in common stocks of closed-
end management investment companies that invest primarily in common stocks of
Asian countries or money market instruments of Asian and European issuers.
In selecting industries and particular issuers, the Advisor will evaluate costs
of labor and raw materials, access to technology, export of products and
government regulation. Although the Fund seeks to invest in larger companies,
it may invest in medium and small companies that, in the Advisor's opinion,
have potential for growth.
Although the Fund intends to invest primarily in securities listed on stock
exchanges, it will also invest in securities traded in over-the-counter
markets, which may pose liquidity risks. No more than 5% of the Fund's assets
will be invested in unlisted securities.
The Fund will invest in options and futures for hedging purposes only.
BALANCED FUND
The Balanced Fund seeks a favorable total rate of return through current income
and capital appreciation consistent with preservation of capital, derived from
investing in a portfolio comprised of fixed income and equity securities.
The Balanced Fund will invest at least 80% of its net assets in fixed income
and equity securities, with at least 25% of its assets in fixed income senior
securities. Permissible investments for the Fund include: (i) corporate bonds
and debentures of U.S. or foreign issuers, rated in the highest four rating
categories by an NRSRO or of comparable quality at the time of purchase as
determined by the Advisor; (ii) securities denominated in U.S. dollars or in
foreign currencies, issued or guaranteed as to principal and interest by the
U.S. Government, its agencies and instrumentalities or issued or guaranteed by
foreign governments, their political subdivisions, agencies or
instrumentalities; (iii) short-term commercial paper of U.S. or foreign
issuers, rated in the highest two rating categories by an NRSRO or determined
by the Advisor to be of comparable quality at the time of investment; (iv)
short-term bank obligations consisting of certificates of deposit, time
deposits and bankers' acceptances of U.S. or foreign commercial banks or
savings and loan institutions with assets as of the end of their most recent
fiscal year of at least $500 million, or its equivalent in appropriate foreign
currency measured using currency exchange rates in effect at the time of
investment; (v) obligations, denominated in U.S. dollars or foreign currencies,
of supranational entities rated in the highest three rating categories by an
NRSRO; (vi) mortgage-backed securities rated in the highest two rating
categories by an NRSRO; (vii) asset-backed securities rated in the highest
three rating categories by an NRSRO; (viii) STRIPS and receipts; (ix)
repurchase agreements involving such securities; (x) loan participations, in
which the Fund will not invest more than 5% of its total assets; (xi)
guaranteed investment contracts ("GICs") and bank investment contracts ("BICs")
deemed by the Advisor to be of investment grade; (xii) swaps; (xiii) municipal
notes rated in the highest two rating categories by an NRSRO or, if unrated,
determined by the Advisor to be of comparable quality; and (xiv) municipal
bonds rated in the highest three rating categories by an NRSRO or, if unrated,
determined by the Advisor to be of comparable quality. The Balanced Fund may
invest up
16
<PAGE>
to 15% of its assets in fixed income securities that are either denominated in
foreign currencies or issued by foreign issuers, provided that assets invested
in such securities will not constitute more than 50% of the assets of the
Balanced Fund invested in fixed income securities.
The remainder of the Fund's assets will be invested in: (i) common stocks; (ii)
warrants to purchase common stocks; (iii) debt securities convertible into
common stocks; (iv) preferred stocks convertible into common stocks; (v) U.S.
dollar denominated equity securities of foreign issuers (including sponsored
ADRs); (vi) foreign securities; and (vii) equity options. The equity securities
in which the Fund will invest are listed on national securities exchanges or
actively traded in the over-the-counter market. The Fund will invest, based on
dividend paying characteristics and growth potential, in equity securities of
companies of all sizes. There are no minimum rating criteria applicable to
convertible securities.
The Balanced Fund may enter into dollar roll transactions with selected banks
and broker-dealers.
The Balanced Fund is not subject to maturity restrictions.
FIXED INCOME FUND
The Fixed Income Fund seeks a high level of total return relative to funds with
like investment objectives, from income and, to a lesser degree, capital
appreciation derived from investing in a portfolio consisting primarily of
quality intermediate- and long-term fixed income securities.
The Fixed Income Fund will invest as fully as feasible (and at least 65% of its
assets) in the following fixed income securities: (i) corporate bonds and
debentures rated in the highest four rating categories by an NRSRO or, if
unrated, determined by the Advisor to be of comparable quality at the time of
purchase; (ii) obligations issued or guaranteed as to principal and interest by
the U.S. Government and its agencies and instrumentalities; (iii) short-term
commercial paper rated in the highest two rating categories by an NRSRO or, if
unrated, determined by the Advisor to be of comparable quality at the time of
investment; (iv) short-term bank obligations rated in the highest two rating
categories by an NRSRO, including certificates of deposit, time deposits, and
bankers' acceptances of U.S. commercial banks or savings and loan institutions
with assets of at least $500 million as of the end of their most recent fiscal
year; (v) U.S. dollar denominated securities issued or guaranteed by foreign
governments, their political subdivisions, agencies or instrumentalities; (vi)
U.S. dollar denominated obligations of supranational entities rated in the
highest three rating categories by an NRSRO; (vii) mortgage-backed securities
rated in the highest two rating categories by an NRSRO; (viii) asset-backed
securities rated in the highest three rating categories of an NRSRO; (ix)
STRIPS and receipts evidencing separately traded interest and principal
component parts of U.S. Government obligations ("Receipts"); (x) repurchase
agreements involving such securities; (xi) loan participations, in which the
Fund will not invest more than 5% of its total assets; (xii) guaranteed
investment contracts ("GICs"); (xiii) bank investment contracts ("BICs"); (xiv)
swaps; (xv) municipal notes rated in the highest two rating categories by an
NRSRO or, if unrated, determined by the Advisor to be of comparable quality;
and (xvi) municipal bonds rated in the highest three rating categories by an
NRSRO or, if unrated, determined by the Advisor to be of comparable quality.
There are no restrictions on the average maturity of the Fund or on the
maturity of any single instrument. Maturities may vary widely depending on the
Advisor's assessment of interest rate trends and other economic and market
factors. The estimated dollar-weighted average portfolio maturity of the Fund
is approximately eight years.
Any remaining assets of the Fund may be invested in variable and floating rate
obligations, dollar rolls, forward commitments, when-issued securities, and
securities of foreign issuers. In addition the Fund may lend the securities in
which it is invested.
17
<PAGE>
INTERMEDIATE GOVERNMENTFIXED INCOME FUND
The Intermediate Government Fixed Income Fund seeks a high level of total
return relative to funds with like investment objectives, consistent with
preservation of capital from income and, to a lesser degree, capital
appreciation, derived from investing in a portfolio consisting of short- and
intermediate-term U.S. Government securities.
The Intermediate Government Fixed Income Fund will invest 100% of its total
assets in Government securities, which include obligations issued or guaranteed
as to principal and interest by the U.S. Government and its agencies and
instrumentalities.
Normally, the Fund will maintain an average weighted maturity of 3 to 10 years;
under certain circumstances, however, the average weighted maturity may fall
below 3 years.
TAX-EXEMPT FIXED INCOME FUND
The Tax-Exempt Fixed Income Fund seeks a high level of total return, relative
to funds with like investment objectives, consistent with preservation of
capital, from income derived from investing in a portfolio consisting primarily
of securities that are exempt from federal income tax and not subject to
taxation as a preference item for purposes of the federal alternative minimum
tax.
The Tax-Exempt Fixed Income Fund will invest as fully as feasible (at least 65%
of the value of its total assets) in fixed income securities issued by or on
behalf of the states, territories and possessions of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, rated in the highest four rating categories by an NRSRO or,
if unrated, determined by the Advisor to be of comparable quality, and will
invest at least 80% of its net assets in comparably-rated fixed income
securities the interest on which is exempt from federal income tax and which
are not subject to taxation as a preference item for purposes of the federal
alternative minimum tax.
The remainder of the Fund's assets may be invested in: (i) short-term, tax-
exempt commercial paper rated in the highest two rating categories by an NRSRO
or, if unrated, determined by the Advisor to be of comparable quality at the
time of investment; (ii) municipal notes rated in the highest two rating
categories by an NRSRO or, if unrated, determined by the Advisor to be of
comparable quality; (iii) fixed income options and futures; (iv) asset-backed
securities; (v) Receipts; (vi) securities issued or guaranteed by the U.S.
Government or its agencies; and (vii) corporate bonds rated in one of the three
highest categories by an NRSRO.
The Fund will not invest more than 10% of its total assets in restricted
securities.
There are no restrictions on the average maturity of the Fund or the maturity
of any single instrument. Maturities may vary widely depending on the Advisor's
assessment of interest rate trends and other economic and market factors.
GLOBAL FIXED INCOME FUND
The Global Fixed Income Fund seeks a high level of total return relative to
funds with like investment objectives, measured in U.S. dollar terms, from
income and capital appreciation derived from investing in a portfolio
consisting of quality fixed income securities denominated in foreign
currencies.
The Global Fixed Income Fund will invest as fully as feasible (at least 65% of
its assets) in high quality fixed income securities of issuers in at least
three of the following countries:
Austria, Australia, Belgium, Canada, Switzerland, Germany, Denmark, Spain,
Finland, United Kingdom, Italy, Ireland, Japan, Luxembourg, The Netherlands,
Sweden, New Zealand, France, Norway, and the United States.
The Fund strives to take maximum advantage of financial and economic
developments and currency fluctuations. All investments will be in high quality
securities denominated in various currencies, including the European Currency
Unit, and listed on
18
<PAGE>
stock exchanges of major industrialized countries. At least 50% of investments
will be made in government bonds or in bonds issued by government-backed
institutions (but no more than 25% of the Fund's assets will be invested in
securities of governmental issuers in any one country). Investments in non-
government bonds will be rated in one of the highest four rating categories by
an NRSRO.
Fixed income securities consist of: (i) corporate bonds and debentures rated in
the highest four rating categories by an NRSRO or, if unrated, determined by
the Advisor to be of comparable quality at the time of purchase; (ii) short-
term commercial paper rated in the highest two rating categories by an NRSRO
or, if unrated, determined by the Advisor to be of comparable quality at the
time of investment; (iii) securities issued or guaranteed by foreign
governments, their political subdivisions, agencies or instrumentalities; (iv)
obligations of supranational entities; (v) repurchase agreements involving such
securities; (vi) loan participations, in which the Fund will not invest more
than 5% of its total assets; and (vii) swaps, fixed income options and futures.
Any remaining Fund assets will be invested in: (i) securities denominated in
U.S. dollars or foreign currencies comparable to the fixed income instruments
described above; (ii) obligations issued or guaranteed as to principal and
interest by the U.S. Government or its agencies and instrumentalities; (iii)
short-term bank obligations, including certificates of deposit, time deposits,
and bankers' acceptances of U.S. or foreign commercial banks or savings and
loans institutions with assets as of the end of their most recent fiscal year
of at least $500 million or its equivalent in appropriate foreign currency
measured using currency exchange rates in effect at the time of investment;
(iv) mortgage-backed securities rated in the highest two rating categories by
an NRSRO; (v) asset-backed securities rated in the highest three rating
categories by an NRSRO; (vi) Receipts; (vii) GICs; and (viii) BICs.
There are no restrictions on the average maturity of the Fund or on the
maturity of any single instrument. Maturities may vary widely depending on the
Advisor's assessment of interest rate trends and other economic and market
factors.
LIMITED VOLATILITY FIXED INCOME FUND
The Limited Volatility Fixed Income Fund seeks a high level of current income,
consistent with relative stability of principal, derived from investing in a
portfolio consisting primarily of short- and intermediate-term fixed income
securities.
The Limited Volatility Fixed Income Fund will invest as fully as feasible (at
least 65% of its assets) in the following short- and intermediate-term taxable
fixed income obligations: (i) corporate bonds and debentures rated in the
highest four rating categories by an NRSRO or, if unrated, determined by the
Advisor to be of comparable quality at the time of purchase; (ii) obligations
issued or guaranteed as to principal and interest by the U.S. Government and
its agencies and instrumentalities; (iii) short-term commercial paper rated in
the highest two rating categories by an NRSRO or, if unrated, determined by the
Advisor to be of comparable quality at the time of purchase; (iv) short-term
bank obligations: certificates of deposit, time deposits, and bankers'
acceptances of U.S. commercial banks or savings and loans institutions with
assets of at least $500 million as of the end of their most recent fiscal year;
(v) U.S. dollar denominated securities issued or guaranteed by foreign
governments, their political subdivisions, agencies or instrumentalities; (vi)
U.S. dollar denominated obligations of supranational entities rated in the
highest three rating categories by an NRSRO; (vii) mortgage-backed securities
rated in the highest two rating categories by an NRSRO; (viii) asset-backed
securities rated in the highest three rating categories by an NRSRO; (ix)
Receipts; (x) repurchase agreements involving such securities; (xi) swaps;
(xii) municipal notes rated in the highest two rating categories by an NRSRO
or, if unrated, determined by the Advisor to be of comparable quality; and
(xiii) municipal bonds rated in the highest three rating categories by an NRSRO
or, if unrated, determined by the Advisor to be of comparable quality. The
19
<PAGE>
Fund will also invest in fixed income options and futures for hedging purposes
only.
The Fund may also invest in dollar roll transactions, variable and floating
rate obligations, forward commitments, when-issued securities, and securities
of foreign issuers. In addition the Fund may lend the securities in which it is
invested under certain conditions.
The Advisor considers short- and intermediate-term obligations to be
obligations having maturities of more than two years but less than five years.
The dollar-weighted average maturity of the Fund will be less than six years.
The Advisor may shorten the average maturity substantially, as a temporary
defensive position, in anticipation of a change in the interest rate
environment.
TREASURY MONEY MARKET FUND
The Treasury Money Market Fund seeks to preserve principal value and maintain a
high degree of liquidity while providing current income by investing
exclusively in U.S. Treasury obligations.
The Treasury Money Market Fund invests in 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
(such component parts of obligations are commonly known as "STRIPS" and all of
the foregoing obligations are referred to herein collectively as "U.S. Treasury
Obligations").
The Fund's investments in STRIPS will be limited to components with maturities
of less than 397 days. Investing in these securities entails certain risks,
including that interest components may be more volatile in value than
comparable maturity Treasury bills, as further described in "Description of
Permitted Investments and Risk Factors." The Fund will invest primarily in U.S.
Treasury Obligations other than STRIPS.
GOVERNMENT MONEY MARKET FUND
The Government Money Market Fund seeks to provide as high a level of current
income as is consistent with preservation of capital and liquidity by investing
in obligations of the U.S. Government and its agencies and instrumentalities.
The Government Money Market Fund invests exclusively in high quality money
market instruments denominated in U.S. dollars consisting of (i) U.S. Treasury
Obligations; (ii) securities issued or guaranteed by the U.S. Government or its
agencies and instrumentalities (e.g., Government National Mortgage Association,
Federal National Mortgage Association, Federal Home Loan Mortgage Corporation,
Federal Land Bank); and (iii) repurchase agreements involving such obligations.
The Government Money Market Fund will enter into repurchase agreements
exclusively with dealers that meet criteria established by Standard & Poor's
Corporation ("S&P") and that meet the credit guidelines of the Trustees of the
Trust.
MONEY MARKET FUND
The Money Market Fund (formerly known as the Taxable Money Market Fund) seeks
to provide as high a level of current income as is consistent with the
preservation of capital and liquidity by investing exclusively in high quality
money market instruments.
The Money Market Fund invests exclusively in the following: (i) U.S. Treasury
Obligations; (ii) obligations issued or guaranteed as to principal and interest
by the U.S. Government or its agencies and instrumentalities; (iii) commercial
paper of U.S. and foreign issuers rated in the two highest short-term rating
categories of an NRSRO at the time of investment or, if unrated, determined by
the Advisor to be of comparable quality; (iv) obligations (certificates of
deposit, time deposits, and bankers' acceptances) of U.S. commercial banks,
U.S. savings and loan institutions, and U.S. and London branches of foreign
banks that have total assets of $500 million or more as shown on their last
published financial statements at the time of investment; (v) short-term
corporate obligations of U.S. and foreign issuers whose
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commercial paper the Fund may purchase; (vi) repurchase agreements involving
such obligations; (vii) obligations of supranational entities; (viii) loan
participations; (ix) receipts evidencing separately traded interest and
principal component parts of U.S. Government obligations; (x) standby
commitments; and (xi) municipal securities. The Fund may not invest more than
25% of its total assets in obligations issued by foreign branches of U.S. banks
and London branches of foreign banks. The Money Market Fund will enter into
repurchase agreements exclusively with dealers that meet criteria established
by S&P and that meet the credit guidelines of the Trustees of the Trust.
TAX-EXEMPT MONEY MARKET FUND
The Tax-Exempt Money Market Fund seeks to preserve principal value and maintain
a high degree of liquidity while providing current income exempt from federal
income tax and not included as a preference item under the alternative minimum
tax.
The Tax-Exempt Money Market Fund invests at least 80% of its total assets in
eligible securities issued by or on behalf of the states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, the interest of which,
in the opinion of bond counsel for the issuer, is exempt from federal income
tax (collectively, "Municipal Securities"). The Fund will purchase municipal
bonds, municipal notes and tax-exempt commercial paper rated in the two highest
short-term rating categories by an NRSRO in accordance with SEC regulations at
the time of investment or, if unrated, determined by the Advisor to be of
comparable quality.
The Advisor has discretion to invest up to 20% of the Fund's assets in the
aggregate in taxable money market instruments (including repurchase agreements)
and securities subject to the alternative minimum tax.
GENERAL INVESTMENT POLICIES
THE EQUITY AND BALANCED FUNDS
Each Fund will invest in common stocks and U.S. dollar denominated equity
securities of foreign issuers only if they are listed on national securities
exchanges or actively traded in the over-the-counter market. Each Fund may
invest in convertible securities whether or not they are listed on national
securities exchanges.
Each Fund will not invest more than 10% of its total assets in restricted
securities. A Fund may invest up to 5% of its assets in restricted securities
that the Advisor determines are liquid. Each Fund will not invest more than 15%
of its total assets in illiquid securities.
The Balanced Fund is also permitted to invest in stock index futures (for
hedging purposes only), engage in securities lending, acquire floating and
variable rate securities and purchase securities on a when-issued basis where
the purchase is for investment in the securities, not for leveraging, and
subject to the investment restrictions described above. See "Description of
Permitted Investments and Risk Factors". The Equity Funds may engage in futures
and options for hedging purposes only.
Each Fund may also invest in money market instruments.For temporary defensive
purposes during periods when the Advisor determines that market conditions
warrant, each Fund may invest up to 100% of its assets in money market
instruments and may hold a portion of its assets in cash. To the extent a Fund
is engaged in temporary defensive investing, the Fund will not be pursuing its
investment objective.
A Fund may enter into futures contracts transactions only to the extent that
obligations under such contracts represent less than 20% of the Fund's assets.
The aggregate value of option positions may not exceed 10% of a Fund's net
assets as of the time such options are entered into by a Fund.
THE FIXED INCOME AND BALANCED FUNDS
All Fixed Income Funds may purchase mortgage-backed securities issued or
guaranteed as to payment of principal and interest by the U.S. Government or
its agencies or instrumentalities and mortgage-backed securities issued by non-
governmental issuers that are rated in the highest two rating categories of an
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NRSRO. The Funds may purchase mortgage-backed securities that are backed or
collateralized by fixed, adjustable or floating rate mortgages. Mortgage-backed
securities are subject to the risk of prepayment of the underlying mortgages.
During periods of declining interest rates, prepayment of mortgages underlying
these securities can be expected to accelerate. When the mortgage-backed
securities held by a Fund are prepaid, the Fund reinvests the proceeds in
securities, the yield of which reflects prevailing interest rates.
The Fixed Income Funds may engage in fixed income options and futures for
hedging purposes only.
The Fixed Income Fund, Intermediate Government Fixed Income Fund, Limited
Volatility Fixed Income Fund and Balanced Fund may enter into dollar roll
transactions with selected banks and broker-dealers. The Fund will place U.S.
Government or other liquid, high quality assets in a segregated account in an
amount sufficient to cover its repurchase obligation.
The quality standards of debt securities and other obligations as described for
the Funds must be satisfied at the time an investment is made. In the event
that an investment held by a Fund is assigned a lower rating or ceases to be
rated, the Advisor under the supervision of the Trustees of the Trust will
promptly reassess whether such security presents suitable credit risks and
whether the Fund should continue to hold the security or obligation in its
portfolio. If a portfolio security or obligation no longer presents suitable
credit risks or is in default, the Fund will dispose of the security or
obligation as soon as reasonably practicable unless the Trustees of the Trust
determine that to do so is not in the best interest of the Fund.
The Fixed Income Fund, Intermediate Government Fixed Income Fund, Tax-Exempt
Fixed Income Fund, Global Fixed Income Fund and Balanced Fund will, in
acquiring fixed income securities, seek opportunities for capital gains as well
as income in light of such Funds' total return objectives. There is no
assurance that any Fund will in fact realize capital gains.
In addition, a Fund may enter into futures contracts transactions only to the
extent that obligations under such contracts represent less than 20% of the
Fund's assets. The aggregate value of option positions may not exceed 10% of a
Fund's net assets as of the time such options are entered into by a Fund. No
more than 15% of a Fund's net assets will be invested in illiquid securities.
For a further description of the foregoing obligations and securities, see the
sections entitled "Description of Permitted Investments and Risk Factors" and
the Statement of Additional Information.
For temporary defensive purposes when the Advisor determines that market
conditions warrant, a Fund may invest up to 100% of its assets in money market
instruments. To the extent a Fund is investing for temporary defensive
purposes, the Fund will not be pursuing its investment objective.
THE MONEY MARKET FUNDS
Each Fund intends to comply with regulations of the SEC applicable to money
market funds using the amortized cost method for calculating net asset value
found in Rule 2a-7 under the 1940 Act. These regulations impose certain
quality, maturity and diversification restraints on investments by the Funds.
Under these regulations, the Funds will invest only in U.S. dollar denominated
securities, will maintain an average maturity on a dollar-weighted basis of 90
days or less, and will acquire only "eligible securities" that present minimal
credit risks and have a maturity of 397 days or less. These constraints
effectively preclude the Funds from investing in securities with interest rates
as high as those of securities that may be acquired by Funds that are permitted
to buy lower rated or longer term securities. For a further discussion of these
rules, see the "Description of Permitted Investments and Risk Factors--
Restraints on Investments by Money Market Funds".
Each Money Market Fund may invest in restricted securities but will not invest
more than 5% of its total assets in such securities.
Each Money Market Fund will not invest more than 10% of its assets in illiquid
securities.
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ALL FUNDS
All Funds may invest in variable and floating rate obligations and may purchase
securities on a when-issued basis. When investing in when-issued securities, a
Fund will not accrue income until delivery of the securities and will invest in
such securities only for purposes of actually acquiring the securities and not
for the purpose of leveraging. In addition, each Fund may engage in securities
lending and engage in futures and options transactions. Such futures and
options transactions include municipal contracts and treasury contracts for the
Tax-Exempt Fixed Income Fund. A Fund may enter into futures contracts provided
that no more than 5% of the Fund's net assets are required as a futures
contract margin deposit.
In addition, each Fund (with the exception of the Treasury Money Market Fund)
reserves the right to engage in securities lending.
There will be no limit to the percentage of portfolio securities that the Fund
may purchase subject to a standby commitment, but the amount paid directly or
indirectly for a standby commitment held by the Fund will not exceed 1/2 of 1%
of the value of the total assets of the Fund.
The portfolio turnover rates for the Small Cap, Tax-Exempt Fixed Income,
Intermediate Government Fixed Income and Global Fixed Income Funds for the
fiscal year ended December 31, 1995 were 142%, 129%, 115% and 105%,
respectively. A high turnover rate will result in higher transaction costs and
may result in additional taxes for shareholders.
RATINGS
NRSROs, such as S&P provide ratings for certain instruments in which the Funds
may invest. For example, municipal notes rated in the second highest rating
category by S&P have satisfactory capacity to pay principal and interest. Bonds
rated in the fourth highest rating category by S&P have an adequate capacity to
pay principal and interest but may have speculative characteristics as well.
Commercial paper rated in the second highest rating category by S&P has
satisfactory capacity for timely payment.
For a description of the above ratings, see the Statement of Additional
Information.
CERTAIN RISK FACTORS
The investment policies of each Fund entail certain risks and considerations of
which an investor should be aware
Foreign Securities: The International Equity, TransEurope, Asian Tigers and
Global Fixed Income Funds will, and certain other Funds may, invest in
securities of foreign issuers. Securities of foreign issuers are subject to
certain risks not typically associated with domestic securities, including,
among other risks, changes in currency rates and in exchange control
regulations, costs in connection with conversions between various currencies,
limited publicly available information regarding foreign issuers, lack of
uniformity in accounting, auditing and financial standards and requirements,
greater securities market volatility, less liquidity of securities, less
government supervision and regulations of securities markets, withholding taxes
and changes in taxes on income on securities, and possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits.
Investments in the securities of foreign issuers may subject a Fund 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 than
are those in the United States.
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Investments in securities of foreign issuers are frequently denominated in
foreign currencies, and since the Fund may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the value of the Fund's assets as
measured in United States dollars may be affected favorably or unfavorably by
changes in currency rates and in exchange control regulations, and the Fund may
incur costs in connection with conversions between various currencies.
Equity Securities: The Funds may temporarily reduce their equity holdings for
defensive purposes in response to adverse market conditions and invest in
domestic, Eurodollar and foreign and short-term money market instruments.
Fixed Income Securities: The market value of a Fund's fixed income investments
will change in response to interest rate changes and other factors. During
periods of falling interest rates, the values of outstanding fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Moreover, while securities
with longer maturities tend to produce higher yields, the prices of securities
with longer maturities 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 a Fund's securities will not affect cash income derived
from these securities but will affect the Fund's net asset value. Securities
rated in the fourth highest category by an NRSRO are considered investment
grade, but may have speculative characteristics as well.
FUNDAMENTAL POLICIES
The investment objective and the following investment limitations are
fundamental policies of each Fund. Fundamental policies cannot be changed with
respect to a Fund without the consent of the holders of a majority of a Fund's
outstanding shares.
INVESTMENT LIMITATIONS
An Equity, Fixed Income or Balalnced Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if as a result more than 5% of the total assets of
the Fund would be invested in the securities of such issuer or more than 10% of
the outstanding voting securities of such issuer would be owned by the Fund.
This restriction applies to 75% of the Fund's assets, and does not apply to the
Global Fixed Income Fund.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities and
repurchase agreements involving such securities. For purposes of this
limitation (i) utility companies will be divided according to their services,
for example, gas, gas transmission, electric and telephone will each be
considered a separate industry; (ii) 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; and (iii) supranational entities will be
considered to be a separate industry.
3. Make loans, except that a Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.
A Money Market Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result,
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more than 5% of the total assets of the Fund would be invested in the
securities of such issuer or more than 10% of the outstanding voting securities
of such issuer would be owned by the Fund; provided, however, that the Tax-
Exempt Money Market Fund may invest up to 25% of its total assets without
regard to this restriction as permitted by applicable law. Each Money Market
Fund, except the Tax-Exempt Money Market Fund, may invest up to 25% of its
assets in securities of a single issuer for a period of up to three business
days if such securities qualify as "first tier securities" under applicable SEC
Rules. For purposes of this limitation, loan participations are considered to
be issued by both the issuing bank and the underlying corporate borrower.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry or securities the
interest upon which is paid from revenue of similar type industrial development
projects, provided that this limitation does not apply to (i) investments in
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities and in repurchase agreements involving such securities; and
(ii) 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; or (iii) tax-
exempt securities issued by governments or political subdivisions of
governments. For purposes of this limitation, (i) loan participations are
considered to be issued by both the issuing bank and the underlying corporate
borrower; (ii) utility companies will be divided according to their services,
for example, gas, gas transmission, electric and telephone will each be
considered a separate industry; (iii) 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; and (iv) supranational entities will be
considered to be a separate industry.
3. Make loans, except that a Fund may (i) purchase or hold debt instruments in
accordance with its investment objective and policies; (ii) enter into
repurchase agreements, and (iii) engage in securities lending.
The foregoing percentages will apply at the time of the purchase of a security.
Additional fundamental and non-fundamental investment limitations are set forth
in the Statement of Additional Information.
THE ADVISOR
The Trust and LaSalle Street Capital Management, Ltd. (the "Advisor"), 10 South
LaSalle Street, Suite 3701, Chicago, Illinois 60603 have entered into an
advisory agreement (the "Advisory Agreement"). Under the Advisory Agreement,
the Advisor makes the investment decisions for the assets of the Funds and
continuously reviews, supervises and administers the Funds' investment
programs, subject to the supervision of, and policies established by, the
Trustees of the Trust. The Trust's shares are not sponsored, endorsed or
guaranteed by, and do not constitute obligations or deposits of, the Advisor or
LaSalle National Trust, N.A. or its affiliates or correspondents and are not
insured by the FDIC or issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities.
The Advisor is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .80% of the average daily net assets of the Value, Growth,
Small Cap and Global Fixed Income Funds; 1.00% of the average daily net assets
of the International Equity, TransEurope and Asian Tigers Funds; .70% of the
average daily net assets of the Balanced Fund; .60% of the average daily net
assets of the Fixed Income, Intermediate Government Fixed Income, Tax-Exempt
Fixed Income and Limited Volatility Fixed Income Funds; .35% of the average
daily net assets of the Treasury Money Market, Money Market and Tax-Exempt
Money Market Funds; and .20% of the average daily net assets of the Government
Money Market Fund. The advisory fee for the Value, Growth, Small Cap,
International Equity, TransEurope, Asian Tigers and Global Fixed Income Funds
is higher than those paid by most mutual funds, but are consistent with those
paid by most mutual funds with similar objectives and policies.
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For the fiscal year ended December 31, 1995, the Advisor received an advisory
fee of .80% for the Value Fund, .80% for the Growth Fund, .80% for the Small
Cap Fund, .70% for the Balanced Fund, 1.00% for the International Equity Fund,
1.00% for the Asian Tigers Fund, .51% for the Fixed Income Fund, .51% for the
Intermediate Government Fixed Income Fund, .48% for the Tax-Exempt Fixed Income
Fund, .80% for the Global Fixed Income Fund, .20% for the Tax-Exempt Money
Market Fund, .20% for the Treasury Money Market Fund, .20% for the Government
Money Market Fund and .21% for the Money Market Fund. The TransEurope Fund and
Limited Volatility Fixed Income Fund had not commenced operations at fiscal
year end.
LaSalle Street Capital Management, Ltd. was organized in March, 1991 under the
laws of the state of Delaware. The Advisor manages assets for common and
collective trusts, corporations, unions, governments, insurance companies and
charitable organizations, and provides investment advisory services to LaSalle
National Trust, N.A. As of December 31, 1995, total assets under management by
the Advisor and LaSalle National Trust, N.A. were approximately $7.1 billion.
The Advisor is a wholly-owned subsidiary of LaSalle National Trust, N.A.
LaSalle National Trust, N.A. is a subsidiary of LaSalle National Corporation, a
bank holding company. LaSalle National Trust, N.A. administers $21.7 billion in
assets. The Advisor is an indirect wholly-owned subsidiary of ABN AMRO Holding
N.V., a Netherlands company.
Jac A. Cerney, Vice President of the Advisor, has served as portfolio manager
to the Value and Balanced Funds since their inception. Mr. Cerney has been
associated with the Advisor and its predecessor since April, 1990.
Keith Dibble, Senior Vice President of the Advisor, has served as portfolio
manager to the Growth Fund since its inception. Mr. Dibble has been associated
with the Advisor and its predecessor since 1987.
John F. Bonetti, Vice President of the Advisor, has served as portfolio manager
of the Small Cap Fund since February, 1995. Mr. Bonetti has been associated
with the Advisor and its predecessor since 1989.
T. Brian Gidley, Vice President of the Advisor, has served as portfolio manager
to the Intermediate Government Fixed Income Fund, Limited Volatility Fixed
Income Fund, Tax-Exempt Fixed Income Fund and Balanced Fund since their
inception. Mr. Gidley has been associated with the Advisor since May, 1991.
Charles H. Self, III, Vice President of the Advisor, has served as portfolio
manager of the Fixed Income Fund since October, 1995. Mr. Self joined the
Advisor in October, 1995, prior to which, he served as a Vice President with
CSI Asset Management from December, 1988 to July, 1995.
THE SUB-ADVISOR
ABN AMRO-NSM International Funds Management B.V. ("AANIFM" or the "Sub-
Advisor"), Foppingadreef 22, P.O. Box 246, 1000 EA Amsterdam, the Netherlands,
serves as the investment sub-advisor of the International Equity Fund,
TransEurope Fund, Asian Tigers Fund and Global Fixed Income Fund pursuant to a
Sub-Advisory Agreement with the Advisor. AANIFM is a holding company affiliate
of the Advisor. Under the Sub-Advisory Agreement, AANIFM manages the Funds,
selects investments and places all orders for purchases and sales of the Funds'
securities, subject to the general supervision of the Trustees of the Trust and
the Advisor. AANIFM has approximately $618 million under management, and
manages two non-U.S. investment companies.
Gijs Dorresteijn, fund manager with the Sub-Advisor, has served as portfolio
manager to the International Equity Fund since its inception. Mr. Dorresteijn
has been associated with the Sub-Advisor and/or its parent since 1979.
Alex Ng has served as portfolio manager to the Asian Tigers Fund since July,
1995. Mr. Ng has been associated with the Sub-Advisor and/or its parent
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since 1988. Mr. Ng also serves as the Far East Director of Asset Management for
a Hong Kong-based affiliate.
Wypke Postma, portfolio manager to the TransEurope Fund and Director of the
Sub-Advisor, has been associated with the Sub-Advisor and/or its parent since
1984.
Roy Scheepe serves as portfolio manager to the Global Fixed Income Fund, and
has worked with the Sub-Advisor since October, 1993. Mr. Scheepe has served as
a portfolio manager with ABN AMRO Bank Asia from 1989 to October, 1991 and as
director of ABN AMRO Bank Asset Management (Curacao) N.V. from October, 1991 to
October, 1993.
For services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, AANIFM is entitled to receive from the Advisor a fee, which is
computed daily and paid quarterly, at the annual rate of .50% of the average
daily net assets of each of the International Equity Fund, TransEurope Fund and
Asian Tigers Fund, and .40% of the average daily net assets of the Global Fixed
Income Fund. The Sub-Advisor received fees from the Advisor of .50% for the
Asian Tigers Fund and .40% for the Global Fixed Income Fund for the fiscal year
ended December 31, 1995.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, Pennsylvania, 19087, a wholly-owned subsidiary of SEI Corporation
("SEI"), and the Trust are parties to an administration agreement (the
"Administration Agreement"). Under the terms of the Administration Agreement,
the Administrator provides the Trust with administrative services, other than
investment advisory services, including all regulatory reporting, necessary
office space, equipment, personnel, and facilities. The Administrator also
serves as shareholder servicing agent for the Trust.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of the average daily net assets of the
Funds.
The Administrator has voluntarily agreed to waive a portion of its fee from the
International Equity, Asian Tigers, Global Fixed Income, Fixed Income,
Intermediate Fixed Income and Money Market Funds in order to limit the total
operating expenses of these Funds. The Administrator reserves the right, in its
sole discretion, to terminate this waiver at any time.
THE TRANSFER AGENT
DST Systems, Inc., 210 W. Tenth Street, Kansas City, Missouri 64105, serves as
the transfer agent, and dividend disbursing agent for the Trust. Compensation
for these services is paid under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
Rembrandt (R) Financial Services Company (the "Distributor"), 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, a subsidiary of SEI Financial
Services Company, and the Trust are parties to a distribution agreement (the
"Distribution Agreement"). The Investor Class shares of the Trust have a
distribution plan dated December 31, 1992 (the "Investor Class Plan"). As
provided in the Investor Class Plan, the Trust will pay a fee of .25% of the
average daily net assets of the Investor Class shares of the Funds 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 LaSalle National Trust, N.A.), savings and loan associations,
insurance companies, and investment counselors, broker-dealers, and the
Distributor's affiliates and subsidiaries as compensation for services,
reimbursement of expenses incurred in connection with distribution assistance,
or provision of Shareholder services. The Investor Class 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 Funds may also execute brokerage or other
agency transactions through an affiliate of the Advisor or through the
Distributor for
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which the affiliate or the Distributor receives compensation.
The Trust Class shares of the Funds are offered without distribution fees to
institutional investors, including customers of LaSalle National Trust, N.A.,
its affiliates and correspondent banks, for the investment of their own funds
or funds for which they act in a fiduciary, agency or custodial capacity. It is
possible that a financial institution may offer different classes of shares of
the Funds to its customers and the shares of such customers may be assessed for
different distribution expenses with respect to different classes of shares.
PURCHASE OF SHARES
Trust Class shares and Investor Class shares of the Funds are sold on a
continuous basis and may be purchased directly from the Trust's Transfer Agent,
DST Systems, Inc., 210 W. Tenth Street, Kansas City, Missouri 64105, either by
mail, telephone or by wire. Shares may also be purchased through a broker-
dealer which has established a dealer agreement with the Distributor. Shares of
each Fund are offered only to residents of states in which the shares are
eligible for purchase.
Purchases of Trust Class shares and Investor Class shares of the Funds may be
made on days on which the New York Stock Exchange is open for business
("Business Days"). However shares may not be purchased by Federal Reserve wire
on federal holidays restricting wire transfers. The minimum initial investment
in the Investor Class is $2,000 ($1,000 minimum for Individual Retirement
Accounts); however, the minimum investment may be waived at the Distributor's
discretion. Subsequent purchases of Investor Class shares must be at least
$100.
A purchase order for Trust Class shares of the Equity, Balanced and Fixed
Income Funds will be effective as of the day received by the Transfer Agent if
the Transfer Agent receives the order before 4:00 p.m., Eastern time. However,
an order may be cancelled if the Custodian does not receive federal funds
before 4:00 p.m., Eastern time on the next Business Day, and the investor could
be liable for any fees or expenses incurred by the Trust. The purchase price of
Trust Class shares of the Fund is the net asset value next determined after a
purchase order is effective. An investor in Trust Class shares of a Fund may
not purchase shares by check.
A purchase order for Investor Class shares of the Equity, Balanced and Fixed
Income Funds will be effective as of the Business Day received by the Transfer
Agent if the Transfer Agent receives the order and payment before 4:00 p.m.,
Eastern time. The purchase price of Investor Class shares of a Fund is the net
asset value next determined after a purchase order is effective plus a sales
load.
A purchase order for Trust Class shares or Investor Class shares of the Money
Market Funds will be effective as of the day received by the Transfer Agent and
eligible to receive dividends declared the same day if the Transfer Agent
receives the order and the Custodian receives federal funds payment before 1:00
p.m., Eastern time on such day. Otherwise, the purchase order will be effective
the next Business Day. The purchase price is the net asset value per share next
computed after the order is received and accepted by the Trust. The net asset
value per share is calculated as of 1:00 p.m., Eastern time each Business Day
based on the amortized cost method described in the Statement of Additional
Information.
The Trust reserves the right to reject a purchase order for Trust Class shares
or Investor Class shares when the Trust or the Transfer Agent determines that
it is not in the best interest of the Trust and/or its Shareholders to accept
such order.
The net asset value per share of an Equity, Balanced or Fixed Income Fund is
determined by dividing the total market value of the Fund's investments and
other assets, less any liabilities, by the total number of outstanding shares
of the Fund. 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
each Business Day. Purchases will be made in full and fractional shares of the
Trust calculated to three decimal places. Although the
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methodology and procedures for determining net asset value are identical for
both classes of a Fund, the net asset value per share of such classes may
differ because of the distribution expenses charged to Investor Class shares.
BY MAIL
Investors may purchase shares of any Fund 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 "Rembrandt (R) Funds, (Fund Name)," to
the Transfer Agent, 210 W. Tenth Street, Kansas City, Missouri 64141-6402.
Subsequent purchases of shares may be made at any time by mailing a check (or
other negotiable bank draft or money order) to the Transfer Agent.
Account Application forms can be obtained by calling 1-800-443-4725.
BY TELEPHONE
If an Account Application has been previously received, an investor may also
purchase shares by telephone by calling 1-800-443-4725. With respect to the
Investor Class shares, orders by telephone will not be executed until payment
has been received. If a check received for purchase of Investor Class shares
does not clear, the purchase will be canceled and the investor could be liable
for any losses or fees incurred.
BY WIRE
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of any Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A.; ABA #10-10-
00695; for Account Number 98-7052-349-3; Further Credit: [Name of Fund]. The
Shareholder's name and account number must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor
must first telephone 1-800-443-4725 to be assigned an account number. The
investor's name, account number, taxpayer identification number or Social
Security number, and address must be specified in the wire. In addition, an
Account Application should be promptly forwarded to: DST Systems, Inc., 210 W.
Tenth Street, Kansas City, Missouri 64141-6402.
Subsequent Purchases: Additional investments may be made at any time through
the wire procedures described above, which must include a Shareholder's name
and account number. The investor's bank may impose a fee for investments by
wire.
OTHER INFORMATION REGARDING PURCHASES
Shares may also be purchased through financial institutions, including LaSalle
National Trust, N.A., which provide distribution assistance or Shareholder
services to the Trust. Shares purchased by persons ("Customers") through
financial institutions may be held of record by the financial institution.
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 the
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. Other Shareholders who desire to
transfer the registration of their shares should contact the Administrator.
Purchases may be made by direct deposit or Automated Clearing House ("ACH")
transactions.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
No certificates representing shares will be issued.
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Pursuant to guidelines adopted and monitored by the Trustees of the Trust, the
Funds may use a pricing service to provide market quotations. A pricing service
may use a matrix system of valuation to value fixed income securities which
considers factors such as securities prices, call features, ratings, and
developments related to a specific security.
SALES CHARGES
The following table shows the regular sales charge on Investor Class shares of
the Equity, Balanced and Fixed Income Funds to a "single purchaser" (defined
below) together with the sales charge reallowed to certain financial
institutions (the "reallowance").
<TABLE>
<CAPTION>
SALES CHARGE SALES CHARGE
AS A AS A
PERCENTAGE PERCENTAGE REALLOWANCE AS
AMOUNT OF OFFERING OF NET PERCENTAGE OF
OF PRICE PER AMOUNT OFFERING PRICE
PURCHASE SHARE INVESTED PER SHARE
-------- ------------ ------------ --------------
<S> <C> <C> <C>
Less than $100,000.................... 4.50% 4.71% 4.05%
$100,000 but less than $250,000....... 3.50% 3.63% 3.15%
$250,000 but less than $500,000....... 3.00% 3.09% 2.70%
$500,000 and above.................... 1.00% 1.01% 0.90%
</TABLE>
The sales charge shown in the table is the maximum sales charge that applies to
sales through financial institutions. Under certain circumstances, reallowances
of up to the entire amount of the sales charge may be paid to certain financial
institutions, who might then be deemed to be "underwriters" under the
Securities Act of 1933. Commission rates may vary among the Funds.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from the sales charge it receives or from any other source
available to it. Under any such program, the Distributor may provide
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of the
Funds.
AUTOMATIC INVESTMENT PLAN
A Shareholder may also arrange for periodic additional investments in the
Investor Class shares of Funds through automatic deductions by ACH from a
checking account by completing an Automatic Investment Plan ("AIP") Application
Form. The minimum pre-authorized investment amount is $50 per month. An AIP
Application Form may be obtained by calling 1-800-443-4725.
ELIGIBILITY FOR REDUCED SALES CHARGE
RIGHTS OF ACCUMULATION
Investors in Investor Class shares of the Equity and Fixed Income Funds will be
entitled to lower, graduated sales charges if the investors' total investment
in a Fund exceeds certain thresholds. In calculating the sales charge rates
applicable to current purchases of Investor Class shares of the Equity and
Fixed Income Funds, a "single purchaser" is entitled to cumulate current
purchases with the current market value of previously purchased shares of the
Fund and the other eligible funds (the "Eligible Funds") which are sold subject
to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Funds for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing
for any one trust, estate or fiduciary account, including employee benefit
plans created under Sections 401 or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") including related plans of the same employer.
To be entitled to a reduced sales charge based upon shares already owned, the
investor must ask the Transfer Agent for such reduction at the time of purchase
and provide the account number(s) of the investor, and, as applicable, the
investor and spouse, and/or their minor children. The Funds may amend or
terminate this right of accumulation at any time as to purchases thereafter.
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<PAGE>
LETTER OF INTENT
By submitting a Letter of Intent (the "Letter") to the Transfer Agent, a
"single purchaser" may purchase shares of the Fund and the other Eligible Funds
during a 13-month period at the reduced sales charge rates applying to the
aggregate amount of the intended purchases stated in the Letter. The Letter may
apply to purchases made up to 90 days before the date of the Letter. To receive
credit for such prior purchases and later purchases benefitting from the
Letter, the Shareholder must notify the Transfer Agent at the time the Letter
is submitted that there are prior purchases that may apply, and, at the time of
later purchases, notify the Transfer Agent that such purchases are applicable
under the Letter.
OTHER CIRCUMSTANCES
No sales charge is imposed on shares of the Funds: (i) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers, to
which the Trust is a party; (ii) sold to dealers or brokers that have a sales
agreement with the Distributor, for their own account or for retirement plans
for their employees; (iii) or sold to employees (and their spouses) of dealers
or brokers that certify to the Transfer Agent at the time of purchase that such
purchase is for their own account (or for the benefit of such employees' minor
children); (iv) in aggregate purchases of $1 million or more by tax exempt
organizations enumerated in Section 501(c) of the Code, or employee benefit
plans created under Sections 401 or 457 of the Code; (v) sold to employees (and
their spouses) of the Advisor and its affiliates or sold to retired employees
of ABN AMRO Holding N.V. and its affiliates and subsidiaries; (vi) which are
purchased with the proceeds of trust or employee benefit plan distributions for
which the Advisor and its affiliates act in a fiduciary capacity; (vii) which
are sold to the participants in a 401(k) Plan that is a shareholder of any
Fund. In addition, no sales charge is imposed on any exchange of Trust Class
shares for Investor Class shares of the same Fund; or (viii) which are sold
through broker-dealers who provide mutual fund transaction services, and who
have entered into an arrangement with the Distributor relating to waivers of
sales charges (for more information, please see the Statement of Additional
Information). Certain broker-dealers who provide such mutual fund transaction
services may charge a fee for this service.
EXCHANGE PRIVILEGES
Some or all of the shares of the Funds for which payment has been received
(i.e., an established account) may be exchanged for shares, at their net asset
value, of other Funds within the Trust with similar or lower sales charges or
for shares of other Funds within the Trust which do not have sales charges. Any
Shareholder or Customer who wishes to make an exchange must have received a
current prospectus of the Fund in which he or she wishes to invest before the
exchange will be effected. For an established account, exchanges will be made
only after instructions in writing or by telephone (an "Exchange Request") are
received by the Transfer Agent. The exchange privilege may be exercised only in
those states where the class of shares of such other Funds of the Trust may
legally be sold.
To exchange shares held of record by LaSalle National Trust, N.A., but
beneficially owned by a Customer, the Customer should contact LaSalle National
Trust, N.A., who will contact the Transfer Agent and effect the exchange on
behalf of the Customer.
If an Exchange Request in good order is received by the Transfer Agent by 4:00
p.m., Eastern time, on any Business Day, the exchange usually will occur on
that day.
REDEMPTION OF SHARES
Shareholders may redeem their shares on any Business Day by contacting their
broker-dealer or financial institution. Otherwise, shares may be redeemed by
mail or by telephone. However, shares may not be redeemed by Federal Reserve
wire on federal holidays restricting wire transfers. Redemption orders for the
Equity, Balanced and Fixed Income Funds must be received by 4:00 p.m., Eastern
time.
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Redemption orders for the Money Market Funds must be received by 1:00 p.m.
Eastern time.
BY MAIL
A written request for redemption must be received by the Transfer Agent in
order to constitute a valid request for redemption. The Transfer Agent may
require that the signature on the written request be guaranteed by a bank which
is a member of the Federal Deposit Insurance Corporation, a trust company,
broker, dealer, credit union (if authorized under state law), securities
exchange or association, clearing agency or savings association. The signature
guarantee requirement will be waived if all of the following conditions apply:
(1) the redemption is for $5,000 worth of shares or less, (2) the redemption
check is payable to the Shareholder(s) of record, and (3) the redemption check
is mailed to the Shareholder(s) at the address of record. The Shareholder may
also have the proceeds mailed to a commercial bank account previously
designated on the Account Application or by written instruction to the Transfer
Agent. There is no charge for having redemption requests mailed to a designated
bank account.
BY TELEPHONE
Shares may be redeemed by telephone if the Shareholder elects that option on
the Account Application. The Shareholder may have the proceeds mailed to his or
her address or mailed or wired to a commercial bank account previously
designated on the Account Application. Under most circumstances, payments will
be transmitted on the next Business Day following receipt of a valid request
for redemption. Wire transfer redemption requests may be made by the
Shareholder by calling the Transfer Agent at 1-800-443-4725, who will deduct a
wire charge of $10.00 from the amount of the redemption. Trust Class
Shareholders may have proceeds of redemptions wired without payment of the wire
charge. 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 other extraordinary circumstances exist, and a
Shareholder experiences difficulties placing redemption orders by telephone,
the Shareholder may wish to consider placing the order by other means.
Shareholders may not close their accounts by telephone.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption, as described above.
Payment to Shareholders for shares redeemed will be made within seven days
after receipt by the Transfer Agent of the valid request for redemption.
At various times, a Fund may be requested to redeem shares for which it has not
yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 10 or more days only until payment has been collected for
the purchase of such shares. The Funds intend 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, a Shareholder may incur
brokerage costs in converting such securities to cash.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in any Fund has a value of less than $1,000.
Accordingly, an investor purchasing shares of any Fund in only the minimum
investment amount may be subject to such involuntary redemption if he or she
thereafter redeems any of these shares. Before any Fund exercises its right to
redeem such shares and to send the proceeds to the Shareholder, the
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<PAGE>
Shareholder will be given notice that the value of the shares in his or her
account is less than the minimum amount and will be allowed 60 days to make an
additional investment in such Fund in an amount which will increase the value
of the account to at least $1,000. There is no charge for an involuntary
redemption.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
SYSTEMATIC WITHDRAWAL PLAN
The Funds offer a Systematic Withdrawal Plan ("SWP") which may be utilized by
Investor Class Shareholders who wish to receive regular distributions from
their account. Upon commencement of the SWP, the account must have a current
value of $5,000 or more. Shareholders may elect to receive automatic payments
via check or ACH of $50 or more on a monthly, quarterly, semi-annual or annual
basis. A SWP Application Form may be obtained by calling 1-800-443-4725.
Shareholders should realize that if withdrawals exceed income dividends, their
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, their original investment could be exhausted
entirely. To participate in the SWP, Shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any
time, upon written notice to the Transfer Agent. It is generally not in the
best interest of shareholders in the SWP to acquire additional shares if they
would have to pay a sales load in connection with such purchases.
CHECKWRITING
CHECKWRITING SERVICE (MONEY MARKET FUNDS)
CheckWriting Service is offered free of charge to Investor Class Shareholders
in the Money Market Funds. An Investor Class Shareholder in any Money Market
Fund may redeem shares by writing checks on his or her account for $500 or
more. Once a Shareholder has signed and returned a signature card, he or she
will receive a supply of checks. A check may be made payable to any person, and
the Shareholder's account will continue to earn dividends until the check
clears.
Because of the difficulty of determining in advance the exact value of a Fund
account, a Shareholder may not use a check to close his or her account. The
checks are free, but a Shareholder's account will be charged a fee for stopping
payment of a check upon a Shareholder's request or if the check cannot be
honored because of insufficient funds or other valid reasons.
PERFORMANCE
THE EQUITY, BALANCED AND FIXED INCOME FUNDS
From time to time, the Funds may advertise yield and total return. These
figures will be based on historical earnings, and are not intended to indicate
future performance. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The
yield is calculated by assuming that the same amount of income generated by the
investment during that period is generated in each 30-day period over one year,
and is shown as a percentage of the investment.
The total return of a Fund refers to the average compounded rate of return on a
hypothetical investment, net of any sales charge imposed on Investor Class
shares, for designated time periods (including, but not limited to, the period
from which the Fund commenced operations through the specified date), assuming
that the entire investment is redeemed at the end of each period and assuming
the reinvestment of all dividend and capital gain distributions. The total
return of a Fund may also be quoted as a dollar amount or on an aggregate
basis, an actual basis, without inclusion of any sales charge, or with a
reduced sales charge in advertisements distributed to investors entitled to a
reduced sales charge.
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<PAGE>
THE MONEY MARKET FUNDS
From time to time a Fund may advertise its "current yield" and "effective
compound yield". Both yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of a Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized". That is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective compound yield" is
calculated similarly, but when annualized, the income earned by an investment
in a Fund is assumed to be reinvested. The Tax-Exempt Money Market Fund may
also advertise a "tax-equivalent yield", which is calculated by determining the
rate of return that would have to be achieved on a fully taxable investment to
produce the after-tax equivalent of the Tax-Exempt Money Market Fund's yield,
assuming certain tax brackets for a Shareholder. The "effective compound yield"
will be slightly higher than the "current yield" because of the compounding
effect of this assumed reinvestment.
ALL FUNDS
A Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Securities
Corp.) or by financial and business publications and periodicals, 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. A Fund may quote services such as Morningstar, Inc., a
service that ranks mutual funds on the basis of risk-adjusted performance, and
Ibbotson Associates of Chicago, Illinois, which provides historical returns of
the capital markets in the U.S. A Fund may use long-term performance of these
capital markets to demonstrate general long-term risk versus reward scenarios
and could include the value of a hypothetical investment in any of the capital
markets. A Fund may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy, and
investment techniques.
A Fund may quote various measures of volatility and benchmark correlation in
advertising, and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate the
validity of a comparative benchmark. Measures of volatility and correlation are
calculated using averages of historical data and cannot be precisely
calculated.
The performance of Trust Class shares will normally be higher than for Investor
Class shares because the Trust Class is not subject to distribution expenses
charged to the Investor Class shares.
Additional performance information is set forth in the 1995 Annual Report to
Shareholders, and is available upon request and without charge by calling
1-800-443-4725.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state, or local income tax treatment of a Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisors regarding specific questions as to federal, state, and local income
taxes. State and local tax consequences on an investment in a Fund may differ
from the federal income tax consequences described below. Additional
information concerning taxes is set forth in the Statement of Additional
Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and
is not combined with the Trust's other Funds. Each Fund intends to qualify for
the special tax treatment afforded regulated investment
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companies as defined under Subchapter M of the Internal Revenue Code of 1986,
as amended. As long as each Fund qualifies for this special tax treatment, it
will be relieved of federal income tax on that part of its net investment
income and net capital gains (the excess of net long-term capital gain over net
short-term capital loss) which is distributed to Shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including, 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 gains will be
distributed annually and will be taxed to Shareholders as long-term capital
gains, regardless of how long the Shareholder has held shares and regardless of
whether the distributions are received in cash or in additional shares. Each
Fund will make annual reports to Shareholders of the federal income tax status
of all distributions.
Certain securities purchased by a Fund (such as STRIPS, TRs, TIGRs and CATS,
defined in "Description of Permitted Investments and Risk Factors"), are sold
at original issue discount, and thus do not make periodic cash interest
payments. Each Fund will be required to include as part of its current income
the imputed interest on such obligations even though the Fund has not received
any interest payments on such obligations during that period. Because each Fund
distributes all of its net investment income to its Shareholders, a Fund may
have to sell portfolio securities to distribute such imputed income, which may
occur at a time when the Advisor would not have chosen to sell such securities
and which may result in a taxable gain or loss.
Income received on direct U.S. obligations is exempt from tax at the state
level when received directly by a Fund and may be exempt, depending on the
state, when received by a Shareholder as income dividends from the Fund,
provided certain State-specific conditions are satisfied. Each Fund will inform
Shareholders annually of the percentage of income and distributions derived
from direct U.S. Treasury obligations. Shareholders should consult their tax
advisors to determine whether any portion of the income dividends received from
a Fund is considered tax exempt in their particular state.
Dividends declared by a Fund in October, November or December of any year and
payable to Shareholders of record on a date in that month will be deemed to
have been paid by the Fund and received by the Shareholder on December 31 of
that year, if paid by the Fund at any time during the following January.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.
Investment income received by a Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. The International
Equity Fund, TransEurope Fund, Asian Tigers Fund and Global Fixed Income Fund
expect to be able to elect to treat Shareholders as having paid their
proportionate share of such foreign taxes.
As a general rule, dividends (not capital gain dividends) paid by a Fund, to
the extent derived from dividends received from domestic corporations, will,
provided certain conditions are met, qualify for the dividends received
deduction for Corporate Shareholders.
Dividends and distributions of capital gains paid by the Fixed Income Funds and
distributions of capital gains paid by the Balanced Fund do not qualify for the
dividends received deduction for corporate Shareholders. As a general rule,
dividends paid by the Balanced Fund, to the extent derived from dividends
received from domestic corporations, will, provided certain conditions are met,
qualify for the dividends received deduction for corporate Shareholders.
The Tax-Exempt Fixed Income Fund intends to qualify to pay "exempt interest
dividends" by satisfying the Code's requirement that at the close of each
quarter of its taxable year at least 50 percent of the value of
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<PAGE>
its total assets consists of obligations, the interest on which is exempt from
federal income tax. So long as this and certain other requirements are met,
dividends of the Tax-Exempt Fixed Income Fund's net tax-exempt interest income
will be exempt interest dividends, which are exempt from federal income tax in
the hands of the Shareholders of the Fund, but may have alternative minimum tax
consequences. See the Statement of Additional Information..
Current federal income tax laws limit the types and volume of bonds qualifying
for the federal income tax exemption of interest, which may have an effect on
the ability of the Tax-Exempt Fixed Income Fund and the Tax-Exempt Money Market
Fund to purchase sufficient amounts of tax-exempt securities to satisfy the
Code's requirements for the payment of "exempt interest dividends." Current
federal tax law also makes interest on certain tax-exempt bonds a tax
preference item for purposes of the individual and corporate alternative
minimum tax. Accordingly, municipal funds may not be an appropriate investment
for persons (including corporations and other business entities) who are
"substantial users" of facilities financed by private activity bonds or certain
industrial development bonds. "Substantial user" is defined generally as
including a "non-exempt person" who regularly uses in a trade or business a
part of a facility financed from the proceeds of industrial development bonds.
Interest on indebtedness incurred by Shareholders to purchase or carry shares
of the Tax-Exempt Fixed Income Fund and the Tax-Exempt Money Market Fund is
generally not deductible for federal income tax purposes.
Each sale, exchange, or redemption of Fund shares is a taxable event to the
Shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated September 17, 1992, and amended September 28, 1992 and October
20, 1992. The Declaration of Trust permits the Trust to offer shares of
separate funds and different classes of each fund. The Trust consists of the
following funds: Money Market Fund, Government Money Market Fund, Treasury
Money Market Fund, Tax-Exempt Money Market Fund, Fixed Income Fund,
Intermediate Government Fixed Income Fund, Tax-Exempt Fixed Income Fund, Global
Fixed Income Fund, Limited Volatility Fixed Income Fund, Latin America Equity
Fund, Value Fund, Growth Fund, Small Cap Fund, International Equity Fund,
TransEurope Fund, Asian Tigers Fund and Balanced Fund. All consideration
received by the Trust for shares of any fund and all assets of such fund belong
to that fund, and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional funds. As of
December 31, 1995, the Latin America Equity, Limited Volatility Fixed Income
and TransEurope Funds had not commenced operations.
The Trust pays its 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, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses. See "Financial Highlights" for more
information regarding the Trust's expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management, administrative and Shareholder services
to the Trust.
VOTING RIGHTS
Each share held entitles the Shareholder of record to one vote. Shareholders of
each fund or class will vote separately on matters relating solely to that fund
or class. As a Massachusetts business trust, the Trust is
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<PAGE>
not required to hold annual meetings of Shareholders, but meetings of
Shareholders will be held from time to time to seek approval 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 semi-annually and audited
financial statements annually. The Trust furnishes periodic reports to
Shareholders of record, and, as necessary, proxy statements for Shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Administrator, 680 East
Swedesford Road, Wayne, Pennsylvania, 19087-1658, at 1-800-443-4725.
DIVIDENDS
Substantially all of the net investment income (not including capital gains) of
the Value, Growth, Small Cap, Balanced, Fixed Income, Intermediate Government
Fixed Income, Tax-Exempt Fixed Income and Limited Liability Fixed Income Funds
is distributed in the form of monthly dividends, and that of the International
Equity, TransEurope, Asian Tigers and Global Fixed Income Funds is distributed
in the form of dividends at least annually. Shareholders who own shares at the
close of business on the record date will be entitled to receive the dividend.
Currently, capital gains of the Funds, if any, will be distributed at least
annually.
The net investment income (exclusive of capital gains) of each of the Money
Market Funds is distributed in the form of dividends, which are declared daily
and distributed monthly to Shareholders. Currently, capital gains of the Funds,
if any, will be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, unless the Shareholder has elected to take such
payment in cash. Shareholders may change their election by providing written
notice to the Transfer Agent at least 15 days prior to the distribution.
Dividends and distributions of the Funds are paid on a per-share basis. The
value of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution. The
amount of dividends payable on Trust Class shares will typically be higher than
the dividends payable on the Investor Class shares because of the distribution
expenses charged to Investor Class shares.
The Trust believes that as of February 15, 1996, LaSalle National Trust, N.A.
and its affiliates owned of record or beneficially, substantially all of the
Trust Class shares of the Value, Growth, Small Cap, International Equity, Asian
Tigers, Balanced, Fixed Income, Intermediate Government Fixed Income, Tax-
Exempt Fixed Income, Global Fixed Income, Treasury Money Market, Government
Money Market, Money Market and Tax-Exempt Money Market Funds. As a consequence,
LaSalle National Trust, N.A. may be deemed to "control" these Funds within the
meaning of the Investment Company Act of 1940, as amended (the "1940 Act").
COUNSEL AND AUDITORS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Ernst & Young LLP
serves as the independent auditors of the Trust.
CUSTODIAN
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101,
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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 AND RISK FACTORS
The following is a description of certain of the permitted investments and risk
factors for the Funds:
AMERICAN DEPOSITARY RECEIPTS ("ADRs")--ADRs are securities, typically issued by
a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation
by the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
ASSET-BACKED SECURITIES (Non-mortgage)--Asset-backed securities consist of
securities secured by company receivables, truck and auto loans, leases and
credit card receivables. Such securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt instruments, which
are also known as collateralized obligations and are generally issued as the
debt of a special purpose entity, such as a trust, organized solely for purpose
of owning such assets and issuing such debt. A Fund may invest in other asset-
backed securities that may be created in the future if the Advisor determines
they are suitable.
Principal and Interest on non-mortgage asset-backed securities may be
guaranteed up to certain amounts and for a certain time 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 non-mortgage
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 is the possibility that
recoveries on repossessed collateral may not, in some cases, be available to
support payments on those securities. Asset-backed securities entail prepayment
risk, which may vary depending on the type of asset, but is generally less than
the prepayment risk associated with mortgage-backed securities. In addition,
unlike most other asset-backed securities, credit card receivables are
unsecured obligations of the card holder.
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.
BANK INVESTMENT CONTRACTS ("BICs")--BICs are contracts issued by U.S. banks and
savings and loan institutions. Pursuant to such contracts, a Fund makes cash
contributions to a deposit fund of the general account of the bank or savings
and loan institution. The bank or savings and loan institution then credits to
the Fund on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. A BIC provides that this guaranteed interest will not be less
than a certain minimum rate.
Generally, BICs are not assignable or transferable without the permission of
the issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs does not currently exist. Therefore, BICs are
considered to be illiquid investments.
CERTIFICATES OF DEPOSIT--Certificates of deposit are interest bearing
instrument with a specific maturity.
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Certificates of deposit are issued by banks and savings and loan institutions
in exchange for the deposit of funds and normally can be traded in the
secondary market prior to maturity. 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 banks, municipalities, 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 have characteristics similar to both fixed income and
equity securities. Because of the conversion feature, the market value of
convertible securities tends to move together with the market value of the
underlying stock. The value of convertible securities is also affected by
prevailing interest rates, the credit quality of the issuer, and any call
provisions.
DOLLAR ROLLS--Dollar roll transactions consist of the sale by a Fund of
mortgage-backed securities to a bank or broker-dealer, together with a
commitment to purchase similar, but not necessarily identical, securities at a
future date. Any difference between the sale price and the purchase price is
netted against the interest income foregone on the securities to arrive at an
implied borrowing (reverse repurchase) rate. Alternatively, the sale and
purchase transactions which constitute the dollar roll can be executed at the
same price, with the Fund being paid a fee as consideration for entering into
the commitment to purchase. Dollar rolls may be renewed after cash settlement
and initially may involve only a firm commitment agreement by the Fund to buy a
security.
If the broker-dealer to whom the Fund sells the security becomes insolvent, the
Fund's right to purchase or repurchase the security may be restricted; the
value of the security may change adversely over the term of the dollar roll;
the security that the Fund is required to repurchase may be worth less than the
security that the Fund originally held; and the return earned by the Fund with
the proceeds of a dollar roll may not exceed transaction costs.
EQUITY SECURITIES--Investments in common stocks are subject to market risks
which may cause their prices to fluctuate over time. Changes in the value of
portfolio securities will not necessarily affect cash income derived from these
securities but will not affect a Fund's net asset value.
FORWARD FOREIGN CURRENCY CONTRACTS--A forward contract involves an obligation
to purchase or sell a specific currency amount at a future date, agreed upon by
the parties, at a price set at the time of the contract. A Portfolio may also
enter into a contract to sell, for a fixed amount of U.S. dollars or other
appropriate currency, the amount of foreign currency approximating the value of
some or all of the Portfolio's securities denominated in such foreign currency.
At the maturity of a forward contract, the Portfolio may either sell a
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Portfolio may realize a gain or loss from currency
transactions.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--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
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futures contracts which are traded on national futures exchanges. In addition,
a Portfolio will only sell covered futures contracts and options on futures
contracts.
Stock and bond index futures are futures contracts for various stock and bond
indices that are traded on registered securities exchanges. Stock and bond
index futures contracts obligate 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 or bond index at the close of the last
trading day of the contract and the price at which the agreement is made.
Stock and bond index futures contracts are bilateral agreements pursuant to
which two parties agree to take or make delivery of an amount of cash equal to
a specified dollar amount times the difference between the stock or bond index
value at the close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery of the stocks or
bonds comprising the Index is made; generally contracts are closed out prior to
the expiration date of the contract.
No price is paid upon entering into futures contracts. Instead, a Portfolio
would be required to deposit an amount of cash or U.S. Treasury securities
known as "initial margin." Subsequent payments, called "variation margin," to
and from the broker, would be made on a daily basis as the value of the futures
position varies (a process known as "marking to market"). The margin is in the
nature of a performance bond or good-faith deposit on a futures contract.
Eurodollar instruments are U.S. dollar-denominated futures contracts or options
thereon which are linked to the London Interbank Offered Rate ("LIBOR"),
although foreign currency denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for
the lending of the funds and sellers to obtain a fixed rate for borrowings.
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.
A Portfolio may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission
("CFTC"), as long as, to the extent that such transactions are not for "bona
fide hedging purposes," the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do not
exceed 5% of a Portfolio's net assets. A Portfolio may buy and sell futures
contracts and related options to manage its exposure to changing interest rates
and securities prices. Some strategies reduce a Portfolio's exposure to price
fluctuations, while others tend to increase its market exposure. Futures and
options on futures can be volatile instruments and involve certain risks that
could negatively impact a Portfolio's return.
In order to avoid leveraging and related risks, when a Portfolio purchases
futures contracts, it will collateralize its position by depositing an amount
of cash or cash equivalents, equal to the market value of the futures positions
held, less margin deposits, in a segregated account with the Trust's custodian.
Collateral equal to the current market value of the futures position will be
marked to market on a daily basis.
GUARANTEED INVESTMENT CONTRACTS ("GICs")--GICs are contracts issued by U.S.
insurance companies. Pursuant to such contracts, the Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Fund on a monthly basis guaranteed
interest at either a fixed, variable or floating rate. A GIC provides that this
guaranteed
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interest will not be less than a certain minimum rate. Generally, a GIC allows
purchasers the option of buying an annuity with the monies accumulated under
the contract.
A GIC is a general obligation of the issuing insurance company and not a
separate account. The purchase price paid for a GIC becomes part of the general
assets of the issuer, and the contract is paid at maturity from the general
assets of the issuer.
Generally, GICs are not assignable or transferable without the permission of
the issuing insurance companies. For this reason, an active secondary market in
GICs does not currently exist. Therefore, GICs are considered by a Fund to be
illiquid investments.
ILLIQUID SECURITIES--Illiquid securities are securities that cannot be disposed
of within 7 business days at approximately the price at which they are being
carried on a Fund's books. An illiquid security includes a demand instrument
with a demand notice period exceeding 7 days, if there is no secondary market
for such security, and repurchase agreements with durations (or maturities)
over 7 days in length.
LOAN PARTICIPATIONS--Loan participations are interests in loans to U.S.
corporations which are administered by the lending bank or agent for a
syndicate of lending banks, and sold by the lending bank or syndicate member
("intermediary bank"). In a loan participation, the borrower corporation will
be deemed to be the issuer of the participation interest except to the extent
the Fund derives its rights from the intermediary bank. Because the
intermediary bank does not guarantee a loan participation in any way, a loan
participation is subject to the credit risks generally associated with the
underlying corporate borrower. In the event of the bankruptcy or insolvency of
the corporate borrower, a loan participation may be subject to certain defenses
that can be asserted by such borrower as a result of improper conduct by the
intermediary bank. In addition, in the event the underlying corporate borrower
fails to pay principal and interest when due, the Fund may be subject to
delays, expenses and risks that are greater than those that would have been
involved if the Fund had purchased a direct obligation of such borrower. Under
the terms of a loan participation, the Fund may be regarded as a creditor of
the intermediary bank, (rather than of the underlying corporate borrower), so
that the Fund may also be subject to the risk that the intermediary bank may
become insolvent. The secondary market, if any, for these loan participations
is limited and any such participation purchased by a Fund may be regarded as
illiquid.
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 are securities that are issued or
guaranteed by a U.S. Government agency representing 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
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(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 non-governmental entity, such as a trust or corporation. 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.
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 then 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
Internal Revenue 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.
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. The market
for SMBs is not as fully developed as other markets; SMBs therefore may be
illiquid.
The Fund also may invest in parallel pay CMOs and Planned Amortization Class
CMOs ("PAC Bonds"). Parallel pay CMOs 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, as with other CMO structures,
must be retired by its stated maturity date or final distribution date, but may
be retired earlier. 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.
Due to prepayments of the underlying mortgage instruments, mortgage-backed
securities do not have a known actual maturity. In the absence of a known
maturity, market participants generally refer to an estimated average life. The
Advisor believes that the estimated average life is the most appropriate
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measure of the maturity of a mortgage-backed security. Accordingly, in order to
determine the average maturity of a Fund, the Advisor will use an estimate of
the average life of a mortgage-backed security. An average life estimate is a
function of an assumption regarding anticipated prepayment patterns. The
assumption is 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 could produce somewhat
different average life estimates with regard to the same security. There can be
no assurance that the average life as estimated by the Advisor will be the
actual average life.
MUNICIPAL SECURITIES--Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair, or improvement of privately operated
facilities. General obligation bonds are backed by the taxing power of the
issuing municipality. Revenue bonds are backed by the revenues of a project or
facility; tolls from a toll bridge for example. The payment of principal and
interest on private activity and industrial development bonds generally is
dependent solely on the ability of the facility's user to meet its financial
obligations and the pledge, if any, of real and personal property so financed
as security for such payment.
Municipal securities include both municipal notes and municipal bonds.
Municipal notes include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes, and construction loan notes. Municipal bonds
include general obligation bonds, revenue or special obligation bonds, private
activity and industrial development bonds.
OBLIGATIONS OF SUPRANATIONAL ENTITIES--Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, Inter-American Development Bank, International Bank
for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank.
OPTIONS--A put option gives the purchaser of the option the right to sell, and
the writer of the option 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.
A Fund may purchase put and call options to protect against a decline in the
market value of the securities in its portfolio or to protect against an
increase in the cost of securities that the Fund may seek to purchase in the
future. A Fund 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 Fund, loss of the premium paid may be
offset by an increase in the value of the Fund's securities or by a decrease in
the cost of acquisition of securities by the Fund.
A Fund may write covered put and 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 Fund 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 Fund will realize as profit the
premium received for such option. When a call option of which a Fund is the
writer is exercised, the Fund 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 Fund is the writer is exercised, the Fund will be
required to purchase the underlying securities at
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the strike price, which may be in excess of the market value of such
securities.
A Fund 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 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
illiquid.
A Fund 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
Fund will be "covered," which means that the Fund will own an equal amount of
the underlying foreign currency. With respect to put options on foreign
currency written by a Fund, the Fund 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 Fund would be required to pay upon exercise
of the put.
A Fund 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 Fund may choose to
terminate an option position by entering into a closing transaction. The
ability of a Fund 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 Fund 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 Fund 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.
RECEIPTS--TRs, TIGRs, CATS and STRIPS--Receipts are interests in separately
traded interest and principal component parts of U.S. Treasury obligations that
are issued by banks and brokerage firms and are created by depositing U.S.
Treasury obligations into a special account at a custodian bank. The custodian
holds the interest and principal payments for the benefit of the registered
owners of the certificates or receipts. The custodian arranges for the issuance
of the certificates or receipts evidencing ownership and maintains the
register. Receipts include "Treasury Receipts" ("TRs"), "Treasury Investment
Growth Receipts" ("TIGRs"), "Certificates of Accrual on Treasury Securities"
("CATS") and "Separately Traded Registered Interest and Principal Securities"
("STRIPS"). TIGRs and CATS are interests in private proprietary accounts, TRs
and STRIPS are interests in accounts sponsored by the U.S. Treasury. STRIPS,
TRs, TIGRs AND CATS are sold as zero coupon securities which means that they
are sold at a
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substantial discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. This discount is amortized over
the life of the security, and such amortization will constitute the income
earned on the security for both accounting and tax purposes. Because of these
features, receipts may be subject to greater price volatility than interest
paying U.S. Treasury Obligations. See also "Taxes".
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a Fund
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 Fund or its agent will have actual or
constructive possession of the securities held as collateral for the repurchase
agreement. Collateral must be maintained at a value at least equal to 100% of
the purchase price. The Fund bears a risk of loss in the event the other party
defaults on its obligations and the Fund is delayed or prevented from
exercising its right to dispose of the collateral securities or if the Fund
realizes a loss on the sale of the collateral securities. A Fund 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, as well as for federal and state income tax purposes.
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS--Investments by each Fund are
subject to limitations imposed under regulations adopted by the SEC. Under
these regulations, money market funds may acquire only obligations that present
minimal credit risks and that are "eligible securities," which means they are
(i) rated, at the time of investment, by at least two NRSROs (one if it is the
only organization rating such obligation) in the highest short-term rating
category or, if unrated, determined to be of comparable quality (a "first tier
security"), or (ii) rated according to the foregoing criteria in the second
highest short-term rating category or, if unrated, determined to be of
comparable quality ("second tier security"). A security is not considered to be
unrated if its issuer has outstanding obligations of comparable priority and
security that have a short-term rating. The Advisor will determine that an
obligation presents minimal credit risks or that unrated instruments are of
comparable quality in accordance with guidelines established by the Trustees.
In addition, in the case of taxable money market funds, investments in second
tier securities are subject to the further constraints that (i) no more than 5%
of a Fund's assets may be invested in such securities in the aggregate, and
(ii) any investment in such securities of one issuer is limited to the greater
of 1% of the Fund's total assets or $1 million. A taxable money market fund may
hold up to 25% its assets in first tier securities of a single issuer for three
Business Days.
RESTRICTED SECURITIES--Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration.
SECURITIES LENDING--In order to generate additional income, a Fund may lend the
securities in which it is invested 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 at all times to 100% of the market
value plus accrued interest of the loaned securities. Collateral is marked to
market daily. A Fund continues to receive interest on the loaned securities
while simultaneously earning interest on the investment of cash collateral in
U.S. Government securities. 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.
SECURITIES OF FOREIGN ISSUERS--There are certain risks connected with investing
in foreign securities, including 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,
45
<PAGE>
restrictions on foreign investments in other jurisdictions, difficulties in
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 Fund's investments denominated in
foreign currencies will depend on the relative strengths of those currencies
and the U.S. dollar, and a Fund may be affected favorably or unfavorably by
changes in the exchange rates or exchange control regulations between foreign
currencies and the U.S. dollar. Changes in foreign currency exchange rates also
may affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains, if any,
to be distributed to shareholders by a Fund.
STANDBY COMMITMENTS AND PUTS--Securities subject to standby commitments or puts
permit the holder thereof to sell the securities at a fixed price prior to
maturity. Securities subject to a standby commitment or put may be sold at any
time at the current market price. However, unless the standby commitment or put
was an integral part of the security as originally issued, it may not be
marketable or assignable; therefore, the standby commitment or put would only
have value to the Fund owning the security to which it relates. In certain
cases, a premium may be paid for a standby commitment or put, which premium
will have the effect of reducing the yield otherwise payable on the underlying
security. The Fund will limit standby commitment or put transactions to
institutions believed to present minimal credit risk.
STOCK INDEX FUTURES--Futures contracts for various stock indices are traded on
registered securities exchanges. Stock index futures may be used by a Fund from
time to time as the Advisor deems it to be appropriate. Futures will be used
for hedging purposes and will not be engaged in for speculative purposes or to
leverage a Fund's net assets. A Fund may enter into futures contracts provided
that no more than 5% of the Fund's net assets are required as a futures
contract margin deposit.
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.
The primary risks associated with the use of stock index futures are: (i)
imperfect correlation between the change in market value of the stocks held by
a Fund and the prices of futures contracts; and (ii) possible lack of a liquid
secondary market for a futures contract and the resulting inability to close a
futures position when desired.
SWAPS, CAPS, FLOORS AND COLLARS--Interest rate swaps, mortgage swaps, currency
swaps and other types of swap agreements such as caps, floors and collars are
designed to permit the purchaser to preserve a return or spread on a particular
investment or portion of its portfolio, and to protect against any increase in
the price of securities the Fund anticipates purchasing at a later date. In a
typical interest rate swap, one party agrees to make regular payments equal to
a floating interest rate times a "notional principal amount," in return for
payments equal to a fixed rate times the same amount, for a specific period of
time. If a swap agreement provides for payment in different currencies, the
parties might agree to exchange the notional principal amount as well. Swaps
may also depend on other prices or rates, such as the value of an index or
mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right
to receive payments to the extent that a specific interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap
and selling a floor.
Swap agreements are sophisticated hedging instruments that typically involve a
small investment of
46
<PAGE>
cash relative to the magnitude of risk assumed. As a result, swaps can be
highly volatile and have a considerable impact on the Fund's performance. Swap
agreements are subject to risks related to the counterparty's ability to
perform, and may decline in value if the counterparty's creditworthiness
deteriorates. The Fund may also suffer losses if it is unable to terminate
outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation the Fund may have under these types of
arrangements will be covered by setting aside liquid, high grade debt
securities in a segregated account. The Fund will enter into swaps only with
counterparties believed to be creditworthy.
TIME DEPOSITS--Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid securities.
U.S. GOVERNMENT AGENCY OBLIGATIONS--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 Securities), others are
supported by the right of the issuer to borrow from the Treasury (e.g., Federal
Farm Credit Bank Securities), while still others are supported only by the
credit of the instrumentality (e.g., Federal National Mortgage Association
Securities). Guarantees of principal by agencies or instrumentalities of the
U.S. Government may be a guarantee of payment at the maturity of the obligation
so that in the event of a default prior to maturity there might not be a market
and thus no means of realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not extend to the value
or yield of these securities nor to the value of the Fund's shares.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, as well as separately traded interest
and principal component parts of such obligations known as Separately Traded
Registered Interest and Principal Securities ("STRIPS") that are transferable
through the Federal book-entry system.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain obligations may carry variable
or floating rates of interest, and may involve conditional or unconditional
demand features. Such instruments bear interest at rates which are not fixed,
but which vary with changes in specified market rates or indices. The interest
rates on these securities may be reset daily, weekly, quarterly or some other
reset period, and may have a floor or ceiling on interest rate changes. There
is a risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand
notice exceeding seven days may be considered illiquid if there is no secondary
market for such security.
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.
The Fund 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 the Fund before settlement. These securities are
subject to market fluctuations 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
47
<PAGE>
general level of interest rates has changed. Although a Fund generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities for its portfolio, a Fund may
dispose of a when-issued security or forward commitment prior to settlement if
it deems appropriate.
48
<PAGE>
REMBRANDT FUNDS(R)
Investment Advisor:
LASALLE STREET CAPITAL MANAGEMENT, LTD.
Investment Sub-Advisor:
ABN AMRO-NSM International Funds Management B.V.
Rembrandt Funds(R) (the "Trust") is a mutual fund that offers a convenient means
of investing in one or more professionally managed portfolios of securities.
This prospectus relates to the Trust Class shares and Investor Class shares of
the following Fund:
- Latin America Equity Fund
Trust Class shares of the Trust are offered primarily to institutional
investors, including customers of LaSalle National Trust, N.A. its affiliates
and correspondents for the investment of their own funds or funds for which they
act in a fiduciary, agency or custodial capacity. Investor Class shares are
offered primarily to individuals and institutional accounts for which LaSalle
National Trust, N.A. does not act in a fiduciary, agency or custodial capacity.
Investors in the Trust Class shares and investors in the Investor Class shares
are referred to hereinafter as "Shareholders".
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, INCLUDING LASALLE NATIONAL TRUST, N.A. OR ANY OF ITS AFFILIATES OR
CORRESPONDENTS INCLUDING LASALLE NATIONAL CORPORATION. THE TRUST'S SHARES ARE
NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), 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 Trust that a
prospective investor should know before investing. Investors are advised to read
this prospectus and retain it for future reference. A Statement of Additional
Information dated April 29, 1996 has been filed with the Securities and Exchange
Commission (the "SEC") and is available without charge by calling 1-800-443-
4725. 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.
April 29, 1996
<PAGE>
2
SUMMARY
Rembrandt Funds(R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. The following summary provides basic information about the Trust
Class shares and the Investor Class shares of the Latin America Equity Fund of
the Trust (the "Fund"). This summary is qualified in its entirety by reference
to the more detailed information provided elsewhere in this prospectus and in
the Statement of Additional Information.
What is the Investment Objective? The Latin America Equity Fund seeks long-term
capital appreciation. See "Investment Objective and Policies".
What are the Permitted Investments and Associated Risk Factors? The Latin
America Equity Fund will invest at least 65% of its assets in common stocks and
other equity securities of Latin American issuers. See "Investment Objective
and Policies", "General Investment Policies", "Risk Factors" and "Description of
Permitted Investments and Risk Factors".
The investment policies of the Fund entail certain risks and considerations of
which an investor should be aware and there can be no assurance that the Fund
will achieve its investment objective. The Fund will invest primarily in
securities of foreign issuers. Securities of foreign issuers are subject to
certain risks not typically associated with domestic securities, including,
among other risks, changes in currency rates and in exchange control
regulations, costs in connection with conversions between various currencies,
limited publicly available information regarding foreign issuers, lack of
uniformity in accounting, auditing and financial standards and requirements,
greater securities market volatility, less liquidity of securities, less
government supervision and regulation of securities markets, withholding taxes
and changes in taxes on income on securities, and possible seizure,
nationalization or expropriation of the foreign issuer or foreign deposits.
Investments in certain Latin American countries also may involve risks of
political instability and high inflation rates. Also, the limited size of many
Latin American securities markets and limited trading volume in issuers could
cause prices to be erratic for reasons apart from factors that affect the
quality of the securities.
The Fund also may invest in repurchase agreements, lend its portfolio
securities, purchase securities on a when-issued basis, engage in futures,
options and swap transactions and enter into forward foreign currency contracts.
Each of these investment strategies involves specific risks which are described
under "General Investment Policies", "Risk Factors" and "Description of
Permitted Investments and Risk Factors" and in the Statement of Additional
Information.
Who is the Advisor? LaSalle Street Capital Management, Ltd. serves as the
Advisor of the Trust. ABN AMRO-NSM International Funds Management B.V. serves as
the investment sub-advisor of the Fund. See "The Advisor" and "The Sub-
Advisor".
Who is the Administrator? SEI Financial Management Corporation serves as the
Administrator and shareholder servicing agent of the Trust. See "The
Administrator".
Who is the Transfer Agent? DST Systems, Inc. serves as transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent".
Who is the Distributor? Rembrandt(R) Financial Services Company serves as
distributor of the Trust's shares. See "The Distributor".
How do I Purchase and Redeem Shares? Purchases and redemptions of Trust Class
shares and Investor Class shares may be made through the Distributor on days on
which both the New York Stock Exchange and the Federal Reserve wire system are
open for business ("Business Days"). A purchase order for Trust Class shares
will be effective as of the Business Day received by the Transfer Agent if the
Transfer Agent receives an order prior to 4:00 p.m., Eastern time on such
Business Day. A purchase order for Investor Class shares will be effective as of
the Business Day received by the Transfer Agent if the Transfer Agent receives a
purchase order and payment before 4:00 p.m., Eastern time on such Business Day.
The purchase price for Trust Class shares is the net asset value per share
determined as of the end of the day the order is effective. The purchase price
for Investor Class shares is the net asset value per share determined as of the
end of the day the order is effective, plus a maximum sales charge of up to
4.50%. The redemption price for Trust Class and Investor Class shares is the net
asset value per share determined as of
<PAGE>
3
the end of the day the order is effective. Redemption orders must be placed
prior to 4:00 p.m., Eastern time on any Business Day for the order to be
accepted that day. See "Purchase of Shares" and "Redemption of Shares".
How are Dividends Paid? Substantially all of the net investment income (not
including capital gains) of the Fund is distributed in the form of periodic
dividends. Any 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".
EXPENSE SUMMARY
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES TRUST CLASS
(As a percentage of average net assets)
- -------------------------------------------------------------------------------
<S> <C>
Advisory Fees............................................. 1.00%
Other Expenses(1)......................................... .65%
- -------------------------------------------------------------------------------
Total Operating Expenses.................................. 1.65%
===============================================================================
</TABLE>
(1) "Other Expenses" for the Fund is based on estimated amounts for the current
fiscal year. "Other Expenses" include, among others, trustees' fees and
expenses, amortization of organizational costs, filing fees, professional
fees, and the costs for reports to shareholders.
<TABLE>
<CAPTION>
EXAMPLE
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000 investment assuming (1) 5% annual
return and (2) redemption at the end of each
time period:
$17 $52 $90 $195
================================================================================
</TABLE>
The example is based on estimated expenses for the current fiscal year. 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 this
table is to assist the investor in understanding the various costs and expenses
that may be directly or indirectly borne by investors in Trust Class shares of
the Fund. A person who purchases shares through a financial institution may be
charged separate fees by the financial institution. The information set forth
in the foregoing table and example relates only to the Trust Class shares. The
Trust also offers Investor Class shares of the Fund which are subject to the
same expenses except for a sales load and certain distribution costs.
Additional information may be found under "The Advisor", "The Administrator" and
"The Distributor".
<PAGE>
4
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES INVESTOR CLASS
(As a percentage of offering price)
- --------------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge Imposed on Purchases.............. 4.50%
Redemption Fee(1)...................................... None
- --------------------------------------------------------------------------------
</TABLE>
(1) A charge, currently $10.00, is imposed on wires of redemption proceeds.
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
- --------------------------------------------------------------------------------
<S> <C>
Advisory Fees................................................... 1.00%
12b-1 Fees...................................................... .25%
Other Expenses(2)............................................... .65%
- --------------------------------------------------------------------------------
Total Operating Expenses........................................ 1.95%
================================================================================
</TABLE>
(2) "Other Expenses" for the Fund is based on estimated amounts for the current
fiscal year. "Other Expenses" include, among others, trustees' fees and
expenses, amortization of organizational costs, filing fees, professional fees,
and the costs for reports to shareholders.
<TABLE>
<CAPTION>
EXAMPLE
- --------------------------------------------------------------------------------
1 Yr. 3 Yrs. 5 Yrs. 10 Yrs.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000 investment assuming (1) imposition
of the maximum sales load; (2) 5% annual
return; and (3) redemption at the end of
each time period:
$63 $102 $143 $257
================================================================================
</TABLE>
The example is based on estimated expenses for the current fiscal year. 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 this
table is to assist the investor in understanding the various costs and expenses
that may be directly or indirectly borne by investors in Investor Class shares
of the Fund. A person who purchases shares through a financial institution may
be charged separate fees by the financial institution. The information set
forth in the foregoing table and example relates only to Investor Class shares.
The Trust also offers Trust Class shares of the Fund which are subject to the
same expenses except there are no sales loads or distribution fees. Additional
information may be found under "The Advisor", "The Administrator" and "The
Distributor".
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Purchase of Shares", "Redemption of
Shares" and "Eligibility For Reduced Sales Charge".
Long-term Shareholders may eventually pay more than the economic equivalent of
the maximum front-end sales charge otherwise permitted by the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.
<PAGE>
5
THE TRUST
Rembrandt Funds(R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in any of its currently
offered investment funds. Shareholders may purchase shares in a fund through
two separate classes, the Trust Class and the Investor Class, which provide for
variations in distribution costs, voting rights and dividends. Except for these
differences between classes, each share of a fund represents an undivided,
proportionate interest in that fund. This prospectus relates to the Trust Class
shares and the Investor Class shares of the Latin America Equity Fund of the
Trust (the "Fund"). Information regarding the Trust's other funds is contained
in separate prospectuses that may be obtained from the Trust's Distributor,
Rembrandt(R) Financial Services Company, 680 East Swedesford Road, Wayne, PA,
19087 or by calling 1-800-443-4725.
INVESTMENT OBJECTIVE AND POLICIES
The Latin America Equity Fund seeks long-term capital appreciation.
The Fund seeks to benefit from economic and other developments in Latin America.
The Advisor and Sub-Advisor believe that investment opportunities may be present
in Latin America as a result of an evolving long-term international trend
encouraging greater market orientation and diminishing governmental intervention
in economic affairs. This trend may be facilitated by local or international
political, economic or financial developments that could benefit the capital
markets of certain Latin American countries.
For the purposes of this prospectus, Latin America includes Argentina, Bolivia,
Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, El
Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru,
Uruguay, Venezuela and the Spanish-speaking island nations of the Caribbean (not
including Cuba and Haiti). Although the Fund has no set policy for allocating
investments among Latin American countries, it is currently contemplated that
the Fund will emphasize investments in issuers located in Argentina, Brazil,
Chile, Colombia, Mexico, Peru and Venezuela. The Fund may be precluded from
investing in certain of the remaining eleven countries and certain Spanish-
speaking islands until such time as adequate custodial arrangements can be
established. The Advisor and the Sub-Advisor will allocate the Fund's
investments among the various countries based upon the Advisor's or Sub-
Advisor's assessment of the relative attractiveness of the equity securities of
issuers in the respective countries. Government regulation and restrictions may
limit the amount, mode and extent of investment in companies in such countries.
The Fund will invest primarily in equity securities of (i) companies organized
in or for which the principal securities trading market is in Latin America, and
(ii) companies, wherever organized, that, in one of the last two fiscal years
derived more than 50% of their annual revenues or profits from goods produced,
sales made or services performed in Latin America ("Latin American issuers").
Under normal circumstances, at least 65% of the Fund's total assets will be
invested in equity securities of Latin American issuers. Equity securities for
this purpose are common stocks and common stock equivalents consisting of
securities convertible into common stocks and securities having common stock
characteristics (i.e., rights and warrants to purchase common stocks, sponsored
----
and unsponsored American Depositary Receipts ("ADRs") of Latin American issuers
and equity securities of closed-end investment companies that invest primarily
in securities of Latin American issuers). Although the Fund intends to invest
primarily in equity securities listed on stock exchanges, it may also invest in
securities traded in over-the-counter markets and in securities for which there
is no organized market.
Securities of Latin American issuers pose greater liquidity risks and other
risks than securities of companies located in developed countries and traded in
more established markets. Low liquidity in markets may adversely affect the
Fund's ability to buy and sell securities and cause increased volatility. Many
of the countries in Latin America may at various times have less stable
political environments than more developed nations. Changes of control may
adversely affect the pricing of securities from time to time. Some of the Latin
American countries may afford only limited opportunities for investing. In
certain Latin American countries, the Fund may be able to invest solely or
primarily through ADRs or similar securities and government approved investment
vehicles (including closed-end investment funds). For example, due to Chile's
current investment restrictions (in most cases, capital invested directly in
Chile cannot be repatriated for at least one year), the Fund's investments in
Chile primarily will be through investment in ADRs and established Chilean
investment companies not subject to repatriation restrictions. The Fund may
invest up to 10% of its total assets in the securities of closed-end investment
companies. If the Fund invests in closed-end investment companies, the Fund's
shareholders will bear not only their proportionate share of the expenses of the
Fund, but also
<PAGE>
6
will indirectly bear duplicative fees (including advisory fees) of the
underlying closed-end fund. See "Risk Factors" for a further discussion of the
risks of investing in foreign securities.
Any remaining assets of the Fund not invested in equity securities of Latin
American issuers may be invested in debt securities, options, futures and
currency hedging transactions such as forward foreign currency contracts.
Although it has no present intention to do so, the Fund may invest in debt
securities rated investment grade or better by a nationally recognized
statistical rating organization ("NRSRO") or, if unrated, determined by the
Advisor or Sub-Advisor to be of comparable quality. Investment grade debt
securities are considered to be of satisfactory credit quality and to have
adequate ability to pay interest and repay principal but may have speculative
characteristics. The Fund may invest in debt securities issued or guaranteed by
a Latin American government or governmental entity ("Sovereign Debt") and in
certain money market instruments as listed below under "General Investment
Policies". Certain Latin American countries are among the largest debtors to
commercial banks and foreign governments. Trading in Sovereign Debt involves a
high degree of risk, since the governmental entity that controls the repayment
of Sovereign Debt may not be willing or able to repay the principal and/or
interest of such debt obligations when it becomes due, due to factors such as
debt service burden, political constraints, cash flow situation and other
national economic factors. As a result, Latin American governments may default
on their Sovereign Debt, which may require holders of such Sovereign Debt to
participate in debt rescheduling or additional lending to defaulting
governments. There is no bankruptcy proceeding by which defaulted Sovereign
Debt may be collected in whole or in part.
The Fund may also invest in obligations of supranational entities, which include
international organizations designated or supported by governmental entities to
promote economic reconstruction or development and international banking
institutions and related governmental agencies. Examples include the
International Bank for Reconstruction and Development (the "World Bank") and the
Inter-American Development Bank. The governmental members, or "stockholders",
usually make initial capital contributions to the supranational entity and in
many cases are committed to make additional capital contributions if the
supranational entity is unable to repay its borrowings.
The Fund's investments will include equity and debt securities of issuers
located in developing countries in Latin America and traded in emerging markets.
The Fund may invest up to 5% of its net assets in a particular type of debt
security known as "Brady Bonds", which were issued under the "Brady Plan" in
exchange for Latin American loans and cash in connection with restructurings in
various Latin American external debt markets in 1990. Brady Bonds are issued in
various currencies, primarily U.S. dollars, and are actively traded in the over-
the-counter secondary market for Latin American debt. In the case of U.S.
dollar-denominated collateralized Brady Bonds, the bonds are collateralized in
full as to principal by zero coupon U.S. Treasury bonds of the same maturity.
In addition, at least one year of rolling interest payments are collateralized
by cash or other liquid investments.
The Fund may buy and sell exchange-listed and over-the-counter put and call
options on securities, equity and fixed income indices and other financial
instruments, and may buy and sell financial futures contracts and options
thereon to manage its exposure to changing interest rates, security prices and
currency exchange rates, and not for speculative purposes. For hedging purposes
only, the Fund may also enter into interest rate swaps, currency swaps, caps,
collars and floors as a way of managing its exposure to different types of
investments. The Fund may also write (i.e., sell) covered call options on the
securities in which it may invest.
Investments in securities of foreign issuers are frequently denominated in
foreign currencies and, since the Fund may temporarily hold uninvested reserves
in bank deposits in foreign currencies, the value of the Fund's assets measured
in U.S. dollars may be affected favorably or unfavorably by changes in currency
rates and in exchange control regulations, and the Fund may incur costs in
connection with conversions between various currencies. The Fund may enter into
forward foreign currency contracts as a hedge against possible variations in
foreign exchange rates or to hedge a specific security transaction or portfolio
position. Currently only a limited market, if any, exists for hedging
transactions relating to currencies in most Latin American markets. This may
limit the Fund's ability to effectively hedge its investments in Latin American
markets.
The Fund is non-diversified for purposes of the Investment Company Act of 1940,
as amended (the "1940 Act"), which means that it is not limited by the 1940 Act
in the proportion of its assets that it may invest in the obligations of a
single issuer. However, the Fund intends to conduct its operations so as to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") by limiting its investments so
that, at the close of each quarter of the taxable year, (a) not more than 25% of
the market value of the Fund's total assets is invested in the securities (other
than U.S. Government securities) of a single issuer and (b) at least 50% of the
market value of the Fund's total assets is represented
<PAGE>
7
by (i) cash and cash items, (ii) U.S. Government securities and (iii) other
securities limited in respect to any one issuer to an amount not greater in
value than 5% of the market value of the Fund's total assets and to not more
than 10% of the outstanding voting securities of such issuer. See "Taxes". To
the extent that a relatively high percentage of the Fund's assets may be
invested in the obligations of a limited number of issuers, the Fund's portfolio
securities may be more susceptible to any single economic, political or
regulatory occurrence than the portfolio securities of a diversified investment
company. The investment of a large percentage of the Fund's assets in the
securities of a small number of issuers may cause the Fund's share price to
fluctuate more than that of a diversified investment company.
For additional information regarding risks and permitted investments of the
Fund, see "General Investment Policies", "Risk Factors" and "Description of
Permitted Investments and Risk Factors."
GENERAL INVESTMENT POLICIES
The Fund will not invest more than 15% of its total assets in restricted
securities (as defined in Rule 144 under the Securities Act of 1933).
The Fund may invest in the following money market instruments: securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities,
repurchase agreements, certificates of deposit and bankers' acceptances issued
by U.S. commercial banks or savings and loan institutions having net assets of
at least $500 million as of the end of their most recent fiscal year and
commercial paper rated in the highest two rating categories by an NRSRO. For
temporary defensive purposes during periods when the Advisor or Sub-Advisor
determines that market conditions warrant, the Fund may invest up to 100% of its
assets in such money market instruments and may hold a portion of its assets in
cash. To the extent the Fund is engaged in temporary defensive investments, the
Fund will not be pursuing its investment objective.
The quality standards of debt securities and other obligations as described for
the Fund must be satisfied at the time an investment is made. In the event that
an investment held by the Fund is assigned a lower rating or ceases to be rated,
the Advisor and Sub-Advisor under the supervision of the Trustees of the Trust
will promptly reassess whether such security presents suitable credit risks and
whether the Fund should continue to hold the security or obligation in its
portfolio. If a portfolio security or obligation no longer presents suitable
credit risks or is in default, the Fund will dispose of the security or
obligation as soon as reasonably practicable unless the Trustees of the Trust
determine that to do so is not in the best interest of the Fund.
Although the Fund will not invest for short-term trading purposes, investment
securities may be sold from time to time without regard to the length of time
they have been held.
RISK FACTORS
The investment policies of the Fund entail certain risks and considerations of
which an investor should be aware and there can be no assurance that the Fund
will achieve its investment objective. The Fund will invest in securities of
foreign issuers. Securities of foreign issuers are subject to certain risks not
typically associated with domestic securities, including, among other risks,
changes in currency rates and in exchange control regulations, costs in
connection with conversions between various currencies, limited publicly
available information regarding foreign issuers, lack of uniformity in
accounting, auditing and financial standards and requirements, greater
securities market volatility, less liquidity of securities, less government
supervision and regulations of securities markets, withholding taxes and changes
in taxes on income on securities, political instability and other risks,
including the risk of seizure, nationalization or expropriation of the foreign
issuer or foreign deposits and the risk of war. In addition, the Fund may
invest in repurchase agreements, lend its portfolio securities, and purchase
securities on a when-issued basis. Each of these investment strategies involves
specific risks which are described under "General Investment Policies" and
"Description of Permitted Investments and Risk Factors" and in the Statement of
Additional Information.
The securities markets of Latin American countries are substantially smaller,
less developed, less liquid and more volatile than the major securities markets
in the United States. The limited size of many Latin American securities
markets and limited trading volume in issuers compared to volume of trading in
U.S. securities could cause prices to be erratic for reasons apart from factors
that affect the quality of the securities. For example, limited market size may
cause prices to be unduly influenced by traders
<PAGE>
8
who control large positions. Adverse publicity and investors' perceptions,
whether or not based on fundamental analysis, may decrease the value and
liquidity of portfolio securities, especially in these markets.
In addition, many of the currencies of Latin American countries have experienced
steady devaluations relative to the U.S. dollar; and major devaluations have
historically occurred in certain countries. For example, the Mexican peso
experienced a major decline in value in late 1994 and early 1995 which caused
fixed income securities of Latin American issuers including governmental
entities to drop sharply in value. Any devaluations in the currencies in which
the Fund's portfolio securities are denominated may have a detrimental impact on
the Fund. Some Latin American countries also may have managed currencies which
are not free floating against the U.S. dollar. In addition, there is risk that
certain Latin American countries may restrict the free conversion of their
currencies into other currencies. Furthermore, Latin American currencies may
not be internationally traded. Also, many Latin American countries have
experienced substantial, and in some periods extremely high, rates of inflation
for many years. Inflation and rapid fluctuations in inflation rates have had
and may continue to have very negative effects on the economies and securities
markets of certain Latin American countries.
FUNDAMENTAL POLICIES
The investment objective and the following investment limitations are
fundamental policies of the Fund. Fundamental policies cannot be changed with
respect to the Fund without the consent of the holders of a majority of the
Fund's outstanding shares.
INVESTMENT LIMITATIONS
The Fund may not:
1. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to investments in the obligations issued or guaranteed
by the U.S. Government or its agencies and instrumentalities and repurchase
agreements involving such securities. For purposes of this limitation (i)
utility companies will be divided according to their services, for example, gas,
gas transmission, electric and telephone will each be considered a separate
industry; (ii) 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; (iii)
supranational entities will be considered to be a separate industry; and (iv)
each foreign government will be considered to be a separate industry.
2. Make loans, except that the Fund may (i) purchase or hold debt instruments
in accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) 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 ADVISOR
The Trust and LaSalle Street Capital Management, Ltd. (the "Advisor"), 10 South
LaSalle Street, Suite 3701, Chicago, IL 60603 have entered into an advisory
agreement (the "Advisory Agreement"). Under the Advisory Agreement, the Advisor
makes the investment decisions for the assets of the Fund and continuously
reviews, supervises and administers the Fund's investment programs, subject to
the supervision of, and policies established by, the Trustees of the Trust. The
Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Advisor or LaSalle National Trust,
N.A. and are not insured by the FDIC or issued or guaranteed by the U.S.
Government or any of its agencies or instrumentalities.
LaSalle Street Capital Management, Ltd. serves as the Advisor of the Trust and
is entitled to a fee which is calculated daily and paid monthly at an annual
rate of 1.00% of the average daily net assets of the Fund. The advisory fee for
the Fund is higher than those paid by most mutual funds, but is consistent with
those paid by most mutual funds with similar objectives and policies. The Fund
may also execute brokerage or other agency transactions through an affiliate of
the Advisor.
<PAGE>
9
LaSalle Street Capital Management, Ltd. was organized in March, 1991 under the
laws of the state of Delaware. The Advisor manages assets for common and
collective trusts, corporations, unions, governments, insurance companies and
charitable organizations and provides investment advisory services to LaSalle
National Trust, N.A. As of December 31, 1995, total assets under management by
the Advisor and LaSalle National Trust, N.A. were approximately $7.1 billion.
The Advisor is a wholly-owned subsidiary of LaSalle National Trust, N.A. LaSalle
National Trust, N.A. is a subsidiary of LaSalle National Corporation, a bank
holding company. LaSalle National Trust, N.A. administers $21.7 billion in
assets. The Advisor is an indirect wholly-owned subsidiary of ABN AMRO Holding
N.V., a Netherlands company.
The Glass-Steagall Act restricts the securities activities of banks such as
LaSalle National Trust, N.A., 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.
THE SUB-ADVISOR
ABN AMRO-NSM International Funds Management B.V., Foppingadreef 22, P.O. Box
246, 1000 EA, Amsterdam, The Netherlands ("AANIFM" or the "Sub-Advisor"), a
registered investment adviser, serves as the investment sub-advisor of the Fund
pursuant to a Sub-Advisory Agreement with the Advisor. AANIFM is a holding
company affiliate of the Advisor. Under the Sub-Advisory Agreement, AANIFM
manages the Fund, selects investments and places all orders for purchases and
sales of the Fund's securities, subject to the general supervision of the
Trustees of the Trust and the Advisor. As of December 31, 1995 AANIFM had
approximately $618 million under management. It manages two non-U.S. investment
companies and its sole experience advising U.S. investment companies is serving
as investment Sub-Advisor to the Trust. From time to time, AANIFM may use third
party consultants in Latin American countries to provide localized expertise and
to assist in the selection of investments.
Mr. Jan-Wim Derks, a Portfolio Manager with and an officer of the Sub-Advisor,
has served as Portfolio Manager to the Latin America Equity Fund since its
inception. Mr. Derks has served as a Portfolio Manager within the ABN AMRO
network since 1989.
For services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, AANIFM is entitled to receive from the Advisor a fee, computed daily
and paid monthly, at the annual rate of .50% of the average daily net assets of
the Fund.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA, 19087, a wholly-owned subsidiary of SEI Corporation ("SEI"),
and the Trust are parties to an administration agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space, equipment,
personnel, and facilities. The Administrator also serves as shareholder
servicing agent for the Trust.
The Administrator is entitled to a fee which is calculated daily and paid
monthly at an annual rate of .15% of the average daily net assets of the Fund.
THE TRANSFER AGENT
DST Systems, Inc., 210 W. Tenth Street, Kansas City, Missouri 64105, serves as
the transfer agent, and dividend disbursing agent for the Trust. Compensation
for these services is paid under a transfer agency agreement with the Trust.
THE DISTRIBUTOR
Rembrandt(R) Financial Services Company (the "Distributor"), 680 East Swedesford
Road, Wayne, PA 19087, a subsidiary of SEI Financial Services Company, and the
Trust are parties to a distribution agreement (the "Distribution Agreement").
The Investor Class shares of the Trust have a distribution plan pursuant to Rule
12b-1 under the 1940 Act (the "Investor Class Plan"). As
<PAGE>
10
provided in the Distribution Agreement and the Investor Class Plan, the Trust
will pay a fee of .25% of the average daily net assets of the Investor Class
shares of the Fund 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 LaSalle National Trust, N.A.), savings
and loan associations, insurance companies, and investment counselors, broker-
dealers, and the Distributor's affiliates and subsidiaries as compensation for
services, reimbursement of expenses incurred in connection with distribution
assistance, or provision of Shareholder services. The Investor Class 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 Fund may also execute brokerage or other
agency transactions through an affiliate of the Advisor or through the
Distributor for which the affiliate or the Distributor receives compensation.
The Trust Class shares of the Fund are offered without distribution fees to
institutional investors, including customers of LaSalle National Trust, N.A.,
its affiliates and correspondent banks, for the investment of their own funds or
funds for which they act in a fiduciary, agency or custodial capacity. It is
possible that a financial institution may offer different classes of shares of
the Fund to its customers and the shares of such customers may be assessed for
different distribution expenses with respect to different classes of shares.
PURCHASE OF SHARES
Trust Class shares and Investor Class shares of the Fund are sold on a
continuous basis and may be purchased directly from the Trust's Transfer Agent,
DST Systems, Inc., 210 W. Tenth Street, Kansas City, Missouri 64105, either by
mail, telephone or by wire. Shares may also be purchased through a broker-dealer
which has established a dealer agreement with the Distributor. Shares of the
Fund are offered only to residents of states in which the shares are eligible
for purchase.
Purchases of Trust Class shares and Investor Class shares of the Fund may be
made on days on which both the New York Stock Exchange and Federal Reserve wire
system are open for business ("Business Days"). The minimum initial investment
in the Investor Class is $2,000 ($1,000 minimum for Individual Retirement
Accounts); however, the minimum investment may be waived at the Distributor's
discretion. Subsequent purchases of Investor Class shares must be at least $100.
A purchase order for Trust Class shares will be effective as of the day received
by the Transfer Agent if the Transfer Agent receives the order before 4:00 p.m.,
Eastern time. However, an order may be cancelled if the Custodian does not
receive federal funds before 4:00 p.m., Eastern time on the next Business Day,
and the investor could be liable for any fees or expenses incurred by the Trust.
The purchase price of Trust Class shares of the Fund is the net asset value next
determined after a purchase order is effective (the "Offering Price"). An
investor in Trust Class shares of the Fund may not purchase shares by check.
A purchase order for Investor Class shares will be effective as of the Business
Day received by the Transfer Agent if the Transfer Agent receives the order and
payment before 4:00 p. m., Eastern time. The purchase price of Investor Class
shares of the Fund is the net asset value next determined after a purchase order
is effective plus a sales load (the "Offering Price").
The Trust reserves the right to reject a purchase order for Trust Class shares
or Investor Class shares when the Trust or the Transfer Agent determines that it
is not in the best interest of the Trust and/or its Shareholders to accept such
order.
The net asset value per share of the Fund is determined by dividing the total
market value of the Fund's investments and other assets, less any liabilities,
by the total outstanding shares of the Fund. Net asset value per share is
determined daily as of the close of business of the New York Stock Exchange
(currently 4:00 p.m., Eastern time) on each Business Day. Purchases will be made
in full and fractional shares of the Trust calculated to three decimal places.
Although the methodology and procedures for determining net asset value are
identical for both classes of the Fund, the net asset value per share of such
classes may differ because of the distribution expenses charged to Investor
Class shares.
By Mail
Investors may purchase Investor Class shares of the Fund 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 "Rembrandt Funds(R),
(Latin America
<PAGE>
11
Equity Fund)," to the Transfer Agent, 210 W. Tenth Street, Kansas City, Missouri
64105. Subsequent purchases of shares may be made at any time by mailing a
check (or other negotiable bank draft or money order) to the Transfer Agent.
Account Application forms can be obtained by calling 1-800-443-4725.
By Telephone
If an Account Application has been previously received, an investor may also
purchase shares by telephone by calling 1-800-443-4725. With respect to the
Investor Class shares, orders by telephone will not be executed until payment
has been received. If a check received for purchase of Investor Class shares
does not clear, the purchase will be canceled and the investor could be liable
for any losses or fees incurred.
By Wire
Shareholders having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares of the Fund by requesting their bank
to transmit funds by wire to: United Missouri Bank of Kansas, N.A.; ABA #10-10-
00695; for Account Number 98-7052-349-3; Further Credit: Latin America Equity
Fund. The Shareholder's name and account number must be specified in the wire.
Initial Purchases: Before making an initial investment by wire, an investor must
first telephone 1-800-443-4725 to be assigned an account number. The investor's
name, account number, taxpayer identification number or Social Security number,
and address must be specified in the wire. In addition, an Account Application
should be promptly forwarded to: DST Systems, Inc., 210 W. Tenth Street, Kansas
City, Missouri 64105.
Subsequent Purchases: Additional investments may be made at any time through the
wire procedures described above, which must include a Shareholder's name and
account number. The investor's bank may impose a fee for investments by wire.
Other Information Regarding Purchases
Shares may also be purchased through financial institutions, including LaSalle
National Trust, N.A., which provide distribution assistance or Shareholder
services to the Trust. Shares purchased by persons ("Customers") through
financial institutions may be held of record by the financial institution.
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 the
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. Other Shareholders who desire to transfer
the registration of their shares should contact the Administrator.
Purchases may be made by direct deposit or Automated Clearing House ("ACH")
transactions.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
No certificates representing shares will be issued.
Pursuant to guidelines adopted and monitored by the Trustees of the Trust, the
Fund may use a pricing service to provide market quotations. A pricing service
may use a matrix system of valuation to value fixed income securities which
considers factors such as securities prices, call features, ratings, and
developments related to a specific security.
The following table shows the regular sales charge on Investor Class shares to a
"single purchaser" (defined below) together with the sales charge reallowed to
certain financial institutions (the "reallowance").
<PAGE>
12
<TABLE>
<CAPTION>
Sales Charge as Sales Charge as Reallowance as
a Percentage a Percentage Percentage of
Offering of Net Offering
Amount of Purchase Price Per Share Amount Invested Price Per Share
- --------------------------- --------------- --------------- ----------------
<S> <C> <C> <C>
Less than $100,000......... 4.50% 4.71% 4.05%
$100,000 but less than 3.50% 3.63% 3.15%
$250,000..................
$250,000 but less than 3.00% 3.09% 2.70%
$500,000..................
$500,000 and above......... 1.00% 1.01% 0.90%
</TABLE>
The sales charge shown in the table is the maximum sales charge that applies to
sales through financial institutions. Under certain circumstances, reallowances
of up to the entire amount of the sales charge may be paid to certain financial
institutions, who might then be deemed to be "underwriters" under the Securities
Act of 1933. Commission rates may vary among the funds of the Trust.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from the sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of the Fund.
Automatic Investment Plan (AIP)
A Shareholder may also arrange for periodic additional investments in the Fund
through automatic deductions by ACH from a checking account by completing an AIP
Application Form. The minimum pre-authorized investment amount is $50 per month.
An AIP Application Form may be obtained by calling 1-800-443-4725.
ELIGIBILITY FOR REDUCED SALES CHARGE
Rights of Accumulation
Investors in Investor Class shares will be entitled to lower, graduated sales
charges if the investors' total investment in the Fund exceeds certain
thresholds. In calculating the sales charge rates applicable to current
purchases of Fund shares, a "single purchaser," is entitled to cumulate current
purchases with the current market value of previously purchased shares of the
Fund and the following other eligible funds: Value Fund, Growth Fund, Small Cap
Fund, International Equity Fund, TransEurope Fund, Asian Tigers Fund, Balanced
Fund, Taxable Fixed Income Fund, Short/Intermediate Government Fixed Income
Fund, Tax-Exempt Fixed Income Fund, Global Fixed Income Fund and Limited
Volatility Fixed Income Fund (the "Eligible Funds") which are sold subject to a
comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Fund for their own account or for trust or
custodial accounts for their minor children, or (iii) a fiduciary purchasing for
any one trust, estate or fiduciary account, including employee benefit plans
created under Sections 401 or 457 of the Code including related plans of the
same employer.
To be entitled to a reduced sales charge based upon shares already owned, the
investor must ask the Transfer Agent for such reduction at the time of purchase
and provide the account number(s) of the investor, and, as applicable, the
investor and spouse, and/or their minor children. The Fund may amend or
terminate this right of accumulation at any time as to purchases thereafter.
Letter of Intent
By submitting a Letter of Intent (the "Letter") to the Transfer Agent, a "single
purchaser" may purchase shares of the Fund and the other Eligible Funds during a
13-month period at the reduced sales charge rates applying to the aggregate
amount of the
<PAGE>
13
intended purchases stated in the Letter. The Letter may apply to purchases made
up to 90 days before the date of the Letter. To receive credit for such prior
purchases and later purchases benefitting from the Letter, the Shareholder must
notify the Transfer Agent at the time the Letter is submitted that there are
prior purchases that may apply, and, at the time of later purchases, notify the
Transfer Agent that such purchases are applicable under the Letter.
Other Circumstances
No sales charge is imposed on shares of the Fund: (i) issued in plans of
reorganization, such as mergers, asset acquisitions and exchange offers, to
which the Trust is a party; (ii) sold to dealers or brokers that have a sales
agreement with the Distributor, for their own account or for retirement plans
for their employees; (iii) or sold to employees (and their spouses) of dealers
or brokers that certify to the Transfer Agent at the time of purchase that such
purchase is for their own account (or for the benefit of such employees' minor
children); (iv) in aggregate purchases of $1 million or more by tax exempt
organizations enumerated in Section 501(c) of the Code, or employee benefit
plans created under Sections 401 or 457 of the Code; (v) sold to employees (and
their spouses) of the Advisor and its affiliates or sold to retired employees of
ABN AMRO Holding N.V. and its affiliates and subsidiaries; (vi) which are
purchased with the proceeds of trust or employee benefit plan distributions for
which the Advisor and its affiliates act in a fiduciary capacity; or (vii) which
are sold to the participants in a 401(k) Plan that is a shareholder of any fund
of the Trust. In addition, no sales charge is imposed on any exchange of Trust
Class shares for Investor Class shares of the same fund.
Exchange Privileges
Some or all of the shares of the Fund for which payment has been received (i.e.,
an established account) may be exchanged for shares, at their net asset value,
of other Funds within the Trust with similar or lower sales charges or for
shares of other Funds within the Trust which do not have sales charges. Any
Shareholder or Customer who wishes to make an exchange must have received a
current prospectus of the Fund in which he or she wishes to invest before the
exchange will be effected. For an established account, exchanges will be made
only after instructions in writing or by telephone (an "Exchange Request") are
received by the Transfer Agent. The exchange privilege may be exercised only in
those states where the class of shares of such other Funds of the Trust may
legally be sold.
To exchange shares held of record by LaSalle National Trust, N.A., but
beneficially owned by a Customer, the Customer should contact LaSalle National
Trust, N.A., who will contact the Transfer Agent and effect the exchange on
behalf of the Customer.
If an Exchange Request in good order is received by the Transfer Agent by 4:00
p.m., Eastern time, on any Business Day, the exchange usually will occur on that
day.
REDEMPTION OF SHARES
Shareholders may redeem their shares by mail or by telephone on any Business
Day.
By Mail
A written request for redemption must be received by the Transfer Agent in order
to constitute a valid request for redemption. The Transfer Agent may require
that the signature on the written request be guaranteed by a bank which is a
member of the FDIC, a trust company, broker, dealer, credit union (if authorized
under state law), securities exchange or association, clearing agency or savings
association. The signature guarantee requirement will be waived if all of the
following conditions apply: (1) the redemption is for $5,000 worth of shares or
less, (2) the redemption check is payable to the Shareholder(s) of record, and
(3) the redemption check is mailed to the Shareholder(s) at the address of
record. The Shareholder may also have the proceeds mailed to a commercial bank
account previously designated on the Account Application or by written
instruction to the Transfer Agent. There is no charge for having redemption
requests mailed to a designated bank account.
By Telephone
Shares may be redeemed by telephone if the Shareholder elects that option on the
Account Application. The Shareholder may have the proceeds mailed to his or her
address or mailed or wired to a commercial bank account previously designated on
the
<PAGE>
14
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. Wire
transfer redemption requests may be made by the Shareholder by calling the
Transfer Agent at 1-800-443-4725, who will deduct a wire charge of $10.00 from
the amount of the redemption. Trust Class Shareholders may have proceeds of
redemptions wired without payment of the wire charge. Shares of the Fund 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. The Trust or Transfer Agent may
be liable for losses resulting from fraudulent or unauthorized instructions if
it does not employ these procedures. If market conditions are extraordinarily
active, or other extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, you may wish to consider
placing your order by other means. Shareholders may not close their accounts by
telephone.
Other Information Regarding Redemptions
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption, as described above.
Net asset value per share is determined as of 4:00 p.m., Eastern time on each
Business Day. Payment to Shareholders for shares redeemed will be made within
seven days after receipt by the Transfer Agent of the valid request for
redemption.
At various times, the Fund may be requested to redeem shares for which it has
not yet received good payment. In such circumstances, the forwarding of proceeds
may be delayed for 10 or more days only until payment has been collected for the
purchase of such shares. The Fund 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, a Shareholder may incur brokerage costs in
converting such securities to cash.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem, at net asset value, the shares of any Shareholder
if, because of redemptions of shares by or on behalf of the Shareholder, the
account of such Shareholder in the Fund has a value of less than $1,000.
Accordingly, an investor purchasing shares of the Fund in only the minimum
investment amount may be subject to such involuntary redemption if he or she
thereafter redeems any of these shares. Before the Fund exercises its right to
redeem such shares and to send the proceeds to the Shareholder, the Shareholder
will be given notice that the value of the shares in his or her account is less
than the minimum amount and will be allowed 60 days to make an additional
investment in the Fund in an amount which will increase the value of the account
to at least $1,000. There is no charge for an involuntary redemption.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
Systematic Withdrawal Plan (SWP)
The Fund offers a Systematic Withdrawal Plan which may be utilized by
Shareholders who wish to receive regular distributions from their account. Upon
commencement of the SWP, the account must have a current value of $5,000 or
more. Shareholders may elect to receive automatic payments via check or ACH of
$50 or more on a monthly, quarterly, semi-annual or annual basis. A SWP
Application Form may be obtained by calling 1-800-443-4725.
Shareholders should realize that if withdrawals exceed income dividends, their
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, their original investment could be exhausted
entirely. To participate in the SWP, Shareholders must have their dividends
automatically reinvested. Shareholders may change or cancel the SWP at any time,
upon written notice to the Transfer Agent. It is generally not in the best
interest of shareholders in the SWP to acquire additional shares if they would
have to pay a sales load in connection with such purchases.
<PAGE>
15
PERFORMANCE
From time to time, the Fund may advertise yield and total return. These figures
will be based on historical earnings and are not intended to indicate future
performance. The yield of the Fund refers to the annualized income generated by
an investment in the Fund over a specified 30-day period. The yield is
calculated by assuming that the same amount of income generated by the
investment during that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of the Fund refers to the average compounded rate of return on
a hypothetical investment, net of any sales charge imposed on Investor Class
shares, for designated time periods (including, but not limited to, the period
from which the Fund commenced operations through the specified date), assuming
that the entire investment is redeemed at the end of each period and assuming
the reinvestment of all dividend and capital gain distributions. The total
return of the Fund may also be quoted as a dollar amount or on an aggregate
basis, an actual basis, without inclusion of any sales charge, or with a reduced
sales charge in advertisements distributed to investors entitled to a reduced
sales charge.
The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical Services Inc.)
or by financial and business publications and periodicals, 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 and other investment alternatives. The Fund may quote services
such as Morningstar, Inc., a service that ranks mutual funds on the basis of
risk-adjusted performance, and Ibbotson Associates of Chicago, Illinois, which
provides historical returns of the capital markets in the U.S. The Fund may use
long-term performance of these capital markets to demonstrate general long-term
risk versus reward scenarios and could include the value of a hypothetical
investment in any of the capital markets. The Fund may also quote financial and
business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate the
validity of a comparative benchmark. Measures of volatility and correlation are
calculated using averages of historical data and cannot be precisely calculated.
The performance of Trust Class shares will normally be higher than for Investor
Class shares because the Trust Class is not subject to distribution expenses
charged to the Investor Class shares.
Additional performance information is set forth in the 1995 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
443-4725.
TAXES
The following summary of federal income tax consequences is based on current tax
laws and regulations, which may be changed by legislative, judicial, or
administrative action. No attempt has been made to present a detailed
explanation of the federal, state, or local income tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisors regarding specific questions as to federal, state, and local income
taxes. State and local tax consequences on an investment in the Fund may differ
from the federal income tax consequences described below. Additional information
concerning taxes is set forth in the Statement of Additional Information.
Tax Status of the Fund
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other Funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Code. As long as the Fund qualifies for this special tax
treatment, it will be relieved of federal income tax on that part of its net
investment income and net capital gains (the excess of net long-term capital
gain over net short-term capital loss) which is distributed to Shareholders.
<PAGE>
16
Tax Status of Distributions
The Fund 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 gains will be
distributed annually and will be taxed to Shareholders as long-term capital
gains, regardless of how long the Shareholder has held shares and regardless of
whether the distributions are received in cash or in additional shares. The Fund
will make annual reports to Shareholders of the federal income tax status of all
distributions.
Income received on direct U.S. obligations is exempt from tax at the state level
when received directly by the Fund and may be exempt, depending on the state,
when received by a Shareholder as income dividends from the Fund provided
certain state-specific conditions are satisfied. The Fund will inform
Shareholders annually of the percentage of income and distributions derived from
direct U.S. Treasury obligations. Shareholders should consult their tax advisors
to determine whether any portion of the income dividends received from the Fund
is considered tax exempt in their particular state.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in that month will be deemed to have
been paid by the Fund and received by the Shareholder on December 31 of that
year, if paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
Sale, exchange, or redemption of Fund shares is a taxable event to the
Shareholder.
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. The Fund expects to
be able to elect to treat Shareholders as having paid their proportionate share
of such foreign taxes.
As a general rule, dividends (not capital gain dividends) paid by the Fund, to
the extent derived from dividends received from domestic corporations, will,
provided certain conditions are met, qualify for the dividends received
deduction for corporate shareholders.
GENERAL INFORMATION
The Trust
The Trust was organized as a Massachusetts business trust under a Declaration of
Trust dated September 17, 1992, and amended September 28, 1992 and October 20,
1992. The Declaration of Trust permits the Trust to offer shares of separate
funds and different classes of the fund. In addition to the Fund, the Trust
consists of the following funds: Value Fund, Growth Fund, Small Cap Fund,
International Equity Fund, TransEurope Fund, Asian Tigers Fund, Balanced Fund,
Taxable Money Market Fund, Government Money Market Fund, Treasury Money Market
Fund, Tax-Exempt Money Market Fund, Taxable Fixed Income Fund,
Short/Intermediate Government Fixed Income Fund, Tax-Exempt Fixed Income Fund,
Global Fixed Income Fund and Limited Volatility Fixed Income Fund. All
consideration received by the Trust for shares of any fund and all assets of
such fund belong to that fund and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
funds.
The Trust pays its expenses, including 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, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses. See "Financial Highlights" in this prospectus
for more information regarding the Trust's expenses.
<PAGE>
17
Trustees of the Trust
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees have approved contracts under which, as described above, certain
companies provide essential management, administrative and Shareholder services
to the Trust.
Voting Rights
Each share held entitles the Shareholder of record to one vote. The fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of Shareholders but meetings of Shareholders will be held from time to
time to seek approval 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 periodic reports to
Shareholders of record, and, as necessary, proxy statements for Shareholder
meetings.
Shareholder Inquiries
Shareholder inquiries should be directed to the Administrator, 680 East
Swedesford Road, Wayne, PA, 19087 at 1-800-443-4725.
Dividends
Substantially all of the net investment income (not including capital gains) of
the Fund is distributed in the form of dividends at least annually. Shareholders
who own shares at the close of business on the Record Date will be entitled to
receive the dividend. Currently, capital gains of the Fund, if any, will be
distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
following the record date, unless the Shareholder has elected to take such
payment in cash. Shareholders may change their election by providing written
notice to the Transfer Agent at least 15 days prior to the distribution.
Dividends and distributions of the Fund are paid on a per-share basis. The value
of each share will be reduced by the amount of the payment. If shares are
purchased shortly before the record date for a dividend or the distribution of
capital gains, a Shareholder will pay the full price for the shares and receive
some portion of the price back as a taxable dividend or distribution. The amount
of dividends payable on Trust Class shares will be more than the dividends
payable on the Investor Class shares because of the distribution expenses
charged to Investor Class shares.
Counsel and Auditors
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Ernst & Young LLP
serves as the independent auditors of the Trust.
Custodian
CoreStates Bank, N.A., serves as Custodian of the Trust. The Custodian holds
cash, securities and other assets of the Trust as required by the 1940 Act.
<PAGE>
18
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of certain of the permitted investments and risk
factors for the Fund:
AMERICAN DEPOSITARY RECEIPTS ("ADRs") -- ADRs are securities, typically issued
by a U.S. financial institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the underlying security. Holders of unsponsored depositary
receipts generally bear all the costs of the unsponsored facility. The
depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.
BANKERS' ACCEPTANCE--a bill of exchange or time draft drawn on and accepted by a
commercial bank. Bankers' acceptances are used by corporations to finance the
shipment and storage of goods and to furnish dollar exchange. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT--a negotiable interest bearing instrument with a
specific short-term maturity. Certificates of deposit are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of deposit
have penalties for early withdrawal.
COMMERCIAL PAPER--the term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months.
CONVERTIBLE SECURITIES--securities which have characteristics similar to both
fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, the Fund's selection of convertible
securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer, and any call provisions.
EQUITY OPTIONS--put and call options for various stocks and stock indices are
traded on national securities exchanges. Options on stocks and stock indices may
be used by the Fund from time to time as the Advisor deems to be appropriate.
Options will be used for hedging purposes and will not be engaged in for
speculative purposes. The aggregate value of option positions may not exceed 10%
of the Fund's net assets as of the time such options are entered into by the
Fund.
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, the Fund 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.
Although the Fund will engage in option transactions only as hedging
transactions and not for speculative purposes, there are risks associated with
such investments including the following: (i) the success of a hedging strategy
may depend on the ability of the Advisor to predict movements in the prices of
the individual securities, fluctuations in markets and movements in interest
rates; (ii) there may be an imperfect correlation between the changes in market
value of the stocks held by the Fund and the prices of options; (iii) there may
not be a liquid secondary market for options; and (iv) while the Fund 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.
EQUITY SECURITIES--investments in common stocks are subject to market risks
which may cause their prices to fluctuate over time. Changes in the value of
portfolio securities will not necessarily affect cash income derived from these
securities but will affect a Fund's net asset value.
<PAGE>
19
FORWARD FOREIGN CURRENCY CONTRACTS--A forward contract involves an obligation to
purchase or sell a specific currency amount at a future date, agreed upon by the
parties, at a price set at the time of the contract. The Fund may also enter
into a contract to sell, for a fixed amount of U.S. dollars or other appropriate
currency, the amount of foreign currency approximating the value of some or all
of the Fund's securities denominated in such foreign currency.
At the maturity of a forward contract, the Fund may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the same currency trader,
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Fund may realize a gain or loss from currency
transactions.
ILLIQUID SECURITIES--securities which cannot be disposed of within seven
business days at approximately the price at which they are being carried on the
Fund's books. The Fund will not invest more than 15% of its total assets in such
instruments. An illiquid security includes a demand instrument with a demand
notice period exceeding seven days, if there is no secondary market for such
security.
OBLIGATIONS OF SUPRANATIONAL ENTITIES--Supranational entities are entities
established through the joint participation of several governments, and include
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank.
OPTIONS AND FUTURES--the Fund may invest in futures and options to a limited
extent. The Fund may enter into futures contracts provided that not more than 5%
of its assets are required as a futures contract margin deposit. In addition,
the Fund may enter into futures contracts and options transactions only to the
extent that obligations under such contracts or transactions represent not more
than 10% of the Fund's assets.
The Fund may buy and sell options and futures contracts to manage its exposure
to changing interest rates, security prices and currency exchange rates. Some
options and futures strategies, including selling futures, buying puts and
writing calls, reduce the Fund's exposure to price fluctuations. Other
strategies, including buying futures, writing puts and buying calls, tend to
increase market exposure. Options and futures may be combined with each other or
with forward commitments in order to adjust the risk and return characteristics
of the overall portfolio. The Fund may invest in options and futures based on
any type of security, index, or currency traded on U.S. or foreign exchanges or
over-the-counter, as long as the underlying security, or securities represented
by an index, are permitted investments of the Fund.
Options and futures can be volatile instruments, and involve certain risks. If
the Advisor applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower the Fund's return. The
Fund could also experience losses if the prices of its options and futures
positions were poorly correlated with its other instruments, or if it could not
close out its positions because of an illiquid secondary market.
In order to cover any obligations it may have under options or futures
contracts, the Fund will either own the underlying asset, have a contract to
acquire such an asset without additional cost or set aside for the purpose of
satisfying any such obligation, high quality liquid assets in a segregated
account.
RECEIPTS--TRs, TIGRs, CATS and STRIPS--interests in separately traded interest
and principal component parts of U.S. Treasury obligations that are issued by
banks and brokerage firms and are created by depositing U.S. Treasury
obligations into a special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the registered owners of the
certificates or receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains the register.
Receipts include "Treasury Receipts" ("TRs"), "Treasury Investment Growth
Receipts" ("TIGRs"), "Certificates of Accrual on Treasury Securities" ("CATS")
and "Separately Traded Registered Interest and Principal Securities" ("STRIPS").
TIGRs and CATS are interests in private proprietary accounts, TRs and STRIPS are
interests in accounts sponsored by the U.S. Treasury.
STRIPS, TRs, TIGRs AND CATS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. This
discount is amortized over the life of the security, and such amortization will
constitute the income earned on the security for both accounting and tax
<PAGE>
20
purposes. Because of these features, receipts may be subject to greater price
volatility than interest paying U.S. Treasury Obligations. See also "Taxes".
REPURCHASE AGREEMENTS--agreements by which a person obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price (including principal and interest) on an agreed upon date within a number
of days from the date of purchase. The Custodian or its agent will hold the
security as collateral for the repurchase agreement. Collateral must be
maintained at a value at least equal to 100% of the purchase price. The Fund
bears a risk of loss in the event the other party defaults on its obligations
and the Fund is delayed or prevented from its right to dispose of the collateral
securities or if the Fund realizes a loss on the sale of the collateral
securities. The Advisor will enter into repurchase agreements on behalf of the
Fund only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on guidelines established and
periodically reviewed by the Trustees. Repurchase agreements are considered
loans under the 1940 Act, as well as for federal and state income tax purposes.
RESTRICTED SECURITIES--securities that may not be sold freely to the public
absent registration under the Securities Act of 1933 or an exemption from
registration.
SECURITIES LENDING--in order to generate additional income, the Fund may lend
the securities in which it is invested pursuant to agreements requiring that the
loan be continuously secured by cash, securities of the U.S. Government or its
agencies or any combination of cash and such securities as collateral equal at
all times to 100% of the market value plus accrued interest of the securities
lent. Collateral is marked to market daily. The Fund will continue to receive
interest on the securities lent while simultaneously earning interest on the
investment of cash collateral in U.S. Government securities. 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. However, loans will only
be made to borrowers deemed by the Advisor or Sub-Advisor to be of good standing
and when, in the judgment of the Advisor or Sub-Advisor, the consideration which
can be earned currently from such securities loans justifies the attendant risk.
SECURITIES OF FOREIGN ISSUERS--foreign investments that involve risks that are
different from investments in securities of U.S. issuers. These risks may
include future unfavorable political and economic developments, possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest. Additionally, there may be less public information
available about foreign issuers. Foreign branches of foreign banks are not
regulated by U.S. banking authorities and generally are not bound by accounting,
auditing and financial reporting standards comparable to U.S. banks. The Fund
may invest in commercial paper of foreign issuers and obligations of foreign
branches of U.S. banks, U.S. and London branches of foreign banks, and
supranational entities which are established through the joint participation of
several governments (e.g., the Asian Development Bank, the Inter-American
Development Bank, International Bank for Reconstruction and Development (World
Bank), African Development Bank, European Economic Community, European
Investment Bank and the Nordic Investment Bank).
SWAPS--as a way of managing its exposure to different types of investments, the
Fund may enter into interest rate swaps, currency swaps and other types of swap
agreements such as caps, collars and floors. In a typical interest rate swap,
one party agrees to make regular payments equal to a floating interest rate
times a "notional principal amount", in return for payments equal to a fixed
rate times the same amount, for a specific period of time. If a swap agreement
provides for payment in different currencies, the parties might agree to
exchange the notional principal amount as well. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specific interest rate exceeds an agreed-
upon level, while the seller of an interest rate floor is obligated to make
payments to the extent that a specified interest rate falls below an agreed-upon
level. An interest rate collar combines elements of buying a cap and selling a
floor.
Swap agreements will tend to shift the Fund's investment exposure from one type
of investment to another. For example, if the Fund agrees to exchange payments
in dollars for payments in foreign currency, the swap agreement would tend to
decrease the Fund's exposure to U.S. interest rates and increase its exposure to
foreign currency and interest rates. Caps and floors have an effect similar to
buying or writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of the Fund's investments and their
share price and yield.
<PAGE>
21
Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and have a considerable impact on the
Fund's performance. Swap agreements are subject to risks related to the
counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. The Fund may also suffer losses if
they are unable to terminate outstanding swap agreements or reduce their
exposure through offsetting transactions.
TIME DEPOSITS--a 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; therefore, the Fund will not invest more than 10% of its
assets in such time deposits and other illiquid securities.
U.S. GOVERNMENT AGENCIES--certain federal agencies such as the Government
National Mortgage Association ("GNMA") have been established as
instrumentalities of the U.S. Government to supervise and finance certain types
of activities. Issues of these agencies, while not direct obligations of the
U.S. Government, are either backed by the full faith and credit of the United
States (e.g., GNMA) or supported by the issuing agencies' right to borrow from
the Treasury. The issues of other agencies are supported only by the credit of
the instrumentality (e.g., Federal National Mortgage Association, "FNMA").
U.S. TREASURY OBLIGATIONS--bills, notes and bonds issued by the U.S. Treasury
and separately traded interest and principal component parts of such obligations
that are transferable through the Federal book-entry system known as Separately
Traded Registered Interest and Principal Securities ("STRIPS").
WARRANTS--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.
The Fund 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 the Fund 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 the Fund generally purchases securities on a when-issued or
forward commitment basis with the intention of actually acquiring securities for
its portfolio, it may dispose of a when-issued security or forward commitment
prior to settlement if it deems appropriate.
<PAGE>
22
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Summary................................................................... 2
Expense Summary........................................................... 3
The Trust................................................................. 5
Investment Objective and Policies......................................... 5
General Investment Policies............................................... 7
Risk Factors.............................................................. 7
Fundamental Policies...................................................... 8
Investment Limitations.................................................... 8
The Advisor............................................................... 8
The Sub-Advisor........................................................... 9
The Administrator......................................................... 9
The Transfer Agent........................................................ 9
The Distributor........................................................... 9
Purchase of Shares........................................................ 10
Eligibility For Reduced Sales Charge...................................... 12
Redemption of Shares...................................................... 13
Performance............................................................... 15
Taxes..................................................................... 15
General Information....................................................... 16
Description of Permitted Investments and Risk Factors..................... 18
<PAGE>
Rembrandt Funds(R)
Investment Advisor:
LaSalle Street Capital Management, Ltd.
This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of
Rembrandt Funds(R) (the "Trust") and should be read in conjunction with the
Trust's prospectuses dated April 29, 1996. Prospectuses may be obtained through
the Distributor, Rembrandt(R) Financial Services Company, 680 East Swedesford
Road, Wayne, Pennsylvania 19087.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
THE TRUST................................................................ 3
DESCRIPTION OF PERMITTED INVESTMENTS..................................... 3
INVESTMENT LIMITATIONS................................................... 13
NON-FUNDAMENTAL POLICIES................................................. 15
THE ADVISOR.............................................................. 16
THE SUB-ADVISOR.......................................................... 17
THE ADMINISTRATOR........................................................ 18
THE DISTRIBUTOR.......................................................... 19
TRUSTEES AND OFFICERS OF THE TRUST....................................... 21
COMPUTATION OF YIELD..................................................... 22
CALCULATION OF TOTAL RETURN.............................................. 25
PURCHASE AND REDEMPTION OF SHARES........................................ 27
LETTER OF INTENT......................................................... 28
DETERMINATION OF NET ASSET VALUE......................................... 28
TAXES.................................................................... 30
PORTFOLIO TRANSACTIONS................................................... 32
TRADING PRACTICES AND BROKERAGE.......................................... 33
DESCRIPTION OF SHARES.................................................... 37
SHAREHOLDER LIABILITY.................................................... 38
LIMITATION OF TRUSTEES' LIABILITY........................................ 47
EXPERTS.................................................................. 48
APPENDIX................................................................. A1
FINANCIAL INFORMATION.................................................... F1
</TABLE>
April 29, 1996
REM-F-007-03
<PAGE>
THE TRUST
Rembrandt Funds(R) is an open-end management investment company established
under Massachusetts law as a Massachusetts business trust under a Declaration of
Trust dated September 17, 1992. The Declaration of Trust permits the Trust to
offer separate series of units of beneficial interest ("shares") and different
classes of shares of each Fund. Shareholders may purchase shares through two
separate classes, the Trust Class and the Investor Class, which provide for
variations in distribution costs, voting rights and dividends. Except for
differences between Trust Class shares and Investor Class shares pertaining to
distribution fees, each share of each fund represents an equal proportionate
interest in that fund. See "Description of Shares." This Statement of
Additional Information relates to the Trust Class shares and Investor Class
shares of the following funds of the Trust: Value Fund, Growth Fund, Latin
America Equity Fund, Small Cap Fund, International Equity Fund, TransEurope
Fund, Asian Tigers Fund (collectively, the "Equity Funds"), Fixed Income Fund
(formerly Taxable Fixed Income Fund), Intermediate Government Fixed Income Fund
(formerly Short/Intermediate Government Fixed Income Fund), Tax-Exempt Fixed
Income Fund, Global Fixed Income Fund, Limited Volatility Fixed Income Fund
(collectively, the "Fixed Income Funds"), Balanced Fund (the "Balanced Fund"),
Money Market Fund (formerly Taxable Money Market Fund), Government Money Market
Fund, Treasury Money Market Fund and Tax-Exempt Money Market Fund (collectively
the "Money Market Funds") (together, the "Funds").
DESCRIPTION OF PERMITTED INVESTMENTS
Variable Amount Master Demand Notes
Variable amount master demand notes may or may not be backed by bank letters of
credit. These notes 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.
Brady Bonds
"Brady Bonds" are a particular type of Latin American debt security. During
1990, the Mexican external debt markets experienced significant changes with the
completion of the "Brady Plan" restructurings in those markets. The
restructurings provided for the exchange of loans and cash for newly issued
bonds ("Brady Bonds"). Brady Bonds fall into two categories: collaterized Brady
Bonds and bearer Brady Bonds. Both types of Brady Bonds are issued in various
currencies, primarily the U.S. dollar. Brady Bonds are actively traded in the
over-the-counter secondary market for Latin American debt. U.S. dollar-
denominated collaterized bonds, which may be fixed par bonds or floating rate
discount bonds, are collaterized in full as to
2
<PAGE>
principal by U.S. Treasury zero coupon bonds having the same maturity. At least
one year of rolling interest payments are collaterized by cash or other
investments.
Floating Rate Notes
Floating rate notes will normally involve industrial development or revenue
bonds which provide that the rate of interest is set as a specific percentage of
a designated base rate (such as the prime rate) at a major commercial bank, and
that the Fund can demand payment of the obligation at all times or at stipulated
dates on short notice (not to exceed 30 days) at par plus accrued interest. A
Fund may use the longer of the period required before the Fund is entitled to
prepayment under such obligations or the period remaining until the next
interest rate adjustment date for purposes of determining the maturity. Such
obligations are frequently secured by letters of credit or other credit support
arrangements provided by banks. The quality of the underlying credit or of the
bank, as the case may be, must be rated in the third highest rating category or,
in the Advisor's opinion, be of comparable quality. The Advisor will monitor
the earning power, cash flow and liquidity ratios of the issuers of such
instruments and the ability of an issuer of a demand instrument to pay principal
and interest on demand. The Advisor may purchase other types of tax-exempt
instruments as long as they are of a quality equivalent to the bond or
commercial paper ratings stated above.
GNMA Certificates
GNMA Certificates are securities issued by the Government National Mortgage
Association ("GNMA"), a wholly-owned U.S. Government corporation which
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 accurately predict 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.
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Junk Bonds
Junk Bonds are debt securities which are rated below investment grade or are not
rated. When debt securities are rated, it is expected that such ratings will
generally be below investment grade. Below investment grade securities are
generally considered to be debt securities rated BB or lower by S&P or Ba or
lower by Moody's or, if unrated, are deemed by the Advisor or Sub-Advisor to be
of comparable quality. Securities below investment grade are the equivalent of
high yield, high risk bonds, commonly known as "junk bonds."
Such securities involve greater risk of default or price declines than
investment grade securities due to changes in the issuer's creditworthiness and
the outlook for economic growth. The market for these securities may be less
active, causing market price volatility and limited liquidity in the secondary
market. This may limit the Fund's ability to sell such securities at their
market value. In addition, the market for these securities may also be
adversely affected by legislative and regulatory developments. Credit quality
in the junk bond market can change suddenly and unexpectedly, and even recently
issued credit ratings may not fully reflect the actual risks imposed by a
particular security.
Mortgage-Backed Securities
Two principal types of mortgage-backed securities are collateralized mortgage
obligations ("CMOs") and real estate mortgage investment conduits ("REMICs"),
which are rated in one of the two highest rating categories by a nationally
recognized statistical rating organization ("NRSRO"). CMOs are securities
collateralized by mortgages, mortgage pass-throughs, mortgage pay-through bonds
(bonds representing an interest in a pool of mortgages where the cash flow
generated from the mortgage collateral pool is dedicated to bond repayment), and
mortgage-backed bonds (general obligations of the issuers payable out of the
issuers' general funds and additionally secured by a first lien on a pool of
single family detached properties). Many CMOs are issued with a number of
classes or series which have different maturities and are retired in
sequence.
Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest and
principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until that
portion of such CMO obligation is repaid, investors in the longer maturities
receive interest only. Accordingly, the CMOs in the longer maturity series are
less likely than other mortgage pass-throughs to be prepaid prior to their
stated maturity. Although some of the mortgages underlying CMOs may be
supported by various types of insurance, and some CMOs may be backed by GNMA
certificates or other mortgage pass-throughs issued or guaranteed by U.S.
Government agencies or instrumentalities, the CMOs themselves are not generally
guaranteed.
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REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured by
an interest in real property. REMICs are similar to CMOs in that they issue
multiple classes of securities.
Asset-Backed Securities
Asset-backed securities include company receivables, truck and auto loans,
leases, and credit card receivables. These issues may be traded over-the-
counter and typically have a short-intermediate maturity structure depending on
the paydown characteristics of the underlying financial assets which are passed
through to the security holder.
STRIPS
Separately traded interest and principal securities ("STRIPS") are component
parts of U.S. Treasury Securities traded through the Federal Book-Entry System.
The Advisor will purchase only STRIPS that it determines are liquid or, if
illiquid, do not violate the Fund's investment policy concerning investments in
illiquid securities. Consistent with Rule 2a-7, the Advisor will purchase only
STRIPS for Money Market Funds that have a remaining maturity of 397 days or
less; therefore, the Money Market Funds currently may purchase only interest
component parts of U.S. Treasury Securities. While there is no limitation on
the percentage of a Fund's assets that may be comprised of STRIPS, the Advisor
will monitor the level of such holdings to avoid the risk of impairing
shareholders' redemption rights and of deviations in the value of shares of the
Money Market Funds.
Repurchase Agreements
Repurchase agreements, in which each of the Funds, except the Treasury Money
Market Fund, is permitted to invest, are agreements by which a person (e.g., a
----
fund) obtains a security and simultaneously commits to return the security to
the seller (primary securities dealer recognized by the Federal Reserve Bank of
New York or a national member bank as defined in Section 3(d)(1) of the Federal
Deposit Insurance Act, as amended) at an agreed upon price (including principal
and interest) on an agreed upon 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.
Repurchase agreements are considered to be loans by the Funds for purposes of
their investment limitations. The repurchase agreements entered into by the
Funds will provide that the underlying security at all times shall have a value
at least equal to 100% of the resale price stated in the agreement (the Advisor
monitors compliance with this requirement). Under all repurchase agreements
entered into by the Funds, the Custodian or its agent must take possession of
the underlying collateral. However, if the seller defaults, the Funds could
realize a loss on the sale of the underlying security to the extent that the
proceeds of sale including
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accrued interest are less than the resale price provided in the agreement
including interest. In addition, even though the Bankruptcy Code provides
protection for most repurchase agreements, if the seller should be involved in
bankruptcy or insolvency proceedings, the Funds may incur delay and costs in
selling the underlying security or may suffer a loss of principal and interest
if the Funds are treated as an unsecured creditor and required to return the
underlying security to the seller's estate.
Municipal Securities
Municipal notes include, but are not limited to, general obligation notes, tax
anticipation notes (notes sold to finance working capital needs of the issuer in
anticipation of receiving taxes on a future date), revenue anticipation notes
(notes sold to provide needed cash prior to receipt of expected non-tax revenues
from a specific source), bond anticipation notes, certificates of indebtedness,
demand notes and construction loan notes. A Fund's investments in any of the
notes described above will be limited to those obligations (i) which are rated
in the highest two rating categories by an NRSRO or (ii) which, if not rated,
are of equivalent quality in the Advisor's judgment.
Municipal bonds must be rated in the highest four rating categories by an NRSRO
at the time of investment or, if unrated, must be deemed by the Advisor to have
essentially the same characteristics and quality as bonds rated in the above
rating categories. The Advisor may purchase industrial development and
pollution control bonds if the interest paid is exempt from federal income tax.
These bonds are issued by or on behalf of public authorities to raise money to
finance various privately-operated facilities for business and manufacturing,
housing, sports, and pollution control. These bonds are also used to finance
public facilities such as airports, mass transit systems, ports and parking.
The payment of the principal and interest on such bonds is dependent solely on
the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment.
Commercial Paper
Tax-exempt commercial paper will be limited to investments in obligations which
are rated in one of the two highest rating categories by an NRSRO at the time of
investment or which are of equivalent quality as determined by the Advisor.
Standby Commitments, or Puts
The Advisor has the authority to purchase securities at a price which would
result in a yield to maturity lower than that generally offered by the seller at
the time of purchase when they can simultaneously acquire the right to sell the
securities back to the seller, the issuer, or a third party (the "writer") at an
agreed-upon price at any time during a stated period or on a certain date. Such
a right is generally denoted as a "standby commitment" or a "put." The purpose
of engaging in transactions involving puts is to maintain flexibility and
liquidity to permit a Fund to meet redemptions and remain as fully invested as
possible in municipal securities. The Funds
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reserve the right to engage in put transactions. The right to put the securities
depends on writer's ability to pay for the securities at the time the put is
exercised. The Funds will limit their put transactions to institutions which the
Advisor believes present minimal credit risks, and the Advisor will use its best
efforts to initially determine and continue to monitor the financial strength of
the sellers of the options by evaluating their financial statements and such
other information as is available in the marketplace. It may, however, be
difficult to monitor the financial strength of the writers because adequate
current financial information may not be available. In the event that any writer
is unable to honor a put for financial reasons, the Fund would be general
creditor (i.e., on a parity with all other unsecured creditors) of the writer.
Furthermore, particular provisions of the contract between the Fund and the
writer may excuse the writer from repurchasing the securities; for example, a
change in the published rating of the underlying municipal securities or any
similar event that has an adverse effect on the issuer's credit or a provision
in the contract that the put will not be exercised except in certain special
cases, for example, to maintain portfolio liquidity. The Fund could, however, at
any time sell the underlying portfolio security in the open market or wait until
the portfolio security matures, at which time it should realize the full par
value of the security.
The municipal securities purchased subject to a put may be sold to third persons
at any time, even though the put is outstanding, but the put itself, unless it
is an integral part of the security as originally issued, may not be marketable
or otherwise assignable. Therefore, the put would have value only to the Fund.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could sell the portfolio security. The
maturity of the underlying security will generally be different from that of the
put. There will be no limit to the percentage of portfolio securities that the
Fund may purchase subject to a put but the amount paid directly or indirectly
for puts which are not integral parts of the security as originally issued which
are held by the Fund will not exceed 1/2 of 1% of the value of the total assets
of such Fund calculated immediately after any such put is acquired. For the
purpose of determining the "maturity" of securities purchased subject to an
option to put, and for the purpose of determining the dollar-weighted average
maturity of the Fund including such securities, the Trust will consider
"maturity" to be the first date on which it has the right to demand payment from
the writer of the put although the final maturity of the security is later than
such date.
Options
Put and call options may be used by a Fund from time to time as the Advisor
deems to be appropriate except as limited by each Fund's investment
restrictions, but will not be used for speculative purposes. Among the
strategies the Advisor may use are: protective puts on stocks owned by a Fund,
buying calls on stocks a Fund is attempting to buy and writing covered calls on
stocks a Fund owns. The aggregate value of option positions may not exceed 10%
of a Fund's net assets at the time such options are entered into by the
Fund.
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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 Fund 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.
A Fund may buy protective put options from time to time on such portion of its
assets as the Advisor determines is appropriate in seeking the Fund's investment
objective. A put option gives the purchaser, in this case the Fund, the right
to sell and the writer has the obligation to buy the underlying security at the
exercise price during the option period. The advantage to the Fund of buying
the protective put is that if the price of the stock falls during the option
period, the Fund may exercise the put and receive the higher exercise price for
the stock. However, if the security rises in value, the Fund will have paid a
premium for the put which will expire unexercised.
A Fund may buy call options from time to time as the Advisor determines is
appropriate in seeking the Fund's investment objective. A call option gives the
purchaser, in this case the Fund, the right to buy and the writer has the
obligation to sell the underlying security at the exercise price during the
option period. The Fund may elect to buy calls on stocks that the Fund is
trying to buy. The advantage of the Fund buying the fiduciary call is that if
the price of the stock rises during the option period, the Fund may exercise the
call and buy the stock for the lower exercise price. If the security falls in
value, the Fund will have paid a premium for the call which will expire
worthless, but will be able to buy the stock at a lower price.
A Fund may write covered call options from time to time on such portion of its
assets as the Advisor determines is appropriate in seeking the Fund's investment
objective. A call gives the purchaser the right to buy and the writer, in this
case the Fund, has the obligation to sell the underlying security at the
exercise price during the option period. The advantage to the Fund of writing
covered call options is that the Fund receives a premium which is additional
income. However, if the security rises in value, the Fund may not fully
participate in the market appreciation.
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 purchase
transaction. A closing purchase transaction is one in which a Fund, when
obligated as a writer of an option, terminates its obligation by purchasing an
option of the same series as the option previously written. A closing purchase
transaction cannot be effected with respect to an option once the option writer
has received an exercise notice for such option.
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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.
There are risks associated with option transactions including the following:
(i) the success of a hedging strategy may depend on the ability of the Advisor
to predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) there may be imperfect correlation
between the movement in prices of securities held by a Fund; (iii) there may not
be a liquid secondary market for options; and (iv) while a Fund 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.
Foreign Securities
Foreign securities may be U.S. dollar denominated obligations or securities of
foreign issuers. Permissible investments may consist of obligations of foreign
branches of U.S. banks and of foreign banks, including European certificates of
deposit, European time deposits, Canadian time deposits and Yankee certificates
of deposit, and investments in Canadian commercial paper, foreign securities and
Europaper. In addition, a Fund may invest in American Depositary Receipts.
These instruments may subject a Fund 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.
Further, it may be more difficult for the Fund's agents to keep currently
informed about corporate actions which may affect the prices of portfolio
securities. Communications between the U.S. and foreign countries may be less
reliable than within the U.S., increasing the risk of delayed settlements of
portfolio securities. Certain markets may require payment for securities before
delivery. The Fund's ability and decisions to purchase and sell portfolio
securities may be affected by laws or regulations relating to the convertibility
of currencies and repatriation of assets. Some countries restrict the extent to
which foreigners may invest in their securities markets.
The Latin America Equity Fund may invest in securities denominated in currencies
of Latin American countries. Accordingly, changes in the value of these
currencies against the U.S. dollar
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will result in corresponding changes in the U.S. dollar value of the Fund's
assets denominated in those currencies.
Some Latin American countries also may have managed currencies, which are not
free floating against the U.S. dollar. In addition, there is risk that certain
Latin American countries may restrict the free conversion of their currencies
into other currencies. Further, it may be difficult to reduce the Fund's Latin
American currency risk through hedging. Any devaluations in the currencies in
which the Fund's portfolio securities are denominated may have a detrimental
impact on the Fund's net asset value.
Certain risks associated with international investments and investing in
smaller, developing capital markets are heightened for investments in Latin
American countries. For example, some of the currencies of Latin American
countries have experienced steady devaluations relative to the U.S. dollar, and
major adjustments have been made in certain of these currencies periodically.
In addition, although there is a trend toward less government involvement in
commerce, governments of many Latin American countries have exercised and
continue to exercise substantial influence over many aspects of the private
sector. In certain cases, the government still owns or controls many companies,
including some of the largest companies in the country. Accordingly, government
actions in the future could have a significant effect on economic conditions in
Latin American countries, which could affect private sector companies and the
Fund, as well as the value of securities in the Fund's portfolio.
When-Issued Securities
When-issued securities are securities which involve the purchase of debt
obligations on a when-issued basis, in which case delivery and payment normally
take place on a future date. The Funds will only make commitments to purchase
obligations on a when-issued basis with the intention of actually acquiring the
securities, but may sell them before the settlement date. The when-issued
securities are subject to market fluctuation, and no interest accrues on the
security to the purchaser during this period. The payment obligation and the
interest rate that will be received on the securities are each fixed at the time
the purchaser enters into the commitment. Purchasing obligations on a when-
issued basis may be used as a form of leveraging because the purchaser may
accept the market risk prior to payment for the securities. The Funds, however,
will set aside at the time they commit to purchase such securities the amount to
cover the purchase price. Consequently, the Funds will not use such purchases
for leveraging.
The Funds will segregate liquid assets in an amount at least equal in value to
the Funds' commitments to purchase when-issued securities. If the value of
these assets declines, the Funds will place additional liquid assets aside on a
daily basis so that the value of the assets set aside is equal to the amount of
such commitments.
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Restricted Securities
Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 (the "1933 Act") absent an
exemption from registration. Certain of the permitted investments of the Funds
may be restricted securities, and the Advisor may invest up to 5% of the total
assets of a Fund in restricted securities provided it determines that at the
time of investment such securities are not illiquid (generally, an illiquid
security cannot be disposed of within seven days in the ordinary course of
business at its full value), based on guidelines and procedures developed and
established by the Board of Trustees of the Trust. The Board of Trustees will
periodically review such procedures and guidelines and will monitor the
Advisor's implementation of such procedures and guidelines. Under these
procedures and guidelines, the Advisor will consider the frequency of trades and
quotes for the security, the number of dealers in, and potential purchasers for,
the securities, dealer undertakings to make a market in the security and the
nature of the security and of the marketplace trades. In purchasing such
restricted securities, the Advisor intends to rely upon the exemption from
registration provided by Rule 144A promulgated under the 1933 Act.
Securities Lending
A Fund may lend securities pursuant to agreements requiring that the loans be
continuously secured by cash, securities of the U.S. Government or its agencies,
or any combination of cash and such securities, as collateral equal to 100% of
the market value at all times of the securities lent. Such loans will not be
made if, as a result, the aggregate amount of all outstanding securities loans
for the Fund exceed one-third of the value of a Fund's total assets taken at
fair market value. A Fund will continue to receive interest on the securities
lent while simultaneously earning interest on the investment of the cash
collateral in U.S. Government securities. However, a Fund will normally pay
lending fees to such broker-dealers and related expenses from the interest
earned on invested collateral. There may be risks of delay in receiving
additional collateral or risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially. However, loans are made only to borrowers deemed by the Advisor to
be of good standing and when, in the judgment of the Advisor, the consideration
which can be earned currently from such securities loans justifies the attendant
risk. Any loan may be terminated by either party upon reasonable notice to the
other party. The Funds may use the Distributor or a broker-dealer affiliate of
the Advisor as a broker in these transactions.
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Investment Company Shares
Investments in shares of open-end funds and closed-end funds, as described
in the prospectus, may result in the layering of expenses. Since such funds pay
management fees and other expenses, shareholders of a Fund would indirectly pay
both Fund expenses and the expenses of underlying funds with respect to Fund
assets invested therein. Under applicable regulations, the Funds are prohibited
from acquiring the securities of other investment companies if, as a result of
such acquisition, the Funds own more than 3% of the total voting stock of the
company; securities issued by any one investment company represent more than 5%
of the Fund's total assets; or securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Funds. See also "Investment Limitations."
The Trust has received an exemptive order from the Securities and Exchange
Commission ("SEC") to permit the Funds to invest in shares of the Money Market
Funds. Pursuant to this order, each Fund is permitted to invest in shares of
the Money Market Funds provided that the Advisor and any of its affiliates waive
management fees and other expenses with respect to Fund assets invested
therein.
It is the position of the staff of the SEC that certain nongovernmental issuers
of CMOs and REMICs constitute investment companies pursuant to the Investment
Company Act of 1940, as amended ("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 been granted orders from the SEC exempting such
instruments from the definition of investment company.
Standard & Poor's Depositary Receipts ("SPDRs")
SPDRs are interests in a unit investment trust ("UIT") that may be obtained from
the UIT or purchased in the secondary market as SPDRs are listed on the American
Stock Exchange.
The UIT will issue SPDRs in aggregations of 50,000 known as "Creation Units" in
exchange for a "Portfolio Deposit" consisting of (a) a portfolio of securities
substantially similar to the component securities ("Index Securities") of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P Index"), (b) a cash
payment equal to a pro rata portion of the dividends accrued on the UIT's
portfolio securities since the last dividend payment by the UIT, net of expenses
and liabilities, and (c) a cash payment or credit ("Balancing Amount") designed
to equalize the net asset value of the S&P Index and the net asset value of a
Portfolio Deposit.
SPDRs are not individually redeemable, except upon termination of the UIT. To
redeem, the Fund must accumulate enough SPDRs to reconstitute a Creation
Unit. The liquidity of small holdings of SPDRs, therefore, will depend upon the
existence of a secondary market. Upon
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redemption of a Creation Unit, the Fund will receive Index Securities and
cash identical to the Portfolio Deposit required of an investor wishing to
purchase a Creation Unit that day.
The price of SPDRs is derived and based upon the securities held by the UIT.
Accordingly, the level of risk involved in the purchase or sale of a SPDR is
similar to the risk involved in the purchase or sale of traditional common
stock, with the exception that the pricing mechanism for SPDRs is based on a
basket of stocks. Disruptions in the markets for the securities underlying
SPDRs purchased or sold by the Fund could result in losses on SPDRs.
Trading in SPDRs involves risks similar to those risks, described above under
"Options," involved in the writing of options on securities.
The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Corporation ("SEI"). However, the purchase of shares of the
Trust by them or by their customers will not be a consideration in determining
which bank obligations the Trust will purchase. The Trust will not purchase
obligations of the Advisor.
INVESTMENT LIMITATIONS
Each Fund has adopted certain investment limitations which, in addition to those
limitations in the Prospectus, are fundamental and may not be changed without
approval by a majority vote of the Fund's outstanding shares. The term
"majority of the Fund's outstanding shares" means the vote of (i) 67% or more of
the Fund's shares present at a meeting, if more than 50% of the outstanding
shares of the Fund are present or represented by proxy, or (ii) more than 50% of
the Fund's outstanding shares, whichever is less.
No Fund may:
1. Acquire more than 10% of the voting securities of any one issuer.
2. Invest in companies for the purpose of exercising control.
3. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under federal securities laws in selling a Fund
security.
4. 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.
The Money Market Funds may not:
1. 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 Fund'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 Fund shall, within three days thereafter or such longer
period as the 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.
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2. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (1) 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.
3. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts and interests in a pool of securities
that are secured by interests in real estate. However, subject to their
permitted investments, any Fund may invest in companies which invest in
real estate commodities or commodities contracts.
4. 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.
5. Purchase securities of other investment companies except for money market
funds and then only as permitted by the 1940 Act and the rules and
regulations thereunder. The Money Market Funds will invest in shares of
another money market fund only if (i) such other money market fund is
subject to Rule 2a-7 under the 1940 Act; (ii) such other money market fund
has investment criteria equal to or higher than those of the investing
Money Market Fund; and (iii) the Trust's Board of Trustees monitors the
activities of such other money market fund.
6. Write or purchase puts, calls, options or combinations thereof.
The Equity, Fixed Income and Balanced Funds may not:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Fund to purchase securities or require a
Fund to segregate assets are not considered to be borrowing. Except where
a Fund has borrowed money for temporary purposes in amounts not exceeding
5% of its total assets, asset coverage of at least 300% is required for all
borrowings.
2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase: (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
NON-FUNDAMENTAL POLICIES
No Fund may:
14
<PAGE>
1. Invest in warrants, except that each of the Tax-Exempt Fixed Income Fund,
Value Fund, Growth Fund, Small Cap Fund, International Equity Fund,
TransEurope Fund, Asian Tigers Fund and Balanced Fund may invest in
warrants in an amount not exceeding 5% of the Fund's net assets as valued
at the lower of cost or market value. Included in that amount, but not to
exceed 2% of the Fund's net assets, may be warrants not listed on the New
York Stock Exchange or the American Stock Exchange.
2. Invest in illiquid securities in an amount exceeding, in the aggregate, 15%
of the Fund's assets. An illiquid security is a security which cannot be
disposed of promptly (within seven days), and in the usual course of
business without a loss, and includes repurchase agreements maturing in
excess of seven days, time deposits with a withdrawal penalty, non-
negotiable instruments and instruments for which no market exists.
3. 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 1/2 of 1% of
the shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities.
4. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
5. 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 Fund 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.
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 Equity, Fixed Income and Balanced Funds may not:
1. Purchase securities on margin or effect short sales, except that each Fund
may: (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin in
connection with futures contracts and options on such contracts; (iii) make
short sales "against the box" or in compliance with the SEC's position
regarding the asset segregation requirements imposed by Section 18 of the
1940 Act.
2. Pledge, mortgage or hypothecate assets, except to secure temporary
borrowings permitted by the Fund's fundamental limitation on permitted
borrowings.
15
<PAGE>
3. Invest its assets in securities of any investment company, except: (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets or consolidations;
or (iii) as otherwise permitted by the 1940 Act.
THE ADVISOR
The Trust and LaSalle Street Capital Management, Ltd., (the "Advisor") have
entered into an advisory agreement (the "Advisory Agreement"). The Advisory
Agreement provides that the Advisor 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 any Fund (including amounts payable to the Advisor but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by the State of California, the Advisor 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 Funds by a majority of the outstanding shares of the Funds, on
not less than 30 days nor more than 60 days written notice to the Advisor, or by
the Advisor on 90 days written notice to the Trust.
For the fiscal years ended December 31, 1993, 1994 and 1995, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
Net Fees Paid Fees Waived
------------------------------------------------------------
Fund 1993 1994 1995 1993 1994 1995
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Treasury Money Market Fund $141,593 $233,796 $229,313 $113,195 $166,562 $184,294
- -------------------------------------------------------------------------------------------
Government Money Market $290,987 $337,352 $376,824 $ 729 $ 0 $ 0
Fund
- -------------------------------------------------------------------------------------------
Money Market Fund $617,047 $952,538 $998,172 $464,036 $605,293 $647,771
- -------------------------------------------------------------------------------------------
Tax-Exempt Money Market $140,974 $271,281 $362,794 $116,029 $206,848 $289,877
Fund
- -------------------------------------------------------------------------------------------
Fixed Income Fund $540,207 $549,880 $576,717 $107,641 $ 96,978 $100,132
- -------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Net Fees Paid Fees Waived
------------------------------------------------------------
Fund 1993 1994 1995 1993 1994 1995
===========================================================================================
<S> <C> <C> <C> <C> <C> <C>
Intermediate Government Fixed $445,774 $508,997 $419,323 $ 89,155 $ 92,677 $ 72,093
Income Fund
- -------------------------------------------------------------------------------------------
Tax-Exempt Fixed Income $295,988 $297,375 $249,245 $ 71,902 $ 75,458 $ 64,521
Fund
- -------------------------------------------------------------------------------------------
Global Fixed Income Fund $101,252 $129,517 $139,512 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------
Limited Volatility Fixed * * * * * *
Income Fund
- -------------------------------------------------------------------------------------------
Value Fund $253,140 $448,762 $788,698 $ 0 $ 103 $ 0
- -------------------------------------------------------------------------------------------
Growth Fund $668,520 $752,337 $685,748 $ 5,889 $ 2,930 $ 0
- -------------------------------------------------------------------------------------------
Small Cap Fund $204,163 $342,751 $163,166 $ 1,875 $ 0 $ 636
- -------------------------------------------------------------------------------------------
International Equity Fund $119,559 $353,164 $643,380 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------
TransEurope Fund * * * * * *
- -------------------------------------------------------------------------------------------
Asian Tigers Fund * $151,709 $211,903 * $ 0 $ 0
- -------------------------------------------------------------------------------------------
Latin America Equity Fund * * * * * *
Balanced Fund $610,153 $430,126 $454,111 $ 0 $ 0 $ 0
===========================================================================================
</TABLE>
* Not in operation during the period.
The Glass-Steagall Act restricts the securities activities of banks, such as
LaSalle National Trust, N.A., 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.
THE SUB-ADVISOR
LaSalle Street Capital Management, Ltd., on behalf of the Trust, and ABN AMRO-
NSM International Funds Management B.V. have entered into a sub-advisory
agreement (the "Sub-Advisory Agreement"). The Sub-Advisory Agreement provides
that the Sub-Advisor 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 or duties thereunder.
The Sub-Advisory Agreement provides that if, for any fiscal year, the Advisor is
required, under its Advisory Agreement with the Trust, to reduce its fees for
the Fund because of excess expenses, the Sub-Advisor shall reduce its fees by an
amount equal to one-half of the amount by which the Advisor reduced its fees.
In addition, from time to time, the Sub-Advisor may voluntarily agree to waive
or reduce some or all of the compensation to which it is entitled under the Sub-
Advisory Agreement.
17
<PAGE>
The continuance of the Sub-Advisory Agreement, after the first year, must be
specifically approved at least annually (a) by the vote of a majority of those
members of the Trust's Board of Trustees who are not interested persons of the
Trust, the Sub-Advisor, or the Advisor, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding shares of the Fund. Notwithstanding the foregoing, this
Agreement may be terminated as to the Fund at any time, without the payment of
any penalty, on sixty (60) days' written notice by the Advisor or by the Sub-
Advisor. The Sub-Advisory Agreement will immediately terminate in the event of
its assignment.
THE ADMINISTRATOR
The Administration Agreement provides that SEI Financial Management Corporation
(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 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, 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 years ended December 31, 1993, 1994, and 1995, the Funds paid the
following fees to the Administrator:
18
<PAGE>
<TABLE>
<CAPTION>
Net Fees Paid
Fund 1993 1994 1995
================================================================
<S> <C> <C> <C>
Treasury Money Market Fund $109,195 $158,779 $176,434
- ----------------------------------------------------------------
Government Money Market Fund $218,787 $253,014 $282,618
- ----------------------------------------------------------------
Money Market Fund $462,663 $605,293 $647,771
- ----------------------------------------------------------------
Tax-Exempt Money Market Fund $110,144 $187,532 $277,850
- ----------------------------------------------------------------
Fixed Income Fund $161,462 $150,882 $159,185
- ----------------------------------------------------------------
Intermediate Government Fixed $133,732 $142,816 $113,044
Income Fund
- ----------------------------------------------------------------
Tax-Exempt Fixed Income Fund $ 91,972 $ 90,263 $ 78,442
- ----------------------------------------------------------------
Global Fixed Income Fund $ 18,985 $ 14,686 $ 26,158
- ----------------------------------------------------------------
Limited Volatility Fixed Income * * *
Fund
- ----------------------------------------------------------------
Value Fund $ 47,464 $ 84,163 $147,881
- ----------------------------------------------------------------
Growth Fund $125,348 $141,613 $128,578
- ----------------------------------------------------------------
Small Cap Fund $ 38,632 $ 64,266 $ 30,713
- ----------------------------------------------------------------
International Equity Fund $ 17,934 $ 43,927 $ 96,507
- ----------------------------------------------------------------
TransEurope Fund * * *
- ----------------------------------------------------------------
Asian Tigers Fund * $ 6,456 $ 31,786
- ----------------------------------------------------------------
Latin America Equity Fund * * *
- ----------------------------------------------------------------
Balanced Fund $130,683 $ 92,170 $ 97,310
================================================================
</TABLE>
* Not in operation during the period.
THE DISTRIBUTOR
Rembrandt(R) Financial Services Company (the "Distributor"), a wholly-owned
subsidiary of SEI Financial Services Company ("SFS"), and the Trust are parties
to a distribution agreement (the "Distribution Agreement"). Unless otherwise
terminated as provided therein, the Distribution Agreement is renewable
annually. Notwithstanding the foregoing, the Distribution Agreement shall be
reviewed and ratified at least annually (i) by the 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
19
<PAGE>
any assignment, as defined in the 1940 Act, and is terminable with
respect to a particular Fund on not less than 60 days' notice by the Trustees,
by vote of a majority of the outstanding shares of such Fund or by the
Distributor.
The Trust has adopted a distribution plan for the Investor Class shares of each
Fund (the "Investor Class 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 Investor Class 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 the Distributor, as that term is
defined in the 1940 Act ("Disinterested Trustees"). The Investor Class Plan
requires that quarterly written reports of amounts spent under the Investor
Class 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 Investor
Class Plan may be terminated with respect to any Fund by a vote of a majority of
the Disinterested Trustees, or by a vote of a majority of the outstanding shares
of that Fund. The Investor Class 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 a Fund
requires the approval of that Fund's shareholders. All material amendments of
the Plan will require approval by a majority of the Trustees of the Trust and of
the Disinterested Trustees.
Pursuant to the Distribution Agreement and the Investor Class Plan, Investor
Class shares are subject to an ongoing distribution fee calculated on each
Fund's aggregate average daily net assets attributable to its Investor Class
shares.
12b-1 Fees
The Trust has adopted the Investor Class Distribution 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 Investor Class
Distribution Plan must be approved annually by a majority of the Trustees of the
Trust and by a majority of the Disinterested Trustees. The Investor Class
Distribution Plan requires that quarterly written reports of amounts spent under
the Investor Class Distribution Plan and the purposes of such expenditures be
furnished to and reviewed by the Trustees. The Investor Class Distribution Plan
may not be amended to increase materially the amount which may be spent
thereunder without approval by a majority of the outstanding shares of the
Trust. All material amendments of the Plan will require approval by a majority
of the Trustees of the Trust and of the Disinterested Trustees.
The Distribution Agreement and the Investor Class Distribution Plan provide for
payments to the Distributor at an annual rate of .25% of the Investor Class
average daily net assets. The Investor Class Plan is characterized as a
compensation plan and is not directly tied to expenses incurred by the
Distributor; the payments the Distributor receives during any year may therefore
be higher or lower than its actual expenses.
For the fiscal year ended December 31, 1995, the Funds paid the following
amounts pursuant to the Investor Class Plan:
<TABLE>
<CAPTION>
Distribution Amount Paid
Fund 1995
=====================================================================
<S> <C> <C>
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
Treasury Money Market Fund $17,018
Government Money Market Fund $ 7,789
Money Market Fund $ 3,171
Tax-Exempt Money Market Fund $ 9,775
Fixed Income Fund $ 1,260
Intermediate Government Fixed Income Fund $ 7,006
Tax-Exempt Fixed Income Fund $ 2,919
Global Fixed Income Fund $ 238
Limited Volatility Fixed Income Fund *
Value Fund $ 3,219
Growth Fund $ 6,260
Small Cap Fund $ 1,066
International Equity Fund $ 4,221
TransEurope Fund *
Asian Tigers Fund $ 2,109
Latin America Equity Fund *
Balanced Fund $10,008
=====================================================================
</TABLE>
* Not in operation during the period.
The distribution-related services that may be provided under the Investor Class
Plan include establishing and maintaining customer accounts and records;
aggregating and processing purchase and redemption requests from customers;
placing net purchase and redemption orders with the Distributor; automatically
investing customer account cash balances; providing periodic statements to
customers; arranging for wires; answering customer inquiries concerning their
investments; assisting customers in changing dividend options, account
designations, and addresses; performing sub-accounting functions; processing
dividend payments from the Trust on behalf of customers; and forwarding
shareholder communications from the Trust (such as proxies, shareholder reports,
and dividend distribution, and tax notices) to these customers with respect to
investments in the Trust. Certain state securities laws may require those
financial institutions providing such distribution services to register as
dealers pursuant to state law.
Except to the extent that the Administrator or Advisor benefitted through
increased fees from an increase in the net assets of the Trust which may have
resulted in part from the expenditures, no "interested person" of the Trust nor
any Trustee of the Trust who is not an interested person of the Trust had a
direct or indirect financial interest in the operation of the Investor Class
Plan or related agreements.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under the
laws governing business trusts in the Commonwealth of Massachusetts. The
Trustees and executive officers of the Trust and their principal occupations for
the last five years are set forth below.
ARNOLD F. BROOKSTONE - Trustee - 150 N. Michigan Avenue, Chicago, IL 60601.
Retired. Executive Vice President, Chief Financial Officer and Planning Officer
of Stone Container Corporation, 1991-1995. Senior Vice President, Chief
Financial Officer and Planning Officer of Stone Container Corporation since
1981. Prior thereto, Mr. Brookstone held various other executive positions with
Stone Container Corporation since 1973.
WILLIAM T. SIMPSON - Trustee - 1318 Navajo Court, Louisville, KY. Consultant,
PNC Bank of Kentucky (formerly Citizens Fidelity Bank and Trust company) (a
state chartered bank) since 1992. Senior Vice President, PNC Bank of Kentucky
1973-1992.
21
<PAGE>
ROBERT A. NESHER - Trustee* - 8 South Street, P.O. Box 89, Kennebunkport, ME
04046-0089. Retired since 1994. Director, Executive Vice President of SEI,
1986-1994. Director and Executive Vice President of the Administrator and
Distributor, 1981-1994.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of SEI and the Administrator and Distributor since
1983.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI, the Administrator and Distributor since 1994.
United States Securities and Exchange Commission, Division of Investment
Management, 1990-1994. Associate, McGuire, Woods, Battle and Boothe (law firm)
prior to 1990.
KATHRYN L. STANTON - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI, the Administrator and Distributor since 1994.
Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
JEFFREY A. COHEN - Controller, Assistant Secretary - CPA, Director,
International and Domestic Funds Accounting, SEI since 1991. Audit Manager,
Price Waterhouse prior to 1991.
RICHARD W. GRANT - Secretary - 2000 One Logan Square, Philadelphia, PA 19103,
Partner of Morgan, Lewis & Bockius LLP (law firm), Counsel to SEI, the Trust,
the Administrator and Distributor.
DAVID G. LEE - President and Chief Executive Officer - 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.
KEVIN P. ROBINS - Vice President, Assistant Secretary - Senior Vice President
and General Counsel of SEI, the Administrator and Distributor since 1994. Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1992. Associate, Morgan, Lewis & Bockius LLP (law firm), 1988-1992.
_______________
*Mr. Nesher is a Trustee who may be deemed to be an "interested person" of the
Trust as the term is defined in the 1940 Act.
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.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Administrator.
For the fiscal year ended December 31, 1995, the Trustees received the
following compensation:
22
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Total
Compensation
Pension from
Aggregate or Registrant
Compensation Retirement and Fund
From Benefits Estimated Complex Paid
Registrant Accrued Annual to Directors
for Fiscal as Part Benefits for Fiscal
Name of Person, Year Ended of Fund Upon Year Ended
Position 1995 Expenses Retirement 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arnold F. Brookstone, $11,500 N/A N/A $11,500 for
Trustee service on
one board
- --------------------------------------------------------------------------------
William T. Simpson, Trustee $11,500 N/A N/A $11,500 for
service on
one board
- --------------------------------------------------------------------------------
Robert A. Nesher,* Trustee $ 0 N/A N/A $0 for
service on
one board
================================================================================
</TABLE>
_______________
*Mr. Nesher is a Trustee who may be deemed an "interested person" of the Trust
as the term is defined in the 1940 Act.
COMPUTATION OF YIELD
From time to time the Treasury Money Market Fund, Government Money Market Fund,
Money Market Fund and Tax-Exempt Money Market Fund advertise their "current
yield" and "effective compound yield." Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"yield" of the Funds refers to the income generated by an investment in a Fund
over a seven-day period (which period will be stated in the advertisement).
This income is then "annualized." That is, the amount of income generated by
the investment during that week is assumed to be generated each week over a 52-
week period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in a Fund is assumed to be reinvested. The "effective yield" will be
slightly higher than the "yield" because of the compounding effect of this
assumed reinvestment.
The current yield of the Funds will be calculated daily based upon the seven
days ending on the date of calculation ("base period"). The yield is computed
by determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing Shareholder account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from Shareholder accounts, and dividing such net change by the value
of the account at the beginning of the some period to obtain the base period
return and multiplying the result by (365/7). Realized and unrealized gains and
losses are not included in the calculation of the yield. The effective yield of
the Funds is determined by computing the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a
balance
23
<PAGE>
of one share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Shareholder accounts, and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and then compounding the base period return by adding 1, raising
the sum to a power equal to 365 divided by 7, and subtracting 1 from the result,
according to the following formula: Effective Yield = (Base Period Return +
1)365/7) - 1. The current and the effective yields reflect the reinvestment of
net income earned daily on portfolio assets.
Tax Equivalent yields are computed by dividing that portion of a Fund's yield
which is tax-exempt by one minus a federal and/or state income tax rate and
adding the product to that portion, if any, of the Fund's yield that is not tax-
exempt.
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; and d = the maximum offering price per share on
the last day of the period.
The yield of these Funds fluctuates, and the annualization of a week's dividend
is not a representation by the Trust as to what an investment in the Fund will
actually yield in the future. Actual yields will depend on such variables as
asset quality, average asset maturity, the type of instruments the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.
For the seven-day period ended December 31, 1995, the end of the Trust's most
recent fiscal year, the Money Market Funds' current, effective and tax-
equivalent yields were as follows:
<TABLE>
<CAPTION>
====================================================================================
7-Day Tax-
7-Day 7-Day Tax- Equivalent
Effective Equivalent Effective
Fund Class 7-Day Yield Yield Yield Yield
=====================================================================================
<S> <C> <C> <C> <C> <C>
Treasury Money Trust 4.92% 5.04% N/A N/A
Market Fund ------------------------------------------------------------------
Investor 4.67% 4.78% N/A N/A
- -------------------------------------------------------------------------------------
Government Money Trust 5.31% 5.45% N/A N/A
Market Fund ------------------------------------------------------------------
Investor 5.06% 5.19% N/A N/A
- -------------------------------------------------------------------------------------
Money Market Fund Trust 5.38% 5.53% N/A N/A
------------------------------------------------------------------
Investor 5.13% 5.27% N/A N/A
- -------------------------------------------------------------------------------------
Tax-Exempt Money Trust 3.37% 3.43% 5.58% 5.68%
Market Fund ------------------------------------------------------------------
Investor 3.12% 3.17% 5.17% 5.25%
=====================================================================================
</TABLE>
24
<PAGE>
Yields are one basis upon which investors may compare the Funds with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.
The Value Fund, Growth Fund, Small Cap Fund, International Equity Fund,
TransEurope Fund, Asian Tigers Fund, Fixed Income Fund, Intermediate Government
Fixed Income Fund, Tax-Exempt Fixed Income Fund, Global Fixed Income Fund,
Limited Volatility Fixed Income Fund, Latin America Equity Fund, and Balanced
Fund may also advertise a 30-day yield figure. These figures will be based on
historical earnings and are not intended to indicate future performance. The
yield of these Funds refers to the annualized income generated by an investment
in the Funds 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.
For the thirty-day period ended December 31, 1995, the yield for the following
Funds were:
<TABLE>
<CAPTION>
==============================================================
Fund Class 30-Day Yield
==============================================================
<S> <C> <C>
Fixed Income Fund Trust 5.45%
-----------------------
Investor 4.96%
- --------------------------------------------------------------
Intermediate Government Fixed Income Trust 5.06%
Fund
-----------------------
Investor 4.60%
- --------------------------------------------------------------
Tax-Exempt Fixed Income Fund Trust 4.72%
-----------------------
Investor 4.27%
- --------------------------------------------------------------
Global Fixed Income Fund Trust 4.35%
-----------------------
Investor 3.86%
- --------------------------------------------------------------
Limited Volatility Fixed Income Fund Trust *
-----------------------
Investor *
- --------------------------------------------------------------
Value Fund Trust 2.53%
-----------------------
Investor 2.18%
- --------------------------------------------------------------
Growth Fund Trust 1.64%
-----------------------
Investor 1.36%
- --------------------------------------------------------------
Small Cap Fund Trust 0.13%
-----------------------
Investor 0%
- --------------------------------------------------------------
International Equity Fund Trust 0%
-----------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
==============================================================
Fund Class 30-Day Yield
==============================================================
Investor 0%
- --------------------------------------------------------------
<S> <C> <C>
TransEurope Fund Trust *
-----------------------
Investor *
- --------------------------------------------------------------
Asian Tigers Fund Trust 0%
-----------------------
Investor 0%
- --------------------------------------------------------------
Latin America Equity Fund Trust *
-----------------------
Investor *
- --------------------------------------------------------------
Balanced Fund Trust 3.18%
-----------------------
Investor 2.80%
==============================================================
</TABLE>
* Not in operation at the end of the period.
The 30-day tax equivalent yield for the Tax-Exempt Fixed Income Fund for the
period ended December 31, 1995, was 7.81%.
CALCULATION OF TOTAL RETURN
From time to time, the Value Fund, Growth Fund, Small Cap Fund, International
Equity Fund, TransEurope Fund, Asian Tigers Fund, Latin America Equity Fund,
Fixed Income Fund, Intermediate Government Fixed Income Fund, Tax-Exempt Fixed
Income Fund, Global Fixed Income Fund, Limited Volatility Fixed Income Fund and
Balanced Fund may advertise total return. The total return of a Fund refers to
the average compounded rate of return to a hypothetical investment for
designated time periods (including but not limited to, the period from which the
Fund commenced operations through the specified date), assuming that the entire
investment is redeemed at the end of each period. In particular, total return
will be calculated according to the following formula: P (1 + T)/n/ = ERV,
where P = a hypothetical initial payment of $1,000; T = average annual total
return: n number of years; and ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the designated time period as of the end
of such period.
Based on the foregoing, the average annual total return for the Funds from
commencement of operations through December 31, 1995, and for the one year
period ended December 31, 1995, were as follows:
<TABLE>
<CAPTION>
==============================================================================
Average Annual Total
Return
-----------------------------
Since
Fund Class One Year Inception
<S> <C> <C> <C>
==============================================================================
</TABLE>
26
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------
Treasury Money Market Fund Investor-Net Asset 5.02% 3.64%
Value/1/
---------------------------------------------------
Trust/2/ 5.28% 3.81%
- ------------------------------------------------------------------------------
Government Money Market Investor-Net Asset 5.33% 4.03%
Fund Value/3/
---------------------------------------------------
Trust/2/ 5.59% 4.16%
- ------------------------------------------------------------------------------
Money Market Fund Investor-Net Asset 5.38% 4.05%
Value/4/
---------------------------------------------------
Trust/2/ 5.64% 4.21%
- ------------------------------------------------------------------------------
Tax-Exempt Money Market Investor-Net Asset 3.24% 2.44%
Fund Value/5/
---------------------------------------------------
Trust/2/ 3.49% 2.66%
- ------------------------------------------------------------------------------
Fixed Income Fund Investor-Offering 12.10% 4.74%
Price/6/
---------------------------------------------------
Investor-Net Asset 17.40% 6.45%
Value/6/
---------------------------------------------------
Trust/2/ 17.75% 7.57%
- ------------------------------------------------------------------------------
Intermediate Government Investor-Offering 8.47% 2.79%
Fixed Income Fund Price/7/
---------------------------------------------------
Investor-Net Asset 13.59% 4.54%
Value/7/
---------------------------------------------------
Trust/2/ 13.86% 5.49%
- ------------------------------------------------------------------------------
Tax-Exempt Fixed Income Investor-Offering 10.18% 3.11%
Fund Price/8/
---------------------------------------------------
Investor-Net Asset 15.43% 4.83%
Value/8/
---------------------------------------------------
Trust/2/ 15.67% 6.11%
- ------------------------------------------------------------------------------
Global Fixed Income Fund Investor-Offering 15.23% 6.27%
Price/9/
---------------------------------------------------
Investor-Net Asset 20.68% 8.13%
Value/9/
---------------------------------------------------
Trust/10/ 20.99% 11.44%
- ------------------------------------------------------------------------------
Limited Volatility Fixed Investor-Offering * *
Income Fund Price
---------------------------------------------------
Investor-Net Asset * *
Value
---------------------------------------------------
Trust * *
- ------------------------------------------------------------------------------
Balanced Fund Investor-Offering 16.04% 5.80%
Price/8/
---------------------------------------------------
Investor-Net Asset 21.52% 7.53%
Value/8/
---------------------------------------------------
Trust/2/ 21.85% 8.51%
- ------------------------------------------------------------------------------
Value Fund Investor-Offering 25.82% 9.26%
Price/11/
---------------------------------------------------
Investor-Net Asset 31.72% 11.09%
Value/11/
---------------------------------------------------
Trust/2/ 32.02% 12.13%
- ------------------------------------------------------------------------------
Growth Fund Investor-Offering 25.37% 7.51%
Price/12/
---------------------------------------------------
</TABLE>
27
<PAGE>
<TABLE>
<S> <C> <C> <C>
---------------------------------------------------
Investor-Net Asset 31.29% 9.27%
Value/12/
---------------------------------------------------
Trust/2/ 31.60% 10.66%
- ------------------------------------------------------------------------------
Small Cap Fund Investor-Offering 25.82% 9.00%
Price/7/
---------------------------------------------------
Investor-Net Asset 31.73% 10.87%
Value/7/
---------------------------------------------------
Trust/2/ 32.13% 8.41%
- ------------------------------------------------------------------------------
International Equity Fund Investor-Offering 8.68% 9.89%
Price/7/
---------------------------------------------------
Investor-Net Asset 13.79% 11.78%
Value/7/
---------------------------------------------------
Trust/2/ 14.03% 14.21%
- ------------------------------------------------------------------------------
Asian Tigers Fund Investor-Offering 6.14% 0.34%
Price/13/
---------------------------------------------------
Investor-Net Asset 11.18% 2.71%
Value/13/
---------------------------------------------------
Trust/14/ 11.61% 2.97%
- ------------------------------------------------------------------------------
Latin America Equity Fund Investor-Offering * *
Price
---------------------------------------------------
Investor-Net Asset * *
Value
---------------------------------------------------
Trust * *
- ------------------------------------------------------------------------------
TransEurope Fund Investor-Offering * *
Price
---------------------------------------------------
Investor-Net Asset * *
Value
---------------------------------------------------
Trust * *
==============================================================================
</TABLE>
* Not in operation during
the period.
- ---------------
/1/ Commenced operations 3/25/93 /8/ Commenced operations 3/9/93
/2/ Commenced operations 1/4/93 /9/ Commenced operations 4/26/93
/3/ Commenced operations 4/22/93 /10/ Commenced operations 2/7/93
/4/ Commenced operations 3/31/93 /11/ Commenced operations 3/26/93
/5/ Commenced operations 4/13/93 /12/ Commenced operations 3/8/93
/6/ Commenced operations 3/12/93 /13/ Commenced operations 1/12/94
/7/ Commenced operations 4/12/93 /14/ Commenced operations 1/3/94
PURCHASE AND REDEMPTION OF SHARES
Each Fund 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, an investor may incur brokerage costs in converting such
securities to cash. State securities laws may require banks and financial
institutions purchasing shares for their customers to register as dealers
pursuant to state laws.
28
<PAGE>
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 Funds 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
Funds 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 Fund'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 Fund for any period during
which the New York Stock Exchange, the Advisor, the Administrator and/or the
Custodian are not open for business. Currently, the following holidays are
observed by the Trust: New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
In calculating the sales charge rates applicable to purchases of shares of the
Global Fixed Income, Fixed Income, Intermediate Government Fixed Income, Tax-
Exempt Fixed Income, Limited Volatility Fixed Income, Balanced, Growth, Small
Cap, International Equity, TransEurope and Asian Tigers Funds, customers of the
following broker-dealer which have entered into an agreement with the
Distributor are entitled to the following percentage-based discount from the
otherwise applicable sales charge:
Name of Group Percentage of Waiver Date Offer Starts
Jack White & Company 100% October 15, 1995
LETTER OF INTENT
Reduced sales charges are applicable to the aggregate amount of purchases made
by any such purchaser previously enumerated within a 13-month period pursuant to
a written Letter of Intent (the "Letter") provided by the Transfer Agent, DST
Systems, Inc., and not legally binding on the signer or a Fund which provides
for the holding in escrow by the Transfer Agent of 5% of the total amount
intended to be purchased until such purchase is completed within the 13-month
period. A Letter may be dated to include shares purchased up to 90 days prior to
the date the Letter is signed. The 13-month period begins on the date of the
earliest purchase. If the intended investment is not completed, the purchaser
will be asked to pay an amount equal to the difference between the sales charge
on the shares purchased at the reduced rate and the sales charge otherwise
applicable to the total shares purchased. If such payment is not made within 20
days following the expiration of the 13-month period, the Transfer Agent will
surrender an appropriate number of the escrowed shares for redemption in order
to realize the difference. Such purchasers may include the value (at offering
price at the level designated in their Letter) of all their shares of the Fund
and of any other
29
<PAGE>
Fund previously purchased and still held as of the date of their Letter toward
the completion of such Letter.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Treasury Money Market, Government Money
Market, Money Market and Tax-Exempt Money Market Fund is calculated by adding
the value of securities and other assets, subtracting liabilities and dividing
by the total number of outstanding shares. Securities will be valued by the
amortized cost method which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which a security's value, as determined by this method, is higher or
lower than the price the Fund would receive if it sold the instrument. During
periods of declining interest rates, the daily yield of the Fund may tend to be
higher than a like computation made by a company with identical investments
utilizing a method of valuation based upon market prices and estimates of market
prices for all of its portfolio securities. Thus, if the use of amortized cost
by the Fund resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in the Fund would be able to obtain a somewhat higher yield
than would result from investment in a company utilizing solely market values,
and existing investors in the Fund would experience a lower yield. The converse
would apply in a period of rising interest rates.
A Fund's use of amortized cost and the maintenance of the Fund's net asset value
at $1.00 are permitted by Rule 2a-7 under the 1940 Act, provided that certain
conditions are met. Rule 2a-7 also requires the Trustees to establish
procedures which are reasonably designed to stabilize the net asset value per
share at $1.00 for the Funds. Such procedures include the determination of the
extent of deviation, if any, of the Funds' current net asset value per share
calculated using available market quotations from the Funds amortized cost price
per share at such intervals as the Trustees deem appropriate and reasonable in
light of market conditions and periodic reviews of the amount of the deviation
and the methods used to calculate such deviation. In the event that such
deviation exceeds 1/2 of 1%, the Trustees are required to consider promptly what
action, if any, should be initiated, and, if the Trustees believe that the
extent of any deviation may result in material dilution or other unfair results
to Shareholders, the Trustees are required to take such corrective action as
they deem appropriate to eliminate or reduce such dilution or unfair results to
the extent reasonably practicable. Such actions may include the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming shares in
kind; or establishing a net asset value per share by using available market
quotations. In addition, if the Funds incur a significant loss or liability,
the Trustees have the authority to reduce pro rata the number of shares of the
--- ----
Funds in each Shareholder's account and to offset each Shareholder's pro rata
--- ----
portion of such loss or liability from the Shareholder's accrued but unpaid
dividends or from future dividends while each other Fund must annually
distribute at least 90% of its investment company taxable income.
30
<PAGE>
The securities of the Equity, Balanced and Fixed Income Funds are valued by the
Administrator pursuant to valuations provided by an independent pricing service.
The pricing service relies primarily on prices of actual market transactions as
well as trader quotations. However, the 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 the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees. Although
the methodology and procedures are identical, the net asset value per share of
Trust Class and Investor Class shares within the Funds may differ because of the
distribution expenses charged to Investor Class shares.
TAXES
The following is only a summary of certain income tax considerations generally
affecting a Fund and its Shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations, including their state and local
income tax liabilities.
Federal Income Tax
All Funds
Each Fund intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code").
In order to qualify for treatment as a RIC under the Code, each Fund must
distribute annually to its Shareholders at least the sum of 90% of its net
interest income excludable from gross income plus 90% of its investment company
taxable income (generally, net investment income plus net short-term capital
gain)(the "Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (a) at least 90% of
the Fund's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or certain other income; (b) the Fund
must derive less than 30% of its gross income each taxable year from the sale or
other disposition of stocks, securities, options, futures or forward contracts
(other than options futures or forward contracts on foreign currencies), or
foreign currencies (or options, futures or forward contracts on foreign
currencies) that are not directly related to the company's business of investing
in stock or securities, held for less than three months; and (c) diversify its
holdings so that; (i) at the close of each quarter of the Fund's taxable year,
at least 50% of the value of its total assets must be represented by cash and
cash items, U.S. Government securities, securities of other RICs and other
securities, with such other securities limited, in respect to any one issuer, to
an amount that does not exceed 5% of the value of the Fund's assets
31
<PAGE>
and that does not represent more than 10% of the outstanding voting securities
of such issuer; and (ii) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer or of two or more issuers which are engaged in the same, similar or
related trades or businesses if the Fund owns at least 20% of the voting power
of such issuers.
Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital gain
(the excess of net long-term capital gain over net short-term capital loss), a
Fund will be subject to a nondeductible 4% excise tax to the extent it fails to
distribute by the end of any calendar year 98% of its ordinary income for that
year and 98% of its capital gain net income for the one-year period ending on
October 31 of that year, plus certain other amounts.
Interest on indebtedness incurred by a Shareholder in order to purchase or carry
shares in a tax-exempt fund is generally not deductible for federal income tax
purposes to the extent that the Fund distributes exempt-interest dividends
during the taxable year. If a Shareholder receives exempt-interest dividends
with respect to any share of these Funds and if such share is held by the
Shareholder for six months or less, then any loss on the sale or exchange of
such share will be disallowed to the extent of the amount of exempt-interest
dividends. In addition, the Code may require a Shareholder who receives exempt-
interest dividends to treat as taxable income a portion of certain non-taxable
social security and railroad retirement benefit payments. Furthermore, entities
or persons who are "substantial users" (or persons related to "substantial
users") of facilities financed by "private activity bonds" or certain industrial
development bonds should consult their tax advisers before purchasing shares in
the Tax-Exempt Funds. For these purposes, the term "substantial user" is
defined generally to include a "non-exempt person" who regularly uses in trade
or business a part of a facility financed from the proceeds of such bonds.
Moreover, some or all of dividends received from the Tax-Exempt Funds may be a
specific preference item, or a component of an adjustment item, for purposes of
the federal individual and corporate alternative minimum taxes. The receipt of
these dividends and distributions also may affect a corporate shareholder's
federal "environmental" tax liability, a foreign corporate shareholder's federal
"branch profits" tax liability, and a Subchapter S corporate shareholder's
federal "excess net passive income" tax liability.
Shareholders of the Tax-Exempt Funds should consult their tax advisers to
determine whether any portion of the income dividends received from the Funds is
considered tax exempt in their particular status.
Issuers of bonds purchased by the Tax-Exempt Funds (or the beneficiary of such
bonds) may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied subsequent to the issuance of such bonds. Shareholders should be
aware that exempt-interest dividends may become subject to federal income
taxation retroactively to the date of issuance of the bonds to which such
dividends
32
<PAGE>
are attributable if such representations are determined to have been inaccurate
or if the issuers (or the beneficiary) of the bonds fail to comply with certain
covenants made at that time.
If for any taxable year a Fund does not qualify as a RIC, all of its taxable
income will be subject to tax at regular corporate rates without any deduction
for distributions to Shareholders. In such case, distributions (including
capital gains distributions) will be taxable as ordinary dividends to the extent
of the Fund's current and accumulated earnings and profits. Such distributions
generally will be eligible for the dividends received deduction in the case of
corporate Shareholders.
A dividends received deduction is available to corporations that receive
dividends from domestic corporations. Dividends paid by an equity fund will be
eligible for the dividends received deduction for corporate shareholders to the
extent they are derived from dividends from domestic corporations and to the
extent that the respective security has been held for at least three months.
Equity Fund Shareholders will be advised each year of the portion of ordinary
income dividends eligible for the deduction.
Dividends received from other funds, e.g., money market or fixed income funds,
will not be eligible for the dividends received deduction. Individual
shareholders are not entitled to the dividends received deduction regardless of
which fund paid the dividend.
State Taxes
A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Funds
to Shareholders and the ownership of shares may be subject to state and local
taxes.
Foreign Taxes
Dividends and interest received by a Fund may be subject to income, withholding
or other taxes imposed by foreign countries and U.S. possessions that would
reduce the yield on the Fund's securities. Tax conventions between certain
countries and the United States may reduce or eliminate these taxes. Foreign
countries generally do not impose taxes on capital gains with respect to
investments by foreign investors. If the Fund meets the Distribution
Requirement and if more than 50% of the value of a Fund's total assets at the
close of its taxable year consists of securities of foreign corporations, the
Fund will be eligible to file an election with the Internal Revenue Service that
will enable Shareholders, in effect, to receive the benefit of the foreign tax
credit with respect to any foreign and U.S. possessions income taxes paid by the
Fund. Pursuant to the election, a Fund will treat those taxes as dividends paid
to its Shareholders. Each Shareholder will be required to include a
proportionate share of those taxes in gross income as income received from a
foreign source and must treat the amount so included as if the Shareholder had
paid the foreign tax directly. The Shareholder may then either deduct the taxes
deemed paid by him or her in computing his or her taxable income or,
alternatively, use the foregoing information in calculating the foreign tax
credit against the Shareholder's federal
33
<PAGE>
income tax. If the Fund makes the election, it will report annually to its
Shareholders the respective amounts per share of the Fund's income from sources
within, and taxes paid to, foreign countries and U.S. possessions.
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 Advisor is responsible for placing the orders
to execute transactions for the Fund. 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 Advisor 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 Funds invest 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 Advisor 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 Advisor 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 Advisor, brokerage business to
brokers or dealers who provide
34
<PAGE>
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 Advisor 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 (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.
The Advisor 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 Fund may obtain, it is the opinion
of the Advisor 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
Funds 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 an affiliate of the Advisor or Sub-Advisor, which are
registered broker-dealers, for commissions 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 Advisor or Sub-Advisor is
35
<PAGE>
permitted to receive and retain compensation for effecting portfolio
transactions for the Trust on an exchange. These rules further require that
commissions paid to the Distributor 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-dealers' 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 December 31, 1995, the Funds paid the following
brokerage fees:
<TABLE>
<CAPTION>
====================================================================================================================================
Total
Commissions Paid Total $ Total $
Total $ Amount to SFS in Amount of Amount of
Total $ of Brokerage % of Total of Connection with Brokered Brokerage
Amount of Commissions Paid Brokerage Repurchase Transactions Commissions
Brokerage to Affiliates in Commissions Paid Agreement for Research Paid for
Fund Commissions 1995 to Affiliates in Transactions in in 1995 Research
Paid in 1995 1995 1995 in 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Intermediate Government $ 0 $ 0 0% $ 1,862 $ 0 $ 0
Fixed Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fixed Income $ 0 $ 0 0% $ 0 $ 0 $ 0
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $ 0 $ 0 0% $ 1,358 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Global Fixed Income Fund $ 0 $ 0 0% $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Fixed * * * * * *
Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Value Fund $125,283 $ 2,994 2% $ 3,876 $ 73,554,157 $ 92,720
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund $117,644 $ 10,080 9% $ 1,543 $113,989,350 $ 99,032
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Fund $ 73,502 $ 0 0% $ 629 $ 43,694,849 $ 48,910
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $169,608 $ 41,731 25% $ 0 $ 39,106,020 $ 167,785
- ------------------------------------------------------------------------------------------------------------------------------------
Asian Tigers Fund $102,905 $ 26,351 26% $ 0 $ 11,863,960 $ 102,906
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Total
Commissions Paid Total $ Total $
Total $ Amount to SFS in Amount of Amount of
Total $ of Brokerage % of Total of Connection with Brokered Brokerage
Amount of Commissions Paid Brokerage Repurchase Transactions Commissions
Brokerage to Affiliates in Commissions Paid Agreement for Research Paid for
Commissions 1995 to Affiliates in Transactions in in 1995 Research
Fund Paid in 1995 1995 1995 in 1995
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
TransEurope Fund * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Latin America Equity Fund * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 87,467 $ 732 1% $ 2,678 $74,370,966 $74,696
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market $ 0 $ 0 0% $ 0 $ 0 $ 0
Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Fund $ 0 $ 0 0% $59,095 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury Money Market Fund $ 0 $ 0 0% $ 0 $ 0 $ 0
- ------------------------------------------------------------------------------------------------------------------------------------
Government Money Market $ 0 $ 0 0% $27,358 $ 0 $ 0
Fund
====================================================================================================================================
</TABLE>
* Not in operation during the period.
For the fiscal years ended December 31, 1993 and 1994, the Funds paid the
following brokerage fees:
<TABLE>
<CAPTION>
=======================================================================================================================
Total $
Total $ Amount Amount of
of Brokerage Brokerage
Total $ Amount Total $ Amount Commissions Commissions
of Brokerage of Brokerage Paid to Paid to
Commissions Paid Commissions Affiliates in Affiliates in
Fund in 1993 Paid in 1994 1993 1994
=======================================================================================================================
<S> <C> <C> <C> <C>
Intermediate Government Fixed Income Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fixed Income Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Global Fixed Income Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
37
<PAGE>
<TABLE>
<CAPTION>
=======================================================================================================================
Total $
Total $ Amount Amount of
of Brokerage Brokerage
Total $ Amount Total $ Amount Commissions Commissions
of Brokerage of Brokerage Paid to Paid to
Commissions Paid Commissions Affiliates in Affiliates in
Fund in 1993 Paid in 1994 1993 1994
=======================================================================================================================
<S> <C> <C> <C> <C>
Limited Volatility Fixed Income Fund * * * *
- -----------------------------------------------------------------------------------------------------------------------
Value Fund $ 87,641 $ 78,580 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Growth Fund $275,010 $155,975 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Small Cap Fund $ 50,586 $ 35,240 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
International Equity Fund $ 95,564 $113,705 $47,238 $53,647
- -----------------------------------------------------------------------------------------------------------------------
Asian Tigers Fund * $160,589 * $55,527
- -----------------------------------------------------------------------------------------------------------------------
TransEurope Fund * * * *
- -----------------------------------------------------------------------------------------------------------------------
Latin America Equity Fund * * * *
- -----------------------------------------------------------------------------------------------------------------------
Balanced Fund $104,386 $ 89,161 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Money Market Fund $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------------------
Treasury Money Market Fund $ 0 $ 0 $ 0 $ 0
Government Money Market Fund $ 0 $ 0 $ 0 $ 0
=======================================================================================================================
</TABLE>
* Not in operation during the period.
The broker-dealers who executed transactions on behalf of the International
Equity Fund and who are affiliates of the Fund's Advisor and Sub-Advisor are
brokers in the ABN AMRO International brokerage network.
Except for the Intermediate Government Fixed Income, Tax Exempt Fixed Income and
Global Fixed Income Funds, it is expected that the portfolio turnover rate will
normally not exceed 100% for any Fund. A portfolio turnover rate would exceed
100% if all of its securities, exclusive of U.S. Government securities and other
securities whose maturities at the time of acquisition are one year or less are
replaced in the period of one year. Turnover rates may vary from year to year
and may be affected by cash requirements for redemptions and by requirements
which enable a Fund to receive favorable tax treatment.
38
<PAGE>
For the fiscal years ended December 31, 1994 and 1995, the portfolio turnover
rate for each of the Funds was:
39
<PAGE>
<TABLE>
<CAPTION>
======================================================================
Turnover Rate
Fund 1994 1995
- ----------------------------------------------------------------------
<S> <C> <C>
Value Fund 38% 37%
- ----------------------------------------------------------------------
Growth Fund 68% 71%
- ----------------------------------------------------------------------
Small Cap Fund 43% 142%
- ----------------------------------------------------------------------
International Equity Fund 6% 11%
- ----------------------------------------------------------------------
TransEurope Fund * *
- ----------------------------------------------------------------------
Asian Tigers Fund 13% 28%
- ----------------------------------------------------------------------
Latin America Equity Fund * *
- ----------------------------------------------------------------------
Fixed Income Fund 126% 59%
- ----------------------------------------------------------------------
Intermediate Government Fixed Income Fund 124% 115%
- ----------------------------------------------------------------------
Tax-Exempt Fixed Income Fund 145% 129%
- ----------------------------------------------------------------------
Global Fixed Income Fund 138% 105%
- ----------------------------------------------------------------------
Limited Volatility Fixed Income Fund * *
- ----------------------------------------------------------------------
Balanced Fund 85% 85%
======================================================================
</TABLE>
* Not in operation during the period.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of the Funds each of which represents an equal proportionate interest in
that Fund with each other share. Shares are entitled upon liquidation to a pro
---
rata share in the net assets of the Funds, and Shareholders have no preemptive
- ----
rights. The Declaration of Trust provides that the Trustees of the Trust may
create additional series of shares. 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. Share 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, under certain
circumstances, could be held
40
<PAGE>
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 Trust's 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.
5% AND 25% SHAREHOLDERS
As of February 15, 1996, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or 25%
or more of the shares of the Funds. Persons who owned of record or beneficially
more than 25% of a Fund's outstanding shares may be deemed to control the Fund
within the meaning of the 1940 Act. The Trust believes that most of the shares
of the Trust Class shares of the Funds were held for the record owner's
fiduciary, agency or custodial customers.
TREASURY MONEY MARKET FUND
LaSalle National Trust, N.A. 93.63%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690
GOVERNMENT MONEY MARKET FUND
LaSalle National Trust, N.A. 97.02%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
MONEY MARKET FUND
LaSalle National Trust, N.A. 99.68%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690
TAX-EXEMPT MONEY MARKET FUND
LaSalle National Trust, N.A. 98.63%
Attn: Income Collection
P.O. Box 1443
41
<PAGE>
Chicago, IL 60690
FIXED INCOME FUND
LaSalle National Trust, N.A. 99.45%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
LaSalle National Trust, N.A. 96.86%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
TAX-EXEMPT FIXED INCOME FUND
LaSalle National Trust, N.A. 97.81%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
GLOBAL FIXED INCOME FUND
LaSalle National Trust, N.A. 99.21%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
VALUE FUND
LaSalle National Trust, N.A. 98.84%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
GROWTH FUND
LaSalle National Trust, N.A. 96.80%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
42
<PAGE>
This page is intentionally left blank
43
<PAGE>
SMALL CAP FUND
LaSalle National Trust, N.A. 97.80%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
INTERNATIONAL EQUITY FUND
LaSalle National Trust, N.A. 98.04%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
ASIAN TIGERS FUND
LaSalle National Trust, N.A. 95.38%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
BALANCED FUND
LaSalle National Trust, N.A. 92.78%
Attn: Security Movement
P.O. Box 1443
Chicago, IL 60690
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
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 willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
44
<PAGE>
EXPERTS
The financial statements of Rembrandt Funds(R) as of December 31, 1995 and for
each of the periods presented therein, appearing in this Statement of Additional
Information have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report therein appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
45
<PAGE>
APPENDIX
Description of Commercial Paper Ratings
The following descriptions of commercial paper ratings have been published by
Standard & Poor's Corporation ("S&P"), Moody's Investors Service, Inc.
("Moody's"), Fitch Investors Service, Inc. ("Fitch"), Duff & Phelps, Inc.
("Duff") and IBCA Limited and IBCA, Inc. (together, "IBCA").
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 "extremely strong safety characteristics." Those rated A-1,
the highest rating category, reflect a "satisfactory" degree of safety regarding
timely payment. Those rated A-2, the second highest rating category, reflect a
safety regarding timely payment but not as high as A-1.
Commercial paper issues rated Prime-1 or Prime-2 by Moody's are judged by
Moody's to be of "superior" quality and "strong" quality respectively on the
basis of relative repayment capacity.
The rating F-1+ (Exceptionally Strong) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch. Paper rated Fitch-1+ is regarded as
having the strongest degree of assurance for timely payment. Paper rated F-1
(Very Strong) reflects an assurance of timely payment only slightly less in
degree than paper rated F-1+ the strongest issues.
The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by good fundamental
protection factors. Risk factors are minor. Duff has incorporated gradations
of 1+ and 1- to assist investors in recognizing quality differences within this
highest tier. Paper rated Duff-1+ has the highest certainty of timely payment,
with outstanding short-term liquidity and safety just below risk-free U.S.
Treasury short-term obligations. Paper rated Duff-1- has high certainty of
timely payment with strong liquidity factors which are supported by good
fundamental protection factors. Risk factors are very small. Paper rated Duff-
2 is regarded as having good certainty of timely payment, good access to capital
markets (although ongoing funding may enlarge total financing requirements) and
sound liquidity factors and company fundamentals. Risk factors are small.
The designation A1, the highest rating category established by 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. Obligations rated A2, the second highest rating category, are
supported by a satisfactory capacity for timely repayment, although such
capacity may be susceptible to adverse changes in business, economic or
financial conditions.
A-1
<PAGE>
Description of Corporate Bond Ratings
The following descriptions of corporate bond ratings have been published by S&P,
Moody's, Fitch, Duff and IBCA.
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 differs 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.
Bonds which are rated BBB 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 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 edged". 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 risk 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.
Debt rated Baa 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.
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
A-2
<PAGE>
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. Fitch
uses plus and minus signs to indicate the relative position of a credit within
the AA rating category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
Fitch uses plus and minus signs to indicate the relative position of a credit
within the AA rating category. Bonds rated AAA by Fitch are considered to be
investment grade and of the highest credit quality. The obligor has an
exceptionally strong ability to pay interest and repay principal, which is
unlikely to be affected by reasonably foreseeable events. Bonds rated AA by
Fitch are considered to be investment grade of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated AAA. Because bonds rated in the AAA and AA
categories are not significantly vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.
Bonds rated Duff-1 are judged by Duff to be of the highest credit quality with
negligible risk factors; only slightly more than for risk-free U.S. Treasury
debt. Bonds rated AA by Duff are judged to be of high credit quality.
Protection factors are strong. Risk is modest but may vary slightly from time
to time because of economic conditions.
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.
A-3
<PAGE>
Statement of Net Assets
TREASURY MONEY MARKET FUND
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
U.S. Treasury Obligations 95%
Cash Equivalents 5%
Description Face Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Treasury Obligations -95%
U.S. Treasury Bills
5.300%, 01/04/96 $ 3,000 $ 2,999
5.360%, 01/11/96 4,000 3,994
5.250%, 01/18/96 5,000 4,988
5.360%, 01/25/96 14,066 14,020
5.350%, 02/08/96 15,000 14,924
5.630%, 02/15/96 5,000 4,967
4.910%, 03/07/96 5,000 4,955
4.900%, 03/14/96 2,000 1,980
U.S. Treasury Notes
4.000%, 01/31/96 13,500 13,484
7.875%, 02/15/96 3,000 3,007
4.625%, 02/15/96 3,000 2,997
7.500%, 02/29/96 3,000 3,009
4.625%, 02/29/96 11,000 10,984
9.375%, 04/15/96 9,000 9,100
7.625%, 04/30/96 5,000 5,033
5.500%, 04/30/96 9,000 9,007
4.250%, 05/15/96 3,000 2,986
-------
Total U.S. Treasury Obligations
(Cost $112,434,000) 112,434
Description Shares (000) Value (000)
- --------------------------------------------------------------------------------
Cash Equivalent - 4.7%
SEI Daily Income Trust Treasury $ 5,564 $ 5,564
II Portfolio --------
5.120%, 01/08/96
Total Cash Equivalent
(Cost $5,564,000 5,564
Total Investments - 99.7%
(Cost $117,998,000) 117,998
--------
Other Assets and Liabilities - 0.3%
Other Assets and Liabilities, Net 408
--------
Net Assets:
Portfolio Shares of the Trust Class (unlimited
authorization - no par value) based on
110,466,966 outstanding shares of beneficial
interest 110,467
Portfolio shares of the Investor Class (unlimited
authorization - no par value) based on 7,930,873
outstanding shares of beneficial interest 7,931
Accumulated net realized gain on investments 8
--------
Total Net Assets - 100.0% $118,406
========
Net Asset Value, Offering, and Redemption Price
Per Share - Trust Class $ 1.00
========
Net Asset Value, Offering, and Redemption Price
Per Share - Investor Class $ 1.00
========
The accompanying notes are an integral part of the financial statements.
22
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Net Assets
GOVERNMENT MONEY MARKET FUND
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
U.S. Government Agency Obligations 60%
Repurchase Agreements 40%
Description Face
Amount(000) Value (000)
- -------------------------------------------------------------------------------
U.S. Government Agency Obligations - 60.5%
FFCB
5.700%, 01/02/96 $ 5,000 $ 5,000
5.630%, 03/01/96 10,000 10,000
FHLB
7.310%, 01/04/96 275 275
7.750%, 04/25/96 1,000 1,006
FHLB Discount Notes
5.560%, 01/22/96 3,000 2,990
5.710%, 01/23/96 4,000 3,986
5.570%, 02/12/96 5,000 4,968
5.570%, 02/21/96 5,000 4,961
5.620%, 02/27/96 7,580 7,514
5.630%, 02/29/96 13,000 12,883
5.390%, 03/19/96 13,410 13,253
FHLMC Discount Notes
5.650%, 02/08/96 8,000 7,953
5.560%, 02/20/96 5,000 4,961
5.620%, 02/29/96 4,000 3,964
Description Face
Amount(000) Value (000)
- -------------------------------------------------------------------------------
FNMA
5.660%, 03/15/96 4,000 4,000
FNMA Discount Notes
5.650%, 02/15/96 7,140 7,090
5.570%, 02/16/96 5,000 4,964
5.620%, 03/04/96 3,220 3,189
5.490%, 03/11/96 5,000 4,947
5.380%, 04/12/96 5,000 4,924
5.230%, 09/05/96 5,000 4,820
5.200%, 10/24/96 5,000 4,785
SLMA (A)
5.400%, 01/30/96 5,000 5,001
-------
Total U.S. Government Agency Obligations
(Cost $127,434,000) 127,434
-------
Repurchase Agreements - 39.8%
Lehman Brothers
5.93%, dated 12/29/95, matures 01/02/96,
repurchase price
$37,438,000 (collateralized by FHLMC Gold
Notes, par value $42,440,000, 6.50%, 07/01/09,
market value: $38,160,000 37,413 37,413
-------
Normura Securities
5.93%, dated 12/29/95, matures 01/02/96,
repurchase price
$46,424,000 (collateralized by various FNMA
obligations, total par
value $129,559,479,0.00% - 11.088%, 06/25/21 -
06/01/24; and FHLMC/GNMA obligation, par
value $1,000,000, 5.00%, 04/25/21, total market
value: $47,322,000) 46,394 46,394
-------
Total Repurchase Agreements
(Cost $83,807,000) 83,807
-------
Total Investments - 100.3%
(Cost $211,241,000) 211,241
-------
Other Assets and Liabilities - (0.3%)
Other Assets and Liabilities, Net (624)
-------
23
<PAGE>
Statement of Net Assets
Description Value (000)
- --------------------------------------------------------------------------------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization - no par value) based on
207,584,587 outstanding shares of beneficial interest $207,585
Portfolio shares of the Investor Class
(unlimited authorization - no par value) based
on 3,002,229 oustanding shares of beneficial interest 3,002
Accumulated net realized gain on investments 30
--------
Total Net Assets - 100.0% $210,617
========
Net Asset Value, Offering, and Redemption Price Per
Share - Trust Class $ 1.00
========
Net Asset Value, Offering, and Redemption Price Per
Share - Investor Class $ 1.00
========
(A) Variable rate interest. The rate reflected on the Statement of Net Assets
is the rate in effect on December 31, 1995.
FFCB - Federal Farm Credit Bank
FHLB - Federal Home Loan Bank
FHLMC - Federal Home Loan Mortgage Corporation
FNMA - Federal National Mortgage Association
GNMA - Government National Mortgage Association
SLMA - Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Net Assets
Money Market Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
<TABLE>
<S> <C>
Certificates of Deposit 41%
Commercial Paper 19%
U.S. Government Agency Obligations 30%
Corporate Bonds 1%
Repurchase Agreements 9%
</TABLE>
<TABLE>
<CAPTION>
Face
Description Amount (000) Value (000)
- ------------------------------------------------------------------------
<S> <C> <C>
Certificates Of Deposit -- 40.7%
Bank of Nova Scotia, New York
5.750%, 03/04/96 $ 8,000 $ 8,000
Barclays Bank, New York
5.770%, 01/16/96 18,000 18,000
Bayerische Vereinsbank, New York
5.730%, 01/30/96 15,000 15,000
Canadian Imperial Bank of
Commerce, New York
5.730%, 02/01/96 18,000 18,000
Commerzbank, New York
5.690%, 03/04/96 15,000 15,001
Credit Suisse, New York
5.770%, 01/22/96 10,000 10,000
Deutsche Bank, New York
5.770%, 01/19/96 8,000 8,000
5.790%, 01/25/96 10,000 10,000
Harris Trust Savings Bank
5.600%, 02/15/96 10,000 10,000
NBD Bank
5.750%, 01/18/96 10,000 10,000
National Westminster Bank, New York
5.830%, 01/12/96 8,000 8,000
5.810%, 01/31/96 5,000 5,000
5.720%, 02/16/96 5,000 5,001
<CAPTION>
Face
Description Amount (000) Value (000)
- -------------------------------------------------------------------------
<S> <C> <C>
Rabobank Nederland NV, New York
5.710%, 02/14/96 $ 8,000 $ 8,000
5.810%, 01/23/96 10,000 10,000
Societe Generale Bank, New York
5.780%, 01/12/96 8,000 8,000
5.750%, 02/15/96 5,000 5,000
5.860%, 03/20/96 5,000 5,001
Wachovia Bank
5.770%, 01/12/96 10,000 10,000
5.810%, 01/25/96 8,000 8,000
----------
Total Certificates Of Deposit
(Cost $194,003,000) 194,003
----------
Commercial Paper -- 19.3%
American Express Credit
5.490%, 03/25/96 18,000 17,769
Associates Corporation of
North America
5.580%, 03/27/96 18,000 17,760
Enterprise Funding
5.700%, 01/05/96 8,000 7,995
5.770%, 01/16/96 8,000 7,981
General Electric Capital
5.680%, 02/13/96 8,000 7,946
5.530%, 04/01/96 5,000 4,930
Golden Managers Acceptance
5.800%, 01/31/96 10,000 9,952
Norwest
5.720%, 01/23/96 10,000 9,965
5.720%, 01/26/96 8,000 7,968
----------
Total Commercial Paper
(Cost $92,266,000) 92,266
----------
U.S. Government Agency Obligations -- 30.1%
FFCB
5.700%, 01/02/96 10,000 10,000
FHLB Discount Notes
5.550%, 01/17/96 10,000 9,975
5.570%, 02/12/96 10,000 9,935
5.650%, 02/15/96 8,845 8,784
5.570%, 02/21/96 10,000 9,921
5.630%, 02/29/96 10,000 9,909
5.540%, 03/13/96 10,975 10,857
5.550%, 03/25/96 12,000 11,849
</TABLE>
25
<PAGE>
Statement of Net Assets
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
FHLMC Discount Note
5.620%, 02/29/96 $ 7,000 $ 6,936
FNMA Discount Notes
5.660%, 02/14/96 15,000 14,898
5.580%, 03/12/96 11,000 10,883
5.420%, 05/10/96 10,000 9,805
5.500%, 05/30/96 10,000 9,777
SLMA (A)
5.400%, 01/30/96 10,000 10,002
----------
Total U.S. Government Agency Obligations
(Cost $143,531,000) 143,531
----------
Corporate Bonds -- 1.1%
General Electric Capital MTN
5.850%, 08/29/96 5,000 4,998
----------
Total Corporate Bonds
(Cost $4,998,000) 4,998
----------
Repurchase Agreements -- 8.9%
Nomura Securities
5.95%, dated 12/29/95,
matures 01/02/96, repurchase price
$42,686,000 (collateralized by various
FNMA obligations, total par value
$70,195,574, 0.00%-6.50%,
09/25/22-06/01/24, total market
value: $43,511,000) 42,658 42,658
----------
Total Repurchase Agreements
(Cost $42,658,000) 42,658
----------
Total Investments -- 100.1%
(Cost $477,456,000) 477,456
----------
Other Assets and Liabilities -- (0.1%)
Other Assets and Liabilities, Net (410)
----------
Description Value (000)
- -----------------------------------------------------------------------------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
475,683,858 outstanding shares of beneficial
interest $475,684
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 1,358,282
outstanding shares of beneficial interest 1,358
Accumulated net realized gain on investments 4
----------
Total Net Assets -- 100.0% $477,046
==========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $1.00
==========
Net Asset Value, Offering, and Redemption
Price Per Share -- Investor Class $1.00
==========
(A) Variable rate instrument. The rate reflected on the Statement of Net Assets
is the rate in effect on December 31, 1995.
FFCB -- Federal Farm Credit Bank
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
MTN -- Medium Term Notes
SLMA -- Student Loan Marketing Association
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Net Assets
Tax-Exempt Money Market Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Tax-Exempt Money Market Fund
Municipal Bonds 93%
Cash Equivalents 7%
Face
Description Amount (000) Value (000)
- ----------------------------------------------------------------
Municipal Bonds -- 92.6%
Alabama -- 3.2%
Housing Finance Authority,
Rime V. Uage Hoover Project
1988-A TECP
3.600%, 02/22/96 $1,500 $1,500
Montgomery, Industrial
Development Board, GE Project
Ser 1990 TECP
3.800%, 01/08/96 4,000 4,000
----------
5,500
----------
Arizona -- 4.7%
Salt River Project, Agricultural
Improvement & Power
District TECP
3.800%, 01/18/96 (C) 4,000 4,000
3.550%, 01/29/96 4,000 4,000
----------
8,000
----------
Face
Description Amount (000) Value (000)
- ------------------------------------------------------------------
Colorado -- 1.2%
El Paso County, School District #11,
Colorado Springs TAN
3.950%, 06/28/96 $2,000 $2,001
----------
Florida -- 8.7%
Jacksonville, Electric Authority
TECP
3.800%, 01/12/96 3,000 3,000
3.450%, 01/19/96 5,100 5,100
Municipal Power Agency, Pooled
Loan Project TECP
3.450%, 01/31/96 6,815 6,815
----------
14,915
----------
Georgia -- 2.9%
Gwinnett County, School
District GO
4.400%, 02/01/96 5,000 5,003
----------
Idaho -- 0.2%
State TAN
4.500%, 06/27/96 400 401
----------
Illinois -- 5.4%
Cook County, Catholic Charities
Housing Development
Ser A VRDN
5.200%, 01/05/96 (A) (B) 1,000 1,000
Dupage, Water Commission RAN
5.900%, 05/01/96 1,000 1,007
State Development Finance
Authority, Saint Xavier
University Project VRDN
5.200%, 01/05/96 (A) (B) (C) 180 180
State Development Finance
Authority, Catholic Charities
Housing Development VRDN
5.200%, 01/05/96 (A) (B) 500 500
State RAN
4.500%, 04/12/96 500 501
4.500%, 05/10/96 6,000 6,015
----------
9,203
==========
27
<PAGE>
Statement of Net Assets
Face
Description Amount (000) Value (000)
- ------------------------------------------------------------------
Indiana -- 5.0%
Hoosier City of Sullivan, Energy
Rural Electric Corporation
Ser L-4 TECP
3.600%, 02/05/96 $2,100 $2,100
Jasper County, Pollution Control
Revenue, Northern Indiana
Public Service Project
Ser 1988-A TECP
3.900%, 01/09/96 (C) 1,600 1,600
3.650%, 01/09/96 (C) 1,000 1,000
Mount Vernon, Pollution Control &
Solid Waste Disposal Revenue
Ser 1989-A TECP
3.700%, 01/11/96 3,900 3,900
----------
8,600
----------
Kansas -- 0.9%
Burlington, Pollution Control
Revenue, Kansas City Power &
Light Ser 1985-A TECP
3.550%, 02/02/96 (C) 1,500 1,500
----------
Kentucky -- 1.2%
Jefferson County, Pollution Control
Revenue, Louisville Gas &
Electric Project Ser 1993-A TECP
3.850%, 01/08/96 2,000 2,000
----------
Maine -- 0.7%
State GO
6.000%, 04/15/96 1,185 1,193
----------
Maryland -- 1.5%
Montgomery County, BAN
Ser 95 TECP
3.700%, 01/11/96 2,500 2,500
----------
Minnesota -- 7.1%
Becker, Pollution Control Revenue,
Northern States Power Company
Ser 1993-B TECP
3.800%, 01/09/96 4,000 4,000
University of Minnesota,
Ser A TECP
3.850%, 01/22/96 8,075 8,075
----------
12,075
----------
Face
Description Amount (000) Value (000)
- ------------------------------------------------------------------
Mississippi -- 3.5%
Clairborne County, Pollution
Control Revenue, Southern
Mississippi Electric Power
Association TECP
3.550%, 01/17/96 $5,000 $5,000
Hinds County, Urban Renewal,
Physicians Office Building
Group VRDN (A) (C)
5.300%, 01/05/96 965 965
----------
5,965
----------
Montana -- 2.3%
State TAN
4.500%, 06/30/96 4,000 4,016
----------
Nebraska -- 4.4%
Omaha, Public Power District TECP
3.800%, 01/10/96 1,610 1,610
3.700%, 02/12/96 5,850 5,850
----------
7,460
----------
New York -- 5.8%
New York City GO Ser B VRDN
5.000%, 01/02/96 (A) (B) 3,000 3,000
New York City Ser A TAN
4.500%, 02/15/96 3,000 3,003
New York City Ser B RAN
4.750%, 06/28/96 (FGIC) 4,000 4,015
----------
10,018
----------
Ohio -- 3.7%
Toledo-Lucas County, Port
Authority Revenue, CSX
Transportation Project TECP
3.650%, 01/03/96 6,400 6,400
----------
Pennsylvania -- 1.6%
State TAN
4.500%, 06/28/96 2,800 2,810
----------
Rhode Island -- 0.7%
State TAN
4.500%, 06/28/96 (C) 1,250 1,254
----------
28
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Net Assets
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------
South Carolina -- 2.9%
York County, Pollution Control
Revenue, North Carolina
Electric Power Ser N-5
3.750%, 03/15/96 (C) $ 4,000 $4,000
York County, Pollution Control
Revenue, Saluda River Project
3.800%, 02/16/96 (A) 1,000 1,000
----------
5,000
----------
Texas -- 10.4%
Board of Regents of The University
of Texas, Revenue Financing
System Ser A TECP
3.850%, 01/18/96 1,600 1,600
3.900%, 01/10/96 1,425 1,425
Dallas County, Refunding
Ser A GO
3.700%, 08/15/96 1,650 1,649
Harris County TAN
4.250%, 02/28/96 1,900 1,902
Houston Texas Independent School
District TRAN
4.500%, 08/29/96 2,120 2,128
State Ser A TRAN
4.750%, 08/30/96 8,000 8,040
Texas Higher Education Authority
SER B VRDN (FGIC)
5.150%, 01/05/96 (A) 1,095 1,095
----------
17,839
----------
Vermont -- 2.3%
State GO TECP
3.600%, 02/21/96 4,000 4,000
----------
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------
Virginia -- 5.3%
Commonwealth of Virginia TECP
3.400%, 02/01/96 $ 6,000 $6,000
Peninsula Ports Authority, Coal
Terminal RB, Dominion I
Terminal Associates
Project TECP
3.450%, 01/31/96 (C) 3,000 3,000
----------
9,000
----------
Washington -- 1.1%
State GO
6.750%, 07/01/96 1,775 1,800
----------
Wisconsin -- 0.9%
Milwaukee, Revenue School Order
Note Ser B
4.750%, 08/22/96 1,500 1,509
----------
Wyoming -- 5.0%
Gillette-Campbell County, Pollution
Control Revenue, Pacificorp
Project Ser 1988 TECP
3.450%, 01/16/96 8,500 8,500
----------
Total Municipal Bonds
(Cost $158,462,000) 158,462
----------
Cash Equivalents -- 7.0%
Dreyfus Tax Exempt
Cash Management Fund
4.430%, 01/08/96 7,560 7,560
SEI Tax Exempt Trust Institutional
Tax Free Portfolio
4.200%, 01/08/96 4,487 4,487
----------
Total Cash Equivalents
(Cost $12,047,000) 12,047
----------
Total Investments -- 99.6%
(Cost $170,509,000) 170,509
----------
Other Assets and Liabilities -- 0.4%
Other Assets and Liabilities, Net 680
----------
29
<PAGE>
Statement of Net Assets
Description Value (000)
- --------------------------------------------------------------------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
167,955,931 outstanding shares of beneficial
interest $167,956
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 3,243,788
outstanding shares of beneficial interest 3,244
Accumulated net realized loss on investments (11)
----------
Total Net Assets -- 100.0% $171,189
==========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $ 1.00
==========
Net Asset Value, Offering, and Redemption
Price Per Share -- Investor Class $ 1.00
==========
(A) Variable rate instrument. The rate reflected on the Statement of Net Assets
is the rate in effect on December 31, 1995.
(B) Put and demand features exist requiring the issuer to repurchase the
instrument prior to maturity. The maturity date shown is the earlier of the put
date or the maturity date.
(C) Securities are held in connection with a letter of credit or other credit
support.
BAN -- Bond Anticipation Note
GO -- General Obligation
RAN -- Revenue Anticipation Note
RB -- Revenue Bond
Ser -- Series
TAN -- Tax Anticipation Note
TECP -- Tax Exempt Commercial Paper
TRAN -- Tax and Revenue Anticipation Note
VRDN -- Variable Rate Demand Note
The following organization has provided underlying credit support for certain
securities as defined in the Statement of Net Assets.
FGIC -- Federal Guaranty Insurance Corporation
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Net Assets
Fixed Income Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Fixed Income Fund
U.S. Government Agency Obligations 1%
Repurchase Agreements 1%
U.S. Treasury Obligations 44%
U.S. Government Agency Mortgage-Backed Obligations 20%
Asset-Backed Securities 17%
Corporate Obligations 17%
Face Market
Description Amount (000) Value (000)
- ---------------------------------------------------------------------------
U.S. Treasury Obligations -- 44.0%
U.S. Treasury Bond
10.750%, 08/15/05 $14,970 $20,578
7.250%, 05/15/16 8,750 9,986
U.S. Treasury Notes
6.375%, 06/30/97 8,000 8,135
5.875%, 03/31/99 13,010 13,241
7.500%, 11/15/01 3,200 3,527
----------
Total U.S. Treasury Obligations
(Cost $51,898,000) 55,467
----------
U.S. Government Agency Mortgage-Backed
Obligations -- 19.7%
FHLMC
6.000%, 03/15/08 1,805 1,794
6.900%, 04/25/20 1,000 1,026
6.500%, 03/01/24 3,752 3,713
7.000%, 06/01/24 3,107 3,136
7.500%, 06/01/24 3,558 3,651
FNMA
6.500%, 03/01/01 1,565 1,583
8.000%, 04/01/10 1,663 1,723
9.050%, 12/25/18 943 1,005
6.500%, 10/01/23 2,034 2,012
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------------
GNMA
8.500%, 07/15/01 $ 78 $ 82
8.500%, 11/15/01 60 63
8.500%, 07/15/02 18 18
8.500%, 06/15/03 129 136
9.500%, 11/15/16 643 690
10.000%, 07/15/18 222 244
9.500%, 07/15/18 113 122
10.000%, 12/15/18 34 37
9.000%, 03/15/19 157 166
9.000%, 09/15/19 95 101
9.000%, 02/15/20 253 268
9.500%, 05/15/20 9 10
8.000%, 06/15/23 928 967
8.000%, 08/15/24 1,972 2,055
9.500%, 01/15/25 284 305
----------
Total U.S. Agency Government Mortgage-Backed
Obligations
(Cost $23,530,000) 24,907
----------
Asset-Backed Securities -- 16.6%
American Express Master Trust
7.850%, 08/15/05 1,940 2,153
Banc One Credit Card Master Trust
6.150%, 07/15/02 2,150 2,182
Discover Card Trust
6.800%, 06/16/00 1,655 1,701
First Chicago Master Trust II (A)
6.050%, 01/15/99 2,150 2,151
MBNA America Credit Card Trust (A)
6.190%, 12/15/00 2,465 2,471
NationsBank Credit Card Master Trust
4.750%, 09/15/98 3,185 3,163
SPNB Home Equity Loans
7.850%, 05/15/98 18 18
Standard Credit Card Master Trust
8.500%, 08/07/97 2,210 2,236
The Money Store Home Equity Trust
5.750%, 10/15/22 2,431 2,376
6.650%, 01/15/16 2,520 2,553
----------
Total Asset-Backed Securities
(Cost $20,774,000) 21,004
----------
31
<PAGE>
Statement of Net Assets
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------
Corporate Obligations -- 17.0%
Auburn Hills Trust
12.000%, 05/01/20 $ 710 $1,115
ANZ Banking Group
6.250%, 02/01/04 2,370 2,364
Citicorp
8.630%, 12/01/02 2,275 2,591
CNA Financial
8.880%, 03/01/98 1,005 1,069
Italy Global Bond
6.000%, 09/27/03 1,200 1,189
Kansallis-Osake-Pankki
10.000%, 05/01/02 890 1,061
Korea Electric Power
7.750%, 04/01/13 1,225 1,305
L.M. Ericsson Telephone
7.750%, 04/16/97 2,105 2,160
Lehman Brothers Holding
5.750%, 02/15/98 2,080 2,072
Lincoln National
7.250%, 05/15/05 1,780 1,889
MBIA
9.380%, 02/15/11 905 1,144
Salomon Brothers
7.430%, 06/24/99 1,685 1,725
7.130%, 08/01/99 670 680
Quebec Province
7.500%, 07/15/23 1,135 1,195
----------
Total Corporate Obligations
(Cost $20,964,000) 21,559
----------
U.S. Government Agency Obligations -- 0.9%
FHLB
7.260%, 09/06/01 1,025 1,103
----------
Total U.S. Government Agency Obligations
(Cost $1,023,000) 1,103
----------
Face Market
Description Amount (000) Value (000)
- -------------------------------------------------------------------------
Repurchase Agreement -- 0.6%
Lehman Brothers
5.90%, dated 12/29/95, matures
01/02/96, repurchase price $687,000
(collateralized by U.S. Treasury Note,
par value $705,000, 5.125%, 11/30/98,
market value: $705,000) $ 686 $ 686
----------
Total Repurchase Agreement
(Cost $686,000) 686
----------
Total Investments -- 98.8%
(Cost $118,875,000) 124,726
----------
Other Assets and Liabilities -- 1.2%
Other Assets and Liabilities, Net 1,483
----------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
12,165,991 outstanding shares of beneficial
interest 123,915
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 62,467
outstanding shares of beneficial interest 640
Undistributed net investment income 1
Accumulated net realized loss on investments (4,198)
Net unrealized appreciation on investments 5,851
----------
Total Net Assets -- 100.0% $126,209
==========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $ 10.32
==========
Net Asset Value, and Redemption
Price Per Share -- Investor Class $10.35
==========
Maximum Offering Price Per Share -- Investor
Class ($10.35 + 95.5%) $ 10.84
----------
(A) Variable rate instrument. The rate reflected on the Statement of Net Assets
is the rate in effect on December 31, 1995.
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
Statement of Net Assets
Intermediate Government Fixed Income Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Immediate Government Fixed-IncomeFund
U.S. Government Agency Obligations 53%
Repurchase Agreements 1%
U.S. Treasury Obligations 42%
U.S. Government Agency Mortgage-Backed Obligations 4%
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
U.S. Government Agency Obligations -- 52.9%
FFCB
6.640%, 05/18/98 $ 2,000 $ 2,007
8.650%, 10/01/99 1,650 1,828
FHLB
6.530%, 07/11/97 2,500 2,544
5.190%, 09/30/98 5,000 4,972
6.170%, 03/08/01 1,500 1,539
5.770%, 02/03/04 1,100 1,098
6.290%, 06/09/05 1,000 1,031
FHLMC
6.780%, 08/18/05 1,500 1,598
6.430%, 09/19/05 4,000 4,168
Financial Assistance
9.380%, 07/21/03 4,000 4,875
FNMA
8.800%, 07/25/97 2,065 2,170
5.650%, 10/20/97 5,025 5,055
8.450%, 07/12/99 5,000 5,459
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------------
IBRD
8.750%, 03/01/97 $ 2,000 $2,077
--------
Total U.S. Government Agency Obligations
(Cost $39,789,000) 40,421
--------
U.S. Treasury Obligations -- 41.2%
U.S. Treasury Notes
6.380%, 06/30/97 9,250 9,405
5.750%, 09/30/97 5,000 5,045
8.880%, 02/15/99 4,500 4,961
6.250%, 05/31/00 5,000 5,169
U.S. Treasury Bond
11.880%, 11/15/03 1,000 1,398
10.750%, 08/15/05 4,000 5,499
--------
Total U.S. Treasury Obligations
(Cost $31,178,000) 31,477
--------
U.S. Government Agency Mortgage-Backed
Obligations -- 4.3%
FHLMC CMO
7.250%, 02/15/19 2,330 2,341
GNMA
9.500%, 11/15/16 108 116
Veterans Affairs
7.750%, 02/15/97 804 810
--------
Total U.S. Government Agency Mortgage-Backed
Obligations
(Cost $3,269,000) 3,267
--------
Repurchase Agreement -- 0.8%
JP Morgan
5.83%, dated 12/29/95, matures
01/02/96, repurchase price $661,000
(collateralized by GNMA ARM, par
value $725,000, 6.00%, 03/20/24,
market value: $676,000) 661 661
--------
Total Repurchase Agreements
(Cost $661,000) 661
--------
Total Investments -- 99.2%
(Cost $74,897,000) 75,826
--------
Other Assets and Liabilities -- 0.8%
Other Assets and Liabilities, Net 586
----------
33
<PAGE>
Statement of Net Assets
Face
Description Value (000)
- -------------------------------------------------------------------------------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
7,304,680 outstanding shares of beneficial
interest $75,173
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 293,228
outstanding shares of beneficial interest 2,763
Distributions in excess of net investment income (3)
Accumulated net realized loss on investments (2,450)
Net unrealized appreciation on investments 929
--------
Total Net Assets -- 100.0% $76,412
========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $10.06
========
Net Asset Value and Redemption Price
Per Share -- Investor Class $10.05
========
Maximum Offering Price Per Share -- Investor
Class ($10.05 / 95.5%) $10.52
========
ARM -- Adjustable Rate Mortgage
CMO -- Collaterallized Mortgage Obligation
FFCB -- Federal Farm Credit Bank
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
IBRD -- International Bank of Reconstruction and Development
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
STATEMENT OF NET ASSETS
TAX-EXEMPT FIXED INCOME FUND
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Tax-Exempt Fixed Income Fund
Municipal Bonds 93%
Cash Equivalents 7%
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------
Municipal Bonds - 91.6%
Arkansas - 2.1%
Jefferson County, Pollution Control
Revenue; Arkansas Power &
Light Company GO (AMBAC)
6.300%, 06/01/18 $ 1,000 $ 1,089
-------
Florida - 2.9%
State Department of
Transportation GO 5.800%, 07/01/21 1,450 1,483
-------
Illinois - 13.0%
Development Finance Authority,
Catholic Charities Housing
Development RB
5.500%, 01/01/05 3,000 3,015
Development Finance Authority,
School District #U-46 Project RB
5.800%, 01/01/11(A) 2,000 2,103
State GO (FGIC)
5.750%, 07/01/20 1,500 1,524
-------
6,642
-------
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------
Kentucky - 4.0%
State Turnpike Authority of Economic
Development RB (AMBAC)
5.630%, 07/01/15 $ 2,000 $ 2,045
-------
Louisiana - 3.0%
East Baton Rouge Parish, Sales &
Use Tax RB (FGIC)
5.900%, 02/01/20 1,500 1,560
-------
Michigan - 2.3%
Marysville, Public School District
GO (MBIA)
5.750%, 05/01/19 1,175 1,200
-------
Mississippi - 10.4%
Harrison County, Wastewater
Treatment Facilities RB (FGIC)
5.880%, 02/01/25 2,500 2,581
State Hospital Equipment &
Facilities Authority, Baptist
Medical Center RB (MBIA)
6.500%, 05/01/10 2,500 2,760
-------
5,341
-------
Missouri - 4.5%
State Health & Educational
Facilities Authority, BJC Health
Systems Project Ser A RB
6.750%, 05/15/10 2,000 2,285
-------
Nevada - 4.1%
Clark County, Refunding & Transit
Improvement RB (MBIA)
6.200%, 06/01/19 2,000 2,095
-------
New York - 8.8%
Battery Park City Authority Ser A RB
5.000%, 11/01/08 2,500 2,419
-------
State Highway & Bridge
Improvement Fund RB (MBIA)
5.600%, 04/01/10 2,000 2,070
-------
4,489
-------
Oklahoma - 2.0%
Tulsa, Industrial Authority
Hospital, St. Johns Medical
Center Project RB
6.250%, 02/15/17 1,000 1,041
=======
35
<PAGE>
STATEMENT OF NET ASSETS
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------
Pennsylvania - 7.0%
Philadelphia Water & Wastewater
RB (MBIA)
5.750%, 06/15/13 $ 2,000 $ 2,052
Pittsburgh Water & Sewer
Authority RB (FGIC)
5.600%, 09/01/22 1,500 1,511
-------
3,563
-------
Tennessee - 2.7%
Shelby County GO
5.600%, 04/01/10 1,350 1,394
-------
Texas - 14.4%
Lower Colorado River Authority
RB (MBIA)
5.250%, 01/01/15 2,000 1,977
San Antonio, Electric & Gas
Company Refunding RB
5.000%, 02/01/12 2,250 2,219
Victoria County Hospital
RB (AMBAC)
6.250%, 01/01/16 1,000 1,059
Wylie Independent School
District GO
7.000%, 08/15/24 1,800 2,104
-------
7,359
-------
Virginia - 8.3%
Virginia Beach GO
5.300%, 07/15/07 1,000 1,032
State Housing Development
Authority SER H RB
6.450%, 01/01/12 3,000 3,202
-------
4,234
-------
Washington - 2.1%
State Public Power Supply System,
Nuclear Project #1 Refinancing RB
7.000%, 07/01/04 1,000 1,089
-------
Total Municipal Bonds
(Cost $44,587,000) 46,909
-------
Face Market
Description Amount (000) Value (000)
- ----------------------------------------------------------------------
Cash Equivalents - 7.1%
SEI Tax Exempt Trust Institutional
Tax Free Portfolio
4.200%, 01/08/96 $ 1,671 $ 1,671
Dreyfus Tax Exempt Cash
Management Fund
4.430%, 01/08/96 1,952 1,952
-------
Total Cash Equivalents
(Cost $3,623,000) 3,623
-------
Total Investments - 98.7%
(Cost $48,210,000) 50,532
-------
Other Assets and Liabilities - 1.3%
Other Assets and Liabilities, Net 678
-------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization--no par value) based on
4,909,030 outstanding shares of beneficial
interest 50,305
Portfolio shares of the Investor Class (unlimited
authorization--no par value) based on 111,130
outstanding shares of beneficial interest 1,109
Distributions in excess of net investment income (1)
Accumulated net realized loss on investments (2,525)
Net unrealized appreciation on investments 2,322
-------
Total Net Assets - 100.0% $51,210
=======
Net Asset Value, Offering, and Redemption Price
Per Share--Trust Class $ 10.20
=======
Net Asset Value and Redemption Price Per Share--
Investor Class $ 10.18
=======
Maximum Offering Price Per Share--Investor
Class ($10.18 + 95.5%) $ 10.66
=======
(a) Securities are held in connection with a letter of credit or other credit
support.
GO -- General Obligation
RB -- Revenue Bond
Ser -- Series
The following organizations have provided underlying credit support for certain
securities as defined in the Statement of Net Assets:
AMBAC -- American Municipal Bond Assurance Company
FGIC -- Federal Guaranty Insurance Corporation
MBIA -- Municipal Bond Insurance Association
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
Schedule of Investments
Global Fixed Income Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Global Fixed Income Fund
<TABLE>
<S> <C>
Germany 19%
Italy 5%
Japan 16%
Spain 11%
Sweden 5%
United Kingdom 13%
Other 9%
Denmark 5%
Canada 5%
France 12%
</TABLE>
<TABLE>
<CAPTION>
Face Market
Description Amount (000) (1) Value (000)
<S> <C> <C>
Foreign Bonds -- 84.9%
Australia -- 3.3%
Australian Government
10.000%, 10/15/07 700 $ 587
--------
Canada -- 4.7%
Government of Canada
8.750%, 12/01/05 1,000 818
--------
Denmark -- 4.6%
Kingdom of Denmark
7.000%, 12/15/04 4,500 808
--------
European Currency Unit -- 4.0%
Credit Foncier
8.375%, 03/17/04 530 700
--------
France -- 10.0%
BTAN French Treasury Bill
4.500%, 05/12/96 4,300 878
Societe Nationale des Chemin
8.875%, 08/11/23 3,800 876
--------
1,754
--------
</TABLE>
<TABLE>
<CAPTION>
Face Market
Description Amount (000) (1) Value (000)
<S> <C> <C>
Germany -- 16.5%
Federal Republic of Germany
8.375%, 05/21/01 2,000 $1,599
6.250%, 01/04/24 2,000 1,300
--------
2,899
--------
Italy -- 4.1%
Republic of Italy
8.500%, 04/01/99 1,200,000 726
--------
Japan -- 13.5%
Austrian Republic Bond
4.500%, 09/28/05 70,000 755
Export-Import Bank
2.875%, 07/28/05 40,000 379
Government of Japan
4.200%, 09/21/15 45,000 475
World Bank
4.500%, 06/20/00 70,000 754
--------
2,363
--------
Spain -- 9.0%
Kingdom of Spain
7.400%, 07/30/99 100,000 780
8.300%, 12/15/98 100,000 807
--------
1,587
--------
Sweden -- 4.4%
Kingdom of Sweden
10.750%, 01/23/97 5,000 773
--------
United Kingdom -- 10.8%
United Kingdom Treasury
6.750%, 11/26/04 750 1,115
7.000%, 11/06/01 500 777
--------
1,892
--------
Total Foreign Bonds
(Cost $13,959,000) 14,907
--------
Total Investments -- 84.9% of Net Assets
(Cost $13,959,000) $14,907
--------
</TABLE>
- --------
(1) In local currency.
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
Schedule of Investments
Balanced Fund
A pie chart depicting the percent of total portfolio investments for the
following Investment classifications:
Balanced Fund
Fixed Income Securities 30%
Cash equivalents 1%
Domestic Common Stocks 51%
Foreign Common Stocks 18%
Market
Description Shares Value (000)
- -----------------------------------------------------------
Domestic Common Stock -- 47.0%
Basic Industry -- 4.6%
Avery Dennison 9,400 $471
E.I. DuPont de Nemours 3,200 224
Phelps Dodge 5,300 330
PPG Industries 9,700 444
USX-U.S. Steel Group 6,400 197
Weyerhaeuser 7,700 333
Witco Chemical 15,500 453
-----
2,452
-----
Capital Goods -- 3.6%
Boeing 2,400 188
Browning-Ferris Industries 4,600 136
General Electric 9,700 698
Keystone International 12,900 258
Minnesota Mining & Manufacturing 2,900 192
National Service Industries 14,800 479
-----
1,951
-----
Market
Description Shares Value (000)
- ------------------------------------------------------------
Consumer Durables -- 2.1%
Ford Motor 17,700 $513
WD-40 8,500 349
Whirlpool 4,700 250
-----
1,112
-----
Consumer Non-Durables -- 8.8%
Bristol-Myers Squibb 5,200 447
Clorox 6,300 451
Coca-Cola 7,100 527
Columbia/HCA Healthcare 4,000 203
Flowers Industries 24,500 297
H.J. Heinz 1,000 33
Johnson & Johnson 3,800 325
Kimberly-Clark 2,300 190
Merck 6,800 447
Pepsico 4,700 263
Philip Morris 5,900 534
Procter & Gamble 4,000 332
UST 13,000 434
VF 5,000 264
-----
4,747
-----
Consumer Services -- 5.0%
Deluxe 16,900 490
Dun & Bradstreet 6,800 440
Fleming Companies 17,700 365
Gannett 3,200 196
H & R Block 5,600 227
J.C. Penney 5,600 267
McDonald's 4,700 212
Wal-Mart Stores 14,300 320
Walt Disney 3,300 195
-----
2,712
-----
Energy -- 5.1%
Burlington Resources 5,100 200
Chevron 9,800 515
Consolidated Natural Gas 10,300 467
Exxon 7,100 569
Halliburton 3,800 192
Mobil 3,900 437
Nicor 13,800 380
-----
2,760
-----
38
<PAGE>
Rembrandt
DECEMBER 31, 1995
[REMBRANDT LOGO]
Schedule of Investments
Market
Description Shares Value (000)
- --------------------------------------------------------------
Financial -- 7.0%
American General 12,800 $ 446
Aon 9,200 459
Bankers Trust New York 6,700 445
Boatmen's Bancshares 6,500 266
First American Bank 5,700 253
Hartford Steam Boiler Inspection &
Insurance 8,900 445
KeyCorp 11,100 402
Mellon Bank 7,100 382
Merry Land & Investment 10,700 253
NationsBank 6,400 445
----------
3,796
----------
Technology -- 4.2%
AMP 5,300 203
Automatic Data Processing 2,700 200
Hewlett Packard 3,000 251
Intel 5,600 318
IBM 3,900 358
Modern Controls 10,200 111
Motorola 3,900 222
Raytheon 4,100 194
Texas Instruments 4,200 217
Xerox 1,400 192
----------
2,266
----------
Transportation -- 0.4%
Norfolk Southern 2,400 191
----------
Utilities -- 6.2%
A T & T 9,600 622
Ameritech 7,600 448
Bell Atlantic 3,800 254
Boston Edison 15,300 451
Central & South West 15,900 443
GTE 10,300 453
US West 5,100 182
Utilicorp United 16,400 482
----------
3,335
----------
Total Domestic Common Stock 25,322
----------
Foreign Common Stock -- 16.4%
Basic Industry -- 1.3%
Akzo N V 2,900 $ 168
Broken Hill ADR 3,000 170
Fletcher Challange Limited ADR 7,300 169
PT Tri Polyta Indonesia ADR* 7,800 107
Rhone-Poulenc S.A. ADR* 4,300 92
----------
706
----------
Capital Goods -- 1.9%
ASEA AB ADR 1,800 174
Empresas ICA S.A. ADR 4,900 50
Hanson PLC ADR 11,900 182
Kubota ADR 400 51
Madeco S.A. ADR 5,700 154
Maderas y Sinteticos S.A. ADR 7,500 146
Norsk Hydro A.S. ADR 4,200 176
Pacific Dunlop ADR* 11,800 114
----------
1,047
----------
Consumer Durables -- 1.0%
Daimler Benz ADR 4,300 219
Nissan Motor ADR* 11,100 169
Sony ADR 2,800 172
----------
560
----------
Consumer Non-Durables -- 3.9%
Bass PLC ADR 7,900 176
Buenos Aires Embotellado* 4,500 93
Cadbury Schweppes PLC ADR 5,300 176
Ciba-Geigy AG ADR* 3,900 172
Fuji Photo Film ADR 2,900 169
Hafslund Nycomed, Cl B ADR 5,000 131
Kirin Brewery ADR 1,500 179
Nestle SA ADR 4,000 221
Novo-Nordisk A/S ADR 5,100 174
Panamerican Beverage, Cl A 4,000 128
Roche Holdings Limited ADR* 2,700 214
Unilever NV 1,900 267
----------
2,100
----------
39
<PAGE>
Schedule of Investments
Market
Description Shares Value (000)
- -----------------------------------------------------------------
Consumer Services -- 1.5%
Coles Myer Limited ADR 4,000 $ 99
Grupo Televisa S.A. ADR 5,300 119
Ito Yokado ADR 900 222
Koninklijke Ahold NV ADR* 4,100 169
News Corporation ADR 8,400 180
--------
789
--------
Energy -- 1.8%
Elf Aquitaine ADR 4,900 180
Repsol 5,500 181
Royal Dutch Petroleum ADR 2,100 296
Schlumberger 2,400 166
YPF Sociedad Anonima ADR 7,800 169
--------
992
--------
Financial -- 1.2%
Aegon N.V. ADR* 3,800 167
Dresdner Bank 5,700 149
National Australia Bank 3,000 136
Tokio Marine & Fire Insurance 2,600 172
--------
624
--------
Technology -- 2.1%
Alcatel Alsthom ADR* 9,900 173
Canon ADR 1,900 174
Hitachi ADR 2,100 211
Kyocera ADR 1,100 164
L.M. Ericsson Telephone ADR 8,800 172
Marsushita Electric Industrial ADR 1,300 214
--------
1,108
--------
Transportation -- 0.4%
Canadian Pacific 10,000 181
--------
Utilities -- 1.3%
Cable & Wireless PLC ADR 8,100 171
Enersis SA ADR 3,000 86
Hong Kong Telecom ADR 8,100 144
Telefonica de Espana ADR 4,300 180
Telefonos de Mexico SA ADR 3,700 118
--------
699
--------
Total Foreign Common Stock 8,806
--------
Total Common Stock
(Cost $29,128,000) 34,128
--------
Face Market
Description Amount (000) Value (000)
- -----------------------------------------------------------------
U.S. Treasury Obligations -- 11.1%
U.S. Treasury Bonds
10.750%, 02/15/03 $ 250 $ 326
10.750%, 08/15/05 500 687
7.250%, 05/15/16 2,250 2,568
U.S. Treasury Notes
6.380%, 06/30/97 1,200 1,220
8.880%, 02/15/99 450 496
5.880%, 03/31/99 250 255
6.250%, 08/31/00 400 414
--------
Total U.S. Treasury Obligations
(Cost $5,777,000) 5,966
--------
Corporate Obligations -- 4.3%
ANZ Banking Group
6.250%, 02/01/04 165 165
Citicorp
8.630%, 12/01/02 260 296
CNA Financial
8.880%, 03/01/98 265 282
Ford Motor Credit
6.380%, 10/06/00 350 355
Italy Global Bond
6.000%, 09/27/03 200 198
Kansallis-Osake
10.000%, 05/01/02 220 263
Korea Electric Power Korella
7.750%, 04/01/13 200 213
Lehman Brothers Holding
5.750%, 02/15/98 300 299
Lincoln National
7.250%, 05/15/05 250 265
--------
Total Corporate Obligations
(Cost $2,301,000) 2,336
--------
U.S. Government Agency Obligations -- 7.6%
FHLB
6.530%, 09/02/97 500 510
7.260%, 09/06/01 295 317
FHLMC
6.780%, 08/18/05 850 905
7.610%, 09/01/04 200 206
40
<PAGE>
Schedule of Investments
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- ----------------------------------------------------------------------
U.S. Government Agency Obligations (continued)
<S> <C> <C>
FNMA
5.940%, 01/29/98 $ 500 $ 502
6.250%, 06/16/00 500 513
8.350%, 11/10/99 300 329
5.650%, 10/20/97 100 101
Private Export Funding
5.750%, 04/30/98 500 503
Private Export Funding
7.300%, 01/31/02 200 216
----------
Total U.S. Government Agency
Obligations
(Cost $3,955,000) 4,102
----------
Asset-Backed Securities -- 4.1%
American Express Master Trust
7.850%, 08/15/05 300 333
First Chicago Master Trust II
6.050%, 01/15/99 1,000 1,000
NationsBank Credit Card Master Trust
4.750%, 09/15/98 300 298
The Money Store Home Equity Trust
6.650%, 01/15/16 325 329
5.750%, 10/15/22 250 245
----------
Total Asset-Backed Securities
(Cost $2,173,000) 2,205
----------
U.S. Government Agency Mortgage-Backed
Obligations -- 0.4%
FNMA REMIC
9.050%, 12/25/18 47 50
GNMA
8.000%, 08/15/25 150 156
9.500%, 05/15/20 28 30
----------
Total U.S. Government Agency
Mortgage-Backed Obligations
(Cost $232,000) 236
----------
</TABLE>
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- ----------------------------------------------------------------------
<S> <C> <C>
Repurchase Agreement -- 0.3%
Lehman Brothers
5.90%, dated 12/29/95, matures
01/02/96, repurchase price $138,000
(collateralized by FHLMC STRIP,
par value $490,000, 0.00%, 02/01/24,
market value: $141,000) $ 137 $137
----------
Total Repurchase Agreement
(Cost $137,000) 137
----------
Total Investments -- 91.2% of Net Assets
(Cost $43,703,000) $49,110
----------
</TABLE>
- -----------
* Non-income producing security.
ADR -- American Depository Receipt
Cl -- Class
FHLB -- Federal Home Loan Bank
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
PLC -- Public Limited Company
REMIC -- Real Estate Mortgage Investment Credit
STRIP -- Separate Trading of Registered Interest and Principal of Securities.
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
Statement of Net Assets
Value Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Consumer Durables 4%
Consumer Non-Durables 18%
Consumer Services 10%
Energy 11%
Financial 15%
Technology 9%
Transportation 1%
Utilities 13%
Repurchase Agreements 2%
Basic Industry 9%
Capital Goods 8%
Market
Description Shares Value (000)
- -------------------------------------------------------
Common Stock -- 96.7%
Basic Industry -- 9.4%
Avery Dennison 46,700 $ 2,341
E.I. DuPont de Nemours 16,300 1,139
Phelps Dodge 26,100 1,625
PPG Industries 50,600 2,315
USX-U.S. Steel Group 31,500 968
Weyerhaeuser 38,400 1,661
Witco Chemical 81,600 2,387
-------
12,436
-------
Capital Goods -- 7.4%
Boeing 12,600 987
Browning-Ferris Industries 22,500 664
General Electric 48,200 3,470
Keystone International 70,200 1,404
Minnesota Mining & Manufacturing 15,300 1,014
National Service Industries 71,500 2,315
-------
9,854
-------
Market
Description Shares Value (000)
- -----------------------------------------------------
Consumer Durables -- 4.3%
Ford Motor 93,300 $2,706
WD-40 41,500 1,701
Whirlpool 23,900 1,273
------
5,680
------
Consumer Non-Durables -- 18.2%
Bristol-Myers Squibb 28,300 2,430
Clorox 31,600 2,263
Coca-Cola 36,100 2,680
Columbia/HCA Healthcare 19,600 995
Flowers Industries 127,600 1,547
H.J. Heinz 4,800 159
Johnson & Johnson 19,000 1,627
Kimberly-Clark 12,200 1,009
Merck 36,100 2,374
Pepsico 23,500 1,313
Philip Morris 29,200 2,643
Procter & Gamble 20,300 1,685
UST 64,500 2,153
VF 25,200 1,329
------
24,207
------
Consumer Services -- 10.3%
Deluxe 87,300 2,532
Dun & Bradstreet 35,500 2,298
Fleming 87,900 1,813
Gannett 16,400 1,006
H & R Block 28,000 1,134
J.C. Penney 27,800 1,324
McDonald's 22,400 1,011
Wal-Mart Stores 71,900 1,609
Walt Disney 16,200 956
------
13,683
------
Energy -- 10.5%
Burlington Resources 24,200 950
Chevron 47,500 2,494
Consolidated Natural Gas 50,900 2,310
Exxon 35,900 2,876
Halliburton 19,700 997
Mobil 20,800 2,330
Nicor 71,900 1,977
------
13,934
------
42
<PAGE>
DECEMBER 31, 1995
Statement of Net Assets [REMBRANDT LOGO]
Market
Description Shares Value (000)
- --------------------------------------------------------------------------
Financial -- 14.7%
American General 67,700 $ 2,361
Aon 45,600 2,274
Bankers Trust New York 33,200 2,208
Boatmen's Bancshares 32,300 1,320
First of America Bank 30,800 1,367
Hartford Steam Boiler Inspection &
Insurance 46,500 2,325
KeyCorp 54,900 1,990
Mellon Bank 37,000 1,989
Merry Land & Investment 55,500 1,311
NationsBank 32,800 2,284
--------
19,429
--------
Technology -- 8.4%
AMP 26,200 1,005
Automatic Data Processing 13,300 988
Hewlett Packard 15,000 1,256
IBM 18,700 1,716
Intel 26,500 1,504
Modern Controls 50,300 547
Motorola 19,500 1,111
Raytheon 21,300 1,006
Texas Instruments 20,600 1,066
Xerox 6,500 891
--------
11,090
--------
Transportation -- 0.7%
Norfolk Southern 12,000 953
--------
Utitilites -- 12.8%
A T & T 47,000 3,043
Ameritech 38,600 2,278
Bell Atlantic 19,400 1,297
Boston Edison 80,200 2,366
Central & South West 83,300 2,322
GTE 54,100 2,380
US West 25,000 894
Utilicorp United 83,600 2,456
--------
17,036
--------
Total Common Stock
(Cost $111,959,000) $128,302
--------
Face Market
Description Amount Value (000)
- ----------------------------------------------------------------------------
Repurchase Agreement -- 2.3%
Lehman Brothers
5.90%, dated 12/29/95, matures
01/02/96, repurchase price $3,100,000
(collateralized by U.S. Treasury Note,
par value $3,165,000, 5.125%, 11/30/98,
market value: $3,163,000) $ 3,098 $ 3,098
--------
Total Repurchase Agreement
(Cost $3,098,000) 3,098
--------
Total Investments -- 99.0%
(Cost $115,057,000) 131,400
--------
Other Assets and Liabilities -- 1.0%
Other Assets and Liabilities, Net 1,340
--------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
10,701,395 outstanding shares of beneficial
interest 113,900
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 121,902
outstanding shares of beneficial interest 1,297
Distribution in excess of net investment income (1)
Accumulated net realized gain on investments 1,201
Net unrealized appreciation on investments 16,343
--------
Total Net Assets -- 100.0% $132,740
========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $12.26
========
Net Asset Value and Redemption Price
Per Share -- Investor Class $12.28
========
Maximum Offering Price Per Share -- Investor
Class ($12.28 + 95.5%) $12.86
========
The accompanying notes are an integral part of the financial statements.
43
<PAGE>
Statement of Net Assets
Growth Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Growth Fund
Repurchase Agreements 1%
Basic Industry 4%
Capital Goods 8%
Consumer Non-Durables 17%
Consumer Services 7%
Energy 11%
Financial 22%
Technology 19%
Transportation 2%
Utilities 9%
Market
Description Shares Value (000)
- ------------------------------------------------------
Common Stock -- 98.8%
Basic Industry -- 3.9%
Dow Chemical 20,900 $1,471
Mead 15,900 831
Rayonier 25,300 844
------
3,146
------
Capital Goods -- 7.9%
Agco 41,250 2,104
Boeing 28,400 2,226
York International 44,000 2,068
------
6,398
------
Consumer Non-Durables -- 17.0%
American Home Products 11,600 1,125
Amgen* 23,400 1,389
Avon Products 35,300 2,661
Bristol-Myers Squibb 18,700 1,606
Colgate-Palmolive 19,500 1,370
H.J. Heinz 54,000 1,789
Philip Morris 13,800 1,249
U.S. Healthcare 56,100 2,608
------
13,797
------
Market
Description Shares Value (000)
- ------------------------------------------------------
Consumer Services -- 7.4%
Borders Group* 98,300 $1,819
Carnival 79,800 1,945
CUC International* 47,100 1,607
Intimate Brands* 40,000 600
------
5,971
------
Energy -- 11.0%
Amoco 26,300 1,890
Atlantic Richfield 16,200 1,794
Enron Oil & Gas 34,900 838
Phillips Petroleum 65,700 2,242
Texaco 27,000 2,120
------
8,884
------
Financial -- 22.0%
Advanta, Cl B 33,300 1,211
American General 47,500 1,657
Household International 22,500 1,330
KeyCorp 43,100 1,562
Lincoln National 25,800 1,387
MBIA 23,100 1,732
MGIC Investment 18,300 993
PMI Group 40,000 1,810
PNC Bank 48,000 1,548
Redwood Trust 50,000 913
St. Paul 48,400 2,692
Thornburg Mortgage Asset 60,200 948
------
17,783
------
Technology -- 18.6%
Altera* 29,800 1,483
Cisco Systems* 18,600 1,388
FTP Software* 41,100 1,192
Hewlett Packard 17,800 1,491
KLA Instruments* 31,400 818
IBM 8,700 798
Information Resources* 101,700 1,258
Intel 32,600 1,850
LSI Logic* 36,200 1,186
Microsoft* 18,800 1,650
Parametric Technology* 18,800 1,250
Xilinx* 23,000 701
------
15,065
------
44
<PAGE>
DECEMBER 31, 1995
Statement of Net Assets [REMBRANDT LOGO]
Shares/Face
Description Amount (000) Value (000)
- ----------------------------------------------------------------
Transportation -- 2.0%
Illinois Central 41,500 $1,593
--------
Utilities -- 9.0%
Ameritech 42,800 2,525
PECO Energy 70,600 2,127
Western Resources 79,800 2,663
--------
7,315
--------
Total Common Stock
(Cost $69,992,000) 79,952
--------
Repurchase Agreement -- 1.1%
Lehman Brothers
5.90%, dated 12/29/95, matures
01/02/96, repurchase price $845,000
(collateralized by FHLMC STRIP,
par value $2,215,000, 0.00%, 11/01/22,
market value: $863,000) $ 844 844
--------
Total Repurchase Agreement
(Cost $844,000) 844
--------
Total Investments -- 99.9%
(Cost $70,836,000) 80,796
--------
Other Assets and Liabilities -- 0.1%
Other Assets and Liabilities, Net 101
--------
Description Value (000)
- -------------------------------------------------------------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
6,738,588 outstanding shares of beneficial
interest $67,282
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 230,641
outstanding shares of beneficial interest 2,439
Undistributed net investment income 1
Accumulated net realized gain on investments 1,215
Net unrealized appreciation on investments 9,960
--------
Total Net Assets -- 100.0% $80,897
========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $ 11.61
========
Net Asset Value and Redemption Price
Per Share -- Investor Class $ 11.62
========
Maximum Offering Price Per Share -- Investor
Class ($11.62 + 95.5%) $ 12.17
========
- --------------------------------------------------------------
* Non-Income Producing Security
FHLMC -- Federal Home Loan Mortgage Corporation
STRIP -- Separate Trading of Registered Interest and Principal of Securities.
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
Statement of Net Assets
International Equity Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
International Equity Fund
Japan 31%
United Kingdom 13%
France 8%
Germany 7%
Netherlands 6%
Switzerland 5%
Hong Kong 4%
Sweden 3%
Singapore 3%
Other 20%
Market
Description Shares Value (000)
- ------------------------------------------------------
Foreign Common Stocks -- 95.8%
Argentina -- 0.5%
YPF ADR 20,000 $ 433
--------
Australia -- 2.0%
Broken Hill Proprietary 80,000 1,129
CRA 32,250 473
--------
1,602
--------
Austria -- 0.6%
Creditanstalt Bankverein "PS" 1,500 215
Vienna International Airport 4,500 299
--------
514
--------
Belgium -- 0.8%
Audiofina 5,500 298
Kredietbank 1,200 329
--------
627
--------
Brazil -- 1.1%
Aracruz Celulose ADR 35,000 271
Telebras ADR * 7,500 356
Usiminas ADR 35,000 280
--------
907
--------
Market
Description Shares Value (000)
- ------------------------------------------------------
Chile -- 1.0%
Endesa ADR 18,000 $ 409
Telecom Chile ADR 4,500 373
--------
782
--------
Denmark -- 1.2%
Sophus Berendsen, Cl B 5,000 563
Unidanmark, Cl A * 8,000 397
--------
960
--------
Finland -- 0.9%
Kymmene * 10,000 265
Nokia, Cl A * 12,000 472
--------
737
--------
France -- 7.7%
Alcatel Alsthom 5,798 501
Carrefour 1,000 607
Cie Generale des Eaux 8,169 817
Elf Aquitaine 16,108 1,189
Havas 4,673 371
L'Oreal 2,800 751
Rhone-Poulenc, Cl A 25,667 551
Saint-Gobain 5,114 567
Sanofi * 9,900 635
--------
5,989
--------
Germany -- 5.3%
Allianz 429 843
Bayer 3,000 797
Bayerische Motoren Werke 850 439
Beiersdorf 750 516
Deutsche Bank 20,000 951
Schering 10,000 665
--------
4,211
--------
Hong Kong -- 4.3%
China Light & Power 60,000 276
Hong Kong Telecommunications 200,000 357
HSBC Holdings 62,373 944
Hutchison Whampoa 110,000 670
Sun Hung Kai Properties 85,600 700
Swire Pacific, Cl A 58,000 450
--------
3,397
--------
46
<PAGE>
DECEMBER 31, 1995
Statement of Net Assets [REMBRANDT LOGO]
Market
Description Shares Value (000)
- ------------------------------------------------------
Indonesia -- 0.3%
Multi Bintang 16,000 $ 225
--------
Italy -- 2.6%
Assicurazioni Generali 25,000 606
Parmalat Finanziaria * 400,000 348
Rinascente 69,815 423
STET * 230,000 652
--------
2,029
--------
Japan -- 30.4%
Ajinomoto 65,000 724
Asahi Glass 40,000 446
Canon 50,000 906
East Japan Railway 140 681
Fanuc 12,500 541
Hitachi 90,000 907
Honda Motor 60,000 1,238
Ito Yokado 17,000 1,048
KAO 60,000 744
Kawasaki Steel 175,000 610
Kinki Nippon Tourist 32,000 226
Kirin Brewery 50,000 591
Kyocera 11,000 817
Matsushita Electric Industrial 50,000 814
Mitsubishi Bank 40,000 942
Mitsubishi Heavy Industries 150,000 1,196
New Oji Paper 70,000 633
Nippon Oil 70,000 440
Nippon Telegraph & Telephone 122 987
Nomura Securities 25,000 545
Secom 13,000 904
Sekisui House 70,000 895
Shiseido 45,000 536
Sony 22,000 1,319
Sumitomo Bank 41,000 870
Takeda Chemical Industries 45,000 741
Tokio Marine & Fire Insurance 90,000 1,177
Tokyo Broadcasting System 28,000 461
Tokyo Electric Power 13,100 350
Toray Industries 125,000 824
Toshiba 110,000 862
--------
23,975
--------
Market
Description Shares Value (000)
- ------------------------------------------------------
Malaysia -- 2.7%
Genting 40,000 $ 334
Malayan Banking 55,000 464
Sime Darby Malaysia 180,000 478
Telekom Malaysia 60,000 468
United Engineers -- F 65,000 415
--------
2,159
--------
Mexico -- 0.9%
Panamerican Beverage ADR 12,500 400
Telefonos de Mexico ADR 10,000 319
--------
719
--------
Netherlands -- 5.4%
Aegon 19,377 859
Ahold 14,420 590
Akzo 4,000 464
Heineken Holding, Cl A 4,125 677
Phillips Electronics 11,000 398
Unilever 5,000 704
Wolters Kluwer 6,566 622
--------
4,314
--------
Norway -- 0.7%
Saga Petroleum, Cl B 45,000 562
--------
Portugal -- 0.3%
Jeronimo Martins & Filho 3,800 211
--------
Singapore -- 2.9%
City Developments 65,000 473
Jardine Matheson 50,663 347
Keppel 55,000 490
Oversea-Chinese Banking -- F 40,500 507
Singapore International
Airlines -- F 50,000 467
--------
2,284
--------
Spain -- 2.0%
Banco Bilbao-Vizcaya 15,000 541
Centros Comerciales Pryca 20,000 420
Telefonica de Espana 47,000 651
--------
1,612
--------
47
<PAGE>
Statement of Net Assets
Market
Description Shares Value (000)
- ----------------------------------------------------------------------------
Sweden -- 2.9%
Asea, Cl B 9,000 $ 877
Astra, Cl A 22,000 879
Ericsson, Cl B 27,500 539
--------
2,295
--------
Switzerland -- 4.8%
Ciba-Geigy, Cl N 1,000 881
Holderbank, Cl I 615 472
Nestle, Cl N 700 775
Roche Holdings, Cl GS 90 713
Schweizerische Bankgesellschaft, Cl I 900 977
--------
3,818
--------
Thailand -- 2.1%
Advanced Info Service -- F 20,000 354
Bangkok Bank -- F 43,000 523
Land and House -- F 25,000 411
Siam Cement -- F 7,000 388
--------
1,676
--------
United Kingdom -- 12.4%
Barclays Bank 76,236 875
BAT Industries 90,833 801
British Airport Authority 60,553 456
BOC Group 41,336 578
Cable & Wireless 81,819 585
Cadbury Schweppes 66,748 552
General Electric 144,425 796
Marks & Spencer 91,080 637
Pearson 80,816 783
Prudential 135,816 875
Shell Transport & Trading 90,000 1,191
SmithKline Beecham, Cl A 80,929 892
Tate & Lyle 106,606 781
--------
9,802
--------
Total Foreign Common Stocks
(Cost $65,269,000) 75,840
--------
Foreign Preferred Stocks -- 2.5%
Australia -- 0.7%
Newscorp 120,000 561
--------
Market
Description Shares Value (000)
- ----------------------------------------------------------------------------
Germany -- 1.8%
Krones 800 $ 324
RWE 2,500 698
Suedzucker 1,000 404
--------
1,426
--------
Total Foreign Preferred Stocks
(Cost $1,960,000) 1,987
--------
Total Investments -- 98.3%
(Cost $67,229,000) 77,827
--------
Other Assets and Liabilities -- 1.7%
Other Assets and Liabilities, Net 1,378
--------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on 5,325,237
outstanding shares of beneficial interest 66,821
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 116,130
outstanding shares of beneficial interest 1,493
Distributions in excess of net investment income (12)
Accumulated net realized gain on investments 304
Net unrealized appreciation on foreign currency and
translation of other assets and liabilities
denominated in foreign currency 1
Net unrealized appreciation on investments 10,598
--------
Total Net Assets -- 100.0% $79,205
========
Net Asset Value, Offering and Redemption Price
Per Share -- Trust Class $14.56
========
Net Asset Value and Redemption Price
Per Share -- Investor Class $14.52
========
Maximum Offering Price Per Share --
Investor Class ($14.52 / 95.5%) $15.20
========
- ----------------------------------
* Non-Income Producing Security
ADR -- American Depository Receipt
Cl -- Class
F -- Foreign Registry Shares
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
DECEMBER 31, 1995
Statement of Net Assets [REMBRANDT LOGO]
Small Cap Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Small Cap Fund
Repurchase Agreements 5%
Basic Industry 3%
Capital Goods 10%
Consumer Durables 2%
Consumer Non-Durables 19%
Consumer Services 13%
Energy 6%
Financial 17%
Technology 23%
Transportation 1%
Utilities 1%
Market
Description Shares Value (000)
- -----------------------------------------------------
Common Stock -- 95.1%
Basic Industry -- 3.2%
Fastenal 9,700 $ 410
Shorewood Packaging* 25,400 362
--------
772
--------
Capital Goods -- 10.1%
Agco 7,900 403
Gentex* 16,300 359
Juno Lighting 21,900 350
Kaydon 8,900 270
NN Ball and Roller 19,200 336
OEA* 13,100 391
Wolverine Tube* 9,700 364
--------
2,473
--------
Consumer Durables -- 2.4%
Sunbeam Oster 21,900 334
WD-40 6,300 258
--------
592
--------
Market
Description Shares Value (000)
- -----------------------------------------------------
Consumer Non-Durables -- 19.1%
American Medical Response* 15,900 $517
Fresenius* 14,200 282
Mid Atlantic Medical Services* 17,500 424
Nautica Enterprises* 13,050 571
Respironics* 26,400 554
Rotech Medical* 13,800 380
Smithfield Foods* 16,400 521
Sofamor/Danek Group* 21,500 610
Sybron International* 12,600 299
Watson Pharmaceuticals* 10,400 510
--------
4,668
--------
Consumer Services -- 12.6%
Applebee's International 25,200 573
Catalina Marketing* 8,000 502
Express Scripts, Cl A* 7,600 388
Grand Casinos* 16,950 394
Men's Wearhouse* 13,200 340
National Education* 69,000 561
Stop & Shop* 14,100 326
--------
3,084
--------
Energy -- 5.8%
Devon Energy 17,000 433
KN Energy 10,500 306
Pride Petroleum Services* 34,900 371
Wicor 9,300 300
--------
1,410
--------
Financial -- 17.1%
Associated Bancorp 8,125 333
Bell Bancorp* 9,600 343
California Federal Bank, Cl A* 23,000 362
Felcor Suite Hotels 8,800 244
Gainsco 27,195 310
Manufactured Home Communities 20,700 362
Mark Twain Bancshares 7,900 306
Mutual Risk Management 11,500 526
National Re Holdings 16,100 612
Quick & Reilly Group 13,725 281
River Forest Bancorp 19,200 490
--------
4,169
--------
49
<PAGE>
Statement of Net Assets
Shares/Fees Market
Description Amount (000) Value (000)
- --------------------------------------------------------------
Technology -- 22.5%
Altera* 8,800 $ 438
Aspect Telecommunications* 10,400 348
FTP Software* 17,500 508
Hyperion Software* 17,600 374
KLA Instruments* 15,100 394
Lam Research* 5,300 242
Maxim Integrated Products* 17,400 670
Progress Software* 22,000 825
Sterling Software* 11,000 686
Tencor Instruments* 13,100 319
US Robotics* 4,400 386
Vicor* 15,200 304
--------
5,494
--------
Transportation -- 1.1%
Air Express International 11,100 255
--------
Utilities -- 1.2%
Southern California Water 13,900 281
--------
Total Common Stock
(Cost $19,757,000) 23,198
--------
Repurchase Agreement -- 5.4%
Prudential Securities
5.90%, dated 12/29/95, matures
01/02/96, repurchase price $1,324,000
(collateralized by U.S. Treasury Note,
par value $1,355,000, 5.125%,
11/30/98, market value: $1,354,000) $ 1,324 1,324
--------
Total Repurchase Agreements
(Cost $1,324,000) 1,324
--------
Market
Description Shares Value (000)
- ------------------------------------------------------------------------
Total Investments -- 100.5%
(Cost $21,081,000) $24,522
--------
Other Assets and Liabilities -- (0.5%)
Other Assets and Liabilities, Net (125)
--------
Net Assets:
Portfolio shares of the Trust Class (unlimited
authorization -- no par value) based on
1,914,355 outstanding shares of beneficial
interest 19,690
Portfolio shares of the Investor Class (unlimited
authorization -- no par value) based on 44,346
outstanding shares of beneficial interest 463
Undistributed net investment income 1
Accumulated net realized gain on investments 802
Net unrealized appreciation on investments 3,441
--------
Total Net Assets -- 100.0% $24,397
========
Net Asset Value, Offering, and Redemption Price
Per Share -- Trust Class $12.46
========
Net Asset Value and Redemption Price
Per Share -- Investor Class $12.46
========
Maximum Offering Price Per Share -- Investor
Class ($12.46 / 95.5%) $13.05
========
- -------------------------------
* Non-Income Producing Security
Cl -- Class
The accompanying notes are an integral part of the financial statements.
50
<PAGE>
DECEMBER 31, 1995
Schedule of Investments [REMBRANDT LOGO]
Asian Tigers Fund
A pie chart depicting the percent of total portfolio investments for the
following investment classifications:
Asian Tigers Fund
Hong Kong 37%
Indonesia 4%
Malaysia 17%
Phillippines 3%
Singapore 16%
South Korea 4%
Taiwan 3%
Thailand 16%
Market
Description Shares Value (000)
- -------------------------------------------------------------
Foreign Common Stocks -- 93.1%
Hong Kong -- 34.4%
Cheung Kong Holdings 105,000 $ 640
China Light & Power 82,000 378
Citic Pacific 122,000 417
Hang Seng Bank 48,000 430
Henderson Land Development* 40,000 241
Hong Kong & China Gas 153,600 247
Hong Kong Telecommunications 417,600 745
HSBC Holdings 92,000 1,392
Hutchison Whampoa 156,000 950
Hysan Development 121,000 320
Johnson Electric 109,000 195
National Mutual Asia* 350,000 317
New World Development 70,000 305
Shangri-La Asia 236,000 289
Sun Hung Kai Properties 82,000 671
Swire Pacific, Cl A 66,000 512
Television Broadcasts 18,000 64
Wheelock 52,000 89
--------
8,202
--------
Market
Description Shares Value (000)
- -------------------------------------------------------------
Indonesia -- 4.1%
Bank Internasional Indonesia -- F 62,000 $ 206
Hanjaya Mandala Sampoerna* 20,000 208
Indofood -- F 20,000 96
Indonesian Satellite ADR 2,400 88
Semen Gresik -- F* 55,000 154
Telekomunikasi -- F* 180,000 236
--------
988
--------
Malaysia -- 16.1%
DCB Holdings* 80,000 233
Genting 33,500 280
Land and General* 65,000 141
Malayan Banking 60,000 506
Malaysian International Shipping -- F 92,000 241
Public Bank -- F 109,000 209
Resorts World 70,000 375
Sime Darby Malaysia 197,600 525
Sime UEP Properties 145,000 228
Telekom Malaysia 64,000 499
Tenaga 76,000 299
United Engineers -- F 48,000 306
--------
3,842
--------
Philippines -- 2.4%
Filinvest Land* 600,000 192
Manila Electric* 28,000 229
Philippine Long Distance
Telephone ADR 3,000 162
--------
583
--------
Singapore -- 15.3%
City Developments 87,600 638
DBS Land 90,000 304
Development Bank of Singapore -- F 26,000 324
Fraser and Neave -- F 28,000 357
Hong Kong Land 77,000 142
Jardine Matheson 14,000 96
Keppel 42,000 374
Oversea-Chinese Banking -- F 63,000 789
Singapore International Airlines -- F 33,000 308
Singapore Press -- F 18,400 325
--------
3,657
--------
51
<PAGE>
Schedule of Investments
Market
Description Shares Value (000)
- ------------------------------------------------------------------
South Korea -- 3.3%
Korea Fund 35,483 $781
--------
Taiwan -- 2.4%
Taiwan Fund 27,500 564
--------
Thailand -- 15.1%
Advanced Info Service -- F 30,000 527
Bangkok Bank -- F 57,000 693
Dhana Siam Finance & Securities -- F 59,000 337
Industrial Finance of Thailand* 110,000 374
Italian-Thai Development* 30,000 307
Land and House -- F 22,000 362
PTT Exploration* 40,000 419
Siam Cement -- F* 12,000 188
Thai Farmers Bank -- F 39,000 393
--------
3,600
--------
Total Foreign Common Stocks
(Cost $20,236,000) 22,217
--------
Total Investments -- 93.1%, of Net Assets
(Cost $20,236,000) $ 22,217
========
- -------------------------------------
* Non-Income Producing Security
ADR -- American Depository Receipts
Cl -- Class
F -- Foreign Registry Shares
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
DECEMBER 31, 1995
Notes
53
<PAGE>
Statement of Assets and Liabilities (000)
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Global Fixed Balanced Asian
Income Fund Fund Tigers Fund
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments at market value (Cost $13,959, $43,703 and $20,236,
respectively) 14,907 $49,110 $22,217
Cash and foreign currency 3,765 -- 1,879
Receivable for investment securities sold -- 1,677 --
Receivable for capital shares sold 17 3,899 20
Other assets 452 339 80
------ ------ ------
Total assets 19,141 55,025 24,196
------ ------ ------
Liabilities:
Distribution payable 1,555 132 270
Payable for capital shares repurchased -- 1,015 --
Other liabilities 28 30 48
------ ------ ------
Total liabilities 1,583 1,177 318
------ ------ ------
Net assets:
Portfolio shares of the Trust Class (unlimited authorization -
no par value) based on 1,647,908, 4,642,722 and 2,214,706
outstanding shares of beneficial interest, respectively 16,640 43,855 21,404
Portfolio shares of the Investor Class (unlimited
authorization - no par value) based on 11,864, 367,470
and 70,215 outstanding shares of beneficial interest, respectively 126 3,705 681
Undistributed net investment income 218 -- --
Accumulated distributions in excess of net investment income -- -- (34)
Accumulated net realized gain (loss) on investments (392) 883 (154)
Accumulated net realized loss from foreign currency transactions (1) -- --
Net unrealized appreciation (depreciation) on foreign currency
and translation of other assets and liabilities denominated in
foreign currencies 19 (2) --
Net unrealized appreciation on investments 948 5,407 1,981
------ ------ ------
Net Assets $17,558 $53,848 $23,878
======= ======= =======
Net Asset Value, Offering and Redemption Price Per Share -- Trust Class $10.58 $10.75 $10.45
====== ======= ======
Net Asset Value and Redemption Price Per Share -- Investor Class $10.56 $10.75 $10.44
====== ======= ======
Maximum Offering Price Per Share -- Investor Class (1) $11.06 $11.26 $10.93
====== ======= ======
</TABLE>
(1) The offering price is calculated by dividing the Net Asset Value by 1 minus
the maximum sales charge of 4.50%.
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Statement of Operations (000)
For the Year Ended December 31, 1995
Treasury Government Tax-Exempt
Money Market Money Market Money Market Money Market
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Investment Income:
Interest $6,611 $11,042 $27,757 $7,189
-------- -------- -------- --------
Expenses:
Administration fees 176 283 705 278
Less administration fees
waived -- -- (57) --
Investment advisory fees 413 377 1,646 653
Less investment advisory
fees waived (184) -- (648) (290)
Custodian fees 16 25 63 20
Transfer agent fees 34 38 63 32
Professional fees 20 31 69 26
Registration & filing fees 9 14 21 34
Printing 3 4 4 5
Trustee 2 3 7 3
Insurance 4 6 16 5
Pricing 1 2 6 1
Distribution fees (1) 17 8 3 10
Amortization of deferred
organization costs 3 3 3 3
Miscellaneous 18 1 3 1
-------- -------- -------- --------
Total Expenses 532 795 1,904 781
-------- -------- -------- --------
Net Investment Income 6,079 10,247 25,853 6,408
-------- -------- -------- --------
Net Realized Loss On
Investments:
Net realized loss from
security transaction -- -- -- (1)
Net Increase In Net
Assets From Operations $6,079 $10,247 $25,853 $6,407
======== ======== ======== ========
(1) All distribution fees are incurred at the Investor Class level.
The accompanying notes are an integral part of the financial statements.
55
<PAGE>
Statement of Operations (000)
For the Year Ended December 31, 1995
Intermediate
Government Tax-Exempt Global
Fixed Income Fixed Income Fixed Income Fixed Income
Fund Fund Fund Fund
- --------------------------------------------------------------------------------
Investment Income:
Interest $7,601 $5,092 $2,926 $1,214
------ ------ ------ ------
Expenses:
Administration fees 170 123 78 26
Less administration fees
waived (11) (10) -- --
Investment advisory fees 677 492 314 140
Less investment advisory
fees waived (100) (72) (65) --
Custodian fees 15 10 7 3
Transfer agent fees 33 32 30 27
Contribution by
administrator -- -- -- (10)
Professional fees 19 12 7 2
Registration & filing fees 13 (3) (1) 1
Printing 2 -- -- --
Trustee fee 2 1 1 --
Insurance 3 3 2 --
Pricing 2 -- 1 --
Distribution fees (1) 1 7 3 --
Amortization of deferred
organization costs 3 3 3 3
Miscellaneous 12 11 16 --
----- ----- ----- -----
Total Expenses 841 609 396 192
----- ----- ----- -----
Net Investment Income 6,760 4,483 2,530 1,022
----- ----- ----- -----
Net Realized and
Unrealized Gain On
Investments:
Net realized gain from
security transactions 1,117 345 318 269
Net realized gain from
foreign currency
transactions -- -- -- 751
Net change in unrealized
appreciation on
investments 10,277 5,923 4,825 1,202
Net change in unrealized
appreciation on foreign
currency and translation
of other assets and
liabilities in foreign
currencies -- -- -- 18
----- ----- ----- -----
Net Increase In Net
Assets From Operations $18,154 $10,751 $7,673 $3,262
======= ======= ====== ======
(1) All distribution fees are incurred at the Investor Class level.
The accompanying notes are an integral part of the financial statements.
56
<PAGE>
DECEMBER 31, 1995
Statement of Operations (000) [REMBRANDT LOGO]
<TABLE>
<CAPTION>
For the Year Ended December 31, 1995
International Asian
Balanced Value Growth Equity Small Cap Tigers
Fund Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Dividends $ 1,341 $ 3,617 $ 1,863 $1,210 $ 182 $ 571
Interest 1,681 446 184 241 81 80
Less foreign taxes withheld -- -- -- (107) -- (37)
-------- ------ ------ ----- ------- ------
Total investment income 3,022 4,063 2,047 1,344 263 614
-------- ------ ------ ----- ------- ------
Expenses:
Administration fees 97 148 128 97 31 32
Investment advisory fees 454 789 686 643 164 212
Less investment advisory fees waived -- -- -- -- (1) --
Custodian fees 7 13 11 84 3 56
Transfer agent fees 26 31 32 27 26 27
Contribution by administrator -- -- -- (2) -- (16)
Professional fees 10 18 12 16 2 3
Registration & filing fees (11) 19 (3) 14 (4) 2
Printing -- 5 1 4 -- 1
Trustee 1 1 1 1 -- --
Insurance 2 2 3 2 1 1
Pricing -- 2 1 4 -- 2
Distribution fees (1) 10 3 6 4 1 2
Amortization of deferred organization costs 3 3 3 3 3 3
Miscellaneous 1 1 -- -- -- --
-------- ------ ------ ----- ------- ------
Total Expenses 600 1,035 881 897 226 325
-------- ------ ------ ----- ------- ------
Net Investment Income 2,422 3,028 1,166 447 37 289
-------- ------ ------ ----- ------- ------
Net Realized and Unrealized Gain (Loss)
On Investments:
Net realized gain (loss) from security
transactions 3,350 3,456 8,079 1,107 2,502 (139)
Net realized loss from foreign currency
transactions (8) -- -- (116) -- (22)
Net change in unrealized appreciation on
investments 7,293 20,121 14,198 7,172 2,930 2,685
Net change in unrealized appreciation (depreciation)
on foreign currency and translation of other
assets and liabilities in foreign currencies (2) -- -- -- -- 1
-------- ------ ------ ----- ------- ------
Net Increase In Net Assets From
Operations $13,055 $26,605 $23,443 $8,610 $5,469 $2,814
======== ======= ======= ====== ======= ======
</TABLE>
(1) All distribution fees are incurred at the Investor Class level.
The accompanying notes are an integral part of the financial statements.
57
<PAGE>
Statement of Changes in Net Assets (000)
<TABLE>
<CAPTION>
Treasury
Money Market
Fund
- ---------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment income $ 6,079 $ 4,009
Net realized loss from
security transactions -- --
---------- ----------
Net increase in net assets
resulting from operations 6,079 4,009
---------- ----------
Dividends distributed from:
Net investment income:
Trust Class (5,746) (3,936)
Investor Class (333) (73)
---------- ----------
Total dividends distributed (6,079) (4,009)
---------- ----------
Capital share transactions:
Trust Class:
Proceeds from shares issued 484,129 274,543
Shares issued in lieu of
cash distributions 5 3
Cost of shares
repurchased (485,213) (271,487)
---------- ----------
Increase (decrease) in net
assets derived from Trust
Class transactions (1,079) 3,059
---------- ----------
Investor Class:
Proceeds from shares issued 33,385 11,461
Shares issued in lieu of
cash distributions 315 60
Cost of shares
repurchased (29,000) (9,637)
---------- ----------
Increase in net
assets derived from Investor
Class transactions 4,700 1,884
---------- ----------
Increase (decrease) in net
assets derived capital
share transactions 3,621 4,943
---------- ----------
Contribution of capital from
affiliate -- --
---------- ----------
Net increase (decrease) in
net assets 3,621 4,943
---------- ----------
Net Assets:
Beginning of year 114,785 109,842
---------- ----------
End of year $ 118,406 $ 114,785
========== ==========
Capital share transactions:
Trust Class:
Shares issued 484,129 274,543
Shares issued in lieu of
cash distributions 5 3
Shares repurchased (485,213) (271,487)
Total Trust Class
transactions (1,079) 3,059
---------- ----------
Investor Class:
Shares issued 33,385 11,461
Shares issued in lieu of
cash distributions 315 60
Shares repurchased (29,000) (9,637)
---------- ----------
Total Investor Class
transactions 4,700 1,884
---------- ----------
Increase (decrease) in
capital shares 3,621 4,943
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
#
58
<PAGE>
REMBRANDT
DECEMBER 31, 1995
[REMBRANDT LOGO]
GOVERNMENT TAX-EXEMPT
MONEY MARKET MONEY MARKET MONEY MARKET
FUND FUND FUND
- --------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994
- --------------------------------------------------------------------------------
$ 10,247 $ 6,426 $ 25,853 $ 17,498 $ 6,408 $ 3,447
-- (702) -- (1,399) (1) --
---------- --------- -------- -------- ---------- --------
10,247 5,724 25,853 16,099 6,407 3,447
---------- --------- -------- -------- ---------- --------
(10,086) (6,340) (25,787) (17,487) (6,283) (3,391)
(161) (86) (66) (11) (125) (56)
---------- --------- -------- -------- ---------- --------
(10,247) (6,426) (25,853) (17,498) (6,408) (3,447)
---------- --------- -------- -------- ---------- --------
404,051 378,541 1,234,299 1,364,586 408,851 377,990
-- -- -- 1 -- --
(353,576) (380,800) (1,219,198)(1,271,110) (401,949) (332,946)
---------- --------- -------- -------- ---------- --------
50,475 (2,259) 15,101 93,477 6,902 45,044
---------- --------- -------- -------- ---------- --------
11,055 12,329 6,603 2,321 16,513 13,112
157 81 62 9 124 48
(10,949) (11,485) (5,912) (1,844) (17,597) (10,350)
---------- --------- -------- -------- ---------- --------
263 925 753 486 (960) 2,810
---------- --------- -------- -------- ---------- --------
50,738 (1,334) 15,854 93,963 5,942 47,854
---------- --------- -------- -------- ---------- --------
-- 700 -- 1,400 -- --
---------- --------- -------- -------- ---------- --------
50,738 (1,336) 15,854 93,964 5,941 47,854
---------- --------- -------- -------- ---------- --------
159,879 161,215 461,192 367,228 165,248 117,394
---------- --------- -------- -------- ---------- --------
$ 210,617 $ 159,879 $ 477,046 $461,192 $ 171,189 $ 165,248
========== ========= ======== ======== ========== =========
404,051 378,541 1,234,299 1,364,586 408,851 377,990
-- -- -- 1 -- --
(353,576) (380,800) (1,219,198)(1,271,110) (401,949) (332,946)
50,475 (2,259) 15,101 93,477 6,902 45,044
---------- --------- -------- -------- ---------- --------
11,055 12,329 6,603 2,321 16,513 13,112
157 81 62 9 124 48
(10,949) (11,485) (5,912) (1,844) (17,597) (10,350)
---------- --------- -------- -------- ---------- --------
263 925 753 486 (960) 2,810
---------- --------- -------- -------- ---------- --------
50,738 (1,334) 15,854 93,963 5,942 47,854
========== ========= ======== ======== ========== =========
59
<PAGE>
Statement of Changes in Net Assets (000)
<TABLE>
<CAPTION>
Fixed Intermediate Tax-Exempt Global
Income Government Fixed Fixed Income Fixed Income
Fund Income Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 6,760 $ 5,880 $ 4,483 $ 4,891 $ 2,530 $ 2,820 $ 1,022 $ 824
Net realized gain (loss)
from security and foreign
currency
transactions 1,117 (5,590) 345 (2,678) 318 (2,840) 1,020 (670)
Net change in unrealized
appreciation (depreciation)
on investments and foreign
currency transactions 10,277 (4,970) 5,923 (5,192) 4,825 (3,429) 1,220 (435)
-------- -------- -------- -------- ------- -------- ------- -------
Net increase (decrease) in
net assets resulting from
operations 18,154 (4,680) 10,751 (2,979) 7,673 (3,449) 3,262 (281)
--------- -------- ------- ------- ------- ------- ------ ------
Dividends distributed from:
Net investment income:
Trust Class (6,740) (5,867) (4,360) (4,870) (2,491) (2,772) (1,582) (868)
Investor Class (29) (24) (151) (11) (54) (38) (10) (5)
Net realized gains:
Trust Class -- -- -- -- -- (196) -- (279)
Investor Class -- -- -- -- -- (3) -- (1)
--------- -------- ------- ------- ------- ------- ------ ------
Total dividends distributed (6,769) (5,891) (4,511) (4,881) (2,545) (3,009) (1,592) (1,153)
--------- -------- ------- ------- ------- ------- ------ ------
Capital share transactions:
Trust Class:
Proceeds from shares issued 41,779 20,696 8,766 16,057 3,761 5,355 4,868 3,752
Shares issued in lieu of cash
distributions -- 2 -- -- -- -- -- --
Cost of shares repurchased (19,953) (48,770) (32,350) (22,029) (12,289) (12,555) (4,120) (3,791)
--------- -------- ------- ------- ------- ------- ------ ------
Increase (decrease) in net
assets derived from Trust
Class transactions 21,826 (28,072) (23,584) (5,972) (8,528) (7,200) 748 (39)
--------- -------- ------- ------- ------- ------- ------ ------
Investor Class:
Proceeds from shares issued 232 451 2,015 1,147 203 912 54 71
Shares issued in lieu of cash
distributions 25 19 140 11 48 33 10 6
Cost of shares
repurchased (103) (71) (534) (63) (288) (230) (32) (1)
--------- -------- ------- ------- ------- ------- ------ ------
Increase (decrease) in net
assets derived from
Investor Class transactions 154 399 1,621 1,095 (37) 715 32 76
Increase (decrease) in net --------- -------- ------- ------- ------- ------- ------ ------
assets derived from
capital share transactions 21,980 (27,673) (21,963) (4,877) (8,565) (6,485) 780 37
--------- -------- ------- ------- ------- ------- ------ ------
Net increase (decrease) in
net assets 33,365 (38,244) (15,723) (12,737) (3,437) (12,943) 2,450 (1,397)
--------- -------- ------- ------- ------- ------- ------ ------
Net assets:
Beginning of period 92,844 131,088 92,135 104,872 54,647 67,590 15,108 16,505
--------- -------- ------- ------- ------- ------- ------ ------
End of period $126,209 $ 92,844 $ 76,412 $ 92,135 $ 51,210 $ 54,647 $ 17,558 $ 15,108
--------- -------- ------- ------- ------- ------- ------ ------
--------- -------- ------- ------- ------- ------- ------ ------
Capital share transactions:
Trust Class:
Shares issued 4,247 2,108 897 1,638 383 538 453 371
-- -- -- -- -- -- -- --
Shares issued in lieu of
cash distributions -- -- -- -- -- -- -- --
Shares repurchased (2,014) (4,983) (3,346) (2,286) (1,262) (1,315) (379) (378)
Total Trust Class
transactions 2,233 (2,875) (2,449) (648) (879) (777) 74 (7)
Investor Class:
Shares
issued 23 45 211 122 21 93 5 6
Shares issued in lieu of cash
distributions 2 2 14 2 5 3 1 1
Shares repurchased (10) (8) (53) (7) (29) (23) (3) --
--------- -------- ------- ------- ------- ------- ------ ------
Total Investor Class
transactions 15 39 172 117 (3) 73 3 7
--------- -------- ------- ------- ------- ------- ------ ------
Increase (decrease) in
capital shares 2,248 (2,836) (2,277) (531) (882) (704) 77 --
--------- -------- ------- ------- ------- ------- ------ ------
</TABLE>
*Commenced operations on January 3, 1994.
The accompanying notes are an integral part of the financial statements.
60
<PAGE>
DECEMBER 31, 1995
LOGO
<TABLE>
<CAPTION>
INTERNATIONAL SMALL ASIAN
BALANCED VALUE GROWTH EQUITY CAP TIGERS
FUND FUND FUND FUND FUND FUND*
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 2,422 $ 1,908 $ 3,028 $ 1,932 $ 1,166 $ 1,484 $ 447 $ 73 $ 37 $ 114 $ 289 $ 67
3,342 181 3,456 1,592 8,079 296 991 251 2,502 (1,238) (161) (62)
7,291 (3,604) 20,121 (3,886) 14,198 (4,297) 7,172 584 2,930 (2,044) 2,686 (705)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
13,055 (1,515) 26,605 (362) 23,443 (2,517) 8,610 908 5,469 (3,168) 2,814 (700)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(2,309) (1,801) (3,032) (1,880) (1,162) (1,444) (292) -- (37) (111) (263) (32)
(122) (69) (31) (20) (25) (16) (2) -- -- -- (6) --
(1,941) (40) (2,748) (1,062) (6,782) (988) (1,076) (23) (303) -- -- (19)
(153) (2) (31) (12) (213) (18) (23) (1) (7) -- -- (1)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(4,525) (1,912) (5,842) (2,974) (8,182) (2,466) (1,393) (24) (347) (111) (269) (52)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
24,298 61,650 63,103 25,664 18,301 28,674 46,191 24,699 9,098 10,505 10,886 23,298
-- 1 -- 1 -- -- -- -- -- -- -- --
(54,617) (44,784) (13,942) (15,147) (37,739) (39,640) (17,048) (7,710) (21,804) (29,074) (8,070) (4,710)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(30,319) 16,867 49,161 10,518 (19,438) (10,966) 29,143 16,989 (12,706) (18,569) 2,816 18,588
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
1,133 2,223 642 526 844 926 586 943 174 194 172 743
270 71 62 31 237 32 22 1 6 -- 6 1
(746) (529) (176) (226) (247) (190) (266) (92) (20) (6) (226) (15)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
657 1,765 528 331 834 768 342 852 160 188 (48) 729
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(29,662) 18,632 49,689 10,849 (18,604) (10,198) 29,485 17,841 (12,546) (18,381) 2,768 19,317
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(21,132) 15,205 70,452 7,513 (3,343) (15,181) 36,702 18,725 (7,424) (21,660) 5,313 18,565
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
74,980 59,775 62,288 54,775 84,240 99,421 42,503 23,778 31,821 53,481 18,565 --
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
$ 53,848 $ 74,980 $132,740 $ 62,288 $ 80,897 $ 84,240 $ 79,205 $42,503 $ 24,397 $31,821 $23,878 $ 18,565
======== ======== ======== ======== ======== ======== ======== ======= ======== ======= ======= ========
2,401 6,296 5,673 2,505 1,618 2,785 3,382 1,898 812 1,062 1,131 2,359
-- -- -- -- -- -- -- -- -- -- -- --
(5,320) (4,564) (1,257) (1,496) (3,383) (3,935) (1,235) (583) (2,192) (2,981) (801) (474)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(2,919) 1,732 4,416 1,009 (1,765) (1,150) 2,147 1,315 (1,380) (1,919) 330 1,885
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
111 224 57 51 75 91 43 72 15 20 18 76
26 7 5 3 21 3 2 -- 1 -- 1 --
(73) (54) (15) (22) (22) (19) (20) (7) (2) (1) (23) (1)
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
64 177 47 32 74 75 25 65 14 19 (4) 75
- -------- -------- -------- -------- -------- -------- -------- ------- -------- ------- ------- --------
(2,855) 1,909 4,463 1,041 (1,691) (1,075) 2,172 1,380 (1,366) (1,900) 326 1,960
======== ======== ======== ======== ======== ======== ======== ======= ======== ======= ======= ========
</TABLE>
61
<PAGE>
Financial Highlights
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM
BEGINNING INVESTMENT GAINS INVESTMENT CAPITAL
OF PERIOD INCOME ON SECURITIES INCOME GAINS
- ------------------------------------------------------------------------------------------------
TREASURY MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRUST CLASS
1995 $1.00 $0.05 $0.00 $(0.05) $0.00
1994 1.00 0.04 0.00 (0.04) 0.00
1993(1) 1.00 0.03 0.00 (0.03) 0.00
INVESTOR CLASS
1995 $1.00 $0.05 $0.00 $(0.05) $0.00
1994 1.00 0.03 0.00 (0.03) 0.00
1993(2) 1.00 0.02 0.00 (0.02) 0.00
- ------------------------------------------------------------------------------------------------
GOVEMMENT MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $1.00 $0.05 $0.00 $(0.05) $0.00
1994 1.00 0.04 0.00 (0.04) 0.00
1993(1) 1.00 0.03 0.00 (0.03) 0.00
INVESTOR CLASS
1995 $1.00 $0.05 $0.00 $(0.05) $0.00
1994 1.00 0.04 0.00 (0.04) 0.00
1993(3) 1.00 0.02 0.00 (0.02) 0.00
- ------------------------------------------------------------------------------------------------
MONEY MARKET FUND
- ------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $1.00 $0.06 $0.00 $(0.06) $0.00
1994 1.00 0.04 0.00 (0.04) 0.00
1993(1) 1.00 0.03 0.00 (0.03) 0.00
INVESTOR CLASS
1995 $1.00 $0.05 $0.00 $(0.05) $0.00
1994 1.00 0.04 0.00 (0.04) 0.00
1993(4) 1.00 0.02 0.00 (0.02) 0.00
- ------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
62
<PAGE>
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Ratio of Net
Investment
Ratio of Net Ratio of Expenses Income (Loss)
Ratio of Investment to Average to Average
Net Asset Net Assets Expenses Income Net Assets Net Assets Portfolio
Value End Total End of to Average to Average (Excluding (Excluding Turnover
of Period Return Period (000) Net Assets Net Assets Waivers) Waivers) Rate
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1.00 5.28% $110,475 0.44% 5.16% 0.59% 5.01% N/A
1.00 3.58 111,545 0.45 3.50 0.61 3.34 N/A
1.00 2.56 108,495 0.47 2.53 0.62 2.38 N/A
$1.00 5.02% $ 7,931 0.69% 4.89% 0.84% 4.74% N/A
1.00 3.32 3,231 0.70 3.52 0.86 3.36 N/A
1.00 2.29 1,347 0.75 2.28 5.23** (2.20)** N/A
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
$1.00 5.59% $207,615 0.42% 5.45% 0.42% 5.45% N/A
1.00 3.89 157,140 0.42 3.81 0.42 3.81 N/A
1.00 3.00 159,401 0.45 2.92 0.45 2.92 N/A
$1.00 5.33% $ 3,002 0.67% 5.18% 0.67% 5.18% N/A
1.00 3.63 2,739 0.67 3.62 0.67 3.62 N/A
1.00 2.78 1,814 0.72 2.69 2.37** 1.04** N/A
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
$1.00 5.64% $475,688 0.41% 5.50% 0.56% 5.35% N/A
1.00 3.97 460,583 0.41 3.93 0.56 3.78 N/A
1.00 3.01 367,110 0.46 2.92 0.61 2.77 N/A
$1.00 5.38% $ 1,358 0.66% 5.22% 0.81% 5.07% N/A
1.00 3.71 605 0.66 4.13 0.81 3.98 N/A
1.00 2.76 118 0.72 2.69 10.48% (7.09) N/A
</TABLE>
The accompanying notes are an integral part of the financial statements.
63
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
For a Share Outstanding Throughout the Period
Net Asset Realized Dividends Distributions
Value Net and Unrealized from Net from
Beginning Investment Gains (Losses) Investment Capital
of Period Income on Securities Income Gains
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tax-Exempt Money Market Fund
Trust Class
1995 $ 1.00 $0.03 $ 0.00 $(0.03) $ 0.00
1994 1.00 0.02 0.00 (0.02) 0.00
1993(1) 1.00 0.02 0.00 (0.02) 0.00
Investor Class
1995 $ 1.00 $0.03 $ 0.00 $(0.03) $ 0.00
1994 1.00 0.02 0.00 (0.02) 0.00
1993(5) 1.00 0.01 0.00 (0.01) 0.00
Fixed Income Fund
Trust Class
1995 $ 9.30 $0.59 $ 1.02 $(0.59) $ 0.00
1994 10.23 0.54 (0.93) (0.54) 0.00
1993(1) 10.00 0.47 0.50 (0.47) (0.27)
Investor Class
1995 $ 9.32 $0.55 $ 1.04 $(0.56) $ 0.00
1994 10.24 0.50 (0.90) (0.52) 0.00
1993(6) 10.30 0.35 0.23 (0.37) (0.27)
Intermediate Government
Fixed Income Fund
Trust Class
1995 $ 9.33 $0.54 $ 0.73 $(0.54) $ 0.00
1994 10.08 0.47 (0.75) (0.47) 0.00
1993(1) 10.00 0.41 0.18 (0.41) (0.10)
Investor Class
1995 $ 9.32 $0.49 $ 0.76 $(0.52) $ 0.00
1994 10.07 0.43 (0.73) (0.45) 0.00
1993(7) 10.21 0.28 (0.02) (0.30) (0.10)
</TABLE>
The accompanying notes are an integral part of the financial statements.
64
<PAGE>
DECEMBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT
RATIO OF NET RATIO OF EXPENSES INCOME (LOSS)
RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
NET ASSET NET ASSETS EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
VALUE END TOTAL END OF TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
OF PERIOD RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1.00 3.49% $167,945 0.41% 3.44% 0.56% 3.29% N/A
1.00 2.50 161,054 0.43 2.52 0.59 2.36 N/A
1.00 1.98 116,000 0.45 1.97 0.60 1.82 N/A
$1.00 3.24% $ 3,244 0.66% 3.19% 0.81% 3.04% N/A
1.00 2.24 4,204 0.68 2.31 0.84 2.15 N/A
1.00 1.65 1,394 0.74 1.81 4.88** (2.33)** N/A
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
$10.32 17.75% $125,563 0.74% 5.97% 0.84% 5.87% 59%
9.30 (3.82) 92,402 0.72 5.45 0.82 5.35 126%
10.23 9.92 131,002 0.77 4.60 0.87 4.50 163
$10.35 17.40%* $ 646 0.99% 5.72% 1.09% 5.62% 59%
9.32 (3.97)* 442 0.98 5.38 1.08 5.28 126
10.24 7.44* 86 1.06 4.08 42.44** (37.30)** 163
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
$10.06 13.86% $ 73,466 0.73% 5.48% 0.83% 5.38% 115%
9.33 (2.78) 91,002 0.74 4.88 0.84 4.78 124
10.08 6.04 104,826 0.76 4.15 0.86 4.05 81
$10.05 13.59%* $ 2,946 0.98% 5.18% 1.08% 5.08% 115%
9.32 (3.03)* 1,133 1.02 5.05 1.12 4.95 124
10.07 3.42* 46 1.04 3.85 77.08** (72.19)** 81
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
65
<PAGE>
DECEMBER 31, 1995
[LOGO]
Financial Highlights
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT CAPITAL
OF PERIOD INCOME ON SECURITIES INCOME GAINS
- -------------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT FIXED INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRUST CLASS
1995 $ 9.26 $0.48 $ 0.94 $(O.48) $ 0.00
1994 10.23 0.44 (0.94) (0.44) (0.03)
1993(1) 10.00 0.42 0.42 (0.42) (0.19)
INVESTOR CLASS
1995 $ 9.24 $0.43 $ 0.97 $(O.46) $ 0.00
1994 10.22 0.40 (0.93) (0.42) (0.03)
1993(8) 10.29 0.32 0.14 (0.34) (0.19)
- -------------------------------------------------------------------------------------------------------------------------
GLOBAL FIXED INCOME FUND
- -------------------------------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $ 9.54 $0.62 $ 1.38 $(O.96) $ 0.00
1994 10.43 0.56 (0.72) (0.55) (0.18)
1993(9) 10.00 0.54 0.94 (0.64) (0.41)
INVESTOR CLASS
1995 $ 9.53 $0.52 $ 1.45 $(O.94) $ 0.00
1994 10.42 0.46 (0.64) (0.53) (0.18)
1993(10) 10.88 0.40 0.12 (0.57) (0.41)
- -------------------------------------------------------------------------------------------------------------------------
BALANCED FUND
- -------------------------------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $ 9.53 $0.39 $ 1.65 $(O.39) $(0.43)
1994 10.04 0.30 (0.50) (0.30) (0.01)
1993(1) 10.00 0.29 0.39 (0.29) (0.35)
INVESTOR CLASS
1995 $ 9.53 $0.34 $ 1.67 $(O.36) $(0.43)
1994 10.03 0.27 (0.49) (O.27) (0.01)
1993(11) 10.28 0.20 0.12 (0.22) (0.35)
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
66
<PAGE>
DECEMBER 31, 1995
[LOGO]
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT
RATIO OF NET RATIO OF EXPENSES INCOME (LOSS)
RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
NET ASSET NET ASSETS EXPENSES INCOME NET ASSETS NET ASSETS PORTFOLIO
VALUE END TOTAL END OF TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
OF PERIOD RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) (WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$10.20 15.67% $ 50,079 0.75% 4.84% 0.87% 4.72% 129%
9.26 (4.93) 53,588 0.71 4.54 0.84 4.41 146
10.23 8.64 67,162 0.75 4.17 0.85 4.07 149
$10.18 15.43%* $ 1,131 1.00% 4.59% 1.12% 4.47% 129%
9.24 (5.27)* 1,059 0.97 4.35 1.10 4.22 146
10.22 5.73* 428 1.05 3.88 11.86** (6.93)** 149
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
$10.58 20.99% $17,433 1.10% 5.86% 1.16% 5.80% 105%
9.54 (1.47) 15,021 1.16 5.09 1.22 5.03 138
10.43 16.33 16,488 1.21 5.95 1.21 5.95 146
$10.56 20.68%* $ 125 1.35% 5.57% 1.41% 5.51% 105%
9.53 (1.71)* 87 1.41 5.03 7.54 (1.10) 138
10.42 6.61 * 17 1.56 5.85 319.45** (312.04)** 146
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
$10.75 21.85% $49,899 0.92% 3.74% 0.92% 3.74% 85%
9.53 (2.11) 72,086 0.94 3.11 0.94 3.11 85
10.04 7.09 58,510 0.97 2.88 0.97 2.88 126
$10.75 21.52%* $ 3,949 1.22% 3.36% 1.22% 3.36% 85%
9.53 (2.29)* 2,894 1.24 2.86 1.34 2.76 85
10.03 4.07* 1,265 1.30 2.30 5.06** (1.46)** 126
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
67
<PAGE>
Financial Highlights
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET NET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE INVESTMENT AND UNREALIZED FROM NET FROM
BEGINNING INCOME GAINS (LOSSES) INVESTMENT CAPITAL
OF PERIOD (LOSS) ON SECURITIES INCOME GAINS
- -------------------------------------------------------------------------------------------------
VALUE FUND
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRUST CLASS
1995 $ 9.79 $ 0.34 $ 2.74 $(0.35) $(0.26)
1994 10.30 0.35 (0.35) (0.34) (0.17)
1993(1) 10.00 0.28 0.38 (0.28) (0.08)
INVESTOR CLASS
1995 $ 9.80 $ 0.32 $ 2.74 $(0.32) $(0.26)
1994 10.30 0.31 (0.33) (0.31) (0.17)
1993(12) 10.41 0.21 (0.03) (0.21) (0.08)
- -------------------------------------------------------------------------------------------------
GROWTH FUND
- -------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $ 9.73 $ 0.16 $ 2.88 $(O.16) $(1.00)
1994 10.21 0.16 (0.36) (0.16) (0.12)
1993(1) 10.00 0.17 0.33 (0.17) (0.12)
INVESTOR CLASS
1995 $ 9.74 $ 0.12 $ 2.89 $(O.13) $(1.00)
1994 10.23 0.13 (0.37) (0.13) (0.12)
1993(13) 10.44 0.10 (0.08) (0.11) (0.12)
- -------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------------------------
TRUST CLASS
1995 $13.00 $ 0.07 $ 1.75 $(0.06) $(0.20)
1994 12.59 0.02 0.40 0.00 (0.01)
1993(1) 10.00 0.00 2.63 0.00 (0,04)
INVESTOR CLASS
1995 $12.96 $ 0.05 $ 1.73 $(0.02) $(0.20)
1994 12.58 0.02 0.37 0.00 (0.01)
1993(14) 10.93 (0.01) 1.70 0.00 (0.04)
- -------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
68
<PAGE>
DECEMBER 31, 1995
<TABLE>
<CAPTION>
RATIO OF NET
INVESTMENT
RATIO OF NET RATIO OF EXPENSES INCOME (LOSS)
RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
NET ASSET NET ASSETS EXPENSES INCOME (LOSS) NET ASSETS NET ASSETS PORTFOLIO
VALUE END TOTAL END OF TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
OF PERIOD RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$12.26 32.02% $131,243 1.05% 3.07% 1.05% 3.07% 37%
9.79 0.00 61,557 1.06 3.45 1.06 3.45 38
10.30 6.73 54,340 1.10 2.85 1.10 2.85 40
$12.28 31.72%* $ 1,497 1.33% 2.79% 1.33% 2.79% 37%
9.80 (0.21)* 731 1.37 3.13 1.37 3.13 38
10.30 1.95* 435 1.48 2.51 8.99** (5.00)** 40
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
$11.61 31.60% $ 78,216 1.02% 1.37% 1.02% 1.37% 71%
9.73 (2.05) 82,710 1.02 1.58 1.03 1.57 68
10.21 5.07 98,581 1.06 1.70 1.07 1.69 82
$11.62 31.29%* $2,681 1.31% 1.10% 1.31% 1.10% 71%
9.74 (2.42)* 1,530 1.33 1.30 1.33 1.30 68
10.23 (0.23)* 840 1.43 1.24 6.55** (3.88)** 82
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
$14.56 14.03% $ 77,519 1.38% 0.70% 1.38% 0.70% 11%
13.00 3.32 41,324 1.43 0.21 1.46 0.18 6
12.59 26.55 23,457 1.64 0.03 1.64 0.03 13
$14.52 13.79%* $1,686 1.68% 0.42% 1.68% 0.42% 11%
12.96 3.08* 1,179 1.73 0.03 2.22 (0.46) 6
12.58 23.52* 321 1.92 (0.38) 20.12** (18.58)** 13
- ------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
69
<PAGE>
Financial Highlights
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
NET ASSET REALIZED DIVIDENDS DISTRIBUTIONS
VALUE NET AND UNREALIZED FROM NET FROM
BEGINNING INVESTMENT GAINS (LOSSES) INVESTMENT CAPITAL
OF PERIOD INCOME (LOSS) ON SECURITIES INCOME GAINS
- --------------------------------------------------------------------------------------------
SMALL CAP FUND
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TRUST CLASS
1995 $ 9.57 $ 0.02 $ 3.05 $(0.02) $(0.16)
1994 10.24 0.03 (0.67) (0.03) 0.00
1993(1) 10.00 0.04 0.24 (0.04) 0.00
INVESTOR CLASS
1995 $ 9.58 $(0.01) $ 3.05 $ 0.00 $(0.16)
1994 10.25 0.00 (0.67) 0.00 0.00
1993(15) 9.51 0.00 0.75 (0.01) 0.00
- --------------------------------------------------------------------------------------------
ASIAN TIGERS FUND
- --------------------------------------------------------------------------------------------
TRUST CLASS
1995 $ 9.47 $ 0.12 $ 0.98 $(0.12) $ 0.00
1994(16) 10.00 0.03 (0.53) (0.02) (0.01)
INVESTOR CLASS
1995 $ 9.47 $ 0.11 $ 0.95 $(0.09) $ 0.00
1994(17) 10.00 0.01 (0.53) 0.00 (0.01)
- --------------------------------------------------------------------------------------------
</TABLE>
*Sales load is not included in total return.
**Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Classes' initial year of operations.
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on March 25, 1993. All ratios and total returns for the
period have been annualized.
3. Commenced operations on April 22, 1993. All ratios and total returns for the
period have been annualized.
4. Commenced operations on March 31, 1993. All ratios and total returns for the
period have been annualized.
5. Commenced operations on April 13, 1993. All ratios and total returns for the
period have been annualized.
6. Commenced operations on March 12, 1993. All ratios and total returns for the
period have been annualized.
7. Commenced operations on April 12, 1993. All ratios and total returns for the
period have been annualized.
8. Commenced operations on March 9, 1993. All ratios and total returns for the
period have been annualized.
9. Commenced operations on February 7, 1993. All ratios and total returns for
the period have been annualized.
70
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Ratio of Net
Investment
Ratio of Net Ratio of Expenses Income (Loss)
Ratio of Investment to Average to Average
Net Asset Net Assets Expenses Income (Loss) Net Assets Net Assets Portfolio
Value End Total End of to Average to Average (Excluding (Excluding Turnover
of Period Return Period (000) Net Assets Net Assets Waivers) Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
$12.46 32.13% $23,844 1.10% 0.18% 1.10% 0.18% 142%
9.57 (6.27) 31,527 1.06 0.27 1.06 0.27 43
10.24 2.82 53,357 1.09 0.40 1.10 0.39 27
$12.46 31.73%* $ 553 1.39% (0.08)% 1.39% (0.08)% 142%
9.58 (6.54)* 294 1.38 0.02 1.38 0.02 43
10.25 10.55* 124 1.57 (0.10) 33.84** (32.37)** 27
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
$10.45 11.61% $23,145 1.52% 1.38% 1.60% 1.30% 28%
9.47 (5.07) 17,860 1.60 0.45 1.71 0.34 13
$10.44 11.18%* $ 733 1.81% 1.05% 1.88% 0.98% 28%
9.47 (5.37)* 705 1.90 0.15 2.75** (0.70)** 13
- --------------------------------------------------------------------------------------------------------------------------------
10. Commenced operations on April 26, 1993. All ratios and total returns for the period have been annualized.
11. Commenced operations on March 9, 1993. All ratios and total returns for the period have been annualized.
12. Commenced operations on March 26, 1993. All ratios and total returns for the period have been annualized.
13. Commenced operations on March 8, 1993. All ratios and total returns for the period have been annualized.
14. Commenced operations on April 12, 1993. All ratios and total returns for the period have been annualized.
15. Commenced operations on April 12, 1993. All ratios and total returns for the period have been annualized.
16. Commenced operations on January 3, 1994. All ratios and total returns for the period have been annualized.
17. Commenced operations on January 12, 1994. All ratios and total returns for the period have been annualized.
The accompanying notes are an integral part of the financial statements.
71
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. Organization
Rembrandt Funds/r/ (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated September 17, 1992. The Trust is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company with 17 funds: Treasury Money Market Fund, Government Money
Market Fund, Money Market Fund (formerly the Taxable Money Market Fund), Tax-
Exempt Money Market Fund (collectively "the Money Market Funds''), Fixed Income
Fund (formerly the Taxable Fixed Income Fund), Intermediate Government Fixed
Income Fund (formerly the Short/Intermediate Government Fixed Income Fund), Tax-
Exempt Fixed Income Fund, Global Fixed Income Fund, Limited Volatility Fixed
Income Fund (collectively "the Fixed Income Funds''), Balanced Fund, Value Fund,
Growth Fund, International Equity Fund, Small Cap Fund, TransEurope Fund, Latin
America Equity Fund and Asian Tigers Fund (collectively "the Equity Funds'').
The Limited Volatility Fixed Income Fund, Latin America Equity Fund and
TransEurope Fund have not yet commenced operations as of December 31, 1995. The
assets of each Fund are segregated, and a shareholder's interest is limited to
the Fund in which shares are held. The Trust is registered to offer two classes
of shares: Trust Class and Investor Class.
2. Significant Accounting Policies
The following is a summary of the significant accounting policies followed by
the Funds.
Security Valuation--Investments in equity securities which are traded on a
national securities exchange (or reported on NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the over-the-
counter market and listed equity securities for which no sale was reported on
that date are stated at the last quoted bid price. Debt obligations exceeding 60
days to maturity for which market quotations are readily available are valued at
the most recently quoted bid price. Debt obligations with 60 days or less until
maturity may be valued at their amortized cost. Foreign securities in the Global
Fixed Income Fund, Asian Tigers Fund, and International Equity Fund are valued
based upon quotations from the primary market in which they are traded.
Investment securities held by the Money Market Funds are stated at amortized
cost which approximates market value. Under the amortized cost method, any
discount or premium is amortized ratably to the maturity of the security and is
included in interest income.
Federal Income Taxes--It is each Fund's intention to qualify as a regulated
investment company for Federal income tax purposes by complying with the
appropriate provisions of the Internal Revenue Code of 1986, as amended.
Accordingly, no provisions for Federal income taxes are required in the
accompanying financial statements.
Security Transactions and Related Income--Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date, and interest income is recognized on an
accrual basis. Costs used in determining realized gains and losses on the sales
of investment securities are those of the specific securities sold, adjusted for
the accretion and amortization of purchase discounts and premiums during the
respective holding periods. Purchase discounts and premiums on securities held
by the Equity and Fixed Income Funds are accreted and amortized to maturity
using the interest method, which approximates the effective interest method.
- --------------------------------------------------------------------------------
72
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value of
the collateral, including accrued interest thereon, is sufficient in the event
of default of the counterparty. If the counterparty defaults and the value of
the collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
Net Asset Value Per Share--The net asset value per share of each Fund is
calculated on each business day. In general, it is computed by dividing the
assets of each Fund, less its liabilities, by the number of outstanding shares
of the Fund.
Foreign Currency Transactions--With respect to the Global Fixed Income Fund,
Asian Tigers Fund, and International Equity Fund (the "International Funds"),
the books and records are maintained in U.S. dollars. Foreign currency amounts
are translated into U.S. dollars on the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income, and expenses at
the relevent rates of exchange prevailing on the respective dates of such
transactions.
The International Funds do not isolate that portion of gains and losses on
investments in equity securities which is due to changes in the foreign exchange
rates from that which is due to change in market prices of equity securities.
The International Funds report certain foreign currency-related transactions as
components of realized gains for financial reporting purposes, whereas such
components are treated as ordinary income for Federal income tax purposes.
Forward Foreign Currency Contracts--The Global Fixed Income Fund enters into
forward foreign currency contracts as hedges against fund positions. The
aggregate principal amounts of the contracts are not recorded as the Fund
intends to settle the contracts prior to delivery. All commitments are "marked-
to-market" daily at the applicable foreign exchange rate and any resulting
unrealized gains or losses are recorded currently. The Fund realizes gains or
losses at the time the forward contracts are extinguished. Unrealized gains or
losses on outstanding positions in forward foreign currency contracts held at
the close of the year are recognized as ordinary income or loss for Federal
income tax purposes.
Maturity Dates--Certain variable rate and floating rate securities of the Funds
are subject to "maturity shortening" devices such as put or demand features.
Under Rule 2a-7 of the Investment Company Act of 1940, as amended, these
securities are deemed to have maturities shorter than the ultimate maturity
dates. Accordingly, the maturity dates reflected in the Statements of Net Assets
are the shorter of the effective put/demand date or the ultimate maturity date.
Classes--Class-specific expenses are borne by that class. Income, expenses, and
realized and unrealized gains/losses are allocated to the respective classes on
the basis of relative daily net assets.
Other--Distributions from net investment income for the Equity and Fixed Income
Funds are paid to shareholders on a periodic basis. Distributions from net
investment income for the Money Market Funds are distributed to shareholders
daily. Any net realized capital gains on sales of securities are distributed to
shareholders at least annually.
The amounts of distributions from net investment income and net realized capital
gains are determined in accordance with Federal income tax regulations, which
may differ from those amounts
- --------------------------------------------------------------------------------
73
<PAGE>
Notes to Financial Statements
recorded under generally accepted accounting principles. These book/tax
differences are either temporary or permanent in nature. To the extent that
these differences are permanent, they are charged or credited to paid-in capital
in the period that the difference arises.
3. Administration and Distribution Agreements
The Trust and SEI Financial Management Corporation (the "Administrator") have
entered into an administration agreement. Under the terms of the Administration
Agreement (the "Administration Agreement''), the "Administrator" is entitled to
a fee calculated daily and paid monthly at an annual rate of .15% of the average
daily net assets of each Fund.
The Trust and Rembrandt Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Financial Services Company, have entered into a
distribution agreement. The Distributor receives no fees for its distribution
services under this agreement for Trust Class shares of any Fund. The
Distributor is entitled to a fee of .25% of the average daily net assets of the
Investor Class shares of the Fixed Income and Money Market Funds and, through
October 24, 1995, .30% of the average daily net assets of the Investor Class
shares of the Equity Funds as compensation for its services. Since October 24,
1995, the distributor is entitled to a fee of .25% of the average daily net
assets of the Investor Class shares of each Fund.
4. Organizational Costs and Transactions with Affiliates
Organizational costs have been capitalized by the Funds and are being amortized
over 60 months commencing with operations. In the event any of the initial
shares are redeemed by any holder thereof during the period that the Fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the Fund will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares being redeemed bears to
the number of initial shares outstanding at the time of the redemption. These
costs include legal fees of approximately $53,000 for organizational work
performed by a law firm of which an officer of the Trust is a partner.
Certain officers of the Trust are also officers of the Administrator and/or
Distributor. Such officers are paid no fees by the Trust for serving in their
roles as officers of the Trust.
During the period ended December 31, 1994, ABN AMRO North America, Inc., an
affiliate of the Advisor, purchased securities from the Money Market Fund and
Government Money Market Fund for $30,000,000 and $15,000,000, respectively,
which represented the amortized cost and carrying value of the securities. The
securities' aggregate market values were $28,600,000 and $14,300,000,
respectively, at the time of purchase. In connection with these transactions the
Funds recorded realized losses on the sales of these securities in their
statements of operations along with an offsetting capital contribution from the
affiliate. These transactions did not change the net asset value of either Fund.
5. Investment Advisory Agreement
The Trust has entered into an investment advisory agreement with LaSalle Street
Capital Management, Ltd. (the "Advisor''), under which the Advisor is entitled
to an annual fee equal to .60% of the average daily net assets of each of the
Fixed Income, Intermediate Government Fixed Income, Limited Volatility Fixed
Income and Tax-Exempt Fixed Income Funds; .80% of the average daily net assets
of the Global Fixed Income, Value, Growth, and Small Cap Funds; 1.00% of the
- --------------------------------------------------------------------------------
74
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
average daily net assets of the International Equity, TransEurope, Latin America
Equity and Asian Tigers Funds; 70% of the average daily net assets of the
Balanced Fund; 35% of the average daily net assets of the Treasury Money Market,
Money Market, and Tax-Exempt Money Market Funds, and .20% of the average daily
net assets of the Government Money Market Fund. The Advisor has voluntarily
agreed for an indefinite period of time, to waive a portion of its fee in an
amount equal to .10% of the average daily net assets of each of the Fixed Income
Funds, except the Global Fixed Income Fund. The Advisor has also voluntarily
agreed for an indefinite period of time, to waive a portion of its fee in an
amount equal to .15% of the average daily net assets of each of the money Market
Funds, except the Government Money Market Fund.
ABN AMRO-NSM International Funds Management B.V. has entered into a sub-advisory
agreement with the Advisor and serves as Sub-Advisor to the International Funds.
Sub-Advisory fees are paid by the Advisor.
6. Investment Transactions
The cost of security purchases and the proceeds from the sale of securities
including U.S. Government securities, other than temporary cash investments,
during the period ended December 31, 1995 were as follows:
Purchases Sales
(000) (000)
--------- -----
Fixed Income $98,106 $61,520
Intermediate Government
Fixed Income 81,023 81,055
Tax-Exempt Fixed Income 62,732 68,892
Global Fixed Income 15,087 15,401
Balanced 49,080 80,105
Value 78,071 34,271
Growth 58,095 81,502
International Equity 35,123 6,532
Small Cap 28,227 41,211
Asian Tigers 9,226 5,377
At December 31 , 1995, the total cost of securities and the net realized gains
or losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on investments at December 31,
1995, for each Fixed Income and Equity Fund is as follows:
Net
Appreciated Depreciated Unrealized
Securities Securities Appreciation
(000) (000) (000)
------------ ----------- -----------
Fixed Income $ 5,898 $ 47 $ 5,851
Intermediate
Government
Fixed Income 1,073 144 929
Tax-Exempt Fixed
Income 2,327 5 2,322
Global Fixed
Income 1,040 92 948
Balanced 5,929 522 5,407
Value 18,468 2,125 16,343
Growth 12,707 2,747 9,960
International Equity 12,209 1,611 10,598
Small Cap 4,205 764 3,441
Asian Tigers 2,925 944 1,981
- --------------------------------------------------------------------------------
75
<PAGE>
Notes to Financial Statements
At December 31, 1995 the following Funds had available realized capital losses
to offset future net capital gains through fiscal year ended:
2002 2003
(000) (000)
----- -----
Government Money Market $ 2 $ --
Tax-Exempt Money Market 10 2
Fixed Income 3,923 --
Intermediate Government Fixed Income 1,919 447
Tax-Exempt Fixed Income 2,215 307
Global Fixed Income 392 --
Asian Tigers -- 142
The market value of the Fixed Income Funds' investments will change in response
to interest rate changes and other factors. During periods of falling interest
rates, the values of fixed income securities generally rise. Conversely, during
periods of rising interest rates, the values of such securities generally
decline. Changes by recognized rating agencies in the ratings of any fixed
income security and in the ability of an issuer to make payments of interest and
principal may also affect the value of these investments.
7. Forward Foreign Currency Contracts
The Global Fixed Income Fund enters into forward foreign currency exchange
contracts as hedges against portfolio positions. Such contracts, which protect
the value of the Fund's investment securities against a decline in the value of
the hedged currency, do not eliminate fluctuations in the underlying prices of
the securities. They simply establish an exchange rate at a future date. Also,
although such contracts tend to minimize the risk of loss due to a decline in
the value of a hedged currency, at the same time they tend to limit any
potential gain that might be realized should the value of such foreign currency
increase.
The following forward foreign currency contract was outstanding at December 31,
1995:
Global Fixed Income Fund:
In Net
Contract Exchange Unrealized
Settlement to Deliver For Depreciation
Date (000) (000) (000)
---------- ---------- --------- -------------
Foreign Currency
Sale: 03/14/96 ES 91,800 DM 1,064 $(6)
- ------------
DM German Mark
ES Spanish Peseta
8. Shareholder Voting Results (Unaudited)
On September 11, 1995 there was a special meeting of shareholders of the Global
Fixed Income Fund to approve the elimination of the fundamental investment
limitation concerning diversification to permit increased investments in the
securities of any single issuer. The following were the results of the vote:
For..................................... 1,291,064
Against................................. 277,665
Abstain................................. 0
There were no other proposals voted upon at such meeting.
- --------------------------------------------------------------------------------
76
<PAGE>
DECEMBER 31, 1995
[REMBRANDT LOGO]
Report of Independent Auditors
Trustees and Shareholders:
Rembrandt Funds(R)
We have audited the accompanying statements of net assets of the Treasury Money
Market Fund, Government Money Market Fund, Money Market Fund, Tax-Exempt Money
Market Fund, Fixed Income Fund, Intermediate Government Fixed Income Fund, Tax-
Exempt Fixed Income Fund, Value Fund, Growth Fund, International Equity Fund,
and Small Cap Fund and the schedules of investments and statements of assets and
liabilities of the Global Fixed Income Fund, Balanced Fund, and Asian Tigers
Fund of Rembrandt Funds(R), which includes the Trust and Investor classes (the
"Trust"), as of December 31, 1995, and the related statements of operations, the
statements of changes in net assets, and the financial highlights for each of
the periods presented herein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the Trust's custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Money Market Fund, Government Money Market Fund, Money Market Fund,
Tax-Exempt Money Market Fund, Fixed Income Fund, Intermediate Government Fixed
Income Fund, Tax-Exempt Fixed Income Fund, Global Fixed Income Fund, Balanced
Fund, Value Fund, Growth Fund, International Equity Fund, Small Cap Fund, and
Asian Tigers Fund at December 31, 1995, the results of their operations, the
changes in their net assets and the financial highlights for each of the periods
presented herein, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Philadelphia, Pennsylvania
January 26, 1996
- -------------------------------------------------------------------------------
77
<PAGE>
DECEMBER 31, 1995
Notice to Shareholders (Unaudited)
For shareholders that do not have a December 31, 1995 taxable year end, this
notice is for informational purposes only. For shareholders with a December 31,
1995 taxable year end, please consult your tax advisor as to the pertinence of
this notice.
For the fiscal year ended December 31, 1995 the funds of the Rembrandt Funds(R)
are designating long term capital gains and qualifying dividend income with
regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
Long Term Ordinary
Capital Gains Income Total
Distributions Distributions Distributions
Fund (Tax Basis) (Tax Basis) (Tax Basis)
- ------ ------------ ------------- ----------------
<S> <C> <C> <C>
Treasury Money Market 0% 100% 100%
Government Money Market 0% 100% 100%
Money Market 0% 100% 100%
Tax-Exempt Money Market 0% 100% 100%
Fixed Income 0% 100% 100%
Intermediate Government Fixed Income 0% 100% 100%
Tax-Exempt Fixed Income 0% 100% 100%
Global Fixed Income 0% 100% 100%
Balanced 17% 83% 100%
Value 22% 78% 100%
Growth 39% 61% 100%
International Equity 70% 30% 100%
Small Cap 43% 57% 100%
Asian Tigers 0% 100% 100%
(C) (D) (E)
Qualifying Tax Exempt Foreign
Fund Dividends(1) Interest Tax Credit
- ------ --------- ------------ ------------
Treasury Money Market 0% 0% 0%
Government Money Market 0% 0% 0%
Money Market 0% 0% 0%
Tax-Exempt Money Market 0% 97% 0%
Fixed Income 0% 0% 0%
Intermediate Government Fixed Income 0% 0% 0%
Tax-Exempt Fixed Income 0% 99% 0%
Global Fixed Income 0% 0% 0%
Balanced 18% 0% 0%
Value 64% 0% 0%
Growth 21% 0% 0%
International Equity 0% 0% 25%(2)
Small Cap 5% 0% 0%
Asian Tigers 0% 0% 11%(3)
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
(2) Trust Class shareholders. 50% for Investor Class shareholders.
(3) Trust Class shareholders. 14% for Investor Class shareholders.
* Items (A) and (B) are based on the percentage of each fund's total
distribution.
** Item (C) is based on the percentage of ordinary income of each fund.
*** Item (D) is based on the percentage of gross income of each fund.
- --------------------------------------------------------------------------------
78
<PAGE>
Notes
- --------------------------------------------------------------------------------
79
<PAGE>
Notes
- --------------------------------------------------------------------------------
80
<PAGE>
REMBRANDT FUNDS(R)
PART C: OTHER INFORMATION
Post Effective Amendment No. 9
Item 24. Financial Statements and Exhibits:
(a) Financial Statements
Part A--Prospectus:
Part B--Statement of Additional Information:
Financial Statements for the fiscal year ended December 31, 1995
Statement of Net Assets
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(b) Additional Exhibits
1(a) Agreement and Declaration of Trust and Amendment thereto are
incorporated herein by reference to Exhibit 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on October 2, 1992.
1(b) Amendment dated October 20, 1992 to Registrant's Agreement and
Declaration of Trust is incorporated herein by reference to
Exhibit 1(b) to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on December 3, 1992.
2 Registrant's By-Laws are incorporated herein by reference to
Exhibit 2 to Registrant's Registration Statement on Form N-1A
(File No. 33-52784) filed with the Securities and Exchange
Commission on October 2, 1992.
3 Not applicable
4 Not applicable
5(a) Form of Administration Agreement incorporated herein by
reference to Exhibit 5(a) to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-
52784), filed with the Securities and Exchange Commission on
December 3, 1992.
5(b) Form of Investment Advisory Agreement with LaSalle Street
Capital Management, Ltd. incorporated herein by reference to
Exhibit 5(b) to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on December 3, 1992.
5(b)(1) Form of Schedule to the Investment Advisory Agreement between
Rembrandt Funds(R) and LaSalle Street Capital Management Ltd.
incorporated herein by reference to Exhibit 5(b)(1) to Post-
Effective Amendment No. 6 to Registrant's Registration Statement
on Form N-1A (File No. 33-52784), filed with the Securities and
Exchange Commission on January 13, 1995.
5(c) Form of Investment Sub-Advisory Agreement incorporated herein by
reference to Exhibit 5(c) to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-
52784), filed with the Securities and Exchange Commission on
December 3, 1992.
5(c)(1) Form of Investment Sub-Advisory Agreement between LaSalle Street
Capital Management, Ltd., on behalf of the Registrant, and ABN
AMRO-NSM International Funds Management B.V. incorporated herein
by reference to Exhibit 5(c)(1) to Post-Effective Amendment No.
6 to Registrant's Registration Statement on Form N-1A (File No.
33-52784), filed with the Securities and Exchange Commission on
January 13, 1995.
6 Form of Distribution Agreement incorporated herein by reference
to Exhibit 6 to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on December 3, 1992.
<PAGE>
7 Not applicable
8(a) Form of Custodian Agreement incorporated herein by reference to
Exhibit 8(a) to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on December 3, 1992.
8(a)(1) Sub-Custodian Agreement between CoreStates Bank, N.A. and
Barclays Bank PLC incorporated herein by reference to Exhibit
8(a)(1) to Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on January 13, 1995.
8(b) Form of Transfer Agent Agreement incorporated herein by
reference to Exhibit 8(b) to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-
52784), filed with the Securities and Exchange Commission on
December 3, 1992.
8(c) Form of Transfer Agency Agreement between the Registrant and
Supervised Service Company incorporated herein by reference to
Exhibit 8(c) to Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784) filed
with the Securities and Exchange Commission on April 1, 1994.
9 Not applicable
10 Opinion and Consent of Counsel incorporated herein by reference
to Exhibit 10 to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File No. 33-52784), filed
with the Securities and Exchange Commission on June 30, 1993.
11(a) Consent of Independent Public Accountants, filed herewith.
12 Not applicable
13 Not applicable
14 Not applicable
15 Form of Distribution Plan - Investor Class incorporated herein
by reference to Exhibit 15 to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-
52784), filed with the Securities and Exchange Commission on
December 3, 1992.
16 Performance Quotation Computation incorporated herein by
reference.
18 Rule 18f-3 Plan, incorporated herein by reference to Exhibit 18
to Post-Effective Amendment No. 8 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784), filed with the
Securities and Exchange Commission on September 26, 1995.
Other Exhibits Powers of Attorney incorporated herein by reference as filed
with Post-Effective Amendment No. 4 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784), filed with the
Securities and Exchange Commission on April 1, 1994.
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 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 February 8, 1996
Number of
Title of Class Record Holders
-------------- --------------
Units of beneficial interest, without par value -
TRUST CLASS
Value Fund.................................................. 6
Growth Fund................................................. 7
-5-
<PAGE>
Number of
Title of Class Record Holders
-------------- --------------
Small Cap Fund......................................... 7
International Equity Fund.............................. 6
TransEurope Fund....................................... 1
Asian Tigers Fund...................................... 14
Fixed Income Fund...................................... 6
Intermediate Government Fixed Income Fund.............. 5
Tax-Exempt Fixed Income Fund........................... 5
Global Fixed Income Fund............................... 6
Limited Volatility Fixed Income Fund................... 0
Money Market Fund...................................... 6
Government Money Market Fund........................... 0
Treasury Money Market Fund............................. 7
Tax-Exempt Money Market Fund........................... 6
Balanced Fund.......................................... 7
Latin America Equity Fund.............................. 0
INVESTOR CLASS
Value Fund............................................. 241
Growth Fund............................................ 428
Small Cap Fund......................................... 94
International Equity Fund.............................. 301
TransEurope Fund....................................... 0
Asian Tigers Fund...................................... 196
Fixed Income Fund...................................... 60
Intermediate Government Fixed Income Fund.............. 21
Tax-Exempt Fixed Income Fund........................... 54
Global Fixed Income Fund............................... 48
Limited Volatility Fixed Income........................ 2
Money Market Fund...................................... 84
Government Money Market Fund........................... 15
Treasury Money Market Fund............................. 12
Tax Exempt Money Market Fund........................... 44
Balanced Fund.......................................... 460
Latin America Equity Fund.............................. 0
Item 27. Indemnification:
Article VIII of the Agreement of Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
-6-
<PAGE>
Item 28. Business and Other Connections of Investment Advisor and Investment
Sub-Advisor:
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- --------------------------- --------------------------- ----------------------
James B. Wynsma ABN AMRO Executive Committee Member
Chairman Management Committee
LaSalle National Trust, President, CEO,
N.A. Assistant Secretary &
Director
LaSalle National Corp. Director
LaSalle Bank Lake View Director
ABN AMRO Asset Management Chairman & Director
(USA) Inc.
ABN AMRO Investment Director
Services, Inc.
Antony Edgar LaSalle National Trust, Senior Vice President
President N.A. & Director
Chief Executive Officer, ABN AMRO Asset Management President & Director
Chief Investment Officer, (USA), Inc.
and Director
Robert K. Quinn ABN AMRO North America, Senior Vice President,
Secretary, Director Inc. General Counsel &
Secretary
Secretary
ABN AMRO Asset Management
(USA) Inc. Secretary
ABN AMRO Credit Corp. Secretary
ABN AMRO Investment
Services, Inc. Secretary, Director
ABN AMRO Mortgage
Corporation Secretary
ABN AMRO North America
Finance Inc. Secretary
ABN AMRO Resource
Management, Inc.
ABN AMRO Treasury & Secretary
Capital Markets Services
Inc.
Cragin American Assurance Secretary
Company
Cragin Financial Corp. Secretary, Director
Cragin Safety Deposit Secretary, Director
Vault Company
Cragin Service Corporation Secretary
Cragin Service Development Secretary
Corporation
CRA-FED, Inc. Secretary, Director
ENB Realty Company,, Inc. Secretary, Director
Iowa County Wisconsin Corp. Secretary, Director
LaSalle Bank DuPage Secretary
LaSalle Chicago Leasing Secretary, Director
Corp.
LaSalle Community Secretary, Director
Bancorporation, Inc.
LaSalle Cragin Bank, F.S.B. Director
LaSalle Management Secretary
Company, Inc.
LaSalle National Bancorp, Director, Secretary
Inc.
LaSalle National Bank Senior Vice President,
General Counsel, &
Secretary
-7-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
LaSalle National Corp. Senior Vice President,
General Counsel,
Secretary
LaSalle National Safe Secretary, Director
Deposit Corp.
LaSalle National Trust, Senior Vice President,
N.A.
General Counsel,
Secretary, & Director
LaSalle Talman Bank, F.S.B. Director
Lease Plan North America Secretary, Director
Inc.
Lisle Corporation Secretary, Director
Monroe Corporation of Secretary, Director
Delaware
Netherlands Trading Secretary
Society East, Inc.
River Oaks Bancorp, Inc. Secretary
Rob-Wal Investment Co. Secretary
Stock Yards Safety Deposit Secretary, Director
Co.
Union Realty Mortgage Secretary
Company, Inc.
Daniel J. Shannon Catholic Charities Board of Advisors
Director Board of Directors
Catholic Charities Housing Board of Directors
Development Member - Finance
Committee
Hospitals Organized for Political Action
Political Education Committee
Mercy Hospital & Medical Treasurer & Director
Center
Notre Dame National President
Monogram Club
Dental Benefit Services of Vice Chairman
Illinois
Tavern Club Board of Governors
Total Travel, Inc. Director
BioSafe International Director
Keith Dibble LaSalle National Trust, Vice President and
Senior Vice President N.A. Assistant Secretary
William M. Finley LaSalle National Trust, Senior Vice President
Senior Vice President N.A. and Assistant
Secretary
Robert L. Hudon LaSalle National Trust, Senior Vice President
Senior Vice President N.A. and
Assistant Secretary
Thomas F. McGrath LaSalle National Trust, Senior Vice President
Senior Vice President N.A. and
Assistant Secretary
Robert M. Antognoli LaSalle National Trust, Vice President and
Vice President N.A. Assistant Secretary
John F. Bonetti LaSalle National Trust, Vice President and
Vice President N.A. Assistant Secretary
-8-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
Wade A. Buckles LaSalle National Trust, Vice President and
Vice President N.A. Assistant Secretary
Jac A. Cerney LaSalle National Trust, Vice President and
Vice President N.A. Assistant Secretary
Martin L. Eisenberg ABN AMRO Bank N.V. Vice President
Vice President Netherlands Trading Vice President
Society East, Inc.
Pine Tree Capital Vice President
Holdings, Inc.
AMRO Securities, Inc. Vice President
ABN AMRO North America Vice President
Finance, Inc.
DBI Holdings, Inc. Vice President
ABN AMRO North America, Senior Vice President
Inc.
ABN AMRO Mortgage Corp. Vice President
ABN AMRO Resource Vice President
Management, Inc.
Danic Asset Management Vice President
Corp.
National Asset Management Vice President
SFH, Inc. Vice President
ABN AMRO Acceptance Corp. Vice President
ABN AMRO Asset Management Vice President
(USA) Inc.
ABN AMRO Credit Corp. Vice President
ABN AMRO Investment Vice President
Services, Inc.
LaSalle Management Vice President
Company, Inc.
Cragin Financial Corp. Vice President
LaSalle Cragin Bank, F.S.B. Vice President
Cragin Service Corp. Vice President
Cragin Safety Deposit Vice President
Valut Company
Cragin American Assurance Tax Officer
Co.
LaSalle Talman Bank, F.S.B. Vice President
Talman Finance Corporation Vice President
D
LaSalle Financial Tax Officer
Services, Inc.
LaSalle Talman Home Tax Officer
Mortgage Corporate
LaSalle National Vice President
Corporation
ABN AMRO Capital (USA) Inc. Vice President
Lease Plan North America, Vice President
Inc.
ABN AMRO Treasury & Vice President
Capital Markets Services,
Inc.
Lisle Corporation Vice President
ABN AMRO Services Company, Vice President
Inc.
LaSalle Bank Vice President
LaSalle Bank Northbrook Tax Officer
LaSalle Bank Lake View Vice President
LaSalle Northwest National Vice President
Bank
LaSalle National Trust, Vice President
N.A.
LaSalle National Bancorp, Vice President
Inc.
Union Realty Mortgage Co., Vice President
Inc.
-9-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
River Oaks Bancorp, Inc. Vice President
LaSalle National Bank Vice President
Monroe Corporation of Vice President
Delaware
LaSalle National Safe Vice President
Deposit Corporation
Rob-Wal Investment Co. Vice President
ENB Realty Co., Inc. Vice President
Stock Yards Safety Deposit Vice President
Company
Iowa County Wisconsin Corp. Vice President
LaSalle Chicago Leasing Vice President
Corporation
LaSalle Business Credit, Vice President
Inc.
European American Bank Vice President
Cityspire Realty Corp. Vice President
EA Debt Corp. Vice President
EA Land Corp. Vice President
EAB Land Company, Inc. Vice President
EAB Mortgage Company, Inc. Vice President
EAB Realty Corp. Vice President
EAB Realty of Florida, Inc. Vice President
EAB Securities, Inc. Vice President
Ashland Properties, Inc. Vice President
Discount Brokers Vice President
International, Inc.
Cra-Fed, Inc. Vice President
Cragin Service Development Vice President
Corp.
Wasco Funding Corp. Vice President
Island Abodes Corp. Vice President
Lyric Holdings, Inc. Vice President
EAB Credit Corp. Vice President
ORE Realty, Inc. Vice President
Texas Holdings, Inc. Vice President
Twelve Polo Realty Inc. Vice President
Vail at North Salem Inc. Vice President
32A Realty Inc. Vice President
81 Lee Avenue Corp. Vice President
169 East Flagler Corp. Vice President
Euram Management, Inc. Vice President
EAB Plaza, Inc. Vice President
117 Seaman Realty, Inc. Vice President
Garden City Marble Corp. Vice President
Mamaroneck Point Realty, Vice President
Inc.
East River 52 Corp. Vice President
Huntington Bay Development Vice President
Corp.
Plaza Homes Inc. Vice President
(Metrofund)
Tower East 147 Inc. Vice President
LSR Realty Inc. Vice President
Beckman Hospitality Corp. Vice President
Atlantic Avenue Vice President
Development Corp.
Bald Hills Park at Vice President
Farmingville Inc.
Bennett 143 Corp. Vice President
-10-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
Birch Locust Valley Corp. Vice President
Broadhollow 532 Melvinne Vice President
Corporation
CK at Manorville Inc. Vice President
Colony at Sayerville, Corp. Vice President
Corners Estates at Vice President
Haupauge Inc.
Corona 114 Apartments Inc. Vice President
Country Knolls at Vice President
Manorville Inc.
Cove Townhouses at Vice President
Southold Inc.
Crystal Domiciles Inc. Vice President
Eastern Shores at Vice President
Northampton Corp.
Edison Townhouse Corp. Vice President
Forestwood at North Hills Vice President
Inc.
Garden State Convention Vice President
Center at Somerest County,
Inc.
Half Acre on 347 at Vice President
Nesoonset Inc.
Horse Race Lane at Vice President
Nissequogue Inc.
Hunt Club at Middletown Vice President
Inc.
Jericho 969 Turnpike Inc. Vice President
Fairfield Avenue Corp. Vice President
Amsterdam Development Corp. Vice President
Brownstone Apts. Inc. Vice President
Central Cedarhurst Corp. Vice President
CSC Land Corp. Vice President
East 91st Street Vice President
Development Corp.
East 92nd Street Vice President
Development Corp.
LLPA Corporation Vice President
Lake and Pulaski at Vice President
Greenlawn Inc.
Lake Front Land Corp. Vice President
Lattingtown Mansion, Inc. Vice President
Long Beach Breeze Corp. Vice President
Lowell Acquisition Corp. Vice President
Ludlow Development Corp. Vice President
MPE at St. James Inc. Vice President
Manor Homes at Aberdeen Vice President
Corp.
Maspeth 56-25 58th Street Vice President
Corp.
Metro Case Corp. Vice President
Mills Pond Estates at St. Vice President
James Inc.
Montauk Hospitality Corp. Vice President
Montauk YC Corp. Vice President
Moreland Hauppauge Corp. Vice President
Nineteenth Street Vice President
Development Corp.
North Hills Links Corp. Vice President
Old Country Road at Vice President
Wyandanch Inc.
Omni General Realty Corp. Vice President
Omni Realty Corp. Vice President
Orchards at Mt. Sinai Inc. Vice President
"(The)"
Parkway Plaza 1400 Corp. Vice President
Plaza Boulevard Equities Vice President
Corp.
Plaza Boulevard Properties Vice President
Corp.
-11-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
Plaza Uniondale Equities Vice President
Corp.
Plaza Uniondale Properties Vice President
Corp.
Remington Ronkonkoma Corp. Vice President
Rendezvous Realty Corp. Vice President
SE at Commack Inc. Vice President
SE at Commack II Inc. Vice President
SE at Commack III Inc. Vice President
SE at Commack IV Inc. Vice President
Scholar Estates at Commack Vice President
Inc.
Seaman Shares at Inwood Vice President
Corp.
Shoreham North Country Vice President
Corp.
Showcase Estates at Dix Vice President
Hills Inc.
Smith Island at Everett Vice President
Corp.
Soho 350 Corp. Vice President
Southampton Settlers Vice President
Corporation
Southeast Ridgefield Land Vice President
Corp.
Steinway 18-50 Astoria Vice President
Corp.
Sterling DTVA Corp. Vice President
TE at Dix Hills Inc. Vice President
TE at Dix Hills II Inc. Vice President
TE at Dix Hills III Inc. Vice President
TO at Mt. Sinai Inc. Vice President
Tara II at Hauppauge Inc. Vice President
Thornwood Estates at Dix Vice President
Hills Inc.
Vermilyea 119 Corp. Vice President
Veterans 4320 Bohemia Corp. Vice President
Village 185 Corp. Vice President
W.M. Seaman at Inwood Corp. Vice President
Welcome Center at Vice President
Manorville Inc.
West End 700 Inc. Vice President
Westminster Downs at Dix Vice President
Hills, Inc.
Westwood Hills at Vice President
Middletown, Inc.
Windsor 37th Corp. Vice President
Z161 Corp. Vice President
Z174 Corp. Vice President
Ziegfeld Villas Corp. Vice President
41 East Sunrise Highway Vice President
Corporation
55 Commerce, Inc. (Sold to Vice President
EMI 1/20/92)
Seventh Street Development Vice President
Corp.
Fourteenth Street Vice President
Development Corp.
West 51st Street Vice President
Development Corp.
West 73rd Street Vice President
Development Corp.
Lemark Land in Setauket, Vice President
Inc.
Ludlow Street Development Vice President
Corp.
Milestone Square Corp. Vice President
Oceanside 35-05 Hampton Vice President
Road Inc.
Oceanside 35-39 Hampton Vice President
Road Inc.
Sangeo 709 Merrick Road Vice President
Corp.
-12-
<PAGE>
Name and Position Name of Other Connection with
with Investment Advisor Company Other Company
- ----------------------- ------------- ---------------
Sherwood Plaza Corp. Vice President
Syosset 240 Jerico, Inc. Vice President
Timothy Brian Gidley LaSalle National Trust, Vice President &
Vice President N.A. Assistant Secretary
Kevin J. Kehres LaSalle National Trust, Vice President &
Vice President N.A. Assistant Secretary
Kathryn L. Martin ABN AMRO Asset Management Compliance Officer
Vice President (USA) Inc.
Ronald C. Scheuer LaSalle National Trust, Vice President &
Vice President N.A. Assistant Secretary
Roger R. Sullivan LaSalle National Trust, Vice President &
Vice President N.A. Assistant Secretary
Park Forest Lions Club Vice President
Karen Van Cleave LaSalle National Trust, Vice President &
Vice President N.A. Assistant Secretary
Anne F. Baumgardner None
Assistant Vice President
Nancy A. Ellefson LaSalle National Trust, Assistant Vice
Assistant Vice President N.A. President & Assistant
Secretary
Mark T. Morgan LaSalle National Trust, Assistant Vice
Assistant Vice President N.A. President & Assistant
Secretary
Christopher M. Proctor None
Assistant Vice President
Michael P. Rauh None
Assistant Vice President
John A. Pavela LaSalle National Trust, Trust Officer &
Officer N.A. Assistant Secretary
Steven J. Tonhaiser None
Officer
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of the Sub-Advisor is or has been,
at any time during the last two fiscal years, engaged for his own account or in
the capacity of director, officer, employee, partner or trustee are as follows:
-13-
<PAGE>
ABN AMRO-NSM International Funds Management B.V., a registered investment
advisor, serves as the investment sub-advisor of the Latin America Equity Fund,
International Equity Fund, TransEurope Fund and Asian Tigers Fund.
Name and
Position with Name of Connection with
Investment Sub-Advisor Other Company Other Company
- ------------------------- -------------------------- ---------------------
Hendrik Stienstra ABN AMRO Bank NV Senior Vice President
Director
Wypke Postma ABN AMRO Bank NV Vice President
Director
George Theodoridis ABN AMO Bank NV Vice President
Director
Mathilde De La Serviere Banque NSM, Paris Vice President
Director
Anne-Marie Georges Banque NSM, Paris Vice President
Director
Jan-Wim Derks ABN AMRO Bank NV Portfolio Manager
Portfolio Manager
Gijs Dorresteijn ABN AMRO Bank NV Vice President
Portfolio Manager
Alex Ng ABN AMRO Asset Management Director
Portfolio Manager (Far East) Ltd.
Roy Scheepe ABN AMRO Luxembourg Director
Portfolio Manager Investment Management S.A.
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing securities of the Registrant also acts as a principal
underwriter, distributor or investment adviser.
Rembrandt Financial Services Company, a wholly-owned subsidiary
of SEI Financial Services Company, acts as distributor for
Rembrandt Funds(R) pursuant to a distribution agreement dated
December 31, 1992. Rembrandt Financial Services Company does not
act as underwriter, depositor or investment advisor for any
other investment company.
(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, Pennsylvania 19087.
-14-
<PAGE>
Position and Offices Positions and Offices
Name with Underwriter with Registrant
- ---- ------------- ---------------
Alfred P. West, Jr. Director, Chairman --
Henry H. Greer Director --
Carmen V. Romeo Director, Executive Vice --
President& Treasurer
Carl A. Guarino President --
Leo J. Dolan, Jr. Senior Vice President --
Sandra K. Orlow Senior Vice President & Vice President & Asst.
Secretary Secretary
Kevin P. Robins Vice President & Assistant Vice President & Asst.
Secretary Secretary
Robert B. Carroll Vice President & Assistant Vice President & Asst.
Secretary Secretary
Todd Cipperman Vice President & Assistant --
Secretary
Kathryn L. Stanton Vice President & Assistant Vice President & Asst.
Secretary Secretary
Kathy Heilig Vice President --
Maryeva Schmitt Vice President --
Kindelan
Mary Jane Maloney Assistant Secretary --
James Dougherty Financial Principal --
Robert Wagner Managing Director --
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6); (8);
(12); and 31a-1(d), the required books and records are maintained at the offices
of Registrant's Custodian:
CoreStates Bank, N.A. Barclays Bank PLC
Broad and Chestnut Streets 75 Wall Street
P.O. Box 7618 New York, NY 10265
Philadelphia, PA 19101
Citibank, N.A.
111 Wall Street
New York, NY 10005
(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:
-15-
<PAGE>
SEI Financial Management Corporation
680 East 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 Advisor:
LaSalle Street Capital ABN AMRO-NSM International Funds
Management, Ltd. Management B.V.
10 South LaSalle Street 22 Foppingadreef
Suite 3701 P.O. Box 283, 1000 E.A.
Chicago, IL 60603 Amsterdam, The Netherlands ZU100GST
Item 31. Management Services: None.
Item 32. Undertakings:
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to Shareholders,
upon request and without charge.
Registrant hereby undertakes to file a post-effective amendment, including
financial statements which need not be audited, within 4-6 months from the later
of the commencement of operations of the Latin America Equity Fund of the
Registrant or the effective date of Post-Effective Amendment No. 6 to the
Registrant's 1933 Act Registration Statement.
-16-
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust for Rembrandt Funds(R)
(formerly The LSNT Funds and The Passport Funds) is on file with the Secretary
of State of The Commonwealth of Massachusetts and notice is hereby given that
this Registration Statement has been executed on behalf of the Trust by an
officer of the Trust as an officer and by its Trustees as trustees and not
individually and the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or Shareholders
individually but are binding only upon the assets and property of the
Trust.
-17-
<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 the Registration Statement No. 33-52784 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of Wayne,
Commonwealth of Pennsylvania on the 28th day of February, 1996.
REMBRANDT FUNDS(R)
By: /s/ David G. Lee
-----------------------------------
David G. Lee
President
ATTEST:
*
- -------------------------------------
Jeffrey A. Cohen
Controller and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
* Trustee February 28, 1996
- -----------------------
Arnold F. Brookstone
* Trustee February 28, 1996
- -----------------------
William T. Simpson
* Trustee February 28, 1996
- -----------------------
Robert A. Nesher
/s/ David G. Lee President & Chief February 28, 1996
- -----------------------
David G. Lee Executive Officer
* Controller & Chief February 28, 1996
- -----------------------
Jeffrey A. Cohen Financial Officer
*By: /s/ David G. Lee
----------------------------
David G. Lee
Attorney-in-Fact
-18-
<PAGE>
Report of Independent Auditors
Board of Directors and Shareholders
Rembrandt Funds
We have audited the accompanying statements of net assets of the Treasury Money
Market Fund, Government Money Market Fund, Money Market Fund, Tax-Exempt Money
Market Fund, Fixed Income Fund, Intermediate Government Fixed Income Fund, Tax-
Exempt Fixed Income Fund, Value Fund, Growth Fund, International Equity Fund,
and Small Cap Fund and the schedules of investments and statements of assets and
liabilities of the Global Fixed Income Fund, Balanced Fund, and Asian Tigers
Fund of Rembrandt Funds, which includes the Trust and Investor classes (the
"Trust") as of December 31, 1995, and the related statements of operations, the
statements of changes in net assets, and the financial highlights for each of
the periods presented herein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held by the
Trust's custodian as of December 31, 1995. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Money Market Fund, Government Money Market Fund, Money Market Fund,
Tax-Exempt Money Market Fund, Fixed Income Fund, Intermediate Government Fixed
Income Fund, Tax-Exempt Fixed Income Fund, Global Fixed Income Fund, Balanced
Fund, Value Fund, Growth Fund, International Equity Fund, Small Cap Fund, and
Asian Tigers Fund at December 31, 1995, the results of their operations, the
changes in their net assets and the financial highlights for each of the periods
presented herein, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
January 26, 1996
<PAGE>
EXHIBIT INDEX
Name Exhibit Sequential Page #
- ---- ------- -----------------
Agreement and Declaration of Trust and 1(a)
Amendment thereto are incorporated herein
by reference to Exhibit 1 to Registrant's
Registration Statement on Form N-1A (File
No. 33-52784), filed with the Securities and
Exchange Commission on October 2, 1992.
Amendment dated October 20, 1992 to 1(b)
Registrant's Agreement and Declaration of
Trust is incorporated herein by reference to
Exhibit 1(b) to Pre-Effective Amendment
No. 1 to Registrant's Registration Statement
on Form N-1A (File No. 33-52784), filed with
the Securities and Exchange Commission on
December 3, 1992.
Registrant's By-Laws are incorporated 2
herein by reference to Exhibit 2 to
Registrant's Registration Statement on
Form N-1A (File No. 33-52784) filed with
the Securities and Exchange Commission
on October 2, 1992.
Not applicable. 3
Not applicable. 4
Form of Administration Agreement 5(a)
incorporated herein by reference to
Exhibit 5(a) to Pre-Effective Amendment
No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784),
filed with the Securities and Exchange
Commission on December 3, 1992.
Form of Investment Advisory Agreement 5(b)
with LaSalle Street Capital Management,
Ltd. incorporated herein by reference to
Exhibit 5(b) to Pre-Effective Amendment
No. 1 to Registrant's Registration Statement
on Form N-1A (File No. 33-52784), filed with
the Securities and Exchange Commission
on December 3, 1992.
<PAGE>
Name Exhibit Sequential Page #
- ---- ------- -----------------
Form of Schedule to the Investment Advisory 5(b)(1)
Agreement between Rembrandt(R) Funds and
LaSalle Street Capital Management Ltd.
incorporated herein by reference to Exhibit 5(b)(1)
to Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A
(File No. 33-52784), filed with the
Securities and Exchange Commission on
January 13, 1995.
Form of Investment Sub-Advisory 5(c)
Agreement incorporated herein by reference
to Exhibit 5(c) to Pre-Effective Amendment
No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784),
filed with the Securities and Exchange
Commission on December 3, 1992.
Form of Investment Sub-Advisory Agreement 5(c)(1)
between LaSalle Street Capital
Management Ltd., on behalf of the
Registrant, and ABN AMRO-NSM International
Funds Management B.V. incorporated herein
by reference to Exhibit 5(c)(1) to Post-
Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A
(File No. 33-52784), filed with the
Securities and Exchange Commission on
January 13, 1995.
Form of Distribution Agreement incorporated 6
herein by reference to Exhibit 6 to
Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on
Form N-1A (File No. 33-52784), filed with
the Securities and Exchange Commission
on December 3, 1992.
Not applicable. 7
Form of Custodian Agreement 8(a)
incorporated herein by reference to
Exhibit 8(a) to Pre-Effective Amendment
No. 1 to Registrant's Registration
Statement on Form N-1A (File No.
33-52784), filed with the Securities and
Exchange Commission on December 3,
1992.
<PAGE>
Name Exhibit Sequential Page #
- ---- ------- -----------------
Sub-Custodian Agreement between CoreStates 8(a)(1)
Bank, N.A. and Barclays Bank PLC incorporated
herein by reference to Exhibit 8(a)(1) to
Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A (File No.
33-52784), filed with the Securities and
Exchange Commission on January 13, 1995.
Form of Transfer Agent Agreement 8(b)
incorporated herein by reference to
Exhibit 8(b) to Pre-Effective Amendment
No. 1 to Registrant's Registration
Statement on Form N-1A (File No.
33-52784), filed with the Securities
and Exchange Commission on
December 3, 1992.
Form of Transfer Agency Agreement 8(c)
between the Registrant and
Supervised Service Company incorporated
herein by reference to Exhibit 8(c) to
Post-Effective Amendment No. 4 to
Registrant's Registration Statement on
Form N-1A (File No. 33-52784) filed
with the Securities and Exchange
Commission on April 1, 1994.
Not applicable. 9
Opinion and Consent of Counsel 10
incorporated herein by reference to
Exhibit 10 to Post-Effective Amendment
No. 2 to Registrant's Registration
Statement on Form N-1A (File No.
33-52784), filed with the Securities and
Exchange Commission on June 30, 1993.
Consent of Independent Public 11(a)
Accountants, filed herewith.
Not applicable. 12
Not applicable. 13
Not applicable. 14
Form of Distribution Plan - Investor 15
Class incorporated herein by reference to
Exhibit 15 to Pre-Effective Amendment
No. 1 to Registrant's Registration
<PAGE>
Name Exhibit Sequential Page #
- ---- ------- -----------------
Statement on Form N-1A (File No.
33-52784), filed with the Securities and
Exchange Commission on December
3, 1992.
Performance Quotation Computation 16
incorporated herein by reference.
Rule 18f-3 Plan, incorporated herein by 18
reference as filed with Post-Effective
Amendment No. 8 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784),
filed with the Securities and Exchange
Commission on September 26, 1995.
Powers of Attorney incorporated herein by Other Exhibits
reference as filed with Post-Effective
Amendment No. 4 to Registrant's Registration
Statement on Form N-1A (File No. 33-52784),
filed with the Securities and Exchange
Commission on April 1, 1994.
<PAGE>
Consent of Independent Auditors
We consent to the references to our firm under the captions "Financial
Highlights" in the Prospectuses and "Experts" in the Statement of Additional
Information and to the use of our report dated January 26, 1996 in the Statement
of Additional Information in this Post Effective Amendment No. 9 to the
Registration Statement (Form N-1A) (No. 33-52784) of Rembrandt Funds.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 26, 1996
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