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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 1995.
File No. 33-65436
File No. 811-7830
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 4 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 5 /X/
MARQUIS FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (800) 932-7781
Robert A. Nesher
c/o SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
(Name and Address of Agent for Service)
Copies to:
Richard W. Grant, Esquire John H. Grady, Jr.
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 One Logan Square 1800 M Street, N.W.
Philadelphia, PA 19103 Washington, D.C. 20036
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/X/ 75 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485.
Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of units of beneficial interest is being registered
by this Registration Statement. Registrant's Rule 24f-2 Notice for fiscal year
ended September 30, 1994 was filed on November 17, 1994.
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MARQUIS FUNDS
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CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
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PART A - Treasury Securities Money Market Fund - Trust Class
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Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives; Investment
Policies; General Information
Item 5. Management of the Fund General Information; The Adviser; The
Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
Item 5A. Management's Discussion of Fund Performance *
Item 6. Capital Stock and Other Securities Taxes; General Information
Item 7. Purchase of Securities Being Offered Purchase of Shares
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A - Treasury Securities Money Market Fund - Retail Class
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives; Investment
Policies; General Information
Item 5. Management of the Fund General Information; The Adviser; The
Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
Item 5A. Management's Discussion of Fund Performance *
Item 6. Capital Stock and Other Securities Taxes; General Information
Item 7. Purchase of Securities Being Offered Purchase of Shares
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A - Treasury Securities Money Market Fund - Cash Sweep Class
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant The Trust; Investment Objectives; Investment
Policies; General Information
Item 5. Management of the Fund General Information; The Adviser; The
Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
Item 5A. Management's Discussion of Fund Performance *
Item 6. Capital Stock and Other Securities Taxes; General Information
Item 7. Purchase of Securities Being Offered Purchase of Shares
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i
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<TABLE>
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Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A -
Government Securities, Louisiana Tax-Free Income, Balanced, Value Equity, Growth Equity
Funds - Class A and Class B
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives; Investment
Policies and Information; General Investment
Policies and Information; General Information
Item 5. Management of Fund General Information; The Adviser; The
Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
Item 5A. Management's Discussion of Fund Performance *
Item 6. Capital Stock and Other Securities General Information; Taxes
Item 7. Purchase of Securities Being Offered How to Purchase Shares; Alternative Sales Charge
Options; Exchanges
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A -
Institutional Money Market Fund
Item 1. Cover Page Cover Page
Item 2. Synopsis Summary
Item 3. Condensed Financial Information *
Item 4. General Description of Registrant The Trust; Investment Objectives; Investment
Policies and Information; General Investment
Policies and Information; General Information
Item 5. Management of Fund General Information; The Adviser; The
Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
Item 5A. Management's Discussion of Fund Performance *
Item 6. Capital Stock and Other Securities General Information; Taxes
Item 7. Purchase of Securities Being Offered How to Purchase Shares; Alternative Sales Charge
Options; Exchanges
Item 8. Redemption or Repurchase Redemption of Shares
Item 9. Pending Legal Proceedings *
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ii
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PART A -
Tax Exempt Money Market Fund Cover Page
Item 1. Cover Page Summary
Item 2. Synopsis *
Item 3. Condensed Financial Information The Trust; Investment Objectives; Investment
Item 4. General Description of Registrant Policies and Information; General Investment
Policies and Information; General Information
General Information; The Adviser; The
Item 5. Management of Fund Administrator; The Shareholder Servicing Agent and
Transfer Agent; The Distributor
*
Item 5A. Management's Discussion of Fund Performance General Information; Taxes
Item 6. Capital Stock and Other Securities
How to Purchase Shares; Alternative Sales Charge
Item 7. Purchase of Securities Being Offered Options; Exchanges
Redemption of Shares
Item 8. Redemption or Repurchase *
Item 9. Pending Legal Proceedings
PART B - All Portfolios
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Additional Description of Permitted Investments;
Investment Limitations; Non-Fundamental Policies
Item 14. Management of the Registrant General Information (Prospectus); Trustees and
Officers of the Trust; The Administrator
Item 15. Control Persons and Principal Holders of Trustees and Officers of the Trust; General
Securities Information (Prospectus)
Item 16. Investment Advisory and Other Services The Adviser; The Administrator; The Distributor;
Experts; The Shareholder Servicing Agent and
Transfer Agent (Prospectus)
Item 17. Brokerage Allocation Fund Transactions; Trading Practices and Brokerage
Item 18. Capital Stock and Other Securities Description of Shares
Item 19. Purchase, Redemption, and Pricing of Securities Purchase of Shares (Prospectus) [or] How to
Being Offered Purchase Shares (Prospectus) and Alternative Sales
Charge Options (Prospectus); Redemption of Shares
(Prospectus); Purchase and Redemption of Shares;
Conversion Feature; Letter of Intent;
Determination of Net Asset Value
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotations Performance (Prospectus); Computation of Yield;
Calculation of Total Return
Item 23. Financial Statements Financial Statements
</TABLE>
iii
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PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of the Registration Statement.
*Not Applicable.
iv
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MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
TREASURY SECURITIES MONEY MARKET FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers the Trust Class shares of the TREASURY
SECURITIES MONEY MARKET FUND (the "Fund"), a separate series of the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-801-1594. The Statement of Additional
Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING, FIRST NATIONAL BANK OF COMMERCE IN NEW
ORLEANS OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
<PAGE>
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. This Summary provides basic information about the Trust Class
shares of the Trust's Treasury Securities Money Market Fund (the "Fund"). The
Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Fund seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income by investing exclusively in obligations issued by the
U.S. Treasury and in repurchase agreements involving such obligations. There
can be no assurance that the Fund will achieve its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The investment
policies of the Fund entail certain risks and considerations of which an
investor should be aware. While the Fund seeks to maintain a net asset value of
$1.00 per share, there can be no assurance that the Fund will be able to do
this on a continuous basis. There may be other risks involved in the ownership
of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its agencies
or instrumentalities of the securities in which the Fund invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Fund. The Trust's shares are not federally insured by the FDIC or
any other government agency.
For more information about the Fund, see "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
HOW DO I PURCHASE SHARES? Trust Class shares of the Fund are offered at net
asset value per share.
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in New
Orleans serves as the investment adviser of the Fund. See "Expense Summary" and
"The Adviser".
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder servicing
agent, transfer agent and dividend disbursing agent for the Trust. See "The
Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in federal funds or in additional shares at the discretion of the
shareholder on the first Business Day of each month. See "Dividends."
2
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES TREASURY SECURITIES MONEY MARKET FUND
TRUST CLASS
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Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee None
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES TREASURY SECURITIES MONEY MARKET FUND
(as a percentage of average net assets) TRUST CLASS
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Advisory Fees (after fee waivers) (1) .20%
Administration Fees .20%
12b-1 Fees .00%
Other Expenses .10%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2) .50%
================================================================================
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(1) The Adviser has waived, on a voluntary basis, a portion of its fee, and the
advisory fee shown reflects this voluntary waiver. The Adviser reserves the
right to terminate its waiver at any time in its sole discretion. Absent
such waiver, the advisory fee for the Fund would be .30%.
(2) Absent the Adviser's voluntary fee waiver, Total Operating Expenses for
Trust Class shares of the Fund would be .60%.
EXAMPLE
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1 YEAR 3 YEARS 5 YEARS 10 YEARS
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An investor would pay the following expenses
on a $1,000 investment in Trust Class shares
of the Fund assuming: (1) 5% annual return and
(2) redemption at the end of each time period: $ 5 $16 $28 $63
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THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by
investors in Trust Class shares of the Fund. The information set forth in the
foregoing table and example relates only to Trust Class shares. The Trust also
offers Retail Class shares and Cash Sweep Class shares of the Fund, which are
subject to the same expenses plus certain additional distribution costs.
Shareholders purchasing shares through a financial institution may be charged
additional account fees by that institution. Additional information may be
found under "The Adviser," "The Administrator," and "The Distributor."
3
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FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout the
year, insofar as they relate to the fiscal year ended September 30, 1994, have
been audited by Arthur Andersen LLP, independent public accountants, whose
report thereon was unqualified. This information should be read in conjunction
with the Trust's financial statements and notes thereto which are included in
the Statement of Additional Information under the heading "Financial
Information." Additional performance information is set forth in the Trust's
1994 Annual Report to Shareholders and is available upon request and without
charge by calling 1-800-471-1144.
For a Trust Class Share Outstanding Throughout the Period
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REALIZED RATIO OF RATIO OF
AND EXPENSES NET INCOME
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ----------- ------------- --------- ------ ---------- ---------- ---------- ---------- ----------
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TREASURY SECURITIES MONEY MARKET FUND TRUST CLASS
1994 $1.00 0.03 0.00 (0.03) $1.00 3.22 %+ $403,778 0.50% 3.15% 0.60% 3.05%
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PORTFOLIO
TURNOVER
RATE
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TREASURY SECURITIES MONEY MARKET FUND TRUST CLASS
1994 N/A
</TABLE>
- --------
+ Total Return is for the period indicated and has been annualized.
4
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THE TRUST
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in its Treasury Securities
Money Market Fund (the "Fund"), a diversified mutual fund, through three
separate classes: Trust Class, Retail Class and Cash Sweep Class, which provide
for variations in distribution costs, voting rights and dividends. Except for
these differences between classes, each share of the Fund represents an
undivided, proportionate interest in the Fund. This Prospectus relates to the
Trust Class shares of the Fund. Information regarding the Retail Class and Cash
Sweep Class shares of the Fund and the Trust's other funds is contained in
separate prospectuses that may be obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objectives.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by the Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations maturing in 397
days or less. The Fund will attempt to maintain a net asset value of $1.00 per
share, although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit and in
repurchase agreements involving such obligations. The Fund may purchase
Treasury Obligations on a when-issued or delayed delivery basis. The Fund may
also engage in securities lending.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
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 (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Trust Class shares of the Fund directly from the Trust's
shareholder servicing and transfer agent, DST Systems, Inc. ("DST"), by wire.
Trust Class shares of the Fund are sold on a continuous basis.
To open an account, an investor must first return a completed and signed
Account Application to DST, 210 West 10th Street, Kansas City, MO 64105.
Account Application forms are available by calling 1-800-801-1594.
5
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WIRE
A shareholder whose Account Application has been received by DST may purchase
Trust Class shares of the Fund by wiring Federal funds. The shareholder must
wire funds to DST and the wire instructions must include the shareholder's
account number. The shareholder must call DST at 1-800-471-1144 before wiring
any funds. An order to purchase shares by Federal funds wire will be deemed to
have been received by the Fund on the Business Day of the wire, provided that
the shareholder notifies DST prior to 12:00 noon, Central time. If DST does not
receive notice by 12:00 noon, Central time, on the Business Day of the wire,
the order will be executed on the next Business Day.
GENERAL INFORMATION REGARDING PURCHASES
Purchases of Trust Class shares of the Fund may be made on any day the New York
Stock Exchange is open for business ("Business Days"). However, shares of the
Fund cannot be purchased by Federal Reserve wire on Federal holidays
restricting wire transfers. The minimum initial investment in Trust Class
shares of the Fund is $1,000,000; however, the Trust's distributor, SEI
Financial Services Company (the "Distributor"), may waive the minimum
investment at its discretion.
A purchase order for shares will be effective, and eligible to receive
dividends declared that same day, on the Business Day received by DST, if DST
receives the order and payment before 12:00 noon, Central time. A purchase
order received (with payment) after this time will be effective on the next
Business Day. The purchase price of Trust Class shares of the Fund is the net
asset value per share next computed after the order is received and accepted by
the Trust. The Fund expects to maintain its net asset value per share constant
at $1.00. The net asset value per share of the Fund is determined by dividing
the total value of its investments and other assets, less any liabilities, by
its total outstanding shares. The Fund's net asset value per share is
calculated as of 3:00 p.m., Central time, each Business Day and is based on the
amortized cost method described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders who desire to transfer the registration of their shares should
contact DST at 1-800-471-1144.
Certain financial institutions through which shares may be purchased may be
required under state law to register as broker dealers.
EXCHANGES
Shares of the Fund may be exchanged for Class A shares of other funds of the
Trust. Investors exchanging shares of the Fund acquired for cash for Class A
shares of another fund of the Trust will be subject to the applicable sales
charge. Shares of the Fund acquired through an exchange of Class A shares of
another fund of the Trust may be exchanged back, with no sales charge, into
Class A shares of any other fund of the Trust.
An investor must have received a current prospectus of the Trust's other fund
into which the exchange is to be made (the "new" fund) before the exchange will
be effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request ") are received by DST. If an Exchange Request
in good order is received by DST by 11:00 a.m. Central time, on any Business
Day, the exchange will occur on that day. The exchange privilege may be
exercised only in those states where the class or shares of the new fund may
legally be sold.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any Business Day. Shares
may be redeemed by mail or by telephone. Shares of the
6
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Funds cannot be redeemed by Federal Reserve wire on Federal holidays
restricting wire transfers.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, DST may require that the signature on the written redemption request be
guaranteed. Signature guarantees can be obtained from banks, brokers, dealers,
credit unions, securities exchanges or associations, clearing agencies or
savings associations. Notaries public cannot guarantee signatures.
BY TELEPHONE
Shares may be redeemed by telephone if the shareholder has elected that option
on the Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a valid request for
redemption. The shareholder may have the proceeds mailed to his or her address
of record or mailed or wired to a commercial bank account previously designated
on the Account Application. Shareholders may request a wire redemption for
redemptions in excess of $500 by calling DST at 1-800-471-1144.
Neither the Trust nor DST will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and DST 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.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per
share is determined as of 3:00 p.m., Central time, on each Business Day.
Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), 210 Baronne
Street, New Orleans, Louisiana 70112, serves the Fund's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Trust. The
Adviser, through its Trust Group, makes the investment decisions for the assets
of the Fund and continuously reviews, supervises and administers the investment
programs of the Fund, subject to the supervision of, and policies established
by, the Trustees of the Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past seven years. The Adviser is a
wholly-owned subsidiary of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
7
<PAGE>
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the Federal Deposit Insurance Corporation or
issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .30% of the Fund's average daily net assets. The Adviser
may voluntarily waive a portion of its fee in order to limit the total
operating expenses of Trust Class shares of the Fund. The Adviser reserves the
right, in its sole discretion, to terminate this voluntary fee waiver at any
time. For the fiscal year ended September 30, 1994, the Adviser was paid an
advisory fee of .20% of the Fund's average net assets.
Gerald S. Dugal is an Assistant Vice President and the Investment Manager for
the Marquis Treasury Securities Money Market Fund, Institutional Money Market
Fund, and the Tax-Exempt Money Market Fund. Mr. Dugal has 10 years of
experience in investment trading, brokerage and research. He is licensed as a
series 7 securities principal and a series 53 municipal securities principal.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087, a wholly-owned subsidiary of SEI, and the Trust are
parties to an Administration Agreement (the "Administration Agreement"). Under
the terms of the Administration Agreement, the Administrator provides the Trust
with administrative services, other than investment advisory services,
including all regulatory reporting, necessary office space, equipment,
personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the Fund's average daily net assets.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
The Trust Class shares of the Funds are offered without distribution fees.
SEI Financial Services Company (the "Distributor"), 680 East Swedesford Road,
Wayne, PA 19087, a wholly-owned subsidiary of SEI Corporation ("SEI"), and the
Trust are parties to a distribution agreement ("Distribution Agreement").
The Fund may execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-day period which is then "annualized". That is, the amount of income
generated by an 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 is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect
of this assumed reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, 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
8
<PAGE>
deductions for administrative and management costs or to other investment
alternatives.
The performance of Trust Class shares will be higher than that of Cash Sweep
Class and Retail Class shares because of the distribution fees charged to Cash
Sweep Class and Retail Class shares.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences of an investment in the Fund may differ from the federal
income tax consequences described below. Additional information concerning
taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended. As long as the
Fund qualifies for this special tax treatment, it will be relieved of federal
income tax on that part of its net investment income (including, for this
purpose, net short-term capital gain) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) which it distributes
to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net realized capital gain will be
distributed at least annually and will be taxed to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares. The Fund
will make annual reports to shareholders of the federal income tax status of
all distributions.
Income received on Treasury Obligations is exempt from income tax at the state
level when received directly and may be exempt, depending on the state, when
received by a shareholder from the Fund provided certain conditions are
satisfied. Interest received on repurchase agreements collateralized by
Treasury Obligations normally is not exempt from state taxation. The Fund will
inform shareholders annually of the percentage of income and distributions
derived from Treasury Obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Fund is considered tax exempt in their particular states.
Certain securities purchased by a Fund (such as STRIPS) are sold with original
issue discount and do not make periodic cash interest payments. The Fund will
be required to include as part of its current income the accrued discount on
such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because the Fund distributes all of its
net investment income to its shareholders, the Fund may have to sell portfolio
securities to distribute such accrued income, which may occur at a time when
the Adviser would not have chosen to sell such securities and which may result
in a taxable gain or loss.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by the
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, if
paid by the Fund at any time during the following January.
9
<PAGE>
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Fund, the Trust offers the following funds: Government
Securities Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Growth Equity
Fund, Institutional Money Market Fund, Tax Exempt Money Market Fund and the
Value Equity Fund. All consideration received by the Trust for shares of any
fund and all assets of such fund belong to that fund and would be subject to
liabilities related thereto. The Trust reserves the right to create and issue
shares of additional funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management, administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of business on the record date will be entitled to receive the
dividend. Currently, capital gains of the Fund, if any, will be distributed at
least annually. Dividends are paid by the Fund in Federal funds or in
additional shares at the discretion of the shareholder on the first business
day of each month.
The amount of dividends payable on Trust Class shares will be more than the
dividends payable on Retail Class shares because of the distribution fees paid
by Retail Class shares.
10
<PAGE>
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. The Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. The 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.
SECURITIES LENDING--In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Treasury equal to at least 100% of the market value of the securities lent. The
Fund continues to receive interest on the securities lent while simultaneously
earning a portion of the return generated from the collateral (or a portion of
the return on the investment of cash collateral). Collateral is marked to
market daily. There may be risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially or become insolvent.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, the Fund will maintain with the
custodian a separate account with liquid high grade debt securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date and no interest accrues to
the Fund before settlement. These securities are subject to market fluctuation
due to changes in market interest rates and it is possible that the market
value at the time of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed. Although 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.
11
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
Financial Highlights........................................................ 4
The Trust................................................................... 5
Investment Objectives and Policies.......................................... 5
Investment Limitations...................................................... 5
Purchase of Shares.......................................................... 5
Exchanges................................................................... 6
Redemption of Shares........................................................ 6
The Adviser................................................................. 7
The Administrator........................................................... 8
The Shareholder Servicing Agent and Transfer Agent.......................... 8
The Distributor............................................................. 8
Performance................................................................. 8
Taxes....................................................................... 9
General Information......................................................... 10
Description of Permitted Investments and Risk Factors....................... 11
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
TREASURY SECURITIES MONEY MARKET FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers the Retail Class shares of the TREASURY
SECURITIES MONEY MARKET FUND (the "Fund"), a separate series of the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-801-1594. The Statement of Additional
Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING FIRST NATIONAL BANK OF COMMERCE IN NEW
ORLEANS OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
<PAGE>
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. This Summary provides basic information about the Retail Class
shares of the Trust's Treasury Securities Money Market Fund (the "Fund"). The
Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Fund seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income by investing exclusively in obligations issued by the
U.S. Treasury and in repurchase agreements involving such obligations. There
can be no assurance that the Fund will achieve its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The investment
policies of the Fund entail certain risks and considerations of which an
investor should be aware. While the Fund seeks to maintain a net asset value of
$1.00 per share, there can be no assurance that the Fund will be able to do
this on a continuous basis. There may be other risks involved in the ownership
of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its agencies
or instrumentalities of the securities in which the Fund invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Fund. The Trust's shares are not federally insured by the FDIC or
any other government agency.
For more information about the Fund, see "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
HOW DO I PURCHASE SHARES? Retail Class shares of the Fund are offered at net
asset value per share. Retail Class shares are subject to annual distribution
fees of .25% of the average daily net assets.
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in New
Orleans serves as the investment adviser of the Fund. See "Expense Summary" and
"The Adviser".
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder servicing
agent, transfer agent and dividend disbursing agent for the Trust. See "The
Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in federal funds or in additional shares at the discretion of the
shareholder on the first Business Day of each month. See "Dividends."
2
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES TREASURY SECURITIES MONEY MARKET FUND
RETAIL CLASS
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES TREASURY SECURITIES MONEY MARKET FUND
(as a percentage of average net assets) RETAIL CLASS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Advisory Fees (after fee waivers) (1) .20%
Administration Fees .20%
12b-1 Fees (after fee waivers)(1) .20%
Other Expenses .10%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2) .70%
================================================================================
</TABLE>
(1) Each of the Adviser and SEI Financial Services Company (the "Distributor")
has waived, on a voluntary basis, a portion of its fee, and the advisory
and 12b-1 fees shown reflect these voluntary waivers. Each of the Adviser
and the Distributor reserves the right to terminate its waiver at any time
in its sole discretion. Absent such waiver, the advisory fee for the Fund
would be .30%, and the 12b-1 fee for the Retail Class shares of the Fund
would be .25%.
(2) Absent the Adviser's and the Distributor's voluntary fee waivers, Total
Operating Expenses for Retail Class shares of the Fund would be .85%.
EXAMPLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Retail Class shares of
the Fund assuming (1) 5% annual return and (2)
redemption at the end of each time period: $7 $22 $39 $87
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by
investors in Retail Class shares of the Fund. The information set forth in the
foregoing table and example relates only to Retail Class shares. The Trust
also offers Trust Class shares and Cash Sweep Class shares of the Fund which
are subject to the same expenses except that Trust Class shares are not
charged distribution expenses and Cash Sweep Class shares are charged higher
distribution expenses than Retail Class shares. Shareholders purchasing shares
through a financial institution may be charged additional account fees by that
institution. Additional information may be found under "The Adviser," "The
Administrator," and "The Distributor."
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout the
year, insofar as they relate to the fiscal year ended September 30, 1994, have
been audited by Arthur Andersen LLP, independent public accountants, whose
report thereon was unqualified. This information should be read in conjunction
with the Trust's financial statements and notes thereto which are included in
the Statement of Additional Information under the heading "Financial
Information." Additional performance information is set forth in the Trust's
1994 Annual Report to Shareholders and is available upon request and without
charge by calling 1-800-471-1144.
For a Retail Class Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
REALIZED RATIO OF RATIO OF
AND EXPENSES NET INCOME
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ----------- ------------- --------- ------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1994(1) $1.00 0.03 0.00 (0.03) $1.00 3.15 %+ $86,848 0.59%* 3.27%* 0.83%* 3.03%*
<CAPTION>
PORTFOLIO
TURNOVER
RATE
---------
<S> <C>
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1994(1) N/A
</TABLE>
- --------
+ Total Return is for the period indicated and has been annualized.
* Annualized.
(1) Commenced operations on October 19, 1993.
4
<PAGE>
THE TRUST
MARQUIS FUNDS(R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in its Treasury Securities
Money Market Fund (the "Fund"), a diversified mutual fund, through three
separate classes: Trust Class, Retail Class and Cash Sweep Class which provide
for variations in distribution costs, voting rights and dividends. Except for
these differences between classes, each share of the Fund represents an
undivided, proportionate interest in the Fund. This Prospectus relates to the
Retail Class shares of the Fund. Information regarding the Trust Class and Cash
Sweep Class shares of the Fund and the Trust's other funds is contained in
separate prospectuses that may be obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objectives.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by a Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations maturing in 397
days or less. The Fund will attempt to maintain a net asset value of $1.00 per
share, although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit and in
repurchase agreements involving such obligations. The Fund may purchase
Treasury Obligations on a when-issued or delayed delivery basis. The Fund may
also engage in securities lending.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
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 (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities.
3. Make loans, except that the Fund may (i) purchase or hold debt instruments
in accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Retail Class shares of the Fund directly from the
Trust's shareholder servicing and transfer agent DST Systems, Inc. ("DST") by
mail, by wire, or through an automatic investment plan. Shares may also be
purchased through broker-dealers, including Marquis Investments, Inc., that
have established a dealer agreement with SEI Financial Services Company, the
Trust's distributor (the "Distributor"). Retail Class shares of the Fund are
sold on a continuous basis.
5
<PAGE>
BY MAIL
You may purchase Retail Class shares of the Fund by completing and signing an
Account Application form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "Marquis Funds (Treasury
Securities Money Market Fund)," to DST at 210 West 10th Street, Kansas City, MO
64105. You may purchase additional shares at any time by mailing payment to
DST. Orders placed by mail will be executed on receipt of your payment. If your
check does not clear, your purchase will be cancelled and you could be liable
for any losses or fees incurred.
You may obtain Account Application forms by calling 1-800-801-1594.
BY WIRE
You may purchase Retail Class shares of the Fund by wiring Federal funds,
provided that your Account Application has been previously received. You must
wire funds to DST and the wire instructions must include your account number.
You must call DST at 1-800-471-1144 before wiring any funds. An order to
purchase shares by Federal funds wire will be deemed to have been received by
the Fund on the Business Day (defined below) of the wire, provided that the
shareholder notifies DST prior to 12:00 noon, Central time. If DST does not
receive notice by 12:00 noon, Central time, on the Business Day of the wire,
the order will be executed on the next Business Day.
AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Fund through
automatic deductions by Automated Clearing House ("ACH") from a checking
account by completing an AIP Application Form. The minimum pre-authorized
investment amount is $50 per month. An AIP Application Form may be obtained by
contacting DST at 1-800-471-1144. The AIP is available only for additional
investments for an existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase Retail Class shares of the Fund on any day the New York Stock
Exchange is open for business ("Business Days"). However, shares of the Fund
cannot be purchased by Federal Reserve wire on Federal holidays restricting
wire transfers. The minimum initial investment in Retail Class shares of the
Fund is $2,500 ($500 minimum for individual retirement accounts and employees
of First National Bank of Commerce in New Orleans, the Fund's investment
adviser (the "Adviser") or its affiliates); however, the Distributor may waive
the minimum investment at its discretion. Subsequent purchases of shares must
be at least $100, except for purchases through the AIP and payroll deductions,
which must be at least $50.
A purchase order for shares will be effective, and eligible to receive
dividends declared that same day, on the Business Day the order is received by
DST if DST receives the order and payment before 12:00 noon, Central time. A
purchase order received (with payment) after this time will be effective on the
next Business Day. The purchase price of Retail Class shares of the Fund is the
net asset value per share next computed after the order is received and
accepted by the Trust. The Fund expects to maintain its net asset value per
share constant at $1.00. The net asset value per share of the Fund is
determined by dividing the total value of its investments and other assets,
less any liabilities, by its total outstanding shares. The Fund's net asset
value per share is calculated as of 3:00 p.m., Central time, each Business Day
and is based on the amortized cost method described in the Statement of
Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer registration of their shares
should contact DST at 1-800-471-1144.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons
6
<PAGE>
("Customers") through financial institutions may be held of record by the
financial institution. Financial institutions may impose an earlier cut-off
time for receipt of purchase orders directed through them to allow for
processing and transmittal of these orders to the Distributor for effectiveness
the same day. Customers should contact their financial institution for
information as to that institution's procedures for transmitting purchase,
exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish such change. Certain financial institutions may be
required under state law to register as broker/dealers.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
EXCHANGES
You may exchange your shares for Class A or Class B shares of other funds of
the Trust. You will be subject to the applicable sales charge on exchange
unless you qualify for a sales load waiver.
You must have received a current prospectus of the Trust's other fund into
which you wish to move your investment (the "new" fund) before the exchange
will be effected. Exchanges will be made only after instructions in writing or
by telephone (an "Exchange Request") are received by DST. If an Exchange
Request in good order is received by DST by 11:00 a.m. Central time, on any
Business Day, the exchange will occur on that day. The exchange privilege may
be exercised only in those states where the class or shares of the new fund may
legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The
institution will contact DST and effect the exchange on behalf of the Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that financial
institution for information on how to redeem shares. Shares cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, DST may require that the signature on the written redemption request be
guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union, securities exchange or association, clearing
agency or savings association. Notaries public cannot guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on your
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address of record or mailed or wired to a
commercial bank account previously designated on your Account Application.
There is no charge for having redemption proceeds mailed to you or to a
designated bank account, but there is a charge for wiring redemption proceeds.
7
<PAGE>
You may request a wire redemption for redemptions in excess of $500 by calling
DST at 1-800-471-1144, who will deduct a wire charge of $25 from the amount of
the wire redemption.
Neither the Trust nor DST will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and DST 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. When market conditions are extremely busy, it is possible that
you may experience difficulties placing redemption orders by telephone, and may
wish to place them by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Fund offers a Systematic Withdrawal Plan which you may use to receive
regular distributions from your 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 ACH of $100 or more on a monthly, quarterly,
semi-annual or annual basis. You may obtain a SWP Application Form by
contacting DST at 1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could
be exhausted entirely. You may change or cancel the SWP at any time on written
notice to DST.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per
share is determined as of 3:00 p.m., Central time, on each Business Day.
Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request. At various times, however, the
Fund may be requested to redeem shares for which it has not yet received good
payment; collection of payment may take 10 or more days. In such circumstances,
redemption proceeds will be held pending clearance of the check.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem your shares at their net asset value if, because
of redemptions, your account in the Fund has a value of less than the minimum
initial purchase amount (normally $2,500; $500 for individual retirement
accounts and for employees of the Adviser or its affiliates). Accordingly, if
you purchase shares of the Fund in only the minimum investment amount, you may
be subject to involuntary redemption if you redeem any shares. Before the Fund
exercises its right to redeem your shares, you will be given notice that the
value of the shares in your account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), 210 Baronne
Street, New Orleans, Louisiana 70112, acts as the Fund's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Trust. The
Adviser, through its Trust Group, makes the investment decisions for the assets
of the Fund and continuously reviews, supervises and administers the investment
programs of the Fund, subject to the supervision of, and policies established
by, the Trustees of the Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in
8
<PAGE>
discretionary investment management accounts for individuals, corporations and
institutions with widely varying investment needs and objectives. The Trust
Group has managed client accounts since 1933 and has managed money market
portfolios for the past seven years. The Adviser is a wholly-owned subsidiary
of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the Federal Deposit Insurance Corporation or
issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .30% of the Fund's average daily net assets. The Adviser
may voluntarily waive a portion of its fee in order to limit the total
operating expenses of Retail class shares of the Fund. The Adviser reserves the
right, in its sole discretion, to terminate this voluntary fee waiver at any
time. For the fiscal year ended September 30, 1994, the Adviser was paid an
advisory fee of .20% of the Fund's average net assets.
Gerald S. Dugal is an Assistant Vice President and the Investment Manager for
the Marquis Treasury Securities Money Market Fund, Institutional Money Market
Fund, and the Tax Exempt Money Market Fund. Mr. Dugal has 10 years of
experience in investment trading, brokerage and research. He is licensed as a
series 7 securities principal and a series 53 municipal securities principal.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087, a wholly-owned subsidiary of SEI, and the Trust are
parties to an Administration Agreement (the "Administration Agreement"). Under
the terms of the Administration Agreement, the Administrator provides the Trust
with administrative services, other than investment advisory services,
including all regulatory reporting, necessary office space, equipment,
personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the Fund's average daily net assets.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
The Retail Class shares of the Fund have a Rule 12b-1 distribution plan (the
"Retail Class Plan"), and the Trust and SEI Financial Services Company (the
"Distributor"), 680 East Swedesford Road, Wayne, PA 19087, a wholly-owned
subsidiary of SEI Corporation ("SEI"), have entered into a distribution
agreement (the "Distribution Agreement").
As provided in the Distribution Agreement and the Retail Class Plan, the Trust
pays the Distributor a fee at the annual rate of .25% of the average daily net
assets of the Retail Class shares of the Fund. This fee will be calculated and
paid each month based on average daily net assets for that month. The
Distributor from time to time may waive a portion of this distribution fee in
order to limit the distribution fee for Retail Class shares of the Fund. The
Distributor reserves the right in its sole discretion to terminate this
voluntary waiver at any time. The Trust Class shares of the Fund are offered
without a similar fee.
9
<PAGE>
The Distributor may use such fees to make payments to financial institutions
and intermediaries such as banks (including the Adviser and its affiliates),
savings and loan associations, insurance companies, and investment counselors,
broker-dealers, and the Distributor's affiliates (collectively, "financial
intermediaries") as compensation for shareholder services or as compensation to
the Distributor for its services. The Retail Class Plan is characterized as a
compensation plan since this fee will be paid to the Distributor without regard
to the shareholder service expenses incurred by the Distributor or the amount
of payments made to financial intermediaries. If the Distributor's expenses are
less than its fees, the Trust will still pay the full fee and the Distributor
will realize a profit, but the Trust will not be obligated to pay in excess of
the full fee, even if the Distributor's actual expenses are higher. The
Distributor has agreed, however, to pay the entire amount of the fee to
financial intermediaries for shareholder services.
The Fund may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-day period which is then "annualized". That is, the amount of income
generated by an 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 is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect
of this assumed reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, 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 or
to other investment alternatives.
The performance of Trust Class shares will be higher than that of Cash Sweep
Class and Retail Class shares because of the distribution fees charged to Cash
Sweep Class and Retail Class shares.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences of an investment in the Fund may differ from the federal
income tax consequences described below. Additional information concerning
taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended. As long as the
Fund qualifies for this special tax treatment, it will be relieved of federal
income tax on that part of its net investment income (including, for this
purpose, net short-term capital gain) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) which it distributes
to shareholders.
10
<PAGE>
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net realized capital gain will be
distributed at least annually and will be taxed to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares. The Fund
will make annual reports to shareholders of the federal income tax status of
all distributions.
Income received on Treasury Obligations is exempt from income tax at the state
level when received directly and may be exempt, depending on the state, when
received by a shareholder from the Fund provided certain conditions are
satisfied. Interest received on repurchase agreements collateralized by
Treasury Obligations normally is not exempt from state taxation. The Fund will
inform shareholders annually of the percentage of income and distributions
derived from Treasury Obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Fund is considered tax exempt in their particular states.
Certain securities purchased by the Fund (such as STRIPS) are sold with
original issue discount and do not make periodic cash interest payments. The
Fund will be required to include as part of its current income the accrued
discount on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
portfolio securities to distribute such accrued income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by the
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, if
paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Fund, the Trust offers the following funds: Government
Securities Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Tax Exempt
Money Market Fund, Institutional Money Market Fund, Growth Equity Fund and the
Value Equity Fund. All consideration received by the Trust for shares of any
fund and all assets of such fund belong to that fund and would be subject to
liabilities related thereto. The Trust reserves the right to create and issue
shares of additional funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management, administrative and shareholder services to the Trust.
11
<PAGE>
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of business on the record date will be entitled to receive the
dividend. Currently, capital gains of the Fund, if any, will be distributed at
least annually. Dividends are paid by the Fund in Federal funds or in
additional shares at the discretion of the shareholder on the first business
day of each month.
The amount of dividends payable on Trust Class shares will be more than the
dividends payable on Retail Class shares because of the distribution fees paid
by Retail Class shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements
12
<PAGE>
must be fully collateralized at all times. The Fund bears a risk of loss in the
event the other party defaults on its obligations and the Fund is delayed or
prevented from its right to dispose of the collateral. The 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.
SECURITIES LENDING--In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Treasury equal to at least 100% of the market value of the securities lent. The
Fund continues to receive interest on the securities lent while simultaneously
earning a portion of the return generated from the collateral (or a portion of
the return on the investment of cash collateral). Collateral is marked to
market daily. There may be risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially or become insolvent.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, the Fund will maintain with the
custodian a separate account with liquid high grade debt securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date and no interest accrues to
the Fund before settlement. These securities are subject to market fluctuation
due to changes in market interest rates and it is possible that the market
value at the time of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed. Although 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.
13
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary............................... 2
Expense Summary....................... 3
The Trust............................. 5
Investment Objectives and Policies.... 5
Investment Limitations................ 5
Purchase of Shares.................... 5
Exchanges............................. 7
Redemption of Shares.................. 7
The Adviser........................... 8
The Administrator..................... 9
The Shareholder Servicing Agent and
Transfer Agent....................... 9
The Distributor....................... 9
Performance........................... 10
Taxes................................. 10
General Information................... 11
Description of Permitted Investments
and Risk Factors..................... 12
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
TREASURY SECURITIES MONEY MARKET FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers the Cash Sweep Class shares of the
TREASURY SECURITIES MONEY MARKET FUND (the "Fund"), a separate series of the
Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-801-1594. The Statement of Additional
Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING, FIRST NATIONAL BANK OF COMMERCE IN NEW
ORLEANS OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
<PAGE>
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. This Summary provides basic information about the Cash Sweep Class
shares of the Trust's Treasury Securities Money Market Fund (the "Fund"). The
Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Fund seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income by investing exclusively in obligations issued by the
U.S. Treasury and in repurchase agreements involving such obligations. There
can be no assurance that the Fund will achieve its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The investment
policies of the Fund entail certain risks and considerations of which an
investor should be aware. While the Fund seeks to maintain a net asset value of
$1.00 per share, there can be no assurance that the Fund will be able to do
this on a continuous basis. There may be other risks involved in the ownership
of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its agencies
or instrumentalities of the securities in which the Fund invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Fund. The Trust's shares are not federally insured by the FDIC or
any other government agency.
For more information about the Fund, see "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
HOW DO I PURCHASE SHARES? Cash Sweep Class shares of the Fund are offered at
net asset value per share. Cash Sweep Class shares are subject to annual
distribution and service fees of .60% of the average daily net assets.
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in New
Orleans serves as the investment adviser of the Fund. See "Expense Summary" and
"The Adviser."
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder servicing
agent, transfer agent and dividend disbursing agent for the Trust. See "The
Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in federal funds or in additional shares at the discretion of the
shareholder on the first Business Day of each month. See "Dividends."
2
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES TREASURY SECURITIES MONEY MARKET FUND
CASH SWEEP CLASS
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES TREASURY SECURITIES MONEY MARKET FUND
(as a percentage of average net assets) CASH SWEEP CLASS
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Advisory Fees (after fee waivers) (1) .20%
Administration Fees .20%
12b-1 Fees (after fee waivers)(1) .60%
Other Expenses .10%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2) 1.10%
================================================================================
</TABLE>
(1) Each of the Adviser and SEI Financial Services Company (the "Distributor")
has waived, on a voluntary basis, a portion of its fee, and the advisory
and 12b-1 fees shown reflect these voluntary waivers. Each of the Adviser
and the Distributor reserves the right to terminate its waiver at any time
in its sole discretion. Absent such waiver, the advisory fee for the Fund
would be .30%, and the 12b-1 fee for the Cash Sweep Class shares of the
Fund would be .75%.
(2) Absent the Adviser's and the Distributor's voluntary fee waivers, Total
Operating Expenses for Cash Sweep Class shares of the Fund would be 1.35%.
EXAMPLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Cash Sweep Class shares
of the Fund assuming (1) 5% annual return and
(2) redemption at the end of each time period: $11 $35 $60 $134
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by
investors in Cash Sweep Class shares of the Fund. Shareholders purchasing
shares through a financial institution may be charged additional account fees
by that institution. The information set forth in the foregoing table and
example relates only to Cash Sweep Class shares. The Trust also offers Trust
Class shares and Retail Class shares of the Fund which are subject to the same
expenses except that Trust Class shares are not charged distribution expenses
and Retail Class shares are charged lower distribution expenses than the Cash
Sweep Class shares. Additional information may be found under "The Adviser,"
"The Administrator," and "The Distributor."
3
<PAGE>
THE TRUST
MARQUIS FUNDS(R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in its Treasury Securities
Money Market Fund (the "Fund"), a diversified mutual fund, through three
separate classes: Trust Class, Retail Class, and Cash Sweep Class, which
provide for variations in distribution costs, voting rights and dividends.
Except for differences between classes, each share of the Fund represents an
undivided, proportionate interest in the Fund. This Prospectus relates to the
Cash Sweep Class shares of the Fund. Information regarding the Trust Class and
Retail Class shares of the Fund and the Trust's other funds is contained in
separate prospectuses that may be obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objectives.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by a Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations maturing in 397
days or less. The Fund will attempt to maintain a net asset value of $1.00 per
share, although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit and in
repurchase agreements involving such obligations. The Fund may purchase
Treasury Obligations on a when-issued or delayed delivery basis. The Fund may
also engage in securities lending.
For additional information regarding risks and permitted investments,
investment practices and risks, see "Description of Permitted Investments and
Risk Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
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 (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities.
3. Make loans, except that the Fund may (i) purchase or hold debt instruments
in accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase Cash Sweep Class shares of the Fund directly from the
Trust's shareholder servicing and transfer agent DST Systems, Inc. ("DST") by
mail, by wire, or through an automatic investment plan. Shares may also be
purchased through broker-dealers, including Marquis Investments, Inc., that
have established a dealer
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agreement with SEI Financial Services Company, the Trust's distributor (the
"Distributor"). Cash Sweep Class shares of the Fund are sold on a continuous
basis.
BY MAIL
You may purchase Cash Sweep Class shares of the Fund by completing and signing
an Account Application form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "Marquis Funds (Treasury
Securities Money Market Fund)," to DST at 210 West 10th Street, Kansas City, MO
64105. You may purchase additional shares at any time by mailing payment to
DST. Orders placed by mail will be executed on receipt of your payment. If your
check does not clear, your purchase will be cancelled and you could be liable
for any losses or fees incurred.
You may obtain Account Application forms by calling 1-800-801-1594.
BY WIRE
You may purchase Cash Sweep Class shares of the Fund by wiring Federal funds,
provided that your Account Application has been previously received. You must
wire funds to DST and the wire instructions must include your account number.
You must call DST at 1-800-471-1144 before wiring any funds. An order to
purchase shares by Federal funds wire will be deemed to have been received by
the Fund on the Business Day (defined below) of the wire, provided that the
shareholder notifies DST prior to 12:00 noon, Central time. If DST does not
receive notice by 12:00 noon, Central time, on the Business Day of the wire,
the order will be executed on the next Business Day.
AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Fund through
automatic deductions by Automated Clearing House ("ACH") from a checking
account by completing an AIP Application Form. The minimum pre-authorized
investment amount is $50 per month. An AIP Application Form may be obtained by
contacting DST at 1-800-471-1144. The AIP is available only for additional
investments for an existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase Cash Sweep Class shares of the Fund on any day the New York
Stock Exchange is open for business ("Business Days"). However, shares of the
Fund cannot be purchased by Federal Reserve wire on Federal holidays
restricting wire transfers. The minimum initial investment in Cash Sweep Class
shares of the Fund is $2,500 ($500 minimum for individual retirement accounts
and employees of First National Bank of Commerce in New Orleans, the Fund's
investment adviser (the "Adviser") or its affiliates); however, the Distributor
may waive the minimum investment at its discretion. Subsequent purchases of
shares must be at least $100, except for purchases through the AIP and payroll
deductions, which must be at least $50.
A purchase order for shares will be effective, and eligible to receive
dividends declared that same day, on the Business Day the order is received by
DST if DST receives the order and payment before 12:00 noon, Central time. A
purchase order received (with payment) after this time will be effective on the
next Business Day. The purchase price of Cash Sweep Class shares of the Fund is
the net asset value per share next computed after the order is received and
accepted by the Trust. The Fund expects to maintain its net asset value per
share constant at $1.00. The net asset value per share of the Fund is
determined by dividing the total value of its investments and other assets,
less any liabilities, by its total outstanding shares. The Fund's net asset
value per share is calculated as of 3:00 p.m., Central time, each Business Day
and is based on the amortized cost method described in the Statement of
Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer registration of their shares
should contact DST at 1-800-471-1144.
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PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held of record by the financial institution. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Distributor
for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish such change. Certain financial institutions may be
required under state law to register as broker/dealers.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
EXCHANGES
You may exchange your shares for Trust Class or Retail Class shares of the Fund
or Class A or Class B shares of any other fund of the Trust. You will be
subject to the applicable sales charge on exchange unless you qualify for a
sales load waiver.
You must have received a current prospectus of the class of shares of the fund
into which you wish to move your investment (the "new" fund) before the
exchange will be effected. Exchanges will be made only after instructions in
writing or by telephone (an "Exchange Request") are received by DST. If an
Exchange Request in good order is received by DST by 11:00 a.m. Central time,
on any Business Day, the exchange will occur on that day. The exchange
privilege may be exercised only in those states where the class or shares of
the new fund may legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The
institution will contact DST and effect the exchange on behalf of the Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that financial
institution for information on how to redeem shares. Shares cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, DST may require that the signature on the written redemption request be
guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union, securities exchange or association, clearing
agency or savings association. Notaries public cannot guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on your
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption.
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<PAGE>
You may have the proceeds mailed to your address of record or mailed or wired
to a commercial bank account previously designated on your Account Application.
There is no charge for having redemption proceeds mailed to you or to a
designated bank account, but there is a charge for wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
DST at 1-800-471-1144, who will deduct a wire charge of $25 from the amount of
the wire redemption.
Neither the Trust nor DST will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and DST 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. When market conditions are extremely busy, it is possible that
you may experience difficulties placing redemption orders by telephone, and may
wish to place them by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Fund offers a Systematic Withdrawal Plan which you may use to receive
regular distributions from your 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 ACH of $100 or more on a monthly, quarterly,
semi-annual or annual basis. You may obtain a SWP Application Form by
contacting DST at 1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could
be exhausted entirely. You may change or cancel the SWP at any time on written
notice to DST.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per
share is determined as of 3:00 p.m., Central time, on each Business Day.
Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request. At various times, however, the
Fund may be requested to redeem shares for which it has not yet received good
payment; collection of payment may take 10 or more days. In such circumstances,
redemption proceeds will be held pending clearance of the check.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem your shares at their net asset value if, because
of redemptions, your account in the Fund has a value of less than the minimum
initial purchase amount (normally $2,500; $500 for individual retirement
accounts and for employees of the Adviser or its affiliates). Accordingly, if
you purchase shares of the Fund in only the minimum investment amount, you may
be subject to involuntary redemption if you redeem any shares. Before the Fund
exercises its right to redeem your shares, you will be given notice that the
value of the shares in your account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), serves as the
Fund's investment adviser. The Adviser, through its Trust Group, makes the
investment decisions for the assets of the Fund and continuously reviews,
supervises and administers the investment programs of the Fund,
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subject to the supervision of, and policies established by, the Trustees of the
Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past seven years. The Adviser is a
wholly-owned subsidiary of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the Federal Deposit Insurance Corporation or
issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .30% of the Fund's average daily net assets. The Adviser
may voluntarily waive a portion of its fee in order to limit the total
operating expenses of the Cash Sweep Class shares of the Fund. The Adviser
reserves the right, in its sole discretion, to terminate this voluntary fee
waiver at any time. For the fiscal year ended September 30, 1994, the Adviser
was paid an advisory fee of .20% of the Fund's average net assets.
Gerald S. Dugal is an Assistant Vice President and the Investment Manager for
the Marquis Treasury Securities Money Market Fund, Institutional Money Market
Fund, and the Tax Exempt Money Market Fund. Mr. Dugal has 10 years of
experience in investment trading, brokerage and research. He is licensed as a
series 7 securities principal and a series 53 municipal securities principal.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087 a wholly-owned subsidiary of SEI provides the Trust with
administrative services, including fund accounting, regulatory reporting,
necessary office space, equipment, personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the Fund's average daily net assets.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
transfer agent, dividend disbursing agent and shareholder servicing agent for
the Trust.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary
of SEI Corporation ("SEI"), serves as distributor. The Cash Sweep Class shares
of the Fund have a Rule 12b-1 distribution plan (the "Cash Sweep Class Plan").
As provided in the Distribution Agreement and the Cash Sweep Class Plan, the
Trust will pay the Distributor a fee at the annual rate of .75% of the average
daily net assets of the Cash Sweep Class shares of the Fund. This fee will be
calculated and paid each month based on average daily net assets for that
month. The Distributor from time to time may waive a portion of this
distribution fee in order to limit the distribution fee for Cash Sweep Class
shares of the Fund. The Distributor reserves the right in its sole discretion
to terminate this voluntary waiver at any time. The Retail Class and Cash Sweep
Class shares of the Fund are offered with different fees.
The Distributor may use such fees to make payments to financial institutions
and
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intermediaries such as banks (including the Adviser and its affiliates),
savings and loan associations, insurance companies, and investment counselors,
broker-dealers, and the Distributor's affiliates (collectively, "financial
intermediaries") as compensation for shareholder services or as compensation to
the Distributor for its services. The Cash Sweep Class Plan is characterized as
a compensation plan since this fee will be paid to the Distributor without
regard to the distribution assistance or shareholder service expenses incurred
by the Distributor or the amount of payments made to financial intermediaries.
If the Distributor's expenses are less than its fees, the Trust will still pay
the full fee and the Distributor will realize a profit, but the Trust will not
be obligated to pay in excess of the full fee, even if the Distributor's actual
expenses are higher. The Distributor has agreed, however, to pay the entire
amount of the fee to financial intermediaries for shareholder services.
The Fund may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-day period which is then "annualized". That is, the amount of income
generated by an 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 is assumed to be reinvested. The "effective yield" will
be slightly higher than the "current yield" because of the compounding effect
of this assumed reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, 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 or
to other investment alternatives.
The performance of Trust Class and Retail Class shares will be higher than that
of Cash Sweep Class shares because of the additional distribution fees charged
to Cash Sweep Class shares.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences of an investment in the Fund may differ from the federal
income tax consequences described below. Additional information concerning
taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended. As long as the
Fund qualifies for this special tax treatment, it will be relieved of federal
income tax on that part of its net investment income (including, for this
purpose, net short-term capital gain) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) which it distributes
to shareholders.
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TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net realized capital gain will be
distributed at least annually and will be taxed to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares. The Fund
will make annual reports to shareholders of the federal income tax status of
all distributions.
Income received on Treasury Obligations is exempt from income tax at the state
level when received directly and may be exempt, depending on the state, when
received by a shareholder from the Fund provided certain conditions are
satisfied. Interest received on repurchase agreements collateralized by
Treasury Obligations normally is not exempt from state taxation. The Fund will
inform shareholders annually of the percentage of income and distributions
derived from Treasury Obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Fund is considered tax exempt in their particular states.
Certain securities purchased by the Fund (such as STRIPS) are sold with
original issue discount and do not make periodic cash interest payments. The
Fund will be required to include as part of its current income the accrued
discount on such obligations even though the Fund has not received any interest
payments on such obligations during that period. Because the Fund distributes
all of its net investment income to its shareholders, the Fund may have to sell
portfolio securities to distribute such accrued income, which may occur at a
time when the Adviser would not have chosen to sell such securities and which
may result in a taxable gain or loss.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by the
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, if
paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Fund, the Trust offers the following funds: Government
Securities Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Institutional
Money Market Fund, Tax Exempt Money Market Fund, Growth Equity Fund and the
Value Equity Fund. All consideration received by the Trust for shares of any
fund and all assets of such fund belong to that fund and would be subject to
liabilities related thereto. The Trust reserves the right to create and issue
shares of additional funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management, administrative and shareholder services to the Trust.
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VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240 or by calling 1-800-471-1144.
DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is determined and declared on each Business Day as a dividend for
shareholders of record as of the close of business on that day. Shareholders
who own shares at the close of business on the record date will be entitled to
receive the dividend. Currently, capital gains of the Fund, if any, will be
distributed at least annually. Dividends are paid by the Fund in Federal funds
or in additional shares at the discretion of the shareholder on the first
business day of each month.
The amount of dividends payable on Trust Class and Retail Class shares will be
more than the dividends payable on Cash Sweep Class shares because of the
additional distribution fees paid by Cash Sweep Class shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements
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must be fully collateralized at all times. The Fund bears a risk of loss in the
event the other party defaults on its obligations and the Fund is delayed or
prevented from its right to dispose of the collateral. The 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.
SECURITIES LENDING--In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Treasury equal to at least 100% of the market value of the securities lent. The
Fund continues to receive interest on the securities lent while simultaneously
earning a portion of the return generated from the collateral (or a portion of
the return on the investment of cash collateral). Collateral is marked to
market daily. There may be risks of delay in recovery of the securities or even
loss of rights in the collateral should the borrower of the securities fail
financially or become insolvent.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, the Fund will maintain with the
custodian a separate account with liquid high grade debt securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date and no interest accrues to
the Fund before settlement. These securities are subject to market fluctuation
due to changes in market interest rates and it is possible that the market
value at the time of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed. Although 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.
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary............................... 2
Expense Summary....................... 3
The Trust............................. 4
Investment Objectives and Policies.... 4
Investment Limitations................ 4
Purchase of Shares.................... 4
Exchanges............................. 6
Redemption of Shares.................. 6
The Adviser........................... 7
The Administrator..................... 8
The Shareholder Servicing Agent and
Transfer Agent....................... 8
The Distributor....................... 8
Performance........................... 9
Taxes................................. 9
General Information................... 10
Description of Permitted Investments
and Risk Factors..................... 11
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
. GOVERNMENT SECURITIES FUND
. LOUISIANA TAX-FREE INCOME FUND
. BALANCED FUND
. VALUE EQUITY FUND
. GROWTH EQUITY FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers Class A and Class B shares of the
following funds (the "Funds" and each a "Fund"), each of which is a separate
series of the Trust:
Class A shares are sold with a front-end sales load that will be reduced or
waived in certain circumstances. Class B shares are sold subject to annual
distribution and service fees and a contingent deferred sales charge that is
eliminated five years after purchase, at which point the Class B shares
automatically convert into Class A shares.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in any of the
Funds. Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-801-1594. The Statement of Additional
Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING, FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
- --------------------------------------------------------------------------------
, 1996
<PAGE>
2
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end, management investment
company providing a convenient way to invest in professionally managed
portfolios of securities. This summary provides basic information about the
Class A and the Class B shares of the Trust's Government Securities Fund,
Louisiana Tax-Free Income Fund (these two, collectively, the "Fixed Income
Funds"), Balanced Fund (formerly the Growth and Income Fund), Value Equity
Fund, and Growth Equity Fund (these three, collectively, the "Equity Funds")
(each of these five a "Fund"). Each Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF EACH FUND? The GOVERNMENT
SECURITIES FUND seeks to provide current income consistent with relative
stability of capital by investing primarily in U.S. Government securities. The
LOUISIANA TAX-FREE INCOME FUND seeks to provide a level of current income
consistent with relative stability of capital by investing primarily in
investment grade securities the interest on which is exempt from federal
income tax and Louisiana personal income taxes and is not a preference item
for purposes of the alternative minimum tax. The BALANCED FUND seeks to
provide capital appreciation and current income through the regular payment of
dividends and interest by investing in a combination of equity, fixed income
and money market instruments. The VALUE EQUITY FUND seeks to provide long-term
capital appreciation by investing primarily in equity securities of
established companies that have a market capitalization in excess of $500
million and have the potential for capital appreciation. The GROWTH EQUITY
FUND seeks to provide long-term capital appreciation by investing primarily in
equity securities of established companies with market capitalization in
excess of $300 million that have the potential for long-term capital
appreciation and growth potential. There can be no assurance that any Fund
will achieve its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUNDS? The investment
policies of each Fund entail certain risks and considerations of which an
investor should be aware. Values of fixed income securities and,
correspondingly, share prices of Funds invested in such securities, tend to
vary inversely with interest rates and may be affected by other market and
economic factors as well. The Louisiana Tax-Free Income Fund, which is a non-
diversified fund, will invest primarily in Louisiana municipal securities.
Both Fixed Income Funds and the Balanced Fund may also invest in securities
that have speculative characteristics. The Balanced, Value Equity and Growth
Equity Funds may purchase equity securities that are volatile and may
fluctuate in value more than other types of investments.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its
agencies or instrumentalities of the securities in which any Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of the security or the
yield or value of shares of that Fund. The Trust's shares are not federally
insured by the FDIC or any other government agency.
For more information about each Fund, see "Investment Objectives and
Policies," "General Investment Policies," and "Description of Permitted
Investments and Risk Factors."
HOW DO I PURCHASE SHARES? The Funds offer two classes of shares to the
general public: Class A shares and Class B shares.
Class A shares are offered at net asset value per share plus a maximum
initial sales charge of 3.50%. Certain purchases of Class A shares qualify for
waived or reduced initial sales charges. Class A shares of the Funds are not
subject to sales charges at the time of redemption and are not assessed any
annual distribution fees.
Class B shares are offered at net asset value per share and are subject to a
maximum contingent deferred sales charge of 3.50% of redemption proceeds
during the first year, declining each year thereafter to 0% after the fifth
year. Class B shares of the Funds pay annual distribution and service fees of
.75% of their average daily net assets. Class B shares convert automatically
to Class A shares five years after the beginning of the calendar month in
which the shareholder's purchase order was accepted. For more information on
Class A and Class B shares, see "How to Purchase Shares," "Alternative Sales
Charge Options" and "The Distributor."
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in
New Orleans (the "Adviser") serves as the Adviser to each Fund. See "Expense
Summary" and "The Adviser."
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
Administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as transfer agent,
dividend disbursing agent and shareholder servicing agent for the Trust. See
"The Shareholder Servicing Agent and Transfer Agent".
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor
of the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of each Fund is distributed in the form of
periodic dividends. Any net realized capital gain is distributed at least
annually. Distributions are paid in additional shares unless the shareholder
elects to take the payment in cash. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
<CAPTION>
ALL FUNDS
SHAREHOLDER TRANSACTION EXPENSES CLASS A
- --------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) 3.50%
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage
of offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LOUISIANA
GOVERNMENT TAX-FREE
SECURITIES INCOME BALANCED VALUE EQUITY GROWTH EQUITY
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fees (after fee
waivers) (1) .35% .00% .45% .47% .59%
Administration Fees (af-
ter fee waivers) (1) .20% .00% .20% .20% .20%
12b-1 Fees .00% .00% .00% .00% .00%
Other Expenses .15% .65%(2) .20% .23% .21%(3)
- -----------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers) (4) .70% .65% .85% .90% 1.00%
===================================================================================
</TABLE>
(1) The Adviser has waived, on a voluntary basis, a portion of its fee, and
the advisory fees shown reflect this voluntary waiver. The Adviser
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, advisory fees would be as follows:
Government Securities Fund--.55%; Louisiana Tax-Free Income Fund--.35%;
Balanced Fund--.74%, Value Equity Fund--.74% and Growth Equity Fund--.74%.
The Administrator waived all of its fee for the Louisiana Tax-Free Income
Fund. Absent such waiver, the administration fee would be .20%.
(2) Other Expenses for the Louisiana Tax-Free Income Fund reflects the
Advisers reimbursement of expenses of .52% of the Fund's average daily net
assets.
(3) Other Expenses for the Growth Equity Fund are based on estimated amounts
for the current fiscal year.
(4) Absent the Adviser's and, with respect to the Louisiana Tax-Free Income
Fund, Administrator's voluntary fee waiver, Total Operating Expenses for
Class A shares would be as follows: Government Securities Fund--.90%;
Louisiana Tax-Free Income Fund--1.72%; Balanced Fund--1.14%, Value Equity
Fund--1.17% and Growth Equity Fund--1.15%.
EXAMPLE
- ------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on
a $1,000 investment in Class A shares
assuming (1) imposition of the maximum
sales load; (2) 5% annual return and
(3) redemption at the end of each time
period:
Government Securities Fund $42 $57 $73 $119
Louisiana Tax-Free Income Fund $41 $55 $70 $113
Balanced Fund $43 $61 $80 $136
Value Equity Fund $44 $63 $83 $142
Growth Equity Fund $45 $66 $88 $153
========================================================================
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the foregoing table and example is to assist the investor in
understanding the various costs and expenses that may be directly or
indirectly borne by investors in Class A shares of the Funds. Shareholders
purchasing shares through a financial institution may be charged additional
account fees by that institution. The information set forth in the foregoing
table and example relates only to Class A shares. Additional information may
be found under "The Adviser," "The Administrator," and "The Distributor."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Alternative Sales Charge Options-Class
A Shares."
<PAGE>
4
<TABLE>
<CAPTION>
ALL FUNDS
SHAREHOLDER TRANSACTION EXPENSES CLASS B
- -------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price) None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase price or redemption proceeds,
as applicable) 3.50%
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LOUISIANA
GOVERNMENT TAX-FREE
SECURITIES INCOME BALANCED VALUE EQUITY GROWTH EQUITY
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Advisory Fees (after fee
waivers) (1) .35% .00% .45% .47% .59%
Administration Fees
(after fee waivers) (1) .20% .00% .20% .20% .20%
12b-1 Fees .75% .75% .75% .75% .75%
Other Expenses .15% .65%(2) .20% .23% .21%(3)
- ------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers) (4) 1.45% 1.40% 1.60% 1.65% 1.75%
====================================================================================
</TABLE>
(1) The Adviser has waived, on a voluntary basis, a portion of its fee, and
the advisory fees shown reflect this voluntary waiver. The Adviser
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, advisory fees would be as follows:
Government Securities Fund--.55%; Louisiana Tax-Free Income Fund--.35%;
Balanced Fund--.74%, Value Equity Fund--.74% and Growth Equity Fund--.74%.
The Administrator waived all of its fee for the Louisiana Tax-Free Income
Fund. Absent such waiver the administration fee would be .20%.
(2) Other Expenses for the Louisiana Tax Free Income Fund reflects the
Advisers reimbursement of expense of .52% of the Fund's average daily net
assets.
(3) Other Expenses for the Growth Equity Fund are based on estimated amounts
for the current fiscal year.
(4) Absent the Adviser's and, with respect to the Louisiana Tax-Free Income
Fund Administrator's, voluntary fee waiver, Total Operating Expenses for
Class B shares would be as follows: Government Securities Fund--1.65%;
Louisiana Tax-Free Income Fund--2.47%; Balanced Fund--1.89%; Value Equity
Fund--1.92% and Growth Equity Fund--1.90%.
EXAMPLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in Class B shares assuming
(1) deduction of the maximum contingent
deferred sales charge applicable and (2) 5%
annual return:
Government Securities Fund
Assuming a complete redemption at end
of period $50 $66 $ 84 $174
Assuming no redemptions $15 $46 $ 79 $174
Louisiana Tax-Free Income Fund
Assuming a complete redemption at end
of period $49 $64 $ 82 $168
Assuming no redemptions $14 $44 $ 77 $168
Balanced Fund
Assuming a complete redemption at end
of period $51 $70 $ 92 $190
Assuming no redemptions $16 $50 $ 87 $190
Value Equity Fund
Assuming a complete redemption at end
of period $52 $72 $ 95 $195
Assuming no redemptions $17 $52 $ 90 $195
Growth Equity Fund
Assuming a complete redemption at end
of period $53 $75 $100 $206
Assuming no redemptions $18 $55 $ 95 $206
==============================================================================
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the foregoing table and example is to assist the investor in
understanding the various costs and expenses that may be directly or
indirectly borne by investors in Class B shares of the Funds. The information
set forth in the foregoing table and example relates only to Class B shares.
Additional information may be found under "The Adviser," "The Administrator,"
and "The Distributor."
Long-term Class B shareholders may eventually pay more than the economic
equivalent of the maximum front-end sales charges otherwise permitted by
National Association of Securities Dealers, Inc.'s Rules of Fair Practice.
<PAGE>
5
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout the year,
insofar as they relate to the fiscal year ended September 30, 1994, have been
audited by Arthur Andersen LLP, independent public accountants, whose report
thereon was unqualified. This information should be read in conjunction with
the Trust's financial statements and notes thereto which are included in the
Statement of Additional Information under the heading "Financial Information."
Additional performance information is set forth in the Trust's 1994 Annual
Report to Shareholders and is available upon request and without charge by
calling 1-800-471-1144. The Growth Equity Fund did not commence operations at
September 30, 1994.
For a Class A Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
REALIZED RATIO OF RATIO OF
AND EXPENSES NET INCOME
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ----------- ------------- --------- ------- ---------- ---------- ---------- ---------- ----------
GOVERNMENT SECURITIES FUND CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 0.43 (0.59) (0.43) $9.41 (1.66)%+ $97,562 0.70% 4.43% 0.90% 4.23%
<CAPTION>
LOUISIANA TAX-FREE INCOME FUND CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 0.36 (0.62) (0.36) $9.38 (2.68)%+ $ 6,971 0.65% 4.10% 1.72% 3.03%
<CAPTION>
BALANCED FUND CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 0.31 (0.41) (0.31) $9.59 (1.02)%+ $71,379 0.85% 3.18% 1.14% 2.89%
<CAPTION>
VALUE EQUITY FUND CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $10.00 0.18 (0.35) (0.18) $9.65 (1.64)%+ $41,922 0.90% 1.95% 1.17% 1.68%
<CAPTION>
PORTFOLIO
TURNOVER
RATE
---------
GOVERNMENT SECURITIES FUND CLASS A
<S> <C>
1994 37.80%
<CAPTION>
LOUISIANA TAX-FREE INCOME FUND CLASS A
<S> <C>
1994 30.31%
<CAPTION>
BALANCED FUND CLASS A
<S> <C>
1994 64.09%
<CAPTION>
VALUE EQUITY FUND CLASS A
<S> <C>
1994 161.42%
</TABLE>
- --------
+ Returns, excluding sales charges, are for the period indicated and have been
annualized.
<PAGE>
6
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout the year,
insofar as they relate to the fiscal year ended September 30, 1994, have been
audited by Arthur Andersen LLP, independent public accountants, whose report
thereon was unqualified. This information should be read in conjunction with
the Trust's financial statements and notes thereto which are included in the
Statement of Additional Information under the heading "Financial Information."
Additional performance information is set forth in the Trust's 1994 Annual
Report to Shareholders and is available upon request and without charge by
calling 1-800-471-1144. The Growth Equity Fund did not commence operations at
September 30, 1994.
For a Class B Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
REALIZED RATIO OF
AND EXPENSES
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS)
--------- ---------- ----------- ------------- --------- ------- ---------- ---------- ---------- ----------
GOVERNMENT SECURITIES FUND CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(1) $10.04 0.31 (0.58) (0.31) $9.46 (2.84)%+ $147 1.45%* 3.88%* 1.69%*
<CAPTION>
LOUISIANA TAX-FREE INCOME FUND CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(2) $ 9.87 0.27 (0.48) (0.27) $9.39 (2.58)%+ $601 1.40%* 3.35%* 2.47%*
<CAPTION>
BALANCED FUND CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(1) $10.03 0.18 (0.39) (0.18) $9.64 (2.24)%+ $868 1.60%* 2.55%* 1.94%*
<CAPTION>
VALUE EQUITY FUND CLASS B
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994(1) $ 9.95 0.08 (0.25) (0.08) $9.70 (1.82)%+ $389 1.65%* 1.30%* 1.93%*
<CAPTION>
RATIO OF
NET INCOME
TO AVERAGE
NET ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
---------- ---------
GOVERNMENT SECURITIES FUND CLASS B
<S> <C> <C>
1994(1) 3.64%* 37.80%
<CAPTION>
LOUISIANA TAX-FREE INCOME FUND CLASS B
<S> <C> <C>
1994(2) 2.28%* 30.31%
<CAPTION>
BALANCED FUND CLASS B
<S> <C> <C>
1994(1) 2.21%* 64.09%
<CAPTION>
VALUE EQUITY FUND CLASS B
<S> <C> <C>
1994(1) 1.02%* 161.42%
</TABLE>
- --------
+ Returns, excluding sales charges, are for the period indicated and have been
annualized.
* Annualized.
(1) Commenced operations on October 22, 1993.
(2) Commenced operations on November 22, 1993.
<PAGE>
7
THE TRUST
MARQUIS FUNDS(R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in the Funds through two
separate classes, Class A and Class B, which provide for variations in sales
charges, distribution costs, voting rights and dividends. Except for these
differences between classes, each share of each Fund represents an undivided,
proportionate interest in that Fund. Each Fund is a diversified mutual fund,
except for the Louisiana Tax-Free Income Fund, which is non-diversified.
Information regarding shares of the Trust's Treasury Securities Money Market
Fund, Institutional Money Market Fund and Tax Exempt Money Market Fund (the
"Money Market Funds") is contained in separate prospectuses that may be
obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
THE GOVERNMENT SECURITIES FUND seeks to provide current income consistent with
relative stability of capital.
Under normal conditions, the Fund will invest at least 65% of its total assets
in obligations issued or guaranteed as to principal and interest by the U.S.
Government or its agencies and instrumentalities ("U.S. Government
securities"). The Fund may also invest in the following securities if, at the
time of purchase, the security either has the requisite rating from a
nationally recognized statistical rating organization ("NRSRO") or is of
comparable quality as determined by First National Bank of Commerce in New
Orleans (the "Adviser"): (i) corporate bonds and debentures rated in one of the
four highest rating categories by an NRSRO; (ii) privately issued mortgage-
backed securities rated in the highest rating category by an NRSRO; (iii)
asset-backed securities rated in the highest rating category by an NRSRO; (iv)
repurchase agreements involving any of the foregoing securities (including U.S.
Government securities); and (v) Money Market Securities (as defined in the
"Description of Permitted Investments and Risk Factors"). For a description of
ratings, see "Appendix."
Normally, the Fund will maintain a dollar-weighted average portfolio maturity
of three to ten years; however, under certain circumstances this average
weighted maturity may fall below three years. In determining the maturity of
mortgage-backed securities, the Adviser will use the estimated average life of
such securities. There are no restrictions on the maturity of any single
instrument.
THE LOUISIANA TAX-FREE INCOME FUND (the "Louisiana Fund") seeks to provide a
level of current income consistent with relative stability of capital.
The Fund will invest at least 80% of its net assets in fixed income securities
the interest on which, in the opinion of bond counsel for the issuer, is exempt
from federal income tax ("Municipal Securities") and is not a preference item
for purposes of the alternative minimum tax. Under normal conditions, at least
65% of the Louisiana's Fund's total assets will be invested in Municipal
Securities the interest on which is exempt from personal income taxes imposed
by the State of Louisiana ("Louisiana Municipal Securities"). The Fund may
invest up to 20% of its net assets in (i) Municipal Securities the interest on
which is a preference item for purposes of the alternative minimum tax and (ii)
taxable investments, including Money Market Securities.
The Louisiana Fund may purchase the following types of Municipal Securities
(including Louisiana Municipal Securities) only if such securities, at the time
of purchase, either have the requisite rating from a NRSRO or are of comparable
quality as determined by the Adviser: (i) bonds and debentures rated in one of
the four highest rating categories by an NRSRO; (ii) notes and certificates of
participation rated in one of the three highest rating categories; and (iii)
commercial paper rated in one of the two highest rating categories.
Normally, the Fund will maintain a dollar-weighted average portfolio maturity
of seven to fifteen years; however, under certain circumstances this average
weighted maturity may fall below seven years. There are no restrictions on the
maturity of any single instrument.
<PAGE>
8
LOUISIANA RISK FACTORS--The Louisiana Fund is more susceptible to factors
adversely affecting issuers of Louisiana Municipal Securities than is a
comparable municipal bond fund that does not focus its investments in Louisiana
Municipal Securities. Although its economy has improved somewhat in recent
years, Louisiana experienced severe financial difficulties in the late 1980s
and continues to face the risks associated with a non-diversified economy. In
particular, the significance of the oil and gas industry in Louisiana's economy
has resulted in financial difficulties during unfavorable markets for oil and
gas products and in financial benefits during favorable markets.
Louisiana is working to expand economic development activities that will take
advantage of its replenishable natural resources such as timber, water for
aquaculture, fish and seafood related products and related industrial uses of
such resources. The state is also pursuing further development of its
transportation capabilities by expanding port-related activities and improving
its highways and airports. Legal gaming in New Orleans, Baton Rouge,
Shreveport, and Lake Charles has contributed to increased construction and
service-sector employment. The state sees gaming as a source of tourism
rejuvenation, with riverboats and a land-based casino in New Orleans approved
for operation.
General obligations of Louisiana are currently rated A- and Baa1, by S&P and
Moody's, respectively. There can be no assurance that the economic conditions
on which these ratings are based will continue or that particular bond issues
may not be adversely affected by changes in economic, political or other
conditions. If either Louisiana or any of its local governmental entities is
unable to meet its financial obligations, the income derived by the Fund, the
Fund's net asset value, the ability to preserve or realize appreciation of the
Fund's capital or the Fund's liquidity could be adversely affected.
NON-DIVERSIFICATION--Investment in the Louisiana Fund, a non-diversified
company, may entail greater risk than would investment in a diversified
company. The Fund's ability to focus its investments on a fewer number of
issuers means that any economic, political, or regulatory developments
affecting the value of the securities in the Fund's portfolio could have a
greater impact on the total value of the portfolio than would be the case if
the portfolio were diversified among more issuers.
The Fund intends to comply with the diversification requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended.
THE BALANCED FUND seeks to provide capital appreciation and current income
through regular payments of dividends and interest.
Under normal conditions, the Fund will invest between 30% and 75% of its total
assets in common stocks, warrants, rights to purchase common stocks, debt
securities convertible into common stocks and preferred stocks of established
companies with market capitalizations in excess of $500 million (together,
"equity securities"). The Fund may also invest in equity securities of foreign
issuers traded in the United States, including American Depositary Receipts
("ADRs"). The Fund will purchase only those common stocks that are traded on
registered exchanges or actively traded in the over-the-counter market.
Under normal conditions, the Fund will invest between 25% and 70% of its total
assets in fixed income securities (other than Money Market Securities)
consisting of the following, but only if, at the time of purchase, such
securities either have the requisite rating from an NRSRO or are of comparable
quality as determined by the Adviser: (i) U.S. Government securities; (ii)
privately issued mortgage-backed securities rated in the highest rating
category; (iii) asset-backed securities rated in the highest rating category;
or (iv) corporate bonds and notes and bank obligations rated in one of the four
highest rating categories. The Fund will maintain at least 25% of its assets in
fixed income senior securities. The Fund is not subject to any maturity
restrictions on its investments in non-Money Market securities.
The Fund may also invest in Money Market Securities.
<PAGE>
9
In making allocation decisions, the Adviser will evaluate projections of risk,
market and economic conditions, volatility, yields and expected return. Because
the Fund in part seeks capital appreciation, the Adviser does not intend to
make frequent changes in asset allocation.
THE VALUE EQUITY FUND seeks to provide long-term capital appreciation.
The Fund will be as fully invested as practicable (at least 65% of its total
assets under normal conditions) in common stocks, warrants, rights to purchase
common stocks, debt securities convertible to common stocks and preferred
stocks (together, "equity securities"). The Fund will invest primarily in
equity securities of established companies with equity-market capitalizations
in excess of $500 million that the Adviser believes to have potential for
capital appreciation based on the soundness of the issuer and the company's
relative value based on an analysis of various fundamental financial
characteristics, including earnings yield, book value, cash flow, anticipated
future growth of dividends and earnings estimates. Although capital
appreciation is the primary purpose for investing in a security, the Fund will
focus on companies that pay current dividends. The Fund may invest in equity
securities of foreign issuers traded in the United States, including ADRs. The
Fund may also invest in Money Market Securities.
The Fund's portfolio turnover rate for the fiscal year ended September 30, 1994
was 161.42%. This rate of turnover will likely result in higher brokerage
commissions and higher levels of realized capital gains than if the turnover
rate was lower.
THE GROWTH EQUITY FUND seeks to provide long-term capital appreciation.
The Fund will be as fully invested as practicable (at least 65% of its total
assets under normal conditions) in common stocks, warrants, rights to purchase
common stocks, debt securities convertible to common stocks and preferred
stocks (together, "equity securities"). The Fund will primarily invest in
equity securities of established companies with equity market capitalizations
in excess of $300 million that the Adviser believes to have potential for
capital appreciation. The Adviser initiates purchase and sale decisions based
on such growth and profitability measures as return on equity, earnings growth,
sales growth and expected return. Capital appreciation is the primary purpose
of the Fund. Current dividend income is a secondary consideration. The Fund may
invest in equity securities of foreign issuers traded in the United States,
including ADRs. The Fund may also invest in Money Market Securities.
For additional information regarding risks and permitted investments,
investment practices and risks, see "Description of Permitted Investments and
Risk Factors."
GENERAL INVESTMENT POLICIES
For temporary defensive purposes when the Adviser determines that market
conditions warrant, each Fund may invest up to 100% of its assets in Money
Market Securities and cash. To the extent a Fund is investing for temporary
defensive purposes, the Fund will not be pursuing its investment objective.
Each Fund, except the Value Equity Fund and Growth Equity Fund, may purchase
securities on a when-issued or delayed delivery basis.
Debt rated in the fourth highest ratings category such as BBB by Standard &
Poor's Corporation ("S&P") or Baa by Moody's Investor Services ("Moody's") is
regarded as having an adequate capacity to pay interest and repay principal.
Such securities are considered to have speculative characteristics.
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to the Funds without the
consent of the holders of a majority of the Fund's outstanding shares.
<PAGE>
10
A Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer or more than 10% of
the outstanding voting securities of such issuer would be owned by the Fund.
This restriction applies to 75% of the Fund's assets. This restriction does not
apply to the Louisiana Fund.
2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers conducting
their principal business activities in the same industry, provided that this
limitation does not apply to (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities; and (ii) tax-exempt securities
issued by governments or political subdivisions of governments. For purposes of
this limitation (i) utility companies will be divided according to their
services, for example, gas, gas transmission, electric and telephone will each
be considered a separate industry; (ii) financial service companies will be
classified according to the end users of their services, for example,
automobile finance, bank finance and diversified finance will each be
considered a separate industry; (iii) supranational entities will be considered
to be a separate industry; and (iv) asset-backed securities secured by distinct
types of assets, such as truck and auto loan leases, credit card receivables
and home equity loans, will each be considered a separate industry.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
The foregoing percentages will apply at the time of the purchase of a security.
Additional investment limitations are set forth in the Statement of Additional
Information.
HOW TO PURCHASE SHARES
Class A shares and Class B shares of the Funds may be purchased directly from
the shareholder servicing and transfer agent, DST Systems, Inc. ("DST") by
mail, by wire or through an automatic investment plan ("AIP"). Shares may also
be purchased through broker-dealers, including Marquis Investments, Inc., that
have established a dealer agreement with SEI Financial Services Company, the
Trust's distributor ("the Distributor").
HOW TO PURCHASE BY MAIL
You may purchase Class A or Class B shares of a Fund by completing and signing
an Account Application form and mailing it, along with a check (or other
negotiable bank instrument or money order) payable to "Marquis Funds (Fund
Name)," to DST at 210 West 10th Street, Kansas City, MO 64105. You may purchase
additional shares at any time by mailing payment to DST. Orders placed by mail
will be executed on receipt of your payment. If your check does not clear, your
purchase will be cancelled and you could be liable for any losses or fees
incurred.
You may obtain Account Application forms by calling 1-800-801-1594.
HOW TO PURCHASE BY WIRE
You may purchase shares by wiring Federal funds, provided that your Account
Application has been previously received. You must wire funds to DST and the
wire instructions must include your account number. You must call DST at
1-800-471-1144 before wiring any funds. An order to purchase shares by Federal
funds wire will be deemed to have been received by the Fund on the Business Day
(defined below) of the wire; provided that the shareholder notifies DST prior
to 3:00 p.m., Central time. If DST does not receive notice by 3:00 p.m.,
Central time, on the Business Day of the wire, the order will be executed on
the next Business Day.
<PAGE>
11
HOW TO PURCHASE THROUGH AN AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Funds through
automatic deductions by Automated Clearing House ("ACH") from a checking
account by completing an AIP Application Form. The minimum pre-authorized
investment amount is $50 per month. An AIP Application Form may be obtained by
contacting DST at 1-800-471-1144. The AIP is available only for additional
investments for an existing account.
GENERAL INFORMATION
You may purchase Class A shares and Class B shares of the Funds on any day the
New York Stock Exchange is open for business ("Business Days"). However, shares
of the Funds cannot be purchased by Federal Reserve wire on Federal holidays
restricting wire transfers. The minimum initial investment in either class of
any Fund is $2,500 ($500 minimum for individual retirement accounts and
employees of First National Bank of Commerce in New Orleans, the Funds'
investment adviser (the "Adviser") or its affiliates); however, the Distributor
may waive the minimum investment at its discretion. Subsequent purchases of
shares must be at least $100 except for purchases through the AIP and payroll
deductions, which must be at least $50.
A purchase order for shares will be effective as of the Business Day received
by the Distributor if the Distributor receives the order and payment before
3:00 p.m., Central time. The purchase price of Class A shares of a Fund is the
net asset value next determined after the purchase order is effective plus the
applicable sales load, if any. The purchase price of Class B shares is the net
asset value next determined after the purchase order is effective.
The net asset value per share of any Fund is determined as of the close of
trading on the New York Stock Exchange (currently, 3:00 p.m., Central time) on
each Business Day by dividing the total market value of that Fund's investments
and other assets, less any liabilities, by the total outstanding shares of the
Fund. Purchases will be made in full and fractional shares calculated to three
decimal places. Pursuant to guidelines adopted and monitored by the Trustees of
the Trust, each Fund may use a pricing service to provide market quotations or
fair market valuations. A pricing service may derive such valuations through
the use of a matrix system to value fixed income securities which considers
factors such as securities prices, yield features, ratings, and developments
related to a specific security. Although the methodology and procedures for
determining net asset value are identical for both classes of a Fund, the net
asset value per share of such classes may differ because of the distribution
expenses charged to Class B shares.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders who own their shares of record and who desire to transfer
registration of their shares should contact DST at 1-800-471-1144.
HOW TO PURCHASE THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held of record by the financial institution. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Distributor
for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish such change.
Depending upon the terms of a particular Customer account, a financial
institution may
<PAGE>
12
charge a Customer account fees. Information concerning these services and any
charges will be provided to the Customer by the financial institution. Certain
of these financial institutions may be required under state law to register as
broker/dealers.
ALTERNATIVE SALES CHARGE OPTIONS
THE TWO ALTERNATIVES: OVERVIEW
You may purchase shares of the Funds at a price equal to their net asset value
per share plus a sales charge which, at your election, may be imposed either
(i) at the time of the purchase (Class A "initial sales charge alternative"),
or (ii) on a contingent deferred basis (the Class B "deferred sales charge
alternative"). Each class represents a Fund's interest in the portfolio of
investments. The classes have the same rights and are identical in all respects
except that (i) Class B shares bear the expenses of the deferred sales
arrangement and distribution and service fees resulting from such sales
arrangement, (ii) each class has exclusive voting rights with respect to
approvals of any Rule 12b-1 distribution plan related to that specific class
(although Class B shareholders may vote on any distribution fees imposed on
Class A shares so long as Class B shares convert into Class A shares) and (iii)
only Class B shares carry a conversion feature. Each class has different
exchange privileges. See "Exchanges." Sales personnel of broker-dealers
distributing the Funds' shares, and other persons entitled to receive
compensation for selling such shares, may receive differing compensation for
selling Class A or Class B shares.
The alternative purchase arrangement permits you to choose the method of
purchasing shares that is more beneficial to you. The amount of your purchase,
the length of time you expect to hold the shares, and whether you wish to
receive dividends in cash or in additional shares will all be factors in
determining which sales charge option is best for you. You should consider
whether, over the time you expect to maintain your investment, the accumulated
distribution and service fees and contingent deferred sales charges on Class B
shares prior to conversion would be less than the initial sales charge on Class
A shares, and to what extent such differential would be offset by the expected
higher yield of Class A shares. Class A shares will normally be more beneficial
to you if you qualify for reduced sales charges as described below.
The Trustees of the Trust have determined that currently no conflict of
interest exists between the Class A and Class B shares. On an ongoing basis,
the Trustees of the Trust, pursuant to their fiduciary duties under the
Investment Company Act of 1940, as amended (the "1940 Act") and state laws,
will seek to ensure that no such conflict arises.
CLASS A SHARES
Sales Load The following table shows the regular sales charge on Class A shares
to a "single purchaser" (defined below) together with the sales charge that is
reallowed to certain financial intermediaries (the "reallowance").
<TABLE>
<CAPTION>
SALES SALES REALLOWANCE
CHARGE AS CHARGE AS AS
PERCENTAGE PERCENTAGE PERCENTAGE
AMOUNT OF OFFERING OF NET OF OFFERING
OF PRICE PER AMOUNT PRICE PER
PURCHASE SHARE INVESTED SHARE
-------- ----------- ---------- -----------
<S> <C> <C> <C>
Less than $100,000 3.50% 3.63% 3.15%
$100,000 but less than $250,000 2.50% 2.56% 2.25%
$250,000 but less than $500,000 2.00% 2.04% 1.80%
$500,000 but less than $1,000,000 1.50% 1.52% 1.35%
$1,000,000 and above none none none
</TABLE>
The sales charge shown in the table is the maximum sales charge that applies to
sales through financial intermediaries. With respect to purchases of Class A
shares of $1,000,000 or more, payment equal to as much as 1.00% of the purchase
price may be paid by the Adviser and/or Administrator to financial
intermediaries through which sales are made. The Distributor may, from time to
time in its sole discretion, institute one or more promotional incentive
programs, which will be paid by the Distributor from the sales charge it
receives or from any other source available to it. Under any such program, the
Distributor will
<PAGE>
13
provide promotional incentives, in the form of cash or other compensation,
including merchandise, airline vouchers, trips and vacation packages, to all
dealers selling shares of the Funds. Such promotional incentives will be
offered uniformly to all dealers and predicated upon the amount of shares of
the Funds sold by the dealer. Under certain circumstances, reallowances of up
to the amount of the entire sales charge may be paid to certain financial
institutions, who might then be deemed to be "underwriters" under the
Securities Act of 1933. Commission rates may vary among the Funds.
Reduced Sales Charge:
Rights of Accumulation
In calculating the sales charge rates applicable to current purchases of Class
A shares, a "single purchaser" is entitled to cumulate current purchases with
the current market value of previously purchased Class A shares of the Funds
sold subject to a comparable sales charge.
The term "single purchaser" refers to (i) an individual, (ii) an individual and
spouse purchasing shares of the Funds for their own account or for trust or
custodial accounts for their minor children, and (iii) a fiduciary purchasing
for any one trust, estate or fiduciary account, including employee benefit
plans created under Sections 401 or 457 of the Internal Revenue Code of 1986,
as amended (the "Code") including related plans of the same employer.
To exercise your right of accumulation based upon shares you already own, you
must ask the Distributor for this reduced sales charge at the time of your
additional purchase and provide the account number(s) of the investor, as
applicable, the investor and spouse, and their minor children. The Funds may
amend or terminate this right of accumulation at any time as to subsequent
purchases.
Reduced Sales Charge: Letter of Intent
By submitting a Letter of Intent (the "Letter") to the Distributor, a "single
purchaser" may purchase shares of the Funds during a 13-month period at the
reduced sales charge rates applying to the aggregate amount of the intended
purchases stated in the Letter. The Letter may apply to purchases made up to 90
days before the date of the Letter. To receive credit for such prior purchases
and later purchases benefitting from the Letter, you must notify the Transfer
Agent at the time the Letter is submitted that there are prior purchases that
may apply, and notify the Transfer Agent again at the time of later purchases
that such purchases are applicable under the Letter.
Waiver of Sales Load
No sales charge is imposed on shares of the Funds: (i) issued as dividends and
capital gain distributions; (ii) acquired through the exercise of exchange
privileges described below; (iii) sold to officers, directors or trustees,
employees and retirees (and their spouses and immediate family members) of the
Trust, First Commerce Corporation and its subsidiaries, affiliates, and
correspondents, and the Distributor and its subsidiaries and affiliates; (iv)
sold to certain accounts for which the Adviser or subsidiaries, affiliates and
correspondents of First Commerce Corporation serve in a fiduciary, agency or
custodial capacity; (v) issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Trust is a party; (vi)
purchased with the proceeds of employee benefit plan distributions for which
the Adviser and its affiliates act in a fiduciary capacity; or (vii) purchased
within thirty days of a redemption of Class A shares of such Funds (only to the
amount of such redemption). In addition, if you acquire Class A shares of a
Fund through an exchange of shares of a Money Market Fund, you will not be
charged a sales load on any portion of your investment on which you were
previously subject to the Funds' sales charges. You must notify the Distributor
at the time of your purchase if you are eligible for a waiver of the sales
load.
CLASS B SHARES
Contingent Deferred Sales Charge
If you redeem your Class B shares within five years of purchase, you will pay a
contingent deferred
<PAGE>
14
sales charge at the rates set forth below. You will not be required to pay the
contingent deferred sales charge on exchange of your Class B shares of any Fund
for Class B shares of any other Fund. See "Exchanges." The charge is assessed
on an amount equal to the lesser of the then-current market value or the cost
of the shares being redeemed. Accordingly, no sales charge is imposed on
increases in net asset value above the initial purchase price. In addition, no
charge is assessed on shares derived from reinvestment of dividends or capital
gain distributions.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEAR SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
---------- -------------------------
<S> <C>
First 3.50%
Second 2.75%
Third 2.00%
Fourth 1.25%
Fifth 0.50%
Sixth None
</TABLE>
In determining whether a particular redemption is subject to a contingent
deferred sales charge, it is assumed that the redemption is first of any Class
A shares in the shareholder's Fund account, second of shares held for over five
years or shares acquired pursuant to reinvestment of dividends or other
distributions and third of shares held longest during the five-year period.
This method should result in the lowest possible sales charge.
The contingent deferred sales charge is waived on redemption of shares (i)
following the death or disability (as defined in the Code) of a shareholder, or
(ii) to the extent that the redemption represents a minimum required
distribution from an individual retirement account or other retirement plan to
a shareholder who has attained the age of 70 1/2. A shareholder, or his or her
representative, must notify the Transfer Agent prior to the time of redemption
if such circumstances exist and the shareholder is eligible for this waiver.
CONVERSION FEATURE. At the end of the period ending five years after the
beginning of the month in which the shares were issued. Class B shares will
automatically convert to Class A shares and will no longer be subject to the
distribution and service fees. Such conversion will be on the basis of the
relative net asset values of the two classes.
EXCHANGES
Exchanges are generally made at net asset value. You may exchange Class A or
Class B shares of any Fund for Class A or Class B shares, respectively, of any
other Fund without paying any additional sales charge. You may exchange an
investment in Class A shares of any Fund for shares of the Money Market Fund,
and move your investment back into Class A shares of any Fund, without paying
any additional sales charge.
For purposes of calculating the Class B shares' five year conversion period or
contingent deferred sales charge payable upon redemption, the holding period of
Class B shares of the "old" Fund and the holding period for Class B shares of
the "new" Fund are aggregated.
You must have received a current prospectus of the Fund into which you wish to
move your investment before the exchange will be effected. Exchanges will be
made only after instructions in writing or by telephone (an "Exchange Request")
are received by DST. If an Exchange Request in good order is received by DST by
3:00 p.m. Central time, on any Business Day, the exchange will occur on that
day. The exchange privilege may be exercised only in those states where the
class or shares of the "new" fund may legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The
institution will contact DST and effect the exchange on behalf of the Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or
<PAGE>
15
through a systematic withdrawal plan. Investors who own shares held of record
by a financial institution should contact that institution for information on
how to redeem shares.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000, or if the request directs the
proceeds to be sent or wired to a shareholder or an address different from that
on record, DST may require that the signature on the written redemption request
be guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union, securities exchange or association, clearing
agency or savings association. Notaries public cannot guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on the
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address or wired to a commercial bank
account previously designated on your Account Application. There is no charge
for having redemption proceeds mailed to you, but there is a $25 charge for
wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
DST at 1-800-471-1144, who will deduct a wire charge of $25 from the amount of
the wire redemption. Shares cannot be redeemed by Federal Reserve wire on
Federal holidays restricting wire transfers.
Neither DST nor the Trust will be responsible for any loss, liability, cost or
expense for acting upon wire or telephone instructions that it reasonably
believes to be genuine. The Trust and DST 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. When
market conditions are extremely busy, it is possible that you may experience
difficulties placing redemption orders by telephone, and may wish to place them
by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Funds offer a Systematic Withdrawal Plan ("SWP"), which you may use to
receive regular distributions from your 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 ACH of $100 or more on a monthly,
quarterly, semi-annual or annual basis. You may obtain an SWP Application Form
by contacting DST at 1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could
be exhausted entirely. You may change or cancel the SWP at any time on written
notice to DST.
It is generally not in your best interest to be participating in the SWP at the
same time that you are purchasing additional shares if you have to pay a sales
load in connection with such purchases. Because automatic withdrawals of Class
B shares will be subject to the contingent deferred sales charge, it may not be
in the best interest of Class B shareholders to participate in the SWP.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption, reduced by any
applicable contingent deferred sales charge for Class B shares. Net asset value
per share is determined as of 3:00 p.m., Central time, on each Business Day.
<PAGE>
16
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request. At various times, however, a
Fund may be requested to redeem shares for which it has not yet received good
payment; collection of payment may take ten or more days. In such
circumstances, redemption proceeds will be held pending clearance of the check.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at net asset value, less any
applicable contingent deferred sales charge, if, because of redemptions, your
account in any Fund has a value of less than the minimum initial purchase
amount (normally $2,500; $500 for individual retirement accounts and employees
of the Adviser or its affiliates). Accordingly, if you purchase shares of any
Fund in only the minimum investment amount, you may be subject to involuntary
redemption if you redeem any shares. Before any Fund exercises its right to
redeem such shares, you will be given notice that the value of the shares in
your account is less than the minimum amount and will be allowed 60 days to
make an additional investment in such Fund in an amount which will increase the
value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), 210 Baronne
Street, New Orleans, Louisiana 70112, serves as each Fund's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Trust. The
Adviser, through its Trust Group, makes the investment decisions for the assets
of the Funds and continuously reviews, supervises and administers the
investment programs of the Funds, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed assets with similar investment
objectives and policies to those of the Funds for the past seven years. The
Adviser has provided investment management services since 1933. The Adviser is
a wholly-owned subsidiary of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the FDIC or issued or guaranteed by the U.S.
Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .55% of the average daily net assets of the Government
Securities Fund, .74% of the average daily net assets of each of the Balanced
Fund and Value Equity Fund and .35% of the average daily net assets of the
Louisiana Fund and .74% for the Growth Equity Fund. The Adviser may voluntarily
waive a portion of its fees in order to limit the total operating expenses of
the Funds. The Adviser reserves the right, in its sole discretion, to terminate
these voluntary fee waivers at any time. For the fiscal year ended September
30, 1994, the Adviser was paid an advisory fee of .35% of the Government
Securities Fund, .00% of the Louisiana Tax-Free Income Fund, .45% of the
Balanced Fund, and .47% of the Value Equity Fund, based on each Fund's average
net assets.
John C. Portwood, CFA, Senior Vice President of the Adviser, has oversight
responsibility of the portfolio managers of all the Funds since the Funds'
inception. With over 27 years of investment management experience, Mr. Portwood
has been the manager of the Adviser's Trust Investment Division for the past
seven years.
<PAGE>
17
Kevin P. Reed, Vice President of the Adviser and Director of Fixed Income, is
the portfolio manager for the Government Securities Fund, the Louisiana Tax-
Free Income Fund, and co-manager of the Balanced Fund since inception. For the
past eleven years, Mr. Reed has been a portfolio manager with the Adviser's
Trust Investment Division.
Effective September 1, 1994, James C. McElroy, CFA, Vice President and Director
of Portfolio Management for the Adviser, became the co-manager of the Balanced
Fund and portfolio manager of the Value Equity Fund. Mr McElroy, who has more
than 12 years of portfolio management experience, joined the Adviser in January
1994. Prior to that, Mr. McElroy served in similar capacities with Zeliff,
Wallace Advisory (1991-1993) and C&S Investment Advisors (1981-1990).
Mr. Dean S. Mailhes, CFA, Vice President and Trust Investment Officer for the
Advisor is the portfolio manager for the Growth Equity Fund. Mr. Mailhes has
more than 14 years of portfolio manager experience, and joined the Advisor in
October 1995. He is a portfolio manager at the Advisor's affiliate bank,
Central Bank of Monroe, and prior to that he was with American Bank in Baton
Rouge, LA.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087, a wholly-owned subsidiary of SEI Corporation ("SEI"),
and the Trust are parties to an Administration Agreement (the "Administration
Agreement"). Under the terms of the Administration Agreement, the Administrator
provides the Trust with administrative services, other than investment advisory
services, including all regulatory reporting, necessary office space,
equipment, personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the average daily net assets of the
Funds.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
Class A shares of the Funds are sold with a front-end sales load. Class B
shares of the Funds have a Rule 12b-1 distribution plan (the "Class B Plan").
SEI Financial Services Company (the "Distributor"), 680 East Swedesford Road,
Wayne, PA 19087, a wholly-owned subsidiary of SEI and the Trust are parties to
a distribution agreement ("Distribution Agreement"). As provided in the
Distribution Agreement and the Class B Plan, the Trust pays the Distributor a
fee at an annual rate of up to .75% of the average daily net assets of the
Class B shares of the Funds. This fee will be calculated and paid each month
based on average daily net assets for that month. Out of this fee, the
Distributor pays .25% of the average daily net assets of the Class B shares to
financial institutions and intermediaries such as banks (including the Adviser
and its affiliates), savings and loan associations, insurance companies, and
investment counselors, broker-dealers, and the Distributor's affiliates
(collectively, "financial intermediaries") as compensation for providing
shareholder services. The Distributor may use the balance of the fee received
from the Funds to make payments to financial intermediaries as compensation for
services or as reimbursement of distribution assistance or shareholder service
expenses incurred by the Distributor. The Class B Plan is characterized as a
compensation plan since the distribution fee is paid to the Distributor without
regard to the distribution assistance or shareholder service expenses incurred
by the Distributor or the amount of payments made to financial intermediaries.
If the Distributor's expenses are less than its fees, the Trust will still pay
the full fee and the Distributor will realize a profit, but the Trust will not
be obligated to pay in excess of the full fee, even if the Distributor's actual
expenses are higher.
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18
The Funds may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Funds may advertise yield and total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. The yield of a Fund refers to the annualized income
generated by an investment in the Fund over a specified 30-day period. The
yield is calculated by assuming that the same amount of income generated by
the investment during that period is generated in each 30-day period over one
year and is shown as a percentage of the investment. The Louisiana 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 this Fund's yield, assuming
certain tax brackets for the shareholder.
The total return of a Fund refers to the average compounded rate of return to
a hypothetical investment, net of any sales charge imposed on Class A shares
or including the contingent deferred sales charge imposed on Class B shares
redeemed at the end of the specified period covered by the total return
figure, for designated time periods (including but not limited to, the period
from which the Fund commenced operations through the specified date), assuming
that the entire investment is redeemed at the end of each period and assuming
the reinvestment of all dividend and capital gain distributions. The total
return of a Fund may also be quoted as a dollar amount or on an aggregate
basis, an actual basis, without inclusion of any front-end or contingent sales
charges, or with a reduced sales charge in advertisements distributed to
investors entitled to a reduced sales charge.
A Fund may periodically compare its performance to that of other mutual funds
tracked by mutual fund rating services (such as Lipper Analytical), financial
and business publications and periodicals, of broad groups of comparable
mutual funds, unmanaged indices which may assume investment of dividends but
generally do not reflect deductions for administrative and management costs or
to other investment alternatives. The Fund may quote Morningstar, Inc., a
service that ranks mutual funds on the basis of risk-adjusted performance. The
Fund may quote Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. The Fund may use long
term performance of these capital markets to demonstrate general long-term
risk versus reward scenarios and could include the value of a hypothetical
investment in any of the capital markets. The Fund may also quote financial
and business publications and periodicals as they relate to fund management,
investment philosophy, and investment techniques.
The Fund may quote various measures of volatility and benchmark correlation in
advertising and may compare these measures to those of other funds. Measures
of volatility attempt to compare historical share price fluctuations or total
returns to a benchmark while measures of benchmark correlation indicate how
valid a comparative benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot be calculated
precisely.
The performance of Class A and Class B shares of a Fund will differ because of
the different sales charge structures of the classes and because of the
distribution fees charged to Class B shares.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of a Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences on an investment in a Fund may differ from the federal
income tax consequences described below. Additional information concerning
taxes is set forth in the Statement of Additional Information.
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19
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and
is not combined with the Trust's other Funds. Each Fund intends to qualify for
the special tax treatment afforded regulated investment companies as defined
under Subchapter M of the 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 gain (the excess of net long-term capital
gain over net short-term capital loss) which it distributes to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Distributions from net investment
income will qualify for the dividends-received deduction for corporate
shareholders only to the extent such distributions are derived from dividends
paid by domestic corporations. It can be expected that only certain dividends
of the Equity Funds, and none of the Fixed Income Funds, will qualify for that
deduction. Any net realized capital gains will be distributed at least annually
and will be taxed to shareholders as long-term capital gains, regardless of how
long the shareholder has held shares. Distributions from net capital gains do
not qualify for the dividends-received deduction. Each Fund will make annual
reports to shareholders of the federal income tax status of all distributions,
including the amount of dividends eligible for the dividends-received
deduction.
Certain securities purchased by a Fund (such as STRIPS, TRs, TIGRs and CATS,
defined in "Description of Permitted Investments and Risk Factors") are sold
with 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 accrued discount 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 accrued income, which may
occur at a time when the Adviser would not have chosen to sell such securities
and which may result in a taxable gain or loss.
Income received on direct U.S. government obligations is exempt from income tax
at the state level when received directly and may be exempt, depending on the
state, when received by a shareholder provided certain state-specific
conditions are satisfied. The Government Securities Fund will inform
shareholders annually of the percentage of income and distributions derived
from direct U.S. obligations. Shareholders should consult their tax advisers to
determine whether any portion of the income dividends received from a Fund is
considered tax exempt in their particular state.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by a
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, 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 federal excise tax.
A sale, exchange, or redemption of a Fund's shares is a taxable event to the
shareholder.
STATE TAXES
The Trust has obtained a ruling from the Louisiana Department of Revenue and
Taxation to the effect the distributions to shareholders of the Louisiana Fund
who are Louisiana residents, which are derived from interest on tax-exempt
obligations of the State of Louisiana or its political subdivisions and certain
obligations of the United States or its territories, will not be subject to
Louisiana income tax. Distributions derived from long-term or short-term
capital gains on such obligations, or from dividends on capital gains on other
types of obligations will be subject to Louisiana individual and corporate
income taxes. A Louisiana resident will also be required to take into account
for
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20
Louisiana individual and corporate income tax purposes capital gains or losses
realized from a redemption, sale or exchange of shares of the Louisiana Fund.
To the extent distributions from the Louisiana Fund are included in the capital
of corporate shareholders otherwise subject to the Louisiana corporate
franchise tax, such investments or distributions will be subject to Louisiana
franchise tax. Shareholders should consult their own tax advisers with respect
to the state, local and foreign tax consequences of investing in the Funds.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Funds, the Trust offers a Treasury Securities Money Market
Fund, Institutional Money Market Fund, and a Tax Exempt Money Market Fund. All
consideration received by the Trust for shares of any fund and all assets of
such fund belong to that fund and would be subject to liabilities related
thereto. The Trust reserves the right to create and issue shares of additional
funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management, administrative and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240, or by calling 1-800-471-1144.
DIVIDENDS
Substantially all net investment income (not including capital gains) is
declared and paid monthly for each Fixed Income Fund and declared and paid
quarterly for each Equity Fund. Shareholders who own shares at the close of
business on the record date will be entitled to receive the dividend. Each Fund
intends to pay such dividends on the first business day of the month following
the month the dividend was declared. 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
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21
shareholder has elected to take such payment in cash. Shareholders may change
their election by providing written notice to the Administrator at least 15
days prior to the distribution.
Dividends and other 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 other
distribution. The amount of dividends payable on Class A shares will be more
than the dividends payable on the Class B shares because of the distribution
and service fees paid by Class B shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the various Funds, and associated risk factors. Further
discussion is contained in the Statement of Additional Information.
AMERICAN DEPOSITARY RECEIPTS--American Depository Receipts ("ADRs") are
securities typically issued by a U.S. financial institution. ADRs evidence
ownership interests in a pool of securities issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" and
"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. Foreign investments involve risks that are
different from investments in securities of U.S. issuers. These risks may
include future unfavorable political and economic developments, possible
withholding taxes, seizure of foreign deposits, currency controls, interest
limitations or other governmental restrictions which might affect payment of
principal or interest. Additionally, there may be less public information
available about foreign issuers. The Equity Funds may invest in sponsored and
unsponsored ADRs.
ASSET-BACKED SECURITIES--Asset-backed securities are securities secured by non-
mortgage assets such as company receivables, truck and auto loans, leases, and
credit card receivables. Such securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt instruments, which
are also known as collateralized obligations and are generally issued as the
debt of a special purpose entity, such as a trust, organized solely for purpose
of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by the U.S. Government or
its agencies or instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain amounts and for a
certain period by a letter of credit issued by a financial institution (such as
a bank or insurance company) unaffiliated with the issuers of such securities.
The purchase of asset-backed securities raises risk considerations peculiar to
the financing of the instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in the obligations
superior to that of the holders of the
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22
asset-backed securities. There also is the possibility that recoveries on
repossessed collateral may not, in some cases, be available to support payments
on those securities. Asset-backed securities entail prepayment risk, which may
vary depending on the type of asset, but is generally less than the prepayment
risk associated with mortgage-backed securities. In addition, credit card
receivables are unsecured obligations of the card holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities. The Government Securities Fund and the Balanced Fund may invest in
these and in other asset-backed securities that may be created in the future if
the Adviser determines they are suitable.
BANKERS' ACCEPTANCES--Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods and to furnish dollar
exchange. Maturities are generally six months or less. All Funds are permitted
to invest in bankers' acceptances.
CERTIFICATES OF DEPOSIT--Certificates of deposit are interest bearing
instruments with a specific short-term maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of
deposit with penalties for early withdrawal will be considered illiquid. All
Funds are permitted to invest in certificates of deposit.
COMMERCIAL PAPER--Commercial paper is a term used to describe unsecured short-
term promissory notes issued by corporations and other entities. Maturities on
these issues vary from a few to 270 days. All Funds are permitted to invest in
commercial paper.
CONVERTIBLE SECURITIES--Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
Convertible securities typically have characteristics similar to both fixed
income and equity securities. Because of the conversion feature, the market
value of 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. The Equity Funds are permitted to invest in convertible securities.
EQUITY SECURITIES--Equity securities include common stocks, preferred stocks,
warrants to acquire common stock, and securities convertible into common stock.
Investments in equity securities are subject to market risks that may cause
their prices to fluctuate over time. Changes in the value of portfolio
securities will not necessarily affect cash income derived from these
securities but will affect a Fund's net asset value.
FIXED INCOME SECURITIES--Fixed income securities include bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which the Funds invest will
change in response to interest rate changes and other factors. During periods
of falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect a Fund's net asset value.
FUTURES AND OPTIONS ON FUTURES--Each of the Funds may invest in futures and
options on futures to a limited extent. Specifically, a Fund may enter into
futures contracts and options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission
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23
("CFTC") if, to the extent that such futures and options are not for "bona fide
hedging purposes" (as defined by the CFTC), the aggregate initial margin and
premiums on such positions (excluding the amount by which options are in the
money) do not exceed 5% of that Fund's net assets. In addition, a Fund may
enter into futures contracts and options on futures only to the extent that
obligations under such contracts or transactions, together with options on
securities, represent not more than 25% of the Fund's assets.
The Funds may buy and sell futures contracts and related options to manage
their exposure to changing interest rates and security prices. Some futures
strategies, including selling futures, buying puts and writing calls, reduce a
Fund's exposure to price fluctuations. Other strategies, including buying
futures, writing puts and buying calls, tend to increase market exposure.
Futures and options may be combined with each other in order to adjust the risk
and return characteristics of the overall portfolio. The Funds may invest in
futures and related options based on any type of security or index traded on
U.S. or foreign exchanges or over-the-counter, as long as the underlying
security, or securities represented by an index, are permitted investments of
the Funds.
Options and futures can be volatile instruments, and involve certain risks. If
the Adviser applies a hedge at an inappropriate time or judges interest rates
incorrectly, options and futures strategies may lower a Fund's return. A Fund
could also experience losses if the prices of its options and futures positions
were poorly correlated with its other instruments, or if it could not close out
its positions because of an illiquid secondary market.
In order to cover any obligations it may have under options or futures
contracts, the Fund will either own the underlying asset, have a contract to
acquire such an asset without additional cost or set aside, in a segregated
account, high quality liquid assets in an amount at least equal in value to
such obligations.
ILLIQUID SECURITIES--Illiquid securities are securities which cannot be
disposed of within seven 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 seven days, if there is no
secondary market for such security and repurchase agreements of over 7 days in
length. Each Fund will not invest more than 15% of its net assets in such
instruments.
MONEY MARKET SECURITIES--Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposits, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper; and (v)
repurchase agreements involving any of the foregoing obligations entered into
with highly-rated banks and broker-dealers.
MORTGAGE-BACKED SECURITIES--Mortgage-backed securities are instruments which
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional thirty-year fixed rate mortgages, graduated payment
mortgages, and adjustable rate mortgages. During periods of declining interest
rates, prepayment of mortgages underlying mortgage-backed securities can be
expected to accelerate. Prepayment of mortgages which underlie securities
purchased at a premium often results in capital losses, while prepayment of
mortgages purchased at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a particular issue.
Government Pass-Through Securities: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or
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24
guarantors of these mortgage-backed securities are GNMA, FNMA and FHLMC. FNMA
and FHLMC obligations are not backed by the full faith and credit of the U.S.
Government as GNMA certificates are, but FNMA and FHLMC securities are
supported by the instrumentalities' right to borrow from the United States
Treasury. Each of GNMA, FNMA and FHLMC guarantees timely distributions of
interest to certificate holders. Each of GNMA and FNMA also guarantees timely
distributions of scheduled principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage loan; however,
FHLMC now issues Mortgage-Backed Securities (FHLMC Gold PCs) which also
guarantees timely payment of monthly principal reduction. Government and
private guarantees do not extend to the securities' value, which is likely to
vary inversely with fluctuations in interest rates.
Private Pass-Through Securities: These are mortgage-backed securities issued by
a non-governmental entity such as a trust, which securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conditions ("REMICs"), that are rated in one of the top two rating
categories. While they are generally structured with one or more types of
credit enhancement, Private Pass-Through Securities typically lack a guarantee
by an entity having the credit status of a governmental agency or
instrumentality.
CMOs: CMOs are debt obligations or multiclass pass-through certificates issued
by agencies or instrumentalities of the U.S. Government or by private
originators or investors in mortgage loans. In a CMO, series of bonds or
certificates are annually issued in multiple classes. Principal and interest
paid on the underlying mortgage assets may be allocated among the several
classes of a series of a CMO in a variety of ways. Each class of a CMO, often
referred to as a "tranche" is issued with a specific fixed or floating coupon
rate and has a stated maturity or final distribution date. Principal payments
on the underlying mortgage assets may cause CMOs to be retired substantially
earlier than their stated maturities or final distribution dates, resulting in
a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by
FNMA or FHLMC represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or GNMA-guaranteed
mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also guarantees the payment of
principal as payments are required to be made on the underlying mortgage
participation certificates. FNMA REMIC Certificates are issued and guaranteed
as to timely distribution of principal and interest by FNMA.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-only class ("IO"),
while the other class may receive all of the principal payments and is thus
termed the principal-only class ("PO"). The value of IOs tends to increase as
rates rise and decrease as rates fall; the opposite is true of POs. SMBs are
extremely sensitive to changes in interest rates because of the impact thereon
of prepayment of principal on the underlying mortgage securities. The market
for SMBs is not as fully developed as other markets; SMBs therefore may be
illiquid.
Risk Factors: Due to the possibility of prepayments of the underlying mortgage
instruments, mortgage-backed securities generally do not have a known maturity.
In the absence of a known maturity, market participants generally refer to an
estimated average life. An average life estimate is a function of an assumption
regarding anticipated prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other factors. The
assumption is necessarily subjective, and thus
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25
different market participants can produce different average life estimates with
regard to the same security. There can be no assurance that estimated average
life will be a security's actual average life.
MUNICIPAL SECURITIES--Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair, or improvement of privately operated
facilities. General obligation bonds are backed by the taxing power of the
issuing municipality. Revenue bonds are backed by the revenues of a project or
facility; tolls from a toll bridge for example. Certificates of participation
represent an interest in an underlying obligation or commitment such as an
obligation issued in connection with a leasing arrangement. 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 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.
The Louisiana Fund currently contemplates that it will not invest more than 25%
of its total assets (at market value at the time of purchase) in: (a)
securities, the interest of which is paid from revenues of projects with
similar characteristics; or (b) industrial development bonds.
OPTIONS--Put and call options for various securities and indices are traded on
national securities exchanges. Options may be used by a Fund from time to time
as the Adviser deems to be appropriate. Options will generally be used for
hedging purposes.
A put option gives the purchase 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.
Although a Fund will engage in option transactions as hedging transactions,
there are risks associated with such investments including the following: (i)
the success of a hedging strategy may depend on the ability of the Adviser to
predict movements in the prices of the individual securities, fluctuations in
markets and movements in interest rates; (ii) 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 options; (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. Each Fund is permitted to engage in option
transactions with respect to securities that are permitted investments and
related indices. Any Fund that writes call options will write only covered call
options.
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.
RECEIPTS--TRs, TIGRs and CATS--interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by
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26
depositing U.S. Treasury obligations into a special account at a custodian
bank. The custodian holds the interest and principal payments for the benefit
of the registered owners of the certificates or receipts. The custodian
arranges for the issuance of the certificates or receipts evidencing ownership
and maintains the register. Receipts include "Treasury Receipts" ("TRs"),
"Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of Accrual
on Treasury Securities" ("CATS"). Each Fund other than the Louisiana Fund is
permitted to invest in receipts.
STRIPS, TRs, TIGRs and CATS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. The
amount of this discount is accrued over the life of the security and
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, receipts may be subject to greater price
volatility than interest paying U.S. Treasury Obligations. See also "Taxes".
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price on an agreed upon date within a number of days
from the date of purchase. Repurchase agreements must be fully collateralized
at all times. A Fund bears a risk of loss in the event the other party defaults
on its obligations and the Fund is delayed or prevented from its right to
dispose of the collateral. 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. All Funds may invest in
repurchase agreements.
SECURITIES LENDING--In order to generate additional income, each Fund may lend
the securities in which it owns pursuant to agreements requiring that the loan
be continuously secured by collateral consisting of cash, securities of the
U.S. Government equal to at least 100% of the market value of the securities
lent. A Fund will continue to receive interest on the securities lent while
simultaneously earning interest on the investment of cash collateral.
Collateral is marked to market daily to provide a level of collateral at least
equal to the value of the securities lent. There may be risks of delay in
recovery of the securities or even loss of rights in the collateral should the
borrower of the securities fail financially or become insolvent. All Funds are
permitted to engage in securities lending.
TIME DEPOSITS--Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market. Time deposits are considered to be illiquid
securities. All Funds are permitted to invest in time deposits.
U.S. GOVERNMENT AGENCY OBLIGATIONS--Obligations issued or guaranteed by
agencies of the United States Government, including, among others, the Federal
Farm Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of
the United States Government, including, among others, the Federal Home Loan
Mortgage Corporation, the Federal Land Banks and the United States Postal
Service. Some of these securities are supported by the full faith and credit of
the United States Treasury (e.g., Government National Mortgage Association),
others are supported by the right of the issuer to borrow from the Treasury
(e.g., Federal Farm Credit Bank), while still others are supported only by the
credit of the instrumentality (e.g., Federal National Mortgage Association).
Guarantees of principal by agencies or instrumentalities of the United States
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.
<PAGE>
27
U.S. GOVERNMENT SECURITIES--Any guaranty by the U.S. Government of the
securities in which any Fund invests guarantees only the payment of principal
and interest on the guaranteed security and does not guarantee the yield or
value of that security or the yield or value of shares of that Fund.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). All Funds are permitted to invest in U.S.
Treasury Obligations.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain of the obligations purchased by
the Funds may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. Such instruments bear interest at rates which are not
fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A demand instrument with
a demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such securities. All Funds are permitted to invest in
variable and floating rate instruments.
WARRANTS--instruments giving holders the right, but not the obligation, to buy
shares of a company at a given price during a specified period. The Equity
Funds are permitted to invest in warrants.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of instrument with payment and delivery
taking place in the future. Delivery of and payment for these securities may
occur a month or more after the date of the purchase commitment. To the extent
required by the 1940 Act, a Fund will maintain with the custodian a separate
account with liquid high grade debt securities or cash in an amount at least
equal to these commitments. The interest rate realized on these securities is
fixed as of the purchase date and no interest accrues to the Fund before
settlement. These securities are subject to market fluctuation due to changes
in market interest rates and it is possible that the market value at the time
of settlement could be higher or lower than the purchase price if the general
level of interest rates has changed. Although 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 deems it
appropriate.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
Financial Highlights........................................................ 5
The Trust................................................................... 7
Investment Objectives and Policies.......................................... 7
General Investment Policies................................................. 9
Investment Limitations...................................................... 9
How to Purchase Shares...................................................... 10
Alternative Sales Charge Options............................................ 12
Exchanges................................................................... 14
Redemption of Shares........................................................ 14
The Adviser................................................................. 16
The Administrator........................................................... 17
The Shareholder Servicing Agent and Transfer Agent.......................... 17
The Distributor............................................................. 17
Performance................................................................. 17
Taxes....................................................................... 18
General Information......................................................... 20
Description of Permitted Investments and Risk Factors....................... 21
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
INSTITUTIONAL MONEY MARKET FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers shares of the INSTITUTIONAL MONEY MARKET
FUND (the "Fund"), a separate series of the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-801-1594. The Statement of Additional
Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING, FIRST NATIONAL BANK OF COMMERCE IN NEW
ORLEANS OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
MRQ-F-008-01
<PAGE>
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. This Summary provides basic information about the Trust's
Institutional Money Market Fund (the "Fund"). The Fund is a separate series of
the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Fund seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income by investing exclusively in obligations issued by the
U.S. Treasury and in repurchase agreements involving such obligations. There
can be no assurance that the Fund will achieve its investment objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The investment
policies of the Fund entail certain risks and considerations of which an
investor should be aware. While the Fund seeks to maintain a net asset value of
$1.00 per share, there can be no assurance that the Fund will be able to do
this on a continuous basis. There may be other risks involved in the ownership
of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its agencies
or instrumentalities of the securities in which the Fund invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Fund. The Trust's shares are not federally insured by the FDIC or
any other government agency.
For more information about the Fund, see "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
HOW DO I PURCHASE SHARES? Shares of the Fund are offered at net asset value per
share.
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in New
Orleans serves as the investment adviser of the Fund. See "Expense Summary" and
"The Adviser".
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder servicing
agent, transfer agent, and dividend disbursing agent for the Trust. See "The
Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in federal funds or in additional shares at the discretion of the
shareholder on the first Business Day of each month. See "Dividends."
2
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES INSTITUTIONAL MONEY MARKET FUND
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee None
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES INSTITUTIONAL MONEY MARKET FUND
(as a percentage of average net assets)
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Advisory Fees (after fee waivers) (1) .03%
Administration Fees .10%
12b-1 Fees 0%
Other Expenses (2) .12%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .25%
================================================================================
</TABLE>
(1) The Adviser has waived, on a voluntary basis, a portion of its fee, and the
advisory fee shown reflects this voluntary waiver. The Adviser reserves the
right to terminate its waiver at any time in its sole discretion. Absent
such waiver, the advisory fee for the Fund would be .15%.
(2) Other Expenses are based on estimates for the current fiscal year.
(3) Absent the Adviser's voluntary fee waiver, Total Operating Expenses for the
Fund would be .37%.
EXAMPLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment in shares of the Fund assuming: (1) 5% annual return
and (2) redemption at the end of each time period: $3 $8
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by
investors in the Fund. The information set forth in the foregoing table and
example relates only to shares of the Institutional Money Market Fund.
Shareholders purchasing shares through a financial institution may be charged
additional account fees by that institution. Additional information may be
found under "The Adviser," "The Administrator," and "The Distributor."
3
<PAGE>
THE TRUST
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares").This prospectus relates to
the Institutional Money Market Fund (the "Fund"), a diversified mutual fund.
Each share of the Fund represents an undivided, proportionate interest in the
Fund. Information regarding the Trust's other funds is contained in separate
prospectuses that may be obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are to preserve principal value and maintain a
high degree of liquidity while providing current income. There can be no
assurance that the Fund will be able to achieve its investment objectives.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by the Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations maturing in 397
days or less. The Fund will attempt to maintain a net asset value of $1.00 per
share, although there can be no assurance that it will be able to do so.
The Fund invests exclusively in obligations issued by the U.S. Treasury
("Treasury Obligations") and backed by its full faith and credit and in
repurchase agreements involving such obligations. The Fund may purchase
Treasury Obligations on a when-issued or delayed delivery basis. The Fund may
also engage in securities lending.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer.
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 (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase shares of the Fund directly from the Trust's shareholder
servicing and transfer agent, DST Systems, Inc. ("DST"), by wire. Shares of the
Fund are sold to investors on a continuous basis.
To open an account, an investor must first return a completed and signed
Account Application to
4
<PAGE>
DST, 210 West 10th Street, Kansas City, MO 64105. Account Application forms are
available by calling 1-800-801-1594.
WIRE
A shareholder whose Account Application has been received by DST may purchase
shares of the Fund by wiring Federal funds. The shareholder must wire funds to
DST and the wire instructions must include the shareholder's account number.
The shareholder must call DST at 1-800-471-1144 before wiring any funds. An
order to purchase shares by Federal funds wire will be deemed to have been
received by the Fund on the Business Day of the wire, provided that the
shareholder notifies DST prior to 12:00 noon, Central time. If DST does not
receive notice by 12:00 noon, Central time, on the Business Day of the wire,
the order will be executed on the next Business Day.
GENERAL INFORMATION REGARDING PURCHASES
Purchases of shares of the Fund may be made on any day the New York Stock
Exchange is open for business ("Business Days"). However, shares of the Fund
cannot be purchased by Federal Reserve wire on Federal holidays restricting
wire transfers. The minimum initial investment in the Fund is $10,000,000;
however, the Trust's distributor, SEI Financial Services Company (the
"Distributor"), may waive the minimum investment at its discretion.
A purchase order for shares will be effective, and eligible to receive
dividends declared that same day, on the Business Day received by DST, if DST
receives the order and payment before 12:00 noon, Central time. A purchase
order received (with payment) after this time will be effective on the next
Business Day. The purchase price of shares of the Fund is the net asset value
per share next computed after the order is received and accepted by the Trust.
The Fund expects to maintain its net asset value per share constant at $1.00.
The net asset value per share of the Fund is determined by dividing the total
value of its investments and other assets, less any liabilities, by its total
outstanding shares. The Fund's net asset value per share is calculated as of
3:00 p.m., Central time, each Business Day and is based on the amortized cost
method described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders who desire to transfer the registration of their shares should
contact DST at 1-800-471-1144.
Certain financial institutions through which shares may be purchased may be
required under state law to register as broker dealers.
EXCHANGES
Shares of the Fund may be exchanged for Class A shares of other funds of the
Trust. Investors exchanging shares of the Fund acquired for cash for Class A
shares of another fund of the Trust will be subject to the applicable sales
charge. Shares of the Fund acquired through an exchange of Class A shares of
another fund of the Trust may be exchanged back, with no sales charge, into
Class A shares of any other fund of the Trust.
An investor must have received a current prospectus of the Trust's other fund
into which the exchange is to be made (the "new" fund) before the exchange will
be effected. Exchanges will be made only after instructions in writing or by
telephone (an "Exchange Request ") are received by DST. If an Exchange Request
in good order is received by DST by 11:00 a.m. Central time, on any Business
Day, the exchange will occur on that day. The exchange privilege may be
exercised only in those states where the class or shares of the new fund may
legally be sold.
5
<PAGE>
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
Shareholders may redeem their shares without charge on any Business Day. Shares
may be redeemed by mail or by telephone. Shares of the Funds cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, DST may require that the signature on the written redemption request be
guaranteed. Signature guarantees can be obtained from banks, brokers, dealers,
credit unions, securities exchanges or associations, clearing agencies or
savings associations. Notaries public cannot guarantee signatures.
BY TELEPHONE
Shares may be redeemed by telephone if the shareholder has elected that option
on the Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a valid request for
redemption. The shareholder may have the proceeds mailed to his or her address
of record or mailed or wired to a commercial bank account previously designated
on the Account Application. Shareholders may request a wire redemption for
redemptions in excess of $500 by calling DST at 1-800-471-1144.
Neither the Trust nor DST will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and DST 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.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per
share is determined as of 3:00 p.m., Central time, on each Business Day.
Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request.
See "Purchase and Redemption of Shares" in the Statement of Additional
Information for examples of when the right of redemption may be suspended.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), 210 Baronne
Street, New Orleans, Louisiana 70112, serves as the Fund's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Trust. The
Adviser, through its Trust Group, makes the investment decisions for the assets
of the Fund and continuously reviews, supervises, and administers the
investment programs of the Fund, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market
6
<PAGE>
portfolios for the past seven years. The Adviser is a wholly-owned subsidiary
of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the Federal Deposit Insurance Corporation or
issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .15% of the Fund's average daily net assets. The Adviser
may voluntarily waive a portion of its fee in order to limit the total
operating expenses of the Fund. The Adviser reserves the right, in its sole
discretion, to terminate this voluntary fee waiver at any time.
Gerald S. Dugal is an Assistant Vice President and the Investment Manager for
the Marquis Institutional Money Market Fund, Treasury Securities Money Market
Fund, and the Tax Exempt Money Market Fund. Mr. Dugal has 10 years of
experience in investment trading, brokerage, and research. He is licensed as a
series 7 securities principal and a series 53 municipal securities principal.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087-1658, a wholly-owned subsidiary of SEI, and the Trust are
parties to an Administration Agreement (the "Administration Agreement"). Under
the terms of the Administration Agreement, the Administrator provides the Trust
with administrative services, other than investment advisory services,
including all regulatory reporting, necessary office space, equipment,
personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .10% of the Fund's average daily net assets.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
Shares of the Fund are offered without distribution fees.
SEI Financial Services Company (the "Distributor"), 680 East Swedesford Road,
Wayne, PA 19087-1658, a wholly-owned subsidiary of SEI Corporation ("SEI"), and
the Trust are parties to a distribution agreement ("Distribution Agreement").
The Fund may execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield" and
"effective compound yield." These figures will fluctuate, as they are based on
historical earnings; they are not intended to indicate future performance and
the Trust makes no representation concerning actual future yields. The "current
yield" of the Fund refers to the income generated by an investment over a
seven-
7
<PAGE>
day period which is then "annualized." That is, the amount of income generated
by an 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 is assumed to be reinvested. The "effective yield" will be slightly
higher than the "current yield" because of the compounding effect of this
assumed reinvestment.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, 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 or
to other investment alternatives.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences of an investment in the Fund may differ from the federal
income tax consequences described below. Additional information concerning
taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended. As long as the
Fund qualifies for this special tax treatment, it will be relieved of federal
income tax on that part of its net investment income (including, for this
purpose, net short-term capital gain) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) which it distributes
to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net realized capital gain will be
distributed at least annually and will be taxed to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares. The Fund
will make annual reports to shareholders of the federal income tax status of
all distributions.
Income received on Treasury Obligations is exempt from income tax at the state
level when received directly and may be exempt, depending on the state, when
received by a shareholder from the Fund provided certain conditions are
satisfied. Interest received on repurchase agreements collateralized by
Treasury Obligations normally is not exempt from state taxation. The Fund will
inform shareholders annually of the percentage of income and distributions
derived from Treasury Obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Fund is considered tax exempt in their particular states.
Certain securities purchased by a Fund (such as STRIPS) are sold with original
issue discount and do not make periodic cash interest payments. The Fund will
be required to include as part of its current income the accrued discount on
such obligations even though the Fund has not received any interest payments on
such obligations during that period. Because the Fund distributes all of its
net investment income to its shareholders, the Fund may have to sell portfolio
securities to
8
<PAGE>
distribute such accrued income, which may occur at a time when the Adviser
would not have chosen to sell such securities and which may result in a taxable
gain or loss.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by the
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, if
paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Fund, the Trust offers the following funds: Treasury
Securities Money Market Fund, Tax Exempt Money Market Fund, Government
Securities Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Growth Equity
Fund and the Value Equity Fund. All consideration received by the Trust for
shares of any fund and all assets of such fund belong to that fund and would be
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management, administrative, and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240 or by calling 1-800-471-1144.
9
<PAGE>
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of business on the record date will be entitled to receive the
dividend. Currently, capital gains of the Fund, if any, will be distributed at
least annually. Dividends are paid by the Fund in Federal funds or in
additional shares at the discretion of the shareholder on the first business
day of each month.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes,
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. The Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. The 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.
SECURITIES LENDING--In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Government equal to at least 100% of the market value of the securities lent.
The Fund continues to receive interest on the securities lent while
simultaneously earning a portion of the return generated from the collateral
(or a portion of the return on the investment of cash collateral). Collateral
is marked to market daily. There may be risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially or become insolvent.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, the Fund will maintain with the
custodian a separate account with liquid high grade debt securities or cash in
an amount at least equal to these commitments. The interest rate
10
<PAGE>
realized on these securities is fixed as of the purchase date and no interest
accrues to the Fund before settlement. These securities are subject to market
fluctuation due to changes in market interest rates and it is possible that the
market value at the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has changed. Although 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.
11
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
The Trust................................................................... 4
Investment Objectives and Policies.......................................... 4
Investment Limitations...................................................... 4
Purchase of Shares.......................................................... 4
Exchanges................................................................... 5
Redemption of Shares........................................................ 6
The Adviser................................................................. 6
The Administrator........................................................... 7
The Shareholder Servicing Agent and Transfer Agent.......................... 7
The Distributor............................................................. 7
Performance................................................................. 7
Taxes....................................................................... 8
General Information......................................................... 9
Description of Permitted Investments and Risk Factors....................... 10
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
TAX EXEMPT MONEY MARKET FUND
MARQUIS FUNDS (R) (the "Trust") is a mutual fund that offers a convenient and
economical means of investing in one or more professionally managed portfolios
of securities. This Prospectus offers shares of the TAX EXEMPT MONEY MARKET
FUND (the "Fund"), a separate series of the Trust.
This Prospectus sets forth concisely the information about the Fund and the
Trust that a prospective investor should know before investing in the Fund.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated , 1996 as
amended, has been filed with the Securities and Exchange Commission (the
"SEC") and is available without charge by calling 1-800-801-1594. The
Statement of Additional Information is incorporated into this Prospectus by
reference.
AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE 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 OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK INCLUDING, FIRST NATIONAL BANK OF COMMERCE IN NEW
ORLEANS OR ANY OF ITS AFFILIATES OR CORRESPONDENTS, INCLUDING FIRST COMMERCE
CORPORATION. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
, 1996
MRQ-F-008-01
<PAGE>
SUMMARY
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
providing a convenient way to invest in professionally managed portfolios of
securities. This Summary provides basic information about the Trust's Tax
Exempt Money Market Fund (the "Fund"). The Fund is a separate series of the
Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Fund seeks to
preserve principal value and maintain a high degree of liquidity while
providing current income exempt from Federal income taxes by investing, under
normal market conditions, at least 80% of its net 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 on which is exempt from Federal
income tax. There can be no assurance that the Fund will achieve its investment
objective.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The investment
policies of the Fund entail certain risks and considerations of which an
investor should be aware. While the Fund seeks to maintain a net asset value of
$1.00 per share, there can be no assurance that the Fund will be able to do
this on a continuous basis. There may be other risks involved in the ownership
of money market mutual funds.
ARE MY INVESTMENTS INSURED? Any guaranty by the U.S. Government, its agencies
or instrumentalities of the securities in which the Fund invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of the Fund. The Trust's shares are not federally insured by the FDIC or
any other government agency.
For more information about the Fund, see "Investment Objective and Policies"
and "Description of Permitted Investments and Risk Factors."
HOW DO I PURCHASE SHARES? Shares of the Fund are offered at net asset value per
share.
WHO IS THE ADVISER? The Trust Group of First National Bank of Commerce in New
Orleans serves as the investment adviser of the Fund. See "Expense Summary" and
"The Adviser".
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
administrator of the Trust. See "Expense Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as shareholder servicing
agent, transfer agent, and dividend disbursing agent for the Trust. See "The
Shareholder Servicing Agent and Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in federal funds or in additional shares at the discretion of the
shareholder on the first Business Day of each month. See "Dividends."
2
<PAGE>
EXPENSE SUMMARY
SHAREHOLDER TRANSACTION EXPENSES TAX EXEMPT MONEY MARKET FUND
<TABLE>
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of offering
price) None
Maximum Sales Load Imposed on Reinvested Dividends (as a percentage of
offering price) None
Maximum Contingent Deferred Sales Charge (as a percentage of original
purchase price or redemption proceeds, as applicable) None
Wire Redemption Fee $25
Exchange Fee None
</TABLE>
ANNUAL OPERATING EXPENSES TAX EXEMPT MONEY MARKET FUND
(as a percentage of average net assets)
<TABLE>
- ------------------------------------------------------------------------------
<S> <C>
Advisory Fees (after fee waivers) (1) .35%
Administration Fees .20%
12b-1 Fees (after fee waivers) (2) .00%
Other Expenses (3) .10%
- ------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (4) .65%
==============================================================================
</TABLE>
(1) The Adviser has waived, on a voluntary basis, a portion of its fee, and the
advisory fee shown reflects this voluntary waiver. The Adviser reserves the
right to terminate its waiver at any time in its sole discretion. Absent
such waiver, the advisory fee for the Fund would be .45%.
(2) Absent the 12b-1 fee waiver, the 12b-1 fee would be .25%.
(3) Other Expenses are based on estimates for the current fiscal year.
(4) Absent the Adviser's and the Distributor's voluntary fee waivers, Total
Operating Expenses for the Fund would be 1.00%.
EXAMPLE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
An investor would pay the following expenses on a $1,000
investment in shares of the Fund assuming: (1) 5% annual return
and (2) redemption at the end of each time period: $7 $21
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by
investors in the Fund. The information set forth in the foregoing table and
example relates only to shares of the Tax Exempt Money Market Fund.
Shareholders purchasing shares through a financial institution may be charged
additional account fees by that institution. Additional information may be
found under "The Adviser," "The Administrator," and "The Distributor."
3
<PAGE>
THE TRUST
MARQUIS FUNDS (R) (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares").This prospectus relates to
the Tax Exempt Money Market Fund (the "Fund"), a diversified mutual fund. Each
share of the Fund represents an undivided, proportionate interest in the Fund.
Information regarding the Trust's other funds is contained in separate
prospectuses that may be obtained by calling 1-800-801-1594.
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objectives are to preserve principal value and maintain a
high degree of liquidity while providing current income exempt from Federal
income taxes. There can be no assurance that the Fund will be able to achieve
its investment objectives.
The Fund complies with regulations of the Securities and Exchange Commission
applicable to money market funds. These regulations impose certain quality,
maturity and diversification restraints on investments by the Fund. Under these
regulations, the Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations maturing in 397
days or less. The Fund will attempt to maintain a net asset value of $1.00 per
share, although there can be no assurance that it will be able to do so.
Under normal market conditions, the Fund will invest at least 80% of its net
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 on which
is exempt from Federal income tax (collectively, "Municipal Securities"). The
Fund will invest at least 80% of its assets in Municipal Securities the
interest on which is not treated as a preference item for purposes of the
federal alternative minimum tax. This investment policy is a fundamental policy
of the Fund. The Fund will purchase municipal bonds, municipal notes, municipal
lease obligations, tax-exempt money market mutual funds, and tax-exempt
commercial paper rated in the two highest short-term rating categories by a
nationally recognized statistical rating organization ("NRSRO") in accordance
with Securities and Exchange Commission ("SEC") regulations at the time of
investment or, if not rated, determined by the Adviser to be of comparable
quality.
The Adviser will not invest more than 25% of Fund assets in Municipal
Securities (a) whose issuers are located in the same state or (b) the interest
on which is derived from revenues of similar type projects. This restriction
does not apply to Municipal Securities in any of the following categories:
public housing authorities; general obligations of states and localities; state
and local housing finance authorities; or municipal utilities systems.
The Fund may purchase municipal obligations with demand features, including
variable and floating rate obligations. In addition, the Fund may invest in
commitments to purchase securities on a "when issued" basis and purchase
securities subject to a standby commitment.
The Fund may invest up to 20% of the Fund's net assets in the aggregate in
taxable money market instruments, taxable money market mutual funds, and
securities subject to the alternative minimum tax. Taxable money market
instruments in which the Fund may invest consist of (i) bankers' acceptances,
certificates of deposits, notes and time deposits of highly-rated U.S. banks
and U.S. branches of foreign banks, (ii) U.S. Treasury obligations and
obligations issued or guaranteed by the agencies and instrumentalities of the
U.S. Government, including STRIPs; (iii) high quality commercial paper issued
by U.S. and foreign corporations; (iv) debt obligations with a maturity of one
year or less issued by corporations with outstanding high-quality commercial
paper; (v) receipts and (vi) repurchase agreements involving any of the
foregoing obligations entered into with highly-rated banks and broker-dealers.
The Fund may engage in securities lending and may also borrow money in amounts
up to 33 1/3% of its net assets.
4
<PAGE>
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitation is a fundamental policy of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States, its agencies or instrumentalities and repurchase agreements
involving such securities) if, as a result, more than 5% of the total assets of
the Fund would be invested in the securities of such issuer. This restriction
applies to 75% of the Fund's assets.
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 (i) investments in the obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities, and
repurchase agreements involving such securities; and (ii) tax-exempt securities
issued by governments or political subdivisions of governments.
3. Make loans except that the Fund may (i) purchase or hold debt instruments in
accordance with its investment objectives and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending as described in
this Prospectus and in the Statement of Additional Information.
Additional investment limitations are set forth in the Statement of Additional
Information.
PURCHASE OF SHARES
Investors may purchase shares of the Fund directly from the Trust's shareholder
servicing and transfer agent DST Systems, Inc. ("DST") by mail, by wire, or
through an automatic investment plan. Shares may also be purchased through
broker-dealers, including Marquis Investments, Inc., that have established a
dealer agreement with SEI Financial Services Company, the Trust's distributor
(the "Distributor"). Shares of the Fund are sold on a continuous basis.
BY MAIL
You may purchase shares of the Fund by completing and signing an Account
Application form and mailing it, along with a check (or other negotiable bank
instrument or money order) payable to "Marquis Funds (Tax Exempt Money Market
Fund)," to DST at 210 West 10th Street, Kansas City, MO 64105. You may purchase
additional shares at any time by mailing payment to DST. Orders placed by mail
will be executed on receipt of your payment. If your check does not clear, your
purchase will be cancelled and you could be liable for any losses or fees
incurred.
You may obtain Account Application forms by calling 1-800-801-1594.
BY WIRE
You may purchase shares of the Fund by wiring Federal funds, provided that your
Account Application has been previously received. You must wire funds to DST
and the wire instructions must include your account number. You must call DST
at 1-800-471-1144 before wiring any funds. An order to purchase shares by
Federal funds wire will be deemed to have been received by the Fund on the
Business Day (defined below) of the wire, provided that the shareholder
notifies DST prior to 11:00 a.m., Central time. If DST does not receive notice
by 11:00 a.m., Central time, on the Business Day of the wire, the order will be
executed on the next Business Day.
AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Fund through
automatic deductions by Automated Clearing House ("ACH") from a checking
account by completing an AIP Application Form. The minimum pre-authorized
5
<PAGE>
investment amount is $50 per month. An AIP Application Form may be obtained by
contacting DST at 1-800-471-1144. The AIP is available only for additional
investments for an existing account.
GENERAL INFORMATION REGARDING PURCHASES
You may purchase shares of the Fund on any day the New York Stock Exchange is
open for business ("Business Days"). However, shares of the Fund cannot be
purchased by Federal Reserve wire on Federal holidays restricting wire
transfers. The minimum initial investment in shares of the Fund is $2,500 ($500
minimum for individual retirement accounts and employees of First National Bank
of Commerce in New Orleans, the Fund's investment adviser (the "Adviser") or
its affiliates); however, the Distributor may waive the minimum investment at
its discretion. Subsequent purchases of shares must be at least $100, except
for purchases through the AIP and payroll deductions, which must be at least
$50.
A purchase order for shares will be effective, and eligible to receive
dividends declared that same day, on the Business Day the order is received by
DST if DST receives the order and payment before 11:00 a.m., Central time. A
purchase order received (with payment) after this time will be effective on the
next Business Day. The purchase price of shares of the Fund is the net asset
value per share next computed after the order is received and accepted by the
Trust. The Fund expects to maintain its net asset value per share constant at
$1.00. The net asset value per share of the Fund is determined by dividing the
total value of its investments and other assets, less any liabilities, by its
total outstanding shares. The Fund's net asset value per share is calculated as
of 3:00 p.m., Central time, each Business Day and is based on the amortized
cost method described in the Statement of Additional Information.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its shareholders to accept such order.
Shareholders of record who desire to transfer registration of their shares
should contact DST at 1-800-471-1144.
PURCHASES THROUGH FINANCIAL INSTITUTIONS
Shares may also be purchased through financial institutions, including the
Adviser, that provide distribution assistance or shareholder services to the
Trust. Shares purchased by persons ("Customers") through financial institutions
may be held of record by the financial institution. Financial institutions may
impose an earlier cut-off time for receipt of purchase orders directed through
them to allow for processing and transmittal of these orders to the Distributor
for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish such change. Certain financial institutions may be
required under state law to register as broker/dealers.
Depending upon the terms of a particular Customer account, a financial
institution may charge a Customer account fees. Information concerning these
services and any charges will be provided to the Customer by the financial
institution.
EXCHANGES
You may exchange your shares for Class A or Class B shares of other funds of
the Trust. You will be subject to the applicable sales charge on exchange
unless you qualify for a sales load waiver.
You must have received a current prospectus of the Trust's other fund into
which you wish to move your investment (the "new" fund) before the exchange
will be effected. Exchanges will be made only after instructions in writing or
by telephone (an "Exchange Request") are received
6
<PAGE>
by DST. If an Exchange Request in good order is received by DST by 11:00 a.m.
Central time, on any Business Day, the exchange will occur on that day. The
exchange privilege may be exercised only in those states where the class or
shares of the new fund may legally be sold.
Customers who beneficially own shares held of record by a financial institution
should contact that institution if they wish to exchange shares. The
institution will contact DST and effect the exchange on behalf of the Customer.
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon sixty days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $25 charge for wiring redemption proceeds. Shares may be redeemed by
mail, by telephone or through a systematic withdrawal plan. Investors who own
shares held of record by a financial institution should contact that financial
institution for information on how to redeem shares. Shares cannot be redeemed
by Federal Reserve wire on Federal holidays restricting wire transfers.
BY MAIL
A written request for redemption must be received by DST in order to constitute
a valid redemption request.
If the redemption request exceeds $5,000 or if the request directs the proceeds
to be sent or wired to a shareholder or an address different from that on
record, DST may require that the signature on the written redemption request be
guaranteed. You should be able to obtain a signature guarantee from a bank,
broker, dealer, credit union, securities exchange or association, clearing
agency or savings association. Notaries public cannot guarantee signatures.
BY TELEPHONE
You may redeem your shares by telephone if you have elected that option on your
Account Application. Under most circumstances, payments will be transmitted on
the next Business Day following receipt of a valid request for redemption. You
may have the proceeds mailed to your address of record or mailed or wired to a
commercial bank account previously designated on your Account Application.
There is no charge for having redemption proceeds mailed to you or to a
designated bank account, but there is a charge for wiring redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
DST at 1-800-471-1144, who will deduct a wire charge of $25 from the amount of
the wire redemption.
Neither the Trust nor DST will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone instructions that
it reasonably believes to be genuine. The Trust and DST 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. When market conditions are extremely busy, it is possible that
you may experience difficulties placing redemption orders by telephone, and may
wish to place them by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Fund offers a Systematic Withdrawal Plan which you may use to receive
regular distributions from your 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 ACH of $100 or more on a monthly, quarterly,
semi-annual or annual basis. You may obtain a SWP Application Form by
contacting DST at 1-800-471-1144.
To participate in the SWP, you must have your dividends automatically
reinvested. You should realize that if your automatic withdrawals exceed income
dividends, your invested principal in the account will be depleted. Thus,
depending on the frequency and amounts of the withdrawal payments and/or any
fluctuations in the net asset value per share, your original investment could
be
7
<PAGE>
exhausted entirely. You may change or cancel the SWP at any time on written
notice to DST.
OTHER INFORMATION REGARDING REDEMPTIONS
All redemption orders are effected at the net asset value per share next
determined after receipt of a valid request for redemption. A redemption order
received before 11:00 a.m., Central time, on any Business Day will be effective
that day and will receive that day's redemption price. Net asset value per
share is determined as of 3:00 p.m., Central time, on each Business Day.
Redeemed shares are not entitled to dividends declared on the day the
redemption order is effective.
Payment to shareholders for shares redeemed will be made within seven days
after DST receives the valid redemption request. At various times, however, the
Fund may be requested to redeem shares for which it has not yet received good
payment; collection of payment may take 10 or more days. In such circumstances,
redemption proceeds will be held pending clearance of the check.
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem your shares at their net asset value if, because
of redemptions, your account in the Fund has a value of less than the minimum
initial purchase amount (normally $2,500; $500 for individual retirement
accounts and for employees of the Adviser or its affiliates). Accordingly, if
you purchase shares of the Fund in only the minimum investment amount, you may
be subject to involuntary redemption if you redeem any shares. Before the Fund
exercises its right to redeem your shares, you will be given notice that the
value of the shares in your account is less than the minimum amount and will be
allowed 60 days to make an additional investment in the Fund in an amount which
will increase the value of the account to at least the minimum amount.
THE ADVISER
First National Bank of Commerce in New Orleans (the "Adviser"), 210 Baronne
Street, New Orleans, Louisiana 70112, serves as the Fund's investment adviser
under an advisory agreement (the "Advisory Agreement") with the Trust. The
Adviser, through its Trust Group, makes the investment decisions for the assets
of the Fund and continuously reviews, supervises, and administers the
investment programs of the Fund, subject to the supervision of, and policies
established by, the Trustees of the Trust.
As of September 30, 1995, the Adviser's Trust Group managed approximately $2.0
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. The Trust Group has managed client accounts since 1933 and has
managed money market portfolios for the past seven years. The Adviser is a
wholly-owned subsidiary of First Commerce Corporation.
The Glass-Steagall Act restricts the securities activities of national banks
such as First National Bank of Commerce in New Orleans but the Comptroller of
the Currency permits national banks to provide investment advisory and other
services to mutual funds. Should the Comptroller's position be challenged
successfully in court or reversed by legislation, the Trust might have to make
other investment advisory arrangements.
The Trust's shares are not sponsored, endorsed or guaranteed by, and do not
constitute obligations or deposits of, the Adviser or First Commerce
Corporation and are not insured by the Federal Deposit Insurance Corporation or
issued or guaranteed by the U.S. Government or any of its agencies.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .45% of the Fund's average daily net assets. The Adviser
may voluntarily waive a portion of its fee in order to limit the total
operating expenses of the Fund. The Adviser reserves the right, in its sole
discretion, to terminate this voluntary fee waiver at any time.
Gerald S. Dugal is an Assistant Vice President and the Investment Manager for
the Marquis Tax Exempt Money Market Fund, Institutional Money Market Fund, and
the Treasury Securities Money
8
<PAGE>
Market Fund. Mr. Dugal has 10 years of experience in investment trading,
brokerage, and research. He is licensed as a series 7 securities principal and
a series 53 municipal securities principal.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), 680 East Swedesford
Road, Wayne, PA 19087-1658, a wholly-owned subsidiary of SEI, and the Trust are
parties to an Administration Agreement (the "Administration Agreement"). Under
the terms of the Administration Agreement, the Administrator provides the Trust
with administrative services, other than investment advisory services,
including all regulatory reporting, necessary office space, equipment,
personnel, and facilities.
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .20% of the Fund's average daily net assets.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 210 West 10th Street, Kansas City, MO 64105, serves as the
dividend disbursing agent and shareholder servicing agent for the Trust. DST
also acts as transfer agent for the Trust under a Transfer Agent Agreement.
THE DISTRIBUTOR
Shares of the Fund are offered without distribution fees.
SEI Financial Services Company (the "Distributor"), 680 East Swedesford Road,
Wayne, PA 19087-1658, a wholly-owned subsidiary of SEI Corporation ("SEI"), and
the Trust are parties to a distribution agreement ("Distribution Agreement").
The Fund may execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor, for which the affiliate or
the Distributor may receive "usual and customary" compensation. For further
information, see the Statement of Additional Information.
PERFORMANCE
From time to time, the Trust may advertise the Fund's "current yield,"
"effective compound yield" and "tax-equivalent yield." These figures will
fluctuate, as they are based on historical earnings; they are not intended to
indicate future performance and the Trust makes no representation concerning
actual future yields. The "current yield" of the Fund refers to the income
generated by an investment over a seven-day period which is then "annualized."
That is, the amount of income generated by an 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 is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment. Tax-
equivalent yield is calculated by determining the rate of return that would
have been achieved on a fully taxable investment to produce the after-tax
equivalent of the Fund's yield, assuming certain tax brackets for a
shareholder.
In addition, the Trust may from time to time compare performance of the Fund to
that of other mutual funds tracked by mutual fund rating services, 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 or
to other investment alternatives.
TAXES
The following summary of federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial, or
administrative action.
No attempt has been made to present a detailed explanation of the federal,
state, or local income tax treatment of the Fund or its shareholders.
Accordingly, shareholders are urged to consult their tax advisers regarding
specific questions as to federal, state, and local income taxes. State and
local tax consequences of an investment in the
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<PAGE>
Fund may differ from the federal income tax consequences described below.
Additional information concerning taxes is set forth in the Statement of
Additional Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for federal income tax purposes and is
not combined with the Trust's other funds. The Fund intends to qualify for the
special tax treatment afforded regulated investment companies as defined under
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As
long as the Fund qualifies for this special tax treatment, it will be relieved
of federal income tax on that part of its net investment income (including, for
this purpose, net short-term capital gain) and net capital gain (the excess of
net long-term capital gain over net short-term capital loss) which it
distributes to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including, for this
purpose, net short-term capital gain) to shareholders. Dividends from net
investment income will be taxable to shareholders as ordinary income whether
received in cash or in additional shares. Any net realized capital gain will be
distributed at least annually and will be taxed to shareholders as long-term
capital gain, regardless of how long the shareholder has held shares. The Fund
will make annual reports to shareholders of the federal income tax status of
all distributions.
Income received on Treasury Obligations is exempt from income tax at the state
level when received directly and may be exempt, depending on the state, when
received by a shareholder from the Fund provided certain conditions are
satisfied. Interest received on repurchase agreements collateralized by
Treasury Obligations normally is not exempt from state taxation. The Fund will
inform shareholders annually of the percentage of income and distributions
derived from Treasury Obligations. Shareholders should consult their tax
advisers to determine whether any portion of the income dividends received from
the Fund is considered tax exempt in their particular states.
Ordinarily, shareholders will include in income all dividends declared by the
Fund in the year those dividends are paid. However, dividends declared by the
Fund in October, November or December of any year and payable to shareholders
of record on a date in one of those months will be deemed to have been paid by
the Fund and received by the shareholders on the last day of that month, if
paid by the Fund at any time during the following January.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated June 29, 1993. The Declaration of Trust permits the Trust to
offer separate series of shares or "funds" and different classes of each fund.
In addition to the Fund, the Trust offers the following funds: Treasury
Securities Money Market Fund, Institutional Money Market Fund, Government
Securities Fund, Louisiana Tax-Free Income Fund, Balanced Fund, Growth Equity
Fund and the Value Equity Fund. All consideration received by the Trust for
shares of any fund and all assets of such fund belong to that fund and would be
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional funds.
The Trust pays its operating expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under Federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the
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Commonwealth of Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide essential management,
administrative, and shareholder services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one vote. Each fund or
class will vote separately on matters relating solely to that fund or class. As
a Massachusetts business trust, the Trust is not required to hold annual
meetings of shareholders but meetings of shareholders will be held from time to
time to seek approval for certain changes in the operation of the Trust and for
the election of Trustees under certain circumstances. In addition, a Trustee
may be removed by the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semiannually and audited
financial statements annually. The Trust furnishes periodic reports to
shareholders of record, and, as necessary, proxy statements for shareholder
meetings.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to DST Systems, Inc., P.O. Box 419240,
Kansas City, MO 64141-6240 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of the Fund is
determined and declared on each Business Day as a dividend for shareholders of
record as of the close of business on that day. Shareholders who own shares at
the close of business on the record date will be entitled to receive the
dividend. Currently, capital gains of the Fund, if any, will be distributed at
least annually. Dividends are paid by the Fund in Federal funds or in
additional shares at the discretion of the shareholder on the first business
day of each month.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen LLP
serves as the independent public accountants of the Trust.
CUSTODIAN
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
The Custodian holds cash, securities and other assets of the Trust as required
by the Investment Company Act of 1940, as amended (the "1940 Act").
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the Fund and associated risk factors. Further discussion is
contained in the Statement of Additional Information.
BANKERS' ACCEPTANCES--Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods and to furnish dollar
exchange. Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT--Certificates of deposit are interest bearing
instruments with a specific short-term maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit of funds and normally
can be traded in the secondary market prior to maturity. Certificates of
deposit with penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER--Commercial paper is a term used to describe unsecured short-
term promissory notes issued by corporations and other entities. Maturities on
these issues vary from a few to 270 days.
FIXED INCOME SECURITIES--Fixed income securities include bonds, notes,
debentures and other interest-bearing securities that represent indebtedness.
The market value of the fixed income investments in which the Fund invest will
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<PAGE>
change in response to interest rate changes and other factors. During periods
of falling interest rates, the values of outstanding fixed income securities
generally rise. Conversely, during periods of rising interest rates, the values
of such securities generally decline. Moreover, while securities with longer
maturities tend to produce higher yields, the prices of longer maturity
securities are also subject to greater market fluctuations as a result of
changes in interest rates. Changes by recognized agencies in the rating of any
fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of these securities will not necessarily affect cash income derived
from these securities but will affect the Fund's net asset value.
MUNICIPAL LEASES--Municipal leases are obligations issued by state and local
governments or authorities to finance the acquisition of equipment and
facilities and may be considered to be illiquid. They may take the form of a
lease, an installment purchase contract, a conditional sales contract, or a
participation certificate in any of the above.
Municipal lease obligations typically are not backed by the municipality's
credit, and their interest may become taxable if the lease is assigned. If
funds are not appropriated for the following year's lease payments, a lease may
terminate, with a possibility of default on the lease obligation and
significant loss to the Fund. Under guidelines established by the Board of
Directors, the credit quality of municipal leases will be determined on an
ongoing basis, including an assessment of the likelihood that a lease will be
canceled.
MUNICIPAL SECURITIES--Municipal securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain funds to be used for
various public facilities, for refunding outstanding obligations, for general
operating expenses, and for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial development bonds
issued by or on behalf of public authorities to obtain funds to provide for the
construction, equipment, repair, or improvement of privately operated
facilities. General obligation bonds are backed by the taxing power of the
issuing municipality. Revenue bonds are backed by the revenues of a project or
facility; tolls from a toll bridge for example. Certificates of participation
represent an interest in an underlying obligation or commitment such as an
obligation issued in connection with a leasing arrangement. 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 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.
PARTICIPATION INTERESTS--Participation interests are interests in Municipal
Securities from financial institutions such as commercial and investment banks,
savings and loan associations and insurance companies. These interests may take
the form of participations, beneficial interests in a trust, partnership
interests or any other form of indirect ownership that allows the Fund to treat
the income from the investment as exempt from federal income tax. The Fund
invests in these participation interests in order to obtain credit enhancement
or demand features that would not be available through direct ownership of the
underlying Municipal Securities.
RECEIPTS--TRs, TIGRs and CATS--interests in separately traded interest and
principal component parts of U.S. Treasury obligations that are issued by banks
or brokerage firms and are created by depositing 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
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<PAGE>
receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts include
"Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"),
and "Certificates of Accrual on Treasury Securities" ("CATS"). Each Fund other
than the Louisiana Fund is permitted to invest in receipts.
STRIPS, TRs, TIGRs and CATS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face value at their
maturity date without interim cash payments of interest or principal. The
amount of this discount is accrued over the life of the security and
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, receipts may be subject to greater price
volatility than interest paying U.S. Treasury Obligations. See also "Taxes".
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which the Fund
obtains a security and simultaneously commits to return the security to the
seller at an agreed upon price (including principal and interest) on an agreed
upon date within a number of days from the date of purchase. Repurchase
agreements must be fully collateralized at all times. The Fund bears a risk of
loss in the event the other party defaults on its obligations and the Fund is
delayed or prevented from its right to dispose of the collateral. The 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 amended.
SECURITIES LENDING--In order to generate additional income, the Fund may lend
securities which it owns pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash or securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. The Fund continues to receive interest on the securities lent
while simultaneously earning a portion of the return generated from the
collateral (or a portion of the return on the investment of cash collateral).
Collateral is marked to market daily. There may be risks of delay in recovery
of the securities or even loss of rights in the collateral should the borrower
of the securities fail financially or become insolvent.
STANDBY COMMITMENTS--Some securities dealers are willing to sell Municipal
Securities to the Fund accompanied by their commitments to repurchase the
Municipal Securities prior to maturity, at the Fund's option, for the amortized
cost of the Municipal Securities at the time of repurchase. These arrangements
are not used to protect against changes in the market value of Municipal
Securities. They permit the Fund, however, to remain fully invested and still
provide liquidity to satisfy redemptions. The cost of Municipal Securities
accompanied by these "standby" commitments could be greater than the cost of
Municipal Securities without such commitments. Standby commitments are not
marketable or otherwise assignable and have value only to the Fund. The default
or bankruptcy of a securities dealer giving such a commitment would not affect
the quality of the Municipal Securities purchased. However, without a standby
commitment, these securities could be more difficult to sell. The Fund enters
into standby commitments only with those dealers whose credit the investment
adviser believes to be of high quality.
TIME DEPOSITS--Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market. Time deposits are considered to be illiquid
securities.
Any guaranty by the U.S. Treasury of the securities in which the Fund invests
guarantees only the payment of principal and interest on the guaranteed
security and does not guarantee the yield or value of that security or the
yield or value of shares of the Fund.
U.S. GOVERNMENT AGENCY OBLIGATIONS--Obligations issued or guaranteed by
agencies of
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the United States Government, including, among others, the Federal Farm Credit
Bank, the Federal Housing Administration and the Small Business Administration,
and obligations issued or guaranteed by instrumentalities of the United States
Government, including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the United States Postal Service. Some
of these securities are supported by the full faith and credit of the United
States Treasury (e.g., Government National Mortgage Association), others are
supported by the right of the issuer to borrow from the Treasury (e.g., Federal
Farm Credit Bank), while still others are supported only by the credit of the
instrumentality (e.g., Federal National Mortgage Association). Guarantees of
principal by agencies or instrumentalities of the United States 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. GOVERNMENT SECURITIES--Any guaranty by the U.S. Government of the
securities in which the Fund invests guarantees only the payment of principal
and interest on the guaranteed security and does not guarantee the yield or
value of that security or the yield or value of shares of the Fund.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes,
and bonds issued by the U.S. Treasury, and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS"). The Fund does not expect to trade STRIPS
actively.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain of the obligations purchased by
the Fund may carry variable or floating rates of interest, may involve a
conditional or unconditional demand feature and may include variable amount
master demand notes. Such instruments bear interest at rates which are not
fixed, but which vary with changes in specified market rates or indices. The
interest rates on these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on such obligations may
not accurately reflect existing market interest rates. A demand instrument with
a demand notice exceeding seven days may be considered illiquid if there is no
secondary market for such securities.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-issued or delayed delivery
basis transactions involve the purchase of an instrument with payment and
delivery taking place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the purchase commitment.
To the extent required by the 1940 Act, the Fund will maintain with the
custodian a separate account with liquid high grade debt securities or cash in
an amount at least equal to these commitments. The interest rate realized on
these securities is fixed as of the purchase date and no interest accrues to
the Fund before settlement. These securities are subject to market fluctuation
due to changes in market interest rates and it is possible that the market
value at the time of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed. Although the Fund
generally purchases securities on a when-issued or forward commitment basis
with the intention of actually acquiring securities for its portfolio, the Fund
may dispose of a when-issued security or forward commitment prior to settlement
if it deems appropriate.
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
The Trust................................................................... 4
Investment Objectives and Policies.......................................... 4
Investment Limitations...................................................... 5
Purchase of Shares.......................................................... 5
Exchanges................................................................... 6
Redemption of Shares........................................................ 7
The Adviser................................................................. 8
The Administrator........................................................... 9
The Shareholder Servicing Agent and Transfer Agent.......................... 9
The Distributor............................................................. 9
Performance................................................................. 9
Taxes....................................................................... 9
General Information......................................................... 10
Description of Permitted Investments and Risk Factors....................... 11
</TABLE>
<PAGE>
MARQUIS FUNDS: Statement of Additional Information
Investment Adviser: First National Bank of Commerce in New Orleans
This Statement of Additional Information is not a prospectus. It provides
information about the activities and operations of Marquis Funds (the "Trust")
in addition to the information provided in the Trust's prospectuses dated
1996 (the "Prospectuses") and should be read in conjunction with a Prospectus.
Prospectuses may be obtained through the Trust's shareholder servicing and
transfer agent, DST Systems, Inc., 210 West 10th Street, Kansas City, Missouri
64105 (1-800-471-1144).
TABLE OF CONTENTS
The Trust.................................................................. 2
Additional Description of Permitted Investments............................ 2
Investment Limitations..................................................... 21
Non-Fundamental Policies................................................... 22
The Adviser................................................................ 23
The Administrator.......................................................... 24
The Distributor............................................................ 25
Trustees and Officers of the Trust......................................... 27
Computation of Yield....................................................... 30
Calculation of Total Return................................................ 32
Purchase and Redemption of Shares.......................................... 33
Conversion Feature......................................................... 34
Letter of Intent........................................................... 34
Determination of Net Asset Value........................................... 34
Taxes...................................................................... 36
Fund Transactions.......................................................... 41
Trading Practices and Brokerage............................................ 42
Description of Shares...................................................... 44
Shareholder Liability...................................................... 45
Limitation of Trustees' Liability.......................................... 45
5% Shareholders............................................................ 46
Experts.................................................................... 49
Financial Information...................................................... -
, 1996
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<PAGE>
THE TRUST
Marquis Funds(R) is an open-end management investment company established under
Massachusetts law as a "Massachusetts business trust" under an Agreement and
Declaration of Trust dated as of June 29, 1993 (the "Declaration of Trust").
The Declaration of Trust permits the Trust to offer separate series of units of
beneficial interest ("shares") and different classes of shares of each series.
The Trust consists of seven series: the Government Securities Fund, the
Louisiana Tax-Free Income Fund (the "Louisiana Fund"), the Balanced Fund
(formerly the "Growth and Income Fund), the Value Equity Fund, the Treasury
Securities Money Market Fund, the Institutional Money Market Fund, and the Tax
Exempt Money Market Fund (the "Money Market Funds") (collectively, the
"Funds"). Each Fund is a diversified mutual fund, except the Louisiana Fund,
which is non-diversified. Except for differences between the Class A and Class
B shares of the Government Securities Fund, the Louisiana Fund (together, the
"Fixed Income Funds"), Balanced Fund, Value Equity Fund and Growth Equity Fund
(together, the "Equity Funds") pertaining to sales loads, service fees,
dividends, voting rights and distribution plans, and differences between the
Trust Class, Retail Class and Cash Sweep Class shares of the Treasury Securities
Money Market Fund and the Institutional Money Market Fund pertaining to
distribution costs, distribution plans, dividends and voting rights, each share
of each Fund represents an equal proportionate interest in that Fund. See
"Description of Shares." Capitalized terms not defined herein are defined in
the Prospectuses. No investment in shares of a Fund should be made without
first reading that Fund's Prospectus.
ADDITIONAL DESCRIPTION OF PERMITTED INVESTMENTS
Variable and Floating Rate Notes
All Funds may invest in variable rate notes and floating rate notes (together,
"adjustable interest rate notes"). The Fixed Income Funds may invest in
adjustable interest rate notes issued by or on behalf of states (including the
District of Columbia), territories and possessions of the United States and
their respective authorities, agencies, instrumentalities and political
subdivisions; such notes constitute a form of Municipal Securities. A variable
--------
rate note is a note whose terms provide for the adjustment of its interest rate
- ---------
on set dates and which, upon such adjustment, can reasonably be expected to have
a market value that approximates its par value; the degree to which a variable
rate note's market value approximates its par value will depend on the frequency
of the readjustment of the note's interest rate and the length of time that must
elapse before the next readjustment. A floating rate note is a note whose terms
------------------
provide for the adjustment of its interest rate whenever a specified interest
rate changes and which, at any time, can reasonably be expected to have a market
value that approximates its par value. Although there may be no active
secondary market with respect to a particular variable or floating rate note
purchased by a Fund, the Fund may
B-2
<PAGE>
seek to resell the note at any time to a third party. The absence of an active
secondary market, however, could make it difficult for the Fund to dispose of a
variable or floating rate note in the event the issuer of the note defaulted on
its payment obligations, and the Fund could, as a result or for other reasons,
suffer a loss to the extent of the default. In addition, a variable or floating
rate demand note with a demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such securities. Variable or
floating rate notes may be secured by bank letters of credit.
For the Money Market Funds only, variable and floating rate notes will be deemed
to have maturities as follows:
1. A variable rate note, the principal amount of which is scheduled on the
face of the instrument to be paid in thirteen months or less, will be deemed by
a Fund to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
2. A variable rate note that is subject to a demand feature will be deemed
by a Fund to have a maturity equal to the longer of the period remaining until
the next readjustment of the interest rate or the period remaining until the
principal amount can be recovered through demand.
3. A floating rate note that is subject to a demand feature will be deemed
by a Fund to have a maturity equal to the period remaining until the principal
amount can be recovered through demand.
As used above, a note is "subject to a demand feature" where the Fund is
entitled to receive the principal amount of the note either at any time on no
more than thirty days' notice or at specified intervals not exceeding thirteen
months and upon no more than thirty days notice.
The Fixed Income Funds and the Equity Funds may invest in variable amount master
demand notes, which may or may not be backed by bank letters of credit. These
variable rate 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.
Bank Obligations
The Funds are not prohibited from investing in obligations of banks that are
clients of
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SEI Corporation ("SEI"). However, the purchase of shares of the Funds by such
banks or by their customers will not be a consideration in determining which
bank obligations the Funds will purchase. The Funds will not purchase
obligations of the Adviser.
Government National Mortgage Association ("GNMA") Certificates
The Fixed Income Funds and the Equity Funds may invest in securities issued by
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 predict
accurately the average maturity of a particular GNMA pool. The scheduled
monthly interest and principal payments relating to mortgages in the pool will
be "passed through" to investors. GNMA securities differ from conventional
bonds in that principal is paid back to the certificate holders over the life of
the loan rather than at maturity. As a result, there will be monthly scheduled
payments of principal and interest. In addition, there may be unscheduled
principal payments representing prepayments on the underlying mortgages.
Although GNMA certificates may offer yields higher than those available from
other types of U.S. Government securities, GNMA certificates may be less
effective than other types of securities as a means of "locking in" attractive
long-term rates because of the prepayment feature. For instance, when interest
rates decline, the value of a GNMA certificate likely will not rise as much as
comparable debt securities due to the prepayment feature. In addition, these
prepayments can cause the price of a GNMA certificate originally purchased at a
premium to decline in price to its par value, which may result in a loss.
Mortgage-Backed Securities
The Government Securities Fund and the Balanced Fund may, in addition to
investing in GNMA securities, invest in other mortgage-backed securities,
principally collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). CMOs are securities collateralized by
mortgages, mortgage pass-throughs, mortgage pay-through bonds (bonds
representing an interest in a pool of mortgages where the cash flow generated
from the mortgage collateral pool is dedicated to bond repayment), and mortgage-
backed bonds (general obligations of the issuers payable out of the issuers'
general funds and additionally secured by a first lien on a pool of single-
family detached properties).
Many CMOs are issued with a number of classes or series that have different
maturities
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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
generally are not guaranteed.
REMICs, which were authorized under the Internal Revenue Code of 1986, as
amended, are private entities formed for the purpose of holding a fixed pool of
mortgages secured by an interest in real property. REMICs are a form of CMO,
and issue multiple classes of securities.
Asset-Backed Securities
The Government Securities and Balanced Funds may invest in asset-backed
securities including company receivables, truck and auto loans, leases, and
credit card receivables. Asset-backed securities, like mortgage-backed
securities, represent ownership of a pool of obligations. The payment of
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. In addition, these issues 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. The purchase of non-mortgage asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, due to the manner in which the issuing organizations
may perfect their interests in their respective obligations, there is a risk
that another party could acquire an interest in the obligations superior to that
of the holders of the asset-backed securities. Also, in most states the
security interest in a motor vehicle must be noted on the certificate of title
to perfect a security interest against competing claims of other parties. Due
to the large number of vehicles involved, however, the certificate of title to
each vehicle financed, pursuant to the obligations underlying the asset-backed
securities, usually is not amended to reflect the assignment of the seller's
security interest for the benefit of the holders of the asset-backed securities.
Therefore, the possibility exists that recoveries on repossessed collateral may
not, in some cases, be available to support payments on those securities. In
addition, various state and Federal laws give the motor vehicle owner the right
to assert against the holder of the owner's obligation certain defenses such
owner would have against the seller of the motor vehicle. The assertion of such
defenses could reduce payments on the related
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asset-backed securities. Insofar as credit card receivables are concerned,
credit card holders are entitled to the protection of a number of state and
Federal consumer credit laws, many of which give such holders the right to set
off certain amounts against balances owed on the credit card, thereby reducing
the amounts paid on such receivables. In addition, unlike most other asset-
backed securities, credit card receivables are unsecured obligations of the card
holder. 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.
The development of non-mortgage asset-backed securities is at an early stage
compared to mortgage-backed securities. While the market for asset-backed
securities is becoming increasingly liquid, the market for non-mortgage asset-
backed securities is not as well developed as that for mortgage-backed
securities guaranteed by government agencies or instrumentalities. The Adviser
intends to limit its purchases of non-mortgage asset-backed securities to
securities that are readily marketable at the time of purchase.
Separately Traded Interest and Principal Securities ("STRIPS")
Each Fund may invest in STRIPS which are component parts of U.S. Treasury
Securities traded through the Federal Book-Entry System. The Adviser will only
purchase STRIPS that it determines are liquid or, if illiquid, do not violate
the Fund's investment policy concerning investments in illiquid securities.
Consistent with Rule 2a-7, the Adviser will purchase for the Money Market Funds
only those STRIPS that have a remaining maturity of 397 days or less; therefore,
the Money Market Funds currently may only purchase 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 Adviser 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
Each Fund may enter into repurchase agreements with primary securities dealers
recognized by the Federal Reserve Bank of New York or with national member banks
as defined in Section 3(d)(1) of the Federal Deposit Insurance Act, as amended.
The repurchase agreement will have an agreed-upon price (including principal and
interest) and an agreed-upon repurchase date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated to
the coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.
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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 Adviser monitors compliance with
this requirement. Under all repurchase agreements entered into by a Fund, the
Custodian or its agent must take possession of the underlying collateral.
However, if the seller defaults, the Fund could realize a loss on the sale of
the underlying security to the extent that the proceeds of sale including
accrued interest are less than the resale price provided in the agreement
including interest. In addition, even though the Bankruptcy Code provides
protection for proceedings, the Fund may incur delay and costs in selling the
underlying security or may suffer a loss of principal and interest if the Fund
is treated as an unsecured creditor and required to return the underlying
security to the seller's estate.
Municipal Securities
Municipal Securities -- The two principal classifications of Municipal
- --------------------
Securities are "general obligation" and "revenue" issues. General obligation
issues are issues involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues, although the
characteristics and method of enforcement of general obligation issues may vary
according to the law applicable to the particular issuer. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. The Louisiana Fund may also invest
in "moral obligation" issues, which are normally issued by special purpose
authorities. Moral obligation issues are not backed by the full faith and
credit of the state and are generally backed by the agreement of the issuing
authority to request appropriations from the state legislative body. Municipal
Securities include debt obligations issued by governmental entities to obtain
funds for various public purposes, such as the construction of a wide range of
public facilities, the refunding of outstanding obligations, the payment of
general operating expenses, and the extension of loans to other public
institutions and facilities. Certain private activity bonds that are issued by
or on behalf of public authorities to finance various privately-owned or
operated facilities are included within the term "Municipal Securities."
Private activity bonds and industrial development bonds are generally revenue
bonds, the credit and quality of which are directly related to the credit of the
private user of the facilities.
Municipal Securities may also include general obligation notes, tax anticipation
notes, bond anticipation notes, revenue anticipation notes, project notes,
certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the Federal government will lend the
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issuer an amount equal to the principal of and interest on the project notes.
The quality of Municipal Securities, both within a particular classification and
between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
NRSRO are general and are not absolute standards of quality. Municipal
Securities with the same maturity, interest rate and rating(s) may have
different yields, while Municipal Securities of the same maturity and interest
rate with different rating(s) may have the same yield.
An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
Municipal Leases -- The Louisiana Fund and Tax Exempt Money Market Fund may
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invest in instruments, or participations in instruments, issued in connection
with lease obligations or installment purchase contract obligations of
municipalities ("municipal lease obligations"). Although municipal lease
obligations do not constitute general obligations of the issuing municipality, a
lease obligation is ordinarily backed by the municipality's covenant to budget
for, appropriate funds for, and make the payments due under the lease
obligation. However, certain lease obligations contain "non-appropriation"
clauses, which provide that the municipality has no obligation to make lease or
installment purchase payments in future years unless money is appropriated for
such purpose in the relevant years. Municipal lease obligations are a
relatively new form of financing, and the market for such obligations is still
developing. Municipal leases will be treated as liquid only if they satisfy
criteria set forth in guidelines established by the Board of Trustees, and there
can be no assurance that a market will exist or continue to exist for any
municipal lease obligation.
Puts on Municipal Securities -- The Louisiana Fund and Tax Exempt Money Market
- ----------------------------
Fund may acquire "puts" with respect to its acquisition of Municipal Securities.
A put is a right to sell a specified security (or securities) within a specified
period of time at a specified exercise price. The Fund may sell, transfer, or
assign the put only in conjunction with the sale, transfer, or assignment of the
underlying security or securities.
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The amount payable upon the exercise of a put is normally (i) the Fund's
acquisition cost of the Municipal Securities (excluding any accrued interest
which the Fund paid on the acquisition), less any amortized market premium or
plus any amortized market or original issue discount during the period the Fund
owned the securities, plus (ii) all interest accrued on the securities since the
last interest payment date during that period.
Puts on Municipal Securities may be acquired to facilitate the liquidity of
portfolio assets and the reinvestment of assets at a rate of return more
favorable than that of the underlying security. A Fund will generally acquire
puts only where the puts are available without the payment of any direct or
indirect consideration. However, if necessary or advisable, the Fund may pay
for puts either separately in cash or by paying a higher price for portfolio
securities which are acquired subject to the puts (thus reducing the yield to
maturity otherwise available for the same securities).
Taxable Municipal Securities -- The Louisiana Fund and Tax Exempt Money Market
- ----------------------------
Fund may invest up to 20% of its total assets in Municipal Securities, such as
certain private activity or industrial revenue bonds, the interest on which is
not tax-exempt for Federal income tax purposes but which otherwise meet the
Fund's investment criteria.
Special Considerations Regarding Louisiana Municipal Securities -- The
- ---------------------------------------------------------------
concentration of investments in Louisiana Municipal Securities by the Louisiana
Fund raises special investment considerations. In particular, changes in the
economic condition and governmental policies of the State of Louisiana or its
municipalities could adversely affect the value of the Louisiana Fund and the
portfolio securities held by it. This section briefly describes current
economic trends in Louisiana.
Louisiana's economy, traditionally dependent on energy, remains mired in slow
growth as domestic oil production has slowed in recent years. As the State's
energy sector has shrunk, services have replaced energy as the leading
employment sector since the mid-1980's, with employment increasing 20% from 1988
to July 1992. Some manufacturing growth continues to take place, with jobs up
13% over the same period. Manufacturing remains concentrated in chemicals,
transportation equipment, and food products, reflecting the petrochemical
industry, shipbuilding at the Port of New Orleans, and the State's seafood
industry. Louisiana population reached its peak of 4.5 million in 1986, after
which it began to decline, reaching 4.2 million only four years later. While
the labor force experienced a similar decline, it grew at a 2.1% rate in 1991
and is projected to continue to grow slowly through the rest of the decade.
Tourism also remains a major sector of economic activity, with the New Orleans
Convention Center a major attraction. The unemployment rate for Louisiana was
7.6% as of November 1992 (versus 6.7% for November 1991), while the U.S.
experienced an unemployment rate of 7.2% for the same period.
Louisiana is the twenty-first largest state in terms of population. It is rich
in natural
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resources. Overall, Louisiana is the nation's third largest producer of
chemical products. It ranks second in the production of the industrial
inorganic chemicals and the manufacture of agricultural chemicals. Oil and gas
extraction, petroleum refining, chemicals and allied products combined employ
approximately 92,800 people, or 6% of the total non-agricultural employment in
Louisiana. These industries provide approximately 12% of the net wages paid to
non-agricultural employees in the State.
Louisiana has five major deepwater ports: New Orleans, Baton Rouge, Lake
Charles, the Port of South Louisiana and the Port of Plaquemine. The Port of
South Louisiana is a conglomerate of public and private facilities, handling
more waterbottom annual tonnage than any other port in the country. The Port of
New Orleans is the world's largest grain exporter and generates more than $3
billion a year in wages and taxes. The Port of Baton Rouge ranks fifth in the
nation, handling over 78 million tons per year. The Port of Baton Rouge's
largest commodity is petroleum coke, and the port is one of the nation's largest
rice exporters. The Port of Lake Charles ranks 16th in the nation in total
tonnage handled. In addition to these three major ports, there are numerous
inland ports located within the State which service barge and boat traffic. The
nation's first offshore oil port (commonly referred to as the "Superport")
started full-time operations on January 1, 1982. The State, involved in the
development of the Superport since 1972, was instrumental in promoting and
financing private industry's efforts to construct deepwater port facilities.
Approximately $764 million of revenue bonds have been issued for construction of
the port complex. The Superport consists of three major elements: (i) a marine
terminal; (ii) an underground storage facility; and (iii) a large diameter
pipeline for transporting oil between the offshore and onshore facilities. The
Superport allows deep draft tankers that are unable to navigate the Mississippi
River to dock and unload crude oil for distribution to the United States.
The agricultural sector of Louisiana's economy is comprised of the agricultural
producers and the agribusinesses which support the production, storage,
transportation, processing and marketing of agricultural products. In 1991,
13,400 identifiable Louisiana agribusiness firms employed 230,500 workers with a
total annual payroll of approximately $3.0 billion. The agricultural sector
accounted for over 19% of employment in the State and over 13% of payrolls.
Total investment in forestry and farm capital and lands is approximately $16
billion and exceeds the total asset value of the manufacturing sector.
During the period from the Fiscal Year 1981 through Fiscal Year 1987, the State
experienced operating budget deficits in six of the seven fiscal years.
Exacerbating the operating deficit problem was the highly dependent nature of
the State's budget on mineral revenues and in particular, the dramatic
fluctuations in oil prices over the past decade. At the height of the oil boom
in the early 1980's, the State derived more than 40% of its operating revenues
directly from sources related to the mineral extraction process. Today, the
percentage has dropped to about 13%, or almost a 70% reduction.
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Fiscal Year 1987 ended with a deficit in the General Fund of $512 million
accumulated during the previous three fiscal years. This deficit was eliminated
through the creation of the Louisiana Recovery District in 1988 and its issuance
of $979,125,000 of bonds secured by a statewide 1% sales tax levied by the
District. Most of the bond issue proceeds were transferred to the General Fund
for the purposes of eliminating the accumulated deficit ($512 million) and
assisting the State's cash flow ($271 million).
Since 1988, the gap between General Fund expenditures and revenues has widened
for a variety of reasons: (i) new expenditures have been phased in; (ii) new tax
exemptions have been implemented; (iii) the Federal government has issued costly
mandates, most significantly in the Medicaid program; and (iv) revenues once
available to the General Fund have in recent years been dedicated for specific
purposes. Furthermore, the State's tax base -- which is comprised in part of
mineral revenues and volume-based taxes, such as those on tobacco, beer, and
liquor -- is inherently inelastic; i.e., its growth rate does not match or
exceed the growth rate of the economy.
The State began Fiscal Year 1988 with a balance of $271 million and ended the
year with an operating surplus which, when combined with prior year adjustments
of $384 million, provided the State with an ending General Fund balance of $655
million. In Fiscal Year 1989, the State budget anticipated the use of $126
million of the surplus for the operating budget. Revenues, however, were
greater than anticipated and none of the surplus was used. In fact, Fiscal Year
1989 ended with a small operating surplus of $47 million which included $13
million of adjustments. This $47 million, when added to the $655 million
balance from the prior fiscal year, brought the accumulated surplus to $702
million as of June 30, 1990.
Approximately $284 million of the Fiscal Year 1989 surplus was used to fund the
Fiscal Year 1990 budget. As a result, the State ended Fiscal Year 1990 with an
accumulated General Fund surplus of $418 million.
The 1992 budget depleted remaining reserves and required two mid-year
expenditure adjustments totalling $115 million. A potential deficit for Fiscal
Year 1992 has been addressed by additional revenue enhancements totaling $1.159
billion. A majority of these enhancements are one time items totaling $489
million and will not be available for future years. The Office of Fiscal
Affairs and Policy Development has projected a budget gap of approximately $600
million for Fiscal Year 1994. The State is operating at a deficit and in order
for it to continue providing for current services, additional and dependable
revenues streams must be developed.
In August 1992, a state constitutional convention was convened which made
numerous proposals to limit state indebtedness and resolve other revenue and
finance issues. However, all the proposals were voted down by a statewide
referendum held on November 3, 1992.
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Currently, the State is working to expand economic development activities that
will take advantage of Louisiana's replenishable resources such as timber, water
for aquaculture, fish and seafood related products and related industrial uses
of such resources. The State is also pursuing further development of its
transportation capabilities by expanding port related activities and improving
its highways and airports.
Positive results have been achieved by establishing research programs with
considerable job creation potential. The $26 million Pennington Biomedical
Research Center at Louisiana State University, in Baton Rouge, concentrates on
nutrition and preventative medicine. Since opening, the center has received a
$9.4 million grant from the United States Department of Agriculture, a $3.5
million Army contract to study nutrition and a $1.5 million donation from the
National Heart, Lung and Blood Institute. Louisiana State University is
constructing the Center for Advanced Microstructures and Devices that will
provide hands-on experience for young scientists and engineers and improve
research capabilities in materials science by furnishing the most advanced
scientific instrumentation available. In addition, the University of
Southwestern Louisiana has devised a "factory of the future" where a product can
be developed, industry can obtain applied research for a product, existing
technology can be transferred to Louisiana industry and university students can
gain practical experience with state-of-the-art technology.
In 1990, the Louisiana Constitution was amended by the electorate to provide for
the creation and operation of a State lottery. The net proceeds from the
lottery are deposited in a special fund in the State Treasury entitled the
Lottery Proceeds Fund (the "Lottery Fund"). Although the Legislature may make
appropriations from the Lottery Fund for any purpose, amounts deposited in the
Lottery Fund cannot be appropriated for expenditure in the same calendar year in
which they are received.
The lottery began with scratch card game operations in September, 1991 and full
lottery operation on January 22, 1992. The State Lottery Commission estimated
$286 million of lottery proceeds would be raised during the 1992 calendar year.
State law provides that, after the first year of operations, the lottery
proceeds will be divided as follows: 50% to lottery winners, 35% to the State,
10% to the Commission and 5% to vendors of lottery tickets. As of December 31,
1992, for the 1992 calendar year, the State received $166,500,000 as its share
of the lottery proceeds. The Revenue Estimating Conference estimates that the
State will receive as its share of lottery proceeds $140,000,000 in the 1993
calendar year.
In 1991, the Louisiana Legislature enacted the Video Draw Poker Devices Control
Law (the "Act") for the purpose of regulating and licensing the use and
operation of video draw poker devices through the video gaming division (the
"Video Division") of the gaming enforcement section of the office of the State
police. The Act imposes annual license fees on manufacturers, distributors,
service entities, device operation device owners and licensed establishments.
In addition, each device owner must remit to the
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Video Division a franchise payment equal to 22-1/2% of the net device revenue
derived from the operation of each device. All franchise payments, license
fees, fines and penalties received by the Video Division must be forwarded to
the State Treasurer for immediate deposit. The funds are first credited to the
Bond Security and Redemption Fund and then credited to the Video Draw Poker
Device Fund. Monies in the Video Draw Poker Device Fund may only be withdrawn
pursuant to appropriation by the Legislature and distributed as follows: (a)
25% to be distributed in the following priority: (i) not exceeding $5,400,000
for district attorneys and assistant district attorneys; (ii) remainder to
municipalities and parishes in which devices are operated to pay for enforcement
of Act 1062; (b) A legislative allocation to the Department of Public Safety &
Corrections to pay for enforcement of Act 1062; (c) Any funds remaining after
payments pursuant to (a) and (b) are deposited in the State general fund.
As of January 4, 1993, the Treasurer's office reports that total revenues since
July 1, 1992 were $13,897,084 of which $6,632,166 is available for general fund
purposes.
In 1991, the Louisiana Legislature also enacted the Louisiana Riverboat Economic
Development and Gaming Control Act ("Act 753") to assist the growth of tourism
by the development of a riverboat industry in the State authorized to operate
regulated gaming activities. Act 753 designates certain rivers and waterways in
the State upon which riverboat gaming may be conducted and provides for the
creation within the Department of Public Safety and Corrections, a gaming
commission known as the Riverboat Gaming Commission (the "Riverboat
Commission"). The Riverboat Commission has the responsibility of licensing,
regulating and inspecting riverboat gaming facilities and enforcing Act 753 and
regulations promulgated thereunder. Act 753 allows the issuance of up to
fifteen licenses to conduct gaming activities on riverboats of new construction
(built after January 1, 1992); provided that, no more than six licenses may be
granted for the operation of riverboat gaming from any one parish.
The Louisiana Economic Development and Gaming Corporation (the "Gaming
Corporation") was created by the Louisiana Legislature in the 1992 Regular
Session ("Act 384") for the purpose of contracting with a casino operator to
provide for or furnish an official gaming establishment and to conduct casino
gaming operations at the official gaming establishment (casino). Act 384
directs that the casino be located on the site of the Rivergate Convention
Center in New Orleans. The Gaming Corporation has recently been formed, its
members confirmed by the State Senate and the Gaming Corporation is proceeding
with its organizational plans and structure. Under the casino contract, the
operator must pay a minimum of 18-1/2% of gross revenues, or $100 million
annually, whichever is higher, to the Gaming Corporation. Each quarter, the
Gaming Corporation must transfer to the State Treasury for deposit in the Casino
Gaming Proceeds Fund net revenues which are surplus to its needs. Such revenues
will be first credited to the Bond Security and Redemption Fund before credit to
the Casino Gaming Proceeds Fund. Monies in the Casino Gaming Proceeds Fund may
be allotted or expended only pursuant to legislative appropriation. Full
operation of a
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permanent casino is not expected to commence until the 1995-96 Fiscal Year;
however, it is anticipated that a temporary casino can be operational in the
1993-94 Fiscal Year and that a portion of the annual minimum gaming revenues
would be received on or after July 1, 1993.
In June 1992 the State also approved a five-year capital improvement plan
totalling $1.9 billion. The State also approved two bills that would establish
major new debt-issuing authorities in the State. One bill would set up the
Louisiana Airport Authority, giving it the power to sell bonds for a proposed
international airport between Baton Rouge and New Orleans. The other would
permit establishment of the Louisiana Maritime Development Authority to fund
shipyard improvements in Louisiana's cities.
The foregoing information as to certain Louisiana risk factors has been provided
in view of the Louisiana Fund's policy of investing in Louisiana Municipal
Securities. This information constitutes only a brief summary, does not purport
to be a complete description of Louisiana risk factors and is principally drawn
from official statements related to securities offerings of the State of
Louisiana that have come to the Fund's attention and were available as of the
date of this Statement of Additional Information.
Options on Securities and Indices
Options -- The Fixed Income Funds and the Equity Funds may trade put and call
- -------
options on permitted investments and related indices to a limited extent. Among
the strategies the Adviser may use for a Fund are: buying protective puts on
securities owned by the Fund, buying fiduciary calls on securities the Fund is
attempting to buy, and writing covered calls on securities the Fund owns.
A Fund may buy protective put options. The Fund may benefit from buying the
protective put if the price of the security already held by the Fund falls
during the option period, because the Fund may exercise the put and receive the
higher exercise price for its security. However, if the security rises in
value, the Fund will have paid a premium for the put which will expire
unexercised.
A Fund may buy fiduciary call options on securities that the Fund is trying to
buy. The Fund may benefit from buying the fiduciary call if the price of the
underlying security rises during the option period, because the Fund may
exercise the call and buy the security for the lower exercise price. If,
however, 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 security at a
lower price.
A Fund may write covered call options. The advantage to the Fund of writing
covered call options is that the Fund receives additional income in the form of
the premium. However, if the security rises in value, the Fund may not fully
participate in that market appreciation.
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During the option period, a covered call option writer may be assigned an
exercise notice by the broker/dealer through whom such call option was sold
requiring the writer to deliver the underlying security against payment of the
exercise price. This obligation is terminated upon the expiration of the option
period or at such earlier time in which the writer effects a closing
transaction. A closing transaction cannot be effected with respect to an option
once the option writer has received an exercise notice for such option.
The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.
Risk Factors in Options Transactions -- The successful use of a Fund's options
- ------------------------------------
strategies depends on, among other things, the Adviser's ability to forecast
interest rate and market movements correctly.
When it purchases an option, a Fund runs the risk that it will lose its entire
investment in the option in a relatively short period of time, unless the Fund
exercises the option or enters into a closing transaction with respect to the
option during the life of the option. If the price of the underlying security
does not rise (in the case of a call) or fall (in the case of a put) to an
extent sufficient to cover the option premium and transaction costs, a Fund will
lose part or all of its investment in the option. This risk differs from the
risk involved with an investment by a Fund in the underlying securities, since
the Fund may continue to hold its investment in those securities notwithstanding
the lack of a change in price of those securities.
The effective use of options also depends on a Fund's ability to terminate
option positions at times when the Adviser deems it desirable to do so.
Although a Fund will take an option position only if the Adviser believes a
liquid secondary market exists for the option, there is no assurance that such a
market does or will continue to exist. If a secondary trading market in options
were to become unavailable, a Fund could no longer engage in closing
transactions; even when a liquid secondary market does generally exist, there
can be no assurance that a Fund will be able to effect a closing transactions on
a given option at any particular time or at an acceptable price. Lack of
investor interest might adversely affect the liquidity of the market for
particular options or series of options. A marketplace may discontinue trading
of a particular option or options generally. In addition, a market could become
temporarily unavailable if unusual events, such as volume in excess of trading
or clearing capability, were to interrupt normal market operations. A
marketplace may at times find it necessary to impose restrictions on particular
types of options transactions, which may limit a Fund's ability to realize its
profits or limit its losses.
Disruptions in the markets for the securities underlying options purchased or
sold by
B-15
<PAGE>
a Fund could result in losses on the options. If trading is interrupted in an
underlying security, the trading of options on that security is normally halted
as well. As a result, a Fund as purchaser or writer of an option will be unable
to close out its position until options trading resumes, and it may be faced
with losses if trading in the security reopens at a substantially different
price. In addition, the Options Clearing Corporation (OCC) or other options
markets may impose exercise restrictions. If a prohibition on exercise is
imposed at the time when trading in the option has also been halted, a Fund as
purchaser or writer of an option will be locked into its position until one of
the two restrictions has been lifted. If a prohibition on exercise remains in
effect until an option owned by a Fund has expired, the Fund could lose the
entire value of its option.
Special risks are presented by internationally-traded options. Because of time
differences between the United States and the various foreign countries, and
because different holidays are observed in different countries, foreign options
markets may be open for trading during hours or on days when U.S. markets are
closed. As a result, option premiums may not reflect the current prices of the
underlying interest in the United States.
Futures Contracts on Securities; Options on Futures
Securities Futures Contracts -- Each Fixed Income Fund or Equity Fund may enter
- ----------------------------
into futures contracts on securities. A futures contract sale creates an
obligation by the seller to deliver the type of instrument called for in the
contract in a specified delivery month for a stated price. A futures contract
purchase creates an obligation by the purchaser to take delivery of the type of
instrument called for in the contract in a specified delivery month at a stated
price. Futures contracts are traded in the United States only on commodities
exchanges or boards of trade, known as "contract markets," approved for such
trading by the CFTC, and must be executed through a futures commission merchant,
or brokerage firm, that is a member of the relevant contract market.
Although futures contracts by their terms call for actual delivery or acceptance
of securities, the contracts usually are closed out before the settlement date
without the making or taking of delivery. A Fund may elect to close some or all
of its futures positions at any time prior to their expiration. The purpose of
making such a move would be to reduce or eliminate the hedge position then
currently held by the Fund. Closing out a futures contract sale (purchase) is
effected by purchasing (selling) a futures contract for the same aggregate
amount of the specific type of financial instrument with the same delivery date.
If the price of the initial sale of the futures contract exceeds the price of
the offsetting purchase, the seller is paid the difference and realizes a gain;
if the offsetting purchase price exceeds the initial sale price, the seller
realizes a loss. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain; if the purchase price exceeds the offsetting sale
price, the purchaser realizes a loss.
B-16
<PAGE>
When a Fund purchases or sells a futures contract, it does not pay or receive
the purchase price; instead, the Fund is required to deposit an "initial margin"
in the form of cash and/or U.S. Government securities with its custodian in a
segregated account in the name of the futures broker. The nature of initial
margin in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of
funds by the Fund to finance the transactions. Rather, initial margin is in the
nature of a performance bond or good faith deposit on the contract that is
returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Futures contracts also involve
brokerage costs, and closing transactions involve additional commission costs.
Subsequent payments, called "variation margin," to and from the broker are made
on a daily basis as the price of the underlying security fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking to market." Final determinations of variation margin
are made when a Fund enters into a closing transaction.
Options on Securities Futures Contracts -- Each Fixed Income Fund or Equity Fund
- ---------------------------------------
may enter into written options on securities futures contracts. A Fund may
purchase and write call and put options on the futures contracts it may buy or
sell, and may enter into closing transactions with respect to such options to
terminate existing positions. A Fund may use such options on futures contracts
in lieu of writing options directly on the underlying securities or purchasing
and selling the underlying futures contracts. Such options generally operate in
the same manner as options purchased or written directly on the underlying
investments. See the section titled "Options on Securities" above.
The Fund holding or writing an option on futures may terminate its position by
selling or purchasing an offsetting option. There can be no guarantee that such
closing transactions will be available.
A Fund will be required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts pursuant to brokers'
requirements similar to those described above.
Cover for Options and Futures Contract Positions -- Transactions using futures
- ------------------------------------------------
contracts and options (other than options that a Fund has purchased) expose a
Fund to an obligation to another party. A Fund will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities or other options or futures contracts or (2) cash, receivables and
short-term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each Fund will
comply with Securities and Exchange Commission guidelines regarding cover for
these instruments and, if the guidelines so require, set aside cash, U.S.
government securities or other liquid, high-grade debt securities in a
segregated
B-17
<PAGE>
account with its Custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while the
position in the corresponding futures contract or option is open, unless they
are replaced with similar assets. As a result, the commitment of a large
portion of a Fund's assets to cover or to segregated accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
Risks of Futures Contracts and Options Transactions -- Successful use of
- ---------------------------------------------------
securities futures contracts by a Fund is subject to the Adviser's ability to
predict correctly movements in the direction of interest rates and other factors
affecting securities markets.
The purchase of options on futures contracts involves less risk to a Fund than
does the purchase or sale of futures contracts, because the maximum amount at
risk is the premium paid for the options (plus transaction costs). However,
there may be circumstances when the purchase of an option on a futures contract
would result in a loss to a Fund when the purchase or sale of the futures
contract would not, such as when there is no movement in the price of the hedged
investments. The writing of an option on a futures contract involves risks
similar to those risks, described above under "Options on Securities," involved
in the writing of options on securities.
There can be no assurance that higher-than-anticipated trading activity or other
unforeseen events will not, at times, render certain market clearing facilities
inadequate, and thereby result in the institution by exchanges of special
procedures which may interfere with the timely execution of customer orders.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a future contract or option thereon can vary from the
previous day's settlement price; once that limit is reached, no trades may be
made that day at a price beyond the limit. Daily price limits do not limit
potential losses because prices could move to the daily limit for several
consecutive days with little or no trading, thereby preventing the liquidation
of unfavorable positions.
If a Fund were unable to liquidate a futures contract or option thereon due to
the absence of a liquid secondary market or the imposition of price limits, it
could incur substantial losses. The Fund would continue to be subject to market
risk with respect to the position. In addition, except in the case of purchased
options, the Fund would be required to make daily variation margin payments and
might be required to maintain the position being hedged by the futures contract
or option or to maintain cash or securities in a segregated account.
To reduce or eliminate a hedge position it holds, a Fund may seek to close out
that position. The ability to establish and close out positions will be subject
to the
B-18
<PAGE>
development and maintenance of a liquid secondary market. There can be no
assurance that such a market does or will continue to exist for a particular
futures contract or option. Reasons for the absence of a liquid secondary
market on an exchange include the following: (i) there may be insufficient
trading interest in certain contracts or options; (ii) restrictions may be
imposed by an exchange on opening transactions or closing transactions or both;
(iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of contracts or options, or underlying
securities; (iv) unusual or unforeseen circumstances may interrupt normal
operations on an exchange; (v) the facilities of an exchange or a clearing
corporation may not at all times be adequate to handle current trading volume;
or (vi) one or more exchanges could, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of contracts or options
(or a particular class or series of contracts or options), in which event the
secondary market on that exchange (or in the class or series of contracts or
options) would cease to exist, although outstanding contracts or options on the
exchange that had been issued by a clearing corporation as a result of trades on
that exchange would continue to be exercisable in accordance with their terms.
Foreign Securities
The Equity Funds may invest in U.S. dollar denominated obligations or securities
of foreign issuers. Permissible investments may consist of obligations of
foreign branches of U.S. banks and of foreign banks, including European
certificates of deposit, European time deposits, Canadian time deposits and
Yankee certificates of deposit, and investments in Canadian commercial paper,
foreign securities and Europaper.
In addition, the Equity Funds may invest in the securities of foreign issuers in
the form of American Depositary Receipts ("ADRs"). ADRs are receipts, typically
issued by a U.S. bank or trust company, that evidence ownership of underlying
securities issued by a foreign corporation, and may not necessarily be
denominated in the same currency as the securities into which they may be
converted. ADRs may be available for investment through sponsored or
unsponsored facilities. A sponsored facility is established jointly by the
issuer of the ADR and the issuer of the security underlying the ADR, whereas a
depository may establish an unsponsored facility without the participation of
the issuer of the underlying security. Depositaries establishing unsponsored
facilities may not be obliged to pass on to ADR holders either voting rights on
the underlying securities or shareholder communications received from the issuer
of the underlying securities, and holders of unsponsored ADRs generally bear all
costs of the unsponsored facility.
Foreign securities may subject a Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or
B-19
<PAGE>
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.
When-Issued Securities
Each Fund may purchase debt obligations on a when-issued basis, in which case
delivery and payment normally take place on a future date. The Funds will make
commitments to purchase obligations on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date. During the period prior to the settlement date, the securities
are subject to market fluctuation, and no interest accrues on the securities to
the purchaser. The payment obligation and the interest rate that will be
received on the securities at settlement are each fixed at the time the
purchaser enters into the commitment. Purchasing obligations on a when-issued
basis may be used as a form of leveraging because the purchaser may accept the
market risk prior to payment for the securities. The Funds, however, will not
use such purchases for leveraging; instead, as disclosed in the Prospectus, a
Fund will set aside assets to cover its commitments. If the value of these
assets declines, the Fund 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 the
commitment.
Securities Lending
Each Fund may lend securities pursuant to agreements requiring that the loans be
continuously secured by cash, U.S. Government securities, or any combination of
cash and such securities, as collateral equal to 100% of the market value at all
times of the securities lent. Such loans will not be made if, as a result, the
aggregate amount of all outstanding securities loans for the Fund exceed one-
third of the value of a Fund's total assets taken at fair market value. A Fund
will continue to receive interest on the securities lent while simultaneously
earning interest on the investment of the cash collateral in U.S. Government
securities. However, a Fund will normally pay lending fees to such broker-
dealers and related expenses from the interest earned on invested collateral.
Investments made with this collateral are considered to be assets of the Fund
and must comply with the Fund's investment limitations. There may be risks of
delay in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans are made only to borrowers deemed
by the Adviser to be of good
B-20
<PAGE>
standing and when, in the judgment of the Adviser, 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
Adviser as a broker in these transactions.
Investment Company Shares
Each Fund may invest in shares of other investment companies, to the extent
permitted by applicable law and subject to certain restrictions. These
investment companies typically incur fees that are separate from those fees
incurred directly by the Fund. A Fund's purchase of such investment company
securities results in the layering of expenses, such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, a Fund is prohibited from acquiring the
securities of another investment company if, as a result of such acquisition:
(1) the Fund owns more than 3% of the total voting stock of the other company;
(2) securities issued by any one investment company represent more than 5% of
the Fund's total assets; or (3) securities (other than treasury stock) issued by
all investment companies represent more than 10% of the total assets of the
Fund. See also "Investment Limitations."
INVESTMENT LIMITATIONS
Each Fund is subject to a number of fundamental investment restrictions that may
be changed only by a vote of a majority of the outstanding shares of that Fund.
A "majority of the outstanding shares" of the Trust or a particular Fund means
the affirmative vote, at a meeting of shareholders duly called, of the lesser of
(a) 67% or more of the votes of shareholders of the Trust or such Fund present
at a meeting at which the holders of more than 50% of the votes attributable to
shareholders of record of the Trust or such Fund are represented in person or by
proxy, or (b) the holders of more than 50% of the outstanding votes of
shareholders of the Trust or such Fund.
Pursuant to these investment restrictions, no Fund will:
1. Purchase securities of any one issuer, other than obligations issued or
guaranteed by the U.S. Government or its agencies and instrumentalities
and repurchase agreements involving such securities, if, immediately
after such purchase, more than 5% of the value of its total assets would
be invested in any one issuer, or more than 10% of the outstanding voting
securities of such issuer; provided that (1) this restriction does not
--------
apply to the Louisiana Fund, (2) for the Government Securities Fund and
the Equity Funds, this restriction applies to only 75% of such Fund's
assets, and (3) the Money Market Funds may invest up to 25% of its total
assets without regard to this restriction only
B-21
<PAGE>
as permitted by applicable laws and regulations. For purposes of this
limitation, a security is considered to be issued by the government
entity (or entities) whose assets and revenues back the security; with
respect to a private activity bond that is backed only by the assets and
revenues of a non-governmental user, a security is considered to be
issued by such non-governmental user. For purposes of this limitation,
all debt securities are each considered as one class.
2. Invest in companies for the purpose of exercising control.
3. Borrow money except for temporary or emergency purposes and then only in
an amount not exceeding one-third of the value of total assets. Any
borrowing will be done from a bank and to the extent that such borrowing
exceeds 5% of the value of the Fund's assets, asset coverage of at least
300% is required. In the event that such asset coverage shall at any
time fall below 300%, the Fund shall, within three days thereafter or
such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its borrowings
to such an extent that the asset coverage of such borrowings shall be at
least 300%. This borrowing provision is included solely to facilitate
the orderly sale of portfolio securities to accommodate heavy redemption
requests if they should occur and is not for investment purposes. All
borrowings will be repaid before making additional investments and any
interest paid on such borrowings will reduce income.
4. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) 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.
5. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts (except that the Fixed Income and
Equity Funds may invest in futures contracts and options on futures
contracts as disclosed in the Prospectuses) 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.
6. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits
as necessary for the clearance of security transactions; this limitation
shall not prohibit short sales "against the box".
7. 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
B-22
<PAGE>
security.
8. Purchase securities of other investment companies except as permitted by
the 1940 Act, and the rules and regulations thereunder.
9. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the Securities and Exchange Commission.
NON-FUNDAMENTAL POLICIES
No Fund may invest in warrants, except that the Equity Funds 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.
No Fixed Income Fund or Equity Fund may invest in illiquid securities in an
amount exceeding, in the aggregate, 15% of that Fund's net assets, and
the Money Market Funds may not invest in illiquid securities in an amount
exceeding, in the aggregate, 10% of each Funds' net assets. An illiquid
security is a security which cannot be disposed of promptly (within seven
days), and in the usual course of business without a loss, and includes
repurchase agreements maturing in excess of seven days, time deposits
with a withdrawal penalty, non-negotiable instruments and instruments for
which no market exists.
No Fund may 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.
No Fund may invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.
No Fund may 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. This restriction shall not apply to
investments a Fund may make in asset-backed securities and in other
investment companies, as described in the appropriate Prospectus.
B-23
<PAGE>
With the exception of the limitations that apply to illiquid securities, the
foregoing percentages will apply at the time of the purchase of a
security and shall not be considered violated unless an excess occurs or
exists immediately after and as a result of a purchase of such security.
THE ADVISER
The Trust and First National Bank of Commerce in New Orleans (the "Adviser")
have entered into an advisory agreement (the "Advisory Agreement") dated
August 17, 1993. The Advisory Agreement provides that the Adviser shall
not be protected against any liability to the Trust or its shareholders
by reason of willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard of its
obligations or duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to the Adviser but
excluding interest, taxes, brokerage, litigation, and other extraordinary
expenses) exceeds limitations established by any state, the Adviser will bear
the amount of such excess.
The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees,
and (ii) by the vote of a majority of the Trustees who are not parties to
the Agreement or "interested persons" of any party thereto, cast in
person at a meeting called for the purpose of voting on such approval.
The Advisory Agreement will terminate automatically in the event of its
assignment, and is terminable at any time without penalty by the Trustees
of the Trust or, with respect to the 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 Adviser, or by the Adviser on 90 days'
written notice to the Trust.
As compensation for its services for the fiscal year ended September 30, 1994,
the Adviser received as compensation for its services to the Treasury
Securities Money Market Fund, Government Securities Fund, Balanced Fund,
Value Equity Fund and the Louisiana Tax-Free Income Fund, $1,039,361,
$359,239, $298,645, $185,658, $0.00, respectively, and waived fees of
$522,234, $204,298, $191,570, $109,936, $19,451 respectively. Also with
respect to the Louisiana Tax-Free Income Fund the Adviser reimbursed
expenses of $28,959. The Institutional Money Market Fund had not
commenced operations as of September 30, 1994.
THE ADMINISTRATOR
SEI Financial Management Corporation serves as administrator (the
"Administrator") to the Trust pursuant to a Management and Administration
Agreement dated as of August 17, 1993 (the "Administration Agreement").
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake
B-24
<PAGE>
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.
As compensation for its services for the fiscal year ended September 30, 1994,
the Administrator received as compensation for its services to the
Treasury Securities Money Market Fund, Government Securities Fund,
Balanced Fund, Value Equity Fund and the Louisiana Tax-Free Income Fund,
$1,041,063, $204,922, $132,490, $79,890, $0.00, respectively, and waived
fees of $11,151 for the Louisiana Tax-Free Income Fund. The
Institutional Money Market Fund had not commenced operations as of
September 30, 1994.
The Administrator, a wholly owned subsidiary of SEI was organized as a Delaware
corporation in 1969 and has its principal business offices at 680 East
Swedesford Road, Wayne, PA 19087-1658. Alfred P. West, Jr., Henry H.
Greer, and Carmen V. Romeo constitute the Board of Directors of the
Administrator. Mr. West is the Chairman of the Board and Chief Executive
Officer of the Administrator and of SEI. Mr. Greer is the President and
Chief Operating Officer of the Administrator and of SEI. SEI and its
subsidiaries are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The
Administrator also serves as administrator to the following other mutual
funds: The Achievement Funds Trust, The Advisors' Inner Circle Fund, The
Arbor Fund, Bishop Street Funds, The Compass Capital Group, Conestoga
Family of Funds, CoreFunds, Inc., CrestFunds, Inc.(C), CUFUND, First
American Funds, Inc., First American Investment Funds, Inc., FFB Lexicon
Funds, Insurance Investment Products Trust, Inventor Funds, Inc., Morgan
Grenfell Investment Trust, The PBHG Funds, Inc., The Pillar Funds,
Rembrandt Funds(R), 1784 Funds, SEI Daily Income Trust, SEI Index Funds,
SEI Institutional Managed Trust, SEI International Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, Stepstone Funds, STI Classic Funds and
STI Classic Variable Trust.
THE DISTRIBUTOR
The Distributor -- SEI Financial Services Company serves as distributor to the
- ---------------
Trust pursuant to a Distribution Agreement dated as of August 17, 1993
(the "Distribution Agreement"), and unless otherwise terminated as
provided therein, the Distribution Agreement will be in effect until
August 17, 1994, and thereafter will continue for successive one-year
periods. Notwithstanding the foregoing, the Distribution Agreement shall
be reviewed and ratified at least annually (i) by the Trust's Trustees or
by the vote of a majority of the outstanding shares of the Trust, and
(ii) by the vote of a majority of the Trustees of the Trust who are not
parties to the Distribution Agreement or interested persons (as defined
in the 1940 Act) of any party to the Distribution Agreement, cast in
person at a meeting called for the purpose of voting on
B-25
<PAGE>
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 sixty days' notice by the
Trust's Trustees, by vote of a majority of the outstanding shares of such
Fund or by the Distributor.
Distribution -- As described in the Prospectuses, shares of the Trust's Funds
- ------------
are sold on a continuous basis by the Distributor. Each of the Class A
shares and the Trust Class shares are offered without distribution fees,
although the Class A shares are sold with a front-end sales load.
However, neither the Class A shares nor the Trust Class shares are
subject to ongoing distribution or service fees, or subject to a sales
charge when they are redeemed.
For the fiscal year ended September 30, 1994, the aggregate sales charge payable
to the Distributor for the Trust's, Government Securities, Value Equity
and Louisiana Tax Free Income Funds were, $1,043.35, $1,741.31,
$2,285.43, respectively. The Institutional Money Market Fund had not
commenced operations as of September 30, 1994.
The Trust has adopted a distribution plan dated August 17, 1993 for the Class B
shares of each Fixed Income and Equity Fund (the "Class B Plan"), a
distribution plan dated August 17, 1993 for the Retail Class shares of
the Money Market Fund (the "Retail Class Plan") and a distribution plan
dated as of August 8, 1994 for Cash Sweep Class shares of the Money
Market Fund (the "Cash Sweep Class Plan"), in each case 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.
Each of the Class B, Retail Class and Cash Sweep Class Plans was approved
by a majority of the Trustees, including a majority of the Trustees who
are not "interested persons" of the Trust or SEI Financial Services, as
that term is defined in the 1940 Act ("Disinterested Trustees").
Continuance of each of the Class B, Retail Class and Cash Sweep Class
Plans must be approved annually by a majority of the Trustees of the
Trust and by a majority of the Disinterested Trustees. Each of the Class
B, Retail Class and Cash Sweep Class Plans requires that quarterly
written reports of amounts spent under that Plan and the purposes of such
expenditures be furnished to and reviewed by the Trustees. In accordance
with Rule 12b-1 under the 1940 Act, the Class B Plan, the Retail Class
Plan or Cash Sweep Class Plan, as applicable, 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. Any of the Class B, Retail Class or Cash Sweep Class Plans 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.
B-26
<PAGE>
None of the Class B, Retail Class or Cash Sweep Class shares incur a sales
charge when they are purchased, but Class B shares are subject to a sales
charge if they are redeemed within five years of purchase. Pursuant to
the Distribution Agreement and the Class B Plan, Class B shares are
subject to an ongoing distribution and service fee calculated on each
Fixed Income and Equity Fund's aggregate average daily net assets
attributable to its Class B shares. Pursuant to the Distribution
Agreement and the Retail Class Plan and Cash Sweep Class Plans, shares of
each class are subject to ongoing distribution and service fees
calculated on the Money Market Fund's aggregate average daily net assets
attributable to shares of each such class, respectively.
Class A shares are not subject to distribution or service fees and pay
correspondingly higher dividends per share. There can, of course, be no
guarantee that any Fund will have net income and pay dividends. However,
because initial sales charges are deducted at the time of purchase,
investors in Class A shares would not have all their funds invested
initially and, therefore, would initially own fewer shares. If you do
not qualify for reduced initial sales charges and you expect to maintain
your investment for an extended period of time, you should weigh the fact
that accumulated distribution and service fees on Class B shares may
exceed the initial sales charge on Class A shares during the life of your
investment against the fact that, because of Class A's initial sales
charges, less of your initial purchase price is actually invested in the
Funds if you purchase Class A shares.
The distribution expenses incurred by the Distributor and other financial
intermediaries in connection with the sale of the shares will be paid, in
the case of Class A shares, from the proceeds of the initial sales charge
and, in the case of Class B shares, from the proceeds of the ongoing
distribution and service fees and the contingent deferred sales charge
paid upon redemptions of shares within five years of purchase.
Pursuant to the Retail Class Plan, for the fiscal year ended September 30, 1994,
the Treasury Securities Money Market Fund paid $55,020 in distribution
fees after waiving fees of $97,814. Pursuant to the Class B Plan, for
the fiscal year ended September 30, 1994, the Value Equity Fund paid
$1,263 in distribution fees, the Louisiana Tax-Free Income Fund paid
$2,895 in distribution fees, the Government Securities Fund paid $719 in
distribution fees, and the Balanced Fund paid $4,190 in distribution
fees. All of the distribution fees paid relate exclusively to sales
expenses. As of September 30, 1994, the Institutional Money Market Fund
had not commenced operations.
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. Each may have
held other positions with the named companies during that period. Unless
otherwise noted, the business address of each Trustee and
B-27
<PAGE>
executive officer is SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, PA 19087-1658. Certain officers of the Fund also serve as Trustees
and/or officers of the Achievement Funds Trust, The Advisors' Inner Circle Fund,
The Arbor Fund, Bishop Street Funds, The Compass Capital Group, Conestoga Family
of Funds, CoreFunds, Inc., CrestFunds, Inc.(C), CUFUND, First American Funds,
Inc., First American Investment Funds, Inc., FFB Lexicon Funds, Insurance
Investment Products Trust, Inventor Funds, Inc., Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R), 1784 Funds,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone
Funds, STI Classic Funds and STI Classic Variable Trust, all of which are open-
end management investment companies.
ROBERT A. NESHER - Chairman of the Board of Trustees* - 8 South Street,
Kennebunkport, ME 04046. Retired since 1994. Executive Vice President of SEI,
1986-1994. Director and Executive Vice President of the Administration and the
Distributor September, 1981 - 1994.
JOHN T. COONEY - Trustee** - 573 N. Post Oak Lane, Houston, TX 77024. Retired
since 1992. Formerly Vice Chairman of Ameritrust Texas N.A. (1989-1992), and
MTrust Corp. (1985-1989).
WILLIAM M. DORAN - Director* - 2000 One Logan Square, Philadelphia, PA 19103.
Partner of Morgan, Lewis & Bockius LLP (law firm). Counsel to the Trust,
Administrator and Distributor for the past five years. Director and Secretary of
SEI.
FRANK E. MORRIS - Trustee** - 105 Walpole Street, Dover, MA 02030. Retired since
1990. Peter Drucker Professor of Management, Boston College (1989-1990).
President, Federal Reserve Bank of Boston (1968-1988).
BARRY M. MULROY - Trustee* - First Commerce Corporation, 210 Barrone Street, New
Orleans, LA 70160. Marketing and Human Resources Director of First Commerce
Service Corporation from 1993 to present. Marketing Director, First Commerce
Service Corporation (1988-1992).
ROBERT A. PATTERSON - Trustee** - 408 Old Main, University Park, PA 16802.
Pennsylvania State University Senior Vice President, Treasurer (Emeritus).
Financial and Investment Consultant, Professor of Transportation (1984-present).
Vice President-Investments, Treasurer, Senior Vice President (Emeritus) (1982-
1984). Director, Pennsylvania Research Corp. Member and Treasurer, Board of
Trustees of Grove City College.
GENE PETERS - Trustee** - 943 Oblong Road, Williamstown, MA 01267. Private
investor from 1987 to present. Vice President and Chief Financial Officer,
Western Company of North America (petroleum service company) (1980-1986).
President of
B-28
<PAGE>
Gene Peters and Associates (import company) (1978-1980). President and Chief
Executive Officer of Jos. Schlitz Brewing Company before 1978.
JAMES M. STOREY - Trustee** - Ten Post Office Square South, Boston, MA 02109.
Retired since 1993. Formerly Partner of Dechert Price & Rhoads (law firm).
DAVID G. LEE - President and Chief Executive Officer - Senior Vice President of
the Administrator and Distributor since 1993. Vice President of the
Administrator and Distributor (1991-1993). President, GW Sierra Trust Funds
before 1991.
KEVIN P. ROBINS - Vice President, Assistant Secretary - Senior Vice President
and General Counsel of SEI, the Administrator and the Distributor since 1994.
Vice President of SEI, the Administrator and the Distributor since 1992.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of SEI, the Administrator and the Distributor since 1983.
KATHRYN L. STANTON - Vice President, Assistant Secretary - Vice President,
Assistant Secretary of SEI, the Administrator and Distributor since 1994.
Associate, Morgan, Lewis & Bockius LLP (law firm) 1989-1994.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of SEI, the Administrator and Distributor since 1994.
United States Securities and Exchange Commission, Division of Investment
Management 1990-1994. Associate, McGuire, Woods, Battle and Booth (law firm)
prior to 1990.
TODD CIPPERMAN - Vice President, Assistant Secretary - Vice President, 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.
JOSEPH LYDON - Vice President, Assistant Secretary - Director of Business
Administration, SEI Corporation since April, 1995; Vice President of Fund Group,
Vice President of the Advisor - Dreman Value Management, LP, President of
Dreman Financial Services, Inc. from 1989 to 1995. B.S. Accounting, St.
Joseph's University.
JEFFREY A. COHEN - Controller, Chief Financial Officer - CPA, Vice President,
International and Domestic Funds Accounting, SEI Corporation since 1991. Audit
Manager, Price Waterhouse prior to 1991.
RICHARD W. GRANT - Secretary - 2000 One Logan Square, Philadelphia, PA 19103,
Partner of Morgan, Lewis & Bockius LLP (law firm), Counsel to the Trust, Manager
and
B-29
<PAGE>
Distributor.
MICHAEL T. ZELINSKY - Assistant Secretary - Blue Sky Supervisor, Legal; SEI
Corporation, October 1995 -present; Legal Assistant, Clark, Ladner, Fortenbaugh
& Young, 1994-1995; Legal Assistant, Seward & Kissel 1993-1994; prior to 1993
Michael was employed in the information and computer industries. B.A. The
American University, 1984.and the Distributor.
JOHN H. GRADY, JR. - Assistant Secretary - 1800 M Street, N.W., Washington,
D.C., 20036, Partner, since 1995 and Associate, 1993-1995, Morgan, Lewis &
Bockius LLP, counsel to the Trust, Manager and Distributor; Associate, Ropes &
Gray, 1988 to 1993.
- ---------------
*Messrs. Nesher, Doran and Mulroy are Trustees who may be deemed to be
"interested" persons of the Trust as the term is defined in the 1940 Act.
**Messrs. Cooney, Morris, Patterson, Storey and Peters serve on the Audit
Committee of the Trust.
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.
As of September 30, 1994, the Trustees and officers of the Trust received
the following compensation:
<TABLE>
<CAPTION>
=================================================================================================
Total
Compensation
Aggregate Pension or from Registrant
Compensation Retirement Estimated and Fund
From Benefits Annual Complex Paid to
Name of Person, Registrant for Accrued as Benefits Upon Directors for
Position Fiscal Year Part of Fund Retirement Fiscal Year
Ended 1994 Expenses Ended 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney, $1,745.12 0 0 $1,745.12 for 1
Trustee Board
- -------------------------------------------------------------------------------------------------
Frank E. Morris, $1,745.12 0 0 $1,745.12 for 1
Trustee Board
- -------------------------------------------------------------------------------------------------
Barry M. Mulroy, N/A 0 0 N/A
Trustee
- -------------------------------------------------------------------------------------------------
Robert A. Patterson, $1,745.12 0 0 $1,745.12 for 1
Trustee Board
- -------------------------------------------------------------------------------------------------
Gene Peters, $1,745.12 0 0 $1,745.12 for 1
Trustee Board
================================================================================================
</TABLE>
B-30
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================
Total
Compensation
Aggregate Pension or from Registrant
Compensation Retirement Estimated and Fund
From Benefits Annual Complex Paid to
Name of Person, Registrant for Accrued as Benefits Upon Directors for
Position Fiscal Year Part of Fund Retirement Fiscal Year
Ended 1995 Expenses Ended 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James M. Storey, $1,745.12 0 0 $1,745.12 for 1
Trustee Board
=================================================================================================
</TABLE>
COMPUTATION OF YIELD
Money Market Funds -- From time to time the Money Market Funds may advertise
- ------------------
"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 a Fund refers to the income generated by an investment in a Fund over
a stated seven-day period. This income is then "annualized," that is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.
The current yield of the Money Market Funds will be calculated daily based upon
the seven days ending on the date of calculation ("base period"). The yield is
computed by determining the net change (exclusive of capital changes) in the
value of a hypothetical pre-existing shareholder account having a balance of one
share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing such net change by
the value of the account at the beginning of the some period to obtain the base
period return and multiplying the result by (365/7). Realized and unrealized
gains and losses are not included in the calculation of the yield. The
effective compound 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, 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.
B-31
<PAGE>
For the 7-day period ended March 31, 1995, the Treasury Securities Money Market
Fund's current and effective yields were 5.42% and 5.57% for the Retail Class
shares, 5.62% and 5.78% for the Trust Class shares of the Money Market Fund. As
of March 31, 1995, the Institutional Money Market Fund had not commenced
operations.
The yields of the Money Market Funds fluctuates, and the annualization of a
week's dividend is not a representation by the Trust as to what an investment in
each Fund will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments each
Fund invests in, changes in interest rates on money market instruments, changes
in the expenses of each Fund and other factors.
Yields are one basis upon which investors may compare the Money Market 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.
Fixed Income and Equity Funds -- The Fixed Income Funds and the Equity Funds may
- -----------------------------
advertise a 30-day yield. These figures will be based on historical earnings
and are not intended to indicate future performance. The yield of 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. In particular, yield will be
calculated according to the following formula:
Yield = 2([(a-b)/(cd) + 1]/6/ - 1) where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement);
c = the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.
The Louisiana 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 Fund's
yield, assuming certain tax brackets for a shareholder. The tax-equivalent
yield of the Fund will be calculated by adding (a) the portion of the Fund's
yield that is not tax-exempt and (b) the result obtained by dividing the portion
of the Fund's yield that is tax-exempt by the difference of one minus a stated
income tax rate.
For the 30-day period ended March 31, 1995, the yield for the Class A shares of
each of the Government Securities, Balanced, Value Equity and Louisiana Tax-Free
Income Funds was 6.33%, 4.20%, 2.26% and 4.49%, respectively.
For the 30-day period ended March 31, 1995, the yield for the Class B shares of
each
B-32
<PAGE>
of the Government Securities, Balanced, Value Equity and Louisiana Tax-Free
Income Funds was 5.81%, 3.61%, 1.58%, and 3.91%, respectively.
CALCULATION OF TOTAL RETURN
From time to time, the Fixed Income Funds and the Equity Funds may advertise
total return. The total return of the 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 Funds 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 returns for the Funds from
inception through March 31, 1995 and for the one year period ended March 31,
1995 were as follows:
<TABLE>
<CAPTION>
====================================================================
Total Return
==========================
Since
Inception* 1 year
--------------------------------------------------------------------
<S> <C> <C>
Government Securities Fund
--------------------------------------------------------------------
Class A/1/ - Offering Price (0.96) .72
--------------------------------------------------------------------
Class A - Net Asset Value 2.60 4.38
--------------------------------------------------------------------
Class B/2/ - Offering Price 1.16 3.71
--------------------------------------------------------------------
Class B - Net Asset Value 1.16 3.71
--------------------------------------------------------------------
Louisiana Tax Free Income Fund
--------------------------------------------------------------------
Class A/1/ - Offering Price (2.01) 2.32
--------------------------------------------------------------------
Class A - Net Asset Value 1.52 6.01
--------------------------------------------------------------------
Class B/3/ - Offering Price 1.64 5.13
--------------------------------------------------------------------
Class B - Net Asset Value 1.64 5.13
--------------------------------------------------------------------
Balanced Fund
--------------------------------------------------------------------
Class A/1/ - Offering Price .45 2.57
--------------------------------------------------------------------
Class A - Net Asset Value 4.06 6.29
====================================================================
</TABLE>
B-33
<PAGE>
<TABLE>
<CAPTION>
====================================================================
Total Return
--------------------------------------------------------------------
<S> <C> <C>
--------------------------------------------------------------------
Class B/2/ - Offering Price 2.51 5.39
--------------------------------------------------------------------
Class B - Net Asset Value 2.51 5.39
--------------------------------------------------------------------
Value Equity Fund
--------------------------------------------------------------------
Class A/1/ - Offering Price .98 5.72
--------------------------------------------------------------------
Class A - Net Asset Value 4.62 9.52
--------------------------------------------------------------------
Class B/2/ - Offering Price 4.13 8.77
--------------------------------------------------------------------
Class B - Net Asset Value 4.13 8.77
--------------------------------------------------------------------
Treasury Securities Money Market Fund
--------------------------------------------------------------------
Class A 5.81 4.41
--------------------------------------------------------------------
Class B 5.52 4.29
====================================================================
</TABLE>
*Returns have been annualized.
---------------
/1/ Commenced operations on October 1, 1993.
/2/ Commenced operations on October 22, 1993.
/3/ Commenced operations on November 22, 1993.
PURCHASE AND REDEMPTION OF SHARES
Each Fund intends to pay cash for all shares redeemed, but under abnormal
conditions which make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting
such securities to cash.
It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities
held by the Funds in lieu of cash. Shareholders may incur brokerage
charges on the sale of any such securities so received in payment of
redemptions. However, a shareholder will at all times be entitled to
aggregate cash redemptions from all Funds of the Trust during any 90-day
period of up to the lesser of $250,000 or 1% of the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which
trading on the New York Stock Exchange is restricted, or during the
existence of an emergency (as determined by the Securities and Exchange
Commission by rule or regulation) as a result of disposal or valuation of
the Fund's securities is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission has by order permitted.
The
B-34
<PAGE>
Trust also reserves the right to suspend sales of shares of the Fund for
any period during which the New York Stock Exchange, the Adviser, the
Administrator and/or the Custodian are not open for business. The New York
Stock Exchange will not open in observance of the following holidays: New
Year's Day; President's Day; Good Friday; Memorial Day; Independence Day;
Labor Day; Thanksgiving; and Christmas.
CONVERSION FEATURE
As described in the Prospectuses, Class B shares of the Fixed Income and
Equity Funds will automatically convert to Class A shares and will no
longer be subject to the distribution and service fees or the contingent
deferred sales charge after five years after the beginning of the month in
which the shares were issued. Such conversion will be on the basis of the
relative net asset values of the two classes, without the imposition of a
sales load, fee or other charge. Because the per share net asset value of
the Class A shares may be higher than that of the Class B shares at the
time of conversion, a shareholder may receive fewer Class A shares than the
number of Class B shares converted, although the dollar value will be the
same.
LETTER OF INTENT
Reduced sales charges are applicable to the aggregate amount of purchases
made by any such purchaser previously enumerated within a 13-month period
pursuant to a written Letter of Intent (the "Letter") provided by the
Distributor, and not legally binding on the signer or a Fund which provides
for the holding in escrow by the Administrator of 5% of the total amount
intended to be purchased until such purchase is completed within the 13-
month period. A Letter may be dated to include shares purchased up to 90
days prior to the date the Letter is signed. The 13-month period begins on
the date of the earliest purchase. If the intended investment is not
completed, the purchaser will be asked to pay an amount equal to the
difference between the sales charge on the shares purchased at the reduced
rate and the sales charge otherwise applicable to the total shares
purchased. If such payment is not made within 20 days following the
expiration of the 13-month period, the Administrator will surrender an
appropriate number of the escrowed shares for redemption in order to
realize the difference. Such purchasers may include the value (at offering
price at the level designated in their Letter) of all their shares of the
Fund and of the Fixed Income Funds and the Equity Funds previously
purchased and still held as of the date of their Letter toward the
completion of such Letter.
DETERMINATION OF NET ASSET VALUE
Money Market Funds -- The net asset value per share of the Money Market
- ------------------
Funds are calculated by adding the value of securities and other assets,
subtracting liabilities and dividing by the number of outstanding shares.
Securities will be valued by the amortized cost method which involves
valuing a security at its cost on the date of
B-35
<PAGE>
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 each Fund would receive if it
sold the instrument. During periods of declining interest rates, the daily
yield of each 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 each Fund resulted in a
lower aggregate portfolio value on a particular day, a prospective investor
in each 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 each Fund would experience a lower yield. The
converse would apply in a period of rising interest rates.
The Money Market Funds use of amortized cost and the maintenance of each
Funds net asset value at $1.00 are permitted by regulations promulgated by
Rule 2a-7 under the 1940 Act, provided that certain conditions are met.
The regulations also require the Trustees to establish procedures which are
reasonably designed to stabilize the net asset value per share at $1.00 for
each Fund. Such procedures include the determination of the extent of
deviation, if any, of each Funds current net asset value per share
calculated using available market quotations from each Funds amortized cost
price per share at such intervals as the Trustees deem appropriate and
reasonable in light of market conditions and periodic reviews of the amount
of the deviation and the methods used to calculate such deviation. In the
event that such deviation exceeds 1/2 of 1%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the
Trustees believe that the extent of any deviation may result in material
dilution or other unfair results to shareholders, the Trustees are required
to take such corrective action as they deem appropriate to eliminate or
reduce such dilution or unfair results to the extent reasonably
practicable. Such actions may include the sale of portfolio instruments
prior to maturity to realize capital gains or losses or to shorten average
portfolio maturity; withholding dividends; redeeming shares in kind; or
establishing a net asset value per share by using available market
quotations. In addition, if each Fund incurs a significant loss or
liability, the Trustees have the authority to reduce pro rata the number of
shares of each Fund 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.
Fixed Income and Equity Funds -- The securities of the Fixed Income Funds
- -----------------------------
and the Equity 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
B-36
<PAGE>
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.
TAXES
The following is only a summary of certain 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 tax liabilities.
All Funds
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, certain administrative changes or court
decisions may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.
Recent legislation, signed into law by President Clinton in August 1993,
increased the top marginal rate of tax imposed on individual taxpayers from
31% to 36% on taxable income in excess of $140,000 and imposed a 10% surtax
on high-income individual taxpayers on taxable income in excess of
$250,000. As a result of these changes, the rate at which capital gains
are taxed differs markedly from the tax rate on ordinary income; the
increases discussed above apply to the tax rates imposed on ordinary income
but the rate imposed on capital gains remains at 28%.
In addition, the recent legislation increased the alternative minimum tax
rates for noncorporate individual taxpayers from 24% to 26% on alternative
minimum taxable income ("AMTI") less the exemption amount up to $175,000
and 28% on AMTI less the exemption amount in excess of $175,000. The
corporate alternative minimum tax rate remains at 20%.
It is the policy of each of the Trust's Funds to qualify for the favorable
tax treatment accorded regulated investment companies under Subchapter M of
the Code. By following such policy, each of the Trust's Funds expects to
eliminate or reduce to a nominal amount the federal taxes to which such
Fund may be subject.
In order to qualify as a regulated investment company each Fund must, among
other things, (1) derive at least 90% of its gross income each taxable year
from dividends, interest, payments with respect to securities loans, and
gains from the sale or other
B-37
<PAGE>
disposition of stock, securities or foreign currencies; or other income
(including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies;
(2) derive less than 30% of its gross income each taxable year from the
sale or other disposition of certain assets held for less than three months
("Short-Short Limitation"), including stock and securities; options,
futures or forward contracts (other than on foreign currencies); or foreign
currencies (including options, futures or forward contracts) if not
directly related to the Fund's principal business of investing in stocks
and securities; and (3) diversify its holdings so that at the end of each
quarter of each taxable year (i) at least 50% of the market value of the
Fund's total assets is represented by cash or cash items, United States
Government securities, securities of other regulated investment companies,
and other securities limited, in respect of any one issuer, to a value not
greater than 5% of the value of the Fund's total assets and 10% of the
outstanding voting securities of such issuer, and (ii) not more than 25% of
the value of its assets is invested in the securities of any one issuer
(other than United States Government securities or securities of any other
regulated investment company) or of two or more issuers that the Fund
controls and that are engaged in the same, similar, or related trades or
businesses. These requirements may restrict the degree to which the Funds
may engage in short-term trading and in certain hedging transactions and
may limit the range of the Fund's investments. If a Fund qualifies as a
regulated investment company, it will not be subject to federal income tax
on the part of its net investment income and net realized capital gains, if
any, which it distributes each year to shareholders, provided the Fund
distributes at least (a) 90% of its "investment company taxable income"
(generally, net investment income plus net short-term capital gain) and (b)
90% of its net interest exempt income (the excess of (i) its tax-exempt
interest income over (ii) certain deductions attributable to that income).
If a Fund fails to distribute in a calendar year at least the sum of 98% of
its ordinary income for the year and 98% of its capital gain net income
(the excess of short and long term gain over short and long term losses)
for the one-year period ending October 31 of the year (and any retained
amount from the prior calendar year), the Fund will be subject to a
nondeductible 4% federal excise tax on the undistributed amounts.
Distributions declared in October, November, or December to shareholders of
record during those months and paid during the following January are
treated as if they were received by each shareholder on December 31 of the
prior year for tax purposes.
In certain cases, a Fund will be required to withhold and remit to the U.S.
Treasury 31% of any taxable dividends, capital gain distributions and
redemption proceeds (other than from redemption of shares of the Money
Market Funds) paid to an individual or certain other non-corporate
shareholder (1) who has failed to provide a correct taxpayer identification
number, (2) who is subject to backup withholding by the Internal Revenue
Service, or (3) who has not certified to the Fund that such shareholder is
not subject to backup withholding. This backup withholding is not an
additional tax, and any
B-38
<PAGE>
amounts withheld may be credited against the shareholder's ultimate U.S.
tax liability.
A Fund's transactions in certain futures contracts, options, forward
contracts, foreign currencies, foreign debt securities, and certain other
investment and hedging activities will be subject to special tax rules. In
a given case, these rules may accelerate income to the Fund, defer losses
to the Fund, cause adjustments in the holding periods of the Fund's assets,
convert short-term capital losses into long-term capital losses, or
otherwise affect the character of the Fund's income. These rules could
therefore affect the amount, timing, and character of distributions to
shareholders. Each Fund will endeavor to make any available elections
pertaining to such transactions in a manner believed to be in the best
interest of the Fund.
Income from the disposition of options and futures contracts will be
subject to the Short-Short Limitation if they were held for less than three
months. If a Fund satisfies certain requirements, then any increase in
value of a position that is part of a "designated hedge" will be offset by
any decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining whether
the Fund satisfies the Short-Short Limitation. Thus, only the net gain (if
any) from the designated hedge will be included in gross income for
purposes of that limitation. To the extent this treatment is not
available, the Fund may be forced to defer the closing out of certain
options and futures contracts beyond the time when it otherwise would be
advantageous to do so.
Shareholders will be advised annually as to the federal income tax
consequences of distributions made during the year. However, information
set forth in the Prospectuses and this Statement of Additional Information
which relates to taxation is only a summary of some of the important tax
considerations generally affecting purchasers of shares of the Trust's
Funds. Further tax information regarding the Funds is included in the
immediately following sections of this Statement of Additional Information.
No attempt has been made to present a detailed explanation of the income
tax treatment of a Fund or its shareholders, and this discussion is not
intended as a substitute for careful tax planning. Accordingly, potential
purchasers of shares of a Fund are urged to consult their tax advisers with
specific reference to their own tax situation.
The following tax information relates specifically to certain of the
Trust's Funds.
B-39
<PAGE>
Additional Tax Information Concerning the Louisiana Fund and Tax Exempt
Money Market Fund
As indicated in the Prospectuses of the Louisiana Fund and Tax Exempt Money
Market Fund, these Funds are designed to provide shareholders with current
tax-exempt interest income and is not intended to constitute a balanced
investment program. Certain recipients of Social Security and railroad
retirement benefits may be required to take into account income from the
Funds in determining the taxability of their benefits. In addition, the
Funds may not be an appropriate investment for shareholders that are
"substantial users" or persons related to such users of facilities financed
by private activity bonds or industrial revenue bonds. A "substantial
user" is defined generally to include certain persons who regularly use a
facility in their trade or business. Shareholders should consult their tax
advisers to determine the potential effect, if any, on their tax liability
of investing in these Funds.
If, at the close of each quarter of its taxable year, at least 50% of the
value of a Fund's total assets consists of securities the interest on which
is excludable from gross income, the Fund may pay "exempt-interest
dividends" to its shareholders. The policy of the Funds is to pay each
year as dividends substantially all of its interest income, net of certain
deductions. An exempt-interest dividend is any dividend or part thereof
(other than a capital gain dividend) paid by a Fund, and designated by the
Fund as an exempt-interest dividend in a written notice mailed to
shareholders within 60 days after the close of such Fund's taxable year.
However, aggregate exempt-interest dividends for the taxable year may not
exceed the net interest from Municipal Securities and other securities
exempt from the regular Federal income tax received by the Fund during the
taxable year. The percentage of the total dividends paid for any taxable
year which qualifies as Federal exempt-interest dividends will be the same
for all shareholders receiving dividends from the Fund during such year,
regardless of the period for which the shares were held.
Exempt-interest dividends may nevertheless be subject to the alternative
minimum tax (the "Alternative Minimum Tax") imposed by section 55 of the
Code or the environmental tax (the "Environmental Tax") imposed by Section
59A of the Code. The Environmental Tax is imposed at the rate of 0.12% and
applies only to corporate taxpayers. The Alternative Minimum Tax and the
Environmental Tax may be imposed in two circumstances. First, exempt-
interest dividends derived from certain "private activity bonds" issued
after August 7, 1986, will generally be an item of tax preference (and
therefore potentially subject to the Alternative Minimum Tax and the
Environmental Tax) for both corporate and non-corporate taxpayers. Second,
in the case of exempt-interest dividends received by corporate
shareholders, all exempt-interest dividends, regardless of when the bonds
from which they are derived were issued or whether they were derived from
private activity bonds, will be included in the corporation's "adjusted
current earnings," as defined in section 56(g) of the Code, in calculating
the corporation's alternative minimum taxable income for purposes of
determining the
B-40
<PAGE>
Alternative Minimum Tax and the Environmental Tax.
The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a
portion of exempt-interest dividends received or accrued during the taxable
year. Foreign corporations engaged in a trade or business in the United
States will be subject to a "branch profits tax" on their "dividend
equivalent amount" for the taxable year, which will include exempt-interest
dividends. Certain Subchapter S corporations may also be subject to taxes
on their "passive investment income," which could include exempt-interest
dividends.
Issuers of bonds purchased by the 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. Investors
should be aware that exempt-interest dividends derived from such bonds may
become subject to Federal income taxation retroactively to the date thereof
if such representations are determined to have been inaccurate or if the
issuer of such bonds (or the beneficiary of such bonds) fails to comply
with the covenants.
Under the Code, if a shareholder receives an exempt-interest dividend with
respect to any share and such share is held for six months or less, any
loss on the sale or exchange of such share will be disallowed to the extent
of the amount of such exempt-interest dividend.
Any net realized long-term capital gains of a Fund will be distributed at
least annually. The Fund will have no tax liability with respect to such
gains and the distributions will be taxable to shareholders as long-term
capital gains, regardless of how long a shareholder has held the Fund's
shares. Such distributions will be designated as a capital gains dividend
in a written notice mailed to shareholders after the close of the Fund's
taxable year. If a shareholder disposes of shares in the Fund at a loss
before having held those shares for more than six months, such loss will be
treated as a long-term capital loss to the extent the shareholder has
received a long-term capital gain distribution on the shares.
Although the Fund does not expect to earn any investment company taxable
income (as defined by the Code), any income earned on taxable investments
will be distributed and will be taxable to shareholders as ordinary income.
In general, "investment company taxable income" comprises taxable net
investment income and net short-term capital gains. The Fund would be
taxed on any undistributed investment company taxable income. Since any
such income will be distributed, it is anticipated that no such tax will be
paid by the Fund.
As indicated in the Prospectuses of the Louisiana Fund and Tax Exempt Money
Market Fund, these Funds may acquire puts with respect to Municipal
Securities held in its
B-41
<PAGE>
portfolio. See "Additional Description Of Permitted Investments --Puts on
Municipal Securities" in this Statement of Additional Information. The
policy of the Funds is to limit acquisitions of puts to those under which
an acquiring Fund will be treated for Federal income tax purposes as the
owner of the Municipal Securities acquired subject to the put and the
interest on the Municipal Securities will be tax-exempt to such Fund.
Although the Internal Revenue Service has issued a published ruling that
provides some guidance regarding the tax consequences of the purchase of
puts, there is currently no guidance available from the Internal Revenue
Service that definitively establishes the tax consequences of many of the
types of puts that these Funds could acquire under the 1940 Act.
Therefore, although the Louisiana Fund will only acquire a put after
concluding that it will have the tax consequences described above, the
Internal Revenue Service could reach a different conclusion. If the
Louisiana Fund or Tax Exempt Money Market Fund were not treated as the
owner of the Municipal Securities, income from such securities would
probably not be tax-exempt.
Although each Fund expects to qualify as a "regulated investment company"
and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of its activities in states and localities in
which its offices are maintained, in which its agents or independent
contractors are located, or in which it is otherwise deemed to be
conducting business, the Fund may be subject to the tax laws of such states
or localities. In addition, in those states and localities which have
income tax laws, the treatment of these Funds and their shareholders under
such laws may differ from its treatment under Federal income tax laws.
Shareholders are advised to consult their tax advisers concerning the
application of state and local taxes.
If for any taxable year a Fund does not qualify for the special tax
treatment afforded regulated investment companies, all of its taxable
income will be subject to Federal tax at regular corporate rates (without
any deduction for distributions to its shareholders). Moreover, upon
distribution to shareholders, the Fund's income, including Municipal
Securities interest income, will be taxable to shareholders to the extent
of the Fund's current and/or accumulated earnings and profits.
State Taxes
A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a regulated investment company for Federal income tax
purposes. Distributions by the Funds to shareholders and the ownership of
shares may be subject to state and local taxes. Therefore, shareholders
are urged to consult with their tax advisors concerning the application of
state and local taxes to investments in the Funds, which may differ from
the Federal income tax consequences. For example, under certain specified
circumstances, state income tax laws may exempt from taxation distributions
---
of a regulated investment company to the extent that such distributions are
derived from interest on Federal obligations. Shareholders are urged to
-------------------------
consult with their tax advisors regarding whether, and under what
- -----------------------------------------------------------------
conditions such exemption is available.
- --------------------------------------
B-42
<PAGE>
FUND TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing the
orders to execute transactions for the 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 Adviser generally seeks reasonably
competitive spreads or commissions, the Trust will not necessarily be
paying the lowest spread or commission available.
The money market securities in which the 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
Adviser will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Money market securities are generally traded on
a net basis and do not normally involve either brokerage commissions or
transfer taxes. The cost of executing portfolio securities transactions of
the Trust will primarily consist of dealer spreads and underwriting
commissions.
TRADING PRACTICES AND BROKERAGE
The Adviser selects brokers or dealers to execute transactions for the
purchase or sale of portfolio securities on the basis of its judgment of
their professional capability to provide the service. The primary
consideration is to have brokers or dealers execute transactions at best
price and execution. Best price and execution refers to many factors,
including the price paid or received for a security, the commission
charged, the promptness and reliability of execution, the confidentiality
and placement accorded the order and other factors affecting the overall
benefit obtained by the account on the transaction. The Trust's
determination of what are reasonably competitive rates is based upon the
professional knowledge of its trading department as to rates paid and
charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis
where the Trust either buys securities directly from the dealer or sells
them to the dealer. In these instances, there is no direct commission
charged but there is a spread (the difference between the buy and sell
price) which is the equivalent of a commission.
The Trust may allocate out of all commission business generated by all of
the funds and accounts under management by the Adviser, brokerage business
to brokers or dealers who provide brokerage and research services. These
research services
B-43
<PAGE>
include advice, either directly or through publications or writings, as to
the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or
sellers of securities; furnishing of analyses and reports concerning
issuers, securities or industries; providing information on economic
factors and trends, assisting in determining portfolio strategy, providing
computer software used in security analyses, and providing portfolio
performance evaluation and technical market analyses. Such services are
used by the Adviser in connection with its investment decision-making
process with respect to one or more funds and accounts managed by it, and
may not be used exclusively with respect to the fund or account generating
the brokerage.
As provided in the Securities Exchange Act of 1934, as amended, higher
commissions may be paid to broker/dealers who provide brokerage and
research services than to broker/dealers who do not provide such services
if such higher commissions are deemed reasonable in relation to the value
of the brokerage and research services provided. Although transactions are
directed to broker/dealers who provide such brokerage and research
services, the Trust believes that the commissions paid to such
broker/dealers are not, in general, higher than commissions that would be
paid to broker/dealers not providing such services and that such
commissions are reasonable in relation to the value of the brokerage and
research services provided. In addition, portfolio transactions which
generate commissions or their equivalent are directed to broker/dealers who
provide daily portfolio pricing services to the Trust. Subject to best
price and execution, commissions used for pricing may or may not be
generated by the funds receiving the pricing service.
The Adviser may place a combined order for two or more accounts or funds
engaged in the purchase or sale of the same security if, in its judgment,
joint execution is in the best interest of each participant and will result
in best price and execution. Transactions involving commingled orders are
allocated in a manner deemed equitable to each account or fund. It is
believed that the ability of the accounts to participate in volume
transactions will generally be beneficial to the accounts and funds.
Although it is recognized that, in some cases, the joint execution of
orders could adversely affect the price or volume of the security that a
particular account or trust may obtain, it is the opinion of the Adviser
and the Trust's Board of Trustees that the advantages of combined orders
outweigh the possible disadvantages of separate transactions.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution,
the Fund 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.
B-44
<PAGE>
It is expected that the Trust may execute brokerage or other agency
transactions through the Distributor or an affiliate of the Adviser, both
of which are registered broker-dealers, for a commission in conformity with
the 1940 Act, the Securities Exchange Act of 1934 and rules promulgated by
the Securities and Exchange Commission (the "SEC"). Under these
provisions, the Distributor or an affiliate of the Adviser is permitted to
receive and retain compensation for effecting portfolio transactions for
the Trust on an exchange if a written contract is in effect between the
Distributor and the Trust expressly permitting the Distributor or an
affiliate of the Adviser to receive and retain such compensation. These
rules further require that commissions paid to the Distributor or affiliate
of the Adviser by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and fair compared to
the commission, fee or other renumeration received or to be received by
other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a
comparable period of time." In addition, the Trust may direct commission
business to one or more designated broker/dealers in connection with such
broker/dealer's provision of services to the Trust or payment of certain
Trust expenses (e.g., custody, pricing and professional fees). The
Trustees, including those who are not "interested persons" of the Trust,
have adopted procedures for evaluating the reasonableness of commissions
paid to the Distributor and will review these procedures periodically.
For the fiscal year ended September 30, 1994, the funds paid the following
brokerage commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
===============================================================================================
Total $ Amount Total $ Amount of
of Brokered Brokerage Brokered
Brokerage Transactions Commissions Transactions With
Commissions for Last Paid Affiliate for Last
Fund Paid Year to Affiliates Year
------------------------------------------------------------------------
1994 1994 1994 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Government 0 129,437,513 0 0
Securities Fund
- -----------------------------------------------------------------------------------------------
Louisiana Tax Free 0 11,727,030 0 0
Income Fund
- -----------------------------------------------------------------------------------------------
Balanced Fund 158,661 110,127,897 39,051.75 (24%) 20,167,383 (18%)
- -----------------------------------------------------------------------------------------------
Value Equity Fund 257,648 132,380,392 71,586.01 (27%) 33,677,487 (25%)
- -----------------------------------------------------------------------------------------------
Treasury Securities 0 22,159,476,418 0 0
Money Market Fund
===============================================================================================
</TABLE>
B-45
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
Institutional Money * * * *
Market Fund
=============================================================================================
</TABLE>
- -------------------
* As of September 30, 1994, had not commenced operations.
For the fiscal year ended September 30, 1994, the portfolio turnover rates for
the Trust's Government Securities, Balanced, Value Equity and Louisiana Tax-Free
Income Funds were 37.80%, 64.09%, 161.42% and 30.31%, respectively.
DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust and was organized pursuant to the
Declaration of Trust. The Declaration of Trust authorizes the Board of Trustees
to issue an unlimited number of shares, which are units of beneficial interest.
The Trust presently has series of shares which represent interests in the
following Funds: the Government Securities Fund, the Louisiana Fund, the
Balanced Fund, the Value Equity Fund, the Money Market Fund, the Institutional
Money Market Fund and the Tax Exempt Money Market Fund, respectively. The
Trust's Declaration of Trust authorizes the Board of Trustees to divide or
redivide any unissued shares of the Trust into one or more additional series.
Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectuses and this Statement of
Additional Information, the Trust's shares will be fully paid and non-
assessable, subject only to the possibility of shareholder liability described
in the following section. All consideration received by the Trust for shares of
any additional series and all assets in which such consideration is invested
would belong to that series and would be subject to the liabilities related
thereto. In the event of a liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution.
Share certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for
B-46
<PAGE>
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by or on
behalf of the Trust or the Trustees, and because the Declaration of Trust
provides for indemnification out of the Trust property for any shareholder held
personally liable for the obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
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.
5% SHAREHOLDERS
The names and addresses of the holders of 5% or more of the outstanding shares
of any fund as of October 31, 1994 and the percentage of outstanding shares of
such Fund held by such shareholders as of such date are, to Trust management's
knowledge, as follows/(1)/:
<TABLE>
<CAPTION>
=================================================================================
Name and Address Number
of Record of % of
Name of Fund or Beneficial Holder Shares Ownership
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury ENBECEE Company 529,852,182.410 99.98%
Securities Money 925 Common Street
Market Fund - New Orleans, LA 70160
Trust Class
- ---------------------------------------------------------------------------------
Treasury National Financial 203,361,094.8600 71.84%
Securities Money Services Corp. for the
Market Fund - Exclusive Benefit of Our
Retail Class Customers
Attn: Mike McLaughlin
200 Liberty Street
New York, NY 10281
- ---------------------------------------------------------------------------------
Treasury Securities ENBECEE Company 79,643,760.4000 28.13%
Money Market Fund - 925 Common Street
Cash Sweep Class New Orleans, LA 70160
=================================================================================
</TABLE>
B-47
<PAGE>
<TABLE>
<CAPTION>
=================================================================================
Name and Address Number
of Record of % of
Name of Fund or Beneficial Holder Shares Ownership
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Government ENBECEE 6,737,853.6790 55.28%
Securities Fund - 925 Common Street
Class A New Orleans, LA 70160
- ---------------------------------------------------------------------------------
ENBECEE 5,325,205.8600 43.69%
925 Common Street
New Orleans, LA 70112
- ---------------------------------------------------------------------------------
Government NFSC FEBO 8,147.8810 33.13%
Securities Fund - Noelie M. Gatipon
Class B 8241 Birch St.
New Orleans, LA 70118
- ---------------------------------------------------------------------------------
Government NFSC FEBO 2,002.1580 8.14%
Securities Fund - Rapides Bank Customer
Class B FBO Marilyn L. Adler IRA
(continued) 4807 Westgarden
Alexandria, LA 71303
- ---------------------------------------------------------------------------------
NFSC FEBO 2,002.1580 8.14%
RBT Customer
FBO Homer H. Adler IRA
4807 W. Garden
Boulevard
Alexandria, LA 71303
- ---------------------------------------------------------------------------------
NFSC FEBO 3,369.1520 13.70%
Jacqueline A. Maroney
Rige E. Maroney
2011 Illinois Ave
Kenner, LA 70062
- ---------------------------------------------------------------------------------
NFSC FEBO 1,458.4450 5.93%
Lori L. Reeves
701 Redwood Drive
Lake Charles, LA 70611
- ---------------------------------------------------------------------------------
NFSC FEBO 2,816.0170 11.45%
Don S. Carlos
629 Verret
Houma, LA 70360
=================================================================================
</TABLE>
B-48
<PAGE>
<TABLE>
<CAPTION>
=================================================================================
Name and Address Number
of Record of % of
Name of Fund or Beneficial Holder Shares Ownership
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Louisiana Tax- ENBECEE Company 669,091.1370 56.09%
Free Income 925 Common Street
Fund - Class A New Orleans, LA 70160-
0030
- ---------------------------------------------------------------------------------
Louisiana Tax- NFSC FEBO 12,752.0280 20.25%
Free Income Mr. Jack F. Worthy
Fund - Class B 1340 Chevelle Dr.
Baton Rouge, LA 70806
- ---------------------------------------------------------------------------------
NFSC FEBO 10,039.4830 15.94%
Irma Lee Dorrill
29885 Joe Stafford Street
Walker, LA 70785
- ---------------------------------------------------------------------------------
NFSC FEBO 5,050.5050 8.02%
Paul Boudreaux
Danielle Boudreaux
P O Box 384
Reserve, LA 70084-0384
- ---------------------------------------------------------------------------------
NFSC FEBO 4,441.9400 7.05%
Ruth Manes
3851 33rd Street
Metairie, LA 70001
- ---------------------------------------------------------------------------------
NFSC FEBO 4,128.0870 6.55%
Harrison L. Cavalier &
Sybil H. Cavalier
12513 E. Sheraton
Baton Rouge, LA 70815
- ---------------------------------------------------------------------------------
NFSC FEBO 3,240.4800 5.15%
Kathleen C. Berault Cust
Matthew Joseph Berault UTMA LA
1635 Eastwood
Slidell, LA 70458
- ---------------------------------------------------------------------------------
Balanced Fund - ENBECEE Company 7,587,456.7590 94.83%
Class A 925 Common Street
New Orleans, LA 70160-
0030
- ---------------------------------------------------------------------------------
Balanced Fund - NFSC FEBO 5,956.8130 5.70%
Class B First NBC
IRA of Henry John Fell
321 Willowbrook Drive
Gretna, LA 70056
=================================================================================
</TABLE>
B-49
<PAGE>
<TABLE>
<CAPTION>
=================================================================================
Name and Address Number
of Record of % of
Name of Fund or Beneficial Holder Shares Ownership
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Equity ENBECEE Company 2,398,667.2380 47.61%
Fund - Class A 925 Common Street
New Orleans, LA 70160-
0030
- --------------------------------------------------------------------------------
ENBECEE Company 2,380,926.1040 47.25%
925 Common Street
New Orleans, LA 70160-
0030
=================================================================================
</TABLE>
- ---------------------
/(1)/ The Trust believes that most of the shares referred to above were held by
the above persons in accounts for their fiduciary, agency or custodial
customers. The Trust's
B-50
<PAGE>
Treasury Securities Money Market Fund Cash Sweep Class has not yet commenced
operations.
EXPERTS
The financial statements in this Statement of Additional Information have been
audited by Arthur Andersen LLP, independent public accountants to the Trust, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in accounting and auditing.
B-51
<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 Services, 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 an "overwhelming degree" of credit protection. Those rated A-
1 reflect a "very strong" degree of safety regarding timely payment. Those
rated A-2 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 the "highest" quality and "higher" quality respectively on the
basis of relative repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial rating assigned by
Fitch. Paper rated Fitch-1 is regarded as having the strongest degree of
assurance for timely payment. The rating Fitch-2 (Very Good Grade) is the
second highest commercial paper rating assigned by Fitch which reflects an
assurance of timely payment only slightly less in degree than the strongest
issues.
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. Ratings of Duff-1 are further
refined by the gradations of "1+" and "1-". Issues rated Duff-1+ have the
highest certainty of timely payment, outstanding short term liquidity, and
safety just below risk-free U.S. Treasury short-term obligations. Issues rated
Duff-1 -- have high certainty of timely payment, strong liquidity factors
supported by good fundamental protection factors, and small risk factors. Paper
rated Duff-2 is regarded as having good certainty of timely payment, good access
to capital markets and sound liquidity factors and company fundamentals. Risk
factors are small.
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
A-1
<PAGE>
rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA by S&P also quality as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree. Debt rated A by S&P 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 by S&P 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 edge". Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A by Moody's 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 by Moody's is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings several times
or many times interest requirements, with such stability of applicable earnings
that safety is beyond reasonable question whatever changes occur in conditions.
Bonds 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
A-2
<PAGE>
broad. The issue may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more
local type market. Bonds rated A by Fitch are considered to be investment grade
and of high credit quality. The Obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with higher ratings.
Bonds rated BBB by Fitch are considered to be investment grade and of
satisfactory credit quality. The obligor's ability to pay interest and repay
principal is considered to be adequate. Adverse changes in economic condition
and circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
Bonds rated AAA by Duff are judged by Duff to be of the highest credit quality,
with negligible risk factors being only slightly more than for risk-free U.S.
Treasury debt. Bonds rated AA by Duff are judged by Duff to be of high credit
quality with strong protection factors and risk that is modest but that may vary
slightly from time to time because of economic conditions. Bonds rated A by
Duff are judged by Duff to have average but adequate protection factors.
However, risk factors are more variable and greater in periods of economic
stress. bonds rated BBB by Duff are judged by Duff as having below average
protection factors but still considerable variability in risk during economic
cycles.
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. Obligations for which there is a low expectation on
investment risk are rated A by IBCA. Capacity for timely repayment of principal
and interest is strong, although adverse changes in business, economic or
financial conditions may lead to increased investment risk. Obligations for
which there is currently a low expectation of investment risk are rated BBB by
IBCA. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are more
likely to lead to increased investment risk than for obligations in higher
categories.
A-3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Trustees of Marquis Funds:
We have audited the accompanying statements of net assets of the Treasury
Securities Money Market, Government Securities, Louisiana Tax-Free Income,
Growth and Income and Value Equity Funds of Marquis Funds as of September 30,
1994, and the related statements of operations, statements of changes in net
assets and financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1994, by correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Treasury Securities Money Market, Government Securities, Louisiana Tax-Free
Income, Growth and Income and Value Equity Funds of Marquis Funds as of
September 30, 1994, the results of their operations, changes in their net
assets, and financial highlights for the periods presented, in conformity with
generally accepted accounting principles.
Arthur Andersen LLP
Philadelphia, Pa.
November 11, 1994
14
<PAGE>
MARQUIS FUNDS
TREASURY SECURITIES MONEY MARKET FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
------- --------
<S> <C> <C>
U. S. TREASURY OBLIGATIONS (15.1%)
U.S. Treasury Bills
4.896%, 12/29/94............................................. $25,000 $ 24,705
3.580%, 01/12/95............................................. 5,000 4,951
5.047%, 02/16/95............................................. 29,720 29,166
U.S. Treasury Notes
4.250%, 10/31/94............................................. 10,000 10,006
4.625%, 11/30/94............................................. 5,000 5,008
--------
Total U. S. Treasury Obligations (Cost $73,835,745).......... 73,836
--------
REPURCHASE AGREEMENT (85.3%)
Aubrey G. Lanston 4.55%, dated 09/30/94, matures 10/03/94,
repurchase price $15,006,000 (collateralized by U.S.
Treasury Note, par value $14,800,000, 7.375%, 05/15/96,
market value: $15,422,000).................................. 15,000
CS First Boston 4.95%, dated 09/30/94, matures 10/03/94,
repurchase price $20,008,000 (collateralized by U.S.
Treasury STRIP, par value $22,604,000, 0.00%, 05/15/96,
market value: $20,417,000).................................. 20,000
Fuji Bank 5.05%, dated 09/30/94, matures 10/03/94, repurchase
price $20,008,000 (collateralized by various U.S. Treasury
STRIPS, par value $80,434,000, 0.00%, 08/15/08-11/15/13,
market value: $20,734,000).................................. 20,000
J.P. Morgan 4.95%, dated 09/30/94, matures 10/03/94,
repurchase price $105,043,000 (collateralized by various
U.S. Treasury STRIPS, par value $389,799,000 0.00%,
11/15/07-05/15/13, market value: $108,167,000).............. 105,000
</TABLE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
------ --------
<S> <C> <C>
J.P. Morgan 5.05%, dated 09/30/94, matures 10/03/94,
repurchase price $4,502,000 (collateralized by U.S. Treasury
STRIPS, par value $30,352,000, 0.00%, 11/15/17, market value:
$4,591,000).................................................. $ 4,500
Kidder Peabody 4.85%, dated 09/30/94, matures 10/03/94,
repurchase price $21,377,000 (collateralized by various U.S.
Treasury Obligations, par value $53,098,000, 0.00%-8.875%,
01/15/95-11/15/22, market value: $21,796,000)................ 21,368
Lehman Brothers 4.90%, dated 09/30/94, matures 10/03/94,
repurchase price $23,739,000 (collateralized by various U.S.
Treasury Bonds, par value $20,180,000, 8.75%-10.375%,
11/15/08-11/15/09, market value: $24,189,000)................ 23,729
Merrill Lynch 4.55%, dated 09/30/94, matures 10/03/94,
repurchase price $23,738,000 (collateralized by various U.S.
Treasury STRIPS, par value $172,064,000, 8.875%-9.125%,
05/15/18-02/15/19, market value: $24,204,000)................ 23,729
Morgan Stanley 4.78%, dated 09/30/94, matures 10/03/94,
repurchase price $22,053,000 (collateralized by U.S. Treasury
Note par value $23,830,000, 5.125%, 11/30/98, market value:
$22,487,000)................................................. 22,044
Nomura Securities 4.75%, dated 09/30/94, matures 10/03/94,
repurchase price $23,739,000 (collateralized by various U.S.
Treasury Obligations, par value $23,608,000, 5.375%-9.25%,
05/31/98-02/15/16, market value: $24,204,000)................ 23,729
</TABLE>
Continued
15
<PAGE>
MARQUIS FUNDS
TREASURY SECURITIES MONEY MARKET FUND
STATEMENT OF NET ASSETS, CONCLUDED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
VALUE
(000)
--------
<S> <C>
REPURCHASE AGREEMENT, CONCLUDED
Prudential Securities 4.88%, dated 09/30/94, matures
10/03/94, repurchase price $23,739,000 (collateralized by
various U.S. Treasury Obligations, par value $39,429,000,
0.00%-14.00%, 02/15/95-05/15/21, market value:
$24,204,000).............................................. $ 23,729
UBS Securities 4.92%, dated 09/30/94, matures 10/03/94,
repurchase price $115,492,000 (collateralized by various
U.S. Treasury Notes, par value $114,960,000, 4.75%-8.875%,
06/30/98-11/15/98, market value: $117,759,000)............ 115,446
--------
Total Repurchase Agreement (Cost $418,274,525)............. 418,274
--------
Total Investments (100.4%) (Cost $492,110,270)............. 492,110
--------
OTHER ASSETS AND LIABILITIES (-0.4%)
Other Assets and Liabilities, Net........................... (1,484)
--------
Total Other Assets and Liabilities......................... (1,484)
--------
</TABLE>
<TABLE>
<CAPTION>
VALUE
(000)
--------
<S> <C>
NET ASSETS:
Portfolio Shares of Institutional Class (unlimited
authorization--no par value) based on 403,778,503
outstanding shares of beneficial interest................. $403,778
Portfolio shares of Retail Class (unlimited authorization--
no par value) based on 86,847,915 outstanding shares of
beneficial interest....................................... 86,848
--------
Total Net Assets: (100.0%)................................. $490,626
========
Net Asset Value, Offering Price, and Redemption Price Per
Share--Institutional Class................................ $ 1.00
========
Net Asset Value, Offering Price, and Redemption Price Per
Share--Retail Class....................................... $ 1.00
========
</TABLE>
- ------------
STRIPS--Separate Trading of Registered Interest and Principal Securities
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
MARQUIS FUNDS
GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------- --------
<S> <C> <C>
U. S. TREASURY OBLIGATIONS (41.0%)
Treasury LINCS
6.000%, 08/15/09............................................. $ 2,500 $ 2,072
U.S. Treasury Bond
7.125%, 02/15/23............................................. 2,500 2,272
U.S. Treasury Notes
4.125%, 06/30/95............................................. 500 494
8.875%, 02/15/96............................................. 500 517
7.250%, 08/31/96............................................. 2,375 2,402
8.500%, 04/15/97............................................. 1,500 1,558
6.875%, 04/30/97............................................. 7,000 7,010
8.500%, 07/15/97............................................. 1,500 1,560
6.500%, 08/15/97............................................. 10,000 9,893
8.625%, 08/15/97............................................. 500 522
9.000%, 05/15/98............................................. 1,000 1,060
5.125%, 06/30/98............................................. 2,500 2,337
9.250%, 08/15/98............................................. 1,875 2,006
8.500%, 02/15/00............................................. 1,000 1,052
8.750%, 08/15/00............................................. 1,500 1,597
6.375%, 08/15/02............................................. 4,000 3,726
--------
Total U. S. Treasury Obligations (Cost $42,625,727).......... 40,078
--------
GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (37.5%)
FHLMC
7.000%, 04/01/00............................................. 84 83
9.000%, 11/01/05............................................. 1,641 1,699
9.000%, 05/01/06............................................. 2,110 2,184
9.000%, 08/01/09............................................. 584 596
9.000%, 12/01/09............................................. 1,707 1,744
FHLMC CMO
7.500%, 11/15/01............................................. 3,375 3,323
6.700%, 05/15/05............................................. 1,500 1,417
7.000%, 09/15/07............................................. 2,750 2,528
6.500%, 04/15/08............................................. 4,000 3,485
7.500%, 10/15/11............................................. 26 25
7.750%, 01/15/20............................................. 3,000 3,043
9.000%, 04/15/20............................................. 1,153 1,183
FNMA
8.500%, 03/01/98............................................. 228 233
7.000%, 09/01/07............................................. 4,845 4,644
FNMA REMIC
9.150%, 08/25/03............................................. 1,088 1,107
7.350%, 06/25/07............................................. 2,000 1,873
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------- --------
<S> <C> <C>
GNMA
10.500%, 06/15/98............................................ $ 32 $ 35
10.500%, 09/15/98............................................ 5 6
9.000%, 07/15/16............................................ 422 439
9.000%, 09/15/16............................................ 547 561
9.000%, 10/15/16............................................ 101 104
9.000%, 11/15/16............................................ 388 398
9.500%, 08/15/17............................................ 427 449
10.000%, 04/15/19............................................ 253 272
9.500%, 12/15/19............................................ 657 691
7.000%, 03/15/24............................................ 2,982 2,708
7.000%, 04/15/24............................................ 2,030 1,844
--------
Total Government Mortgage-Backed Obligations
(Cost $38,891,392).......................................... 36,674
--------
U.S. GOVERNMENT AGENCY OBLIGATIONS (5.8%)
FNMA
9.550%, 12/10/97............................................. 850 904
9.150%, 04/10/98............................................. 625 661
9.150%, 09/10/99............................................. 225 227
9.000%, 10/11/99............................................. 1,500 1,501
TVA
8.375%, 10/01/99............................................. 2,250 2,329
--------
Total U.S. Government Agency Obligations (Cost $6,023,149)... 5,622
--------
CORPORATE OBLIGATIONS (11.6%)
Baxter International
7.500%, 05/01/97............................................. 1,875 1,875
Exxon Capital
8.000%, 12/01/95............................................. 1,000 1,018
Ford Capital
9.000%, 08/15/98............................................. 500 520
Ford Motor Credit
9.300%, 03/15/95............................................. 1,500 1,523
General Electric Capital
5.625%, 01/15/95............................................. 2,250 2,247
Nationsbank
6.625%, 01/15/98............................................. 4,250 4,164
--------
Total Corporate Obligations (Cost $11,809,780)............... 11,347
--------
</TABLE>
Continued
17
<PAGE>
MARQUIS FUNDS
GOVERNMENT SECURITIES FUND
STATEMENT OF NET ASSETS, CONCLUDED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------- --------
<S> <C> <C>
CASH EQUIVALENTS (2.7%)
SEI Liquid Asset Trust Treasury Portfolio
4.190%, 10/07/94............................................. $ 2,613 $ 2,613
--------
Total Cash Equivalents (Cost $2,613,454)..................... 2,613
--------
Total Investments (98.6%) (Cost $101,963,502)................ 96,334
--------
OTHER ASSETS AND LIABILITIES (1.4%)
Other Assets and Liabilities, Net............................. 1,375
--------
Total Other Assets and Liabilities 1,375
--------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
(000)
--------
<S> <C>
NET ASSETS:
Portfolio shares of Class A (unlimited authorization--no par
value) based on 10,365,315 outstanding shares of beneficial
interest....................................................... $103,786
Portfolio shares of Class B (unlimited authorization--no par
value) based on 15,556 outstanding shares of beneficial
interest....................................................... 154
Undistributed net investment income............................. 14
Accumulation net realized loss in investments................... (615)
Net unrealized depreciation in investments...................... (5,630)
--------
Total Net Assets: (100.0%)...................................... $ 97,709
========
Net Asset Value and Redemption Price Per Share--Class A......... $ 9.41
========
Maximum Offering Price Per Share--Class A (9.41/96.50%)......... $ 9.75
========
Net Asset Value, Offering Price Per Share--Class B.............. $ 9.46
========
</TABLE>
- ------------
CMO --Collateralized Mortgage Obligation
FHLMC --Federal Home Loan Mortgage Corporation
FNMA --Federal National Mortgage Association
GNMA --Government National Mortgage Association
LINCS --Synthetic-Linked Coupon Securities
REMIC --Real Estate Mortgage Investment Conduit
TVA --Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
18
<PAGE>
MARQUIS FUNDS
LOUISIANA TAX-FREE INCOME FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------ ------
<S> <C> <C>
MUNICIPAL BONDS (91.5%)
Kentucky (0.7%)
McCracken County, Lourdes Hospital Project RB, (BIG)
6.000%, 11/01/12................................................ $ 50 $ 50
------
50
Louisiana (90.8%)
Alexandria, Utilities RB Ser B, (FGIC)
4.650%, 05/01/04................................................ 150 139
Alexandria, Utilities RB, (FGIC)
4.500%, 05/01/96................................................ 25 25
5.250%, 05/01/11................................................ 100 88
Ascension Parish, Parish-Wide School District GO, (AMBAC)
4.900%, 03/01/09................................................ 150 132
Bossier City, Sales & Use Tax RB, Public Improvement Ser ST,
(AMBAC)
5.500%, 11/01/99................................................ 100 101
De Soto Parish, Central Louisiana Electric Pollution Control
VRDN Ser B
3.600%, 10/05/94 (A) (B) (C).................................... 100 100
East Baton Rouge Parish, Sales & Use Tax Revenue, Sewer
Improvements Ser ST-A, (FGIC)
4.800%, 02/01/09................................................ 340 294
East Baton Rouge, Mortgage Financing Authority Ser B
5.300%, 10/01/14 (C)............................................ 100 85
East Baton Rouge, Mortgage Financing Authority, Single Family
Mortgage Ser B
4.350%, 10/01/00 (C)............................................ 100 94
Greater New Orleans Expressway, Louisiana Expressway RB
4.800%, 11/01/97................................................ 25 25
Gretna, Refunding Sales Tax RB, (AMBAC)
5.200%, 06/01/06................................................ 225 217
Iberville, School District #5 GO, (FSA)
5.750%, 10/01/03................................................ 250 252
Jefferson Parish, Ad Valorem Property Tax Ser A GO, (FGIC)
5.250%, 09/01/05................................................ 250 239
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------ ------
<S> <C> <C>
Louisiana, continued
Jefferson Parish, Hospital Services District #1, (FGIC)
5.100%, 01/01/05................................................ $300 $ 282
Kenner, Sales Tax RB, (FGIC)
5.750%, 06/01/06................................................ 100 99
Lafayette, Public Improvement Sales Tax RB, (FGIC)
4.625%, 05/01/05................................................ 300 270
5.500%, 03/01/07................................................ 200 191
Lafayette, Public Power Authority Electric RB, (AMBAC)
5.000%, 11/01/06................................................ 250 230
Lafayette, Utilities RB, (AMBAC)
4.100%, 11/01/99................................................ 175 166
4.700%, 11/01/04................................................ 125 115
Mandeville, Water Utility Improvements, Ad Valorem Property Tax
RB
5.150%, 02/01/10................................................ 100 88
Natchitoches Parish, School District #7 GO, (FSA)
4.900%, 03/01/07................................................ 190 173
New Orleans, Exhibit Hall Authority, Hotel Occupancy Tax RB,
(AMBAC)
5.125%, 01/15/96................................................ 50 50
Offshore Terminal Authority RB, First Stage Ser B
6.350%, 09/01/97................................................ 65 67
5.850%, 09/01/00................................................ 100 102
Public Facilities Authority RB, Alton Ochsner Medical Foundation
Project Ser A, (MBIA)
6.000%, 05/15/01................................................ 100 103
Public Facilities Authority RB, Alton Ochsner Medical Foundation
Project Ser B, (MBIA)
6.000%, 05/15/17................................................ 100 95
Public Facilities Authority RB, Jefferson Parish Eastbank
Project, (FGIC)
4.850%, 08/01/06................................................ 250 228
Public Facilities Authority RB, Special Assessment Revenue,
(FSA)
4.400%, 10/01/00................................................ 120 114
</TABLE>
Continued
19
<PAGE>
MARQUIS FUNDS
LOUISIANA TAX-FREE INCOME FUND
STATEMENT OF NET ASSETS, CONCLUDED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------ ------
<S> <C> <C>
MUNICIPAL BONDS, CONCLUDED
Louisiana, concluded
Public Facilities Authority RB, Tulane University Project Ser
A-1, (FGIC)
3.900%, 02/15/95................................................ $ 25 $ 25
6.000%, 02/15/06................................................ 100 101
Public Facitilies Authority RB, Local Government Refunding
Project Ser A, (FSA)
5.100%, 03/01/01................................................ 250 243
Saint James Parish GO, Unlimited Ad Valorem Property Tax
4.800%, 03/01/05................................................ 85 78
5.200%, 03/01/08................................................ 75 68
Saint Tammany Parish, Sales & Use Tax RB, (FGIC)
5.750%, 04/01/06................................................ 250 248
Shreveport, Public Improvements, Ad Valorem Property Tax RB
4.750%, 12/01/09................................................ 200 171
Slidell, Sales & Use Tax RB, Public Improvement Ser B
5.200%, 10/01/05................................................ 100 94
5.400%, 10/01/07................................................ 200 188
State University, Agricultural & Mechanical College RB, (FGIC)
5.400%, 07/01/05................................................ 150 145
Unlimited GO Ser A, (MBIA)
4.750%, 08/01/99................................................ 115 114
6.250%, 08/01/99................................................ 250 263
5.100%, 08/01/01................................................ 250 246
5.300%, 08/01/04................................................ 250 243
Unlimited GO Ser B, (MBIA)
5.600%, 08/01/07................................................ 250 243
5.600%, 08/01/08................................................ 250 240
------
6,874
------
Total Municipal Bonds
(Cost $7,305,769).............................................. 6,924
------
Total Investments (99.3%)
(Cost $7,899,641).............................................. 7,518
------
CASH EQUIVALENTS (7.8%)
SEI Tax Exempt Trust Institutional Tax Free Portfolio
3.360%, 10/07/94................................................ 346 346
SEI Tax Exempt Trust Tax Free Portfolio
3.050%, 10/07/94................................................ 248 248
------
Total Cash Equivalents
(Cost $593,872)................................................ 594
------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
(000)
------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES (0.7%)
Other Assets and Liabilities, Net................................. $ 54
------
Total Other Assets and Liabilities 54
------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization--no par
value) based on 743,353 outstanding shares of beneficial
interest........................................................ 7,348
Portfolio shares of Class B (unlimited authorization--no par
value) based on 64,049 outstanding shares of beneficial
interest........................................................ 637
Undistributed net investment income.............................. 1
Accumulated net realized loss on investments..................... (32)
Net unrealized depreciation on investments....................... (382)
------
Total Net Assets: (100.0%)....................................... $7,572
======
Net Asset Value and Redemption Price Per Share--Class A.......... $ 9.38
======
Maximum Offering Price Per
Share--A (9.38/96.50%).......................................... $ 9.72
======
Net Asset Value, Offering Price Per Share--Class B............... $ 9.39
======
</TABLE>
- ------------
(A) Variable rate instrument. The rate reflected on the Statement of Net
Assets is the rate in effect on September 30, 1994.
(B) Put and demand features exist requiring the issuer to repurchase the
instrument prior to maturity. The maturity date shown is the lesser of the
put date or the maturity date.
(C) Securities are held in connection with a letter of credit or some other
type of credit support.
GO --General Obligation
RB --Revenue Bond
VRDN --Variable Rate Demand Note
Ser --Series
The following organizations have provided underlying credit support for
certain securities as defined in the Statement of Net Assets:
AMBAC--American Municipal Bond Assurance Company
BIG --Bond Investors Guaranty
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
MBIA --Municipal Bond Insurance Association
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
MARQUIS FUNDS
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
COMMON STOCK (42.7%)
Aerospace & Defense (1.0%)
Litton Industries*............................................ 2,800 $ 104
Loral......................................................... 8,300 327
Martin Marietta............................................... 6,500 289
-------
720
-------
Aircraft (1.5%)
McDonnell Douglas............................................. 2,500 289
Northrop...................................................... 7,150 324
Textron....................................................... 9,900 503
-------
1,116
-------
Apparel/Textiles (0.5%)
Vanity Fair................................................... 6,900 341
-------
Automotive (1.0%)
Chrysler...................................................... 4,500 202
Echlin........................................................ 10,050 306
Ford Motor.................................................... 6,500 180
-------
688
-------
Banks (5.1%)
Bank of New York.............................................. 10,900 323
Barnett Banks................................................. 7,000 310
Boatmen's Bancshares.......................................... 11,100 345
First Bank System............................................. 9,600 347
First Chicago................................................. 4,400 202
First Interstate Bancorp...................................... 4,200 341
First Union................................................... 6,400 277
Mellon Bank................................................... 4,500 253
Nationsbank................................................... 5,400 265
NBD Bancorp................................................... 9,800 281
Norwest....................................................... 9,900 245
Suntrust Banks................................................ 5,700 278
Wachovia...................................................... 7,800 252
-------
3,719
-------
Beauty Products (0.9%)
Avon Products................................................. 5,400 322
Colgate Palmolive............................................. 5,100 296
-------
618
-------
Building & Construction (0.3%)
Lennar........................................................ 13,100 200
-------
Building & Construction Supplies (0.2%)
Harsco........................................................ 4,100 170
-------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
Chemicals (0.4%)
Air Products & Chemicals........................................ 6,100 $ 285
-------
Communications Equipment (0.9%)
Harris.......................................................... 6,200 301
Sprint.......................................................... 9,800 374
-------
675
-------
Computers & Services (0.7%)
Compaq Computer*................................................ 9,800 320
Hewlett Packard................................................. 2,350 205
-------
525
-------
Drugs (2.0%)
Baxter International............................................ 11,600 326
Bristol Myers Squibb............................................ 4,600 264
Johnson & Johnson............................................... 6,500 335
Schering Plough................................................. 3,600 256
Upjohn.......................................................... 7,700 263
-------
1,444
-------
Electrical Services (4.7%)
American Electric Power......................................... 10,150 321
Baltimore Gas & Electric........................................ 13,600 313
Consolidated Edison of New York................................. 10,000 249
Dominion Resources of Virginia.................................. 7,300 272
Duke Power...................................................... 7,600 296
General Public Utilities........................................ 10,000 248
Northeast Utilities............................................. 10,700 235
Oklahoma Gas & Electric......................................... 8,100 273
Portland General................................................ 17,500 295
PSI Holdings.................................................... 4,800 107
Public Service Enterprise Group................................. 11,250 295
Scana........................................................... 6,500 288
Southern........................................................ 13,500 251
-------
3,443
-------
Entertainment (0.4%)
Walt Disney..................................................... 6,900 268
-------
Environmental Services (0.3%)
WMX Technologies................................................ 6,500 188
-------
Financial Services (1.6%)
American Express................................................ 11,600 352
Beneficial...................................................... 9,100 372
FNMA............................................................ 2,100 165
Transamerica.................................................... 5,700 286
-------
1,175
-------
</TABLE>
Continued
21
<PAGE>
MARQUIS FUNDS
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS, CONTINUED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
COMMON STOCK, CONTINUED:
Food, Beverage & Tobacco (2.8%)
American Brands................................................. 8,100 $ 294
Conagra......................................................... 8,700 274
IBP............................................................. 8,500 278
Philip Morris................................................... 5,400 330
Unilever NV ADR................................................. 2,300 261
UST............................................................. 8,700 249
Whitman......................................................... 19,000 318
-------
2,004
-------
Gas/Natural Gas (1.4%)
Nicor........................................................... 10,800 262
Pacific Enterprises............................................. 9,900 210
Sonat........................................................... 9,800 308
Williams........................................................ 8,700 261
-------
1,041
-------
Insurance (1.7%)
Aflac........................................................... 9,000 307
American General................................................ 11,200 304
Saint Paul...................................................... 7,300 297
US Healthcare................................................... 6,300 293
-------
1,201
-------
Machinery (1.9%)
Briggs & Stratton............................................... 3,700 260
Cummins Engine.................................................. 7,100 280
General Electric................................................ 5,700 274
General Signal.................................................. 9,400 330
Texas Instruments............................................... 3,700 253
-------
1,397
-------
Marine Transportation (0.4%)
Alexander & Baldwin............................................. 12,500 320
-------
Measuring Devices (0.3%)
Johnson Controls................................................ 4,700 234
-------
Medical Products & Services (0.4%)
Columbia HCA Healthcare......................................... 6,200 270
-------
Miscellaneous Business Services (0.4%)
Safety Kleen.................................................... 15,800 257
-------
Paper & Paper Products (1.0%)
Bemis........................................................... 14,800 366
Kimberly Clark.................................................. 5,900 347
-------
713
-------
Petroleum & Fuel Products (0.4%)
Mapco........................................................... 4,600 258
-------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
Petroleum Refining (1.9%)
Amoco........................................................... 5,200 $ 307
Ashland Oil..................................................... 8,200 290
Exxon........................................................... 2,600 150
Mobil........................................................... 3,600 285
Murphy Oil...................................................... 7,000 305
-------
1,337
-------
Printing & Publishing (0.3%)
Wallace Computer Services....................................... 7,600 224
-------
Professional Services (0.9%)
FlightSafety International...................................... 8,100 314
Servicemaster LP................................................ 12,000 303
-------
617
-------
Railroads (0.4%)
Norfolk Southern................................................ 5,050 314
-------
Retail (3.2%)
American Stores................................................. 8,900 225
Brinker International*.......................................... 9,100 218
Dayton Hudson................................................... 3,800 291
J C Penney...................................................... 5,100 263
May Department Stores........................................... 9,300 367
Mercantile Stores............................................... 8,100 336
Sears Roebuck................................................... 6,900 331
Wendy's International........................................... 17,200 249
-------
2,280
-------
Rubber & Plastic (1.6%)
Bandag.......................................................... 5,650 306
Goodyear Tire & Rubber.......................................... 11,400 380
Mark IV Industries.............................................. 8,300 189
Premark International........................................... 6,500 275
-------
1,150
-------
Semi-Conductors/Instruments (0.4%)
Linear Technology............................................... 6,500 288
-------
Steel & Steel Works (0.4%)
Worthington Industries.......................................... 14,300 307
-------
Telephones & Telecommunication (0.5%)
Ameritech....................................................... 5,000 201
MCI Communications.............................................. 7,400 190
-------
391
-------
Wholesale (0.9%)
Avnet........................................................... 9,150 336
Computer Associates International............................... 7,000 312
-------
648
-------
Total Common Stock (Cost $30,778,104)........................... 30,826
-------
</TABLE>
Continued
22
<PAGE>
MARQUIS FUNDS
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS, CONTINUED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------ -------
<S> <C> <C>
U. S. TREASURY OBLIGATIONS (31.0%)
U.S. Treasury Bond
7.125%, 02/15/23............................................... $1,000 $ 909
U.S. Treasury Notes
4.625%, 12/31/94............................................... 1,300 1,298
4.125%, 05/31/95............................................... 1,300 1,287
8.875%, 07/15/95............................................... 1,250 1,279
7.250%, 11/15/96............................................... 2,250 2,275
8.000%, 01/15/97............................................... 250 257
6.750%, 05/31/97............................................... 2,000 1,995
9.000%, 05/15/98............................................... 2,000 2,119
9.250%, 08/15/98............................................... 2,000 2,139
6.375%, 01/15/99............................................... 1,000 970
7.000%, 04/15/99............................................... 3,000 2,973
6.375%, 07/15/99............................................... 1,000 965
8.000%, 08/15/99............................................... 2,000 2,062
8.500%, 02/15/00............................................... 500 526
5.750%, 08/15/03............................................... 1,500 1,322
-------
Total U. S. Treasury Obligations (Cost $23,862,286)............ 22,376
-------
GOVERNMENT MORTGAGE-BACKED OBLIGATIONS (16.2%)
FHLMC
7.000%, 04/01/00............................................... 29 29
9.000%, 05/01/06............................................... 224 232
9.000%, 08/01/09............................................... 592 604
FHLMC CMO
7.500%, 10/15/11............................................... 3 3
9.000%, 04/15/20............................................... 659 676
7.150%, 01/15/23............................................... 2,000 1,748
FNMA
7.000%, 09/01/07............................................... 1,938 1,857
FNMA REMIC
7.000%, 01/25/03............................................... 2,000 1,866
9.150%, 08/25/03............................................... 1,208 1,230
GNMA
7.000%, 07/15/08............................................... 679 650
13.500%, 05/15/11.............................................. 23 27
12.500%, 10/15/13.............................................. 5 6
12.000%, 03/15/14.............................................. 57 64
13.500%, 09/15/14.............................................. 18 22
9.000%, 12/15/16............................................... 99 101
10.000%, 07/15/18.............................................. 263 282
10.000%, 03/15/19.............................................. 217 233
7.500%, 08/15/22............................................... 679 666
7.000%, 04/15/24............................................... 1,507 1,369
-------
Total Government Mortgage-Backed Obligations
(Cost $12,455,246)............................................ 11,665
-------
</TABLE>
<TABLE>
<CAPTION>
FACE MARKET
AMOUNT VALUE
(000) (000)
------ -------
<S> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS (0.1%)
FNMA
8.150%, 08/12/96.............................................. $ 100 $ 103
-------
Total U.S. Government Agency Obligations
(Cost $106,705).............................................. 103
-------
CORPORATE OBLIGATIONS (1.4%)
Ford Motor Credit
5.600%, 07/14/95.............................................. 1,000 995
-------
Total Corporate Obligations (Cost $1,009,057)................. 995
-------
CASH EQUIVALENTS (4.7%)
SEI Equity Index Fund......................................... 6 100
SEI Liquid Asset Trust Treasury Portfolio
4.190%, 10/07/94.............................................. 3,321 3,321
-------
Total Cash Equivalents (Cost $3,425,483)...................... 3,421
-------
REPURCHASE AGREEMENT (6.7%)
UBS Securities 4.92%, dated 09/30/94, matures 10/03/94,
repurchase price $4,868,283 (collateralized by various U.S.
Treasury Notes, par value $4,375,000, 6.00%-7.125%, 09/30/99-
10/15/99; Resolution Funding Corporation, par value $455,000,
8.875%, 07/15/20; and $120,000 cash; market value:
$4,964,000).................................................. 4,866
-------
Total Repurchase Agreement (Cost $4,866,288).................. 4,866
-------
Total Investments (102.8%) (Cost $76,503,169)................. 74,252
-------
OTHER ASSETS AND LIABILITIES (-2.8%)
Other Assets and Liabilities................................... (2,005)
-------
Total Other Assets and Liabilities............................ (2,005)
-------
</TABLE>
Continued
23
<PAGE>
MARQUIS FUNDS
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS, CONCLUDED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
MARKET
VALUE
(000)
--- -------
<S> <C> <C>
NET ASSETS:
Portfolio shares of Class A (unlimited authorization--no par
value) based on 7,444,891 outstanding shares of beneficial
interest........................................................ $74,172
Portfolio shares of Class B (unlimited authorization--no par
value) based on 90,067 outstanding shares of beneficial
interest........................................................ 893
Undistributed net investment income.............................. 5
Accumulated net realized loss on investment...................... (572)
Net unrealized depreciation on investment........................ (2,251)
-------
Total Net Assets: (100.0%)....................................... $72,247
=======
Net Asset Value and Redemption Price Per Share--Class A.......... $ 9.59
=======
Maximum Offering Price Per Share--Class A (9.59/96.50%).......... $ 9.94
=======
Net Asset Value, Offering Price Per Share--Class B............... $ 9.64
=======
</TABLE>
- ------------
*Non-income producing security
ADR --American Depository Receipt
GNMA --Government National Mortgage Association
FHLMC --Federal Home Loan Mortgage Corporation
FNMA --Federal National Mortgage Association
CMO --Collateralized Mortgage Obligation
REMIC --Real Estate Mortgage Investment Conduit
LP --Limited Partnership
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
MARQUIS FUNDS
VALUE EQUITY FUND
STATEMENT OF NET ASSETS
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
COMMON STOCK (95.8%)
Aerospace & Defense (2.8%)
Litton Industries*.............................................. 12,300 $ 459
Loral........................................................... 9,000 354
Martin Marietta................................................. 8,700 387
-------
1,200
-------
Aircraft (2.6%)
McDonnell Douglas............................................... 2,900 335
Northrop........................................................ 9,500 429
Textron......................................................... 6,400 326
-------
1,090
-------
Apparel/Textiles (0.9%)
Vanity Fair..................................................... 7,400 365
-------
Automotive (2.5%)
Chrysler........................................................ 6,000 269
Echlin.......................................................... 13,400 408
Ford Motor...................................................... 13,200 366
-------
1,043
-------
Banks (10.9%)
Bank of New York................................................ 13,000 385
Barnett Banks................................................... 9,300 412
Boatmen's Bancshares............................................ 11,400 354
First Bank System............................................... 17,100 624
First Chicago................................................... 8,700 399
First Interstate Bancorp........................................ 5,900 479
First Union..................................................... 8,500 368
Nationsbank..................................................... 7,300 358
NBD Bancorp..................................................... 13,000 372
Norwest......................................................... 13,100 324
Suntrust Banks.................................................. 4,200 205
Wachovia........................................................ 10,300 332
-------
4,612
-------
Beauty Products (1.6%)
Avon Products................................................... 5,000 299
Colgate Palmolive............................................... 6,600 383
-------
682
-------
Building & Construction (0.6%)
Lennar.......................................................... 17,300 264
-------
Building & Construction Supplies (1.1%)
Harsco.......................................................... 10,800 448
-------
Chemicals (0.9%)
Air Products And Chemicals...................................... 8,000 374
-------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
Communications Equipment (2.5%)
Harris.......................................................... 8,300 $ 404
Sprint.......................................................... 16,700 636
-------
1,040
-------
Computers & Services (3.2%)
Compaq Computer*................................................ 12,000 392
Hewlett Packard................................................. 4,600 401
Computer Associates International............................... 13,000 578
-------
1,371
-------
Drugs (4.6%)
Baxter International............................................ 15,900 447
Bristol Myers Squibb............................................ 6,400 367
Johnson & Johnson............................................... 8,200 423
Schering Plough................................................. 4,700 334
Upjohn.......................................................... 11,100 379
-------
1,950
-------
Electrical Services (9.4%)
American Electric Power......................................... 13,000 406
Baltimore Gas & Electric........................................ 15,900 366
Consolidated Edison of New York................................. 12,300 306
Dominion Resources of Virginia.................................. 9,200 343
Duke Power...................................................... 8,900 347
General Public Utilities........................................ 9,200 228
Northeast Utilities............................................. 14,800 326
Oklahoma Gas & Electric......................................... 10,000 338
Portland General................................................ 15,900 268
Public Service Enterprise Group................................. 15,000 394
Scana........................................................... 7,700 342
Southern........................................................ 17,200 320
-------
3,984
-------
Entertainment (0.8%)
Walt Disney..................................................... 8,900 346
-------
Environmental Services (0.6%)
WMX Technologies................................................ 9,000 260
-------
Financial Services (3.9%)
American Express................................................ 14,000 425
Beneficial...................................................... 9,600 391
FNMA............................................................ 4,500 354
Franlin Resources............................................... 4,000 150
Transamerica.................................................... 6,600 332
-------
1,652
-------
</TABLE>
Continued
25
<PAGE>
MARQUIS FUNDS
VALUE EQUITY FUND
STATEMENT OF NET ASSETS, CONTINUED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
COMMON STOCK, CONTINUED
Food, Beverage & Tobacco (6.8%)
American Brands................................................. 10,300 $ 373
Conagra......................................................... 10,000 315
Dean Foods...................................................... 12,000 363
IBP............................................................. 11,200 367
Philip Morris................................................... 7,300 446
Unilever NV ADR................................................. 3,000 340
UST............................................................. 11,600 332
Whitman......................................................... 20,450 343
-------
2,879
-------
Gas/Natural Gas (3.6%)
Nicor........................................................... 14,700 356
Pacific Enterprises............................................. 15,600 332
Sonat........................................................... 10,900 342
Williams........................................................ 16,600 498
-------
1,528
-------
Insurance (3.8%)
Aflac........................................................... 12,500 427
American General................................................ 14,800 401
Saint Paul...................................................... 9,600 390
US Healthcare................................................... 8,100 377
-------
1,595
-------
Machinery (3.5%)
Briggs & Stratton............................................... 4,600 323
Cummins Engine.................................................. 8,400 331
General Signal.................................................. 12,300 432
Texas Instruments............................................... 5,800 397
-------
1,483
-------
Marine Transportation (1.0%)
Alexander & Baldwin............................................. 16,600 424
-------
Measuring Devices (0.9%)
Johnson Controls................................................ 7,800 388
-------
Medical Products & Services (0.9%)
Columbia HCA Healthcare......................................... 8,300 361
-------
Miscellaneous Business Services (0.8%)
Safety Kleen.................................................... 20,900 340
-------
Paper & Paper Products (2.1%)
Bemis........................................................... 18,100 448
Kimberly Clark.................................................. 7,300 429
-------
877
-------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
SHARES (000)
------ -------
<S> <C> <C>
Petroleum & Fuel Products (0.8%)
Mapco........................................................... 6,200 $ 347
-------
Petroleum Refining (4.0%)
Amoco........................................................... 7,000 415
Ashland Oil..................................................... 11,300 400
Exxon........................................................... 3,600 207
Mobil........................................................... 4,800 380
Murphy Oil...................................................... 6,800 296
-------
1,698
-------
Printing & Publishing (0.7%)
Wallace Computer Services....................................... 10,600 313
-------
Professional Services (1.8%)
FlightSafety International...................................... 10,700 414
Servicemaster LP................................................ 14,000 354
-------
768
-------
Railroads (1.0%)
Norfolk Southern................................................ 6,700 417
-------
Retail (6.9%)
American Stores................................................. 14,000 354
Brinker International*.......................................... 10,800 259
Dayton Hudson................................................... 5,200 398
J C Penney...................................................... 7,100 367
May Department Stores........................................... 7,800 307
Mercantile Stores............................................... 10,400 430
Sears Roebuck................................................... 8,500 408
Wendy's International........................................... 27,000 392
-------
2,915
-------
Rubber & Plastic (3.8%)
Bandag.......................................................... 7,700 417
Goodyear Tire & Rubber.......................................... 8,900 297
Mark IV Industries.............................................. 21,000 477
Premark International........................................... 10,000 423
-------
1,614
-------
Semi-Conductors/Instruments (0.9%)
Linear Technology............................................... 9,000 399
-------
Steel & Steel Works (1.0%)
Worthington Industries.......................................... 19,000 409
-------
Telephones & Telecommunication (1.7%)
Ameritech....................................................... 10,000 402
MCI Communications.............................................. 12,600 323
-------
725
-------
</TABLE>
Continued
26
<PAGE>
MARQUIS FUNDS
VALUE EQUITY FUND
STATEMENT OF NET ASSETS, CONCLUDED
SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
SHARES/
FACE MARKET
AMOUNT VALUE
(000) (000)
------- -------
<S> <C> <C>
COMMON STOCK, CONCLUDED
Wholesale (0.9%)
Avnet......................................................... 10,000 $ 368
-------
Total Common Stock
(Cost $40,702,717)........................................... 40,529
-------
CASH EQUIVALENTS (3.2%)
SEI Equity Index Fund......................................... $ 32 500
SEI Liquid Asset Trust Treasury Portfolio
4.190%, 10/07/94.............................................. 837 837
-------
Total Cash Equivalents
(Cost $1,337,335)............................................ 1,337
-------
Total Investments (99.0%)
(Cost $42,040,052)........................................... 41,866
-------
OTHER ASSETS AND LIABILITIES (1.0%)
Other Assets and Liabilities, Net.............................. 445
-------
Total Other Assets and Liabilities............................ 445
-------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
(000)
-------
<S> <C> <C>
NET ASSETS:
Portfolio shares of Class A (unlimited authorization--no par
value) based on 4,343,679 outstanding shares of beneficial
interest.................................................... $43,286
Portfolio shares of Class B (unlimited authorization--no par
value) based on 40,069 outstanding shares of beneficial
interest.................................................... 388
Distributions in excess of net investment income............. (1)
Accumulated net realized loss on investments................. (1,188)
Net unrealized depreciation on investments................... (174)
-------
Total Net Assets: (100.0%)................................... $42,311
=======
Net Asset Value and Redemption Price per Share--Class A...... $ 9.65
=======
Maximum Offering Price Per Share--Class A (9.65/96.50%)...... $ 10.00
=======
Net Asset Value, Offering Price Per Share--Class B........... $ 9.70
=======
</TABLE>
- ------------
* Non-income producing security
ADR --American Depository Receipt
FNMA --Federal National Mortgage Association
LP --Limited Partnership
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
MARQUIS FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
TREASURY
SECURITIES GOVERNMENT LOUISIANA GROWTH AND VALUE
MONEY MARKET SECURITIES TAX-FREE INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- ---------- ---------- ----------
10/1/93 10/1/93 10/1/93 10/1/93 10/1/93
TO 9/30/94 TO 9/30/94 TO 9/30/94 TO 9/30/94 TO 9/30/94
(000) (000) (000) (000) (000)
------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest Income........ $19,152 $ 5,256 $ 265 $ 1,893 $ 36
Dividend Income........ -- -- -- 781 1,102
------- ------- ----- ------- -------
Total Investment
Income................ 19,152 5,256 265 2,674 1,138
------- ------- ----- ------- -------
Expenses:
Administration Fees.... 1,041 205 11 132 80
Waiver of
Administration Fees... -- -- (11) -- --
Investment Advisory
Fees.................. 1,562 564 19 490 296
Waiver of Investment
Advisory Fees......... (522) (202) (19) (192) (109)
Contribution by
Advisor............... -- -- (29) -- --
Custodian/Transfer
Agent Fees............ 123 58 44 54 48
Distribution Fees(1)... 153 1 3 4 1
Distribution Fee
Waiver(1)............. (98) -- -- -- --
Professional Fees...... 72 17 4 16 7
Registration Fees...... 212 43 7 32 20
Trustee Fees........... 13 3 1 3 1
Printing Expense....... 47 11 2 10 5
Amortization of
Deferred Organization
Costs................. 22 5 1 5 2
Insurance and Other
Fees.................. 33 13 6 13 10
------- ------- ----- ------- -------
Total Expenses......... 2,658 718 39 567 361
------- ------- ----- ------- -------
Net Investment Income. 16,494 4,538 226 2,107 777
------- ------- ----- ------- -------
Net Realized Loss on
Securities Sold....... -- (615) (32) (572) (1,188)
Change in Unrealized
Depreciation on
Investment Securities. -- (5,630) (382) (2,251) (174)
------- ------- ----- ------- -------
Net Realized and
Unrealized Loss on
Investments............ -- (6,245) (414) (2,823) (1,362)
------- ------- ----- ------- -------
Increase (Decrease) in
Net Assets Resulting
from Operations........ $16,494 $(1,707) $(188) $ (716) $ (585)
======= ======= ===== ======= =======
</TABLE>
- ------------
(1) All distribution fees and waivers are incurred at the Retail Class level
for Treasury Securities Money Market and the Class B level for the non-
dollar funds.
The accompanying notes are an integral part of the financial statements.
28
<PAGE>
MARQUIS FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
TREASURY
SECURITIES GOVERNMENT LOUISIANA GROWTH AND VALUE
MONEY MARKET SECURITIES TAX-FREE INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ---------- ---------- ---------- ----------
10/1/93(1) 10/1/93(1) 10/1/93(1) 10/1/93(1) 10/1/93(1)
TO 9/30/94 TO 9/30/94 TO 9/30/94 TO 9/30/94 TO 9/30/94
(000) (000) (000) (000) (000)
------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net Investment Income.. $ 16,494 $ 4,538 $ 226 $ 2,107 $ 777
Net Realized Loss on
Securities Sold....... -- (615) (32) (572) (1,188)
Net Unrealized
Depreciation of
Investment Securities. -- (5,630) (382) (2,251) (174)
----------- -------- ------- ------- --------
Net Increase
(Decrease) in Net
Assets Resulting from
Investment
Activities........... 16,494 (1,707) (188) (716) (585)
----------- -------- ------- ------- --------
DISTRIBUTIONS TO
SHAREHOLDERS
Income Distribution
Class A (2)........... (14,494) (4,520) (212) (2,088) (776)
Income Distribution
Class B (3)........... (2,000) (4) (13) (14) (2)
----------- -------- ------- ------- --------
Total Distribution.... (16,494) (4,524) (225) (2,102) (778)
----------- -------- ------- ------- --------
SHARE TRANSACTIONS:
Class A (2):
Shares Issued.......... 1,742,355 136,743 9,735 76,453 54,146
Shares Issued in Lieu
of Cash Distribution.. 3 3,255 40 2,032 558
Shares Redeemed........ (1,338,580) (36,212) (2,427) (4,313) (11,418)
----------- -------- ------- ------- --------
Total Class A Share
Transactions......... 403,778 103,786 7,348 74,172 43,286
----------- -------- ------- ------- --------
Class B (3):
Shares Issued.......... 254,104 150 628 903 444
Shares Issued in Lieu
of Cash Distribution.. 1,999 4 9 13 2
Shares Redeemed........ (169,255) -- -- (23) (58)
----------- -------- ------- ------- --------
Total Class B Share
Transactions......... 86,848 154 637 893 388
----------- -------- ------- ------- --------
Increase in Net Assets
from Shareholder
Transactions.......... 490,626 103,940 7,985 75,065 43,674
----------- -------- ------- ------- --------
Total Increase in Net
Assets............... 490,626 97,709 7,572 72,247 42,311
----------- -------- ------- ------- --------
NET ASSETS:
Beginning of Period.... -- -- -- -- --
End of Period.......... $ 490,626 $ 97,709 $ 7,572 $72,247 $ 42,311
=========== ======== ======= ======= ========
SHARES ISSUED AND
REDEEMED:
Class A (2):
Issued................. 1,742,355 13,755 994 7,676 5,462
Issued in Lieu of Cash
Distribution.......... 3 337 4 211 58
Redeemed............... (1,338,580) (3,726) (255) (442) (1,176)
----------- -------- ------- ------- --------
Total Class A Share
Transactions......... 403,778 10,366 743 7,445 4,344
----------- -------- ------- ------- --------
Class B (3):
Issued................. 254,104 15 63 91 46
Issued in Lieu of Cash
Distribution.......... 1,999 -- 1 1 --
Redeemed............... (169,255) -- -- (2) (6)
----------- -------- ------- ------- --------
Total Class B Share
Transactions......... 86,848 15 64 90 40
----------- -------- ------- ------- --------
Net Increase in Share
Transactions.......... 490,626 10,381 807 7,535 4,384
=========== ======== ======= ======= ========
</TABLE>
- ------------
(1) Commencement of operations.
(2) Institutional Class for Treasury Securities Money Market.
(3) Retail Class for Treasury Securities Money Market.
The accompanying notes are an integral part of the financial statements.
29
<PAGE>
MARQUIS FUNDS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
REALIZED RATIO OF
AND EXPENSES
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN (000) NET ASSETS NET ASSETS WAIVERS)
--------- ---------- ----------- ------------- --------- ------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND INSTITUTIONAL CLASS
1994 $ 1.00 0.03 0.00 (0.03) $1.00 3.22 %+ $403,778 0.50% 3.15% 0.60%
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1994(1) $ 1.00 0.03 0.00 (0.03) $1.00 3.15 %+ $ 86,848 0.59%* 3.27%* 0.83%*
GOVERNMENT SECURITIES FUND CLASS A
1994 $10.00 0.43 (0.59) (0.43) $9.41 (1.66)%+ $ 97,562 0.70% 4.43% 0.90%
GOVERNMENT SECURITIES FUND CLASS B
1994(2) $10.04 0.31 (0.58) (0.31) $9.46 (2.84)%+ $ 147 1.45%* 3.88%* 1.69%*
LOUISIANA TAX-FREE INCOME FUND CLASS A
1994 $10.00 0.36 (0.62) (0.36) $9.38 (2.68)%+ $ 6,971 0.65% 4.10% 1.72%
LOUISIANA TAX-FREE INCOME FUND CLASS B
1994(3) $ 9.87 0.27 (0.48) (0.27) $9.39 (2.58)%+ $ 601 1.40%* 3.35%* 2.47%*
GROWTH AND INCOME FUND CLASS A
1994 $10.00 0.31 (0.41) (0.31) $9.59 (1.02)%+ $ 71,379 0.85% 3.18% 1.14%
GROWTH AND INCOME FUND CLASS B
1994(2) $10.03 0.18 (0.39) (0.18) $9.64 (2.24)%+ $ 868 1.60%* 2.55%* 1.94%*
VALUE EQUITY FUND CLASS A
1994 $10.00 0.18 (0.35) (0.18) $9.65 (1.64)%+ $ 41,922 0.90% 1.95% 1.17%
VALUE EQUITY FUND CLASS B
1994(2) $ 9.95 0.08 (0.25) (0.08) $9.70 (1.82)%+ $ 389 1.65%* 1.30%* 1.93%*
<CAPTION>
RATIO OF
NET INCOME
TO AVERAGE
NET ASSETS PORTFOLIO
(EXCLUDING TURNOVER
WAIVERS) RATE
---------- ---------
<S> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND INSTITUTIONAL CLASS
1994 3.05% N/A
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1994(1) 3.03%* N/A
GOVERNMENT SECURITIES FUND CLASS A
1994 4.23% 37.80%
GOVERNMENT SECURITIES FUND CLASS B
1994(2) 3.64%* 37.80%
LOUISIANA TAX-FREE INCOME FUND CLASS A
1994 3.03% 30.31%
LOUISIANA TAX-FREE INCOME FUND CLASS B
1994(3) 2.28%* 30.31%
GROWTH AND INCOME FUND CLASS A
1994 2.89% 64.09%
GROWTH AND INCOME FUND CLASS B
1994(2) 2.21%* 64.09%
VALUE EQUITY FUND CLASS A
1994 1.68% 161.42%
VALUE EQUITY FUND CLASS B
1994(2) 1.02%* 161.42%
</TABLE>
- ------------
+ Returns, excluding sales charges, are for the period indicated and have been
annualized.
* Annualized.
(1) Commenced operations on October 19, 1993.
(2) Commenced operations on October 22, 1993.
(3) Commenced operations on November 22, 1993.
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
MARQUIS FUNDS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
1. ORGANIZATION:
The Marquis Funds (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated June 29, 1993. The Trust is registered under
the Investment Company Act of 1940, as amended, as an open-end management
company with five portfolios: Treasury Securities Money Market Fund (the "Money
Market Fund"), the Government Securities Fund, Louisiana Tax-Free Income Fund,
Growth and Income Fund, and Value Equity Fund (the "Non-Dollar Funds"). The
assets of each Fund are segregated, and a shareholder's interest is limited to
the Fund in which shares are held. The Trust is registered to offer the
following classes of shares: Institutional, Retail, and the Cash Sweep in the
Money Market Fund, and Class A and Class B in the Non-Dollar Funds. The Cash
Sweep Class of the Money Market Fund has not commenced operations as of
September 30, 1994.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Portfolios.
Securities Valuation--Investments in equity securities which are traded on
a national securities exchange (or reported on the NASDAQ national market
system) are stated at the last quoted sales price if readily available for
such equity securities on each business day; other equity securities
traded in the over-the-counter market and listed equity securities for
which no sale was reported on that date are stated at the last quoted bid
price. Debt obligations exceeding sixty days to maturity for which market
quotations are readily available are valued at the most recently quoted
bid price. Debt obligations with sixty days or less remaining until
maturity may be valued at their amortized cost. Restricted and illiquid
securities for which quotations are not readily available are valued at
fair value using methods determined in good faith as approved by the Board
of Trustees.
Federal Income Taxes--It is each Portfolio's intention to qualify as a
regulated investment company for Federal income tax purposes by complying
with the appropriate provisions of the Internal Revenue Code of 1986, as
amended. Accordingly, no provision for Federal income taxes is required in
the accompanying financial statements.
Security Transactions and Related Income--Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date and interest income
is recognized on the accrual basis. Costs used in determining realized
gains and losses on the sales of investment securities are those of the
specific securities sold adjusted for the accretion and amortization of
purchase discounts and premiums during the respective holding period.
Purchase discounts and premiums on securities held by the Non-Dollar Funds
are accreted and amortized to maturity using the scientific interest
method, which approximates the effective interest method.
Continued
31
<PAGE>
MARQUIS FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1994
Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market
value of the collateral, including accrued interest thereon, is sufficient
in the event of default of the counterparty. The Portfolios also invest in
tri-party repurchase agreements. Securities held as collateral for tri-
party repurchase agreements are maintained in a segregated account by the
broker's custodian bank until maturity of the repurchase agreement. If the
counterparty defaults and the value of the collateral declines or if the
counterparty enters an insolvency proceeding, realization of the
collateral by the Portfolios may be delayed or limited.
Net Asset Value Per Share--The net asset value per share of each Portfolio
is calculated on each business day. In general, it is computed by dividing
the assets of each Portfolio, less its liabilities, by the number of
outstanding shares of the Portfolio.
Classes--Class specific expenses are borne by that class. Income,
expenses, and realized and unrealized gains/losses are allocated to the
respective classes on the basis of relative daily net assets.
Other--Distributions from net investment income are declared and paid
quarterly for the Growth and Income Fund and the Value Equity Fund.
Distributions from net investment income are declared daily and paid
monthly for the Treasury Securities Money Market Fund, Government
Securities Fund and Louisiana Tax-Free Income Fund. Any net realized
capital gains are declared and distributed to shareholders at least
annually.
3. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS:
First National Bank of Commerce in New Orleans (the "Adviser") serves as
investment adviser to each Portfolio pursuant to an investment advisory
agreement (the "Advisory Agreement") with the Trust. For its services, the
Adviser is entitled to a fee, which is calculated daily and paid monthly, at an
annual rate based on the average daily net assets of each Portfolio as follows:
Treasury Securities Money Market Fund--.30%, Government Securities Fund--.55%,
Louisiana Tax-Free Income Fund--.35%, Growth and Income Fund--.74%, and Value
Equity Fund--.74%. The adviser has voluntarily agreed to waive a portion of
their fee so that expenses of each Portfolio will not exceed certain annual
expense limitations.
The Trust and SEI Financial Management Corporation (the "Administrator") have
entered into an Administration Agreement. Under terms of the Administration
Agreement, the Administrator is entitled to a fee calculated daily and paid
monthly at an annual rate of .20% of the average daily net
assets of the Portfolios. The Administrator has voluntarily agreed to waive a
portion of their fee on the Louisiana Tax-Free Income Fund.
Continued
32
<PAGE>
MARQUIS FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1994
The Trust and SEI Financial Services Company (the "Distributor") have entered
into a Distribution Agreement. As provided in the Distribution Agreement the
Trust will pay a fee, at an annual rate of .25% of the average daily net assets
of the Retail class of Treasury Securities Money Market Fund and .75% of the
Class B shares of the Non-Dollar Funds to the Distributor as compensation of
its services.
The Class A shares of the Non-Dollar Funds are subject to a maximum sales load
of 3.50%.
There is a contingent deferred sales charge on the Class B shares of the Non-
Dollar Funds which varies depending on the number of years from time of payment
for the purchase of shares until the time of redemption of such shares (the
"holding period"). Solely for the purpose of determining the number of years
from the time of any payment for the purchase of shares, all payments during
the month are aggregated and deemed to have been made on the first day of the
month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
YEARS CHARGE AS A PERCENTAGE
SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
-------- -------------------------
<S> <C>
First 3.50%
Second 2.75%
Third 2.00%
Fourth 1.25%
Fifth 0.50%
Sixth None
</TABLE>
4. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES:
Organizational costs have been capitalized by the Portfolios and are being
amortized over sixty months commencing with operations. In the event any of the
initial shares of the Portfolios are redeemed by any holder thereof during the
period that the Portfolios are amortizing its organizational costs, the
redemption proceeds payable to the holder thereof by the Portfolios will be
reduced by the unamortized organizational costs in the same ratio as the number
of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption. These costs include legal fees of
approximately $54,278 for organizational work performed by a law firm of which
an officer of the Portfolio is a partner.
Continued
33
<PAGE>
MARQUIS FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED
SEPTEMBER 30, 1994
5. INVESTMENT TRANSACTIONS--The cost of security purchases and the proceeds from
the sale of securities, other than temporary cash investments, for the period
ended September 30, 1994 were as follows:
<TABLE>
<CAPTION>
LOUISIANA GROWTH
GOVERNMENT TAX-FREE AND VALUE
SECURITIES INCOME INCOME EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- --------- ------- --------
<S> <C> <C> <C> <C>
PURCHASES:
U.S. Gov't............................... $122,267 $ 0 $43,458 $ 0
Other.................................... 14,577 8,881 4,290 108,079
SALES:
U.S. Gov't............................... $ 32,576 $ 0 $ 6,331 $ 0
Other.................................... 2,510 1,738 3,270 65,662
</TABLE>
On September 30, 1994, the total cost of securities and the net realized gains
or losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on securities at September 30,
1994, for each Non-Dollar Fund is as follows:
<TABLE>
<CAPTION>
LOUISIANA GROWTH
GOVERNMENT TAX-FREE & VALUE
SECURITIES INCOME INCOME EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
---------- --------- ------- -------
<S> <C> <C> <C> <C>
Aggregate Gross Unrealized Gain......... $ 2 $ 6 $ 1,299 $ 1,642
Aggregate Gross Unrealized Loss......... (5,632) (388) (3,550) (1,816)
------- ----- ------- -------
Net Unrealized Loss..................... $(5,630) $(382) $(2,251) $ (174)
======= ===== ======= =======
</TABLE>
6. CONCENTRATION OF CREDIT RISK
The Treasury Securities Money Market Fund invests primarily in a portfolio of
money market instruments maturing in one year or less whose ratings are within
the highest ratings category assigned by a nationally recognized statistical
rating agency or, if not rated, are believed to be of comparable quality. The
ability of the issuers of the securities held by a Portfolio to meet their
obligations may be affected by economic developments in a specific industry,
state or region. The Government Securities and Growth and Income Funds invest
in debt instruments.
The Louisiana Tax-Free Income Fund is more susceptible to factors adversely
affecting issuers of Louisiana Municipal Securities than a comparable municipal
bond fund that does not concentrate its investments in Louisiana Municipal
Securities.
Continued
34
<PAGE>
MARQUIS FUNDS
NOTES TO FINANCIAL STATEMENTS, CONCLUDED
SEPTEMBER 30, 1994
The following table presents a summary of holdings in the Government Securities
and Louisiana Tax-Free Income Funds as of September 30, 1994.
<TABLE>
<CAPTION>
LOUISIANA
GOVERNMENT TAX-FREE
SECURITIES INCOME
FUND FUND
---------- ---------
<S> <C> <C>
U.S. Gov't Security........................................ 84.02%
AAA........................................................ 4.74% 78.02%
AA......................................................... 6.43%
A.......................................................... 1.94% 4.51%
NOT RATED.................................................. 2.87% 17.47%
</TABLE>
Fund breakdowns are stated as a percentage of total investments. U.S.
Government Securities represent obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities. Repurchase agreements are
collateralized by U.S. Government Securities.
Continued
35
<PAGE>
STATEMENT OF NET ASSETS MARQUIS FUNDS
- --------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
TREASURY SECURITIES
MONEY MARKET FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 12.9%
U.S. Treasury Bills
6.107%, 05/18/95 $25,000 $ 24,807
6.241%, 06/01/95 25,000 24,747
5.984%, 07/27/95 35,000 34,341
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $83,895,270) 83,895
-----------
REPURCHASE AGREEMENTS -- 87.4%
Aubrey G. Lanston 6.200%, dated 03/31/95, matures
04/03/95, repurchase price $30,015,000
(collateralized by U.S. Treasury Note, par value
$29,855,000, 7.500%, 01/01/97, market value:
$30,616,000) 30,000
Fuji Bank 6.300%, dated 03/31/95, matures 04/03/95,
repurchase price $30,016,000 (collateralized by
various U.S. Treasury STRIPS, par value $43,311,000,
0.000%, 02/15/99-05/15/01, market value:
$30,607,000) 30,000
HSBC 6.250%, dated 03/31/95, matures 04/03/95,
repurchase price $30,015,000 (collateralized by U.S.
Treasury STRIPS, par value $34,060,000, 0.000%,
11/15/96, market value: $30,616,000) 30,000
J.P. Morgan 6.125%, dated 03/31/95, matures 04/03/95,
repurchase price $155,078,000 (collateralized by
various U.S. Treasury STRIPS, par value
$354,331,000, 0.000%, 11/15/95-05/15/14, market
value: $158,103,000) 155,000
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Value (000)
- --------------------------------------------------------------------------------
<S> <C>
Lehman Brothers 6.250%, dated 03/31/95, matures 04/03/95,
repurchase price $30,015,000 (collateralized by various U.S.
Treasury STRIPS, par value $145,800,000, 0.000%, 04/16/96-
05/15/16, market value: $31,004,000) $ 30,000
Merrill Lynch 6.000%, dated 03/31/95, matures 04/03/95,
repurchase price $30,015,000 (collateralized by U.S. Treasury
Note, par value $29,675,000, 7.500%, 12/31/96, market value:
$30,618,000) 30,000
Morgan Stanley 5.980%, dated 03/31/95, matures 04/03/95,
repurchase price $28,033,000 (collateralized by U.S. Treasury
Note, par value $28,570,000, 4.250%, 11/30/95, market value:
$28,600,000) 28,019
Nomura Securities 6.200%, dated 03/31/95, matures 04/03/95,
repurchase price $27,976,000 (collateralized by various U.S.
Treasury Obligations, par value $26,154,000, 5.500%-13.875%,
12/21/95-02/15/20, market value: $28,521,000) 27,962
Prudential Securities 6.130%, dated 03/31/95, matures
04/03/95, repurchase price $28,033,000 (collateralized by
various U.S. Treasury Obligations, par value $43,014,000,
0.000%-6.500%, 06/29/95-05/15/04, market value: $28,580,000) 28,019
UBS Securities 6.170%, dated 03/31/95, matures 04/03/95,
repurchase price $151,416,000 (collateralized by various U.S.
Treasury Notes, par value $151,931,000, 5.500%-8.875%,
03/31/97-02/15/98, market value: $154,370,000) 151,339
Wachovia 6.250%, dated 03/31/95, matures 04/03/95, repurchase
price $30,015,000 (collateralized by U.S. Treasury Note, par
value $31,245,000, 4.375%, 11/15/96, market value:
$30,665,000) 30,000
--------
TOTAL REPURCHASE AGREEMENTS
(Cost $570,339,058) 570,339
--------
TOTAL INVESTMENTS -- 100.3%
(Cost $654,234,328) 654,234
--------
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE>
STATEMENT OF NET ASSETS/SCHEDULE OF INVESTMENTS
- -------------------------------------------------------------------------------
March 31, 1995
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Description Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND
LIABILITIES -- (0.3%)
Other Assets and Liabilities, Net $ (2,048)
-----------
NET ASSETS:
Portfolio shares of Institutional Class (unlimited
authorization--no par value) based on 456,337,284
outstanding shares of beneficial interest 456,337
Portfolio shares of Retail Class (unlimited authorization--no
par value) based on 195,838,169 outstanding shares of
beneficial interest 195,838
Accumulated net realized gain on investments 11
-----------
TOTAL NET ASSETS -- 100.0% $ 652,186
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER
SHARE -- INSTITUTIONAL CLASS $1.00
===========
NET ASSET VALUE, OFFERING, AND REDEMPTION PRICE PER
SHARE -- RETAIL CLASS $1.00
===========
</TABLE>
- --------------------------------------------------------------------------------
STRIPS -- Separate Trading of Registered Interest and Principal Securities
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS --
42.3%
Treasury LINCS
6.000%, 08/15/09 $ 2,500 $ 2,122
U.S. Treasury Bond
7.125%, 02/15/23 2,500 2,384
U.S. Treasury Notes
9.250%, 01/15/96 625 638
8.875%, 02/15/96 500 510
7.250%, 08/31/96 2,575 2,594
8.500%, 04/15/97 2,250 2,321
6.875%, 04/30/97 6,000 6,006
8.500%, 07/15/97 1,500 1,550
6.500%, 08/15/97 10,500 10,411
8.625%, 08/15/97 750 778
9.000%, 05/15/98 1,250 1,319
5.125%, 06/30/98 2,500 2,365
9.250%, 08/15/98 2,200 2,345
7.875%, 11/15/99 750 773
8.500%, 02/15/00 1,500 1,586
8.750%, 08/15/00 2,250 2,413
6.375%, 08/15/02 4,250 4,051
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $45,981,435) 44,166
-----------
GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 40.8%
FHLMC
7.000%, 04/01/00 68 69
9.000%, 11/01/05 1,485 1,537
9.000%, 05/01/06 2,233 2,310
7.250%, 05/01/07 88 84
9.000%, 08/01/09 835 843
9.000%, 12/01/09 1,585 1,621
FHLMC CMO
7.500%, 11/15/01 3,975 3,960
6.700%, 05/15/05 1,750 1,674
7.000%, 09/15/07 3,250 3,071
6.500%, 04/15/08 4,500 4,051
7.750%, 01/15/20 3,500 3,518
9.000%, 04/15/20 1,251 1,277
FNMA
8.500%, 03/01/98 198 203
7.000%, 09/01/07 4,652 4,520
FNMA REMIC
9.150%, 08/25/03 1,056 1,076
7.350%, 06/25/07 2,000 1,926
6.250%, 10/25/22 124 117
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
GNMA
10.500%, 06/15/98 $ 24 $ 26
10.500%, 09/15/98 4 4
9.000%, 07/15/16 619 640
9.000%, 09/15/16 541 559
9.000%, 10/15/16 144 149
9.000%, 11/15/16 367 379
9.500%, 08/15/17 626 656
10.000%, 04/15/19 251 270
10.000%, 05/15/19 68 73
9.500%, 12/15/19 666 698
7.000%, 03/15/24 2,946 2,757
7.000%, 04/15/24 2,628 2,460
8.500%, 10/01/24 2,033 2,062
-----------
TOTAL GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $44,063,728) 42,590
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.8%
FNMA
9.550%, 12/10/97 975 1,032
9.150%, 04/10/98 975 1,027
9.150%, 09/10/99 225 228
TVA
8.375%, 10/01/99 2,650 2,756
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $5,298,588) 5,043
-----------
CORPORATE OBLIGATIONS -- 4.2%
Baxter International
7.500%, 05/01/97 2,200 2,210
Exxon Capital
8.000%, 12/01/95 1,000 1,008
Ford Capital BV
9.000%, 08/15/98 750 784
Patriot Shipping
8.125%, 12/07/04 400 413
-----------
TOTAL CORPORATE OBLIGATIONS
(Cost $4,507,535) 4,415
-----------
CASH EQUIVALENTS -- 0.4%
SEI Liquid Asset Trust
Treasury Portfolio
5.770%, 04/07/95 394 394
-----------
TOTAL CASH EQUIVALENTS
(Cost $394,151) 394
-----------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Value (000)
- --------------------------------------------------------------------------------
<S> <C>
REPURCHASE AGREEMENT -- 1.7%
UBS Securities 6.170%, dated 03/31/95, matures 04/03/95,
repurchase price $1,810,000 (collateralized by U.S. Treasury
Note, par value $1,790,000, 7.250%, 11/30/96, market value:
$1,848,000) $ 1,809
-------
TOTAL REPURCHASE AGREEMENT
(Cost $1,808,828) 1,809
-------
TOTAL INVESTMENTS -- 94.2%
(Cost $102,054,265) $98,417
=======
</TABLE>
- --------------------------------------------------------------------------------
CMO -- Collateralized Mortgage Obligation
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
LINCS -- Synthetic-Linked Coupon Securities
REMIC -- Real Estate Mortgage Investment Conduit
TVA -- Tennessee Valley Authority
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
STATEMENT OF NET ASSETS
- -------------------------------------------------------------------------------
March 31, 1995
- -------------------------------------------------------------------------------
LOUISIANA TAX-FREE
INCOME FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 94.2%
LOUISIANA -- 94.2%
Alexandria, Utilities RB
Ser B
4.650%, 05/01/04 $150 $ 143
Alexandria, Utilities RB, (FGIC)
4.500%, 05/01/96 25 25
5.250%, 05/01/11 100 92
Ascension Parish, Parish-Wide School District GO,
(AMBAC)
4.900%, 03/01/09 150 137
Bossier City, Sales & Use Tax RB, Public Improvement
Ser ST, (AMBAC)
5.500%, 11/01/99 100 103
East Baton Rouge, Mortgage Financing Authority RB
Ser B
5.300%, 10/01/14 (A) 95 84
East Baton Rouge, Mortgage Financing Authority,
Single Family Mortgage RB Ser B
4.350%, 10/01/00 (A) 90 86
East Baton Rouge Parish, Sales & Use Tax RB, Sewer
Improvements Ser ST-A, (FGIC)
4.800%, 02/01/09 340 294
Greater New Orleans Expressway, Louisiana Expressway
RB
4.800%, 11/01/97 25 25
Gretna, Refunding Sales Tax RB, (AMBAC)
5.200%, 06/01/06 225 223
Iberville School District District #5 GO, (FSA)
5.750%, 10/01/03 250 257
Jefferson Parish, Ad Valorem Property Tax Ser A GO,
(FGIC)
5.250%, 09/01/05 250 246
</TABLE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Jefferson Parish, Hospital Services District #1
GO, (FGIC)
5.100%, 01/01/05 $300 $ 288
Kenner, Sales Tax RB, (FGIC)
5.750%, 06/01/06 100 102
Lafayette, Public Improvement Sales Tax RB, (FGIC)
4.625%, 05/01/05 300 275
5.500%, 03/01/07 200 197
Lafayette, Public Power Authority Electric RB,
(AMBAC)
5.000%, 11/01/06 250 232
Lafayette, Utilities RB, (AMBAC)
4.100%, 11/01/99 175 170
4.700%, 11/01/04 125 119
Mandeville, Water Utility Improvements, Ad Valorem
Property Tax RB
5.150%, 02/01/10 100 92
Natchitoches Parish, School District #7 GO, (FSA)
4.900%, 03/01/07 190 180
New Orleans, Exhibit Hall Authority, Hotel Occupancy
Tax RB, (AMBAC)
5.125%, 01/15/96 50 50
Offshore Terminal Authority RB, First Stage Ser B
6.350%, 09/01/97 65 67
5.850%, 09/01/00 100 103
Public Facilities Authority RB, (FSA)
4.400%, 10/01/00 120 113
Public Facilities Authority RB, Alton Ochsner
Medical Foundation Project Ser A, (MBIA)
6.000%, 05/15/01 100 105
Public Facilities Authority RB, Alton Ochsner
Medical Foundation Project Ser B, (MBIA)
6.000%, 05/15/17 100 97
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
MARQUIS FUNDS
- -------------------------------------------------------------------------------
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Public Facilities Authority RB, Jefferson Parish
Eastbank Project, (FGIC)
4.850%, 08/01/06 $250 $ 235
Public Facilities Authority RB, Tulane University
Ser A-1, (FGIC)
6.000%, 02/15/06 100 103
Public Facilities Authority RB, Ser A, (FSA)
5.100%, 03/01/01 250 248
Saint James Parish GO, Unlimited Ad Valorem Property
Tax
4.800%, 03/01/05 85 81
5.200%, 03/01/08 75 70
Saint Tammany Parish, Sales & Use Tax RB, (FGIC)
5.750%, 04/01/06 250 250
Saint Tammany Parish GO, School District #12, (FGIC)
6.500%, 03/01/05 200 210
Shreveport, Public Improvements, Ad Valorem Property
Tax RB
4.750%, 12/01/09 200 178
Slidell, Sales & Use Tax RB, Public Improvement Ser
B
5.200%, 10/01/05 100 97
5.400%, 10/01/07 200 193
State GO Series A, (MBIA)
5.600%, 05/15/07 250 251
5.700%, 05/15/08 250 251
State University, Agricultural & Mechanical College
RB, (FGIC)
5.400%, 07/01/05 150 147
5.500%, 07/01/06 250 246
Unlimited GO Ser A, (MBIA)
6.250%, 08/01/99 250 262
5.100%, 08/01/01 250 248
5.300%, 08/01/04 250 248
Unlimited GO, (MBIA)
4.750%, 08/01/99 115 113
5.600%, 08/01/07 250 251
5.600%, 08/01/08 250 249
------
7,836
------
TOTAL MUNICIPAL BONDS
(Cost $8,058,046) 7,836
------
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
CASH EQUIVALENTS -- 3.1%
SEI Tax Exempt Trust--Institutional Tax Free
Portfolio
4.030%, 04/07/95 $223 $ 223
SEI Tax Exempt Trust --
Tax Free Portfolio
3.830%, 04/07/95 34 34
------
TOTAL CASH EQUIVALENTS
(Cost $256,935) 257
------
TOTAL INVESTMENTS -- 97.3%
(Cost $8,314,981) 8,093
------
OTHER ASSETS AND LIABILITIES -- 2.7%
Other Assets and Liabilities, Net 226
------
NET ASSETS:
Portfolio shares of Class A (unlimited
authorization -- no par value) based on 811,407
outstanding shares of beneficial interest 7,985
Portfolio shares of Class B (unlimited
authorization -- no par value) based on 58,552
outstanding shares of beneficial interest 589
Accumulated net realized loss on investments (33)
Net unrealized depreciation on investments (222)
------
TOTAL NET ASSETS -- 100.0% $8,319
======
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE --
CLASS A $9.56
======
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A
(9.56/96.50%) $9.91
======
NET ASSET VALUE, OFFERING PRICE PER SHARE -- CLASS B $9.57
======
</TABLE>
- --------------------------------------------------------------------------------
GO -- General Obligation
RB -- Revenue Bond
Ser---Series
(A) Securities are held in connection with a letter of credit or some other
type of credit support.
The following organizations have provided underlying credit support for certain
securities as defined in the Statement of Net Assets:
AMBAC -- American Municipal Bond Assurance Company
FGIC -- Financial Guaranty Insurance Company
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Insurance Association
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
March 31, 1995
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 49.4%
AEROSPACE & DEFENSE -- 1.5%
Lockheed Martin* 7,600 $ 402
Loral 9,500 403
Raytheon 4,700 343
-------
1,148
-------
AIR TRANSPORTATION -- 0.5%
Federal Express* 5,800 392
-------
AIRCRAFT -- 1.9%
Allied Signal 8,300 326
McDonnell Douglas 8,500 474
Textron 10,700 606
-------
1,406
-------
APPAREL/TEXTILES -- 0.6%
V F 7,900 420
-------
AUTOMOTIVE -- 2.9%
Chrysler 5,300 222
Dana 11,000 281
Eaton 6,900 374
Echlin 11,750 452
Ford Motor 7,900 213
Paccar 6,000 255
Strattec Strategy* 1,580 18
TRW 4,800 331
-------
2,146
-------
BANKS -- 4.4%
Bank of New York 12,400 408
Barnett Banks 8,000 364
First Bank System 11,000 443
First Chicago 5,400 271
First Interstate Bancorp 4,900 387
Mellon Bank 9,150 373
NBD Bancorp 11,100 361
Suntrust Banks 6,300 337
Wachovia 9,100 323
-------
3,267
-------
BUILDING & CONSTRUCTION -- 0.3%
Lennar 15,300 247
-------
CHEMICALS -- 2.7%
EI du Pont de Nemours 5,200 315
Lubrizol 9,900 349
Nalco Chemical 9,600 323
Olin 5,400 290
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Rhone Poulenc Rorer 8,800 $ 382
Union Carbide 11,800 361
-------
2,020
-------
COMPUTERS & SERVICES -- 2.4%
Apple Computer 8,200 289
Compaq Computer* 11,000 380
Computer Associates International 8,000 475
Hewlett Packard 50 6
Sun Microsystems* 10,100 351
Tandem Computers* 16,600 257
-------
1,758
-------
CONTAINERS & PACKAGING -- 0.5%
Ball 10,400 358
-------
DRUGS -- 0.9%
Bristol Myers Squibb 5,300 334
Upjohn 9,200 329
-------
663
-------
ELECTRICAL SERVICES -- 5.8%
Cinergy 4,910 122
Consolidated Edison of New York 11,500 313
Duke Power 8,600 331
Florida Progress 10,300 310
General Public Utilities 11,300 329
Hawaiian Electric Industries 10,000 335
New England Electric System 10,400 321
Nipsco Industries 10,400 324
Northeast Utilities 12,200 259
Northern States Power 7,200 317
Oklahoma Gas & Electric 9,400 322
Public Service Enterprise Group 13,050 357
San Diego Gas & Electric 15,600 324
SCE 23,700 368
-------
4,332
-------
ELECTRICAL TECHNOLOGY -- 0.5%
Texas Instruments 4,500 398
-------
ENVIRONMENTAL SERVICES -- 0.3%
WMX Technologies 7,700 212
-------
FINANCIAL SERVICES -- 1.7%
American Express 13,200 461
Beneficial 10,300 404
Transamerica 6,500 368
-------
1,233
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
FOOD, BEVERAGE & TOBACCO -- 2.9%
Campbell Soup 7,694 $ 372
IBP 9,900 323
Pepsico 9,000 351
Philip Morris 6,200 405
Unilever NV ADR 2,700 354
UST 10,200 324
-------
2,129
-------
GAS/NATURAL GAS -- 1.2%
Mapco 5,400 301
Pacific Enterprises 11,600 287
Williams 10,500 322
-------
910
-------
GLASS PRODUCTS -- 0.5%
PPG Industries 8,900 336
-------
HOUSEHOLD FURNITURE &
FIXTURES -- 0.5%
Leggett & Platt 9,200 386
-------
HOUSEHOLD PRODUCTS -- 0.9%
Maytag 21,400 366
Sherwin Williams 9,700 329
-------
695
-------
INSURANCE -- 3.5%
AFLAC 10,500 425
American General 12,900 416
Cigna 4,900 366
Lincoln National 8,800 354
Providian 9,200 323
Saint Paul 8,300 415
US Healthcare 7,300 323
-------
2,622
-------
MACHINERY -- 3.5%
Briggs & Stratton 8,600 317
Caterpillar 5,200 289
Cummins Engine 8,100 363
Deere 3,900 317
General Electric 6,500 352
General Signal 9,900 353
Parker-Hannifin 6,100 270
Timken 9,700 344
-------
2,605
-------
MEASURING DEVICES -- 0.4%
Johnson Controls 5,700 290
-------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS &
SERVICES -- 0.4%
Columbia HCA Healthcare 7,200 $ 310
-------
MISCELLANEOUS
TRANSPORTATION -- 0.3%
Harsco 5,300 233
-------
PAPER & PAPER PRODUCTS -- 0.1%
Kimberly-Clark 1,757 91
-------
PETROLEUM REFINING -- 2.2%
Amoco 6,000 382
Ashland 9,400 335
Exxon 3,100 207
Mobil 4,100 380
Murphy Oil 7,800 336
-------
1,640
-------
PRINTING & PUBLISHING -- 1.3%
A.H. Belo, Ser A 6,000 348
Gannett 5,900 315
Wallace Computer Services 8,900 286
-------
949
-------
PROFESSIONAL SERVICES -- 0.4%
Servicemaster LP 13,800 328
-------
RAILROADS -- 0.5%
Norfolk Southern 5,850 391
-------
RETAIL -- 1.2%
American Stores 10,900 279
Bruno's 36,000 324
Circuit City Stores 11,400 301
-------
904
-------
RUBBER & PLASTIC -- 1.4%
Bandag 6,450 369
Premark International 7,500 331
Sonoco Products 14,400 349
-------
1,049
-------
STEEL & STEEL WORKS -- 0.4%
Worthington Industries 16,800 334
-------
TELEPHONES & TELECOMMUNICATION -- 0.8%
Ameritech 6,200 256
Pacific Telesis Group 10,700 323
-------
579
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Face
Amount Market
Description (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TRUCKING -- 0.1%
Pittston Services Group 2,420 $ 67
-------
TOTAL COMMON STOCK
(Cost $34,653,858) 36,848
-------
U.S. TREASURY OBLIGATIONS -- 28.4%
U.S. TREASURY BOND
7.125%, 02/15/23 1,000 953
U.S. TREASURY NOTES
4.125%, 05/31/95 1,300 1,296
8.875%, 07/15/95 1,250 1,260
7.250%, 11/15/96 2,250 2,267
8.000%, 01/15/97 250 255
6.750%, 05/31/97 2,000 1,996
9.000%, 05/15/98 2,000 2,111
9.250%, 08/15/98 2,000 2,132
6.375%, 01/15/99 1,000 978
7.000%, 04/15/99 3,000 3,000
6.375%, 07/15/99 1,000 975
8.000%, 08/15/99 2,000 2,070
8.500%, 02/15/00 500 529
5.750%, 08/15/03 1,500 1,361
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $23,333,508) 21,183
-------
GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 15.1%
FHLMC
7.000%, 04/01/00 23 24
9.000%, 05/01/06 199 206
9.000%, 08/01/09 552 557
FHLMC CMO
9.000%, 04/15/20 582 594
7.150%, 01/15/23 2,000 1,808
FNMA
7.000%, 09/01/07 1,861 1,809
FNMA REMIC
7.000%, 01/25/03 2,000 1,890
9.150%, 08/25/03 996 1,015
GNMA
7.500%, 08/15/07 663 657
7.000%, 07/15/08 651 633
13.500%, 05/15/11 23 27
12.500%, 10/15/13 5 6
12.000%, 03/15/14 52 59
13.500%, 09/15/14 14 16
9.000%, 12/15/16 98 101
10.000%, 07/15/18 248 266
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Face Market
Description Amount (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS (continued)
10.000%, 03/15/19 199 $ 214
7.000%, 04/15/24 1,499 1,403
-------
TOTAL GOVERNMENT MORTGAGE-BACKED OBLIGATIONS
(Cost $11,888,909) 11,285
-------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 0.2%
FNMA
8.150%, 08/12/96 100 101
-------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(Cost $104,957) 101
-------
MEDIUM TERM NOTE -- 1.3%
Ford Motor Credit
5.600%, 07/14/95 1,000 998
-------
TOTAL MEDIUM TERM NOTE
(Cost $1,003,298) 998
-------
REGISTERED INVESTMENT
COMPANY -- 0.2%
SEI Equity Index Fund 6 105
-------
TOTAL REGISTERED INVESTMENT COMPANY
(Cost $104,232) 105
-------
CASH EQUIVALENTS -- 0.4%
SEI Liquid Asset Trust Treasury Portfolio
5.770%, 04/07/95 314 314
-------
TOTAL CASH EQUIVALENTS
(Cost $313,523) 314
-------
REPURCHASE AGREEMENT -- 4.7%
UBS Securities 6.170%, dated 03/31/95, matures
04/03/95, repurchase price $3,524,000
(collateralized by U.S. Treasury Note, par
value $3,530,000, 7.250%, 02/15/98, market
value: $3,595,000) 3,522
-------
TOTAL REPURCHASE AGREEMENT
(Cost $3,522,325) 3,522
-------
TOTAL INVESTMENTS -- 99.7%
(Cost $73,924,610) 74,356
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
MARQUIS FUNDS
- -------------------------------------------------------------------------------
(Unaudited)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Value (000)
- -------------------------------------------------------------------------------
<S> <C>
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities, Net $ 205
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 7,449,257 outstanding shares of beneficial
interest 74,166
Portfolio shares of Class B (unlimited authorization -- no par
value) based on 91,768 outstanding shares of beneficial
interest 910
Accumulated net realized loss on investments (946)
Net unrealized appreciation on investments 431
--------
TOTAL NET ASSETS -- 100.0% $ 74,561
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $9.89
========
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A (9.89/96.50%) $10.25
========
NET ASSET VALUE, OFFERING PRICE PER SHARE -- CLASS B $9.94
========
</TABLE>
- ---------------------------------
* Non-income producing security
ADR -- American Depository Receipt
CMO -- Collateralized Mortgage Obligation
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
GNMA -- Government National Mortgage Association
LP -- Limited Partnership
REMIC -- Real Estate Mortgage Investment Conduit
Ser -- Series
- -------------------------------------------------------------------------------
VALUE EQUITY FUND
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK -- 88.4%
AEROSPACE & DEFENSE -- 2.8%
Lockheed Martin* 10,700 $ 566
Loral 11,300 480
Raytheon 6,300 459
-------
1,505
-------
AIR TRANSPORTATION -- 1.0%
Federal Express* 7,900 534
-------
AIRCRAFT -- 2.7%
Allied Signal 11,100 436
McDonnell Douglas 9,600 535
Textron 7,900 447
-------
1,418
-------
APPAREL/TEXTILES -- 1.0%
V F 10,000 531
-------
AUTOMOTIVE -- 5.7%
Chrysler 7,500 314
Dana 14,900 380
Eaton 9,400 510
Echlin 15,850 610
Ford Motor 13,200 356
Paccar 7,800 332
TRW 7,750 534
-------
3,036
-------
BANKS -- 7.7%
Bank of New York 14,900 490
Barnett Banks 9,300 423
First Bank System 13,500 544
First Chicago 9,400 471
First Interstate Bancorp 6,500 514
Mellon Bank 11,600 473
NBD Bancorp 13,000 423
Suntrust Banks 5,900 316
Wachovia 12,200 433
-------
4,087
-------
BUILDING & CONSTRUCTION -- 0.6%
Lennar 20,500 331
-------
CHEMICALS -- 5.0%
EI du Pont de Nemours 6,700 405
Lubrizol 12,800 451
Nalco Chemical 12,300 414
Olin 7,000 376
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
March 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CHEMICALS (continued)
Rhone Poulenc Rorer 11,000 $ 477
Union Carbide 17,120 525
-------
2,648
-------
COMPUTERS & SERVICES -- 4.2%
Apple Computer 11,960 422
Compaq Computer* 11,400 393
Computer Associates International 9,400 558
Sun Microsystems* 13,100 455
Tandem Computers* 24,330 377
-------
2,205
-------
CONTAINERS & PACKAGING -- 1.0%
Ball 15,340 527
-------
DRUGS -- 0.9%
Upjohn 14,100 504
-------
ELECTRICAL SERVICES -- 10.0%
Consolidated Edison of New York 15,100 411
Duke Power 8,900 343
Florida Progress 13,200 398
General Public Utilities 12,200 355
Hawaiian Electric Industries 13,500 452
New England Electric System 12,300 380
Nipsco Industries 13,500 420
Northeast Utilities 14,800 315
Northern States Power 9,200 405
Oklahoma Gas & Electric 12,600 432
Public Service Enterprise Group 17,800 487
San Diego Gas & Electric 20,100 417
SCE 32,500 508
-------
5,323
-------
ELECTRICAL TECHNOLOGY -- 1.2%
Texas Instruments 7,100 628
-------
ENVIRONMENTAL SERVICES -- 0.6%
WMX Technologies 11,700 322
-------
FINANCIAL SERVICES -- 2.8%
American Express 15,300 534
Beneficial 11,900 467
Transamerica 8,300 470
-------
1,471
-------
FOOD, BEVERAGE & TOBACCO -- 5.5%
Campbell Soup 10,506 508
IBP 13,300 434
Pepsico 12,300 480
Philip Morris 7,900 515
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Shares Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Unilever NV ADR 3,600 $ 473
UST 14,970 475
-------
2,885
-------
GAS/NATURAL GAS -- 2.7%
Mapco 7,500 418
Pacific Enterprises 18,340 454
Williams 17,500 536
-------
1,408
-------
GLASS PRODUCTS -- 0.8%
PPG Industries 12,000 453
-------
HOUSEHOLD FURNITURE & FIXTURES -- 1.0%
Leggett & Platt 12,500 525
-------
HOUSEHOLD PRODUCTS -- 1.7%
Maytag 29,000 497
Sherwin Williams 12,400 420
-------
917
-------
INSURANCE -- 6.3%
AFLAC 13,600 550
American General 16,050 518
Cigna 6,200 463
Lincoln National 11,300 455
Providian 11,800 414
Saint Paul 10,000 500
US Healthcare 9,900 438
-------
3,338
-------
MACHINERY -- 5.6%
Briggs & Stratton 11,200 413
Caterpillar 7,100 395
Cummins Engine 10,100 452
Deere 5,400 439
General Electric 7,800 422
Parker-Hannifin 8,000 354
Timken 13,400 476
-------
2,951
-------
MEASURING DEVICES -- 0.9%
Johnson Controls 9,500 483
-------
MISCELLANEOUS TRANSPORTATION -- 0.9%
Harsco 11,100 488
-------
PETROLEUM REFINING -- 4.0%
Amoco 7,400 471
Ashland 11,300 403
British Petroleum PLC ADR 950 80
Exxon 4,900 327
Mobil 5,300 490
Murphy Oil 7,800 336
-------
2,107
-------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares/Face
Amount Market
Description (000) Value (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PRINTING & PUBLISHING -- 2.5%
A.H. Belo, Ser A 8,100 $ 469
Gannett 7,900 422
Wallace Computer Services 13,000 418
-------
1,309
-------
PROFESSIONAL SERVICES -- 0.8%
Servicemaster LP 17,200 409
-------
RAILROADS -- 1.0%
Norfolk Southern 7,600 508
-------
RETAIL -- 2.4%
American Stores 18,400 472
Bruno's 46,600 419
Circuit City Stores 15,400 406
-------
1,297
-------
RUBBER & PLASTIC -- 2.5%
Bandag 7,450 426
Premark International 9,900 437
Sonoco Products 18,500 448
-------
1,311
-------
STEEL & STEEL WORKS -- 0.9%
Worthington Industries 23,100 459
-------
TELEPHONES &
TELECOMMUNICATION -- 1.7%
Ameritech 10,800 446
Pacific Telesis Group 14,800 447
-------
893
-------
TOTAL COMMON STOCK
(Cost $44,071,155) 46,811
-------
REGISTERED INVESTMENT COMPANY -- 6.8%
Fidelity U.S. Equity Index Portfolio 81 1,498
SEI Equity Index Fund 129 2,116
-------
TOTAL REGISTERED INVESTMENT COMPANY
(Cost $3,614,677) 3,614
-------
CASH EQUIVALENTS -- 0.6%
SEI Liquid Asset Trust Treasury Portfolio
5.770%, 04/07/95 305 305
-------
TOTAL CASH EQUIVALENTS
(Cost $305,001) 305
-------
</TABLE>
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Description Value (000)
- ------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 1.8%
UBS Securities 6.170%, dated 03/31/95, matures 04/03/95,
repurchase price $939,000 (collateralized by U.S.
Treasury Note, par value $960,000, 6.625%, 03/31/97,
market value: $958,000) $ 938
--------
TOTAL REPURCHASE AGREEMENT
(Cost $938,376) 938
--------
TOTAL INVESTMENTS 97.6%
(Cost $48,929,209) 51,668
--------
OTHER ASSETS AND LIABILITIES -- 2.4%
Other Assets and Liabilities, Net 1,272
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no
par value) based on 5,161,975 outstanding shares of
beneficial interest 51,226
Portfolio shares of Class B (unlimited authorization -- no
par value) based on 56,061 outstanding shares of
beneficial interest 546
Accumulated net realized loss on investments (1,571)
Net unrealized appreciation on investments 2,739
--------
TOTAL NET ASSETS -- 100.0% $ 52,940
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $10.15
========
MAXIMUM OFFERING PRICE PER SHARE -- CLASS A (10.15/96.50%) $10.52
========
NET ASSET VALUE, OFFERING PRICE PER SHARE -- CLASS B $10.20
========
</TABLE>
- ---------------------------------
* Non-income producing security
ADR -- American Depository Receipt
LP -- Limited Partnership
PLC -- Public Limited Company
Ser -- Series
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
MARKET
VALUE
(000)
========
<S> <C>
ASSETS:
Investment Securities (Cost $102,054,265) $ 98,417
Cash 344
Accounts Receivable -- Accrued Income 1,313
Accounts Receivable -- Securities Sold 4,979
Accounts Receivable -- Capital Shares Sold 1
Other Assets 187
--------
Total Assets 105,241
--------
LIABILITIES:
Accounts Payable -- Income Distribution (514)
Accounts Payable -- Accrued Expenses (81)
Other Liabilities (148)
--------
Total Liabilities (743)
--------
NET ASSETS:
Portfolio shares of Class A (unlimited authorization -- no par
value) based on 10,935,212 outstanding shares of beneficial
interest 108,966
Portfolio shares of Class B (unlimited authorization -- no par
value) based on 16,564 outstanding shares of beneficial interest 163
Accumulated net realized loss on investments (994)
Net unrealized depreciation on investments (3,637)
--------
TOTAL NET ASSETS $104,498
========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE -- CLASS A $9.54
========
MAXIMUM PUBLIC OFFERING PRICE PER SHARE -- CLASS A ($9.54/96.5%) $9.89
========
NET ASSET VALUE, OFFERING PRICE PER SHARE -- CLASS B $9.59
========
</TABLE>
12
<PAGE>
STATEMENT OF OPERATIONS (000) MARQUIS FUNDS
- --------------------------------------------------------------------------------
For the Six Month Period Ended March 31, 1995 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY
SECURITIES GOVERNMENT LOUISIANA GROWTH AND VALUE
MONEY MARKET SECURITIES TAX-FREE INCOME EQUITY
FUND FUND FUND FUND FUND
============ ========== ========== ========== ==========
10/1/94 10/1/94 10/1/94 10/1/94 10/1/94
TO 3/31/95 TO 3/31/95 TO 3/31/95 TO 3/31/95 TO 3/31/95
============ ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income $15,714 $3,341 $205 $1,161 $ 29
Dividend income -- -- -- 513 744
------------ ---------- ---------- ---------- ----------
Total investment income $15,714 3,341 205 1,674 773
EXPENSES:
Administration fees 568 104 8 72 46
Waiver of administration
fees -- -- (3) -- --
Investment advisory fees 852 287 13 264 170
Waiver of investment
advisory fees (219) (80) (13) (72) (41)
Custodian/Transfer agent
fees 69 26 16 23 20
Distribution fees(1) 170 1 2 3 2
Distribution fee
waiver(1) (76) -- -- -- --
Professional fees 34 7 1 5 3
Registration fees 51 8 1 2 3
Trustee fees 6 1 -- 1 1
Printing expense 34 7 1 5 2
Amortization of deferred
organization costs 9 2 -- 1 1
Insurance and other fees 16 3 1 3 2
------------ ---------- ---------- ---------- ----------
Total expenses 1,514 366 27 307 209
------------ ---------- ---------- ---------- ----------
Net investment income 14,200 2,975 178 1,367 564
------------ ---------- ---------- ---------- ----------
Net realized gain (loss)
on securities sold 11 (380) (1) (374) (382)
Change in unrealized
appreciation on
investment securities -- 1,993 159 2,682 2,913
------------ ---------- ---------- ---------- ----------
Net realized and
unrealized gain on
investments 11 1,613 158 2,308 2,531
------------ ---------- ---------- ---------- ----------
Increase in net assets
resulting from
operations $14,211 $4,588 $336 $3,675 $3,095
============ ========== ========== ========== ==========
</TABLE>
(1) All distribution fees and waivers are incurred at the Retail Class level
for Treasury Securities Money Market and the Class B level for the non-
dollar funds.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
TREASURY SECURITIES GOVERNMENT
MONEY MARKET SECURITIES
FUND FUND
======================= =====================
10/1/94 10/1/93 10/1/94 10/1/93
TO 3/31/95 TO 9/30/94 TO 3/31/95 TO 9/30/94
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income $ 14,200 $ 16,494 $ 2,975 $ 4,538
Net realized gain (loss) on
securities sold 11 -- (380) (615)
Net unrealized depreciation of
investment securities -- -- 1,993 (5,630)
---------- ----------- ---------- ----------
Net increase (decrease) in
net assets resulting from
investment activities 14,211 16,494 4,588 (1,707)
---------- ----------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A (1) (10,821) (14,494) (2,986) (4,520)
Income distribution Class B (2) (3,379) (2,000) (4) (4)
---------- ----------- ---------- ----------
Total distribution (14,200) (16,494) (2,990) (4,524)
---------- ----------- ---------- ----------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 751,290 1,742,355 22,091 136,743
Shares issued in lieu of cash
distribution 3 3 1,753 3,255
Shares redeemed (698,734) (1,338,580) (18,663) (36,212)
---------- ----------- ---------- ----------
Total Class A share
transactions 52,559 403,778 5,181 103,786
---------- ----------- ---------- ----------
Class B (2):
Shares issued 240,208 254,104 31 150
Shares issued in lieu of cash
distribution 2,954 1,999 4 4
Shares redeemed (134,172) (169,255) (25) --
---------- ----------- ---------- ----------
Total Class B share
transactions 108,990 86,848 10 154
---------- ----------- ---------- ----------
Increase in net assets from
shareholder transactions 161,549 490,626 5,191 103,940
---------- ----------- ---------- ----------
Total increase in net assets 161,560 490,626 6,789 97,709
---------- ----------- ---------- ----------
NET ASSETS:
Beginning of period 490,626 -- 97,709 --
End of period $ 652,186 $ 490,626 $104,498 $ 97,709
========== =========== ========== ==========
SHARES ISSUED AND REDEEMED:
Class A (1):
Issued 751,290 1,742,355 2,370 13,755
Issued in lieu of cash
distribution 3 3 187 337
Redeemed (698,734) (1,338,580) (1,987) (3,726)
---------- ----------- ---------- ----------
Total Class A share
transactions 52,559 403,778 570 10,366
---------- ----------- ---------- ----------
Class B (2):
Issued 240,208 254,104 3 15
Issued in lieu of cash
distribution 2,954 1,999 1 --
Redeemed (134,172) (169,255) (3) --
---------- ----------- ---------- ----------
Total Class B share
transactions 108,990 86,848 1 15
---------- ----------- ---------- ----------
Net increase in share
transactions 161,549 490,626 571 10,381
========== =========== ========== ==========
</TABLE>
(1) Institutional Class for Treasury Securities Money Market.
(2) Retail Class for Treasury Securities Money Market.
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
LOUISIANA GROWTH AND VALUE
TAX-FREE INCOME EQUITY
FUND FUND FUND
======================== =========================== ===========================
10/1/94 10/1/93 10/1/94 10/1/93 10/1/94 10/1/93
TO 3/31/95 TO 9/30/94 TO 3/31/95 TO 9/30/94 TO 3/31/95 TO 9/30/94
---------- ---------- ---------- ---------- ---------- ----------
<S> <S> <C> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:
Net investment income $ 178 $ 226 $ 1,367 $ 2,107 $ 564 $ 777
Net realized gain (loss) on
securities sold (1) (32) (374) (572) (382) (1,188)
Net unrealized depreciation of
investment securities 159 (382) 2,682 (2,251) 2,913 (174)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net assets resulting from
investment activities 336 (188) 3,675 (716) 3,095 (585)
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Income distribution Class A (1) (168) (212) (1,358) (2,088) (559) (776)
Income distribution Class B (2) (10) (13) (14) (14) (4) (2)
---------- ---------- ---------- ---------- ---------- ----------
Total distribution (178) (225) (1,372) (2,102) (563) (778)
---------- ---------- ---------- ---------- ---------- ----------
SHARE TRANSACTIONS:
Class A (1):
Shares issued 1,150 9,735 7,308 76,453 15,872 54,146
Shares issued in lieu of cash
distribution 28 40 1,299 2,032 320 558
Shares redeemed (542) (2,427) (8,612) (4,313) (8,252) (11,418)
---------- ---------- ---------- ---------- ---------- ----------
Total Class A share
transactions 636 7,348 (5) 74,172 7,940 43,286
---------- ---------- ---------- ---------- ---------- ----------
Class B (2):
Shares issued 128 628 26 903 179 444
Shares issued in lieu of cash
distribution 7 9 13 13 3 2
Shares redeemed (182) -- (23) (23) (25) (58)
---------- ---------- ---------- ---------- ---------- ----------
Total Class B share
transactions (47) 637 16 893 157 388
---------- ---------- ---------- ---------- ---------- ----------
Increase in net assets from
shareholder transactions 589 7,985 11 75,065 8,097 43,674
---------- ---------- ---------- ---------- ---------- ----------
Total increase in net assets 747 7,572 2,314 72,247 10,629 42,311
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS:
Beginning of period 7,572 -- 72,247 -- 42,311 --
End of period $8,319 $ 7,572 $74,561 $72,247 $52,940 $ 42,311
========== ========== ========== ========== ========== ==========
SHARES ISSUED AND REDEEMED:
Class A (1):
Issued 124 994 765 7,676 1,645 5,462
Issued in lieu of cash
distribution 3 4 134 211 33 58
Redeemed (59) (255) (895) (442) (859) (1,176)
---------- ---------- ---------- ---------- ---------- ----------
Total Class A share
transactions 68 743 4 7,445 819 4,344
---------- ---------- ---------- ---------- ---------- ----------
Class B (2):
Issued 14 63 3 91 18 46
Issued in lieu of cash
distribution 1 1 1 1 1 --
Redeemed (20) -- (2) (2) (3) (6)
---------- ---------- ---------- ---------- ---------- ----------
Total Class B share
transactions (5) 64 2 90 16 40
---------- ---------- ---------- ---------- ---------- ----------
Net increase in share
transactions (63) 807 6 7,535 835 4,384
========== ========== ========== ========== ========== ==========
</TABLE>
15
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
For the Six Months Ended March 31, 1995 (Unaudited) and the Period Ended
September 30, 1994
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
REALIZED RATIO OF RATIO OF
AND EXPENSES NET INCOME
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF RATIO OF TO AVERAGE TO AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES NET INCOME NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE TO AVERAGE (EXCLUDING (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME PERIOD RETURN+ (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
--------- ---------- ----------- ------------- --------- ------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
TREASURY SECURITIES MONEY MARKET FUND INSTITUTIONAL CLASS
1995 $1.00 0.03 -- (0.03) $1.00 4.41 % $456,346 0.50%* 5.01%* 0.57%* 4.94%*
1994 1.00 0.03 -- (0.03) 1.00 3.22 403,778 0.50 3.15 0.60 3.05
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1995 $1.00 0.02 -- (0.02) $1.00 4.29 % $195,840 0.64%* 4.97%* 0.83%* 4.78%*
1994(1) 1.00 0.03 -- (0.03) 1.00 3.15 86,848 0.59 * 3.27 * 0.83 * 3.03 *
GOVERNMENT SECURITIES FUND CLASS A
1995 $9.41 0.27 0.13 (0.27) $9.54 4.38 % $104,339 0.70%* 5.70%* 0.85%* 5.55%*
1994 10.00 0.43 (0.59) (0.43) 9.41 (1.66) 97,562 0.70 4.43 0.90 4.23
GOVERNMENT SECURITIES FUND CLASS B
1995 $9.46 0.24 0.13 (0.24) $9.59 3.71 % $159 1.45%* 4.95%* 1.60%* 4.80%*
1994(2) 10.04 0.31 (0.58) (0.31) 9.46 (2.84) 147 1.45 * 3.88 * 1.69 * 3.64 *
LOUISIANA TAX-FREE INCOME FUND CLASS A
1995 $9.38 0.21 0.18 (0.21) $9.56 6.01 % $7,759 0.65%* 4.66%* 1.06%* 4.25%*
1994 10.00 0.36 (0.62) (0.36) 9.38 (2.68) 6,971 0.65 4.10 1.72 3.03
LOUISIANA TAX-FREE INCOME FUND CLASS B
1995 $9.39 0.18 0.18 (0.18) $9.57 5.13 % $560 1.40%* 3.90%* 1.81%* 3.49%*
1994(3) 9.87 0.27 (0.48) (0.27) 9.39 (2.58) 601 1.40 * 3.35 * 2.47 * 2.28 *
GROWTH AND INCOME FUND CLASS A
1995 $9.59 0.19 0.30 (0.19) $9.89 6.29 % $73,649 0.85%* 3.83%* 1.05%* 3.63%*
1994 10.00 0.31 (0.41) (0.31) 9.59 (1.02) 71,379 0.85 3.18 1.14 2.89
GROWTH AND INCOME FUND CLASS B
1995 $9.64 0.15 0.30 (0.15) $9.94 5.39 % $912 1.60%* 3.08%* 1.80%* 2.88%*
1994(2) 10.03 0.18 (0.39) (0.18) 9.64 (2.24) 868 1.60 * 2.55 * 1.94 * 2.21 *
VALUE EQUITY FUND CLASS A
1995 $9.65 0.11 0.50 (0.11) $10.15 9.52 % $52,368 0.90%* 2.45%* 1.08%* 2.27%*
1994 10.00 0.18 (0.35) (0.18) 9.65 (1.64) 41,922 0.90 1.95 1.17 1.68
VALUE EQUITY FUND CLASS B
1995 $9.70 0.08 0.50 (0.08) $10.20 8.77 % $572 1.65%* 1.70%* 1.83%* 1.52%*
1994(2) 9.95 0.08 (0.25) (0.08) 9.70 (1.82) 389 1.65 * 1.30 * 1.93 * 1.02 *
<CAPTION>
PORTFOLIO
TURNOVER
RATE
---------
<S> <C>
TREASURY SECURITIES MONEY MARKET FUND INSTITUTIONAL CLASS
1995 --
1994 --
TREASURY SECURITIES MONEY MARKET FUND RETAIL CLASS
1995 --
1994(1) --
GOVERNMENT SECURITIES FUND CLASS A
1995 16.23%
1994 37.80
GOVERNMENT SECURITIES FUND CLASS B
1995 16.23%
1994(2) 37.80
LOUISIANA TAX-FREE INCOME FUND CLASS A
1995 1.27%
1994 30.31
LOUISIANA TAX-FREE INCOME FUND CLASS B
1995 1.27%
1994(3) 30.31
GROWTH AND INCOME FUND CLASS A
1995 25.10%
1994 64.09
GROWTH AND INCOME FUND CLASS B
1995 25.10%
1994(2) 64.09
VALUE EQUITY FUND CLASS A
1995 56.79%
1994 161.42
VALUE EQUITY FUND CLASS B
1995 56.79%
1994(2) 161.42
</TABLE>
+ Returns are for the period indicated and have been annualized.
* Annualized.
(1) Commenced operations on October 19, 1993.
(2) Commenced operations on October 22, 1993.
(3) Commenced operations on November 22, 1993.
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS MARQUIS FUNDS
- --------------------------------------------------------------------------------
March 31, 1995 (Unaudited)
1. ORGANIZATION
================================================================================
The Marquis Funds (the "Trust") was organized as a Massachusetts business
trust under a Declaration of Trust dated June 29, 1993. The Trust is registered
under the Investment Company Act of 1940, as amended, as an open-end management
company with five portfolios: Treasury Securities Money Market Fund (the "Money
Market Fund"), the Government Securities Fund, Louisiana Tax-Free Income Fund,
Growth and Income Fund, and Value Equity Fund (the "Non-Dollar Funds"). The as-
sets of each Fund are segregated, and a shareholder's interest is limited to
the Fund in which shares are held. The Trust is registered to offer the follow-
ing classes of shares: Institutional, Retail, and the Cash Sweep in the Money
Market Fund, and Class A and Class B in the Non-Dollar Funds. The Cash Sweep
Class of the Money Market Fund has not commenced operations as of March 31,
1995.
2. SIGNIFICANT ACCOUNTING POLICIES
================================================================================
The following is a summary of the significant accounting policies followed by
the Funds.
Securities Valuation -- Investments in equity securities which are traded on a
national securities exchange (or reported on the NASDAQ national market system)
are stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the over-
the-counter market and listed equity securities for which no sale was reported
on that date are stated at the last quoted bid price. Debt obligations exceed-
ing sixty days to maturity for which market quotations are readily available
are valued at the most recently quoted bid price. Debt obligations with sixty
days or less remaining until maturity may be valued at their amortized cost.
Restricted and illiquid securities for which quotations are not readily avail-
able are valued at fair value using methods determined in good faith as ap-
proved by the Board of Trustees.
Federal Income Taxes -- It is each Fund's intention to qualify as a regulated
investment company for Federal income tax purposes by complying with the appro-
priate provisions of the Internal Revenue Code of 1986, as amended. According-
ly, no provision for Federal income taxes is required in the accompanying fi-
nancial statements.
Security Transactions and Related Income -- Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date and interest income is recognized on the
accrual basis. Costs used in determining realized gains and losses on the sales
of investment securities are those of the specific securities sold adjusted for
the accretion and amortization of purchase discounts and premiums during the
respective holding period. Purchase discounts and premiums on securities held
by the Non-Dollar Funds are accreted and amortized to maturity using the scien-
tific interest method, which approximates the effective interest method.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- ---------------------------------------------------------------------------
March 31, 1995
Repurchase Agreements -- Securities pledged as collateral for repurchase agree-
ments are held by the custodian bank until the respective agreements mature.
Provisions of the repurchase agreements ensure that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default of the counterparty. The Funds also invest in tri-party repurchase
agreements. Securities held as collateral for tri-party repurchase agreements
are maintained in a segregated account by the broker's custodian bank until ma-
turity of the repurchase agreement. If the counterparty defaults and the value
of the collateral declines or if the counterparty enters an insolvency proceed-
ing, realization of the collateral by the Funds may be delayed or limited.
Net Asset Value Per Share -- The net asset value per share of each Fund is cal-
culated on each business day. In general, it is computed by dividing the assets
of each Fund, less its liabilities, by the number of outstanding shares of the
Fund.
Classes -- Class specific expenses are borne by that class. Income, expenses,
and realized and unrealized gains/losses are allocated to the respective clas-
ses on the basis of relative daily net assets.
Other -- Distributions from net investment income are declared and paid
quarterly for the Growth and Income Fund and the Value Equity Fund.
Distributions from net investment income are declared daily and paid monthly
for the Treasury Securities Money Market Fund. Distributions from net
investment income are declared and paid monthly for the Government Securities
Fund and Louisiana Tax-Free Income Fund. Any net realized capital gains are
declared and distributed to shareholders at least annually.
3. INVESTMENT ADVISORY, ADMINISTRATIVE, AND DISTRIBUTION AGREEMENTS
================================================================================
First National Bank of Commerce in New Orleans (the "Adviser") serves as
investment adviser to each Fund pursuant to an investment advisory agreement
(the "Advisory Agreement") with the Trust. For its services, the Adviser is
entitled to a fee, which is calculated daily and paid monthly, at an annual
rate based on the average daily net assets of each Fund as follows: Treasury
Securities Money Market Fund -- .30%, Government Securities Fund -- .55%,
Louisiana Tax-Free Income Fund -- .35%, Growth and Income Fund -- .74%, and
Value Equity Fund -- .74%. The adviser has voluntarily agreed to waive a
portion of their fee so that expenses of each Fund will not exceed certain
annual expense limitations.
The Trust and SEI Financial Management Corporation (the "Administrator") have
entered into an Administration Agreement. Under terms of the Administration
Agreement, the Administrator is entitled to a fee calculated daily and paid
monthly at an annual rate of .20% of the average daily net assets of the Funds.
The Administrator has voluntarily agreed to waive a portion of their fee on the
Louisiana Tax-Free Income Fund.
18
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
The Trust and SEI Financial Services Company (the "Distributor") have entered
into a Distribution Agreement. As provided in the Distribution Agreement the
Trust will pay a fee, at an annual rate of .25% of the average daily net assets
of the Retail class of Treasury Securities Money Market Fund and .75% of the
Class B shares of the Non-Dollar Funds to the Distributor as compensation of
its services.
The Class A shares of the Non-Dollar Funds are subject to a maximum sales
load of 3.50%.
There is a contingent deferred sales charge on the Class B shares of the Non-
Dollar Funds which varies depending on the number of years from time of payment
for the purchase of shares until the time of redemption of such shares (the
"holding period"). Solely for the purpose of determining the number of years
from the time of any payment for the purchase of shares, all payments during
the month are aggregated and deemed to have been made on the first day of the
month.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED SALES
CHARGE AS A PERCENTAGE
YEARS SINCE OF DOLLAR AMOUNT
PURCHASE SUBJECT TO CHARGE
=========== =========================
<S> <C>
First 3.50%
Second 2.75%
Third 2.00%
Fourth 1.25%
Fifth 0.50%
Sixth None
</TABLE>
4. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES
================================================================================
Organizational costs have been capitalized by the Funds and are being amor-
tized over sixty months commencing with operations. In the event any of the
initial shares of the Funds are redeemed by any holder thereof during the pe-
riod that the Funds are amortizing their organizational costs, the redemption
proceeds payable to the holder thereof by the Funds will be reduced by the un-
amortized organizational costs in the same ratio as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of redemption. These costs include legal fees of approximately $54,278 for
organizational work performed by a law firm of which an officer and a trustee
of the Trust is a partner.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
- ---------------------------------------------------------------------------
March 31, 1995
5. INVESTMENT TRANSACTIONS
================================================================================
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments, for the period ended March 31, 1995 were
as follows:
<TABLE>
<CAPTION>
LOUISIANA GROWTH
GOVERNMENT TAX-FREE AND VALUE
SECURITIES INCOME INCOME EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
========== ========= ======= =======
<S> <C> <C> <C> <C>
PURCHASES:
U.S. Government $15,618 $ -- $ -- $ --
Other 1,688 947 18,975 33,647
SALES:
U.S. Government $ 7,195 $ -- $ 1,836 $ --
Other 8,679 91 14,726 25,478
</TABLE>
On March 31, 1995, the total cost of securities and the net realized gains or
losses on securities sold for Federal income tax purposes was not materially
different from amounts reported for financial reporting purposes. The aggregate
gross unrealized appreciation and depreciation on securities at March 31, 1995,
for each Non-Dollar Fund is as follows:
<TABLE>
<CAPTION>
LOUISIANA GROWTH
GOVERNMENT TAX-FREE AND VALUE
SECURITIES INCOME INCOME EQUITY
FUND FUND FUND FUND
(000) (000) (000) (000)
========== ========= ======= =======
<S> <C> <C> <C> <C>
Aggregate Gross Unrealized Gain $ 365 $ 27 $ 2,901 $ 3,675
Aggregate Gross Unrealized Loss (4,002) (249) (2,470) (936)
------- ----- ------- -------
Net Unrealized Gain (Loss) $(3,637) $(222) $ 431 $(2,739)
======= ===== ======= =======
</TABLE>
6. CONCENTRATION OF CREDIT RISK
================================================================================
The Treasury Securities Money Market Fund invests primarily in a portfolio of
money market instruments maturing in one year or less whose ratings are within
the highest ratings category assigned by a nationally recognized statistical
rating agency or, if not rated, are believed to be of comparable quality. The
ability of the issuers of the securities held by the Fund to meet their obliga-
tions may be affected by economic developments in a specific industry, state or
region. The Government Securities and Growth and Income Funds invest in debt
instruments.
20
<PAGE>
MARQUIS FUNDS
- --------------------------------------------------------------------------------
(Unaudited)
The Louisiana Tax-Free Income Fund is more susceptible to factors adversely
affecting issuers of Louisiana Municipal Securities than a comparable municipal
bond fund that does not concentrate its investments in Louisiana Municipal Se-
curities.
The following table presents a summary of holdings in the Government Securi-
ties and Louisiana Tax-Free Income Funds as of March 31, 1995.
<TABLE>
<CAPTION>
LOUISIANA
GOVERNMENT TAX-FREE
SECURITIES INCOME
RATING/SECURITY CATEGORY FUND FUND
======================== ========== =========
<S> <C> <C>
U.S. Government Security 93.28% --
AAA 1.44% 83.42%
AA -- --
A 3.05% 11.18%
NOT RATED 2.23% 5.40%
</TABLE>
The above percentages are stated as a percentage of total investments. U.S.
Government Securities represent obligations issued or guaranteed by the U.S.
Government and its agencies or instrumentalities. Repurchase agreements are
collateralized by U.S. Government Securities.
21
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
Financial statements and exhibits filed as part of the Registration
Statement:
(a) Part A - Prospectus
Financial Highlights
(b) Part B - Statement of Additional Information
Statement of Net Assets as of September 30, 1994
Statement of Operations For the Periods Ended as of September 30, 1994
Statement of Changes in Net Assets For the Period Ended as of
September 30, 1994
Financial Highlights For a Share Outstanding Throughout the Period
Notes to Financial Statements as of September 30, 1994
Statement of Net Assets as of March 31, 1995, unaudited
Statement of Net Assets/Schedule of Investments as of March 31, 1995,
unaudited
Statement of Assets and Liabilities as of March 31, 1995, unaudited
Statement of Operations as of March 31, 1995, unaudited
Statement of Changes in Net Assets for the period ended March 31,
1995, unaudited
Financial Highlights for the Six Months Ended March 31, 1995
(unaudited) and the period ended September 30, 1994
(b) Exhibits:
(1) Registrant's Agreement and Declaration of Trust is incorporated
herein by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A, filed with
the Securities and Exchange Commission on August 25, 1993.
(2) Registrant's By-Laws are incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A, filed with the Securities and Exchange
Commission on August 25, 1993.
(5) Form of Investment Advisory Agreement between the Registrant
and First National Bank of Commerce in New Orleans is
incorporated herein by reference to Pre-Effective Amendment No.
1 to Registrant's Registration Statement on Form N-1A, filed
with the Securities and Exchange Commission on August 25, 1993.
(6) Form of Distribution Agreement between the Registrant and SEI
Financial Services Company is incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A, filed with the Securities and Exchange
Commission on August 25, 1993.
(8) Form of Custodian Agreement between the Registrant and First
National Bank of Commerce in New Orleans is incorporated herein
by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on August 25, 1993.
(9)(a) Form of Administration Agreement between the Registrant and SEI
Financial Management Corporation is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on August 25, 1993.
(9)(b) Form of Transfer Agent Agreement between the Registrant and
Supervised Service Company is incorporated herein by reference
to Post-Effective Amendment No. 2 to Registrant's
C-1
<PAGE>
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on November 29, 1994.
(10) Opinion and Consent of Counsel is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on August 25, 1993.
(11) Opinion and Consent of Independent Accountants is filed
herewith.
(15)(a)12b-1 Plan with respect to the Retail Class Shares of the
Treasury Securities Money Market Fund is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on August 25, 1993.
(15)(b)12b-1 Plan with respect to the Class B Shares of the
Government Securities, Louisiana Tax-Free, Growth and Income
and Value Equity Funds is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A, filed with the Securities and Exchange
Commission on August 25, 1993.
(15)(c)Distribution Plan with respect to the Class C Shares of the
Treasury Securities Money Market Fund is incorporated herein by
reference to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on November 29, 1994.
(18) Rule 18f-3 plan is incorporated herein by reference to Exhibit
15(d) of Post-Effective Amendment No. 3 to Registrant's
Registration Statement filed with the Securities and Exchange
Commission on May 26, 1995.
(27) Financial Data Schedules are filed herewith.
Powers of Attorney for Jeffrey A. Cohen, John T. Cooney,
William M. Doran, David G. Lee, Frank E. Morris, Barry M.
Mulroy, Robert A. Patterson, Gene Peters, Robert A. Nesher,
Carmen V. Romeo and James M. Storey are incorporated herein by
reference to Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A, filed with the Securities
and Exchange Commission on November 29, 1994.
- ------------------
Item 25. Persons Controlled by or under Common Control with Registrant
Persons directly or indirectly controlled by or under common control with
the Registrant, the percentage of voting securities owned by such control
persons and, if a company, the state under whose laws it was organized:
See the Prospectuses and the Statement of Additional Information
regarding the Trust's control relationships. The Administrator is a
subsidiary of SEI Corporation which also controls the distributor of the
Registrant, SEI Financial Services Company, and other corporations engaged
in providing various financial and record keeping services, primarily to
bank trust departments, pension plan sponsors and investment managers.
Item 26. Number of Holders of Securities
The number of record holders of each class as of November 8, 1995:
C-2
<PAGE>
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
- ---------------------------------------------------------- --------------
<S> <C>
units of beneficial interest, without par value-
Treasury Securities Money Market Fund-Trust Class....... 16
Treasury Securities Money Market Fund-Retail Class...... 292
Treasury Securities Money Market Fund-Cash Sweep Class.. 4
Government Securities Fund-Class A...................... 321
Government Securities Fund-Class B...................... 25
Louisiana Tax-Free Income Fund-Class A.................. 462
Louisiana Tax-Free Income Fund-Class B.................. 38
Balanced Fund-Class A................................... 385
Balanced Fund-Class B................................... 118
Value Equity Fund-Class A............................... 439
Value Equity Fund-Class B............................... 180
Institutional Money Market Fund......................... 4
</TABLE>
Item 27. Indemnification
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1
to the Registration Statement in incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to trustees, officers and
controlling persons of the Registrant by the Registrant pursuant to the
Declaration of Trust or otherwise, the Registrant is aware that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and therefore, is unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by trustees, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
Item 28. Business and Other Connections of Investment Adviser
Business and other connections of a substantial nature in which each
investment adviser and each director, officer or partner of such investment
adviser is or has been involved at any time during the past two fiscal years in
the capacity of director, officer, employee, partner or trustee are as follows:
First National Bank of Commerce in New Orleans ("First National Bank")
offers a wide variety of financial services to customers. First National
Bank currently manages assets of approximately $2.0 billion. First
National Bank's principal place of business is 210 Baronne Street, New
Orleans, Louisiana 70112.
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of First National Bank is or has
been, at any time during the last two fiscal years, engaged for his or her own
account or in the capacity of director, officer, employee, partner or trustee
are as follows:
C-3
<PAGE>
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Adviser Other Company Other Company
- --------------------------- -------------------------- -----------------------
<S> <C> <C>
Edward M. Simmons McIlhenny Company President & CEO
Director
H. Leighton Steward The LL&E Company Chairman, President & CEO
Director
Joseph B. Storey Oil & Gas Consultant Consultant
Director
Norman C. Francis Xavier University President
Director
Patrick F. Taylor Taylor Energy Company Chairman and CEO
Director
Charles C. Teamer Dillard University Vice President, Fiscal Affairs
Director
Lloyd F. Gaubert L.F. Gaubert & Co. Inc. President
Director
John J. Gelpi, Jr. Industrial Metals of the South, President
Director Inc.
Erik F. Johnsen Central Gulf Lines, Inc. President
Director
J. Merrick Jones, Jr. Canal Barge Co., Inc. President
Director
Edwin Lupberger Entergy Corporation Chairman and President
Director
Robert W. Merrick Latter & Blum, Inc. President
Director
G. Frank Purvis, Jr. Pan-American Life Insurance Co. Chairman of the Board
Director
Ashton J. Ryan, Jr. -- --
Director, President & COO
Margaret Moss Allums -- --
Director
Ian Arnof First Commerce Corporation President & CEO
Director
William G. Barry Audubon Computer Rentals, Inc. Chairman of the Board
Director
Sydney Besthoff, III K&B, Incorporated --
Director
John D. Charbonnet Charbonnet Construction President
Director
Laurance Eustis, Jr. Eustis Insurance, Inc. Chairman of the Board
Director
Howard C. Gaines -- --
Director, President & CEO
Gerard W. Barrousse -- --
Executive Vice President
Glenn W. Hayes -- --
Executive Vice President
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Investment Adviser Other Company Other Company
- --------------------------- -------------------------- -----------------------
<S> <C> <C>
Suzanne T. Mestayer -- --
Executive Vice President
David T. Spell, Jr. -- --
Executive Vice President
</TABLE>
Item 29. Principal Underwriters
----------------------
(a) Furnish the name of each investment company (other than the
Registrant) for which each principal underwriter currently
distributing the securities of the Registrant also acts as a
principal underwriter, distributor or investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts
as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Compass Capital Group March 8, 1991
FFB Lexicon Funds October 18, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The PBHG Funds, Inc. July 16, 1993
Inventor Funds, Inc. August 1, 1994
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Classic Variable Trust August 18, 1995
SFS provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting
services ("Funds Evaluation") and automated execution, clearing and
settlement of securities transactions ("MarketLink").
C-5
<PAGE>
(b) Furnish the information required by the following table with respect
to each director, officer or partner of each principal underwriter
named in the answer to Item 21 of Part B. Unless otherwise noted,
the business address of each director or officer is 680 East
Swedesford Road, Wayne, PA 19087.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- --------------------------------------------------------- ---------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief --
Executive Officer
Henry H. Greer Director, President & Chief --
Operating Officer
Carmen V. Romeo Director, Executive Vice --
President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice --
President-Capital Resources Division
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, --
General Counsel & Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Jeff Drennen Vice President --
Vic Galef Managing Director --
Lawrence D. Hutchison Vice President --
Kim Kirk Managing Director --
John Krzeminski Managing Director --
Carolyn McLaurin Managing Director & Vice President --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Robert Ludwig Team Leader --
Vicki Malloy Team Leader --
Mick Duncan Team Leader --
Robert Aller Vice President --
Steve Bendinelli Vice President --
Cris Brookmyer Vice President & Controller --
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary --
Todd Cipperman Vice President & Assistant Secretary --
Ed Daly Vice President --
</TABLE>
C-6
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- --------------------------------------------------------- ---------------------
<S> <C> <C>
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Robert S. Ludwig Vice President & Team Leader --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary --
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary --
Daniel Spaventa Vice President --
William Zawaski Vice President --
Larry Pokora Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records
The names and addresses of each person maintaining physical possession of
any account, book or other document required to be maintained under Rule 31(a)
of the 1940 Act are as follows:
With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6); (8);
(12); and 31a-1(d), the required books and records are maintained at the offices
of Registrant's custodian:
First National Bank of Commerce in New Orleans
210 Baronne Street
New Orleans, Louisiana 70112
With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D); (4); (5);
(6); (8); (9); (10); (11); and 31a-1(f), the required books and records are
maintained at the offices of Registrant's administrator:
SEI Financial Management Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's investment adviser:
First National Bank of Commerce in New Orleans
210 Baronne Street
New Orleans, Louisiana 70112
Item 31. Management Services
Not Applicable
C-7
<PAGE>
Item 32. Undertakings
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform
the Board of Trustees of their desire to communicate with shareholders of
the Trust, the Trustees will inform such shareholders as to the approximate
number of shareholders of record and the approximate costs of mailing or
afford said shareholders access to a list of shareholders.
Registrant undertakes to hold a meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions
of Section 16(c) of the Investment Company Act of 1940 relating to
shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
The Registrant undertakes to file a post-effective amendment to its
Registration Statement within four to six months of the effective date of
this Post-Effective Amendment No. 3 that contains financial statements for
the Institutional Money Market Fund which need not be audited.
The Registrant undertakes to file a post-effective amendment to its
Registration Statement within four to six months of the effective date of
this Post-Effective Amendment No. 4 that contains financial statements for
the Growth Equity Fund which need not be audited.
The Registrant undertakes to file a post-effective amendment to its
Registration Statement within four to six months of the effective date of
this Post-Effective Amendment No. 4 that contains financial statements for
the Tax Exempt Money Market Fund which need not be audited.
C-8
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of Marquis Funds is on file
with the Secretary of State of The Commonwealth of Massachusetts and notice is
hereby given that this Registration Statement has been executed on behalf of the
Trust by an officer of the Trust as an officer and by its Trustees as trustees
and not individually and the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or shareholders
individually but are binding only upon the assets and property of the Trust.
C-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it has
duly caused this Amendment to Registration Statement No. 33-65436 to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Wayne, Commonwealth of Pennsylvania on the ___ day of November, 1995.
Marquis Funds
By: _____________________
David G. Lee
President
ATTEST:
By: ________________________
Jeffrey A. Cohen
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment has
been signed below by the following persons in the capacity on the dates
indicated.
<TABLE>
<S> <C> <C>
* Trustee November __, 1995
- ------------------------
John T. Cooney
* Trustee November __, 1995
- ------------------------
Robert A. Patterson
* Trustee November __, 1995
- ------------------------
William M. Doran
* Trustee November __, 1995
- ------------------------
Frank E. Morris
* Trustee November __, 1995
- ------------------------
Gene Peters
* Trustee November __, 1995
- ------------------------
Barry Mulroy
* Trustee November __, 1995
- ------------------------
James M. Storey
* Trustee November __, 1995
- ------------------------
Robert A. Nesher
Controller & Chief Financial November __, 1995
- ------------------------ Officer
Jeffrey A. Cohen
Trustee
</TABLE>
*By ____________________________
David G. Lee
Attorney in Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Name Sequential Page #
- ------- ---- -----------------
<S> <C> <C>
EX-99.B1 Registrant's Agreement and Declaration of Trust is incorporated herein
by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on August 25, 1993.
EX-99.B2 Registrant's By-Laws are incorporated herein by reference to Pre-
Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A, filed with the Securities and Exchange Commission on August
25, 1993.
EX-99.B5 Form of Investment Advisory Agreement between the Registrant and First
National Bank of Commerce in New Orleans is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on August 25, 1993.
EX-99.B6 Form of Distribution Agreement between the Registrant and SEI
Financial Services Company is incorporated herein by reference to Pre-
Effective Amendment No. 1 to Registrant's Registration Statement on
Form N-1A, filed with the Securities and Exchange Commission on August
25, 1993.
EX-99.B8 Form of Custodian Agreement between the Registrant and First National
Bank of Commerce in New Orleans is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A, filed with the Securities and Exchange Commission on
August 25, 1993.
EX-99.B9(a) Form of Administration Agreement between the Registrant and SEI
Financial Management Corporation is incorporated herein by reference
to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A, filed with the Securities and Exchange
Commission on August 25, 1993.
EX-99.B9(b) Form of Transfer Agent Agreement between the Registrant and
Supervised Service Company is incorporated herein by reference to
Post-Effective Amendment No. 2 to Registrant's Registration Statement
on Form N-1A, filed with the Securities and Exchange Commission on
November 29, 1994.
EX-99.B10 Opinion and Consent of Counsel is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A, filed with the Securities and Exchange Commission on
August 25, 1993.
EX-99.B11 Consent of Independent Accountants is filed herewith.*
EX-99.B15(a) 12b-1 Plan with respect to the Retail Class Shares of the Treasury
Securities Money Market Fund is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration Statement
on Form N-1A, filed with the Securities and Exchange Commission on
August 25, 1993.
EX-99.B15(b) 12b-1 Plan with respect to the Class B Shares of the Government
Securities, Louisiana Tax-Free, Balanced (formerly the "Growth and
Income" Fund) and Value Equity Funds is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed with the Securities and
Exchange Commission on August 25, 1993.
EX-99.B15(c) Distribution Plan with respect to the Class C shares of the
Treasury Money Market Fund is incorporated herein by reference to
Post-Effective Amendment No. 2 to Registrant's Registration Statement
on Form N-1A, filed with the Securities and Exchange Commission on
November 29, 1994.
EX-99.B18 Rule 18f-3 Plan is incorporated herein by reference to Exhibit 15(d)
of Post-Effective Amendment No. 3 to Registrant's Registration
Statement filed with the Securities and Exchange Commission on May 26,
1995.
EX-27.1 Financial Data Schedule for Treasury Securities Money Market Fund -
Class A*
EX-27.2 Financial Data Schedule for Treasury Securities Money Market Fund -
Class B*
EX-27.3 Financial Data Schedule for Government Securities Fund - Class A*
EX-27.4 Financial Data Schedule for Government Securities Fund - Class B*
EX-27.5 Financial Data Schedule for Louisiana Tax-Free Income Fund - Class A*
EX-27.6 Financial Data Schedule for Louisiana Tax-Free Income Fund - Class B*
EX-27.7 Financial Data Schedule for Growth and Income Fund - Class A*
EX-27.8 Financial Data Schedule for Growth and Income Fund - Class B*
EX-27.9 Financial Data Schedule for Value Equity Fund - Class A*
EX-27.10 Financial Data Schedule for Value Equity Fund - Class B*
</TABLE>
______________________
*Filed herewith.
<PAGE>
Powers of Attorney for Jeffrey A. Cohen, John T. Cooney, William
M. Doran, David G. Lee, and Frank E. Morris, Barry M. Mulroy,
Robert A. Patterson, Gene Peters, Robert A. Nesher and Carmen V.
Romeo, and James M. Storey are incorporated herein by reference to
Post-Effective amendment No. 2 to Registrant's Registration
statement on Form N-1A, filed with the Securities and Exchange
Commission on November 29, 1994.
- ---------
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use in this
registration statement of our report dated November 11, 1994 included in the
Post-Effective Amendment No. 4 to the Registration Statement on Form N-1A of the
(No. 33-65436), and to all references to our Firm included in this Registration
Statement File No. 33-65436.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
November 10, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> TREASURY SECURITIES MONEY MARKET CLASS A
<NUMBER> 011
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> OCT-01-1994 OCT-01-1993
<PERIOD-END> MAR-31-1995 SEP-30-1994
<INVESTMENTS-AT-COST> 654,234 492,110
<INVESTMENTS-AT-VALUE> 654,234 492,110
<RECEIVABLES> 1,186 599
<ASSETS-OTHER> 211 144
<OTHER-ITEMS-ASSETS> 0 0
<TOTAL-ASSETS> 655,631 492,853
<PAYABLE-FOR-SECURITIES> 0 0
<SENIOR-LONG-TERM-DEBT> 0 0
<OTHER-ITEMS-LIABILITIES> 3,445 2,227
<TOTAL-LIABILITIES> 3,445 2,227
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 652,175 490,626
<SHARES-COMMON-STOCK> 456,337 403,778
<SHARES-COMMON-PRIOR> 403,778 0
<ACCUMULATED-NII-CURRENT> 0 0
<OVERDISTRIBUTION-NII> 0 0
<ACCUMULATED-NET-GAINS> 11 0
<OVERDISTRIBUTION-GAINS> 0 0
<ACCUM-APPREC-OR-DEPREC> 0 0
<NET-ASSETS> 652,186 490,626
<DIVIDEND-INCOME> 0 0
<INTEREST-INCOME> 15,714 19,152
<OTHER-INCOME> 0 0
<EXPENSES-NET> (1,514) (2,658)
<NET-INVESTMENT-INCOME> 14,200 16,494
<REALIZED-GAINS-CURRENT> 11 0
<APPREC-INCREASE-CURRENT> 0 0
<NET-CHANGE-FROM-OPS> 14,211 16,494
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> (10,821) (14,494)
<DISTRIBUTIONS-OF-GAINS> 0 0
<DISTRIBUTIONS-OTHER> 0 0
<NUMBER-OF-SHARES-SOLD> 751,290 1,742,355
<NUMBER-OF-SHARES-REDEEMED> (698,734) (1,338,580)
<SHARES-REINVESTED> 3 3
<NET-CHANGE-IN-ASSETS> 52,567 403,778
<ACCUMULATED-NII-PRIOR> 0 0
<ACCUMULATED-GAINS-PRIOR> 0 0
<OVERDISTRIB-NII-PRIOR> 0 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
<GROSS-ADVISORY-FEES> 852 1,562
<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 1,809 3,278
<AVERAGE-NET-ASSETS> 569,323 523,755
<PER-SHARE-NAV-BEGIN> 1.00 1.00
<PER-SHARE-NII> .03 .03
<PER-SHARE-GAIN-APPREC> 0 0
<PER-SHARE-DIVIDEND> (.03) 0
<PER-SHARE-DISTRIBUTIONS> 0 (.03)
<RETURNS-OF-CAPITAL> 0 0
<PER-SHARE-NAV-END> 1.00 1.00
<EXPENSE-RATIO> .50 .50
<AVG-DEBT-OUTSTANDING> 0 0
<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> TREASURY SECURITIES MONEY MARKET CLASS B
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<S> <C> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> GOVERNMENT SECURITIES FUND CLASS A
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<S> <C> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> GOVERNMENT SECURITIES FUND CLASS B
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<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> OCT-01-1994 OCT-01-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUND
<SERIES>
<NAME> LOUISIANA TAX FREE INCOME FUND CLASS A
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<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUND
<SERIES>
<NAME> LOUISIANA TAX FREE INCOME FUND CLASS B
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<S> <C> <C>
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<PERIOD-START> OCT-01-1994 OCT-01-1993
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> GROWTH AND INCOME FUND CLASS A
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<S> <C> <C>
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<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> GROWTH AND INCOME FUND CLASS B
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<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> VALUE EQUITY FUND CLASS A
<NUMBER> 051
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> OCT-01-1994 OCT-01-1993
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<OVERDISTRIB-NII-PRIOR> (1) 0
<OVERDIST-NET-GAINS-PRIOR> 0 0
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<INTEREST-EXPENSE> 0 0
<GROSS-EXPENSE> 250 470
<AVERAGE-NET-ASSETS> 46,188 39,967
<PER-SHARE-NAV-BEGIN> 9.65 10.00
<PER-SHARE-NII> .11 .18
<PER-SHARE-GAIN-APPREC> .50 (.35)
<PER-SHARE-DIVIDEND> (.11) (.18)
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<PER-SHARE-NAV-END> 10.15 9.65
<EXPENSE-RATIO> .90 .90
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<AVG-DEBT-PER-SHARE> 0 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NAME> VALUE EQUITY FUND CLASS B
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<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS YEAR
<FISCAL-YEAR-END> SEP-30-1995 SEP-30-1994
<PERIOD-START> OCT-01-1994 OCT-01-1993
<PERIOD-END> MAR-31-1995 SEP-30-1994
<INVESTMENTS-AT-COST> 48,929 42,040
<INVESTMENTS-AT-VALUE> 51,668 41,866
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<TOTAL-ASSETS> 53,259 42,387
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<OTHER-ITEMS-LIABILITIES> 319 76
<TOTAL-LIABILITIES> 319 76
<SENIOR-EQUITY> 0 0
<PAID-IN-CAPITAL-COMMON> 51,772 43,674
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<ACCUMULATED-NET-GAINS> (1,571) (1,188)
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<ACCUM-APPREC-OR-DEPREC> 2,739 (174)
<NET-ASSETS> 52,940 42,311
<DIVIDEND-INCOME> 744 1,102
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<EXPENSES-NET> (209) (361)
<NET-INVESTMENT-INCOME> 564 777
<REALIZED-GAINS-CURRENT> (382) (1,188)
<APPREC-INCREASE-CURRENT> 2,913 (174)
<NET-CHANGE-FROM-OPS> 3,095 (585)
<EQUALIZATION> 0 0
<DISTRIBUTIONS-OF-INCOME> (4) (2)
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<NUMBER-OF-SHARES-REDEEMED> (25) (58)
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<PER-SHARE-NAV-BEGIN> 9.70 9.95
<PER-SHARE-NII> .08 .08
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</TABLE>
