<PAGE>
REMBRANDT FUNDS (R)
INVESTOR SHARES
APRIL 30, 1997 (AS REVISED OCTOBER 10, 1997)
- --------------------------------------------------------------------------------
Equity Funds Fixed Income Funds
. VALUE FUND . FIXED INCOME FUND
. GROWTH FUND . INTERMEDIATE GOVERNMENT FIXED INCOME FUND
. SMALL CAP FUND . TAX-EXEMPT FIXED INCOME FUND
. INTERNATIONAL EQUITY FUND . INTERNATIONAL FIXED INCOME FUND
. TRANSEUROPE FUND . LIMITED VOLATILITY FIXED INCOME FUND
. ASIAN TIGERS FUND Money Market Funds
. LATIN AMERICA EQUITY FUND . TREASURY MONEY MARKET FUND
. GOVERNMENT MONEY MARKET FUND
Balanced Fund . MONEY MARKET FUND
. BALANCED FUND . TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Please read this Prospectus carefully before investing, and keep it on file for
future reference. It concisely sets forth information that can help you decide
if a Fund's investment goals match your own.
A Statement of Additional Information dated April 30, 1997 (and revised October
10, 1997) has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge by calling 1-800-443-
4725. The Statement of Additional Information is incorporated into this
Prospectus by reference.
Investor Shares are offered to individuals and institutional investors through
financial intermediaries which have established a dealer agreement with the
Distributor. Investors in the Investor Shares are referred to hereinafter as
"Shareholders."
AN INVESTMENT IN ANY OF THE TRUST'S 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.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
................................................................................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights....................................................... 2
Portfolio Expenses.................................................... 5
Financial Highlights.................................................. 7
Your Account and Doing Business with Us............................... 12
Investment Objectives and Policies.................................... 16
General Investment Policies........................................... 27
Certain Risk Factors.................................................. 29
Investment Limitations................................................ 30
The Advisor........................................................... 31
The Sub-Advisor....................................................... 33
The Administrator..................................................... 34
The Transfer Agent.................................................... 34
Distribution and Shareholder Servicing................................ 34
Performance........................................................... 35
Taxes................................................................. 37
Additional Information About Doing Business with Us................... 39
General Information................................................... 41
Description of Permitted Investments and Risk Factors................. 43
</TABLE>
................................................................................
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Funds
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol. [LOGO OF SEI REMBRANDT APPEARS HERE] (R)
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Investor Shares of
the following Funds: Value Fund, Growth Fund, Small Cap Fund, International
Equity Fund, TransEurope Fund, Asian Tigers Fund, Latin America Equity Fund
(collectively, the "Equity Funds"), Balanced Fund ("Balanced Fund"), Fixed
Income Fund, Intermediate Government Fixed Income Fund, Tax-Exempt Fixed Income
Fund, International 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"). The TransEurope Limited
Volatility and Latin America Equity Funds are not currently offering Investor
Shares to the public. 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.
INVESTMENT OBJECTIVES
AND POLICIES
Below are the investment objectives and some basic investment
policies of each Fund. For more information, see "Investment
Objectives and Policies," "General Investment Policies" and
"Description of Permitted Investments and Risk Factors."
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 Latin America Equity Fund seeks long-term capital
appreciation.
The Balanced Fund seeks to obtain a favorable total rate
of return through current income and capital appreciation
consistent with the preservation of capital, derived from
investing in a portfolio comprised of fixed income and equity
securities.
2
<PAGE>
FIXED INCOME The Fixed Income Fund seeks a high level of total return
FUNDS 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 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 primarily 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 International Fixed Income Fund (formerly 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 The Treasury Money Market Fund seeks to preserve principal
FUNDS 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.
UNDERSTANDING Each Fund invests in different securities. Values of equity
RISK 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, International Fixed Income, and Latin America
Equity 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
3
<PAGE>
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 additional risks of political instability, high
inflation rates, and limited trading markets. See "General
Investment Policies," "Risk Factors" and "Description of
Permitted Investments and Risk Factors" in this prospectus,
and the Statement of Additional Information.
MANAGEMENT ABN AMRO Asset Management (USA) Inc. (the
PROFILE "Advisor")(formerly LaSalle Street Capital Management, Ltd.)
serves as the Advisor to the Funds. ABN AMRO-NSM
International Funds Management B.V. (the "Sub-Advisor")
serves as the investment sub-advisor to the International
Equity Fund, TransEurope Fund, Asian Tigers Fund, Latin
America Equity Fund and International Fixed Income Fund. SEI
Fund Resources (the "Administrator") serves as the
Administrator and shareholder servicing agent of the Trust.
DST Systems, Inc. ("DST") serves as transfer agent
("Transfer Agent") and dividend disbursing agent for the
Trust. Rembrandt(R) Financial Services Company, an affiliate
of the Administrator (the "Distributor"), serves as
distributor of the Trust's shares. See "The Advisor," "The
Sub-Advisor," "The Administrator" and "The Distributor."
YOUR ACCOUNT You may generally open an Investor Shares account with a
AND DOING minimum amount of $2,000 per Fund and make additional
BUSINESS WITH investments with as little as $100. However, please contact
US your financial intermediary for their specific requirements
regarding minimum initial and subsequent purchase amounts.
Purchases and Redemptions of a Fund's shares are made at net
asset value per share. See "Your Account and Doing Business
With Us."
DIVIDENDS Substantially all of the net investment income (exclusive of
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
(exclusive of 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 you elect to take the
payment in cash. See "General Information--Dividends."
INFORMATION/
SERVICE For more information, call your financial intermediary.
CONTACTS
4
<PAGE>
PORTFOLIO EXPENSES _____________________________________________________________
The purpose of the following table is to help you understand the various cost
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in INVESTOR SHARES.
SHAREHOLDER TRANSACTION EXPENSES(1)(As a percentage of offering price)
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases None
Redemption Fee(2) None
- --------------------------------------------------------------------------------
(1) Certain financial intermediaries may impose account fees or other charges.
(2) A charge, currently $10.00, is imposed on wires of redemption proceeds.
ANNUAL OPERATING EXPENSES (As a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY/BALANCED FUNDS
---------------------
SMALL INT'L TRANS ASIAN LATIN AMERICA
VALUE GROWTH CAP EQUITY EUROPE TIGERS EQUITY BALANCED
----- ------ ----- ------ ------ ------ ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .80% .80% .80% 1.00% 1.00% 1.00% 1.00% .70%
12b-1 Fees .25% .25% .25% .25% .25% .25% .25% .25%
Other Expenses (after
fee waivers)(1) .23% .22% .25% .36% .54% .54% .70% .24%
- ----------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers)(2) 1.28% 1.27% 1.30% 1.61% 1.79% 1.79% 1.95% 1.19%
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Absent fee waivers, Other Expenses would be: Value Fund--.48%, Growth
Fund--.47%, Small Cap Fund--.50%, International Equity Fund--.61%,
TransEurope Fund--.79%, Asian Tigers Fund--.79%, Latin America Equity
Fund--.95% and Balanced Fund--.49%. "Other Expenses" for the TransEurope
and Latin America Equity Funds are based on estimated amounts for the
current fiscal year.
(2) Absent waivers described above, Total Operating Expenses would be: Value
Fund--1.53%, Growth Fund--1.52%, Small Cap Fund--1.55%, International
Equity Fund--1.86%, TransEurope Fund--2.04%, Latin America Equity Fund--
2.20% and Balanced Fund--1.44%. These waivers are voluntary and may be
discontinued at any time at the discretion of the service provider that is
waiving its fee.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FIXED INCOME FUNDS
------------------
INTERMEDIATE INTERNATIONAL 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)(1) .50% .50% .48% .80% .50%
12b-1 Fees .25% .25% .25% .25% .25%
Other Expenses (after
fee waivers)(2) .23% .24% .25% .31% .24%
- -------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers)(3) .98% .99% .98% 1.36% .99%
- -------------------------------------------------------------------------------------
</TABLE>
(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from each
Fixed Income Fund (except the International Fixed Income Fund). The Advisor
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, Advisory Fees for the Funds would be as
follows: Fixed Income Fund--.60%, Intermediate Government Fixed Income
Fund--.60%, Tax-Exempt Fixed Income Fund-- .60% and Limited Volatility
Fixed Income Fund-- .60%. See "The Advisor."
(2) Absent fee waivers, Other Expenses would be: Fixed Income Fund--.48%,
Intermediate Government Fixed Income Fund--.49%, Tax-Exempt Fixed Income--
.50%, International Fixed Income--.56%, and Limited Volatility Fixed
Income--.49%. "Other Expenses" for the Limited Volatility Fixed Income Fund
are based on estimated amounts for the current fiscal year.
(3) Absent waivers described above, Total Operating Expenses for the Funds
would be as follows: Fixed Income Fund--1.33%, Intermediate Government
Fixed Income Fund--1.34%, Tax-Exempt Fixed Income Fund--1.35%, and Limited
Volatility Fixed Income Fund--1.34%. These fee waivers are voluntary and
may be discontinued at any time at the discretion of the service provider
that is waiving its fee.
5
<PAGE>
- --------------------------------------------------------------------------------
<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)(1) .20% .20% .20% .19%
12b-1 Fees .25% .25% .25% .25%
Other Expenses (after fee waivers)(2) .16% .23% .26% .13%
- ----------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers)(3) .61% .68% .71% .57%
- ----------------------------------------------------------------------------
</TABLE>
(1) The Advisor is waiving, 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 waiver, Advisory Fees would be as follows: Treasury Money
Market Fund--.35%, Money Market Fund--.35% and Tax-Exempt Money Market
Fund--.35%. See "The Advisor."
(2) The Administrator is waiving, on a voluntary basis, a portion of its fee
from each Money Market Fund. The Administrator reserves the right to change
the amount of or terminate its waiver at any time in its sole discretion.
"Other Expenses" have been restated to reflect current administrative fee
waivers. Absent such waivers, "Other Expenses" for the Funds would be as
follows: Treasury Money Market Fund--.49%, Government Money Market Fund--
.49%, Money Market Fund,--.48% and Tax-Exempt Money Market Fund--.46%.
(3) Absent waivers described above, Total Operating Expenses for the Funds
would be as follows: Treasury Money Market Fund--1.09%, Government Money
Market Fund--.94%, Money Market Fund--1.08% and Tax-Exempt Money Market
Fund--1.06%. These fee waivers are voluntary and may be discontinued at any
time the discretion of the service provider that is waiving its fee.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the
end of each time period: 13 41 70 155
Value Fund 13 40 70 153
Growth Fund 13 41 71 157
Small Cap Fund 16 51 88 191
International Equity Fund 18 56 -- --
TransEurope Fund 18 56 97 211
Asian Tigers Fund 20 61 105 227
Latin America Equity Fund 12 38 65 144
Balanced Fund 10 31 54 120
Fixed Income Fund 10 32 55 121
Intermediate Government Fixed Income Fund 10 31 54 120
Tax-Exempt Fixed Income Fund 14 43 74 164
International Fixed Income Fund 10 32 -- --
Limited Volatility Fixed Income Fund 6 20 34 78
Treasury Money Market Fund 7 22 38 85
Government Money Market Fund 7 23 40 88
Money Market Fund 6 18 32 71
Tax-Exempt Money Market Fund
- ----------------------------------------------------------------------------
</TABLE>
THE EXAMPLE IS BASED ON TOTAL OPERATING EXPENSES, EXCEPT FOR THE LATIN AMERICA
EQUITY FUND, 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 you in understanding the various costs and expenses that may
be directly or indirectly borne by investors in the Investor Shares of the
Funds. If you purchase shares through a financial institution, you may be
charged separate fees by the financial institution. See "The Advisor," "The
Administrator" and "The Distributor."
6
<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 24, 1997 on
the Trust's financial statements as of December 31, 1996 incorporated by
reference to 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, 1996, the
TransEurope Fund and Limited Volatility Fixed Income Fund had not yet commenced
operations. In addition, as of December 31, 1996, Investor Shares of the Latin
America Equity Fund were not available for purchase by the public. Additional
performance information is set forth in the Trust's 1997 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
443-4725.
FOR AN INVESTOR SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Ratio of Ratio of
Net Expenses
Realized Net Ratio of Investment to
Net Net and Distri- Asset Net Expenses Income Average
Asset Invest- Unrealized Dividends butions Contri- Value Assets to (Loss) to Net
Value ment Gains from Net from bution End End of Average Average Assets
Beginning Income/ (Losses )on Investment Capital of of Total Period Net Net (Excluding
of Period (Loss) Securities Income Gains Capital Period Return (000) Assets Assets Waivers)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
----------
VALUE FUND
----------
1996 $12.28 $ 0.25 $ 2.18 $(0.25) $(1.20) $0.00 $13.26 20.09%* $ 1,672 1.28% 1.94 % 1.28%
1995 9.80 0.32 2.74 (0.32) (0.26) 0.00 12.28 31.72 * 1,497 1.33 2.79 1.33
1994 10.30 0.31 (0.33) (0.31) (0.17) 0.00 9.80 (0.21)* 731 1.37 3.13 1.37
1993(1) 10.41 0.21 (0.03) (0.21) (0.08) 0.00 10.30 1.95 * 435 1.48 2.51 8.99
-----------
GROWTH FUND
-----------
1996 $11.62 $ 0.14 $ 2.33 $(0.14) $(0.86) $0.00 $13.09 21.41%* $ 3,031 1.27% 1.11 % 1.27%
1995 9.74 0.12 2.89 (0.13) (1.00) 0.00 11.62 31.29 * 2,681 1.31 1.10 1.31
1994 10.23 0.13 (0.37) (0.13) (0.12) 0.00 9.74 (2.42)* 1,530 1.33 1.30 1.33
1993(2) 10.44 0.10 (0.08) (0.11) (0.12) 0.00 10.23 (0.23)* 840 1.43 1.24 6.55**
--------------
SMALL CAP FUND
--------------
1996 $12.46 $(0.07) $ 2.39 $ 0.00 $(1.78) $0.00 $13.00 19.18%* $ 579 1.30% (0.52)% 1.30%
1995 9.58 (0.01) 3.05 0.00 (0.16) 0.00 12.46 31.73 * 553 1.39 (0.08) 1.39
1994 10.25 0.00 (0.67) 0.00 0.00 0.00 9.58 (6.54)* 294 1.38 0.02 1.38
1993(3) 9.51 0.00 0.75 (0.01) 0.00 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 Average
(Excluding Turnover Commission
Waivers) Rate Rate+++
- --------------------------------------------
<S> <C> <C> <C>
----------
VALUE FUND
----------
1996 1.94 % 58% $0.0493
1995 2.79 37 N/A
1994 3.13 38 N/A
1993(1) (5.00)** 40 N/A
-----------
GROWTH FUND
-----------
1996 1.11 % 58% $0.0600
1995 1.10 71 N/A
1994 1.30 68 N/A
1993(2) (3.88)** 82 N/A
--------------
SMALL CAP FUND
--------------
1996 (0.52)% 158% $0.0599
1995 (0.08) 142 N/A
1994 0.02 43 N/A
1993(3) (32.37)** 27 N/A
</TABLE>
============================================
* Sales loads, which were imposed prior to October 10, 1997, are not included
in total return.
** Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Shares' initial year of operations.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on March 26, 1993. All ratios and total returns for the
period have been annualized.
2. Commenced operations on March 8, 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.
7
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
<TABLE>
<CAPTION>
Ratio of Ratio of
Realized Net Expenses
and Net Ratio of Investment to
Net Net Unrealized Distri- Asset Net Expenses Income Average
Asset Invest- Gains Dividends butions Contri- Value Assets to (Loss) to Net
Value ment (Losses) from Net from bution End End of Average Average Assets
Beginning Income on Investment Capital of of Total Period Net Net (Excluding
of Period (Loss) Securities Income Gains Capital Period Return (000) Assets Assets Waivers)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------
INTERNATIONAL EQUITY FUND
-------------------------
1996 $14.52 $ 0.04 $ 1.35 $ 0.00 $(0.15) $0.03 $15.79 9.85%*+ $ 1,608 1.61% 0.20 % 1.61%
1995 12.96 0.05 1.73 (0.02) (0.20) 0.00 14.52 13.79 * 1,686 1.68 0.42 1.68
1994 12.58 0.02 0.37 0.00 (0.01) 0.00 12.96 3.08 * 1,179 1.73 0.03 2.22
1993(1) 10.93 (0.01) 1.70 0.00 (0.04) 0.00 12.58 23.52 * 321 1.92 (0.38) 20.12**
-----------------
ASIAN TIGERS FUND
-----------------
1996 $10.44 $(0.02) $ 1.48 $(0.01) $(0.02) $0.02 $11.89 14.21%*++ $ 840 1.79% (0.15)% 1.79%
1995 9.47 0.11 0.95 (0.09) 0.00 0.00 10.44 11.18 * 733 1.81 1.05 1.88
1994(2) 10.00 0.01 (0.53) 0.00 (0.01) 0.00 9.47 (5.37)* 705 1.90 0.15 2.75**
<CAPTION>
Ratio of
Net
Investment
Income
(Loss) to
Average
Net
Assets Portfolio Average
(Excluding Turnover Commission
Waivers) Rate Rate+++
- -------------------------------------------
<S> <C> <C> <C>
INTERNATIONAL EQUITY FUND
-------------------------
1996 0.20 % 9% $0.0561
1995 0.42 11 N/A
1994 (0.46) 6 N/A
1993(1) (18.58)** 13 N/A
ASIAN TIGERS FUND
-----------------
1996 (0.15)% 24% $0.0106
1995 0.98 28 N/A
1994(2) (0.70)** 13 N/A
</TABLE>
==========================================
* Sales loads, which were imposed prior to October 10, 1997, are not included
in total return.
** Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Shares' initial year of operations.
+ The total return for the period ended December 31, 1996 includes the effect
of a capital contribution from an affiliate of the Advisor. Without the
capital contribution, the total return for the Investor Shares would have
been 9.64%.
++ The total return for the period ended December 31, 1996 includes the effect
of a capital contribution from an affiliate of the Advisor. Without the
capital contribution, the total return for the Investor Shares would have
been 14.02%.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on April 12, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on January 12, 1994. All ratios and total returns for
the period have been annualized.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
<TABLE>
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Realized Net Expenses Income
and Net Ratio of Investment to (Loss) to
Unrealized Distri- Asset Net Expenses Income Average Average
Net Asset Net Gains Dividends butions Value Assets to to Net Net
Value Invest- (Losses) from Net from 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>
-------------
BALANCED FUND
-------------
1996 $10.75 $0.30 $ 1.04 $(0.32) $(0.79) $10.98 12.86 %* $ 3,710 1.19% 2.89% 1.19% 2.89 %
1995 9.53 0.34 1.67 (0.36) (0.43) 10.75 21.52* 3,949 1.22 3.36 1.22 3.36
1994 10.03 0.27 (0.49) (0.27) (0.01) 9.53 (2.29)* 2,894 1.24 2.86 1.34 2.76
1993(1) 10.28 0.20 0.12 (0.22) (0.35) 10.03 4.07* 1,265 1.30 2.30 5.06** (1.46)**
-----------------
FIXED INCOME FUND
-----------------
1996 $10.35 $0.57 $(0.26) $(0.57) $ 0.00 $10.09 3.24 %* $ 459 0.98% 5.65% 1.08% 5.55 %
1995 9.32 0.55 1.04 (0.56) 0.00 10.35 17.40* 646 0.99 5.72 1.09 5.62
1994 10.24 0.50 (0.90) (0.52) 0.00 9.32 (3.97)* 442 0.98 5.38 1.08 5.28
1993(2) 10.30 0.35 0.23 (0.37) (0.27) 10.24 7.44* 86 1.06 4.08 42.44** (37.30)**
-----------------------------------------
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
1996 $10.05 $0.49 $(0.18) $(0.51) $ 0.00 $ 9.85 3.30 %* $ 251 0.99% 4.87% 1.09% 4.77 %
1995 9.32 0.49 0.76 (0.52) 0.00 10.05 13.59* 2,946 0.98 5.18 1.08 5.08
1994 10.07 0.43 (0.73) (0.45) 0.00 9.32 (3.03)* 1,133 1.02 5.05 1.12 4.95
1993(3) 10.21 0.28 (0.02) (0.30) (0.10) 10.07 3.42* 46 1.04 3.85 77.08** (72.19)**
<CAPTION>
Portfolio Average
Turnover Commission
Rate Rate+++
- ------------------------------------------
<S> <C> <C>
-------------
BALANCED FUND
-------------
1996 104% $0.0496
1995 85 N/A
1994 85 N/A
1993(1) 126 N/A
-----------------
FIXED INCOME FUND
-----------------
1996 194% N/A
1995 59 N/A
1994 126 N/A
1993(2) 163 N/A
-----------------------------------------
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
1996 179% N/A
1995 115 N/A
1994 124 N/A
1993(3) 81 N/A
</TABLE>
==========================================
* Sales loads, which were imposed prior to October 10, 1997, are not included
in total return.
** Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Shares' initial year of operations.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on March 9, 1993. All ratios and total returns for the
period have been annualized.
2. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
3. Commenced operations on April 12,1993. All rates and total returns for the
period have been annualized.
9
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
<TABLE>
<CAPTION>
Ratio of
Net
Investment
Ratio of Ratio of Income
Realized Net Expenses (Loss)
and Net Ratio of Investment to to
Net Unrealized Distri- Asset Net Expenses Income Average Average
Asset Net Gains Dividends butions Value Assets to to Net Net
Value Invest- (Losses) from Net from 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>
----------------------------
TAX-EXEMPT FIXED INCOME FUND
----------------------------
1996 $10.18 $0.43 $(0.17) $(0.47) $ 0.00 $ 9.97 2.70%* $ 680 0.98% 4.70% 1.10% 4.58%
1995 9.24 0.43 0.97 (0.46) 0.00 0.18 15.43 * 1,131 1.00 4.59 1.12 4.47
1994 10.22 0.40 (0.93) (0.42) (0.03) 9.24 (5.27)* 1,059 0.97 4.35 1.10 4.22
1993(1) 10.29 0.32 0.14 (0.34) (0.19) 10.22 5.73 * 428 1.05 3.88 11.86** (6.93)**
-------------------------------
INTERNATIONAL FIXED INCOME FUND
-------------------------------
1996 $10.56 $0.54 $(0.27) $(0.60) $ 0.00 $10.23 2.62%* $ 112 1.36% 4.43% 1.36% 4.43%
1995 9.53 0.52 1.45 (0.94) 0.00 10.56 20.68 * 125 1.35 5.57 1.41 5.51
1994 10.42 0.46 (0.64) (0.53) (0.18) 9.53 (1.71)* 87 1.41 5.03 7.54 (1.10)
1993(2) 10.88 0.40 0.12 (0.57) (0.41) 10.42 6.61 * 17 1.56 5.85 319.45** (312.04)**
--------------------------
TREASURY MONEY MARKET FUND
--------------------------
1996 $ 1.00 $0.04 $ 0.00 $(0.04) $ 0.00 $ 1.00 4.54% $ 10,910 0.69% 4.45% 0.84% 4.30%
1995 1.00 0.05 0.00 (0.05) 0.00 1.00 5.02 7,931 0.69 4.89 0.84 4.74
1994 1.00 0.03 0.00 (0.03) 0.00 1.00 3.32 3,231 0.70 3.52 0.86 3.36
1993(1) 1.00 0.02 0.00 (0.02) 0.00 1.00 2.29 1,347 0.75 2.28 5.23** (2.20)**
<CAPTION>
Portfolio Average
Turnover Commission
Rate Rate+++
- -------------------------------
<S> <C> <C>
----------------------------
TAX-EXEMPT FIXED INCOME FUND
----------------------------
1996 98% N/A
1995 129 N/A
1994 146 N/A
1993(1) 149 N/A
-------------------------------
INTERNATIONAL FIXED INCOME FUND
-------------------------------
1996 85% N/A
1995 105 N/A
1994 138 N/A
1993(2) 146 N/A
--------------------------
TREASURY MONEY MARKET FUND
--------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
</TABLE>
===============================
*Sales loads, which were imposed prior to October 10, 1997, are not included
in total return.
**Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Shares' initial year of operations.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on March 9, 1993. All ratios and total returns for the
period have been annualized.
2. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
10
<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>
----------------------------
GOVERNMENT MONEY MARKET FUND
----------------------------
1996 $1.00 $0.05 $0.00 $(0.05) $0.00 $1.00 4.82% $ 5,093 0.69% 4.71% 0.69% 4.71%
1995 1.00 0.05 0.00 (0.05) 0.00 $1.00 5.33 3,002 0.67 5.18 0.67 5.18
1994 1.00 0.04 0.00 (0.04) 0.00 $1.00 3.63 2,739 0.67 3.62 0.67 3.62
1993(1) 1.00 0.02 0.00 (0.02) 0.00 $1.00 2.78 1,814 0.72 2.69 2.37 1.04
-----------------
MONEY MARKET FUND
-----------------
1996 $1.00 $0.05 $0.00 $(0.05) $0.00 $1.00 4.87% $ 1,466 0.68% 4.77% 0.83% 4.62%
1995 1.00 0.05 0.00 (0.05) 0.00 $1.00 5.38 1,358 0.66 5.22 0.81 5.07
1994 1.00 0.04 0.00 (0.04) 0.00 $1.00 3.71 605 0.66 4.13 0.81 3.98
1993(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
----------------------------
1996 $1.00 $0.03 $0.00 $(0.03) $0.00 $1.00 2.88% $ 2,807 0.65% 2.85% 0.81% 2.69%
1995 1.00 0.03 0.00 (0.03) 0.00 $1.00 3.24 3,244 0.66 3.19 0.81 3.04
1994 1.00 0.02 0.00 (0.02) 0.00 $1.00 2.24 4,204 0.68 2.31 0.84 2.15
1993(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 Average
Turnover Commission
Rate Rate+++
- -------------------------------
<S> <C> <C>
----------------------------
GOVERNMENT MONEY MARKET FUND
----------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
-----------------
MONEY MARKET FUND
-----------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(2) N/A N/A
----------------------------
TAX-EXEMPT MONEY MARKET FUND
----------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(3) N/A N/A
</TABLE>
===============================
**Ratios are high relative to subsequent years as a result of the low initial
asset levels during the Investor Shares' initial year of operations.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on April 22, 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.
11
<PAGE>
................................................................................
[LOGO OF SEI WHAT IS AN
REMBRANDT INTERMEDIARY?
APPEARS HERE](R)
Any entity, such as a bank, broker-dealer, other financial institution,
association or organization that has entered into an arrangement with the
Distributor to sell Fund shares to its customers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US
Investor Shares of the Funds are sold on a continuous basis and may be
purchased through financial institutions or broker-dealers which have
established a dealer agreement with the Distributor ("Intermediaries"). The
Funds may make Investor Shares available to other investors in the future.
Shares of each Fund are offered only to residents of states and other
jurisdictions in which the shares are eligible for purchase. For more
information about the following topics, see "Additional Information About Doing
Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY,
REDEEM AND Shares of the Funds may be purchased through Intermediaries
EXCHANGE which provide various services to their customers. Each
SHARES Intermediary may impose its own rules regarding investing in
the Funds, including procedures for purchases, redemptions, and
exchanges. Contact your Intermediary for information about the
services available to you and for specific instructions on how
to buy, sell and exchange shares. Certain Intermediaries may
charge account fees. Information concerning shareholder
services and any charges will be provided to you by your
Intermediary. Some Intermediaries may be required to register
as broker-dealers under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
Other Purchases of Investor Shares may be made by direct deposit or
Information Automated Clearing House transactions if your Intermediary
Regarding offers such services. Please contact your Intermediary to
Purchases find out if these services are available to you and for more
information about direct deposit or Automated Clearing House
transactions.
Your Intermediary also may impose a wire charge on
purchases.
No certificates representing shares will be issued.
Automatic You may systematically buy Investor Shares through deductions
Investment from your checking account, provided these accounts are
Plan ("AIP") maintained through banks which are part of the Automated
Clearing House system. Upon notice, the amount you commit to
the AIP may be changed or canceled at any time. The minimum
pre-authorized investment amount is $50 per month. You should
contact your Intermediary to find out if the AIP is available
to you. You may obtain an AIP application form by calling
1-800-443-4725 or by contacting your Intermediary.
12
<PAGE>
................................................................................
[LOGO OF SEI HOW DOES AN
REMBRANDT EXCHANGE TAKE
APPEARS HERE](R) PLACE?
When making an exchange, you authorize the sale of your shares of one or more
Funds in order to pur-chase the shares of another Fund. In other words, you are
execut-ing a sell order and then a buy order. This sale of your shares is a
taxable event which could result in a taxable gain or loss.
................................................................................
EXCHANGING
SHARES
When Can You Once payment for your shares has been received and accepted
Exchange (i.e., an account has been established), you may exchange
Shares? some or all of your Investor Shares for Investor Shares of
other Funds within the Trust. Exchanges are made at net asset
value.
Exchanges will be made only after instructions in writing or
by telephone (an "Exchange Request") are received by the
Transfer Agent.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice.
Requesting an To exchange shares, you should contact your Intermediary, who
Exchange of will contact DST Systems, Inc., 1004 Baltimore Avenue, Kansas
Shares City, Missouri 64105 (the "Transfer Agent") and effect the
exchange on your behalf.
If an Exchange Request in good order is received by the
Transfer Agent by 4:00 p.m., Eastern time for any non-Money
Market Fund and 1:00 p.m., Eastern time for any Money Market
Fund, on any Business Day, the exchange usually will occur on
that day. Your Intermediary may have earlier cutoff times for
Exchange Requests. Please contact your Intermediary for more
information about their exchange policies.
13
<PAGE>
................................................................................
[LOGO OF SEI WHAT IS A
REMBRANDT SIGNATURE
APPEARS HERE](R) GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities ex-change or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
................................................................................
REDEMPTION OF You may redeem your shares on any Business Day. Redemption
SHARES requests must be made directly to your Intermediary.
Redemption orders for the Equity, Balanced and Fixed Income
Funds must be received by 4:00 p.m., Eastern time. Redemption
orders for the Money Market Funds must be received by 1:00
p.m., Eastern time. Your Intermediary may have earlier cutoff
times for redeeming shares. Please contact your Intermediary
for more information regarding redemption orders.
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 or to a commercial bank account
previously designated either on the Account Application or by
written instruction to the Transfer Agent.
Redemption Payment to shareholders for shares redeemed generally will be
Proceeds made within seven days after receipt by the Transfer Agent of
the valid request for redemption. The Funds intend to pay
cash for all shares redeemed, but under conditions which make
payment in cash unwise, payment may be made wholly or partly
in portfolio securities with a market value equal to the
redemption price. In such cases, you may incur brokerage
costs in converting such securities to cash.
You may have redemption proceeds mailed to your address or
mailed or wired to a commercial bank account previously
designated on your Account Application. There is no charge
for having redemption proceeds mailed to a designated bank
account. Under most circumstances, payments will be wired on
the next Business Day following receipt of a valid request
for redemption. Redemption proceeds may be transferred by
wire for a wire charge of $10.00, which is deducted from the
amount of the redemption. Redemption proceeds may not be
transmitted by Federal Reserve wire on federal holidays
restricting wire transfers.
Communications Neither the Trust nor the Transfer Agent will be responsible
with the for any loss, liability, cost or expense for acting upon wire
Transfer Agent 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
14
<PAGE>
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 an Intermediary experiences difficulties placing
redemption orders by telephone, the Intermediary may wish to
consider placing the order by other means. Your Intermediary
may not close your account by telephone. Please contact your
Intermediary for more information regarding their specific
requirements for written and telephone requests for
redemptions and signature guarantee requirements.
Other All redemption orders are effected at the net asset value
Information per share next determined after receipt of a valid request
Regarding for redemption, as described above.
Redemptions 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 will be
delayed for at least 15 days from the date of purchase or
until payment has been collected for the purchase of such
shares.
See "Purchase and Redemption of Shares" in the Statement
of Additional Information for examples of when your right to
redeem your shares may be suspended.
Systematic The Funds offer a Systematic Withdrawal Plan ("SWP") for
Withdrawal Plan Investor Shareholders who wish to receive regular
distributions from their account. Upon commencement of the
SWP, your account must have a current value of $5,000 or
more. You may elect to receive automatic payments via check
or Automated Clearing House of $50 or more on a monthly,
quarterly, semi-annual or annual basis. You should contact
your Intermediary to find out if a SWP is available to you
and for information about the SWP. A SWP Application Form
may be obtained by calling 1-800-443-4725 or by contacting
your Intermediary.
You should realize that if withdrawals exceed income
dividends, your invested principal in your account will be
depleted. Thus, depending on the frequency and amounts of
the withdrawal payments and/or any fluctuations in the net
asset value per share, your original investment could be
exhausted entirely. To participate in the SWP, you must have
your dividends automatically reinvested. To change or cancel
the SWP, please contact your Intermediary.
CHECKWRITING You may redeem your Money Market Investor Shares by writing
SERVICE checks on your account. Once you have signed and returned a
signature card, you will receive a supply of checks. A check
(Money Market may be made payable to any person, and your account will
Funds) continue to earn dividends until the check clears.
Because of the difficulty of determining in advance the
exact value of a Fund account, you may not use a check to
close your account. Your account may be charged a fee for
stopping payment of a check upon your request or if the
check cannot be honored because of insufficient funds or
other valid reasons.
You should contact your Intermediary to find out if
checkwriting services are available to you and for more
information about checkwriting services.
15
<PAGE>
................................................................................
[LOGO OF SEI WHAT ARE
REMBRANDT INVESTMENT
APPEARS HERE](R) OBJECTIVES AND
POLICIES?
Each Fund's investment objective is a statement of what it seeks to achieve.
It is important to make sure that the investment objective matches your own
financial needs and circumstances. The investment policies section spells out
the types of securities in which each Fund invests.
................................................................................
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 total 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. The Fund will invest
in options and futures for hedging purposes only.
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 total
assets in the common stock of corporations of any size that,
in the Advisor's opinion, have 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. The Fund will invest
in options and futures for hedging purposes only.
16
<PAGE>
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 total
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 Fund, factors reviewed will include sales and
earnings growth rates and the strength of the issuer's
balance sheet.
Because the Fund invests primarily in common stocks of
smaller capitalization companies, the Fund's shares may
fluctuate significantly in value, 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.
The Fund will invest in options and futures for hedging
purposes only.
INTERNATIONAL The International Equity Fund seeks a high level of total
EQUITY FUND return through capital appreciation and current income.
The International Equity Fund will invest at least 65% of
its total assets in equity securities of issuers in at least
three countries other than the U.S.
While the Fund will not necessarily spread its
investments among more than three countries other than the
U.S., the Advisor intends to diversify its investments among
countries to reduce currency risk. Investments will be made
primarily in common stocks of companies domiciled in
developed countries, but may be made in the securities of
companies domiciled in developing countries, as well.
Although the Fund will 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. The Fund will invest in options and futures for
hedging purposes only.
17
<PAGE>
TRANSEUROPE The TransEurope Fund seeks a high level of total return
FUND through capital appreciation and current income.
The TransEurope Fund will invest as fully as feasible
(and at least 65% of its total assets) in equity securities
of European issuers located in Belgium, Denmark, Finland,
France, Germany, Italy, the Netherlands, Norway, Spain,
Sweden, Switzerland and the United Kingdom. Investments may
also be made in the equity securities of issuers located in
the smaller and emerging markets of Europe. The Fund may
also invest in the equity securities of issuers in the
following Eastern European countries: the Czech Republic,
Hungary, Poland 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. The Fund
currently is not offering its shares to the public.
ASIAN TIGERS The Asian Tigers Fund seeks to achieve capital appreciation.
FUND The Asian Tigers Fund will invest primarily in equity
securities that 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.
Under normal circumstances, at least 65% of the total
assets of the Fund will be invested in equity securities of
issuers located in some or all of the following Asian
countries: China, Hong Kong, Indonesia, Malaysia, the
Philippines, Singapore and Thailand. The Fund may also
invest in common stocks traded on markets in India,
Pakistan, Sri Lanka, South Korea and Taiwan, and may invest
up to 5% of its net assets in other developing markets. 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.
While the Fund intends to invest primarily in securities
listed on stock exchanges, it may also invest in securities
traded in over-the-counter markets, which may pose liquidity
18
<PAGE>
risks. No more than 5% of the Fund's net assets will be
invested in unlisted securities. The Fund will invest in
options and futures for hedging purposes only.
LATIN AMERICA The Latin America Equity Fund seeks long-term capital
EQUITY FUND appreciation.
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.
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 purpose 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. Government
regulation and restrictions may limit the amount, mode and
extent of investment in companies in such countries.
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.
The Fund may invest in investment grade debt securities,
including debt securities issued or guaranteed by a Latin
American government or governmental entity ("Sovereign
Debt"), obligations of supranational entities, Brady Bonds
and money market instruments.
For hedging purposes only, the Fund may also enter into
options, futures, interest rate swaps, currency
transactions, caps, collars and floors. The Fund may also
write (i.e., sell) covered call options on the securities in
which it may invest.
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. The Fund may be more
susceptible to any single economic, political or regulatory
occurrence than a diversified investment company. The
investment of a large percentage of the Fund's assets
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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. The Fund currently is not
offering Investor Class Shares to the public.
BALANCED FUND The Balanced Fund seeks a favorable total rate of return
through current income and capital appreciation consistent
with preservation of capital, by 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 determined by
the Advisor to be of comparable quality at the time of
purchase; (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 or
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 is not subject to maturity restrictions. The
Balanced Fund may invest up 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
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<PAGE>
(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 is also permitted to invest in options
and futures (for hedging purposes only), engage in
securities lending, acquire floating and variable rate
securities, enter into dollar roll transactions with
selected banks and broker-dealers 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.
FIXED INCOME The Fixed Income Fund seeks a high level of total return
FUND relative to funds with like investment objectives, from
income and, to a lesser degree, capital appreciation by
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 total 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, its agencies or 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) GICs; (xiii) 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
21
<PAGE>
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. The Fund may invest in
options and futures for hedging purposes only.
INTERMEDIATE The Intermediate Government Fixed Income Fund seeks a high
GOVERNMENT level of total return relative to funds with like investment
FIXED INCOME objectives, consistent with preservation of capital from
FUND income and, to a lesser degree, capital appreciation, by
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, its agencies or
instrumentalities.
Normally, the Fund will maintain an average weighted
maturity of three to ten years; under certain circumstances,
however, the average weighted maturity may fall below three
years. The Fund may invest in options and futures for
hedging purposes only.
TAX-EXEMPT The Tax-Exempt Fixed Income Fund seeks a high level of total
FIXED INCOME return, relative to funds with like investment objectives,
FUND consistent with preservation of capital, from income by
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.
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<PAGE>
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.
The Fund may invest in options and futures for hedging
purposes only.
INTERNATIONAL The International Fixed Income Fund, formerly the Global
FIXED INCOME Fixed Income Fund, seeks a high level of total return
FUND relative to funds with like investment objectives, measured
in U.S. dollar terms, from income and capital appreciation
by investing in a portfolio consisting of investment quality
fixed income securities denominated in foreign currencies.
The International Fixed Income Fund will invest as fully
as feasible (at least 65% of its total assets) in investment
quality fixed income securities of issuers in at least three
of the following countries: Austria, Australia, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Japan, Luxembourg, The Netherlands, New Zealand, Norway,
Spain, Sweden, Switzerland and the United Kingdom.
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.
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 in quality 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
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<PAGE>
assessment of interest rate trends and other economic and
market factors. The Fund may invest in options and futures
for hedging purposes only.
LIMITED The Limited Volatility Fixed Income Fund seeks a high level
VOLATILITY of current income, consistent with relative stability of
FIXED INCOME principal, by investing primarily in a portfolio consisting
FUND 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 total 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, its
agencies or 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 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 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.
The Fund currently is not offering its shares to the
public.
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<PAGE>
TREASURY MONEY The Treasury Money Market Fund seeks to preserve principal
MARKET FUND 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 The Government Money Market Fund seeks to provide as high a
MONEY MARKET level of current income as is consistent with preservation
FUND of capital and liquidity by investing in obligations of the
U.S. Government, its agencies or 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, its
agencies or instrumentalities (e.g., Government National
Mortgage Association ("GNMA"), Fannie Mae, Federal Home Loan
Mortgage Corporation ("FHLMC"), Federal Land Bank); and
(iii) repurchase agreements involving such obligations.
MONEY MARKET The Money Market Fund seeks to provide as high a level of
FUND 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
highest two 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 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
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<PAGE>
obligations issued by foreign branches of U.S. banks and
London branches of foreign banks.
TAX-EXEMPT The Tax-Exempt Money Market Fund seeks to preserve principal
MONEY MARKET value and maintain a high degree of liquidity while
FUND providing current income exempt from Federal income tax and
not included as a preference item under the Federal
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"). In pursuing this policy, the Fund
may purchase municipal bonds, municipal notes, tax-exempt
commercial paper rated in the highest two 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, and shares of tax-
exempt money market funds.
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 Federal alternative minimum tax.
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<PAGE>
GENERAL INVESTMENT POLICIES ____________________________________________________
THE EQUITY AND Each Fund will invest in equity securities only if they are
BALANCED FUNDS 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 invest not more than 10% of its total
assets in restricted securities. In addition, 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 net assets in illiquid securities.
A Fund may enter into futures contract 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 Each Fund may purchase mortgage-backed securities issued or
INCOME AND guaranteed as to payment of principal and interest by the
BALANCED FUNDS U.S. Government, its agencies or instrumentalities and
mortgage-backed securities issued by non-governmental
issuers that are rated in the highest two rating categories
of an NRSRO.
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 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 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.
Each Fund will invest not more than 10% of its total
assets in restricted securities. In addition, 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.
A Fund may enter into futures contract 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.
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<PAGE>
THE MONEY Each Money Market Fund intends to comply with regulations of
MARKET FUNDS the SEC applicable to 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 will not invest more than 10% of
its net assets in illiquid securities.
ALL FUNDS All Funds may invest in variable and floating rate
obligations and may purchase securities on a when-issued
basis. A Fund (except the Money Market Funds) may enter into
futures contracts and options on futures for bona fide
hedging purposes only.
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 a 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.
For temporary defensive purposes when the Advisor
determines that market conditions warrant, the Equity Funds,
Fixed Income Funds and Balanced 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.
RATINGS NRSROs provide ratings for certain instruments in which the
Funds may invest. For example, bonds rated in the fourth
highest rating category have an adequate capacity to pay
principal and interest but may have speculative
characteristics as well.
For a description of ratings, see the Statement of
Additional Information.
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<PAGE>
CERTAIN RISK FACTORS ___________________________________________________________
The investment policies of each Fund entail certain risks
and considerations of which an investor should be aware.
Foreign The International Equity, TransEurope, Latin America Equity,
Securities Asian Tigers and International 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.
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 problems 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.
Investments in securities of foreign issuers are
frequently denominated in foreign currencies and the value
of a 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 a Fund may incur costs in
connection with conversions between various currencies. A
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 emerging
markets, including Latin American markets. This may limit a
Fund's ability to effectively hedge its investments in such
markets.
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<PAGE>
INVESTMENT LIMITATIONS _________________________________________________________
No Equity, Fixed Income or Balanced Fund may:
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 Latin America Equity or
International Fixed Income Funds.
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.
No Money Market Fund may:
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. 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.
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.
30
<PAGE>
................................................................................
[LOGO OF SEI INVESTMENT
REMBRANDT ADVISOR
APPEARS HERE](R)
A Fund's investment advisor manages the investment activities and is
responsible for the performance of the Fund. The advisor conducts investment
research, executes investment strategies based on an assessment of economic and
market conditions, and determines which securities to buy, hold or sell.
................................................................................
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 investment limitations are
set forth in the Statement of Additional Information.
THE ADVISOR ____________________________________________________________________
The Trust and ABN AMRO Asset Management (USA) Inc., (the
"Advisor"), (formerly LaSalle Street Capital Management, Ltd.),
208 South LaSalle Street, Chicago, Illinois 60604-1003 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 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 International Fixed Income Funds; 1.00% of the
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;
.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 Advisor may voluntarily waive a portion of its fee in
order to limit the total operating expenses of the Funds. The
Advisor reserves the right, in its sole discretion, to
terminate this voluntary fee waiver at any time.
31
<PAGE>
For the fiscal year ended December 31, 1996, the Advisor
received an advisory fee of .80% for the Value Fund, .80%
for the Growth Fund, .80% for the Small Cap Fund, 1.00% for
the International Equity Fund, 1.00% for the Asian Tigers
Fund, .70% for the Balanced Fund, 50% for the Fixed Income
Fund, .50% for the Intermediate Government Fixed Income
Fund, .48% for the Tax-Exempt Fixed Income Fund, .80% for
the International Fixed Income Fund, .20% for the Government
Money Market Fund, .19% for the Tax-Exempt Money Market
Fund, .20% for the Treasury Money Market Fund and .20% for
the Money Market Fund. The TransEurope Fund and Limited
Volatility Fixed Income Fund had not commenced operations at
fiscal year end. The Latin America Equity Fund had not
offered Investor Shares to the public at fiscal year end.
ABN AMRO Asset Management (USA) Inc. was organized in
March, 1991 under the laws of the State of Delaware. The
Advisor manages assets for corporations, unions,
governments, insurance companies and charitable
organizations. As of December 31, 1996, total assets under
management by the Advisor were approximately $3.4 billion.
The Advisor is a direct, wholly-owned subsidiary of ABN
AMRO Capital Markets Holding, Inc., which is an indirect,
wholly-owned subsidiary of ABN AMRO Holding N.V., a
Netherlands company.
Jac A. Cerney, Senior Vice President of the Advisor, has
served as portfolio manager for 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 for the Growth Fund since its
inception. Mr. Dibble has been associated with the Advisor
and its predecessor since 1987.
Marc G. Borghans, Vice President of the Advisor, has
served as co-manager of the Small Cap Fund since March, 1997
and portfolio manager since July, 1997. Mr. Borghans has
been associated with the Advisor or its affiliates since
1988.
Mark W. Karstrom, Senior Vice President of the Advisor,
has served as portfolio manager for the Intermediate
Government Fixed Income Fund and the Limited Volatility
Fixed Income Fund since September, 1996. Mr. Karstrom joined
the Advisor in August 1996. He served as a Vice President,
Portfolio Manager with Norwest Investment Management and
Trust and a predecessor firm from May, 1985 to July, 1996.
Charles H. Self, III, Senior Vice President of the
Advisor, has served as portfolio manager for the Fixed
Income Fund since October, 1995. He served as the portfolio
manager for the Tax-Exempt Fixed Income Fund since
September, 1996 to June, 1997, and co-manager of the Tax-
Exempt Fixed Income Fund from April, 1997 to June, 1997. Mr.
Self joined the Advisor in October, 1995. He served as a
Vice President with CSI Asset Management from December, 1988
to July, 1995.
Phillip P. Mierzwa, Assistant Vice President of the
Advisor, has served as co-manager of the Tax-Exempt Fixed
Income Fund since April, 1997. He has been associated with
the Advisor or its affiliates since February, 1990.
32
<PAGE>
Gregory D. Boal, Senior Vice President of the Advisor,
has served as portfolio manager of the fixed income portion
of the Balanced Fund since April, 1997 and as co-manager of
the Tax-Exempt Fixed Income Fund since July, 1997. Mr. Boal
joined the Advisor in March, 1997. He served as Manager,
Fixed Income Division of First Citizens Bank from November,
1989 to March, 1997.
THE SUB-ADVISOR ________________________________________________________________
ABN AMRO-NSM International Funds Management B.V. (the "Sub-
Advisor"), Hoogoorddreef 66-68, P.O. Box 283, 1000 EA
Amsterdam, The Netherlands, serves as the investment sub-
advisor of the International Equity Fund, TransEurope Fund,
Asian Tigers Fund, International Fixed Income Fund and Latin
America Equity Fund pursuant to a Sub-Advisory Agreement
with the Advisor. The Sub-Advisor is a holding company
affiliate of the Advisor. Under the Sub-Advisory Agreement,
the Sub-Advisor 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. The Sub-Advisor has
approximately $828 million under management, and manages two
non-U.S. investment companies.
Wypke Postma fund manager with the Sub-Advisor, has
served as portfolio manager for the International Equity
Fund since March, 1997. Mr. Postma has been associated with
the Sub-Advisor and/or its affiliates since 1984.
Alex Ng has served as portfolio manager for the Asian
Tigers Fund since July, 1995. Mr. Ng has been associated
with the Sub-Advisor and/or its parent since 1988. Mr. Ng
also serves as the Far East Director of Asset Management for
a Hong Kong-based affiliate of the Advisor.
Felix Lanters, portfolio manager for the TransEurope
Fund, has been associated with the Sub-Advisor and/or its
parent since 1987.
Wouter Weijand has served as portfolio manager for the
International Fixed Income Fund since September, 1997. Mr.
Weijand has worked in various investment management
positions with ABN AMRO and/or its affiliates since 1984.
Jan-Wim Derks, an officer of the Sub-Advisor, has served
as portfolio manager for the Latin America Equity Fund since
its inception. Mr. Derks has served as a Portfolio Manager
with ABN AMRO and/or its affiliates since 1989.
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, Latin America Equity Fund and Asian Tigers
Fund, and .40% of the average daily net assets of the
International Fixed Income Fund. The Sub-Advisor received
fees from the Advisor of .50% for the Asian Tigers Fund,
.50% for the Latin America Equity Fund and International
Equity Fund and .40% for the International Fixed Income Fund
for the fiscal year ended December 31, 1996. As of fiscal
33
<PAGE>
year end, the TransEurope Fund had not commenced operations
and the Latin America Equity Fund had not offered Investor
Shares to the public.
THE ADMINISTRATOR ______________________________________________________________
SEI Fund Resources (the "Administrator"), Oaks,
Pennsylvania, 19456, a Delaware business trust, provides the
Trust with administrative services, including fund
accounting, regulatory reporting, necessary office space,
equipment, personnel and facilities. SEI Investments
Management Corporation, a wholly-owned subsidiary of SEI
Corporation ("SEI"), is the owner of all beneficial interest
in the Administrator.
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 TRANSFER
AGENT __________________________________________________________________________
DST Systems, Inc., 1004 Baltimore Avenue, 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.
DISTRIBUTION
AND SHAREHOLDER
SERVICING ______________________________________________________________________
Rembrandt(R) Financial Services Company (the "Distributor"),
Oaks, Pennsylvania 19456, a subsidiary of SEI Financial
Services Company, and the Trust are parties to a
distribution agreement (the "Distribution Agreement").
The Funds have adopted plans under which firms, including
the Distributor, may provide shareholder and administrative
services to Investor Shares shareholders for compensation.
Under each plan, the Distributor may provide those services
itself, or may enter into arrangements under which third
parties provide such services and are compensated by the
Distributor.
The Trust has a distribution plan with respect to
Investor Shares (the "Distribution Plan"). As provided in
the Distribution Plan, the Trust pays a fee of .25% of the
average daily net assets of Investor Shares to the
Distributor as compensation for its services. From this
amount, the Distributor may make payments to financial
institutions and intermediaries such as banks, 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
Distribution Plan is characterized as a compensation plan
since the distribution fee is paid to the Distributor
without regard to the distribution or shareholder services
expenses incurred by the Distributor or the amount of
payments made to financial institutions and intermediaries.
34
<PAGE>
In addition, the Trust has a shareholder servicing plan
with respect to Investor Shares (the "Shareholder Servicing
Plan"). As provided in the Shareholder Servicing Plan, the
Trust pays a fee of .25% of the average daily net assets of
the Investor Shares to the Distributor in exchange for the
Distributor (or its agent's) efforts in maintaining client
accounts, arranging bank wires, responding to client
inquiries concerning services provided or investment, and
assisting clients in purchase, redemption and exchange
transactions and changing their dividend options, account
designations and addresses.
It is possible that an institution may offer different
classes of shares to its customers and differing services to
the classes, and thus receive compensation with respect to
different classes. These financial institutions may also
charge separate fees to their customers.
The Funds may 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 also offers Common Shares, which are sold
without a 12b-1 fee or shareholder servicing fee, primarily
to individuals and institutional investors directly and
through wrap programs, retirement plans, discount brokerage
programs, and various brokerage firms. For more information
about Common Shares, you may call 1-800-433-4725.
PERFORMANCE ____________________________________________________________________
THE EQUITY, From time to time, the Funds may advertise yield and total
BALANCED AND return. These figures will be based on historical earnings
FIXED INCOME and are not intended to indicate future performance. The
FUNDS 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 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, on an aggregate basis, or an actual basis.
THE MONEY From time to time a Fund may advertise its current yield and
MARKET FUNDS 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
35
<PAGE>
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 effective compound yield will be slightly
higher than the current yield because of the compounding
effect of this assumed reinvestment. 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.
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.
Additional performance information is set forth in the
1996 Annual Report to Shareholders, and is available upon
request and without charge by calling 1-800-443-4725.
The portfolio turnover rates for the Small Cap, Balanced,
Fixed Income, and Intermediate Government Fixed Income Funds
for the fiscal year ended December 31, 1996 were 158%, 104%,
194%, and 179%, respectively. A high turnover rate will
result in higher transaction costs and may result in
additional tax consequences for shareholders.
The performance of Common Shares will normally be higher
than that of Investor Shares because of the additional
distribution and administrative services expenses charged to
Investor Shares.
36
<PAGE>
................................................................................
[LOGO OF SEI TAXES
REMBRANDT
APPEARS HERE](R)
You must pay taxes on your Fund's earnings, whether you take your payments in
cash or additional shares.
................................................................................
[LOGO OF SEI DISTRIBUTIONS
REMBRANDT
APPEARS HERE](R)
The Fund dis-tributes income dividends and capital gains. Income dividends
represent the earnings from the Fund's in-vestments; capi-tal gains dis-
tributions occur when investments in the Fund are sold for more than the origi-
nal purchase price.
................................................................................
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. In addition, state and local tax
consequences on an investment in a Fund may differ from the
Federal income tax consequences described below. Accordingly,
you are urged to consult your tax advisor regarding specific
questions as to federal, state, and local income taxes.
Additional information concerning taxes is set forth in the
Statement of Additional Information.
Tax Status of Each Fund is treated as a separate entity for Federal
the Funds income tax purposes and is not combined with the Trust's other
Funds. Each Fund intends to qualify for the special tax
treatment afforded regulated investment companies as defined
under Subchapter M of the Internal Revenue Code. 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 Each Fund will distribute all of its net investment income
Distributions (including, for this purpose, net short-term capital gain) to
shareholders. Dividends from net investment income will be
taxable to you as ordinary income whether received in cash or
in additional shares. Any net capital gains will be distributed
annually as capital gains distributions and will be treated as
gain from the sale or exchange of a capital asset held for more
than one year, regardless of how long the you have held shares
and regardless of whether the distributions are received in
cash or in additional shares. Each Fund will notify you
annually of the Federal income tax character 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
37
<PAGE>
shareholders, a Fund may have to sell portfolio securities
to distribute such 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 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 you as
income dividends from the Fund, provided certain state-
specific conditions are satisfied. Each Fund will inform you
annually of the percentage of income and distributions
derived from U.S. obligations. You should consult your tax
advisor to determine whether any portion of the income
dividends received from a Fund is considered tax exempt in
your 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 shareholders 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, Latin America Equity Fund, Asian Tigers
Fund and International Fixed Income Fund expect to be able
to elect to treat Shareholders as having paid their
proportionate share of such foreign taxes withheld.
As a general rule, income dividends (not capital gain
distributions) paid by a Fund, to the extent the dividend is
derived from dividends received from domestic corporations,
may qualify for the dividends received deduction for
corporate shareholders. Distributions of net capital gains
from any Fund do not qualify for the dividends received
deduction.
Dividends paid by the Fixed Income Funds will not qualify
for the dividends received deduction for corporate
shareholders.
Each of the Tax-Exempt Fixed Income Fund and Tax-Exempt
Money Market 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 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 consisting of such Funds' 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
38
<PAGE>
payment of "exempt interest dividends." Accordingly,
municipal funds may not be an appropriate investment for
persons (including corporations and other business entities)
who are "substantial users" (or persons related to
"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. 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.
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 you.
ADDITIONAL
INFORMATION ABOUT
DOING BUSINESS
WITH US ________________________________________________________________________
Business Days You may buy, redeem or exchange shares on days on which the
New York Stock Exchange is open for business (a "Business
Day"). However, shares of a Money Market Fund cannot be
purchased by Federal Reserve wire on federal holidays
restricting wire transfers.
A purchase order for Investor 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. However, an order may be canceled if the
Custodian does not receive Federal funds before 4:00 p.m.,
Eastern time on the next Business Day, and you could be
liable for any fees or expenses incurred by the Trust. The
purchase price of Investor Shares of a Fund is the net asset
value next determined after a purchase order is effective.
A purchase order for Investor 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.
Your Intermediary may have earlier cutoff times for share
transactions. Please contact your Intermediary for more
information about its order requirements.
Minimum The minimum initial investment in the Investor Shares is
Investment $2,000; however, the minimum investment may be waived at the
Distributor's discretion. All subsequent purchases must be
at least $100. The Funds are intended to be long-term
investment vehicles and are not designed to provide
investors with a means of speculating on short-term
movements. Consequently, the Trust reserves the right to
reject a purchase order for Investor Shares
39
<PAGE>
when the Trust or the Transfer Agent determines that it is
not in the best interest of the Trust or its shareholders to
accept such order.
Maintaining a Due to the relatively high cost of handling small
Minimum Account investments, each Fund reserves the right to redeem, at net
Balance asset value, your shares if, because of redemptions of
shares by or on your behalf, your account in any Fund has a
value of less than $1,000. Accordingly, if you purchase
shares of any Fund in only the minimum investment amount you
may be subject to such involuntary redemption if you
thereafter redeems any of these shares. Before any Fund
exercises its right to redeem such shares and to send the
proceeds to you, you will be given notice that the value of
the shares in your account is less than the minimum amount
and will be allowed 60 days to make an additional investment
in such Fund in an amount that will increase the value of
the account to at least $1,000. See "Purchase and Redemption
of Shares" in the Statement of Additional Information for
examples of when the right of redemption may be suspended.
Your Intermediary may impose its own initial and
subsequent investment requirements. You should contact your
Intermediary for information about any such requirements.
Your Intermediary also may have requirements for
maintaining a minimum account balance. You should contact
your Intermediary for information about any such
requirements.
Net Asset Value The purchase price of a share of the Funds is the net asset
value per share next computed after the order is received
and accepted by the Trust. The selling price of a share of
the Funds is the net asset value per share next determined
after receipt of the request for redemption in good order.
The net asset value per share of the Money Market Funds is
calculated as of 1:00 p.m., Eastern time, each Business Day.
The net asset value of the Equity, Balanced and Fixed Income
Funds is determined as of the regular close of business of
the New York Stock Exchange (currently 4:00 p.m. Eastern
time) each Business Day.
How the Net The net asset value per share of a Fund is determined by
Asset Value is dividing the total market value of the Fund's investments
Determined and other assets, less any liabilities, by the total number
of outstanding shares of the Fund. The Equity, Balanced and
Fixed Income Funds value their portfolio securities at the
last quoted sales price for such securities, or, if there is
no such reported sales price on the valuation date, at the
most recent quoted bid price. The investments of the Money
Market Funds will be valued using the amortized cost method
described in the Statement of Additional Information. 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.
40
<PAGE>
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, International 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, 1996, the
Limited Volatility Fixed Income Fund and TransEurope Fund
had not commenced operations. The Latin America Equity Fund
is not available for purchase in Investor Shares.
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.
Trustees of the The management and affairs of the Trust are supervised by
Trust 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 not required
to hold annual shareholder meetings but such meetings 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.
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Shareholder Shareholder inquiries should be directed to the
Inquiries Administrator, Oaks, Pennsylvania, 19456, 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 Volatility Fixed
Income Funds is distributed in the form of monthly
dividends, and that of the International Equity, Latin
America Equity, TransEurope, Asian Tigers and International
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 Trust believes that as of April 1, 1997, banking
affiliates of ABN AMRO Capital Markets Holding, Inc. owned
of record or beneficially, substantially all of the Common
Shares of the Value, Growth, Small Cap, International
Equity, Asian Tigers, Balanced, Fixed Income, Intermediate
Government Fixed Income, Tax-Exempt Fixed Income,
International Fixed Income, Treasury Money Market,
Government Money Market, Money Market and Tax-Exempt Money
Market Funds. As a consequence, these banking affiliates may
be deemed to "control" these Funds within the meaning of the
1940 Act.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Auditors Ernst & Young LLP serves as the independent auditors of the
Trust.
Custodians CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
7618, Philadelphia, Pennsylvania 19101, acts as Custodian of
the Trust. Morgan Stanley Trust Company, serves as foreign
Sub-Custodian of the Trust. The Custodians hold cash,
securities and other assets of the Trust as required by the
1940 Act.
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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 ADRs are securities, typically issued by a U.S. financial
Depositary institution (a "depositary"), that evidence ownership
Receipts interests in a security or a pool of securities issued by a
("ADRs") 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 Asset-backed securities consist of securities secured by
Securities company receivables, truck and auto loans, leases and credit
(Non-mortgage) 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.
Bankers' Bankers' acceptances are bills of exchange or time drafts
Acceptances 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 BICs are contracts issued by U.S. banks and savings and loan
Contracts ("BICs")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. Generally, BICs are not
assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this
reason, BICs are considered to be illiquid investments.
Certificates of Certificates of deposit are interest bearing instruments
Deposit with a specific maturity. Certificates of deposit are issued
by banks and savings and loan institutions in exchange for
the deposit of funds and normally can be traded in the
secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered
illiquid.
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Commercial Commercial paper is a term used to describe unsecured short-
Paper term promissory notes issued by banks, municipalities,
corporations and other entities. Maturities on these issues
vary from a few to 270 days.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of shares 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 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 a 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 a Fund to buy a
security.
If the broker-dealer to whom a Fund sells the security
becomes insolvent, the Fund's right to purchase or
repurchase the security may be restricted. Also, the value
of the security may change adversely over the term of the
dollar roll, such that the security that the Fund is
required to repurchase may be worth less than the security
that the Fund originally held.
Equity Equity securities are common stocks and common stock
Securities 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 ADRs and equity securities of
closed-end investment companies. 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.
Fixed Income The market value of fixed income investments will change in
Securities 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 NRSROs 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.
Forward Foreign A forward contract involves an obligation to purchase or
Currency sell a specific currency amount at a future date, agreed
Contracts upon by the parties, at a price set at the time of the
contract.
At the maturity of a forward contract, a Fund may either
sell a portfolio security and make delivery of the foreign
currency, or it may retain the security and terminate its
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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. A Fund may
realize a gain or loss from currency transactions.
Futures Futures contracts provide for the future sale by one party
Contracts and and purchase by another party of a specified amount of a
Options on specific security at a specified future time and at a
Futures specified price. An option on a futures contract gives the
Contracts 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 Fund 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 Fund will minimize the
risk that it will be unable to close out a futures contract
by only entering into futures contracts which are traded on
national futures exchanges. In addition, a Fund 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.
Eurodollar futures 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.
No price is paid upon entering into futures contracts.
Instead, a Fund is 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, are 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.
In order to avoid leveraging and related risks, when a
Fund purchases futures contracts, it will collateralize its
position by depositing an amount of liquid securities, 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.
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
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may be an imperfect or no correlation between the changes in
market value of the securities held by a Fund 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.
Guaranteed GICs are contracts issued by U.S. insurance companies.
Investment Pursuant to such contracts, the Fund makes cash
Contracts contributions to a deposit fund of the insurance company's
("GICs") general account. The insurance company then credits to the
Fund on a monthly basis guaranteed interest at either a
fixed, variable or floating rate. Generally, GICs are not
assignable or transferable without the permission of the
issuing insurance companies. For this reason, GICs are
considered by a Fund to be illiquid investments.
Illiquid Illiquid securities are securities that cannot be disposed
Securities 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 Loan participations are interests in loans to U.S.
Participations 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 a 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, a 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, a 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.
Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities 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, balloon
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
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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, Fannie Mae and FHLMC. GNMA, Fannie Mae
and FHLMC guarantee timely distributions of interest to
certificate holders. GNMA and Fannie Mae also guarantee
timely distributions of scheduled principal. Fannie Mae and
FHLMC obligations are not backed by the full faith and
credit of the U.S. Government as GNMA certificates are, but
Fannie Mae and FHLMC securities are supported by the
instrumentalities' right to borrow from the U.S. Treasury.
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"). 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.
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.
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.
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 Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae. 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.
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
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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.
Municipal Municipal securities consist of (i) debt obligations issued
Securities 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 are entities established through the
Supranational joint participation of several governments, and include the
Entities 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 Nordic Investment
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.
Options A put option gives the purchaser 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 the right to buy, and the writer 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 a 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.
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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 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, cash equivalents or
liquid 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. 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 cash equivalents 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.
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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. 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.
Receipts 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 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 purposes.
Because of these features, receipts may be subject to
greater price volatility than interest paying U.S. Treasury
obligations.
Repurchase Repurchase agreements are agreements by which a Fund obtains
Agreements 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. A Fund bears a risk of
loss in the event the other party defaults on its
obligations and the Fund is delayed or prevented from
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 each Money Market Fund are subject to
Investments by limitations imposed under regulations adopted by the SEC.
Money Market Under these regulations, money market funds may acquire only
Funds 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
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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 Restricted securities are securities that may not be sold
Securities freely to the public absent registration under the
Securities Act of 1933 or an exemption from registration.
Rights Rights are instruments giving shareholders the right to
purchase shares of newly issued common stock below the
public offering price before they are offered to the public.
Securities In order to generate additional income, a Fund may lend the
Lending 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.
Standby Securities subject to standby commitments or puts permit the
Commitments holder thereof to sell the securities at a fixed price prior
and Puts 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.
Swaps, Caps, Interest rate swaps, mortgage swaps, currency swaps and
Floors and other types of swap agreements such as caps, floors and
Collars 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. Swaps may also depend on other
prices or rates, such as the value of an index or mortgage
prepayment rates.
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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.
Swap agreements will tend to shift a Fund's investment
exposure from one type of investment to another. Depending
on how they are used, swap agreements may increase or
decrease the overall volatility of a Fund's investment and
their share price and yield.
Time Deposits Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Time deposits with a
withdrawal penalty are considered to be illiquid.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations 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., Fannie Mae 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 U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve conditional or unconditional
Instruments 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.
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 When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
the purchase commitment. A Fund will maintain with the
Custodian a separate account with cash or cash equivalents
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
52
<PAGE>
than the purchase price if the 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. 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.
53
<PAGE>
REMBRANDT FUNDS (R)
COMMON SHARES A NO-LOAD CLASS
APRIL 30, 1997 (AS REVISED OCTOBER 10, 1997)
- --------------------------------------------------------------------------------
Equity Funds Fixed Income Funds
. VALUE FUND . FIXED INCOME FUND
. GROWTH FUND . INTERMEDIATE GOVERNMENT FIXED INCOME FUND
. SMALL CAP FUND . TAX-EXEMPT FIXED INCOME FUND
. INTERNATIONAL EQUITY FUND . INTERNATIONAL FIXED INCOME FUND
. TRANSEUROPE FUND . LIMITED VOLATILITY FIXED INCOME FUND
. ASIAN TIGERS FUND Money Market Funds
. LATIN AMERICA EQUITY FUND . TREASURY MONEY MARKET FUND
. GOVERNMENT MONEY MARKET FUND
Balanced Fund . MONEY MARKET FUND
. BALANCED FUND . TAX-EXEMPT MONEY MARKET FUND
- --------------------------------------------------------------------------------
Please read this Prospectus carefully before investing, and keep it on file for
future reference. It concisely sets forth information that can help you decide
if a Fund's investment goals match your own.
A Statement of Additional Information dated April 30, 1997 (and revised October
10, 1997) has been filed with the Securities and Exchange Commission (the
"SEC") and is available upon request and without charge by calling
1-800-443-4725. The Statement of Additional Information is incorporated into
this Prospectus by reference.
Common Shares of the Rembrandt Funds(R) (the "Trust") are offered to
individuals and institutional investors directly and through wrap programs,
retirement plans, discount brokerage programs, and various brokerage firms.
AN INVESTMENT IN ANY OF THE TRUST'S 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.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
................................................................................
TABLE OF CONTENTS
<TABLE>
<S> <C>
Fund Highlights......................................................... 2
Annual Operating Expenses............................................... 5
Financial Highlights.................................................... 7
Your Account and Doing Business with Us................................. 11
Investment Objectives and Policies...................................... 15
General Investment Policies............................................. 25
Certain Risk Factors.................................................... 27
Investment Limitations.................................................. 28
The Advisor............................................................. 29
The Sub-Advisor......................................................... 31
The Administrator....................................................... 32
The Transfer Agent...................................................... 32
The Distributor......................................................... 32
Performance............................................................. 33
Taxes................................................................... 34
Additional Information About Doing Business with Us..................... 37
General Information..................................................... 38
Description of Permitted
Investments and Risk Factors........................................... 41
................................................................................
</TABLE>
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Funds
before investing. Brief descriptions are also provided throughout the Prospectus
to better explain certain key points. To find these helpful guides, look for
this symbol.
[LOGO(R) OF SEI REMBRANDT APPEARS HERE]
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Common Shares of the
following Funds: Value Fund, Growth Fund, Small Cap Fund, International Equity
Fund, TransEurope Fund, Asian Tigers Fund, Latin America Equity Fund
(collectively, the "Equity Funds"), Balanced Fund ("Balanced Fund"), Fixed
Income Fund, Intermediate Government Fixed Income Fund, Tax-Exempt Fixed Income
Fund, International 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"). The TransEurope and
Limited Volatility Funds currently are not offering their shares to the public.
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.
INVESTMENT OBJECTIVES Below are the investment objectives and some basic
AND POLICIES investment policies of each Fund. For more information,
see "Investment Objectives and Policies," "General
Investment Policies" and "Description of Permitted
Investments and Risk Factors."
EQUITY AND The Growth Fund and Small Cap Fund both seek a high
BALANCED FUNDS 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 Latin America Equity Fund seeks long-term capital
appreciation.
The Balanced Fund seeks to obtain a favorable total
rate of return through current income and capital
appreciation consistent with the preservation of
capital, derived from investing in a portfolio comprised
of fixed income and equity securities.
2
<PAGE>
FIXED INCOME The Fixed Income Fund seeks a high level of total return
FUNDS 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 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 primarily 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 International Fixed Income Fund (formerly 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. The Limited Volatility Fund currently is
not offering its shares to the public.
MONEY MARKET The Treasury Money Market Fund seeks to preserve principal
FUNDS 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.
UNDERSTANDING Each Fund invests in different securities. Values of equity
RISK 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, International Fixed Income, and Latin America
Equity 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
3
<PAGE>
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 additional risks of political instability, high
inflation rates, and limited trading markets. See "General
Investment Policies," "Risk Factors" and "Description of
Permitted Investments and Risk Factors" in this prospectus,
and the Statement of Additional Information.
MANAGEMENT ABN AMRO Asset Management (USA) Inc. (the "Advisor")
PROFILE (formerly LaSalle Street Capital Management, Ltd.) serves as
the Advisor to the Funds. ABN AMRO-NSM International Funds
Management B.V. (the "Sub-Advisor") serves as the investment
sub-advisor to the International Equity Fund, TransEurope
Fund, Asian Tigers Fund, Latin America Equity Fund and
International Fixed Income Fund. SEI Fund Resources (the
"Administrator") serves as the Administrator and shareholder
servicing agent of the Trust. DST Systems, Inc. ("DST")
serves as transfer agent ("Transfer Agent") and dividend
disbursing agent for the Trust. Rembrandt(R) Financial
Services Company, an affiliate of the Administrator (the
"Distributor"), serves as distributor of the Trust's shares.
See "The Advisor," "The Sub-Advisor," "The Administrator"
and "The Distributor."
YOUR ACCOUNT You may open a Common Shares account with a minimum amount
AND DOING of $2,000 per Fund and make additional investments with as
BUSINESS WITH little as $100. A Common Shares account may be opened by
US contacting the transfer agent or your financial
intermediary. Redemptions of a Fund's shares are made at net
asset value per share. See "Your Account and Doing Business
With Us."
DIVIDENDS Substantially all of the net investment income (exclusive of
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
(exclusive of 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 you elect to take the
payment in cash. See "General Information--Dividends."
INFORMATION/
SERVICE For more information, call 1-800-443-4725, or contact your
CONTACTS financial intermediary.
4
<PAGE>
PORTFOLIO EXPENSES _____________________________________________________________
The purpose of the following table is to help you understand the various cost
and expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in COMMON SHARES.
SHAREHOLDER TRANSACTION EXPENSES/1/ (As a percentage of offering price)
- --------------------------------------------------------------------------------
Maximum Sales Charge Imposed on Purchases None
Redemption Fee(2) None
- --------------------------------------------------------------------------------
(1) Certain financial intermediaries may impose account fees or other charges.
(2) A charge, currently $10.00, is imposed on wires of redemption proceeds.
ANNUAL OPERATING EXPENSES (As a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY/BALANCED FUNDS
---------------------
SMALL LATIN AMERICA
VALUE GROWTH CAP INT'L EQUITY TRANS EUROPE ASIAN TIGERS EQUITY BALANCED
----- ------ ----- ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Advisory Fees .80% .80% .80% 1.00% 1.00% 1.00% 1.00% .70%
12b-1 Fees None None None None None None None None
Other Expenses(1) .23% .22% .25% .36% .54% .54% .70% .24%
- --------------------------------------------------------------------------------------------------------------
Total Operating Expenses 1.03% 1.02% 1.05% 1.36% 1.54% 1.54% 1.70% .94%
- --------------------------------------------------------------------------------------------------------------
(1) "Other Expenses" for the TransEurope Fund are based on estimated amounts
for the current fiscal year.
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
FIXED INCOME FUNDS
------------------
INTERMEDIATE LIMITED
GOVERNMENT TAX-EXEMPT INTERNATIONAL VOLATILITY
FIXED INCOME FIXED INCOME FIXED INCOME FIXED INCOME FIXED INCOME
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Advisory Fees (after fee waivers)(1) .50% .50% .48% .80% .50%
12b-1 Fees None None None None None
Other Expenses (after fee waivers)(2) .23% .24% .25% .31% .24%
- --------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers)(3) .73% .74% .73% 1.11% .74%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from
each Fixed Income Fund (except the International Fixed Income Fund). The
Advisor reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, Advisory Fees for the other Funds would be
as follows: Fixed Income Fund--.60%, Intermediate Government Fixed Income
Fund--.60%, Tax-Exempt Fixed Income Fund--.60%, and Limited Volatility
Fixed Income Fund--.60%. See "The Advisor."
(2) "Other Expenses" for the Limited Volatility Fixed Income Fund are based on
estimated amounts for the current fiscal year.
(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Funds would be as follows: Fixed Income Fund--.83%, Intermediate
Government Fixed Income Fund--.84%, Tax-Exempt Fixed Income Fund--.85%, and
Limited Volatility Fixed Income Fund--.84%.
5
<PAGE>
- --------------------------------------------------------------------------------
<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)(1) .20% .20% .20% .19%
12b-1 Fees None None None None
Other Expenses (after fee waivers)(2) .16% .16% .15% .13%
- ----------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers)(3) .36% .36% .35% .32%
- ----------------------------------------------------------------------------
</TABLE>
(1) The Advisor is waiving, on a voluntary basis, a portion of its fee from
each Money Market 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 waiver, Advisory Fees for the Funds would be as
follows: Treasury Money Market Fund--.35%, Money Market Fund--.35% and Tax-
Exempt Money Market Fund--.35%. Additional information may be found under
"The Advisor."
(2) The Administrator is waiving, on a voluntary basis, a portion of its fee
from each Money Market Fund. The Administrator reserves the right to change
the amount of or terminate its waiver at any time in its sole discretion.
"Other Expenses" have been restated to reflect current administrative fee
waivers. Absent such current waivers, "Other Expenses" for the Funds would
be as follows: Treasury Money Market Fund--.24%, Government Money Market
Fund--.24%, Money Market Fund--.23% and Tax-Exempt Money Market Fund--.21%.
(3) Absent the voluntary waivers described above, Total Operating Expenses for
the Funds would be as follows: Treasury Money Market Fund--.59%, Money
Market Fund--.58% and Tax-Exempt Money Market Fund--.56%.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1,000 investment assuming (1) 5% annual re-
turn and (2) redemption at the end of each time
period:
Value Fund $11 $33 $57 $126
Growth Fund 10 32 56 125
Small Cap Fund 11 33 58 128
International Equity Fund 14 43 74 164
TransEurope Fund 16 49 -- --
Asian Tigers Fund 16 49 84 183
Latin America Equity Fund 17 54 92 201
Balanced Fund 10 30 52 115
Fixed Income Fund 7 23 41 91
Intermediate Government Fixed Income Fund 8 24 41 92
Tax-Exempt Fixed Income Fund 7 23 41 91
International Fixed Income Fund 11 35 61 135
Limited Volatility Fixed Income Fund 8 24 -- --
Treasury Money Market Fund 4 12 20 46
Government Money Market Fund 4 12 20 46
Money Market Fund 4 11 20 44
Tax-Exempt Money Market Fund 3 10 18 41
- ----------------------------------------------------------------------------
</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
you in understanding the various costs and expenses that may be directly or
indirectly borne by investors in the Common Shares of the Funds. If you
purchase shares through a financial institution, you may be charged separate
fees by the financial institution. See "The Advisor," "The Administrator" and
"The Distributor."
6
<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 24, 1997 on
the Trust's financial statements as of December 31, 1996 incorporated by
reference to 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, 1996, the
TransEurope Fund and Limited Volatility Fixed Income Fund had not yet commenced
operations. Additional performance information is set forth in the Trust's 1997
Annual Report to Shareholders and is available upon request and without charge
by calling 1-800-443-4725.
FOR A COMMON SHARE* OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Ratio of Ratio of
Net Expenses
Realized Net Ratio of Investment to
Net Net and Distri- Asset Net Expenses Income Average
Asset Invest- Unrealized Dividends butions Contri- Value Assets to (Loss) to Net
Value ment Gains from Net from bution End End of Average Average Assets
Beginning Income/ (Losses )on Investment Capital of of Total Period Net Net (Excluding
of Period (Loss) Securities Income Gains Capital Period Return (000) Assets Assets Waivers)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VALUE FUND
----------
1996 $12.26 $ 0.29 $ 2.18 $(0.29) $(1.20) $0.00 $13.24 20.43% $164,710 1.01% 2.19 % 1.03%
1995 9.79 0.34 2.74 (0.35) (0.26) 0.00 12.26 32.02 131,243 1.03 3.07 1.05
1994 10.30 0.35 (0.35) (0.34) (0.17) 0.00 9.79 0.00 61,557 1.06 3.45 1.06
1993(1) 10.00 0.28 0.38 (0.28) (0.08) 0.00 10.30 6.73 54,340 1.10 2.85 1.10
GROWTH FUND
-----------
1996 $11.61 $ 0.17 $ 2.31 $(0.17) $(0.86) $0.00 $13.06 21.69% $ 95,215 1.02% 1.36 % 1.02%
1995 9.73 0.16 2.88 (0.16) (1.00) 0.00 11.61 31.60 78,216 1.02 1.37 1.02
1994 10.21 0.16 (0.36) (0.16) (0.12) 0.00 9.73 (2.05) 82,710 1.02 1.58 1.03
1993(1) 10.00 0.17 0.33 (0.17) (0.12) 0.00 10.21 5.07 98,581 1.06 1.70 1.07
SMALL CAP FUND
--------------
1996 $12.46 $(0.03) $ 2.38 $ 0.00 $(1.78) $0.00 $13.03 19.42% $ 36,375 1.05% (0.27)% 1.05%
1995 9.57 0.02 3.05 (0.02) (0.16) 0.00 12.46 32.13 23,844 1.10 0.18 1.10
1994 10.24 0.03 (0.67) (0.03) 0.00 0.00 9.57 (6.27) 31,527 1.06 0.27 1.06
1993(1) 10.00 0.04 0.24 (0.04) 0.00 0.00 10.24 2.82 53,357 1.09 0.40 1.10
INTERNATIONAL EQUITY FUND
-------------------------
1996 $14.56 $ 0.06 $ 1.37 $(0.04) $(0.15) $0.03 $15.83 10.09%+ $96,442 1.36% 0.44 % 1.36%
1995 13.00 0.07 1.75 (0.06) (0.20) 0.00 14.56 14.03 77,519 1.38 0.70 1.38
1994 12.59 0.02 0.40 0.00 (0.01) 0.00 13.00 3.32 41,324 1.43 0.21 1.46
1993(1) 10.00 0.00 2.63 0.00 (0.04) 0.00 12.59 26.55 23,457 1.64 0.03 1.64
ASIAN TIGERS FUND
-----------------
1996 $10.45 $ 0.02 $ 1.48 $(0.04) $(0.02) $0.02 $11.91 14.55%++ $33,602 1.54% 0.23 % 1.54%
1995 9.47 0.12 0.98 (0.12) 0.00 0.00 10.45 11.61 23,145 1.52 1.38 1.60
1994(2) 10.00 0.03 (0.53) (0.02) (0.01) 0.00 9.47 (5.07) 17,860 1.60 0.45 1.71
LATIN AMERICA EQUITY FUND
-------------------------
1996(3) $10.00 $(0.02) $ 0.26 $ 0.00 $ 0.00 $10.24 2.40% $11,490 2.09%** (0.55)% 2.09%
<CAPTION>
Ratio of
Net
Investment
Income
(Loss) to
Average
Net Assets Portfolio Average
(Excluding Turnover Commission
Waivers) Rate Rate+++
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VALUE FUND
----------
1996 2.19 % 58% $0.0493
1995 3.07 37 N/A
1994 3.45 38 N/A
1993(1) 2.85 40 N/A
GROWTH FUND
-----------
1996 1.36 % 58% $0.0600
1995 1.37 71 N/A
1994 1.57 68 N/A
1993(1) 1.69 82 N/A
SMALL CAP FUND
--------------
1996 (0.27)% 158% $0.0599
1995 0.18 142 N/A
1994 0.27 43 N/A
1993(1) 0.39 27 N/A
INTERNATIONAL EQUITY FUND
-------------------------
1996 0.44 % 9% $0.0561
1995 0.70 11 N/A
1994 0.18 6 N/A
1993(1) 0.03 13 N/A
ASIAN TIGERS FUND
-----------------
1996 0.23 % 24% $0.0106
1995 1.30 28 N/A
1994(2) 0.34 13 N/A
LATIN AMERICA EQUITY FUND
-------------------------
1996(3) (0.55)% 10% $0.0004
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Known as Trust Class, prior to October 10, 1997.
** Ratios are high as a result of the low initial asset levels during the
Common Shares' initial year of operations.
+ The total return for the period ended December 31, 1996 includes the effect
of a capital contribution from an affiliate of the Advisor. Without the
capital contribution, the total return for the Common Shares would have
been 9.87%.
++ The total return for the period ended December 31, 1996 includes the effect
of a capital contribution from an affiliate of the Advisor. Without the
capital contribution, the total return for the Common Shares would have
been 14.36%.
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on January 3, 1994. All ratios and total returns for
the period have been annualized.
3. Commenced operations on July 1, 1996. All ratios and total returns for the
period have been annualized.
7
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
<TABLE>
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Realized Net Expenses Income
and Net Ratio of Investment to (Loss) to
Unrealized Distri- Asset Net Expenses Income Average Average
Net Asset Net Gains Dividends butions Value Assets to to Net Net
Value Invest- (Losses) from Net from 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>
BALANCED FUND
-------------
1996 $10.75 $0.35 $ 1.02 $(0.35) $(0.79) $10.98 13.15 % $ 54,546 0.94% 3.14% 0.94% 3.14 %
1995 9.53 0.39 1.65 (0.39) (0.43) 10.75 21.85 49,899 0.92 3.74 0.92 3.74
1994 10.04 0.30 (0.50) (0.30) (0.01) 9.53 (2.11) 72,086 0.94 3.11 0.94 3.11
1993(1) 10.00 0.29 0.39 (0.29) (0.35) 10.04 7.09 58,510 0.97 2.88 0.97 2.88
FIXED INCOME FUND
-----------------
1996 $10.32 $0.59 $(0.26) $(0.59) $ 0.00 $10.06 3.42 % $123,930 0.73% 5.92% 0.83% 5.82 %
1995 9.30 0.59 $ 1.02 (0.59) 0.00 10.32 17.75 125,563 0.74 5.97 0.84 5.87
1994 10.23 0.54 $(0.93) (0.54) 0.00 9.30 (3.82) 92,402 0.72 5.45 0.82 5.35
1993(1) 10.00 0.47 $ 0.50 (0.47) (0.27) 10.23 9.92 131,002 0.77 4.60 0.87 4.50
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
1996 $10.06 $0.54 $(0.21) $(0.54) $ 0.00 $ 9.85 3.51 % $ 56,895 0.74% 5.38% 0.84% 5.28 %
1995 9.33 0.54 0.73 (0.54) 0.00 10.06 13.86 73,466 0.73 5.48 0.83 5.38
1994 10.08 0.47 (0.75) (0.47) 0.00 9.33 (2.78) 91,002 0.74 4.88 0.84 4.78
1993(1) 10.00 0.41 0.18 (0.41) (0.10) 10.08 6.04 104,826 0.76 4.15 0.86 4.05
<CAPTION>
Portfolio Average
Turnover Commission
Rate Rate+++
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BALANCED FUND
-------------
1996 104% $0.0496
1995 85 N/A
1994 85 N/A
1993(1) 126 N/A
FIXED INCOME FUND
-----------------
1996 194% N/A
1995 59 N/A
1994 126 N/A
1993(1) 163 N/A
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
-----------------------------------------
1996 179% N/A
1995 115 N/A
1994 124 N/A
1993(1) 81 N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
8
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
<TABLE>
<CAPTION>
Ratio of
Net
Investment
Ratio of Ratio of Income
Realized Net Expenses (Loss)
and Net Ratio of Investment to to
Net Unrealized Distri- Asset Net Expenses Income Average Average
Asset Net Gains Dividends butions Value Assets to to Net Net
Value Invest- (Losses) from Net from 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>
TAX-EXEMPT FIXED INCOME FUND
----------------------------
1996 $10.20 $0.50 $(0.21) $(0.50) $ 0.00 $ 9.99 2.96% $ 39,756 0.73% 4.95% 0.85% 4.83%
1995 9.26 0.48 0.94 (0.48) 0.00 10.20 15.67 50,079 0.75 4.84 0.87 4.72
1994 10.23 0.44 (0.94) (0.44) (0.03) 9.26 (4.93) 53,588 0.71 4.54 0.84 4.41
1993(1) 10.00 0.42 0.42 (0.42) (0.19) 10.23 8.64 67,162 0.75 4.17 0.85 4.07
INTERNATIONAL FIXED INCOME FUND
-------------------------------
1996 $10.58 $0.48 $(0.18) $(0.64) $ 0.00 $10.24 2.82% $ 17,561 1.11% 4.66% 1.11% 4.66%
1995 9.54 0.62 1.38 (0.96) 0.00 10.58 20.99 17,433 1.10 5.86 1.16 5.80
1994 10.43 0.56 (0.72) (0.55) (0.18) 9.54 (1.47) 15,021 1.16 5.09 1.22 5.03
1993(2) 10.00 0.54 0.94 (0.64) (0.41) 10.43 16.33 16,488 1.21 5.95 1.21 5.95
TREASURY MONEY MARKET FUND
--------------------------
1996 $ 1.00 $0.05 $ 0.00 $(0.05) $ 0.00 $ 1.00 4.80% $156,455 0.44% 4.70% 0.59% 4.55%
1995 1.00 0.05 0.00 (0.05) 0.00 1.00 5.28 110,475 0.44 5.16 0.59 5.01
1994 1.00 0.04 0.00 (0.04) 0.00 1.00 3.58 111,545 0.45 3.50 0.61 3.34
1993(1) 1.00 0.03 0.00 (0.03) 0.00 1.00 2.56 108,495 0.47 2.53 0.62 2.38
GOVERNMENT MONEY MARKET FUND
----------------------------
1996 $1.00 $0.05 $0.00 (0.05) $0.00 $1.00 5.08% $256,392 0.44% 4.96% 0.44% 4.96%
1995 1.00 0.05 0.00 (0.05) 0.00 $1.00 5.59 207,615 0.42 5.45 0.42 5.45
1994 1.00 0.04 0.00 (0.04) 0.00 $1.00 3.89 157,140 0.42 3.81 0.42 3.81
1993(1) 1.00 0.03 0.00 (0.03) 0.00 $1.00 3.00 159,401 0.45 2.92 0.45 2.92
MONEY MARKET FUND
-----------------
1996 $1.00 $0.05 $0.00 $(0.05) $0.00 $1.00 5.13% $598,715 0.43% 5.02% 0.58% 4.87%
1995 1.00 0.06 0.00 (0.06) 0.00 $1.00 5.64 475,688 0.41 5.50 0.56 5.35
1994 1.00 0.04 0.00 (0.04) 0.00 $1.00 3.97 460,583 0.41 3.93 0.56 3.78
1993(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
<CAPTION>
Portfolio Average
Turnover Commission
Rate Rate+++
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TAX-EXEMPT FIXED INCOME FUND
----------------------------
1996 98% N/A
1995 129 N/A
1994 146 N/A
1993(1) 149 N/A
INTERNATIONAL FIXED INCOME FUND
-------------------------------
1996 85% N/A
1995 105 N/A
1994 138 N/A
1993(2) 146 N/A
TREASURY MONEY MARKET FUND
--------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
GOVERNMENT MONEY MARKET FUND
----------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
MONEY MARKET FUND
-----------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
2. Commenced operations on February 7, 1993. All ratios and total returns for
the period have been annualized.
9
<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>
TAX-EXEMPT MONEY MARKET FUND
----------------------------
1996 $1.00 $0.03 $0.00 $(0.03) $0.00 $1.00 3.14% $187,629 0.40% 3.10% 0.56% 2.94%
1995 1.00 0.03 0.00 (0.03) 0.00 $1.00 3.49 167,945 0.41 3.44 0.56 3.29
1994 1.00 0.02 0.00 (0.02) 0.00 $1.00 2.50 161,054 0.43 2.52 0.59 2.36
1993(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
<CAPTION>
Portfolio Average
Turnover Commission
Rate Rate+++
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TAX-EXEMPT MONEY MARKET FUND
----------------------------
1996 N/A N/A
1995 N/A N/A
1994 N/A N/A
1993(1) N/A N/A
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
+++ Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is required for fiscal years
beginning after 09/01/95.
1. Commenced operations on January 4, 1993. All ratios and total returns for
the period have been annualized.
10
<PAGE>
................................................................................
[LOGO OF HOW DO I OBTAIN AN APPLICATION?
SEI REMBRANDT(R)
APPEARS HERE]
Account Application forms can be obtained
by calling 1-800-443-4725.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US
Common Shares of a Fund are sold on a continuous basis and may be purchased
directly from the Transfer Agent, DST Systems, Inc., 1004 Baltimore Avenue,
Kansas City, Missouri 64105, either by mail, telephone or by wire. Shares may
also be purchased through a variety of channels, including wrap programs,
retirement plans, discount brokerage programs and through various brokerage
firms including Jack White & Company, Lombard Institutional, and Quick &
Reilly. For more information about the following topics, see "Additional
Information About Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY COMMON SHARES FROM THE TRANSFER AGENT
Opening an You may purchase Common Shares of a Fund by completing and
Account By signing an Account Application form and mailing it, along with
Mail a check (or other negotiable bank instrument or money order)
payable to "Rembrandt Funds(R), [Fund Name]," to Rembrandt
Funds, P.O. Box 419402, 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.
made payable to the Rembrandt Funds(R). Third party checks,
credit cards, credit card checks and cash will not be
accepted. When purchases are made by check, redemptions will
not be allowed until the investment being redeemed has been
in the account for 15 days.
By Telephone If an Account Application has been previously received, you
also may purchase shares over the telephone by calling 1-800-
443-4725. Orders by telephone will not be executed until
payment has been received. If a check received for purchase
of Common Shares does not clear, the purchase will be
canceled and you could be liable for any losses or fees
incurred.
By Wire If you have an account with a commercial bank that is a
member of the Federal Reserve System may purchase shares of a
Fund by requesting your bank to transmit funds by wire to:
United Missouri Bank, N.A.; ABA #10-10-00695; for Account
Number 98-7052-349-3; Further Credit: [Name of Fund]. Your
name and account number must be specified in the wire. Your
bank may impose a fee for investments by wire.
Initial Purchases: Before making an initial investment by
wire, you must first telephone 1-800-443-4725 to be assigned
an account number. Your 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: Rembrandt Funds,
P.O. Box 419402, Kansas City, Missouri 64141-6402.
Subsequent Purchases: Additional investments may be made
at any time through the wire procedures described above,
which must include your name and account number.
Other Other shareholders who desire to transfer the registration of
Information their shares should contact the Administrator by calling 1-
Regarding 800-443-4725.
Purchases
11
<PAGE>
................................................................................
[LOGO OF SEI HOW DOES AN EXCHANGE TAKE PLACE?
REMBRANDT (R)
APPEARS HERE]
When making an exchange, you authorize the sale of your shares of one or more
Funds in order to purchase the shares of another Fund. In other words, you are
executing a sell order and then a buy order. This sale of your shares is a
taxable event which could result in a taxable gain or loss.
................................................................................
Purchases of Common Shares may be made by direct deposit
or Automated Clearing House transactions.
No certificates representing shares will be issued.
Automatic You may systematically buy Common Shares through deductions
Investment from your checking accounts, provided these accounts are
Plan ("AIP") maintained through banks which are part of the Automated
Clearing House system. Upon notice, the amount you commit to
the AIP may be changed or canceled at any time. The minimum
pre-authorized investment amount is $50 per month.You may
obtain an AIP application form by calling 1-800-443-4725. If
you purchased shares through a financial intermediary, contact
your intermediary to find out if the AIP is available to you.
See "Doing Business Through Intermediaries."
EXCHANGING SHARES
When Can You Once payment for your shares has been received and accepted
Exchange (i.e., an account has been established), you may exchange
Shares? some or all of your Common Shares for Common Shares of
other Funds within the Trust. Exchanges are made at net
asset value. 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 Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or
to terminate the exchange privilege, upon 60 days' notice.
Requesting an To request an exchange, you must provide proper written
Exchange of instructions to the Transfer Agent. Telephone exchanges
Shares will also be accepted if you previously elected this option
on your account application.
If an Exchange Request in good order is received by the
Transfer Agent by 4:00 p.m., Eastern time, for non-Money
Market Funds and 1:00 p.m., Eastern time for Money Market
Funds, on any Business Day, the exchange usually will occur
on that day.
REDEMPTION OF You may redeem your shares on any Business Day, by mail or
SHARES by telephone. Redemption orders for the Equity, Balanced
and Fixed Income Funds must be received by 4:00 p.m.,
Eastern time. 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
12
<PAGE>
................................................................................
[LOGO OF SEI WHAT IS A SIGNATURE GUARANTEE?
REMBRANDT(R)
APPEARS HERE]
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signa-ture guarantee.
................................................................................
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
or to a commercial bank account previously designated either on
the Account Application or by written instruction to the
Transfer Agent.
By Telephone Shares may be redeemed by telephone if you elect that option on
your Account Application.
Redemption Payment for shares redeemed generally will be made within
Proceeds seven days after receipt by the Transfer Agent of the valid
request for redemption. The Funds intend to pay cash for all
shares redeemed, but under conditions which make payment in
cash unwise, payment may be made wholly or partly in
portfolio securities with a market value equal to the
redemption price. In such cases, you may incur brokerage
costs in converting such securities to cash.
You may have the proceeds mailed to your address or mailed
or wired to a commercial bank account previously designated
on your Account Application. There is no charge for having
redemption proceeds mailed to a designated bank account.
Under most circumstances, payments will be wired on the next
Business Day following receipt of a valid request for
redemption. Wire transfer redemption requests may be made 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.
Redemption proceeds may not be transmitted by Federal Reserve
wire on federal holidays restricting wire transfers.
Communicating Neither the Trust nor the Transfer Agent will be responsible
with the for any loss, liability, cost or expense for acting upon wire
Transfer Agent 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 you experience difficulties placing redemption
orders by telephone, you may wish to consider placing the
order by other means. You may not close your account by
telephone.
Other All redemption orders are effected at the net asset value per
Information share next determined after receipt of a valid request for
Regarding redemption, as described above.
Redemptions
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 will be
13
<PAGE>
delayed for at least 15 days from the date of purchase or
until payment has been collected for the purchase of such
shares.
See "Purchase and Redemption of Shares" in the Statement
of Additional Information for examples of when your right
to redeem your shares may be suspended.
Systematic The Funds offer a Systematic Withdrawal Plan ("SWP") for
Withdrawal Plan shareholders who wish to receive regular distributions from
their account. Upon commencement of the SWP, your account
must have a current value of $5,000 or more. You may elect
to receive automatic payments via check or Automated
Clearing House 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.
You should realize that if withdrawals exceed income
dividends, your invested principal in the account will be
depleted. Thus, depending on the frequency and amounts of
the withdrawal payments and/or any fluctuations in the net
asset value per share, their original investment could be
exhausted entirely. To participate in the SWP, you must
have your dividends automatically reinvested. You may
change or cancel the SWP at any time, upon written notice
to the Transfer Agent.
If you purchased shares through a financial
Intermediary, contact your Intermediary to find out if the
SWP is available to you. See "Doing Business Through
Intermediaries."
CHECKWRITING Checkwriting is offered free of charge to Common Shares
SERVICE shareholders in the Money Market Funds. You may redeem your
money market fund common shares by writing checks on your
(Money Market account for $100 or more. Once you have signed and returned
Funds) a signature card, you will receive a supply of checks. A
check may be made payable to any person, and the your
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, you may not use a check to
close your account. The checks are free, but your account
will be charged a fee for stopping payment of a check upon
your request or if the check cannot be honored because of
insufficient funds or other valid reasons.
If you purchased money market fund shares through a
financial Intermediary contact your Intermediary to find
out if checkwriting services are available to you. See
"Doing Business Through Intermediaries."
DOING BUSINESS Common Shares of the Funds may be purchased through
THROUGH financial institutions or broker-dealers which have
INTERMEDIARIES established a dealer agreement with the Distributor
("Intermediaries"). Each Intermediary may impose its own
rules regarding investing in the Funds, including
procedures for purchases, redemptions, and exchanges.
Contact your Intermediary for information about the
services available to you and for specific instructions on
how to buy, sell and exchange shares. Certain
Intermediaries may charge account fees. Information
concerning any charges will be provided to you by your
Intermediary. Some Intermediaries may be required to
register as broker-dealers under state law.
14
<PAGE>
................................................................................
[LOGO OF SEI WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
REMBRANDT(R)
APPEARS HERE
Each Fund's investment objec-tive is a statement of what it seeks to achieve.
It is important to make sure that the investment objective matches your own
financial needs and circumstanc-es. The investment policies section spells out
the types of securities in which each Fund invests.
................................................................................
The shares you purchase through your Intermediary may be
held "of record" by that Intermediary. If you want to transfer
the registration of shares beneficially owned by you, but held
"of record" by your Intermediary, you should call your
Intermediary to request this change.
An Intermediary is any entity, such as a bank, broker-
dealer, other financial institution, association or
organization that has entered into an arrangement with the
Distributor to sell Fund shares to its customers.
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 total 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. The Fund will invest in options and
futures for hedging purposes only.
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 total
assets in the common stock of corporations of any size that,
in the Advisor's opinion, have 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
15
<PAGE>
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. The Fund will invest in options and futures
for hedging purposes only.
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 total
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 Fund, factors reviewed will include sales and
earnings growth rates and the strength of the issuer's
balance sheet.
Because the Fund invests primarily in common stocks of
smaller capitalization companies, the Fund's shares may
fluctuate significantly in value, 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.
The Fund will invest in options and futures for hedging
purposes only.
INTERNATIONAL The International Equity Fund seeks a high level of total
EQUITY FUND return through capital appreciation and current income.
The International Equity Fund will invest at least 65% of
its total assets in equity securities of issuers in at least
three countries other than the U.S.
While the Fund will not necessarily spread its
investments among more than three countries other than the
U.S., the Advisor intends to diversify its investments among
countries to reduce currency risk. Investments will be made
primarily in common stocks of companies domiciled in
developed countries, but may be made in the securities of
companies domiciled in developing countries, as well.
Although the Fund will invest primarily in securities listed
on national stock exchanges, it will also invest in
securities
16
<PAGE>
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. The Fund will invest in options and futures for
hedging purposes only.
TRANSEUROPE The TransEurope Fund seeks a high level of total return
FUND through capital appreciation and current income.
The TransEurope Fund will invest as fully as feasible
(and at least 65% of its total assets) in equity securities
of European issuers located in Belgium, Denmark, Finland,
France, Germany, Italy, the Netherlands, Norway, Spain,
Sweden, Switzerland and the United Kingdom. Investments may
also be made in the equity securities of issuers located in
the smaller and emerging markets of Europe. The Fund may
also invest in the equity securities of issuers in the
following Eastern European countries: the Czech Republic,
Hungary, Poland 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.
The Fund currently is not offering its shares to the
public.
ASIAN TIGERS The Asian Tigers Fund seeks to achieve capital appreciation.
FUND The Asian Tigers Fund will invest primarily in equity
securities that 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.
Under normal circumstances, at least 65% of the total
assets of the Fund will be invested in equity securities of
issuers located in some or all of the following Asian
countries: China, Hong Kong, Indonesia, Malaysia, the
Philippines, Singapore and Thailand. The Fund may also
invest in common stocks traded on markets in India,
Pakistan, Sri Lanka, South Korea and Taiwan, and may invest
up to 5% of its net assets in other developing markets. 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.
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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.
While the Fund intends to invest primarily in securities
listed on stock exchanges, it may also invest in securities
traded in over-the-counter markets, which may pose liquidity
risks. No more than 5% of the Fund's net assets will be
invested in unlisted securities. The Fund will invest in
options and futures for hedging purposes only.
LATIN AMERICA The Latin America Equity Fund seeks long-term capital
EQUITY FUND appreciation.
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.
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 purpose 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. Government
regulation and restrictions may limit the amount, mode and
extent of investment in companies in such countries.
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.
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<PAGE>
The Fund may invest in investment grade debt securities,
including debt securities issued or guaranteed by a Latin
American government or governmental entity ("Sovereign
Debt"), obligations of supranational entities, Brady Bonds
and money market instruments.
For hedging purposes only, the Fund may also enter into
options, futures, interest rate swaps, currency
transactions, caps, collars and floors. The Fund may also
write (i.e., sell) covered call options on the securities in
which it may invest.
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. The Fund may be more
susceptible to any single economic, political or regulatory
occurrence than 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.
BALANCED FUND The Balanced Fund seeks a favorable total rate of return
through current income and capital appreciation consistent
with preservation of capital, by 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 determined by
the Advisor to be of comparable quality at the time of
purchase; (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 or
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
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<PAGE>
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 is not subject to maturity restrictions. The
Balanced Fund may invest up 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 is also permitted to invest in options
and futures (for hedging purposes only), engage in
securities lending, acquire floating and variable rate
securities, enter into dollar roll transactions with
selected banks and broker-dealers 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.
FIXED INCOME The Fixed Income Fund seeks a high level of total return
FUND relative to funds with like investment objectives, from
income and, to a lesser degree, capital appreciation by
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 total 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, its agencies or 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;
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<PAGE>
(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) GICs; (xiii) 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. The Fund may invest in
options and futures for hedging purposes only.
INTERMEDIATE The Intermediate Government Fixed Income Fund seeks a high
GOVERNMENT level of total return relative to funds with like investment
FIXED INCOME objectives, consistent with preservation of capital from
FUND income and, to a lesser degree, capital appreciation, by
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, its agencies or
instrumentalities.
Normally, the Fund will maintain an average weighted
maturity of three to ten years; under certain circumstances,
however, the average weighted maturity may fall below three
years. The Fund may invest in options and futures for
hedging purposes only.
TAX-EXEMPT The Tax-Exempt Fixed Income Fund seeks a high level of total
FIXED INCOME return, relative to funds with like investment objectives,
FUND consistent with preservation of capital, from income by
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
21
<PAGE>
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.
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.
The Fund may invest in options and futures for hedging
purposes only.
INTERNATIONAL The International Fixed Income Fund, formerly the Global
FIXED INCOME Fixed Income Fund, seeks a high level of total return
FUND relative to funds with like investment objectives, measured
in U.S. dollar terms, from income and capital appreciation
by investing in a portfolio consisting of investment quality
fixed income securities denominated in foreign currencies.
The International Fixed Income Fund will invest as fully
as feasible (at least 65% of its total assets) in investment
quality fixed income securities of issuers in at least three
of the following countries: Austria, Australia, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Japan, Luxembourg, The Netherlands, New Zealand, Norway,
Spain, Sweden, Switzerland and the United Kingdom.
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.
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 in quality 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,
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<PAGE>
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.
The Fund may invest in options and futures for hedging
purposes only.
LIMITED The Limited Volatility Fixed Income Fund seeks a high level
VOLATILITY of current income, consistent with relative stability of
FIXED INCOME principal, by investing primarily in a portfolio consisting
FUND 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 total 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, its
agencies or 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 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.
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<PAGE>
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. The Fund currently is not offering its shares
to the public.
TREASURY MONEY The Treasury Money Market Fund seeks to preserve principal
MARKET FUND 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 The Government Money Market Fund seeks to provide as high a
MONEY MARKET level of current income as is consistent with preservation
FUND of capital and liquidity by investing in obligations of the
U.S. Government, its agencies or 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, its
agencies or instrumentalities (e.g., Government National
Mortgage Association ("GNMA"), Fannie Mae, Federal Home Loan
Mortgage Corporation ("FHLMC"), Federal Land Bank); and
(iii) repurchase agreements involving such obligations.
MONEY MARKET The Money Market Fund seeks to provide as high a level of
FUND 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
highest two 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
24
<PAGE>
obligations of U.S. and foreign issuers whose 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.
TAX-EXEMPT The Tax-Exempt Money Market Fund seeks to preserve principal
MONEY MARKET value and maintain a high degree of liquidity while
FUND providing current income exempt from Federal income tax and
not included as a preference item under the Federal
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"). In pursuing this policy, the Fund
may purchase municipal bonds, municipal notes, tax-exempt
commercial paper rated in the highest two 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, and shares of tax-
exempt money market funds.
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 Federal alternative minimum tax.
GENERAL
INVESTMENT
POLICIES _______________________________________________________________________
THE EQUITY AND Each Fund will invest in equity securities only if they are
BALANCED FUNDS 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 invest not more than 10% of its total
assets in restricted securities. In addition, 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 net assets in illiquid securities.
A Fund may enter into futures contract 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.
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<PAGE>
THE FIXED Each Fund may purchase mortgage-backed securities issued or
INCOME AND guaranteed as to payment of principal and interest by the
BALANCED FUNDS U.S. Government, its agencies or instrumentalities and
mortgage-backed securities issued by non-governmental
issuers that are rated in the highest two rating categories
of an NRSRO.
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 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 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.
Each Fund will invest not more than 10% of its total
assets in restricted securities. In addition, 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.
A Fund may enter into futures contract 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 MONEY Each Money Market Fund intends to comply with regulations of
MARKET FUNDS the SEC applicable to 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 will not invest more than 10% of
its net assets in illiquid securities.
ALL FUNDS All Funds may invest in variable and floating rate
obligations and may purchase securities on a when-issued
basis. A Fund (except the Money Market Funds) may enter into
futures contracts and options on futures for bona fide
hedging purposes only.
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<PAGE>
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 a 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.
For temporary defensive purposes when the Advisor
determines that market conditions warrant, the Equity Funds,
Fixed Income Funds and Balanced 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.
RATINGS NRSROs provide ratings for certain instruments in which the
Funds may invest. For example, bonds rated in the fourth
highest rating category have an adequate capacity to pay
principal and interest but may have speculative
characteristics as well.
For a description of 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 The International Equity, TransEurope, Latin America Equity,
Securities Asian Tigers and International 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.
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 problems 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
27
<PAGE>
no bankruptcy proceeding by which defaulted Sovereign Debt
may be collected in whole or in part.
Investments in securities of foreign issuers are
frequently denominated in foreign currencies and the value
of a 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 a Fund may incur costs in
connection with conversions between various currencies. A
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 emerging
markets, including Latin American Markets. This may limit a
Fund's ability to effectively hedge its investments in such
markets.
INVESTMENT
LIMITATIONS ____________________________________________________________________
No Equity, Fixed Income or Balanced Fund may:
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 Latin America Equity or
International Fixed Income Funds.
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.
No Money Market Fund may:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States, its agencies
or instrumentalities and repurchase agreements involving
such
28
<PAGE>
................................................................................
[LOGO OF SEI INVESTMENT ADVISOR
REMBRANDT(R)
APPEARS HERE]
................................................................................
A Fund's investment advisor manages the investment activities and is
responsible for the performance of the Fund. The advisor conducts investment
research, executes investment strategies based on an assessment of economic
and market conditions, and determines which securities to buy, hold or sell.
................................................................................
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. 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.
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 investment limitations are
set forth in the Statement of Additional Information.
THE ADVISOR ____________________________________________________________________
The Trust and ABN AMRO Asset Management (USA) Inc. (the
"Advisor") (formerly LaSalle Street Capital Management, Ltd.),
208 South LaSalle Street, Chicago, Illinois 60604-1003 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.
29
<PAGE>
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
International Fixed Income Funds; 1.00% of the 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; .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 Advisor may
voluntarily waive a portion of its fee in order to limit the
total operating expenses of the Funds. The Advisor reserves
the right, in its sole discretion, to terminate this
voluntary fee waiver at any time.
For the fiscal year ended December 31, 1996, the Advisor
received an advisory fee of .80% for the Value Fund, .80%
for the Growth Fund, .80% for the Small Cap Fund, 1.00% for
the International Equity Fund, 1.00% for the Asian Tigers
Fund, 1.00% for the Latin America Equity Fund, .70% for the
Balanced Fund, .50% for the Fixed Income Fund, .50% for the
Intermediate Government Fixed Income Fund, .48% for the Tax-
Exempt Fixed Income Fund, .80% for the International Fixed
Income Fund, .19% for the Treasury Money Market Fund, .20%
for the Government Money Market Fund, .20% for the Money
Market Fund and .19% for the Tax-Exempt Money Market Fund.
The TransEurope Fund and Limited Volatility Fixed Income
Fund had not commenced operations at fiscal year end.
ABN AMRO Asset Management (USA) Inc. was organized in
March, 1991 under the laws of the State of Delaware. The
Advisor manages assets for corporations, unions,
governments, insurance companies and charitable
organizations. As of December 31, 1996, total assets under
management by the Advisor were approximately $3.4 billion.
The Advisor is a direct, wholly-owned subsidiary of ABN
AMRO Capital Markets Holding, Inc., which is an indirect,
wholly-owned subsidiary of ABN AMRO Holding N.V., a
Netherlands company.
Jac A. Cerney, Senior Vice President of the Advisor, has
served as portfolio manager for 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 for the Growth Fund since its
inception. Mr. Dibble has been associated with the Advisor
and its predecessor since 1987.
Marc G. Borghans, Vice President of the Advisor, has
served as co-manager of the Small Cap Fund since March, 1997
and as manager since July, 1997. Mr. Borghans has been
associated with the Advisor or its affiliates since 1988.
Mark W. Karstrom, Senior Vice President of the Advisor,
has served as portfolio manager for the Intermediate
Government Fixed Income Fund and the Limited Volatility
30
<PAGE>
Fixed Income Fund since September, 1996. Mr. Karstrom joined
the Advisor in August 1996. He served as a Vice President,
Portfolio Manager with Norwest Investment Management and
Trust and a predecessor firm from May, 1985 to July, 1996.
Charles H. Self, III, Senior Vice President of the
Advisor, has served as portfolio manager for the Fixed
Income Fund since October, 1995. He served as the portfolio
manager for the Tax-Exempt Fixed Income Fund since
September, 1996 to June, 1997, and co-manager of the Tax-
Exempt Fixed Income Fund from April, 1997 to June, 1997. Mr.
Self joined the Advisor in October, 1995. He served as a
Vice President with CSI Asset Management from December, 1988
to July, 1995.
Phillip P. Mierzwa, Assistant Vice President of the
Advisor, has served as co-manager of the Tax-Exempt Fixed
Income Fund since April, 1997. He has been associated with
the Advisor or its affiliates since February, 1990.
Gregory D. Boal, Senior Vice President of the Advisor,
has served as portfolio manager of the fixed income portion
of the Balanced Fund since April, 1997 and as co-manager of
the Tax-Exempt Fixed Income Fund since July, 1997. Mr. Boal
joined the Advisor in March, 1997. He served as Manager,
Fixed Income Division of First Citizens Bank from November,
1989 to March, 1997.
THE SUB-ADVISOR ________________________________________________________________
ABN AMRO-NSM International Funds Management B.V. (the "Sub-
Advisor"), Hoogoorddreef 66-68, P.O. Box 283, 1000 EA
Amsterdam, The Netherlands, serves as the investment sub-
advisor of the International Equity Fund, TransEurope Fund,
Asian Tigers Fund, International Fixed Income Fund and Latin
America Equity Fund pursuant to a Sub-Advisory Agreement
with the Advisor. The Sub-Advisor is a holding company
affiliate of the Advisor. Under the Sub-Advisory Agreement,
the Sub-Advisor 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. The Sub-Advisor has
approximately $828 million under management, and manages two
non-U.S. investment companies.
Wypke Postma fund manager with the Sub-Advisor, has
served as portfolio manager for the International Equity
Fund since March, 1997. Mr. Postma has been associated with
the Sub-Advisor and/or its affiliates since 1984.
Alex Ng has served as portfolio manager for the Asian
Tigers Fund since July, 1995. Mr. Ng has been associated
with the Sub-Advisor and/or its parent since 1988. Mr. Ng
also serves as the Far East Director of Asset Management for
a Hong Kong-based affiliate of the Advisor.
Felix Lanters, portfolio manager for the TransEurope
Fund, has been associated with the Sub-Advisor and/or its
parent since 1987.
31
<PAGE>
Wouter Weijand has served as portfolio manager for the
International Fixed Income Fund since September, 1997. Mr.
Weijand has worked in various investment management
positions with ABN AMRO and/or its affiliates since 1984.
Jan-Wim Derks, an officer of the Sub-Advisor, has served
as portfolio manager for the Latin America Equity Fund since
its inception. Mr. Derks has served as a Portfolio Manager
with ABN AMRO and/or its affiliates since 1989.
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, Latin America Equity Fund and Asian Tigers
Fund, and .40% of the average daily net assets of the
International Fixed Income Fund. The Sub-Advisor received
fees from the Advisor of .50% for the Asian Tigers Fund,
.50% for the Latin America Equity Fund and International
Equity Fund and .40% for the International Fixed Income Fund
for the fiscal year ended December 31, 1996.
THE ADMINISTRATOR ______________________________________________________________
SEI Fund Resources (the "Administrator"), Oaks,
Pennsylvania, 19456, a Delaware business trust, provides the
Trust with administrative services, including fund
accounting, regulatory reporting, necessary office space,
equipment, personnel and facilities. SEI Investments
Management Corporation, a wholly-owned subsidiary of SEI
Investments Company ("SEI"), is the owner of all beneficial
interest in the Administrator.
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 TRANSFER
AGENT __________________________________________________________________________
DST Systems, Inc., 1004 Baltimore Avenue, 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"),
Oaks, Pennsylvania 19456, a subsidiary of SEI Financial
Services Company, and the Trust are parties to a
distribution agreement (the "Distribution Agreement").
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.
The Funds may execute brokerage or other agency
transactions through an affiliate of the Advisor or through
the Distributor for which the affiliate of the Distributor
receives compensation.
32
<PAGE>
The Trust also offers Investor Shares which are sold with
a shareholder servicing fee and a 12b-1 fee primarily to
institutions and individuals through financial
Intermediaries which have established a dealer agreement
with the Distributor. For more information about Investor
Shares, you may contact your financial Intermediary or call
1-800-443-4725.
PERFORMANCE ____________________________________________________________________
THE EQUITY, From time to time, the Funds may advertise yield and total
BALANCED AND return. These figures will be based on historical earnings
FIXED INCOME and are not intended to indicate future performance. The
FUNDS 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, 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, on an aggregate basis, or an actual basis.
THE MONEY From time to time a Fund may advertise its current yield and
MARKET FUNDS 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 effective compound yield will
be slightly higher than the current yield because of the
compounding effect of this assumed reinvestment. 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.
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
33
<PAGE>
................................................................................
[LOGO OF SEI TAXES
REMBRANDT(R)
APPEARS HERE]
You must pay taxes on your Fund's earnings, whether you take your payments in
cash or additional shares.
................................................................................
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.
Additional performance information is set forth in the
1996 Annual Report to Shareholders, and is available upon
request and without charge by calling 1-800-443-4725.
The portfolio turnover rates for the Small Cap, Balanced,
Fixed Income, and Intermediate Government Fixed Income Funds
for the fiscal year ended December 31, 1996, were 158%, 104%,
194%, and 179%, respectively. A high turnover rate will
result in higher transaction costs and may result in
additional tax consequences for shareholders.
The performance of Common Shares of each Fund will
normally be higher than that of Investor Shares because of
the additional distribution and administrative services
expenses charged to Investor Shares.
TAXES __________________________________________________________________________
The following summary of Federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial, or administrative action.
No attempt has been made to present a detailed explanation of
the federal, state, or local income tax treatment of a Fund
or its shareholders. In addition, state and local tax
consequences on an investment in a Fund may differ from the
Federal income tax consequences described below. Accordingly,
you are urged to consult your tax advisor regarding specific
questions as to Federal, state, and local income taxes.
Additional information concerning taxes is set forth in the
Statement of Additional Information.
Tax Status of Each Fund is treated as a separate entity for Federal
the Funds income tax purposes and is not combined with the
Trust's other Funds. Each Fund intends to qualify for the
special tax treatment afforded regulated investment companies
as defined under Subchapter M of the Internal Revenue Code. As
long as each Fund qualifies for this special tax treatment, it
will be relieved of Federal income
34
<PAGE>
................................................................................
[LOGO OF SEI DISTRIBUTIONS
REMBRANDT(R)
APPEARS HERE]
................................................................................
The Fund distributes income dividends and capital gains. Income dividends
represent the earnings from the Fund's investments; capital gains
distributions occur when investments in the Fund are sold for more than the
origi-nal purchase price.
................................................................................
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 Each Fund will distribute all of its net investment income
Distributions (including, for this purpose, net short-term capital gain) to
shareholders. Dividends from net investment income will be
taxable to you as ordinary income whether received in cash or
in additional shares. Any net capital gains will be distributed
annually as capital gains distributions and will be treated as
gain from the exchange of a capital asset held for more than
one year, regardless of how long you have held shares and
regardless of whether you receive the distributions are
received in cash or in additional shares. Each Fund will notify
you annually of the Federal income tax character 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 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 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 you as
income dividends from the Fund, provided certain state-
specific conditions are satisfied. Each Fund will inform you
annually of the percentage of income and distributions
derived from U.S. obligations. You should consult your tax
advisor to determine whether any portion of the income
dividends received from a Fund is considered tax exempt in
your 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 shareholders 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,
35
<PAGE>
TransEurope Fund, Latin America Equity Fund, Asian Tigers
Fund and International Fixed Income Fund expect to be able
to elect to treat Shareholders as having paid their
proportionate share of such foreign taxes withheld.
As a general rule, income dividends (not capital gain
distributions) paid by a Fund, to the extent the dividend is
derived from dividends received from domestic corporations,
may conditions are met, qualify for the dividends received
deduction for corporate shareholders. Distributions of net
capital gains from any Fund do not qualify for the dividends
received deduction.
Dividends paid by the Fixed Income Funds will not qualify
for the dividends received deduction for corporate
shareholders.
Each of the Tax-Exempt Fixed Income Fund and Tax-Exempt
Money Market 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 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 consisting of such Funds' 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." Accordingly,
municipal funds may not be an appropriate investment for
persons (including corporations and other business entities)
who are "substantial users" (or persons related to
"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. 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.
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 you.
36
<PAGE>
................................................................................
[LOGO OF SEI BUY, EXCHANGE AND SELL REQUESTS ARE IN "GOOD ORDER" WHEN:
REMBRANDT(R)
APPEARS HERE]
. The account number and Fund name are shown
. The amount of the transaction is specified in dollars or share s
. Signatures of all owners appear exactly as they are registered on the
account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH US ____________________________
Business Days You may buy, redeem or exchange shares on days on which the
New York Stock Exchange is open for business (a "Business
Day"). However, shares of a Money Market Fund cannot be
purchased by Federal Reserve wire on Federal holidays
restricting wire transfers.
A purchase order for Common 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
canceled 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 Common Shares of the Fund is
the net asset value next determined after a purchase order is
effective.
A purchase order for Common 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. Your Intermediary may have earlier cutoff times
for share transactions. If you purchased shares through an
Intermediary, please contact your Intermediary for more
information about its order requirements.
Minimum The minimum initial investment is $2,000; however, the
Investment minimum investment may be waived at the Distributor's
discretion. All subsequent purchases must be at least $100.
The Funds are intended to be long-term investment vehicles
and are not designed to provide investors with a means of
speculating on short-term movements. Consequently, the Trust
reserves the right to reject a purchase order for Common
Shares when the Trust or the Transfer Agent determines that
it is not in the best interest of the Trust or its
shareholders to accept such order. Your Intermediary may
impose its own minimum initial and subsequent investment
requirements. If you purchased shares through an
Intermediary, you should contact your Intermediary for
information about any such requirements.
Maintaining a Due to the relatively high cost of handling small
Minimum investments, each Fund reserves the right to redeem, at net
Account asset value, your shares if, because of redemptions of shares
Balance by or on your behalf, your account in any Fund has a value of
less than $1,000, the minimum initial
37
<PAGE>
purchase amount. Accordingly, if you purchase shares of any
Fund in only the minimum investment amount, you may be
subject to such involuntary redemption if you thereafter
redeem any of these shares. Before any Fund exercises its
right to redeem such shares and send the proceeds you, you
will be given notice that the value of the shares in your
account is less than the minimum amount and will be allowed
60 days to make an additional investment in such Fund in an
amount that will increase the value of the account to at
least $1,000. See "Purchase and Redemption of Shares" in the
Statement of Additional Information for examples of when the
right of redemption may be suspended.
Your Intermediary also may have requirements for
maintaining a minimum account balance. If you purchased
shares through an Intermediary, you should contact your
Intermediary for information about any such arrangements.
Net Asset Value The purchase price of a share of the Funds is the net asset
value per share next computed after the order is received
and accepted by the Trust. The selling price of a share of
the Funds is the net asset value per share next determined
after receipt of the request for redemption in good order.
The net asset value per share of the Money Market Funds is
calculated as of 1:00 p.m., Eastern time, each Business Day.
The net asset value of the Equity, Balanced and Fixed Income
Funds is determined as of the regular close of business of
the New York Stock Exchange (currently 4:00 p.m. Eastern
time) each Business Day.
How the Net The net asset value per share of a Fund is determined by
Asset Value is dividing the total market value of the Fund's investments
Determined and other assets, less any liabilities, by the total number
of outstanding shares of the Fund. The Equity, Balanced and
Fixed Income Funds value their portfolio securities at the
last quoted sales price for such securities, or, if there is
no such reported sales price on the valuation date, at the
most recent quoted bid price. The investments of the Money
Market Funds will be valued using the amortized cost method
described in the Statement of Additional Information. 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.
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, International 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
38
<PAGE>
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, 1996, the Limited Volatility Fixed
Income Fund and TransEurope Fund had not commenced
operations. The Latin America Equity Fund is not available
for purchase in Investor Shares. Each Fund offers two
classes of shares: Common Shares and Investor Shares. Each
class has its own expense structure and other
characteristics. Investor Shares are offered through a
separate prospectus.
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.
Trustees of the The management and affairs of the Trust are supervised by
Trust 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 not required
to hold annual shareholder meetings, but such meetings 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 Shareholder inquiries should be directed to the
Inquiries Administrator, Oaks, Pennsylvania, 19456, 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 Volatility Fixed
Income Funds is distributed in the form of monthly
dividends, and that of the International Equity, Latin
America Equity, TransEurope, Asian Tigers and International
Fixed Income Funds is distributed in the form of dividends
at least annually. Shareholders who own shares at the close
of business on the
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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 Trust believes that as of April 1, 1997, banking
affiliates of ABN AMRO Capital Markets Holding, Inc. owned
of record or beneficially, substantially all of the Common
Shares of the Value, Growth, Small Cap, International
Equity, Asian Tigers, Balanced, Fixed Income, Intermediate
Government Fixed Income, Tax-Exempt Fixed Income,
International Fixed Income, Treasury Money Market,
Government Money Market, Money Market and Tax-Exempt Money
Market Funds. As a consequence, these banking affiliates may
be deemed to "control" these Funds within the meaning of the
1940 Act.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Auditors Ernst & Young LLP serves as the independent auditors of the
Trust.
Custodians CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
7618, Philadelphia, Pennsylvania 19101, acts as Custodian of
the Trust. Morgan Stanley Trust Company, serves as foreign
Sub-Custodian of the Trust. The Custodians hold cash,
securities and other assets of the Trust as required by the
1940 Act.
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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 ADRs are securities, typically issued by a U.S. financial
Depositary institution (a "depositary"), that evidence ownership
Receipts interests in a security or a pool of securities issued by a
("ADRs") 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 Asset-backed securities consist of securities secured by
Securities company receivables, truck and auto loans, leases and credit
(Non-mortgage) 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.
Bankers' Bankers' acceptances are bills of exchange or time drafts
Acceptances 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 BICs are contracts issued by U.S. banks and savings and loan
Contracts ("BICs")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. Generally, BICs are not
assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this
reason, BICs are considered to be illiquid investments.
Certificates of Certificates of deposit are interest bearing instruments
Deposit with a specific maturity. Certificates of deposit are issued
by banks and savings and loan institutions in exchange for
the deposit of funds and normally can be traded in the
secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered
illiquid.
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Commercial Commercial paper is a term used to describe unsecured short-
Paper term promissory notes issued by banks, municipalities,
corporations and other entities. Maturities on these issues
vary from a few to 270 days.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of shares 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 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 a 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 a Fund to buy a
security.
If the broker-dealer to whom a Fund sells the security
becomes insolvent, the Fund's right to purchase or
repurchase the security may be restricted. Also, the value
of the security may change adversely over the term of the
dollar roll, such that the security that the Fund is
required to repurchase may be worth less than the security
that the Fund originally held.
Equity Equity securities are common stocks and common stock
Securities 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 ADRs and equity securities of
closed-end investment companies. 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.
Fixed Income The market value of fixed income investments will change in
Securities 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 NRSROs 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.
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Forward Foreign A forward contract involves an obligation to purchase or
Currency sell a specific currency amount at a future date, agreed
Contracts upon by the parties, at a price set at the time of the
contract.
At the maturity of a forward contract, a 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. A Fund may
realize a gain or loss from currency transactions.
Futures Futures contracts provide for the future sale by one party
Contracts and and purchase by another party of a specified amount of a
Options on specific security at a specified future time and at a
Futures specified price. An option on a futures contract gives the
Contracts 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 Fund 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 Fund will minimize the
risk that it will be unable to close out a futures contract
by only entering into futures contracts which are traded on
national futures exchanges. In addition, a Fund 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.
Eurodollar futures 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.
No price is paid upon entering into futures contracts.
Instead, a Fund is 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, are 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.
In order to avoid leveraging and related risks, when a
Fund purchases futures contracts, it will collateralize its
position by depositing an amount of liquid securities, cash
or cash equivalents, equal to the market value of the
futures positions held, less margin
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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.
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 a Fund 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.
Guaranteed GICs are contracts issued by U.S. insurance companies.
Investment Pursuant to such contracts, the Fund makes cash
Contracts contributions to a deposit fund of the insurance company's
("GICs") general account. The insurance company then credits to the
Fund on a monthly basis guaranteed interest at either a
fixed, variable or floating rate. Generally, GICs are not
assignable or transferable without the permission of the
issuing insurance companies. For this reason, GICs are
considered by a Fund to be illiquid investments.
Illiquid Illiquid securities are securities that cannot be disposed
Securities 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 Loan participations are interests in loans to U.S.
Participations 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 a 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, a 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, a 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.
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Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities 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, balloon
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, Fannie Mae and FHLMC. GNMA, Fannie Mae
and FHLMC guarantee timely distributions of interest to
certificate holders. GNMA and Fannie Mae also guarantee
timely distributions of scheduled principal. Fannie Mae and
FHLMC obligations are not backed by the full faith and
credit of the U.S. Government as GNMA certificates are, but
Fannie Mae and FHLMC securities are supported by the
instrumentalities' right to borrow from the U.S. Treasury.
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"). 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.
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.
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.
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 Fannie Mae or FHLMC represent
beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae. 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.
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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.
Municipal Municipal securities consist of (i) debt obligations issued
Securities 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 are entities established through the
Supranational joint participation of several governments, and include the
Entities 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 Nordic Investment
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.
Options A put option gives the purchaser 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 the right to buy, and the writer 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
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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 a 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 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, cash equivalents or
liquid 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
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on price movements in the particular market represented by
the index generally, rather than the price movements in
individual securities. 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 cash
equivalents 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. 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.
Receipts 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 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 purposes.
Because of these features, receipts may be subject to
greater price volatility than interest paying U.S. Treasury
obligations.
Repurchase Repurchase agreements are agreements by which a Fund obtains
Agreements 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. A Fund bears a risk of
loss in the event the other party defaults on its
obligations and the Fund is delayed or prevented from
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.
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Restraints on Investments by each Money Market Fund are subject to
Investments by limitations imposed under regulations adopted by the SEC.
Money Market Under these regulations, money market funds may acquire only
Funds 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 Restricted securities are securities that may not be sold
Securities freely to the public absent registration under the
Securities Act of 1933 or an exemption from registration.
Rights Rights are instruments giving shareholders the right to
purchase shares of newly issued common stock below the
public offering price before they are offered to the public.
Securities In order to generate additional income, a Fund may lend the
Lending 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.
Standby Securities subject to standby commitments or puts permit the
Commitments holder thereof to sell the securities at a fixed price prior
and Puts 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.
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Swaps, Caps, Interest rate swaps, mortgage swaps, currency swaps and
Floors and other types of swap agreements such as caps, floors and
Collars 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. 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.
Swap agreements will tend to shift a Fund's investment
exposure from one type of investment to another. Depending
on how they are used, swap agreements may increase or
decrease the overall volatility of a Fund's investment and
their share price and yield.
Time Deposits Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Time deposits with a
withdrawal penalty are considered to be illiquid.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations 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., Fannie Mae 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 U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve conditional or unconditional
Instruments 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.
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.
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When-Issued and When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
the purchase commitment. A Fund will maintain with the
Custodian a separate account with cash or cash equivalents
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
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. 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.
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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
appropriate prospectus. The Trust has two prospectuses, dated April 30, 1997
(and revised October 10, 1997). One Prospectus relates to Common Shares of each
Fund and the other relates to Investor Shares of each Fund. Prospectuses may be
obtained by writing to the Distributor, Rembrandt(R) Financial Services Company,
Oaks, Pennsylvania 19456 or by calling 1-800-443-4725.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST................................................................... 2
DESCRIPTION OF PERMITTED INVESTMENTS........................................ 3
INVESTMENT LIMITATIONS..................................................... 14
NON-FUNDAMENTAL POLICIES................................................... 16
THE ADVISOR................................................................ 17
THE SUB-ADVISOR............................................................ 18
THE ADMINISTRATOR.......................................................... 19
DISTRIBUTION AND SHAREHOLDER SERVICING..................................... 20
TRUSTEES AND OFFICERS OF THE TRUST......................................... 23
COMPUTATION OF YIELD....................................................... 25
CALCULATION OF TOTAL RETURN................................................ 28
PURCHASE AND REDEMPTION OF SHARES.......................................... 30
LETTER OF INTENT........................................................... 31
DETERMINATION OF NET ASSET VALUE........................................... 31
TAXES...................................................................... 32
PORTFOLIO TRANSACTIONS..................................................... 36
TRADING PRACTICES AND BROKERAGE............................................ 36
DESCRIPTION OF SHARES...................................................... 41
SHAREHOLDER LIABILITY...................................................... 41
5% AND 25% SHAREHOLDERS.................................................... 42
LIMITATION OF TRUSTEES' LIABILITY.......................................... 44
FINANCIAL STATEMENTS....................................................... 45
APPENDIX.................................................................. A-1
</TABLE>
April 30, 1997
(As revised October 10, 1997)
REM-F-007-07
<PAGE>
THE TRUST
Rembrandt Funds(R) is an open-end management investment company established as a
Massachusetts business trust pursuant to 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
Common Shares and the Investor Shares, which provide for variations in
distribution costs, voting rights and dividends. Except for these differences
between Common Shares and Investor Shares, 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 Common Shares and Investor
Shares of the following funds: 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 the Taxable
Fixed Income Fund), Intermediate Government Fixed Income Fund (formerly the
Short/Intermediate Government Fixed Income Fund), Tax-Exempt Fixed Income Fund,
International Fixed Income Fund (formerly the Global Fixed Income Fund), Limited
Volatility Fixed Income Fund (collectively, the "Fixed Income Funds"), Balanced
Fund (the "Balanced Fund"), Money Market Fund, Government Money Market Fund,
Treasury Money Market Fund and Tax-Exempt Money Market Fund (collectively, the
"Money Market Funds" and together with the Equity, Balanced and Fixed Income
Funds, 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
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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 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
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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.
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 debt
securities rated BB or lower by S&P or Ba or lower by Moody's or, if unrated,
deemed by the Advisor or Sub-Advisor to be of comparable quality. Securities
rated 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 that are 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
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<PAGE>
guaranteed. FHLMC has in the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC now issues mortgage-
backed securities (FHLMC Gold PCs) which also guarantee timely payment of
monthly principal reductions. Government and private guarantees do not extend
to the securities' value, which is likely to vary inversely with fluctuations in
interest rates.
Certain of the Funds 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 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.
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.
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 holder 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.
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, that do not violate the Fund's investment policy concerning
investments in illiquid securities. Consistent with Rule 2a-7, the Advisor will
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purchase for Money Market Funds only STRIPS 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, into which each of the Funds, except the Treasury Money
Market Fund, is permitted to enter, 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 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 creditors and
required to return the underlying securities 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) rated in the
highest two rating categories by an NRSRO or (ii) if not rated, of equivalent
quality in the Advisor's judgment.
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<PAGE>
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
facilities. 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
Investments in tax-exempt commercial paper will be limited to investments in
obligations rated in one of the two highest rating categories by an NRSRO at the
time of investment, or determined by the Advisor to be of equivalent quality.
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 reserve the right to engage in put
transactions. The right to put the securities depends on the 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.
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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.
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. 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.
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A Fund may buy call options from time to time as the Advisor determines is
appropriate in seeking the Fund's investment objective. 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. 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.
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 or non-U.S. dollar denominated
obligations or securities of foreign issuers, including 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
("ADRs"). 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
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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 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.
Any devaluations in the currencies in which the Fund's portfolio securities are
denominated may have a detrimental impact on the Fund. 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. 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
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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.
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 investments 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 will directly bear duplicative fees (including advisory fees) of
the underlying closed-end fund.
When-Issued Securities
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 the purchaser accrues no interest on the security 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 will segregate cash, cash equivalents or liquid
securities 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.
Consequently, the Funds will not use such purchases for leveraging.
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. Up to 10% of a Fund's assets may consist of
restricted securities that are illiquid and the Advisor may invest up to an
additional 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
-11-
<PAGE>
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 under the 1933 Act.
Securities Lending
Securities loaned by a Fund pursuant to an agreement which requires collateral
to secure the loan 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 loaned securities 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. 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.
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.
-12-
<PAGE>
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. A UIT is a type of investment company, so investments in SPDRs
are subject to those regulations described above limiting a Fund's acquisition
of investment company securities.
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 Funds 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 redemption of a Creation Unit, the Funds
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 Funds 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.
Swaps, Caps and Floors
Swap agreements are sophisticated hedging instruments that typically involve a
small investment of 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
-13-
<PAGE>
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.
In a typical cap or floor agreement, 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. In swap agreements, 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
investment and their share price and yield.
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 below 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
-14-
<PAGE>
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 port folio
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.
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
-15-
<PAGE>
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:
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, Latin America Equity 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 net assets (except for all Money Market Funds for which the
limit is 10%).
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 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.
- 16 -
<PAGE>
2. Pledge, mortgage or hypothecate assets, except to secure temporary
borrowings permitted by the Fund's fundamental limitation on permitted
borrowings.
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 foregoing percentages (except for the limitation on illiquid securities)
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 ADVISOR
The Trust and LaSalle Street Capital Management, Ltd., 10 South LaSalle Street,
Suite 3701, Chicago, Illinois 60603 (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, 1994, 1995, and 1996, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
==========================================================================================================
Net Fees Paid Fees Waived
----------------------------------------------------------------------------
Fund 1994 1995 1996 1994 1995 1996
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Treasury Money Market Fund $233,796 $229,313 $291,794 $166,562 $184,294 $235,779
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- 17 -
<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================
Net Fees Paid Fees Waived
----------------------------------------------------------------------------
Fund 1994 1995 1996 1994 1995 1996
==========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Government Money Market
Fund $337,352 $376,824 $ 448,001 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Money Market Fund $952,538 $998,172 $1,138,578 $605,293 $647,771 $853,933
- ----------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund $271,281 $362,794 $318,245 $206,848 $289,877 $275,379
- ----------------------------------------------------------------------------------------------------------
Fixed Income Fund $549,880 $576,717 $625,690 $96,978 $100,132 $125,138
- ----------------------------------------------------------------------------------------------------------
Intermediate Government Fixed
Income Fund $508,997 $419,323 $334,912 $92,677 $72,093 $ 66,982
- ----------------------------------------------------------------------------------------------------------
Tax-Exempt Fixed Income Fund $297,375 $249,245 $218,761 $75,458 $64,521 $56,636
- ----------------------------------------------------------------------------------------------------------
International Fixed Income Fund $129,517 $139,512 $140,609 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Limited Volatility Fixed Income
Fund * * * * * *
- ----------------------------------------------------------------------------------------------------------
Value Fund $448,762 $788,698 $1,170,294 $103 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Growth Fund $752,337 $685,748 $723,113 $2,930 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Small Cap Fund $342,751 $163,166 $235,012 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
International Equity Fund $353,164 $643,380 $886,424 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
TransEurope Fund * * * * * *
- ----------------------------------------------------------------------------------------------------------
Asian Tigers Fund $151,709 $211,903 $312,823 $ 0 $ 0 $ 0
- ----------------------------------------------------------------------------------------------------------
Latin America Equity Fund * * $44,270 * * $ 0
- ----------------------------------------------------------------------------------------------------------
Balanced Fund $430,126 $454,111 $391,615 $ 0 $ 0 $ 0
==========================================================================================================
</TABLE>
* Not in operation during the period.
THE SUB-ADVISOR
LaSalle Street Capital Management, Ltd., on behalf of the Trust, and ABN AMRO-
NSM International Funds Management B.V., Foppingadreef 22, Amsterdam, 1000 EA
Amsterdam, The Netherlands (the "Sub-Advisor"), 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.
- 18 -
<PAGE>
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.
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 Trust and SEI Fund Resources (the "Administrator"), a wholly-owned
subsidiary of SEI Investments Company ("SEI") have entered into an
administration agreement (the "Administration Agreement"). The Administration
Agreement provides that the Administrator shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Administration Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Administrator in the performance of its duties or from reckless disregard by
it of its duties and obligations thereunder.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI"), is the owner of all
beneficial interest in the Administrator. SEI and its subsidiaries and
affiliates, including the Administrator, 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 and its affiliates also serve 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, Boston 1784
Funds(R),CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB
Funds, Inc., First American Funds, Inc., First American Investment Funds, Inc.,
First American Strategy Funds, Inc., HighMark Funds, Marquis Funds(R), Monitor
Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., The Pillar Funds,
Profit Funds Investment Trust, Rembrandt Funds(R), Santa Barbara Group of Mutual
Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust,
- 19 -
<PAGE>
SEI Institutional Managed Trust, SEI International Trust, SEI Liquid Asset
Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable Trust, and
TIP Funds.
For the fiscal years ended December 31, 1994, 1995, and 1996, the Funds paid the
following fees to the Administrator:
<TABLE>
<CAPTION>
======================================================================
Net Fees Paid
-------------------------------------
Fund 1994 1995 1996
----------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Money Market Fund $158,779 $176,434 $226,103
----------------------------------------------------------------------
Government Money Market Fund $253,014 $282,618 $336,001
----------------------------------------------------------------------
Money Market Fund $605,293 $647,771 $853,933
----------------------------------------------------------------------
Tax-Exempt Money Market Fund $187,532 $277,850 $254,410
----------------------------------------------------------------------
Fixed Income Fund $150,882 $159,185 $187,707
----------------------------------------------------------------------
Intermediate Government Fixed $142,816 $113,044 $100,473
Income Fund
----------------------------------------------------------------------
Tax-Exempt Fixed Income Fund $ 90,263 $ 78,442 $ 68,849
----------------------------------------------------------------------
International Fixed Income Fund $ 14,686 $ 26,158 $ 26,364
----------------------------------------------------------------------
Limited Volatility Fixed Income * * *
Fund
----------------------------------------------------------------------
Value Fund $ 84,163 $147,881 $219,430
----------------------------------------------------------------------
Growth Fund $141,613 $128,578 $135,584
----------------------------------------------------------------------
Small Cap Fund $ 64,266 $ 30,713 $ 44,065
----------------------------------------------------------------------
International Equity Fund $ 43,927 $ 96,507 $132,965
----------------------------------------------------------------------
TransEurope Fund * * *
----------------------------------------------------------------------
Asian Tigers Fund $ 6,456 $ 31,786 $ 46,924
----------------------------------------------------------------------
Latin America Equity Fund * * $ 6,640
----------------------------------------------------------------------
Balanced Fund $ 92,170 $ 97,310 $ 83,917
======================================================================
</TABLE>
* Not in operation during the period.
DISTRIBUTION AND SHAREHOLDER SERVICING
Rembrandt(R) Financial Services Company, Oaks, Pennsylvania 19456 (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
- 20 -
<PAGE>
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 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.
Rule 12b-1 Fees
The Trust has adopted a distribution plan for the Investor Shares of each Fund
(the "Investor Shares 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 Shares 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 Shares Plan
requires that quarterly written reports of amounts spent under the Investor
Shares 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
Shares 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 Shares 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 Shares Plan, Investor
Shares are subject to an ongoing distribution fee calculated on each Fund's
aggregate average daily net assets attributable to its Investor Shares.
The Distribution Agreement and the Investor Shares Plan provide for payments to
the Distributor at an annual rate of .25% of the Investor Shares average daily
net assets. The Investor Shares 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, 1996, the Funds paid the following
amounts pursuant to the Investor Shares Plan:
- 21 -
<PAGE>
<TABLE>
<CAPTION>
====================================================================================
Distribution Amount Paid
Fund 1996
====================================================================================
<S> <C>
Treasury Money Market Fund $23,603
- ------------------------------------------------------------------------------------
Government Money Market Fund $11,419
- ------------------------------------------------------------------------------------
Money Market Fund $ 3,753
- ------------------------------------------------------------------------------------
Tax-Exempt Money Market Fund $ 7,665
- ------------------------------------------------------------------------------------
Fixed Income Fund $ 1,540
- ------------------------------------------------------------------------------------
Intermediate Government Fixed Income Fund $ 2,487
- ------------------------------------------------------------------------------------
Tax-Exempt Fixed Income Fund $ 2,165
- ------------------------------------------------------------------------------------
International Fixed Income Fund $ 340
- ------------------------------------------------------------------------------------
Limited Volatility Fixed Income Fund *
- ------------------------------------------------------------------------------------
Value Fund $ 4,103
- ------------------------------------------------------------------------------------
Growth Fund $ 7,113
- ------------------------------------------------------------------------------------
Small Cap Fund $ 1,414
- ------------------------------------------------------------------------------------
International Equity Fund $ 4,177
- ------------------------------------------------------------------------------------
TransEurope Fund *
- ------------------------------------------------------------------------------------
Asian Tigers Fund $ 2,265
- ------------------------------------------------------------------------------------
Latin America Equity Fund *
- ------------------------------------------------------------------------------------
Balanced Fund $ 9,712
====================================================================================
</TABLE>
* Not in operation during the period.
The distribution-related services that may be provided under the Investor Shares
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
- 22 -
<PAGE>
"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 Shares Plan or related agreements.
SHAREHOLDER SERVICING PLAN
The Trust has adopted a shareholder servicing plan for the Investor Shares of
each Fund (the "Shareholder Servicing Plan"). Under the Shareholder Servicing
Plan, the Distributor may perform, or may compensate other service providers for
performing, the following shareholder services: maintaining client accounts;
arranging for bank wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing dividend options, account
designations and addresses; sub-accounting; providing information on share
positions to clients; forwarding shareholder communications to clients,
processing purchase, exchange and redemption orders; and processing dividend
payments.
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 (4/8/30) -- Trustee and Chairman -- 150 N. Michigan Avenue,
Chicago, Illinois 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 (7/26/27) -- Trustee -- 1318 Navajo Court, Louisville,
Kentucky. 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.
ROBERT A. NESHER (8/17/46) -- Trustee* -- 8 South Street, P.O. Box 89,
Kennebunkport, Maine 04046-0089. Currently performs various services on behalf
of SEI for which Mr. Nesher is compensated. Director, Executive Vice
President of SEI, 1986-1994. Director and Executive Vice President of the
Administrator and Distributor, 1981-1994.
DAVID G. LEE (4/16/52) -- 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.
RICHARD W. GRANT (10/25/45) -- Secretary -- 2000 One Logan Square, Philadelphia,
Pennsylvania 19103, Partner of Morgan, Lewis & Bockius LLP (law firm), Counsel
to SEI, the Trust, the Administrator and Distributor.
JIM VOLK (8/28/62) -- Controller, Chief Financial Officer -- Director of
Investment Accounting Operations of SEI, the Administrator and Distribution
since 1996. Assistant Chief Accountant, Securities and Exchange Commission,
Division of Investment Management, 1993 to 1996. Senior Manager, Coopers &
Lybrand, 1985-1993.
SANDRA K. ORLOW (10/18/53) -- Vice President, Assistant Secretary -- Vice
President and Assistant Secretary of SEI and the Administrator and Distributor
since 1983.
- 23 -
<PAGE>
TODD CIPPERMAN (2/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since May, 1995, Associate, Dewey Ballantine (law firm) 1994-1995, Associate,
Winston & Strawn (law firm) 1991-1995.
KATHRYN L. STANTON (11/19/58) -- 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.
KEVIN P. ROBINS (4/15/61) -- 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.
BARBARA A. NUGENT (6/18/56) -Vice President, Assistant Secretary -Vice President
and Assistant Secretary of SEI, the Administrator and Distributor; Associate,
Drinker Biddle & Reath (law firm), 1994-1996; Assistant Vice
President/Administration, Delaware Service Company, Inc., 1981-1994.
MARC H. CAHN (6/19/57) -Vice President, Assistant Secretary -Vice President and
Assistant Secretary of SEI, the Administrator and Distributor; Associate General
Counsel, Barclays Bank PLC, 1995-1996; Counsel for First Fidelity Bancorporation
prior to 1995.
JOHN H. GRADY, JR. (6/1/61) -Assistant Secretary -1800 M Street, N.W.
Washington, DC 20036. Partner, Morgan, Lewis & Bockius LLP (law firm) since
1995; Associate, Morgan, Lewis & Bockius LLP, 1993-1995; Associate, Ropes & Gray
(law firm), 1988-1993.
- ----------------------------
*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, 1996, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
=========================================================================================================================
Total Compensation
Aggregate Pension or from Registrant and
Compensation Retirement Estimated Fund Complex Paid
From Registrant Benefits Accrued Annual Benefits to Directors for
Name of Person, Position for Fiscal Year as Part of Fund Upon Retirement Fiscal Year Ended
Ended 1996 Expenses 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Arnold F. Brookstone, $14,000 N/A N/A $14,000 for service
Trustee on one board
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 24 -
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================================
Total Compensation
Aggregate Pension or from Registrant and
Compensation Retirement Estimated Fund Complex Paid
From Registrant Benefits Accrued Annual Benefits to Directors for
Name of Person, Position for Fiscal Year as Part of Fund Upon Retirement Fiscal Year Ended
Ended 1996 Expenses 1996
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William T. Simpson, $14,000 N/A N/A $14,000 for service
Trustee on one board
- -------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher,* $ 0 N/A N/A $0 for service
Trustee 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 same 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 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.
- 25 -
<PAGE>
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 instru ments 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, 1996, 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 Common 4.58% 4.68% N/A N/A
Market Fund --------------------------------------------------------------
Investor 4.33% 4.42% N/A N/A
- ---------------------------------------------------------------------------------
Government Money Common 5.04% 5.16% N/A N/A
Market Fund --------------------------------------------------------------
Investor 4.79% 4.90% N/A N/A
- ---------------------------------------------------------------------------------
Money Market Fund Common 5.14% 5.27% N/A N/A
--------------------------------------------------------------
Investor 4.89% 5.00% N/A N/A
- ---------------------------------------------------------------------------------
Tax-Exempt Money Common 3.40% 3.45% 5.63% 5.30%
Market Fund --------------------------------------------------------------
Investor 3.15% 3.20% 5.22% 5.30%
=================================================================================
</TABLE>
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, International Fixed Income
Fund, Limited Volatility Fixed Income Fund, Latin America Equity Fund, and
Balanced Fund may also advertise a 30-day yield figure.
-26-
<PAGE>
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, 1996, the yield for the following
Funds were:
<TABLE>
<CAPTION>
=============================================================================
Fund Class 30-Day Yield
=============================================================================
<S> <C> <C>
Fixed Income Fund Common 5.90%
-----------------------------------
Investor 5.39%
- -----------------------------------------------------------------------------
Intermediate Government Fixed Income Fund Common 5.53%
-----------------------------------
Investor 5.04%
- -----------------------------------------------------------------------------
Tax-Exempt Fixed Income Fund Common 4.80%
-----------------------------------
Investor 4.34%
- -----------------------------------------------------------------------------
International Fixed Income Fund Common 2.94%
-----------------------------------
Investor 2.57%
- -----------------------------------------------------------------------------
Limited Volatility Fixed Income Fund Common *
-----------------------------------
Investor *
- -----------------------------------------------------------------------------
Value Fund Common 2.00%
-----------------------------------
Investor 1.66%
- -----------------------------------------------------------------------------
Growth Fund Common 1.16%
-----------------------------------
Investor 0.87%
- -----------------------------------------------------------------------------
Small Cap Fund Common 0.00%
-----------------------------------
Investor 0.00%
- -----------------------------------------------------------------------------
International Equity Fund Common N/A
-----------------------------------
Investor N/A
- -----------------------------------------------------------------------------
TransEurope Fund Common *
-----------------------------------
Investor *
- -----------------------------------------------------------------------------
Asian Tigers Fund Common N/A
-----------------------------------
Investor N/A
- -----------------------------------------------------------------------------
Latin America Equity Fund Common N/A
-----------------------------------
Investor *
- -----------------------------------------------------------------------------
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
=============================================================================
Fund Class 30-Day Yield
=============================================================================
<S> <C> <C>
Balanced Fund Common 2.94%
----------------------------------
Investor 2.56%
=============================================================================
</TABLE>
* Not in operation at the end of the period.
The 30-day tax equivalent yields for the Tax-Exempt Fixed Income Fund for the
period ended December 31, 1996, was 7.95% for the Common Shares and 7.19% for
the Investor Shares.
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, International 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, 1996, and for the one and three
year periods ended December 31, 1996, were as follows:
<TABLE>
<CAPTION>
==============================================================================
Average Annual Total Return
-------------------------------
Fund Class One Year Three Since
Year Inception
================================================================================
<S> <C> <C> <C> <C>
Treasury Money Market Fund Investor-Net
Asset Value/1 #/ 4.54% 4.29% 3.88%
-----------------------------------------------------
Common/2/ 4.80% 4.55% 4.06%
- --------------------------------------------------------------------------------
Government Money Market Investor-Net
Fund Asset Value/3 #/ 4.82% 4.59% 4.24%
-----------------------------------------------------
Common/2/ 5.08% 4.85% 4.39%
- ------------------------------------------------------------------------------
Money Market Fund Investor-Net
Asset Value/4 #/ 4.87% 4.65% 4.27%
-----------------------------------------------------
Common/2/ 5.13% 4.91% 4.44%
- --------------------------------------------------------------------------------
</TABLE>
-28-
<PAGE>
<TABLE>
<CAPTION>
==============================================================================
Average Annual Total Return
-------------------------------
Fund Class One Year Three Since
Year Inception
================================================================================
<S> <C> <C> <C> <C>
Tax-Exempt Money Market Investor-Net
Fund Asset Value/5 #/ 2.88% 2.79% 2.56%
-------------------------------------------------
Common/2/ 3.14% 3.05% 2.78%
- ------------------------------------------------------------------------------
Fixed Income Fund Investor-Offering
Price/6 #/ (1.43)% 3.59% 4.32%
-------------------------------------------------
Investor-Net
Asset Value/6/ 3.24% 5.19% 5.60%
------------------------------------------------
Common/2/ 3.42% 5.41% 6.51%
- -----------------------------------------------------------------------------
Intermediate Government Investor-Offering
Fixed Income Fund Price/7 #/ (1.32)% 2.82% 2.93%
------------------------------------------------
Investor-Net
Asset Value/7/ 3.30% 4.40% 4.21%
------------------------------------------------
Common/2/ 3.51% 4.64% 4.99%
- -----------------------------------------------------------------------------
Tax-Exempt Fixed Income Investor-Offering
Fund Price/8 #/ (1.93)% 2.36% 3.00%
------------------------------------------------
Investor-Net
Asset Value/8/ 2.70% 3.94% 4.27%
------------------------------------------------
Common/2/ 2.96% 4.23% 5.31%
- -----------------------------------------------------------------------------
International Fixed Income Investor-Offering
Fund Price/9 #/ (2.02)% 5.15% 5.27%
------------------------------------------------
Investor-Net
Asset Value/9/ 2.62% 6.77% 6.60%
------------------------------------------------
Common/10/ 2.82% 7.02% 9.16%
- -----------------------------------------------------------------------------
Limited Volatility Fixed Investor-Offering
Income Fund Price/#/ * * *
------------------------------------------------
Investor-Net
Asset Value * * *
------------------------------------------------
Common * * *
- -----------------------------------------------------------------------------
Balanced Fund Investor-Offering
Price/8 #/ 7.75% 8.58% 7.61%
------------------------------------------------
Investor-Net
Asset Value/8/ 12.86% 10.25% 8.90%
------------------------------------------------
Common/2/ 13.15% 10.51% 9.65%
- -----------------------------------------------------------------------------
Value Fund Investor-Offering
Price/11 #/ 14.67% 14.65% 12.03%
------------------------------------------------
Investor-Net
Asset Value/11/ 20.09% 16.44% 13.41%
------------------------------------------------
Common/2/ 20.43% 16.72% 14.16%
- -----------------------------------------------------------------------------
Growth Fund Investor-Offering
Price/12 #/ 15.92% 14.11% 10.99%
------------------------------------------------
Investor-Net
Asset Value/12/ 21.41% 15.86% 12.33%
------------------------------------------------
Common/2/ 21.69% 16.19% 13.33%
- -----------------------------------------------------------------------------
</TABLE>
-29-
<PAGE>
<TABLE>
<CAPTION>
==============================================================================
Average Annual Total Return
-------------------------------
Fund Class One Year Three Since
Year Inception
==============================================================================
<S> <C> <C> <C> <C>
Small Cap Fund Investor-Offering
Price/7 #/ 13.79% 11.91% 11.65%
-------------------------------------------------
Investor-Net
Asset Value/7/ 19.18% 13.63% 13.04%
------------------------------------------------
Common/2/ 19.42% 13.93% 11.07%
- -----------------------------------------------------------------------------
International Equity Fund Investor-Offering
Price/7 #/ 4.93% 7.17% 9.88%
------------------------------------------------
Investor-Net
Asset Value/7/ 9.85% 8.82% 11.26%
------------------------------------------------
Common/2/ 10.09% 9.05% 13.16%
- -----------------------------------------------------------------------------
Asian Tigers Fund Investor-Offering
Price/13 #/ 9.09% * 4.82%
------------------------------------------------
Investor-Net
Asset Value/13/ 14.21% * 6.45%
------------------------------------------------
Common/14/ 14.55% * 6.70%
- -----------------------------------------------------------------------------
Latin America Equity Fund Investor-Offering
Price/#/ * * *
------------------------------------------------
Investor-Net
Asset Value * * *
------------------------------------------------
Common 2.40% * 4.76%
- -----------------------------------------------------------------------------
TransEurope Fund Investor-Offering
Price/#/ * * *
------------------------------------------------
Investor-Net
Asset Value * * *
------------------------------------------------
Common * * *
=============================================================================
</TABLE>
* Not in operation during the period.
# Prior to July 28, 1997 Investor shares were subject to front-end sales load
- ---------------
/1/ Commenced operations 3/25/93
/2/ Commenced operations 1/4/93
/3/ Commenced operations 4/22/93
/4/ Commenced operations 3/31/93
/5/ Commenced operations 3/24/93
/6/ Commenced operations 3/12/93
/7/ Commenced operations 4/12/93
/8/ Commenced operations 3/9/93
/9/ Commenced operations 4/26/93
/10/ Commenced operations 2/7/93
/11/ Commenced operations 3/26/93
/12/ Commenced operations 3/8/93
/13/ Commenced operations 1/12/94
/14/ Commenced operations 1/3/94
/15/ Commenced operations 7/1/96
PURCHASE AND REDEMPTION OF SHARES
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
-30-
<PAGE>
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 regula tion) 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, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Funds is calculated by adding the value of
securities and other assets, subtracting liabilities and dividing by the total
number of outstanding shares. Securities of the Treasury Money Market,
Government Money Market, Money Market and Tax-Exempt Money Market Funds 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 avail able 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
-31-
<PAGE>
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.
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
Common Shares and Investor Shares within the Funds may differ because of the
distribution expenses charged to Investor 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 Sub chapter 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 a
Fund's gross
-32-
<PAGE>
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) a 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, or foreign currencies
(or options, futures or forward contracts on foreign currencies) that are not
directly related to a Fund'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 a 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 a Fund's assets 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 a 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. Each Fund intends to make
sufficient distributions to avoid liability for the 4% federal excise tax.
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.
Tax Exempt Funds
Interest on indebtedness incurred by a Shareholder in order to purchase or carry
shares in the Tax-Exempt Fixed Income Fund or Tax-Exempt Money Market 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 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
-33-
<PAGE>
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 exempt-interest 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 an S corporation Shareholder's federal excess "passive investment
income."
Shareholders of the Tax-Exempt Funds should consult their tax advisers to
determine whether any portion of the income dividends received from such Funds
is considered tax exempt in their particular states.
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 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.
Equity and Balanced Funds
A dividends-received deduction is available to corporations that receive
dividends from domestic corporations. Dividends paid by an Equity or Balanced
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 and Balanced Fund Shareholders will be advised each
year of the portion of ordinary income dividends eligible for the deduction.
Individual shareholders are not entitled to the dividends received deduction
regardless of which fund paid the dividend.
Fixed Income and Money Market Funds
Dividends received from other funds, e.g., Money Market or Fixed Income Funds,
----
will not be eligible for the dividends-received deduction.
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.
-34-
<PAGE>
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 a 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 a Fund meets the Distribution Requirement
and if more than 50% of the value of such Fund's total assets at the close of
its taxable year consists of stock or securities of foreign corporations, such
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 income tax. If a Fund makes the
election, it will report annually to its Shareholders the respective amounts per
share of such 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 and Sub-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 and Sub-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 and Sub-
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.
-35-
<PAGE>
TRADING PRACTICES AND BROKERAGE
The Advisor and Sub-Advisor select brokers or dealers to execute transactions
for the purchase or sale of portfolio securities on the basis of their judgment
of the professional capability of the brokers or dealers to provide the service.
The primary consideration is to have brokers or dealers execute transactions at
best price and execution. Best price and execution refer 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 any other accounts under management by the Advisor and Sub-Advisor,
brokerage business to brokers or dealers who provide brokerage and research
services. These research services include advice, either directly or through
publications or writings, as to the value of securities, the advisability of
investing in, purchasing or selling securities, and the availability of
securities or purchasers or sellers of securities; furnishing of analyses and
reports concerning issuers, securities or industries; providing information on
economic factors and trends; assisting in determining portfolio strategy;
providing computer software used in security analyses; and providing portfolio
performance evaluation and technical market analyses. Such services are used by
the Advisor and Sub-Advisor in connection with their investment decision-making
process with respect to one or more funds and accounts managed by them, 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 trans
actions 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.
-36-
<PAGE>
The Advisor and Sub-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 their
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 Sub-Advisor and the Trust's Board
of Trustees that the advantages of combined orders outweigh the possible
disadvantages of separate transactions.
Consistent with the Conduct Rules 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 is
a registered broker-dealer, 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 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, 1996, the Funds paid the following
brokerage fees:
-37-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Total
Total $ Commissions Total $
Amount of % of Total of Paid to SFS in Amount of
Total $ Brokerage Brokerage % of Total Brokerage Connection with Brokerage
Amount of Commissions Commissions Transactions Repurchase Commissions
Brokerage Paid to Paid to Effected Through Agreement Paid for
Commissions Affiliates in Affiliates in Affiliated Brokers Transactions in Research
Fund Paid in 1996 1996 1996 in 1996 1996 in 1996
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Intermediate Government
Fixed Income Fund $0 $0 0% 0% $1,652.54 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Fixed Income
Fund $0 $0 0% 0% $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Fixed Income Fund $0 $0 0% 0% $2,941.04 $0
- ------------------------------------------------------------------------------------------------------------------------------------
International Fixed Income
Fund $0 $0 0% 0% $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Fixed
Income Fund * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Value Fund $185,275 $0 0% 0% $1,699.77 $130,921
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund $99,324 $0 0% 0% $1,717.97 $99,324
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Fund $89,340 $0 0% 0% $838.21 $78,287
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $80,851 $0 0% 0% $0 $80,851
- ------------------------------------------------------------------------------------------------------------------------------------
Asian Tigers Fund $109,083 $0 0% 0% $0 $101,066
- ------------------------------------------------------------------------------------------------------------------------------------
TransEurope Fund * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Latin America Equity Fund $38,488 $0 0% 0% $0 $38,488
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $37,786 $0 0% 0% $831.08 $27,594
- ------------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Money Market
Fund $0 $0 0% 0% $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Money Market Fund $0 $0 0% 0% $101,268.72 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Treasury Money Market Fund $0 $0 0% 0% $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Government Money Market
Fund $0 $0 0% 0% $39,439.90 $0
====================================================================================================================================
</TABLE>
* Not in operation during the period.
For the fiscal years ended December 31, 1994 and 1995, the Funds paid the
following brokerage fees:
-38-
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
Total $ Amount of Brokerage Commissions Total $ Amount of Brokerage
Paid in Commissions Paid to Affiliates in
Fund 1994 1995 1994 - 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<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
- ------------------------------------------------------------------------------------------------------------------------------------
International Fixed Income Fund $0 $0 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
Limited Volatility Fixed Income Fund * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Value Fund $78,580 $125,283 $0 $2,994
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Fund $155,975 $117,644 $0 $10,080
- ------------------------------------------------------------------------------------------------------------------------------------
Small Cap Fund $35,240 $73,502 $0 $0
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity Fund $113,705 $169,608 $62,007 $66,033
- ------------------------------------------------------------------------------------------------------------------------------------
Asian Tigers Fund $160,589 $102,905 $59,738 $24,295
- ------------------------------------------------------------------------------------------------------------------------------------
TransEurope Fund * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Latin America Equity Fund * * * *
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $89,161 $87,467 $0 $732
- ------------------------------------------------------------------------------------------------------------------------------------
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 Funds and who are
affiliates of the Fund's Advisor and Sub-Advisor are brokers in the ABN AMRO
International brokerage network. In addition, the Funds executed brokerage
trades through SEI Financial Services Company, an affiliate of the Administrator
and Distributor.
Except for the Intermediate Government Fixed Income, Fixed Income, Tax Exempt
Fixed Income and International 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.
-39-
<PAGE>
For the fiscal years ended December 31, 1995 and 1996, the portfolio turnover
rate for each of the Funds was:
<TABLE>
<CAPTION>
============================================================
Turnover Rate
- ------------------------------------------------------------
Fund 1995 1996
- ------------------------------------------------------------
<S> <C> <C>
Value Fund 37% 58%
- ------------------------------------------------------------
Growth Fund 71% 58%
- ------------------------------------------------------------
Small Cap Fund 142% 158%
- ------------------------------------------------------------
International Equity Fund 11% 9%
- ------------------------------------------------------------
TransEurope Fund * *
- ------------------------------------------------------------
Asian Tigers Fund 28% 24%
- ------------------------------------------------------------
Latin America Equity Fund * 10%
- ------------------------------------------------------------
Fixed Income Fund 59% 194%
- ------------------------------------------------------------
Intermediate Government Fixed Income Fund 115% 179%
- ------------------------------------------------------------
Tax-Exempt Fixed Income Fund 129% 98%
- ------------------------------------------------------------
International Fixed Income Fund 105% 85%
- ------------------------------------------------------------
Limited Volatility Fixed Income Fund * *
- ------------------------------------------------------------
Balanced Fund 85% 104%
============================================================
</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. 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.
-40-
<PAGE>
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 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 April 1, 1997, 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 Bank N.A. 210,781,047.7500 95.90%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
GOVERNMENT MONEY MARKET FUND
LaSalle National Bank N.A. 200,060,372.9100 97.10%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
MONEY MARKET FUND
LaSalle National Bank N.A. 618,984,122.3000 99.49%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
-41-
<PAGE>
TAX-EXEMPT MONEY MARKET FUND
LaSalle National Bank N.A. 264,175,440.8600 98.95%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
FIXED INCOME FUND
LaSalle National Bank N.A. 12,699,633.0270 99.66%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
INTERMEDIATE GOVERNMENT FIXED INCOME FUND
LaSalle National Bank N.A. 5,680,987.3080 99.74%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
TAX-EXEMPT FIXED INCOME FUND
LaSalle National Bank N.A. 3,939,396.7920 98.43%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
INTERNATIONAL FIXED INCOME FUND
LaSalle National Bank N.A. 2,011,407.4540 99.51%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
VALUE FUND
LaSalle National Bank N.A. 12,945,512.5880 99.08%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
-42-
<PAGE>
GROWTH FUND
LaSalle National Bank N.A. 7,539,904.8240 97.07%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
SMALL CAP FUND
LaSalle National Bank N.A. 2,697,812.5030 98.43%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
INTERNATIONAL EQUITY FUND
LaSalle National Bank N.A. 6,215,886.1060 98.57%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
ASIAN TIGERS FUND
LaSalle National Bank N.A. 3,026,941.1560 98.04%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
BALANCED FUND
LaSalle National Bank N.A. 5,045,815.4230 94.02%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
LATIN AMERICA EQUITY FUND
LaSalle National Bank N.A. 1,563,465.4440 100.00%
Attn: Income Collection
P.O. Box 1443
Chicago, IL 60690-1443
-43-
<PAGE>
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.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended December 31, 1996,
including notes thereto and the report of Ernst & Young are herein incorporated
by reference from the Trust's Annual Report. A copy of the 1996 Annual Report
to Shareholders must accompany the delivery of this Statement of Additional
Information.
-44-
<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 charactertics." 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.
<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, suit able 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 earn-
<PAGE>
ings that safety is beyond reasonable question whatever changes occur in
conditions. Bonds rated AA by Fitch are judged by Fitch to be of safety
virtually beyond question and are readily salable, whose merits are not unlike
those of the AAA class, but whose margin of safety is less strikingly broad. The
issue may be the obligation of a small company, strongly secured but influenced
as to rating by the lesser financial power of the enterprise and more local type
market. 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.
