<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1997.
File No. 33-65436
File No. 811-7830
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 8 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 9 /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., Esquire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 One Logan Square 1800 M Street, N.W.
Philadelphia, PA 19103 Washington, D.C. 20036
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/x/ immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485.
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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, 1996 was filed on November 13, 1996.
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<PAGE>
MARQUIS FUNDS
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
N-1A ITEM NO. LOCATION
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<S> <C> <C>
PART A - Treasury Securities Money Market Fund - Trust 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, Tax Exempt 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 Sub-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, Tax Exempt 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 Sub-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 *
</TABLE>
<PAGE>
PART A - Government Securities, Louisiana Tax-Fee Income, Balanced, Value
Equity, Growth Equity, Strategic Income Bond, Small Cap Equity and International
Equity Funds - Class A and Class B
<TABLE>
<S> <C> <C>
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 the Fund General Information; The Adviser; Small Cap Growth and
International Equity Portfolios; 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 of 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 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 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 General Information; Taxes
Item 7. Purchase of Securities Being Offered How to Purchase of Shares; Alternative Sales
Charge Options; Exchanges
Item 8. Redemption or Repurchase Redemption of Shares
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 Polices
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 Securities Trustees and Officers of the Trust; General
Information (Prospectus)
Item 16. Investment Advisory and Other Services The Adviser and Sub-Adviser; SFM and the Money
Managers; The Administrator; The Distributor;
The Portfolios' Administrator and Shareholder
Servicing Agent; Experts;
</TABLE>
<PAGE>
<TABLE>
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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>
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.
<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 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 January 28, 1997 has
been filed with the Securities and Exchange Commission (the "SEC") and is
available without charge by calling 1-800-471-1144. 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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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.
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JANUARY 28, 1997
<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 Trust Class
shares of the Trust's Treasury Securities Money Market Fund (the "Fund"). The
Fund is a separate series of the Trust.
WHAT IS THE INVESTMENT OBJECTIVE 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 Fund Resources 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 additional shares unless the shareholder elects to take payment in cash
on the first Business Day of each month. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
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SHAREHOLDER TRANSACTION EXPENSES TREASURY SECURITIES MONEY MARKET FUND
TRUST CLASS
<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
<CAPTION>
ANNUAL OPERATING EXPENSES TREASURY SECURITIES MONEY MARKET FUND
(as a percentage of average net assets) TRUST CLASS
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<S> <C>
Management Fees (after fee waivers) (1) .29%
12b-1 Fees None
Other Expenses .21%
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Total Operating Expenses (after fee waivers) (2) .50%
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</TABLE>
(1)The Adviser has voluntarily agreed to waive a portion of its advisory fee.
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 .51%. Total Operating Expenses have
been restated to reflect current fees.
EXAMPLE
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<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
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
</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 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."
<PAGE>
4
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 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 1996 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 each Period ended September 30,
<TABLE>
<CAPTION>
RATIO OF
NET
REALIZED RATIO OF RATIO OF INVESTMENT
AND NET EXPENSES INCOME TO
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT TO AVERAGE AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES INCOME TO NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE 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 TRUST CLASS
1996 $1.00 $0.05 -- $(0.05) $1.00 5.06% $637,819 0.50% 4.92% 0.53% 4.89%
1995 1.00 0.05 -- (0.05) 1.00 5.33 521,270 0.50 5.23 0.57 5.16
1994 1.00 0.03 -- (0.03) 1.00 3.22 403,778 0.50 3.15 0.60 3.05
</TABLE>
<PAGE>
5
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 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is 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 objective.
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.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Fund.
Fundamental policies cannot be changed with respect to the Fund without the
consent of the holders of a majority of the Fund's outstanding shares.
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 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; and (ii) enter into
repurchase agreements.
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., or an authorized
sub-transfer agent (collectively, the "Transfer Agent"), 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, along with a check (or other negotiable bank instrument or
money order payable to "Marquis Funds (Treasury Securities Money Market Fund),"
to Marquis Funds, PO Box 419316, Kansas City, MO 64141-6316. Third party
checks, credit cards, credit card checks and cash will not be accepted.
<PAGE>
6
When purchases are made by check, redemption proceeds will not be forwarded
until the investment being redeemed has been in the account for 15 days. You
may purchase additional shares at any time by mailing payment to the Transfer
Agent. Orders placed by mail will be executed on receipt of your payment. If
your check does not clear, your purchase will be canceled and you could be
liable for any losses or fees incurred. Account Application forms are available
by calling 1-800-471-1144.
WIRE
A shareholder whose Account Application has been received by the Transfer Agent
may purchase Trust Class shares of the Fund by wiring Federal funds. The
shareholder must wire funds to the Transfer Agent and the wire instructions
must include the shareholder's account number. The shareholder must call
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 the Transfer Agent prior to
12:00 noon, Central time. If the Transfer Agent does not receive notice by
12:00 noon, Central time, on the Business Day (defined below) 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 and Federal Reserve wire system are open for business ("Business
Days").
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 the Transfer
Agent, if it 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 of record who desire to transfer the registration of their shares
should call 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 the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent 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.
<PAGE>
7
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 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 the Transfer Agent 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, the Transfer Agent 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. A notary 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 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 1-800-471-1144.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions.
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 7 days after
the Transfer Agent 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"), 201 St. Charles
Avenue, New Orleans, Louisiana 70170, 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, 1996, the Adviser's Trust Group managed approximately $2.3
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 eight years. The Adviser is a
wholly-owned subsidiary of First Commerce Corporation.
<PAGE>
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 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, 1996, the Adviser was paid an
advisory fee of .27% of the Fund's average net assets.
Gerald S. Dugal, Vice President and a senior portfolio manager of the Adviser,
is the portfolio manager of the Treasury Securities Money Market Fund, the
Institutional Money Market Fund, Strategic Income Bond Fund and the Tax Exempt
Money Market Fund. During the past five years, Mr. Dugal served as a senior
portfolio manager and Director of Fixed Income and Trading with the Adviser.
Mr. Dugal has over 10 years of experience in investment trading, brokerage and
research. He is licensed as a general securities principal and a municipal
securities principal.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator") has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator 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 .15% of the Fund's average daily net assets.
The Administrator reserves the right to terminate any waivers or reimbursements
at any time at its sole discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore 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"), Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI Investments Company, 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
<PAGE>
9
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. In
addition, state and local tax consequences of an investment in the Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE 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, so as to be
relieved of federal income tax, net of investment company taxable income, and
net of capital gain (the excess of net long-term capital gains over net short-
term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including net short-
term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of the Fund's earnings and
profits. 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 shareholders have held their shares and regardless of whether the
distributions are received in cash or additional shares. Dividends and
distributions of capital gains paid by the Fund do not qualify for the
dividends received deduction for corporate shareholders. The Fund will provide
annual reports to shareholders of the federal income tax status of all
distributions.
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
December 31 of the year declared, if paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which 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 imputed
interest 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 imputed 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.
<PAGE>
10
Investment income received directly by the Fund on Treasury Obligations is
exempt from income tax at the state level and may be exempt, depending on the
state, when received by a shareholder as income dividends from the Fund
provided certain state-specific conditions are satisfied. 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.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated 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: Institutional
Money Market Fund, Tax Exempt Money Market Fund, Government Securities Fund,
Louisiana Tax-Free Income Fund, Strategic Income Bond Fund, Balanced Fund,
Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund and International
Equity Fund. All consideration received by the Trust for shares of any fund and
all assets of such fund belong to that fund and would be subject to liabilities
related thereto. The Trust reserves the right to create and issue shares of
additional funds.
The Trust pays its 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 Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
<PAGE>
11
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 and Cash Sweep shares because of the
distribution fees paid by Retail Class and Cash Sweep 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 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.
<PAGE>
<TABLE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
Financial Highlights........................................................ 4
The Trust................................................................... 5
Investment Objective and Policies........................................... 5
Investment Limitations...................................................... 5
Purchase of Shares.......................................................... 5
Exchanges................................................................... 6
Redemption of Shares........................................................ 7
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
.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 the Retail Class shares of the TREASURY
SECURITIES MONEY MARKET FUND and TAX EXEMPT MONEY MARKET FUND (the "Funds"),
each a separate series of the Trust.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in the Funds.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated January 28, 1997 has
been filed with the Securities and Exchange Commission (the "SEC") and is
available without charge by calling 1-800-471-1144. The Statement of
Additional Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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.
- ------------------------------------------------------------------------------
JANUARY 28, 1997
<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 Retail Class
shares of the Trust's Treasury Securities Money Market Fund (the "Treasury
Fund") and Tax Exempt Money Market Fund (the "Tax Exempt Fund") (collectively,
the "Funds"). Each Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Treasury 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. The Tax
Exempt 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 either 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. While each Fund seeks to maintain a net asset value
of $1.00 per share, there can be no assurance that either 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 either 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. The Trust's shares are not federally insured by the FDIC
or any other government agency.
For more information about each Fund, see "Investment Objective and Policies,"
"General Investment Policies" and "Description of Permitted Investments and
Risk Factors."
HOW DO I PURCHASE SHARES? Retail Class shares of the Funds 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 each Fund. Additionally, Weiss,
Peck & Greer, L.L.C. serves as investment sub-adviser (the "sub-adviser") to
the Tax Exempt Fund. See "Expense Summary," "The Adviser," and "The Sub-
Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources 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 each Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in additional shares unless the shareholder elects to take payment in cash
on the first Business Day of each month. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
TREASURY SECURITIES TAX EXEMPT
MONEY MARKET FUND MONEY MARKET FUND
SHAREHOLDER TRANSACTION EXPENSES RETAIL CLASS RETAIL CLASS
- --------------------------------------------------------------------------------
<S> <C> <C>
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None
Maximum Sales Load Imposed on
Reinvested Dividends
(as a percentage of offering price) None None
Maximum Contingent Deferred Sales
Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) None None
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fees (after fee waivers) (1) .29% .35%
12b-1 Fees (1) .20% .00%
Other Expenses .21% .30%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers) (2) .70% .65%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive a portion of its advisory fee
and the Distributor has voluntarily agreed to waive 12b-1 fees to the
extent necessary to keep "Total Operating Expenses" for the Retail Class
shares of the Treasury Fund and Tax Exempt Fund from exceeding .70% and
0.65%, respectively. The Adviser and the Distributor reserve the right to
terminate their waivers at any time in their sole discretion. Absent such
waivers, the advisory fee for the Treasury Fund and Tax Exempt Fund would
be .30% and .45%, respectively, and the 12b-1 fee for the Retail Class
shares of the Funds would be .25%.
(2) Absent the Adviser's and the Distributor's voluntary fee waivers, Total
Operating Expenses for Retail Class shares of the Treasury Fund and Tax
Exempt Fund would be .76% and 1.00%, respectively. Total Operating
Expenses have been restated to reflect current fees.
<TABLE>
EXAMPLE
- -------------------------------------------------------------------------------
<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 as-
suming (1) 5% annual return and (2) redemption
at the end of each time period:
Treasury Money Market Fund $7 $22 $39 $87
Tax Exempt Money Market Fund $ 7 $21 N/A N/A
</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. BECAUSE
THE TAX EXEMPT FUND HAD RECENTLY BECOME OPERATIONAL AS OF THE DATE OF THIS
PROSPECTUS, THE TAX EXEMPT FUND HAS NOT PROJECTED EXPENSES BEYOND THE THREE-
YEAR PERIOD SHOWN.
<PAGE>
4
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 Treasury
Fund also offers Trust Class shares and both Funds offer Cash Sweep 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."
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 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 1996 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 each Period ended
September 30,
<TABLE>
<CAPTION>
RATIO OF
NET
REALIZED RATIO OF RATIO OF INVESTMENT
AND NET EXPENSES INCOME TO
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT TO AVERAGE AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES INCOME TO NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE 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
1996 $1.00 $0.05 -- $(0.05) $1.00 4.86% $411,068 0.70% 4.72% 0.78% 4.64%
1995 1.00 0.05 -- (0.05) 1.00 5.16 282,747 0.68 5.12 0.82 4.98
1994(1) 1.00 0.03 -- (0.03) 1.00 3.15* 86,848 0.59* 3.27* 0.83* 3.03*
TAX EXEMPT MONEY MARKET FUND
1996(2) $1.00 $0.01 -- $(0.01) $1.00 2.83%* $ 66,214 0.65%* 2.92%* 1.12%* 2.45%*
</TABLE>
- --------
* Annualized.
(1) Commenced operations on October 19, 1993.
(2) Commenced operations on June 7, 1996.
<PAGE>
5
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
separate classes: Trust Class (Treasury Fund only), 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 each
Fund represents an undivided, proportionate interest in that Fund. This
Prospectus relates to the Retail Class shares of the Funds. Information
regarding the Trust Class shares of the Treasury Fund, Cash Sweep Class shares
of both Funds and the Trust's other funds is contained in separate prospectuses
that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TREASURY FUND
THE TREASURY FUND seeks 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 objective.
The Treasury 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.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TAX EXEMPT FUND
THE TAX EXEMPT FUND seeks 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 objective.
Under normal market conditions, the Tax Exempt 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
(an "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 the Tax Exempt Fund's 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 Tax Exempt 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 Tax Exempt Fund may purchase securities on a when-issued or delayed basis
only when settlement takes place within 15 days of the purchase of such
securities.
The Tax Exempt 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
<PAGE>
6
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.q
The Tax Exempt Fund may engage in securities lending and may also borrow money
in amounts up to 33 1/3% of its net assets.
GENERAL INVESTMENT POLICIES
Each 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, each Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations with remaining
maturities of 397 days or less. Each 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.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of that Fund's outstanding shares.
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. This restriction
applies to 75% of the Tax Exempt 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, with respect to the Tax
Exempt Fund, (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 with respect to the Tax Exempt Fund (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 a Fund directly from the Trust's
shareholder servicing and transfer agent, DST Systems, Inc., or an authorized
sub-transfer agent (collectively, the "Transfer Agent") by mail, by wire, or
through an automatic investment plan. Shares may also be purchased through
broker-dealers, including Marquis Investments, LLC that have established a
dealer agreement with SEI Financial Services Company, the Trust's distributor
(the "Distributor"). Retail Class shares of the Funds are sold on a continuous
basis.
BY MAIL
You may purchase Retail Class 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 Marquis Funds at PO Box 419316, Kansas City, MO 64141-6316. You may
purchase additional shares at any time by mailing payment to Marquis Funds.
Orders placed by mail will be executed on receipt of your payment. If your
check does not
<PAGE>
7
clear, your purchase will be cancelled and you could be liable for any losses
or fees incurred.
Third party checks, credit cards, credit card checks and cash will not be
accepted. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for 15
days.
You may obtain Account Application forms by calling 1-800-471-1144.
BY WIRE
You may purchase Retail Class shares of a Fund by wiring Federal funds,
provided that your Account Application has been previously received. You must
wire funds to the Transfer Agent and the wire instructions must include your
account number. You must call 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 the Transfer Agent prior to 12:00 noon, Central time. If
the Transfer Agent 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 a 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 calling
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 a Fund on any day the New York Stock
Exchange and the Federal Reserve wire system are open for business ("Business
Days").
The minimum initial investment in Retail Class shares of a 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, and eligible to receive
dividends declared that same day, on the Business Day the order is received by
the Transfer Agent if it 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 a Fund is the net asset value per share next computed after the order is
received and accepted by the Trust. Each Fund expects to maintain its net asset
value per share constant at $1.00. The net asset value per share of a Fund is
determined by dividing the total value of its investments and other assets,
less any liabilities, by its total outstanding shares. Each 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 call 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 in street name 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
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8
transmittal of these orders to the Transfer Agent for effectiveness the same
day. Customers should contact their financial institution for information as to
that institution's procedures for transmitting purchase, exchange or redemption
orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish the transfer. 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 the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent 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 the Transfer Agent 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 60 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 the Transfer Agent 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, the Transfer Agent 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. A notary 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 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
1-800-471-1144, however a wire charge of $25 will be deducted from the amount
of the wire redemption.
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9
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. 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 Trust 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 calling
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 the Transfer Agent.
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 7 days after
the Transfer Agent 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. When purchases are made by check, redemption proceeds
will not be forwarded until the investment being redeemed has been in the
account for fifteen days.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at their net asset value if, because
of redemptions, your account in that 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 a Fund in only the minimum investment amount, you may be
subject to involuntary redemption if you redeem any shares. Before a 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"), 201 St. Charles
Avenue, New Orleans, Louisiana 70170, acts 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 Treasury Fund 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. With respect to the Tax Exempt Fund,
the Adviser has delegated these responsibilities, subject to its supervision,
to the investment sub-adviser.
As of September 30, 1996, the Adviser's Trust Group managed approximately $2.3
billion in discretionary investment management accounts for individuals,
corporations and institutions with
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10
widely varying investment needs and objectives. The Trust Group has managed
client accounts since 1933 and has managed money market portfolios for the past
eight 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 Treasury Fund's average daily net assets and
0.45% of the Tax Exempt 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 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, 1996, the Adviser was paid an advisory fee of .27% of the
Treasury Fund's average net assets and .26% of the Tax Exempt Fund's average
net assets.
Gerald S. Dugal, Vice President and a senior portfolio manager of the Adviser,
is the portfolio manager of the Treasury Securities Money Market Fund, the
Institutional Money Market Fund, the Strategic Income Bond Fund and the Tax
Exempt Money Market Fund. During the past five years, Mr. Dugal served as a
senior portfolio manager and Director of Fixed Income and Trading with the
Adviser. Mr. Dugal has 10 years of experience in investment trading, brokerage
and research. He is licensed as a general securities principal and a municipal
securities principal.
THE SUB-ADVISER
Weiss, Peck & Greer, L.L.C. ("WPG") serves as the Tax Exempt Fund's investment
sub-adviser under a sub-advisory agreement (the "Sub-Advisory Agreement") with
the Adviser. Under the Sub-Advisory Agreement, and subject at all times to the
supervision of the Adviser and the Trustees of the Trust, WPG invests the
assets of the Fund on a daily basis, and continuously administers the
investment program of the Fund.
WPG is a limited liability company founded as a limited partnership in 1970,
and engages in investment management, venture capital management and management
buyouts. Since its founding, WPG has been active in managing portfolios of tax
exempt securities. Currently, WPG manages over $12 billion in assets, $2
billion of which is invested in tax exempt money market funds. The principal
business address of WPG is One New York Plaza, New York, N.Y. 10004.
WPG is entitled to a fee which is paid by the Adviser and which is calculated
daily and paid monthly, at an annual rate of: .075% of the Tax Exempt Fund's
average daily net assets up to $150 million, .05% of the next $350 million of
the Fund's average daily net assets, .04% of the next $500 million in average
daily net assets; and .01% of the Fund's average daily net assets over $1
billion.
For the fiscal period ended September 30, 1996, WPG was paid a sub-advisory fee
of 7.5% (annualized) of the Tax Exempt Fund's average daily net assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator 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.
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11
The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .15% of each Fund's average daily net assets.
The Administrator reserves the right to terminate any waivers or reimbursements
at any time at its sole discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore 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 Funds have a Rule 12b-1 distribution plan (the
"Retail Class Plan"), and the Trust and SEI Financial Services Company (the
"Distributor"), Oaks, Pennsylvania 19456, a wholly-owned subsidiary of SEI
Investments Company, 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 Funds. 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 Funds. The
Distributor reserves the right in its sole discretion to terminate this
voluntary waiver at any time.
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 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 Trust may advertise each 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 a 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.
The Tax Exempt 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.
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12
In addition, the Trust may from time to time compare performance of a 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 the various classes of shares of a Fund will differ because
of the distribution fees charged to the 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 Funds or its shareholders. In
addition, state and local tax consequences of an investment in a Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and
is not combined with the Trust's other funds. Each Fund intends to qualify for
the special tax treatment afforded regulated investment companies as defined
under Subchapter M of the Internal Revenue Code of 1986, as amended, so as to
be relieved of federal income tax, net of investment company taxable income,
and net of capital gain (the excess of net long-term capital gains over net
short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment
company taxable income are taxable to shareholders as ordinary income (whether
received in cash or in additional shares) to the extent of a Fund's earnings
and profits. 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 shareholders have held their shares and regardless
of whether the distributions are received in cash or in additional shares.
Dividends and distribution of capital gains paid by a Fund do not qualify for
the dividends received deduction for corporate shareholders. Each Fund will
make annual reports to shareholders of the federal income tax status of all
distributions.
If, at the close of each quarter of its taxable year, at least 50% of the value
of the Tax Exempt Fund's assets consist of obligations, the interest on which
is excludable from gross income for federal tax purposes, that Fund may pay
"exempt-interest dividends" to its shareholders. Those dividends constitute the
portion of the aggregate dividends as designated by the Fund equal to the
excess of the excludable interest over certain amounts disallowed as
deductions. Exempt-interest dividends are excludable from a shareholder's gross
income for regular federal income tax purposes, but may have certain collateral
federal income tax consequences, including alternative minimum tax. See the
Statement of Additional Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Tax Exempt Fund to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of "exempt-
interest dividends."
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
December 31 of the year declared paid by the Fund at any time during the
following January.
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13
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments, a Fund
will be required to include as part of its current income the imputed interest
on such obligations even though the Fund has not received any interest payments
on such obligations during that period. Because each Fund distributes all of
its net investment income to its shareholders, a Fund may have to sell
portfolio securities to distribute such imputed 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.
Investment income received directly by a Fund 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 as
income dividends provided certain state specific conditions are satisfied.
Interest received on repurchase agreements collateralized by direct U.S.
Government obligations normally is not exempt from state taxation. Each Fund
will inform shareholders annually of the percentage of income and distributions
derived from direct U.S. Government 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 states.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated 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 the following funds: Institutional
Money Market Fund, Government Securities Fund, Louisiana Tax-Free Income Fund,
Strategic Income Bond Fund, Balanced Fund, Value Equity Fund, Growth Equity
Fund, Small Cap Equity Fund and International Equity Fund. All consideration
received by the Trust for shares of any fund and all assets of such fund belong
to that fund and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional funds.
The Trust pays its 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.
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14
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 Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
DIVIDENDS
The net investment income (not including capital gains) of a 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 each Fund, if any, will be distributed at least
annually. Dividends are paid by the Funds 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 Funds and associated risk factors. The only permitted
investments for the Treasury Fund include Repurchase Agreements and U.S.
Treasury obligations. 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 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.
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15
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
Trustees, 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 a Fund to treat
the income from the investment as exempt from federal income tax. The Tax
Exempt 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 receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. 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.
Receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a Fund
obtains a security and simultaneously commits to
<PAGE>
16
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. 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, as amended.
SECURITIES LENDING--In order to generate additional income, the Tax Exempt 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 a 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 a 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 a 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 Tax
Exempt 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 may be considered to be
illiquid securities.
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
Securities), others are supported by the right of the issuer to borrow from the
Treasury (e.g., Federal Farm Credit Bank Securities), while still others are
supported only by the credit of the instrumentality (e.g., Federal National
Mortgage Association Securities). Guarantees of principal by agencies or
instrumentalities of the 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 Tax Exempt Fund's shares.
U.S. GOVERNMENT SECURITIES--Any guaranty by the U.S. Government of the
securities in which a Fund invests guarantees only the payment of principal and
interest on the guaranteed security
<PAGE>
17
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 Funds do not expect to trade STRIPS
actively.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain of the obligations purchased by
the Tax Exempt 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.
However, the Tax Exempt Fund may purchase securities on a when-issued or
delayed basis only when settlement takes place within 15 days of the purchase
of such securities. To the extent required by the 1940 Act, the Tax Exempt 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 Tax Exempt 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.
<PAGE>
<TABLE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
Summary.................................................................... 2
Expense Summary............................................................ 3
Financial Highlights....................................................... 4
The Trust.................................................................. 5
Investment Objective and Policies for the Treasury Fund.................... 5
Investment Objective and Policies for the Tax Exempt Fund.................. 5
General Investment Policies................................................ 6
Investment Limitations..................................................... 6
Purchase of Shares......................................................... 6
Exchanges.................................................................. 8
Redemption of Shares....................................................... 8
The Adviser................................................................ 9
The Sub-Adviser............................................................ 10
The Administrator.......................................................... 10
The Shareholder Servicing Agent and Transfer Agent......................... 11
The Distributor............................................................ 11
Performance................................................................ 11
Taxes...................................................................... 12
General Information........................................................ 13
Description of Permitted Investments and Risk Factors...................... 14
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
.TREASURY SECURITIES MONEY MARKET FUND
.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 the Cash Sweep Class shares of the
TREASURY SECURITIES MONEY MARKET FUND and TAX EXEMPT MONEY MARKET FUND (the
"Funds"), each a separate series of the Trust.
This Prospectus sets forth concisely the information about the Funds and the
Trust that a prospective investor should know before investing in the Funds.
Investors are advised to read this Prospectus and retain it for future
reference. A Statement of Additional Information dated January 28, 1997 has
been filed with the Securities and Exchange Commission (the "SEC") and is
available without charge by calling 1-800-471-1144. The Statement of
Additional Information is incorporated into this Prospectus by reference.
AN INVESTMENT IN THE FUNDS IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUNDS WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE 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.
- ------------------------------------------------------------------------------
JANUARY 28, 1997
<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 Cash Sweep Class
shares of the Trust's Treasury Securities Money Market Fund (the "Treasury
Fund") and Tax Exempt Money Market Fund (the "Tax Exempt Fund") (collectively,
the "Funds"). Each Fund is a separate series of the Trust.
WHAT ARE THE INVESTMENT OBJECTIVES AND POLICIES OF THE FUND? The Treasury 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. The Tax
Exempt 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 either 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. While each Fund seeks to maintain a net asset value
of $1.00 per share, there can be no assurance that either 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 either 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. The Trust's shares are not federally insured by the FDIC
or any other government agency.
For more information about each Fund, see "Investment Objective and Policies,"
"General Investment Policies" and "Description of Permitted Investments and
Risk Factors."
HOW DO I PURCHASE SHARES? Cash Sweep Class shares of the Funds are offered at
net asset value per share. Cash Sweep Class shares are subject to annual
distribution 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 each Fund. Additionally, Weiss,
Peck & Greer, L.L.C. serves as investment sub-adviser (the "sub-adviser") to
the Tax Exempt Fund. See "Expense Summary," "The Adviser" and "The Sub-
Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources 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 each Fund is distributed in the form of monthly
dividends. Any capital gain is distributed at least annually. Dividends are
paid in additional shares unless the shareholder elects to take payment in cash
on the first Business Day of each month. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
<S> <C> <C>
TREASURY SECURITIES TAX EXEMPT
MONEY MARKET FUND MONEY MARKET FUND
SHAREHOLDER TRANSACTION EXPENSES CASH SWEEP CLASS CASH SWEEP CLASS
- --------------------------------------------------------------------------------
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None None
Maximum Sales Load Imposed on Reinvested
Dividends
(as a percentage of offering price) None None
Maximum Contingent Deferred Sales Charge
(as a percentage of original purchase
price or redemption proceeds, as
applicable) None None
Wire Redemption Fee $25 $25
Exchange Fee None None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management Fees (after fee waivers) (1) .29% .35%
12b-1 Fees (1) .60% .60%
Other Expenses .21% .30%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee
waivers) (2) 1.10% 1.25%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The Adviser has voluntarily agreed to waive a portion of its advisory fee
and the Distributor has voluntarily agreed to waive 12b-1 fees to the
extent necessary to keep "Total Operating Expenses" for the Cash Sweep
Class shares of the Treasury Fund and Tax Exempt Fund from exceeding 1.10%
and 1.25%, respectively. The Adviser and the Distributor reserve the right
to terminate their waivers at any time in their sole discretion. Absent
such waivers, the advisory fee for the Treasury Fund and Tax Exempt Fund
would be .30% and .45%, respectively, and the 12b-1 fee for the Cash Sweep
Class shares of the Funds 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 Treasury Fund and
Tax Exempt Fund would be 1.26% and 1.50%, respectively. Total Operating
Expenses have been restated to reflect current fees.
EXAMPLE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
You would pay the following expenses on a $1,000 investment in
Cash Sweep Class shares assuming (1) 5% annual return and
(2) redemption at the end of each time period:
Treasury Money Market Fund $11 $35
Tax Exempt Money Market Fund $13 $40
</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. BECAUSE
THE CASH SWEEP CLASS OF EACH FUND WERE NOT OPERATIONAL AS OF THE DATE OF THIS
PROSPECTUS, THE FUNDS HAVE NOT PROJECTED EXPENSES BEYOND THE THREE-YEAR PERIOD
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. The information set forth in
the foregoing table and example relates only to Cash Sweep Class shares. The
Treasury Fund also offers Trust Class shares and both Funds offer 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 shares are
charged lower distribution expenses than Cash Sweep 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."
<PAGE>
4
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
separate classes: Trust Class (Treasury Fund only), 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 each
Fund represents an undivided, proportionate interest in that Fund. This
Prospectus relates to the Cash Sweep Class shares of the Funds. Information
regarding the Trust Class shares of the Treasury Fund, Retail Class shares of
both Funds and the Trust's other funds is contained in separate prospectuses
that may be obtained by calling 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TREASURY FUND
THE TREASURY FUND seeks 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 objective.
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.
INVESTMENT OBJECTIVE AND POLICIES FOR THE TAX EXEMPT FUND
THE TAX EXEMPT FUND seeks 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 objective.
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 (an "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 Tax Exempt 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 Tax Exempt Fund may purchase securities on a when-issued or delayed basis
only when settlement takes place within 15 days of the purchase of such
securities.
The Tax Exempt 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
<PAGE>
5
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 Tax Exempt Fund may engage in securities lending and may also borrow money
in amounts up to 33 1/3% of its net assets.
GENERAL INVESTMENT POLICIES
- ---------------------------
Each 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, each Fund will maintain a dollar-weighted average portfolio
maturity of 90 days or less, and will acquire only obligations with remaining
maturities of 397 days or less. Each 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.
For additional information regarding permitted investments, investment
practices and risks, see "Description of Permitted Investments and Risk
Factors."
INVESTMENT LIMITATIONS
The following investment limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to a Fund without the
consent of the holders of a majority of that Fund's outstanding shares.
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. This restriction
applies to 75% of the Tax Exempt 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, with respect to the Tax
Exempt Fund, (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, with respect to the Tax Exempt Fund, (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 a Fund directly from the
Trust's shareholder servicing and transfer agent, DST Systems, Inc., or an
authorized sub-transfer agent (collectively, the "Transfer Agent"), by mail, by
wire, or through an automatic investment plan. Shares may also be purchased
through broker-dealers, including Marquis Investments, LLC, that have
established a dealer agreement with SEI Financial Services Company, the Trust's
distributor (the "Distributor"). Cash Sweep Class shares of the Funds are sold
on a continuous basis.
BY MAIL
You may purchase Cash Sweep Class 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 Marquis Funds at PO Box 419316, Kansas City, MO 64141-6316. You may
purchase additional shares at any time by mailing payment to the Transfer
Agent. 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.
Third party checks, credit cards, credit card checks and cash will not be
accepted. When purchases are made by check, redemption proceeds will not be
forwarded until the investment being redeemed has been in the account for
15 days.
<PAGE>
6
You may obtain Account Application forms by calling 1-800-471-1144.
BY WIRE
You may purchase Cash Sweep Class shares of a Fund by wiring Federal funds,
provided that your Account Application has been previously received. You must
wire funds to the Transfer Agent and the wire instructions must include your
account number. You must call 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 the Transfer Agent prior to 12:00 noon, Central time. If
the Transfer Agent 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 a 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 calling
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 a Fund on any day the New York
Stock Exchange and the Federal Reserve wire system are open for business
("Business Days").
The minimum initial investment in Cash Sweep Class shares of a 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, and eligible to receive
dividends declared that same day, on the Business Day the order is received by
the Transfer Agent if it 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 a Fund is the net asset value per share next computed after the order
is received and accepted by the Trust. Each Fund expects to maintain its net
asset value per share constant at $1.00. The net asset value per share of a
Fund is determined by dividing the total value of its investments and other
assets, less any liabilities, by its total outstanding shares. Each 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 call 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 Transfer
Agent for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
<PAGE>
7
institution to accomplish the transfer. 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 the Transfer Agent. 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 the Transfer Agent 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 60 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 the Transfer Agent 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, the Transfer Agent 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. A notary 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 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
1-800-471-1144, however a wire charge of $25 will be deducted from the amount
of the wire redemption.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are
<PAGE>
8
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 Trust 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 calling
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 the Transfer Agent.
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 7 days after
the Transfer Agent 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. When purchases are made by check, redemption proceeds
will not be forwarded until the investment being redeemed has been in the
account for fifteen days.
Due to the relatively high costs of handling small investments, each Fund
reserves the right to redeem your shares at their net asset value if, because
of redemptions, your account in that 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 a Fund in only the minimum investment amount, you may be
subject to involuntary redemption if you redeem any shares. Before a 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"), 201 St. Charles
Avenue, New Orleans, Louisiana 70170, acts 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 Treasury Fund, subject to the supervision of, and
policies established by, the Trustees of the Trust. With respect to the Tax
Exempt Fund, the Adviser has delegated these responsibilities, subject to its
supervision, to the sub-adviser.
As of September 30, 1996, the Adviser's Trust Group managed approximately $2.3
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 eight years. The Adviser is a
wholly-owned subsidiary of First Commerce Corporation.
<PAGE>
9
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 Treasury Fund's average daily net assets and
0.45% of the Tax Exempt 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 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, 1996, the Adviser was paid an advisory fee of .27% of the
Treasury Fund's average net assets and .26% of the Tax Exempt Fund's average
net assets.
Gerald S. Dugal, Vice President and a senior portfolio manager, is the
portfolio manager of the Treasury Securities Money Market Fund, the
Institutional Money Market Fund, Strategic Income Bond Fund and the Tax Exempt
Money Market Fund. During the past five years, Mr. Dugal served as a senior
portfolio manager and Director of Fixed Income and Trading with the Adviser.
Mr. Dugal has over 10 years of experience in investment trading, brokerage and
research. He is licensed as a general securities principal and a municipal
securities principal.
THE SUB-ADVISER
Weiss, Peck & Greer, L.L.C. ("WPG") serves as the Tax Exempt Fund's investment
sub-adviser under a sub-advisory agreement (the "Sub-Advisory Agreement") with
the Adviser. Under the Sub-Advisory Agreement, WPG invests the assets of the
Fund on a daily basis, and continuously administers the investment program of
the Fund.
WPG is a limited liability company founded as a limited partnership in 1970,
and engages in investment management, venture capital management and management
buyouts. Since its founding, WPG has been active in managing portfolios of tax
exempt securities. Currently, WPG manages over $12 billion in assets, $2
billion of which is invested in tax exempt money market funds. The principal
business address of WPG is One New York Plaza, New York, N.Y. 10004.
WPG is entitled to a fee which is paid by the Adviser and which is calculated
daily and paid monthly, at an annual rate of: .075% of the Tax Exempt Fund's
average daily net assets up to $150 million; .05% of the next $350 million of
the Fund's average daily net assets, .04% of the next $500 million in average
daily net assets; and .01% of the Fund's average daily net assets over $1
billion.
For the fiscal period ended September 30, 1996, WPG was paid a sub-advisory fee
of 7.5% (annualized) of the Tax Exempt Fund's average daily net assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator 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 .15% of each Fund's average daily net assets.
The Administrator reserves the right to terminate any waivers or
reimbursements, at any time in its sole discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore Street, Kansas City, MO 64105, serves as the
dividend disbursing
<PAGE>
10
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 Cash Sweep Class shares of the Funds have a Rule 12b-1 distribution plan
(the "Cash Sweep Class Plan"), and the Trust and SEI Financial Services Company
(the "Distributor"), Oaks, Pennsylvania 19456, a wholly-owned subsidiary of SEI
Investments Company, have entered into a distribution agreement (the
"Distribution Agreement").
As provided in the Distribution Agreement and the Cash Sweep Class Plan, the
Trust pays the Distributor a fee at the annual rate of .60% of the average
daily net assets of the Cash Sweep Class shares of the Funds. 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 Funds. The Distributor reserves the right in its sole discretion
to terminate this voluntary waiver at any time.
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 Cash Sweep 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 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 Trust may advertise each 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 a 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.
The Tax Exempt 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.
In addition, the Trust may from time to time compare performance of a 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 the various classes of shares of a Fund will differ because
of the distribution fees charged to the Cash Sweep Class and Retail Class
shares.
<PAGE>
11
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 Funds or its shareholders. In
addition, state and local tax consequences of an investment in a Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal income tax purposes and
is not combined with the Trust's other funds. Each Fund intends to qualify for
the special tax treatment afforded regulated investment companies as defined
under Subchapter M of the Internal Revenue Code of 1986, as amended, so as to
be relieved of federal income tax, net of investment company taxable income,
and net of capital gain (the excess of net long-term capital gains over net
short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from net investment
company taxable income are taxable to shareholders as ordinary income (whether
received in cash or in additional shares) to the extent of a Fund's earnings
and profits. 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 shareholders have held their shares and regardless
of whether the distributions are received in cash or in additional shares.
Dividends and distribution of capital gains paid by a Fund do not qualify for
the dividends received deduction for corporate shareholders. Each Fund will
make annual reports to shareholders of the federal income tax status of all
distributions.
If, at the close of each quarter of its taxable year, at least 50% of the value
of the Tax Exempt Fund's assets consist of obligations the interest on which is
excludable from gross income for federal tax purposes, that Fund may pay
"exempt-interest dividends" to its shareholders. Those dividends constitute the
portion of the aggregate dividends as designated by the Fund equal to the
excess of the excludable interest over certain amounts disallowed as
deductions. Exempt-interest dividends are excludable from a shareholder's gross
income for regular federal income tax purposes, but may have certain collateral
federal income tax consequences, including alternative minimum tax. See the
Statement of Additional Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Tax Exempt Fund to purchase sufficient amounts of tax-exempt
securities to satisfy the Code's requirements for the payment of "exempt-
interest dividends."
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
December 31 of the year declared paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which are sold with
original issue discount and do not make periodic cash interest payments, a Fund
will be required to include as part of its current income the imputed interest
on such obligations even though the Fund has not received any interest payments
on such obligations during that period. Because each Fund distributes all of
its net investment income to its shareholders, a Fund may have to sell
portfolio securities to distribute such imputed 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.
<PAGE>
12
Investment income received directly by a Fund 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 as
income dividends provided certain state specific conditions are satisfied.
Interest received on repurchase agreements collateralized by direct U.S.
Government obligations normally is not exempt from state taxation. Each Fund
will inform shareholders annually of the percentage of income and distributions
derived from direct U.S. Government 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 states.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated 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 the following funds: Institutional
Money Market Fund, Government Securities Fund, Louisiana Tax-Free Income Fund,
Strategic Income Bond Fund, Balanced Fund, Value Equity Fund, Growth Equity
Fund, Small Cap Equity Fund and International Equity Fund. All consideration
received by the Trust for shares of any fund and all assets of such fund belong
to that fund and would be subject to liabilities related thereto. The Trust
reserves the right to create and issue shares of additional funds.
The Trust pays its 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 Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 or by calling 1-800-471-1144.
<PAGE>
13
DIVIDENDS
The net investment income (not including capital gains) of a 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 each Fund, if any, will be distributed at least
annually. Dividends are paid by the Funds 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 Funds and associated risk factors. The only permitted
investments for the Treasury Fund include Repurchase Agreements and U.S.
Treasury obligations. 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 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.
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
Trustees,
<PAGE>
14
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 a Fund to treat
the income from the investment as exempt from federal income tax. The Tax
Exempt 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 receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts are sold as
zero coupon securities which means that they are sold at a substantial discount
and redeemed at face value at their maturity date without interim cash payments
of interest or principal. 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.
Receipts include Treasury Receipts ("TRs"), Treasury Investment Growth Receipts
("TIGRs"), and Certificates of Accrual on Treasury Securities ("CATS").
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 (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. 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, as amended.
<PAGE>
15
SECURITIES LENDING--In order to generate additional income, the Tax Exempt 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 a 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 a 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 a 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 Tax Exempt
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 may be considered to be
illiquid securities.
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
securities), others are supported by the right of the issuer to borrow from the
Treasury (e.g., Federal Farm Credit Bank securities), while still others are
supported only by the credit of the instrumentality (e.g., Federal National
Mortgage Association securities). Guarantees of principal by agencies or
instrumentalities of the 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 Tax Exempt Fund's shares.
U.S. GOVERNMENT SECURITIES--Any guaranty by the U.S. Government of the
securities in which a 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 Funds do not expect to trade STRIPS
actively.
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain of the obligations purchased by
the Tax Exempt Fund may carry variable or floating rates of interest, may
involve a conditional or unconditional
<PAGE>
16
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.
However, the Tax Exempt Fund may purchase securities on a when-issued or
delayed basis only when settlement takes place within 15 days of the purchase
of such securities. To the extent required by the 1940 Act, the Tax Exempt 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 Tax Exempt 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.
<PAGE>
<TABLE>
TABLE OF CONTENTS
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Summary..................................................................... 2
Expense Summary............................................................. 3
The Trust................................................................... 4
Investment Objective and Policies for the Treasury Fund..................... 4
Investment Objective and Policies for the Tax Exempt Fund................... 4
General Investment Policies................................................. 5
Investment Limitations...................................................... 5
Purchase of Shares.......................................................... 5
Exchanges................................................................... 7
Redemption of Shares........................................................ 7
The Adviser................................................................. 8
The Sub-Adviser............................................................. 9
The Administrator........................................................... 9
The Shareholder Servicing Agent and Transfer Agent.......................... 9
The Distributor............................................................. 10
Performance................................................................. 10
Taxes....................................................................... 11
General Information......................................................... 12
Description of Permitted Investments and Risk Factors....................... 13
</TABLE>
<PAGE>
MARQUIS FUNDS (R)
Investment Adviser:
FIRST NATIONAL BANK OF COMMERCE IN NEW ORLEANS
. GOVERNMENT SECURITIES FUND
. LOUISIANA TAX-FREE INCOME FUND
. STRATEGIC INCOME BOND FUND
. BALANCED FUND
. VALUE EQUITY FUND
. GROWTH EQUITY FUND
. SMALL CAP EQUITY FUND
. INTERNATIONAL 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 above
funds (collectively, 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.
The Small Cap Equity Fund currently seeks to achieve its objective of capital
appreciation by investing up to 100% of its assets in the Small Cap Growth
Portfolio, a separate series of SEI Institutional Managed Trust ("SIMT"), an
open-end management investment company advised by SEI Financial Management
Corporation ("SFM"), with an investment objective, investment policies and
restrictions identical to those of the Small Cap Equity Fund. The performance
of the Small Cap Equity Fund, therefore, will be directly related to the
performance of the Small Cap Growth Portfolio.
The International Equity Fund currently seeks to achieve its objective of
long-term capital appreciation by investing up to 100% of its assets in the
International Equity Portfolio, a separate series of SEI International Trust
("SIT"), an open-end management investment company advised by SFM, with an
investment objective, investment policies and restrictions identical to those
of the International Equity Fund. The performance of the International Equity
Fund, therefore, will be directly related to the performance of the
International Equity Portfolio.
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 1997 has been
filed with the Securities and Exchange Commission (the "SEC") and is available
without charge by calling 1-800-471-1144. 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, 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.
JANUARY 28, 1997
<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, Strategic Income Bond Fund (these three,
collectively, the "Fixed Income Funds"), Balanced Fund, Value Equity Fund,
Growth Equity Fund, Small Cap Equity Fund and International Equity Fund (these
five, collectively, the "Equity Funds"). 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 STRATEGIC INCOME BOND FUND
seeks to provide current income by investing primarily in investment grade
fixed income securities. 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 which have a low
current valuation relative to various measures of intrinsic value. The GROWTH
EQUITY FUND seeks to provide long-term capital appreciation by investing
primarily in companies whose sales end earnings are expected to grow at an
above average rate. The SMALL CAP EQUITY FUND seeks to provide long-term
capital appreciation by investing up to 100% of its assets in Class A shares
of the Small Cap Growth Portfolio of SIMT, which in turn invests primarily in
equity securities of smaller growth companies (i.e., companies with market
capitalizations of less than $1 billion at the time of purchase). The
INTERNATIONAL EQUITY FUND seeks to provide long-term capital appreciation by
investing up to 100% of its assets in Class A shares of the International
Equity Portfolio of SIT, which in turn invests primarily in a diversified
portfolio of equity securities of non-U.S. issuers. 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. The
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. The Small Cap Equity Fund and the
International Equity Fund (together, the "Feeder Funds") are currently
"feeder" funds in separate Corporate Master-Feeder(TM) structures. That is,
the Small Cap Equity Fund and International Equity Fund each invest in another
open-end management investment company and hold as their only investment
securities, shares of a single "master" fund, in this case, the Small Cap
Growth Portfolio and the International Equity Portfolio (together, the
"Portfolios"), respectively.
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.
<PAGE>
3
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 and reaching 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. With respect
to the Small Cap Equity Fund and the International Equity Fund, the Adviser
invests in a "master" fund, cash and other non-investment securities and
monitors the performance of SFM as the manager of the Small Cap Growth
Portfolio and the International Equity Portfolio. See "Expense Summary" and
"The Adviser."
WHO IS THE ADMINISTRATOR? SEI Fund Resources 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 ("SFS") 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>
4
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>
* A redemption charge of 1.00% will be assessed against the proceeds of any
redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such
redemption request is made within 1 year of the date the shares were
purchased. See "Alternative Sales Charge Options--Class A Shares."
ANNUAL OPERATING EXPENSES--CLASS A
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LOUISIANA STRATEGIC
GOVERNMENT TAX-FREE INCOME
SECURITIES INCOME BOND BALANCED VALUE EQUITY GROWTH EQUITY
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees (after
fee waivers) (1) .48% .27% .55% .66% .74% .64%
12b-1 Fees None None None None None None
Other Expenses (1)(2) .22% .38% .35% .24% .26% .36%
- --------------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers) (3) .70% .65% .90% .90% 1.00% 1.00%
============================================================================================
</TABLE>
(1) The Adviser has voluntarily agreed to waive its fee, and the Administrator
has voluntarily agreed to reimburse Other Expenses, to the extent
necessary to keep "Total Operating Expenses" from exceeding .70% for the
Government Securities Fund, .65% for the Louisiana Tax-Free Income Fund,
.90% for the Strategic Income Bond Fund, .90% for the Balanced Fund, 1.00%
for the Value Equity Fund and 1.00% for the Growth Equity Fund. The
Adviser and Administrator each reserves the right to terminate its waiver
or reimbursement, respectively, at any time in its sole discretion. Absent
such waivers, management fees would be as follows: Government Securities
Fund--.55%; Louisiana Tax-Free Income Fund--.35%; Strategic Income Bond
Fund--.74%; Balanced Fund--.74%, Value Equity Fund--.74% and Growth Equity
Fund--.74%.
(2) Other Expenses for the Growth Equity Fund and Strategic Income Bond Fund
are based on estimated amounts for the current fiscal year.
(3) Absent the Adviser's voluntary fee waiver and the Administrator's
voluntary fee reimbursement, Total Operating Expenses for Class A shares
would be as follows: Government Securities Fund--.80%; Louisiana Tax-Free
Income Fund--.75%; Strategic Income Bond Fund--1.09%; Balanced Fund--
1.01%; Value Equity Fund--1.02%; and Growth Equity Fund--1.12%. Total
Operating Expenses for the Government Securities Fund, Louisiana Tax-Free
Fund, Balanced Fund and Value Equity Fund have been restated to reflect
current fees.
<PAGE>
5
ANNUAL OPERATING EXPENSES--CLASS A
(as a percentage of average net assets)
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
EQUITY FUND EQUITY FUND
- ------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers) (1) 1.19% 1.15%
12b-1 Fees None None
Other Expenses (after fee reimbursements) (1)(2) .11% .40%
- ------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (1)(3) 1.30% 1.55%
==============================================================================
</TABLE>
(1) Management Fees include fees at the "master" level of 1.00% and .96% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and fees at the "feeder" level of .19% and .19% for the Small
Cap Equity Fund and the International Equity Fund, respectively. The
Adviser has voluntarily agreed to waive its fee, and the Administrator has
voluntarily agreed to reimburse Other Expenses, to the extent necessary to
keep the Total Operating Expenses at the feeder level from exceeding .20%
for the Small Cap Equity Fund and .27% for the International Equity Fund.
The Adviser and the Administrator each reserves the right to terminate its
waiver or reimbursement, respectively, at any time in its sole discretion.
Absent such waiver, Management Fees at the feeder level would be .40% for
the Small Cap Equity Fund and .40% for the International Equity Fund.
Absent such reimbursements, Other Expenses at the feeder level for the
Small Cap Equity Fund and International Equity Fund are estimated to be
.60% and .67%, respectively, for the current fiscal year.
(2) Other Expenses include expenses at the "master" level of .10% and .32% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and expenses at the "feeder" level of .01% and .08% for the
Small Cap Equity Fund and the International Equity Fund, respectively. The
Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee at the master level with respect to the
Portfolios and the Other Expenses shown reflect this waiver. The
Distributor reserves the right to terminate its waiver at any time in its
sole discretion. Absent such waivers, Other Expenses of the Small Cap
Growth Portfolio and International Equity Portfolio at the master level
would be .32% and .44%, respectively.
(3) Absent the master fund adviser's voluntary fee waivers, the Adviser's
voluntary fee waivers and the Administrator's voluntary reimbursements,
Total Operating Expenses are estimated to be as follows: Small Cap Equity
Fund--2.32%; and International Equity Fund--2.47%.
The Trustees believe that, because of the resultant economies of scale and
associated decreased expenses, the aggregate per share expenses of both the
Small Cap Equity Fund and International Equity Fund together with those of the
corresponding Portfolio will be approximately equal to the expenses the
respective Fund would incur if it invested directly in securities in which the
corresponding Portfolio invests.
<TABLE>
<CAPTION>
EXAMPLE
- ------------------------------------------------------------------------
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
Strategic Income Bond Fund $44 $63 N/A N/A
Balanced Fund $44 $63 $83 $142
Value Equity Fund $45 $66 $88 $153
Growth Equity Fund $45 $66 N/A N/A
Small Cap Equity Fund $48 $75 N/A N/A
International Equity Fund $50 $82 N/A N/A
========================================================================
</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. BECAUSE
THE STRATEGIC INCOME BOND, GROWTH EQUITY, SMALL CAP EQUITY AND INTERNATIONAL
EQUITY FUNDS WERE EITHER NOT OPERATIONAL OR HAD JUST RECENTLY BECOME
OPERATIONAL AS OF THE DATE OF THIS PROSPECTUS, THE FUNDS HAVE NOT PROJECTED
EXPENSES BEYOND THE THREE-YEAR PERIOD SHOWN.
<PAGE>
6
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."
<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--CLASS B
(as a percentage of average net assets)
<TABLE>
<CAPTION>
LOUISIANA STRATEGIC
GOVERNMENT TAX-FREE INCOME
SECURITIES INCOME BOND FUND BALANCED VALUE EQUITY GROWTH EQUITY
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Management Fees
(after fee waivers) (1) .48% .27% .55% .66% .74% .64%
12b-1 Fees .75% .75% .75% .75% .75% .75%
Other Expenses (1)(2) .22% .38% .35% .24% .26% .36%
- --------------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waivers) (3) 1.45% 1.40% 1.65% 1.65% 1.75% 1.75%
============================================================================================
</TABLE>
(1) The Adviser has voluntarily agreed to waive its fee, and the Administrator
has voluntarily agreed to reimburse Other Expenses, to the extent
necessary to keep "Total Operating Expenses" from exceeding 1.45% for the
Government Securities Fund, 1.40% for the Louisiana Tax-Free Income Fund,
1.65% for the Strategic Income Bond Fund and 1.65% for the Balanced Fund,
1.75% for the Value Equity Fund, and 1.75% for the Growth Equity Fund. The
Adviser and Administrator each reserves the right to terminate its waiver
or reimbursement, respectively, at any time in its sole discretion. Absent
such waivers, advisory fees would be as follows: Government Securities
Fund--.55%; Louisiana Tax-Free Income Fund--.35%; Strategic Income Bond
Fund--.74%; Balanced Fund--.74%, Value Equity Fund--.74% and Growth Equity
Fund--.74%.
(2) Other Expenses for the Growth Equity Fund and Strategic Income Bond Fund
are based on estimated amounts for the current fiscal year.
(3) Absent the Adviser's voluntary fee waiver and the Administrator's
voluntary fee reimbursement, Total Operating Expenses for Class B shares
would be as follows: Government Securities Fund--1.55%; Louisiana Tax-Free
Income Fund--1.50%; Strategic Income Bond Fund--1.84%; Balanced Fund--
1.76%; Value Equity Fund--1.77%; and Growth Equity Fund--1.87%. Total
Operating Expenses for the Government Securities Fund, Louisiana Tax-Free
Fund, Balanced Fund and Value Equity Fund have been restated to reflect
current fees.
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL
EQUITY FUND EQUITY FUND
- ------------------------------------------------------------------------------
<S> <C> <C>
Management Fees (after fee waivers)(1) 1.19% 1.15%
12b-1 Fees .75% .75%
Other Expenses (after fee reimbursements)(1)(2) .11% .40%
- ------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (1)(3) 2.05% 2.30%
==============================================================================
</TABLE>
(1) Management Fees include fees at the "master" level of 1.00% and .96% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and fees at the "feeder" level of .19% and .19% for the
Small Cap Equity Fund and the International Equity Fund, respectively. The
Adviser has voluntarily agreed to waive its fee, and the Administrator has
voluntarily agreed to reimburse Other Expenses, to the extent necessary to
keep the Total Operating Expenses at the feeder level from exceeding .20%
for the Small Cap Equity Fund and .27% for the International Equity Fund.
The Adviser and the Administrator each reserves the right to terminate its
waiver or reimbursement, respectively, at any time in its sole discretion.
Absent such waiver, Management Fees at the feeder level would be .40% for
the Small Cap Equity Fund and .40% for the International Equity Fund.
Absent such reimbursements, Other Expenses at the feeder level for the
Small Cap Equity Fund and International Equity Fund are estimated to be
.60% and .67%, respectively, for the current fiscal year.
<PAGE>
7
(2) Other Expenses include expenses at the "master" level of .10% and .32% for
the Small Cap Growth Portfolio and the International Equity Portfolio,
respectively, and expenses at the "feeder" level of .01% and .08% for the
Small Cap Equity Fund and the International Equity Fund, respectively. The
Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee at the master level with respect to the
Portfolios and the Other Expenses shown reflect this waiver. The
Distributor reserves the right to terminate its waiver at any time in its
sole discretion. Absent such waivers, Other Expenses of the Small Cap
Growth Portfolio and International Equity Portfolio at the master level
would be .32% and .44%, respectively.
(3) Absent the master fund adviser's voluntary fee waivers, the Adviser's
voluntary fee waivers and the Administrator's voluntary reimbursements,
Total Operating Expenses are estimated to be as follows: Small Cap Equity
Fund--3.07%; and International Equity Fund--3.22%.
The Trustees believe that, because of the resultant economies of scale and
associated decreased expenses, the aggregate per share expenses of both of the
Small Cap Equity Fund and International Equity Fund together with those of the
corresponding Portfolio will be approximately equal to the expenses the
respective Fund would incur if it invested directly in securities in which the
corresponding Portfolio invests.
<TABLE>
<CAPTION>
EXAMPLE
- -------------------------------------------------------------------------------
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 $125*
Assuming no redemptions $15 $46 $ 79 $125*
Louisiana Tax-Free Income Fund
Assuming a complete redemption at end
of period $49 $64 $ 82 $119*
Assuming no redemptions $14 $44 $ 77 $119*
Strategic Income Bond Fund
Assuming a complete redemption at end
of period $52 $72 N/A N/A
Assuming no redemptions $17 $52 N/A N/A
Balanced Fund
Assuming a complete redemption at end
of period $52 $72 $ 95 $147*
Assuming no redemptions $17 $52 $ 90 $147*
Value Equity Fund
Assuming a complete redemption at end
of period $53 $75 $100 $159*
Assuming no redemptions $18 $55 $ 95 $159*
Growth Equity Fund
Assuming a complete redemption at end
of period $53 $75 N/A N/A
Assuming no redemptions $18 $55 N/A N/A
Small Cap Equity Fund
Assuming a complete redemption at end
of period $56 $84 N/A N/A
Assuming no redemptions $21 $64 N/A N/A
International Equity Fund
Assuming a complete redemption at end
of period $58 $92 N/A N/A
Assuming no redemptions $23 $72 N/A N/A
==============================================================================
</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. BECAUSE
THE STRATEGIC INCOME BOND, GROWTH EQUITY, SMALL CAP EQUITY AND INTERNATIONAL
EQUITY FUNDS WERE EITHER NOT OPERATIONAL OR HAD JUST RECENTLY BECOME
OPERATIONAL AS OF THE DATE OF THIS PROSPECTUS, THE FUNDS HAVE NOT PROJECTED
EXPENSES BEYOND THE THREE-YEAR PERIOD SHOWN.
* Class B shares automatically convert to Class A shares after 5 years.
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 Conduct Rules.
<PAGE>
8
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 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 1996 Annual Report to Shareholders and is available upon
request and without charge by calling 1-800-471-1144. The Strategic Income
Bond, Small Cap Equity and International Equity Funds had not commenced
operations as of September 30, 1996.
For a Class A Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
REALIZED RATIO OF RATIO OF RATIO OF
AND NET NET EXPENSES NET EXPENSES
NET ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS TO INVESTMENT TO AVERAGE
VALUE NET GAINS OR FROM NET FROM VALUE END OF AVERAGE INCOME TO NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD NET AVERAGE (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) ASSETS NET ASSETS WAIVERS)
--------- ---------- ----------- ------------- ------------- ------ ------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND CLASS A
1996 $ 9.87 $0.55 $(0.16) $(0.55) $ -- $ 9.71 4.10% $160,317 0.70% 5.53% 0.79%
1995 9.41 0.54 0.46 (0.54) -- 9.87 10.84 124,404 0.70 5.63 0.84
1994 10.00 0.43 (0.59) (0.43) -- 9.41 (1.66) 97,562 0.70 4.43 0.90
LOUISIANA TAX-FREE INCOME FUND CLASS A
1996 $ 9.79 $0.42 $ -- $(0.42) $ -- $ 9.79 4.48% $ 20,937 0.65% 4.38% 0.75%
1995 9.38 0.42 0.41 (0.42) -- 9.79 9.01 11,705 0.65 4.51 0.95
1994 10.00 0.36 (0.62) (0.36) -- 9.38 (2.68) 6,971 0.65 4.10 1.72
BALANCED FUND CLASS A
1996 $10.87 $0.38 $ 0.59 $(0.38) $(0.15) $11.31 9.11% $114,384 0.89% 3.53% 1.01%
1995 9.59 0.37 1.28 (0.37) -- 10.87 17.58 87,076 0.85 3.70 1.04
1994 10.00 0.31 (0.41) (0.31) -- 9.59 (1.02) 71,379 0.85 3.18 1.14
VALUE EQUITY FUND CLASS A
1996 $11.81 $0.25 $ 1.30 $(0.25) $(0.18) $12.93 13.38% $ 93,508 0.97% 2.12% 1.02%
1995 9.65 0.24 2.16 (0.24) -- 11.81 25.13 58,854 0.90 2.40 1.07
1994 10.00 0.18 (0.35) (0.18) -- 9.65 (1.64) 41,922 0.90 1.95 1.17
GROWTH EQUITY FUND CLASS A
1996(1) $11.00 $0.05 $ 1.10 $(0.05) $ -- $12.10 10.46% $ 18,400 1.00%* 0.73%* 1.12%*
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS PORTFOLIO AVERAGE
(EXCLUDING TURNOVER COMMISSION
WAIVERS) RATE RATE**
---------- ---------- ----------
<S> <C> <C> <C>
GOVERNMENT SECURITIES FUND CLASS A
1996 5.44% 22.80% n/a
1995 5.49 18.33 n/a
1994 4.23 37.80 n/a
LOUISIANA TAX-FREE INCOME FUND CLASS A
1996 4.28% 8.26% n/a
1995 4.21 2.31 n/a
1994 3.03 30.31 n/a
BALANCED FUND CLASS A
1996 3.41% 57.22% $.0794
1995 3.51 55.06 n/a
1994 2.89 64.09 n/a
VALUE EQUITY FUND CLASS A
1996 2.07% 95.93% $.0795
1995 2.23 97.88 n/a
1994 1.68 161.42 n/a
GROWTH EQUITY FUND CLASS A
1996(1) 0.61%* 91.09%* $.0797
</TABLE>
- --------
+ Total Return does not reflect sales load on Class A shares.
* Annualized.
** Average commission rate paid for security purchases and sales during the
period. Presentation of the rate is only required for fiscal years beginning
after September 1, 1995.
(1) Commenced operations on March 1, 1996.
<PAGE>
9
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 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 1996 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144. The
Strategic Income Bond, Small Cap Equity and International Equity Funds had not
commenced operations as of September 30, 1996.
For a Class B Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
RATIO OF
REALIZED RATIO OF NET RATIO OF
AND NET NET EXPENSES INVESTMENT EXPENSES
NET ASSET UNREALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET ASSETS TO INCOME TO TO AVERAGE
VALUE NET GAINS OR FROM NET FROM VALUE END OF AVERAGE AVERAGE NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL END OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD INCOME INVESTMENTS INCOME GAINS PERIOD RETURN+ (000) ASSETS ASSETS WAIVERS)
--------- ---------- ----------- ------------- ------------- ------ ------- ------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT SECURITIES FUND CLASS B
1996 $ 9.92 $0.46 $(0.15) $(0.47) $ -- $ 9.76 3.23% $ 523 1.45% 4.81% 1.54%
1995 9.46 0.46 0.47 (0.47) -- 9.92 10.10 244 1.45 4.86 1.59
1994 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 B
1996 $ 9.79 $0.35 $ -- $(0.35) $ -- $ 9.79 3.60% $ 727 1.40% 3.62% 1.50%
1995 9.39 0.35 0.40 (0.35) -- 9.79 8.21 567 1.40 3.77 1.70
1994 9.87 0.27 (0.48) (0.27) -- 9.39 (2.58)* 601 1.40* 3.35* 2.47*
BALANCED FUND CLASS B
1996 $10.93 $0.30 $ 0.59 $(0.30) $(0.15) $11.37 8.30% $1,996 1.64% 2.80% 1.76%
1995 9.64 0.30 1.29 (0.30) -- 10.93 16.75 1,137 1.60 2.95 1.79
1994 10.03 0.18 (0.39) (0.18) -- 9.64 (2.24)* 868 1.60* 2.55* 1.94*
VALUE EQUITY FUND CLASS B
1996 $11.86 $0.17 $ 1.29 $(0.17) $(0.18) $12.97 12.49% $3,990 1.73% 1.37% 1.77%
1995 9.70 0.15 2.17 (0.16) -- 11.86 24.17 1,288 1.65 1.62 1.82
1994 9.95 0.08 (0.25) (0.08) -- 9.70 (1.82)* 389 1.65* 1.30* 1.93*
GROWTH EQUITY FUND CLASS B
1996(1) $11.14 $0.01 $ 0.93 $(0.01) $ -- $12.07 8.48% $ 152 1.75%* (0.02)* 1.87%*
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME TO
AVERAGE
NET ASSETS PORTFOLIO AVERAGE
(EXCLUDING TURNOVER COMMISSION
WAIVERS) RATE RATE**
---------- --------- ----------
<S> <C> <C> <C>
GOVERNMENT SECURITIES FUND CLASS B
1996 4.72% 22.80% n/a
1995 4.72 18.33 n/a
1994 3.64* 37.80 n/a
LOUISIANA TAX-FREE INCOME FUND CLASS B
1996 3.52% 8.26% n/a
1995 3.47 2.31 n/a
1994 2.28* 30.31 n/a
BALANCED FUND CLASS B
1996 2.68% 57.22% $.0794
1995 2.76 55.06 n/a
1994 2.21* 64.09 n/a
VALUE EQUITY FUND CLASS B
1996 1.33% 95.93% $0.795
1995 1.45 97.88 n/a
1994 1.02* 161.42 n/a
GROWTH EQUITY FUND CLASS B
1996(1) (0.14)* 91.09% $.0797
</TABLE>
- --------
+ Total return does not reflect contingent deferred sales charge on Class B
shares.
* Annualized.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal
years beginning after September 1, 1995.
(1) Commenced operations on April 19, 1996.
9
<PAGE>
10
FINANCIAL HIGHLIGHTS
The following are financial highlights of the Small Cap Growth Portfolio of
SIMT for a share outstanding throughout the periods indicated. This
information should be read in conjunction with SIMT's financial statements as
of, and for the fiscal year ended, September 30, 1996 and notes thereto which
have been audited by Price Waterhouse LLP, independent accountants, which are
incorporated by reference into this Statement of Additional Information.
Additional performance information is set forth in SIMT's 1996 Annual Report
to Shareholders and is available upon request and without charge by calling 1-
800-342-5734.
For a Class A Share Outstanding Throughout the Period ended September 30,
<TABLE>
<CAPTION>
RATIO OF
NET RATIO RATIO OF EXPENSES
REALIZED NET OF NET TO
AND DISTRIBUTIONS DISTRIBUTIONS ASSET NET EXPENSES INVESTMENT AVERAGE
NET ASSET NET UNREALIZED FROM FROM VALUE ASSETS TO INCOME (LOSS) NET
VALUE INVESTMENT GAINS NET REALIZED END END OF AVERAGE TO AVERAGE ASSETS
BEGINNING INCOME (LOSSES ON INVESTMENT CAPITAL OF TOTAL PERIOD NET NET (EXCLUDING
OF PERIOD (LOSS) SECURITIES) INCOME GAINS PERIOD RETURN* (000) ASSETS ASSETS WAIVERS)
--------- ---------- ----------- ------------- ------------- ------ ------ -------- -------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP GROWTH PORTFOLIO CLASS A
1996 $19.88 $(0.08) $4.37 $ -- $ 3.66 $20.51 26.56% $380,525 1.10% (0.63)% 1.11%
1995 14.04 (0.14) 5.98 -- -- 19.88 41.65% 310,238 1.10% (0.60)% 1.13%
1994 14.67 (0.05) 0.07 -- (0.65) 14.04 0.23% 300,296 1.01% (0.51)% 1.11%
1993 10.65 (0.02) 4.05 (0.01) -- 14.67 37.81% 193,816 0.97% (0.25)% 1.14%
1992(1) 10.00 0.02 0.65 (0.02) -- 10.65 15.07% 36,191 0.97% 0.49% 1.29%
<CAPTION>
RATIO OF
NET
INVESTMENT
INCOME
(LOSS)
TO AVERAGE
NET AVERAGE
ASSETS PORTFOLIO COMM-
(EXCLUDING TURNOVER ISSION
WAIVERS) RATE RATE**
---------- --------- -------
<S> <C> <C> <C>
SMALL CAP GROWTH PORTFOLIO CLASS A
1996 (0.64)% 167% $0.0529
1995 (0.63)% 113% N/A
1994 (0.61)% 97% N/A
1993 (0.42)% 85% N/A
1992(1) 0.17% 33% N/A
</TABLE>
- --------
* Sales load is not reflected in total return.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal
years beginning after September 1, 1995.
(1) Small Cap Growth Class A shares were offered beginning April 20, 1992. All
ratios including total return for that period have been annualized.
The following financial highlights of the International Equity Portfolio of
SIT for a share outstanding throughout the periods indicated. This information
should be read in conjunction with SIT's 1)unaudited financial statements as
of, and for the period ended, August 31, 1996 and notes thereto which are
incorporated by reference into the Statement of Additional Information and 2)
financial statements as of, and for the fiscal year ended, February 29, 1996
and notes thereto which have been audited by Price Waterhouse LLP, independent
accountants, which are incorporated by reference into this Statement of
Additional Information. Additional performance information is set forth in
SIT's 1996 Semi-Annual Report to Shareholders and is available upon request
and without charge by calling 1-800-342-5734.
For a Class A Share Outstanding Throughout each Period ended February 28 or
29,
<TABLE>
<CAPTION>
RATIO RATIO OF
NET NET OF NET
REALIZED DISTRIBUTIONS DISTRIBUTIONS ASSET NET EXPENSES INVESTMENT
NET ASSET NET AND FROM FROM VALUE ASSETS TO INCOME (LOSS)
VALUE INVESTMENT UNREALIZED NET REALIZED RETURN END END OF AVERAGE TO AVERAGE
BEGINNING INCOME GAINS INVESTMENT CAPITAL OF OF TOTAL PERIOD NET NET
OF PERIOD (LOSS) (LOSSES) INCOME(A) GAINS CAPITAL PERIOD RETURN (000) ASSETS ASSETS
--------- ---------- ---------- ------------- ------------- ------- ------ ------ -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO CLASS A
1996* $10.00 $0.09 $ 0.12 $ -- $ -- $ -- $10.21 2.10% $449,655 1.27% 1.78%
1996 9.59 0.14 1.45 (0.19) (0.99) -- 10.00 17.30 347,646 1.25 1.29
1995 11.00 0.15 (0.97) -- (0.59) -- 9.59 (7.67) 328,503 1.19 1.30
1994 8.93 0.13 2.05 (0.11) -- -- 11.00 24.44 503,498 1.10 1.46
1993 9.09 0.16 0.04 (0.36) -- -- 8.93 2.17 178,287 1.10 1.80
1992 9.56 0.19 (0.36) (0.30) -- -- 9.09 (1.63) 92,456 1.10 2.07
1991 9.62 0.18 (0.14) -- (0.01) (0.09) 9.65 0.36 35,829 1.10 3.52
1990(1) 10.00 0.04 (0.42) -- -- -- 9.62 (3.70) 8,661 1.10 3.13
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES INCOME
TO (LOSS)
AVERAGE TO AVERAGE
NET NET AVERAGE
ASSETS ASSETS PORTFOLIO COMM-
(EXCLUDING (EXCLUDING TURNOVER ISSION
WAIVERS) WAIVERS) RATE RATE**
---------- ---------- --------- -------
<S> <C> <C> <C> <C>
INTERNATIONAL EQUITY PORTFOLIO CLASS A
1996* 1.31% 1.74% 54% N/A
1996 1.29 1.25 102 N/A
1995 1.21 1.28 64 N/A
1994 1.24 1.32 19 N/A
1993 1.53 1.37 23 N/A
1992 1.52 1.63 79 N/A
1991 1.64 2.98 14 N/A
1990(1) 5.67 (1.44) -- N/A
</TABLE>
- --------
* For the six month period ended August 31, 1996 (unaudited). All ratios,
excluding total return, for that period have been annualized. Amounts
designated as "----" are either $0 or have been rounded to $0.
** Average commission rate paid per share for security purchases and sales
during the period. Presentation of the rate is only required for fiscal
years beginning after September 1, 1995.
(1) International Equity (formerly the Core International Equity Portfolio)
Class A shares were offered beginning December 20, 1989. All ratios for
that period have been annualized.
(A) Distributions from net investment income include distributions of certain
foreign currency gains and losses.
<PAGE>
11
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 and each Portfolio 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 1-800-471-1144.
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 (an "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 an 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>
12
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. Further
difficulties may result from the uncertain state of the land-based casino
industry in New Orleans.
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. Louisiana's economy in 1995, compared to 1994, was in a period
of economic expansion. The state is also pursuing further development of its
transportation capabilities by expanding port-related activities and improving
its highways and airports.
General obligations of Louisiana are currently rated AAA and Aaa, by Standard &
Poor's Corporation ("S&P") and Moody's Investor Services, Inc. ("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 mutual
fund, may entail greater risk than would investment in a diversified mutual
fund. 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 STRATEGIC INCOME BOND FUND seeks to provide current income.
Under normal conditions, the Fund will invest at least 65% of its net assets in
fixed income securities that are rated investment grade or higher, i.e., rated
in one of the four highest rating categories by an NRSRO, at the time of
purchase, or, if not rated, determined to be of comparable quality by the
Adviser. Emphasis in the Fund will generally be in U.S. Government securities
and investment grade corporate obligations of U.S. issuers. Additional fixed
income securities in which the Fund may invest consist of: (i) mortgage-backed
securities, (ii) obligations issued by the Canadian government, (iii) asset-
backed securities, (iv) guaranteed investment contracts ("GICs"), (v) bank
investment contracts ("BICs"), (vi) zero coupon obligations, (vii) floating or
variable rate instruments, (viii) money market securities; (ix) convertible
securities, (x) restricted securities, and (xi) other investment companies. The
Fund may enter into repurchase agreements with respect to any of the foregoing
and purchase securities subject to swaps, caps, floors and collars.
Normally, the Fund will maintain a dollar-weighted average portfolio maturity
of greater than 10 years; however, under certain circumstances, this average
weighted maturity may fall below 10 years. There are no restrictions on the
maturity of any single instrument.
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
<PAGE>
13
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.
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 by
investing primarily in equity securities which have a low current valuation
relative to various measures of intrinsic value.
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 for liquidity purposes.
THE GROWTH EQUITY FUND seeks to provide long-term capital appreciation by
investing primarily in companies whose sales and earnings are expected to grow
at an above average rate.
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 long-
term capital appreciation and growth. 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 liquidity purposes.
THE SMALL CAP EQUITY FUND seeks to provide long-term capital appreciation. It
currently pursues this objective by investing up to 100% of its assets in the
Small Cap Growth Portfolio of SIMT, which has an identical objective.
<PAGE>
14
Under normal market conditions, the Small Cap Growth Portfolio will invest at
least 65% of its total assets in the equity securities of smaller growth
companies (i.e., companies with market capitalizations less than $1 billion)
which, in the opinion of the Portfolio's sub-advisors (the "Money Managers"),
are in an early stage or transitional point in their development and have
demonstrated or have the potential for above average capital growth. The Money
Managers will select companies that have the potential to gain market share in
their industry, achieve and maintain high and consistent profitability or
produce increases in earnings. The Money Managers also seek companies with
strong company management and superior fundamental strength. Small
capitalization companies have the potential to show earnings growth over time
that is well above the growth rate of the overall economy. Any remaining assets
may be invested in the equity securities of more established companies that the
Money Managers believe may offer strong capital appreciation potential due to
their relative market position, anticipated earnings growth, changes in
management or other similar opportunities. Equity securities include common
stock, preferred stock, warrants and rights to subscribe to common stock and,
in general, any security that is convertible into or exchangeable for common
stock. The Portfolio may also invest in equity securities of foreign issuers
traded in the United States, including ADRs.
In order to meet liquidity needs, or for temporary defensive purposes, the
Portfolio may invest all or a portion of its assets in common stocks of larger,
more established companies, fixed income securities, cash or money market
securities. Fixed income securities will only be purchased if they are rated
investment grade or better.
The Small Cap Growth Portfolio's annual turnover rate may exceed 100%. Such a
turnover rate may result in higher transaction costs and may result in
additional taxes for shareholders. See "Taxes."
THE INTERNATIONAL EQUITY FUND seeks to provide long-term capital appreciation.
It currently pursues this objective by investing up to 100% of its assets in
the International Equity Portfolio of SIT, which has an identical objective.
Securities of non-U.S. issuers purchased by the International Equity Portfolio
will typically be listed on recognized foreign exchanges but also may be
purchased in foreign markets, on U.S. registered exchanges, in the over-the-
counter market or in the form of sponsored or unsponsored ADRs traded on
registered exchanges or NASDAQ, or sponsored or unsponsored European Depositary
Receipts ("EDRs"), Continental Depositary Receipts ("CDRs") or Global
Depositary Receipts ("GDRs"). The Portfolio expects its investments to
emphasize both large and intermediate capitalization companies.
The International Equity Portfolio may enter into forward foreign currency
contracts as a hedge against possible variations in foreign exchange rates. A
forward foreign currency contract is a commitment to purchase or sell a
specified currency, at a specified future date, at a specified price. The
Portfolio may enter into forward foreign currency contracts to hedge a specific
security transaction or to hedge a portfolio position. These contracts may be
bought or sold to protect the Portfolio, to some degree, against a possible
loss resulting from an adverse change in the relationship between foreign
currencies and the U.S. dollar. The Portfolio also may invest in options on
currencies.
The International Equity Portfolio expects to be fully invested in its primary
investments, described above, but may invest up to 35% of its total assets in
U.S. or non-U.S. cash reserves: money market instruments; swaps; options on
securities, non-U.S. Indices and currencies; futures contracts, including stock
index futures contracts; and options on futures contracts.
The International Equity Portfolio may invest in money market securities. The
Portfolio is also permitted to acquire floating and variable rate securities,
purchase securities on a when-issued or delayed delivery basis, and invest up
to 10% of its total assets in illiquid securities. The Portfolio may sell
securities short "against the box." Although permitted to do so, the Portfolio
does not currently intend to invest in securities issued by passive foreign
investment companies or to engage in securities lending. For a more detailed
description
<PAGE>
15
of the International Equity Portfolio's investment objective and policies, see
the Portfolio's prospectus.
GENERAL INVESTMENT POLICIES
For temporary defensive purposes when the Adviser or, with respect to the Small
Cap Growth Portfolio, SFM or the Money Managers determines that market
conditions warrant, each Fund and the Small Cap Growth Portfolio may invest up
to 100% of its assets in money market securities and cash. For temporary
defensive purposes, when SFM and the Money Managers determine that market
conditions warrant, the International Equity Portfolio may invest up to 50% of
its assets in money market securites and in other U.S. and non-U.S. long- and
short-term debt instruments which are rated BBB or higher by S&P or Baa or
higher by Moody's at the time of purchase, or which are determined by the Money
Managers to be of comparable quality; invest a portion of such assets in cash;
and invest such assets in securities of supranational entities which are rated
A or higher by S&P or Moody's at the time of purchase or which are determined
by the Money Managers to be of comparable quality. Additionally, with respect
to the Small Cap Equity Fund or International Equity Fund, for temporary
defensive purposes or to maintain the respective Fund's status as a regulated
investment company under the Internal Revenue Code, the Adviser may invest up
to 100% of such Fund's assets in cash and other non-investment securities.To
the extent a Fund or Portfolio is investing for temporary defensive purposes,
the Fund or Portfolio will not be pursuing its investment objective. Each Fund
except the Value Equity Fund and Growth Equity Fund, and the International
Equity Portfolio, may purchase securities on a when-issued or delayed delivery
basis.
In order to generate additional income, each Fund or Portfolio may lend the
securities which it owns. The International Equity Portfolio does not currently
intend to engage in securities lending. All Funds and Portfolios may invest in
repurchase agreements.
Debt rated in the fourth highest ratings category such as BBB by S&P or Baa by
Moody's is regarded as having an adequate capacity to pay interest and repay
principal. Such securities are considered to have speculative characteristics.
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 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. The
Portfolios have adopted fundamental policies that are similar to these
policies.
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
<PAGE>
16
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.
For purposes of the industry concentration limitations discussed above, the
following definitions apply to the International Equity Portfolio; these
definitions form part of the fundamental 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 end users of
their services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; (iii) supranational
agencies will be deemed to be issuers conducting their principal business
activities in the same industry; and (iv) governmental issuers within a
particular country will be deemed to be conducting their principal business in
the same industry.
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., or an
authorized sub-transfer agent (collectively, the "Transfer Agent") by mail, by
wire or through an automatic investment plan ("AIP"). Shares may also be
purchased through broker-dealers, including Marquis Investments, LLC, that have
established a dealer agreement with SEI Financial Services Company, the Trust's
distributor ("SFS" or the "Distributor"). Shares of the Fund are sold on a
continuous basis.
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 Marquis Funds at PO Box 419316, Kansas City, MO 64141-6316. Third
party checks, credit cards, credit card checks and cash will not be accepted.
When purchases are made by check, redemption proceeds will not be forwarded
until the investment being redeemed has been in the account for 15 days. You
may purchase additional shares at any time by mailing payment to the Transfer
Agent. 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 1-800-471-1144.
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 the Transfer
Agent and the wire instructions must include your account number. You must call
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 the
Transfer Agent prior to 3:00 p.m., Central time. If the Transfer Agent 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.
HOW TO PURCHASE THROUGH AN AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Funds through
automatic
<PAGE>
17
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 calling
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
Adviser 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 call 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 Transfer
Agent for effectiveness the same day. Customers should contact their financial
institution for information as to that institution's procedures for
transmitting purchase, exchange or redemption orders to the Trust.
Customers who desire to transfer the registration of shares beneficially owned
by them but held of record by a financial institution should contact the
institution to accomplish the transfer.
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. Certain of these financial institutions may be required under
state law to register as broker/dealers.
<PAGE>
18
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), (iii)
only Class B shares carry a conversion feature and (iv) 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% 3.50%
$100,000 but less than $250,000 2.50% 2.56% 2.50%
$250,000 but less than $500,000 2.00% 2.04% 2.00%
$500,000 but less than $1,000,000 1.50% 1.52% 1.50%
*$1,000,000 and above none none none
</TABLE>
* A redemption charge of 1.00% will be assessed against the proceeds of any
redemption request relating to Class A shares of the Funds that were
purchased without a sales charge in reliance upon the waiver accorded to
purchases in the amount of $1 million or more, but only where such redemption
request is made within 1 year of the date the shares were purchased. The
charge will be based on the lesser of: (i) the net asset value of your
redeemed Class A shares at the time of redemption, or (ii) the net asset
value of your redeemed shares at the time of purchase. The redemption charge
does not apply to shares acquired through the reinvestment of dividends. This
charge is payable to the Distributor.
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 to financial intermediaries through which sales are made. The
Distributor may, from time to time in its sole discretion, institute one or
more promotional
<PAGE>
19
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 may provide promotional incentives, in the form of cash or
other compensation, including merchandise, airline vouchers, trips and vacation
packages, to dealers selling shares of the Funds. Such promotional incentives
will be predicated upon the amount of shares of the Funds sold by the dealer.
The amount of the entire sales charge will be paid to financial institutions.
Financial institutions that receive more than 90% of the sales charge may be
considered "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.
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 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.
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 for Class A shares as described below or at the time of any
exchanges of Class B shares; (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
<PAGE>
20
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; (vii) purchased within thirty days of a
redemption of Class A shares of such Funds (only to the amount of such
redemption); (viii) sold to purchasers of Class A shares of the Value Equity
Fund that are sponsors of other investment companies which are unit investment
trusts for deposit by such sponsors into such unit investment trusts, and
purchasers of Class A shares of the Value Equity Fund that are holders of such
unit investment trusts that invest distributions from such unit investment
trusts in Class A shares of the Value Equity Fund; (ix) purchased within thirty
days of a redemption of Class B shares of such Funds for which the contingent
deferred sales charge was paid (only to the amount of such redemption); or (x)
sold to clients who have enrolled in asset allocation programs sponsored or
operated by the Adviser or subsidiaries, affiliates and correspondents of First
Commerce Corporation. 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 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 Class B shares held for
over five years or Class B shares acquired pursuant to reinvestment of
dividends or other distributions and third of Class B 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
<PAGE>
21
shares of the Treasury Securities Money Market Fund and Tax Exempt 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 the Transfer Agent. If an Exchange Request in good order is
received by the Transfer Agent 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 the Transfer Agent 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 60 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
institution for information on how to redeem shares.
BY MAIL
A written request for redemption must be received by the Transfer Agent 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, the Transfer Agent 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. A notary 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
1-800-471-1144, however a wire charge of $25 will be deducted from the amount
of the wire redemption. Shares cannot be redeemed by Federal Reserve wire on
Federal holidays restricting wire transfers.
Neither the Transfer Agent 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 the Transfer Agent will
each employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of personal identification
prior to acting upon instructions received by telephone and recording telephone
instructions. 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.
<PAGE>
22
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 calling 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 the Transfer Agent.
It is generally not in your best interest to participate in the SWP if you
purchase additional shares at the same time and 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.
Payment to shareholders for shares redeemed will be made within 7 days after
the Transfer Agent 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. When purchases are made by check, redemption proceeds
will not be forwarded until the investment being redeemed has been in the
account for fifteen days.
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"), 201 St. Charles
Avenue, New Orleans, Louisiana 70170, 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. With respect to the Small Cap Equity
Fund and International Equity Fund, the Adviser invests in a "master" fund,
cash and other non-investment securities and monitors the performance of SFM,
the manager of both the Small Cap Growth Portfolio and the International Equity
Portfolio, and has authority to recommend to the Trustees changes in the
underlying master fund. Should the Funds withdraw from the Corporate Master-
Feeder(TM) structure, the Adviser may manage the assets of the Small Cap Equity
Fund and International Equity Fund directly as it deems
<PAGE>
23
appropriate after consultation with the Trustees of the Trust. See "Small Cap
Growth and International Equity Portfolios" below.
As of September 30, 1996, the Adviser's Trust Group managed approximately $2.3
billion in discretionary investment management accounts for individuals,
corporations and institutions with widely varying investment needs and
objectives. 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 Strategic
Income Bond Fund, Balanced Fund, Value Equity Fund and Growth Equity Fund, .35%
of the average daily net assets of the Louisiana Fund, .40% of the average
daily net assets of each of the Small Cap Equity Fund and International Equity
Fund. Each Feeder Fund's shareholders will bear their pro rata portion of the
respective Portfolio's advisory fees. 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. Should the Adviser determine that the
Small Cap Equity Fund and/or the International Equity Fund should no longer
remain in a Corporate Master-Feeder(TM) structure, the Adviser will manage all
of the investments for such Fund(s). At that time, the Adviser would be
entitled to a fee, calculated daily and paid monthly, at an annual rate of .90%
of the average daily net assets of the Small Cap Equity Fund and/or 1.10% of
the average daily net assets of the International Equity Fund.
For the fiscal year ended September 30, 1996, the Adviser was paid an advisory
fee of .47% of the Government Securities Fund, .27% of the Louisiana Tax-Free
Income Fund, .64% of the Balanced Fund, .69% of the Value Equity Fund and .64%
of the Growth Equity Fund, based on each Fund's average net assets. The
Strategic Income Bond, Small Cap Equity and International Equity Funds had not
commenced operations as of September 30, 1996.
John C. Portwood, CFA, Senior Vice President of the Adviser, shares oversight
responsibility of the portfolio managers of all the Funds since the Funds'
inception. He serves as portfolio manager of the Growth Equity Fund and as co-
manager of the Value Equity Fund. Mr. Portwood is the Chief Investment
Strategist of the Adviser's Trust Group, with over 28 years of investment
management experience and the past eight with the Adviser.
Kevin P. Reed, Senior Vice President of the Adviser and Manager of the Trust
Investment Division, shares oversight responsibility of the portfolio managers
of all the Funds and has been the portfolio manager for the Government
Securities Fund, the Louisiana Tax-Free Income Fund, and co-manager of the
Balanced Fund since their inception. For the past twelve years, Mr. Reed has
been a portfolio manager with the Adviser's Trust Investment Division.
Gerald S. Dugal, Vice President and a senior portfolio manager of the Adviser,
is the portfolio manager of the Treasury Securities Money Market Fund, the
Institutional Money Market Fund, Strategic Income Bond Fund and the Tax Exempt
Money Market Fund. During the past five years, Mr. Dugal served as a senior
portfolio manager and Director of Fixed Income and Trading with the Adviser.
Mr. Dugal has over 10 years of experience in portfolio management, investment
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24
trading, brokerage, and research. He is licensed as a general securities
principal and a municipal securities principal.
Gregory W. Hodlewsky, Vice President of the Adviser, serves as co-manager of
the Value Equity Fund and the Balanced Fund. Mr. Hodlewsky is a senior
portfolio manager and Manager of Equities and Quantitative Research with the
Adviser. Mr. Hodlewsky has 10 years of experience in portfolio management,
investment trading and research. Mr. Hodlewsky joined the Adviser in 1994 and
prior thereto was employed by Nationsbank.
SMALL CAP GROWTH AND INTERNATIONAL EQUITY PORTFOLIOS
SFM serves as the Manager of the Small Cap Growth Portfolio and International
Equity Portfolio. SFM is a wholly-owned subsidiary of SEI Investments Company
("SEI"), a financial services company located in Oaks, Pennsylvania. The
principal business address of SFM is Oaks, Pennsylvania, 19456. SEI was founded
in 1968, and is a leading provider of investment solutions to banks,
institutional investors, investment advisers and insurance companies.
Affiliates of SFM have provided consulting advice to institutional investors
for more than 20 years, including advice regarding selection and evaluation of
money managers. SFM currently serves as manager or administrator to more than
40 investment companies, including more than 290 funds, with more than $68
billion in assets as of September 30, 1996.
SFM operates as a "manager of managers" with respect to the Small Cap Growth
Portfolio, a separate series of SIMT, and the International Equity Portfolio, a
separate series of SIT, and SFM oversees the investment advisory services
provided to each Portfolio and manages the cash portion of each Portfolio's
assets. Pursuant to separate sub-advisory agreements with SFM, and under the
supervision of SFM and the respective Board of Trustees, the Money Managers are
responsible for the day-to-day investment management of all or a discrete
portion of the respective assets of the Small Cap Growth Portfolio and the
International Equity Portfolio. Money Managers are selected based primarily
upon the research and recommendations of SFM, which evaluates quantitatively
and qualitatively a Money Manager's skills and investment results in managing
assets for specific asset classes, investment styles and strategies.
SIMT's Board of Trustees is responsible for overseeing the operation of SIMT,
including reviewing and approving SIMT's contracts with SFM and the Money
Managers. Likewise, SIT's Board of Trustees is responsible for overseeing the
operation of SIT, including reviewing and approving SIT's contracts with SFM
and the Money Managers. The same individuals currently serve as the Trustees of
SIMT and SIT. Subject to review by the appropriate Board, SFM allocates and,
when appropriate, reallocates a Portfolio's assets among Money Managers,
monitors and evaluates Money Manager performance, and oversees Money Manager
compliance with the Funds' investment objectives, policies and restrictions.
SFM HAS ULTIMATE RESPONSIBILITY FOR THE INVESTMENT PERFORMANCE OF THE
PORTFOLIOS DUE TO ITS RESPONSIBILITY TO OVERSEE MONEY MANAGERS AND RECOMMEND
THEIR HIRING, TERMINATION AND REPLACEMENT. The Securities and Exchange
Commission has issued an exemptive order (the "Order") that permits both SIMT
and SIT to retain Money Managers unaffiliated with SFM without submitting the
Money Manager's contract with SFM to a vote of shareholders. The Order also
permits the non-disclosure of amounts payable by SFM under all such contracts.
For its management services, SFM is entitled to a fee, which is calculated
daily and paid monthly, at the rates (shown as a percentage of the average
daily net assets) of .65% for the Small Cap Growth Portfolio and .505% for the
International Equity Portfolio. SFM pays each Money Manager for its services
from the management fees SFM receives from the Portfolios.
As of the date of this prospectus, the assets of the Small Cap Growth Portfolio
are being managed by the following Money Managers: First of America Investment
Corporation; Nicholas-Applegate Capital Management Inc.; Furman Selz Capital
Management LLC; and Wall Street Associates.
As of the date of this prospectus, the assets of the International Equity
Portfolio are being managed by
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25
the following Money Managers: Acadian Asset Management, Inc.; Farrell Wako
Global Investment Management, Inc.; Lazard London International Investment
Management Limited; Seligman Henderson Co.; and jointly, Yamaichi Capital
Management Inc. and Yamaichi Capital Management (Singapore) Limited.
SFS serves as the distributor pursuant to distribution agreements with both
SIMT and SIT. No compensation is paid to the distributor for distribution
services for the shares of the Portfolios. The principal business address for
SFS is Oaks, Pennsylvania 19456. DST serves as SIMT's transfer agent and
Corestates Bank, N.A., Broad and Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101, acts as wire agent of SIT's assets.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania, 19456. The Administrator 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 .15% of the average daily net assets of the
Funds. The Administrator has voluntarily agreed to waive all or a portion of
its fees and/or reimburse other expenses for the Small Cap Equity Fund and the
International Equity Fund in order to limit total operating expenses at the
feeder level of each Fund. The Administrator reserves the right to terminate
its waivers or reimbursements, respectively, at any time in its sole
discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore 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"), Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI, and the Trust are parties to a distribution
agreement (the "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.
The Funds may also execute brokerage or other agency transactions through an
affiliate of the Adviser or through the Distributor for which the
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26
affiliate or the Distributor may receive "usual and customary" compensation.
For further information, see the Statement of Additional Information.
SMALL CAP GROWTH AND INTERNATIONAL EQUITY PORTFOLIOS
The Small Cap Growth and International Equity Portfolios have each adopted a
shareholder service plan (individually, a "Plan") for its Class A shares, the
class in which the Small Cap Equity Fund and International Equity Fund each
invests. Under each Plan, firms, including the Distributor, that provide
shareholder and administrative services may receive compensation therefore.
Under such arrangements, the Distributor may retain as profit any difference
between the fee it receives and the amount it pays to any third parties. Under
each Plan, a Portfolio may pay the Distributor a shareholder servicing fee at a
negotiated annual rate of up to .25% of the average daily net assets of the
Portfolio attributable to Class A shares that are subject to the arrangement in
return for provision of a broad range of shareholder and administrative
services.
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.
Each Feeder Fund may advertise the performance of its corresponding Portfolio
adjusted to reflect applicable sales loads and operating expenses, other than
Rule 12b-1 fees. The data for the Small Cap Growth Portfolio and the
International Equity Portfolio will be adjusted to reflect Fund operating
expenses at the feeder level of .20% and .27%, respectively, and (i) with
respect to the Class A Shares, to take into account a 3.50% sales load; and
(ii) with respect to Class B Shares, to take into account the applicable
contingent deferred sales charge. Investment performance reflects voluntary fee
waivers and reimbursements currently in effect and, with respect to Class B
Shares, does not reflect each Fund's 12b-1 fees. In the absence or reduction of
current fee waivers or reimbursements, or if current Rule 12b-1 fees applicable
to Class B Shares were reflected, Total Return would be reduced.
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.
<PAGE>
27
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 with 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.
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 Internal Revenue Code of 1986, as amended (the
"Code"), so as to be relieved of federal income tax, net of investment company
taxable income, and net of capital gain (the excess of net long-term capital
gains over net short-term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
Each Fund will distribute all of its net investment income (including net
short-term capital gains) to shareholders. Dividends from a Fund's net
investment company taxable income will be taxable to shareholders as ordinary
income whether received in cash or in additional shares, to the extent of the
Fund's earnings and profits. Dividends paid by a Fund to corporate shareholders
will qualify for the dividends-received deduction to the extent attributable to
dividends received by the Fund from domestic corporations (including, with
respect to the Feeder Funds, a pro rata portion of such dividends received by
the corresponding Portfolio). It can be expected that only certain dividends of
the Equity Funds, and none of the Fixed Income Funds, will qualify for that
deduction. A portion of such dividends received may be subject to the
alternative minimum tax. 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 and regardless of whether the
distributions are received in cash or in additional shares. Distributions from
net capital gains do not qualify for the dividends-received deduction. Each
Fund will provide 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 imputed interest on such obligations even though the Fund has not received
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28
any interest payments on such obligations during that period. Because each Fund
distributes all of its net investment income to its shareholders, a Fund may
have to sell portfolio securities to distribute such imputed income, which may
occur at a time when the Adviser would not have chosen to sell such securities
and which may result in a taxable gain or loss.
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
December 31 of the year declared, if paid by the Fund at any time during the
following January.
Investment income received directly by a Fund on direct U.S. Government
obligations is exempt from income tax at the state level and may be exempt,
depending on the state, when received by a shareholder as income dividends
provided certain state-specific conditions are satisfied. Each Fund will inform
shareholders annually of the percentage of income and distributions derived
from direct U.S. Government 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.
Each Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for the federal excise tax applicable to
regulated investment companies.
A sale, exchange or redemption of a Fund's shares is a taxable event to the
shareholder.
The Louisiana Tax-Free Income Fund will distribute all of its net investment
income (including net short-term capital gain) to shareholders. If, at the
close of each quarter of its taxable year, at least 50% of the value of the
Fund's assets consist of obligations the interest on which is excludable from
gross income for federal tax purposes, the Fund may pay "exempt-interest
dividends" to its shareholders. Those dividends constitute the portion of the
aggregate dividends as designated by the Fund equal to the excess of the
excludable interest over certain amounts disallowed as deductions. Exempt-
interest dividends are excludable from a shareholder's gross income for regular
federal income tax purposes, but may have certain collateral federal income tax
consequences, including alternative minimum tax. See the Statement of
Additional Information.
Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Louisiana Tax-Free Income Fund to purchase sufficient amounts of
tax-exempt securities to satisfy the Code's requirements for the payment of
"exempt-interest dividends."
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 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
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29
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. A discussion
of SIMT's Trustees and officers appears in SIMT's Statement of Additional
Information. A discussion of SIT's Trustees and officers appears in SIT's
Statement of Additional Information.
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
(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). 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.
In the case of the Small Cap Equity Fund or International Equity Fund, whenever
a vote is requested on matters pertaining to the Small Cap Growth Portfolio or
International Equity Portfolio, respectively, the Trust will either (a) seek
instructions from the appropriate Fund's shareholders with regard to the voting
of the proxies and vote such proxies only in accordance with such instructions;
or (b) vote the shares held by it in the same proportion as the vote of all the
other shareholders of the particular Portfolio. In the second alternative,
other investors in a Portfolio could control the results of voting at the
Portfolio level.
SIMT, SIT AND THE PORTFOLIOS
Both SIMT and SIT are organized as Massachusetts business trusts. The Trustees
believe that neither the Small Cap Equity Fund or the International Equity Fund
will be adversely affected by reason of investing in the corresponding
Portfolio.
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 Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316, or by calling 1-800-471-1144.
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30
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 and the Balanced 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 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.
CUSTODIANS
First National Bank of Commerce in New Orleans acts as Custodian of the Trust.
CoreStates Bank, N.A. has custody of the Small Cap Growth Portfolio's assets
and State Street Bank and Trust Company acts as custodian for the assets of the
International Equity Portfolio. The Custodians hold cash, securities and other
assets of the Trust and the Portfolios as required by the 1940 Act.
RISK FACTORS RELATING TO THE FEEDER FUNDS AND THE PORTFOLIOS
Unlike other mutual funds which directly acquire and manage their own portfolio
securities, each Feeder Fund seeks to achieve its investment objective by
investing up to 100% of its assets in the corresponding Portfolio, which is a
separate registered investment company with identical investment objectives.
The investment objective of a Feeder Fund or a Portfolio may not be changed
without shareholder approval. In addition to selling beneficial interests to
the Feeder Funds, the Portfolios may sell beneficial interests to other mutual
funds or institutional investors. Such investors will invest in the Portfolios
on the same terms and conditions and will pay a proportionate share of the
respective Portfolio's expenses. However, other investors investing in the
Portfolios are not required to buy their shares at the same public offering
prices as the Feeder Funds. Investors in the Feeder Funds should be aware that
because of these differences, other investors in the other funds that invest in
the Portfolios may obtain different returns. Such differences in returns are
also present in other mutual fund structures.
Certain changes in a Portfolio's investment objective, policies or restrictions
may require the corresponding Feeder Fund to redeem its investment. Any such
withdrawal could result in a distribution-in-kind of portfolio securities (as
opposed to a cash distribution from the Portfolio). The Feeder Fund could incur
brokerage fees or other transaction costs in converting such securities to
cash. The distribution-in-kind may also result in a less diversified portfolio
of investments or adversely affect the liquidity of the Feeder Fund. In
addition, the investment of a Feeder Fund may be withdrawn from the
corresponding Portfolio at any time if the Adviser determines that it is in the
best interest of that Feeder Fund to do so.
Upon any such withdrawal, the Adviser and Trustees of the Trust would consider
what action might be taken, including the investment of all of the assets of
such Feeder Fund in another pooled investment entity having the same investment
objective as the Feeder Fund or retaining an investment adviser to manage the
Feeder Fund's
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31
assets in accordance with its investment policies. The performance of a Feeder
Fund might be adversely impacted under such circumstances and such Feeder Fund
may not be able to achieve its objective.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments and investment
practices for the various Funds (and the Portfolios), and associated risk
factors. Unless otherwise indicated, policies that relate to "a Fund," "all
Funds," or "Equity Funds" also relate to the Portfolios. Further discussion is
contained in the Statement of Additional Information.
AMERICAN DEPOSITARY RECEIPTS, CONTINENTAL DEPOSITARY RECEIPTS, EUROPEAN
DEPOSITARY RECEIPTS AND GLOBAL DEPOSITARY 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. EDRs, which are sometimes referred to as CDRs are securities,
typically issued by a non-U.S. financial institution, that evidence ownership
interests in a security or a pool of securities issued by either a U.S. or
foreign issuer. GDRs are issued globally and evidence a similar ownership
arrangement. Generally, ADRs are designed for trading in the U.S. securities
market. EDRs are designed for trading in European Securities Markets and GDRs
are designed for trading in non-U.S. Securities Markets. ADRs, EDRs, CDRs and
GDRs may be available for investment through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by the issuer of the
security underlying the receipt and a depositary, whereas an unsponsored
facility may be established by a depositary without participation by the issuer
of the underlying security. Holders of unsponsored depositary receipts
generally bear all the costs of the unsponsored facility. The depositary of an
unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security
or to pass through, to the holders of the receipts, voting rights with respect
to the deposited securities. 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 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, the Balanced Fund and Strategic
Income Bond Fund
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32
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.
BANK INVESTMENT CONTRACTS ("BICs")--BICs are contracts issued by U.S. banks and
savings and loan institutions. Pursuant to such contracts, a Fund makes cash
contributions to a deposit fund of the general account of the bank or savings
and loan institution. The bank or savings and loan institution then credits to
the Fund on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. A BIC provides that this guaranteed interest will not be less
than a certain minimum rate. A BIC is a general obligation of the issuing bank
or savings and loan institution and not a separate account. The purchase price
paid for a BIC becomes part of the general assets of the issuer, and the
contract is paid at maturity from the general assets of the issuer.
BICs are generally not assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs currently does not exist. Therefore, BICs are
considered to be illiquid investments.
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.
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33
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 ("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 foregoing 25% limitation does not apply
to the International Equity Fund or the International Equity Portfolio.
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.
GUARANTEED INVESTMENT CONTRACTS ("GICs")--GICs are contracts issued by U.S.
insurance companies. Pursuant to such contracts, a Fund makes cash
contributions to a deposit fund of the insurance company's general account. The
insurance company then credits to the Fund on a monthly basis guaranteed
interest at either a fixed, variable or floating rate. A GIC provides that this
guaranteed interest will not be less than a certain minimum rate. A GIC is a
general obligation of the issuing insurance company and not a separate account.
The purchase price paid for a GIC becomes part of the general assets of the
issuer, and the contract is paid at maturity from the general assets of the
issuer.
Generally, GICs are not assignable or transferable without the permission of
the issuing insurance company. For this reason, an active secondary market in
GICs does not currently exist and GICs are considered to be illiquid
investments.
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% (10% with respect to the
International Equity Portfolio) of its net assets in such instruments.
INVESTMENT COMPANIES--Because of restrictions on direct investment by U.S.
entities in certain countries, investment in other investment companies may be
the most practical or only manner in which an international and global fund can
invest in the securities markets of those countries. The International Equity
Portfolio does not intend to invest in other investment companies unless, in
the judgment of its Money Managers, the potential benefits of such investments
exceed the
<PAGE>
34
associated costs relative to the benefits and costs associated with direct
investments in the underlying securities.
Investments in closed-end investment companies may involve the payment of
substantial premiums above the net asset value of such issuer's portfolio
securities and are subject to limitations under the 1940 Act. The International
Equity Portfolio also may incur tax liability to the extent it invests in the
stock of a foreign issuer that constitutes a "passive foreign investment
company."
As a shareholder in an investment company, the International Equity Portfolio
would bear its ratable share of that investment company's expenses, including
its advisory and administration fees. In accordance with applicable state
regulatory provisions, the Portfolio's advisers have agreed to waive their
management fee with respect to the portion of this Portfolio's assets invested
in shares of other open-ended investment companies. The Portfolio continues to
pay its own management fees and other expenses with respect to their
investments in shares of closed-end investment companies.
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.
With respect to the International Equity Portfolio, money market securities are
considered to include securities issued or guaranteed by the United States
Government, its agencies or instrumentalities; securities issued or guaranteed
by non-U.S. governments, which are rated at time of purchase A or higher by S&P
or Moody's, or are determined by the advisers to be of comparable quality;
repurchase agreements, certificates of deposit and bankers' acceptances issued
by banks or savings and loan associations having net assets of at least $500
million as of the end of their most recent fiscal year; high-grade commercial
paper, and other long- and short-term debt instruments which are rated at the
time of purchase A or higher by S&P or Moody's, and which, with respect to such
long-term debt instruments, are within 397 days of their maturity.
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 guarantors of these mortgage-backed
securities are the Government National Mortgage Association ("GNMA"), the
Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("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
<PAGE>
35
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 conduits ("REMICs"), that are rated in one of the top two rating
categories. While they are generally structured with one or more types of
credit enhancement, Private Pass-Through Securities typically lack a guarantee
by an entity having the credit status of a governmental agency or
instrumentality.
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 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
<PAGE>
36
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.
OBLIGATIONS OF SUPRANATIONAL ENTITIES--Supranational entities are entities
established through the joint participation of several governments, including
the Asian Development Bank, the Inter-American Development Bank, International
Bank for Reconstruction and Development (World Bank), African Development Bank,
European Economic Community, European Investment Bank and the Nordic Investment
Bank. The governmental members, or "stock holders," usually make initial
capital contributions to the supranational entity and, in many cases, are
committed to make additional capital contributions if the supranational entity
is unable to repay its borrowings.
OPTIONS--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 purchaser of the option the right to sell, and the
writer the obligation to buy, the underlying security at any time during the
option period. A call option gives the purchaser of the option the right to
buy, and the writer of the option the obligation to sell, the underlying
security at any time during the option period. The premium paid to the writer
is the consideration for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an "opening transaction."
In order to close out an option position, a Fund may enter into a "closing
transaction"--the sale (purchase) of an option contract on the same security
with the same exercise price and expiration date as the option contract
originally opened.
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.
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37
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.
PRIVATIZATIONS--Privatizations are foreign government programs for selling all
or part of the interests in government owned or controlled enterprises. The
ability of a U.S. entity to participate in privatizations in certain foreign
countries may be limited by local law, or the terms on which a Fund may be
permitted to participate may be less advantageous than those applicable for
local investors. There can be no assurance that foreign governments will
continue to sell their interests in companies currently owned or controlled by
them or that privatization programs will be successful.
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 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.
RESTRICTED SECURITIES--Restricted securities are securities that may not be
sold freely to the public absent registration under the Securities Act of 1933
or an exemption from registration.
SECURITIES LENDING--All Funds are permitted to engage in securities lending,
under which securities are loaned 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. 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.
SECURITIES OF FOREIGN ISSUERS--There are certain risks connected with investing
in foreign securities. These include risks of adverse political and economic
developments (including possible governmental seizure or nationalization of
assets), the possible imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting requirements, the
possibility that there will be less information on such securities and their
issuers available to the public, the difficulty of obtaining or enforcing court
judgments abroad, restrictions on foreign investments in other jurisdictions,
difficulties in
<PAGE>
38
effecting repatriation of capital invested abroad and difficulties in
transaction settlements and the effect of delay on shareholder equity. Foreign
securities may be subject to foreign taxes, and may be less marketable than
comparable U.S. securities. The value of a Fund's investments denominated in
foreign currencies will depend on the relative strengths of those currencies
and the U.S. dollars, and a Fund may be affected favorably or unfavorably by
changes in the exchange rates or exchange control regulations between foreign
currencies and the U.S. dollar. Changes in foreign currency exchange rates also
may affect the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income and gains if any,
to be distributed to shareholders by a Fund. Furthermore, emerging market
countries may have less stable political environments than more developed
countries. Also it may be more difficult to obtain a judgement in a court
outside the United States.
SHORT SALES-- A short sale is "against the box" if at all times during which
the short position is open, a Fund owns at least an equal amount of the
securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities that are sold
short.
SWAPS, CAPS, FLOORS AND COLLARS--Interest rate swaps, mortgage swaps, currency
swaps and other types of swap agreements such as caps, floors and collars are
designed to permit the purchaser to preserve a return or spread on a particular
investment or portion of its portfolio, and to protect against any increase in
the price of securities, a Fund anticipates purchasing at a later date. In a
typical interest rate swap, one party agrees to make regular payments equal to
a floating interest rate times a "notional principal amount" in return for
payments equal to a fixed rate times the same amount for a specific period of
time. Swaps may also depend on other prices or rates such as the value of an
index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party.
Swap agreements will tend to shift a Fund's investment exposure from one type
of investment to another. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a Fund's investment and its
share price and yield.
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, FHLMC, 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.,
GNMA securities), 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., FNMA securities).
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 any Fund invests guarantees only the payment of
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39
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 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, 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>
TABLE OF CONTENTS
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<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 4
Financial Highlights........................................................ 8
The Trust................................................................... 11
Investment Objectives and Policies.......................................... 11
General Investment Policies................................................. 15
Investment Limitations...................................................... 15
How to Purchase Shares...................................................... 16
Alternative Sales Charge Options............................................ 18
Exchanges................................................................... 20
Redemption of Shares........................................................ 21
The Adviser................................................................. 22
Small Cap Growth and International Equity Portfolios........................ 24
The Administrator........................................................... 25
The Shareholder Servicing Agent and Transfer Agent.......................... 25
The Distributor............................................................. 25
Small Cap Growth and International Equity Portfolios........................ 26
Performance................................................................. 26
Taxes....................................................................... 27
General Information......................................................... 28
Risk Factors Relating to the Feeder Funds and the Portfolios................ 30
Description of Permitted Investments and Risk Factors....................... 31
</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 January 28, 1997 has
been filed with the Securities and Exchange Commission (the "SEC") and is
available without charge by calling 1-800-471-1144. 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 NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- ------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY ANY BANK, 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.
- ------------------------------------------------------------------------------
JANUARY 28, 1997
MRQ-F-008-01
<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 Trust's
Institutional Money Market Fund (the "Fund"). The Fund is a separate series of
the Trust.
WHAT IS THE INVESTMENT OBJECTIVE 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 Fund Resources 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 additional shares unless the shareholder elects to take payment in cash
on the first Business Day of each month. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES INSTITUTIONAL MONEY MARKET FUND
<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>
Management Fees (after fee waivers) (1) .06%
12b-1 Fees None
Other Expenses (2) .19%
- ------------------------------------------------------
Total Operating Expenses (after fee waivers) (2) .25%
======================================================
</TABLE>
(1) The Adviser has voluntarily agreed to waive its advisory fee or reimburse
expenses to the extent necessary to keep "Total Operating Expenses" for
the Fund from exceeding .25%. 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) Absent the Adviser's voluntary fee waiver, Total Operating Expenses for
the Fund would be .34%.
<TABLE>
EXAMPLE
- -----------------------------------------------------------------------------
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------
<S> <C> <C> <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 $14 $32
</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."
<PAGE>
4
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended September 30 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 1996 Annual Report to Shareholders and
is available upon request and without charge by calling 1-800-471-1144.
For a Share Outstanding Throughout each Period ended September 30,
<TABLE>
<CAPTION>
RATIO OF
NET
REALIZED RATIO OF RATIO OF INVESTMENT
AND NET EXPENSES INCOME TO
NET ASSET UNREALIZED DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT TO AVERAGE AVERAGE
VALUE NET GAINS OR FROM NET VALUE END OF EXPENSES INCOME TO NET ASSETS NET ASSETS
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT END OF TOTAL PERIOD TO AVERAGE 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>
INSTITUTIONAL MONEY MARKET FUND
1996 $1.00 $0.05 -- $(0.05) $1.00 5.33% $28,004 0.25% 5.19% 0.34% 5.10%
1995(1) 1.00 0.01 -- (0.01) 1.00 5.55* 31,314 0.25* 5.56* 0.60* 5.21*
</TABLE>
- --------
* Annualized.
(1) Commenced operations on August 10, 1995.
<PAGE>
5
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 1-800-471-1144.
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is 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 objective.
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.
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 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; and (ii) enter into
repurchase agreements.
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., or an authorized sub-transfer
agent (collectively, the "Transfer Agent"), 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, along with a check (or other negotiable bank instrument or
money order payable to "Marquis Funds (Institutional Money Market Fund)", to
Marquis Funds, P.O. Box 419316, Kansas City, MO 64141-6316. Third party checks,
credit cards, credit card checks and cash will not be accepted. When purchases
are made by check, redemption proceeds will not be forwarded until the
investment
<PAGE>
6
being redeemed has been in the account for 15 days. You may purchase additional
shares at any time by mailing payment to the Transfer Agent. Orders placed by
mail will be executed on receipt of your payment. If your check does not clear,
your purchase will be canceled and you could be liable for any losses or fees
incurred. Account Application forms are available by calling 1-800-471-1144.
WIRE
A shareholder whose Account Application has been received by the Transfer Agent
may purchase shares of the Fund by wiring Federal funds. The shareholder must
wire funds to the Transfer Agent and the wire instructions must include the
shareholder's account number. The shareholder must call 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 the Transfer Agent prior to 12:00 noon,
Central time. If the Transfer Agent 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 and the Federal Reserve wire system are open for business ("Business
Days"). 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 the Transfer
Agent, if it 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
Adviser 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
call 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 the Transfer Agent. If an
Exchange Request in good order is received by the Transfer Agent 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.
<PAGE>
7
The Trust reserves the right to change the terms or conditions of the exchange
privilege discussed herein upon 60 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 the Transfer Agent 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, the Transfer Agent 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. A notary 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 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 1-800-471-1144.
Neither the Trust nor the Transfer Agent will be responsible for any loss,
liability, cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions.
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 7 days after
the Transfer Agent 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"), 201 St. Charles
Avenue, New Orleans, Louisiana 70170, 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, 1996, the Adviser's Trust Group managed approximately $2.3
billion in
<PAGE>
8
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 eight 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. For the fiscal
year ended September 30, 1996, the Adviser was paid an advisory fee of .06% of
the Fund's average net assets.
Gerald S. Dugal, Vice President and a senior portfolio manager of the Adviser,
is the portfolio manager of the Treasury Securities Money Market Fund, the
Institutional Money Market Fund, the Strategic Income Bond Fund and the Tax
Exempt Money Market Fund. During the past five years, Mr. Dugal served as a
senior portfolio manager and Director of Fixed Income and Trading with the
Adviser. Mr. Dugal has over 10 years of experience in investment trading,
brokerage, and research. He is licensed as a general securities principal and a
municipal securities principal.
THE ADMINISTRATOR
SEI Fund Resources, a Delaware business trust (the "Administrator"), has its
principal business offices at Oaks, Pennsylvania 19456. The Trust and the
Administrator 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 Administrator reserves the right to terminate any waivers or reimbursements
at any time at its sole discretion.
THE SHAREHOLDER SERVICING AGENT AND TRANSFER AGENT
DST Systems, Inc., 1004 Baltimore 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"), Oaks, Pennsylvania 19456, a
wholly-owned subsidiary of SEI Investments Company, 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.
<PAGE>
9
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.
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. In
addition, state and local tax consequences of an investment in the Fund may
differ from the federal income tax consequences described below. Accordingly,
shareholders are urged to consult with their tax advisers regarding specific
questions as to federal, state and local income taxes. Additional information
concerning taxes is set forth in the Statement of Additional Information.
TAX STATUS OF THE 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, so as to be
relieved of federal income tax, net of investment company taxable income, and
net of capital gain (the excess of net long-term capital gains over net short-
term capital losses) distributed to shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund will distribute all of its net investment income (including net short-
term capital gains) to shareholders. Dividends from net investment company
taxable income are taxable to shareholders as ordinary income (whether received
in cash or in additional shares) to the extent of the Fund's earnings and
profits. 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 shareholders have held their shares and regardless of whether the
distributions are received in cash or in additional shares. Dividends and
distributions of capital gains paid by the fund do not qualify for the
dividends received deduction for corporate shareholders. The Fund will provide
annual reports to shareholders of the federal income tax status of all
distributions.
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
December 31 of the year declared, if paid by the Fund at any time during the
following January.
With respect to investments in U.S. Treasury STRIPS, which 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 imputed
interest on such
<PAGE>
10
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 imputed 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.
Investment income received directly by the Fund on Treasury Obligations is
exempt from income tax at the state level and may be exempt, depending on the
state, when received by a shareholder as income dividends from the Fund
provided certain state specific conditions are satisfied. 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.
The Fund intends to make sufficient distributions prior to the end of each
calendar year to avoid liability for federal excise tax applicable to regulated
investment companies.
A sale, exchange or redemption of a Fund's shares generally is a taxable
transaction to the shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under a Declaration
of Trust dated 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, Strategic Income Bond Fund,
Balanced Fund, Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund and
International Equity Fund. All consideration received by the Trust for shares
of any fund and all assets of such fund belong to that fund and would be
subject to liabilities related thereto. The Trust reserves the right to create
and issue shares of additional funds.
The Trust pays its 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.
<PAGE>
11
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 Marquis Funds, P.O. Box 419316,
Kansas City, MO 64141-6316 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.
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.
<PAGE>
<TABLE>
TABLE OF CONTENTS
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<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
Financial Highlights........................................................ 4
The Trust................................................................... 5
Investment Objective and Policies........................................... 5
Investment Limitations...................................................... 5
Purchase of Shares.......................................................... 5
Exchanges................................................................... 6
Redemption of Shares........................................................ 7
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): 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
January 28, 1997 (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., 1004 Baltimore Street, Kansas
City, Missouri 64105, or by calling 1-800-471-1144.
TABLE OF CONTENTS
The Trust...................................................................B-2
Additional Description of Permitted Investments.............................B-3
Investment Limitations......................................................B-21
Non-Fundamental Policies....................................................B-24
The Adviser and Sub-Adviser.................................................B-29
SFM and the Money Managers .................................................B-31
The Administrator...........................................................B-33
The Distributor.............................................................B-34
The Portfolios' Administrator and Shareholder Servicing Agent...............B-36
Trustees and Officers of the Trust..........................................B-37
Computation of Yield........................................................B-43
Calculation of Total Return.................................................B-45
Purchase and Redemption of Shares...........................................B-47
Conversion Feature..........................................................B-48
Letter of Intent............................................................B-48
Determination of Net Asset Value............................................B-49
Taxes.......................................................................B-51
Fund Transactions...........................................................B-57
Trading Practices and Brokerage.............................................B-57
Description of Shares.......................................................B-66
Shareholder Liability.......................................................B-67
Limitation of Trustees' Liability...........................................B-67
5% Shareholders.............................................................B-68
Financial Information.......................................................B-71
January 28, 1997
MRQ-F-004-06
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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 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 eleven series: the Government Securities Fund, the
Louisiana Tax-Free Income Fund (the "Louisiana Fund"), the Strategic Income Bond
Fund, the Balanced Fund, the Value Equity Fund, the Growth Equity Fund, the
Small Cap Equity Fund, and the International Equity Fund (the "Non-Money Market
Funds"); and 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 (i) differences between the
Class A and Class B shares of the Government Securities Fund, the Louisiana
Fund, the Strategic Income Bond Fund (together, the "Fixed Income Funds"), the
Balanced Fund, the Value Equity Fund, the Growth Equity Fund, the Small Cap
Equity Fund and the International Equity Fund (together, the "Equity Funds"),
pertaining to sales loads, service fees, dividends, voting rights and
distribution plans, (ii) differences between the Trust Class, Retail Class and
Cash Sweep Class shares of the Treasury Securities Money Market Fund and (iii)
differences between Retail Class and Cash Sweep Class shares of the Tax Exempt
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
carefully.
The Small Cap Equity Fund expects to invest up to 100% of its assets in the
Small Cap Growth Portfolio, a separate series of SEI Institutional Managed Trust
("SIMT"). The International Equity Fund expects to invest up to 100% of its
assets in the International Equity Portfolio, a separate series of SEI
International Trust ("SIT"). The Small Cap Growth Portfolio and the
International Equity Portfolio are referred to herein as the "Portfolios."
The investment policies of the Small Cap Equity Fund and the International
Equity Fund will be substantially similar to those of the Small Cap Growth
Portfolio and International Equity Portfolio, respectively, should the Funds
withdraw from the Corporate Master-Feeder/TM/ structure and the Adviser manage
their assets directly.
Unless otherwise indicated, policies with respect to "a Fund," "all Funds" or
"Equity Funds" includes the Portfolios.
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<PAGE>
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 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 397 calendar days 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
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<PAGE>
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 397 days
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 SEI Investments Company ("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.
Forward Foreign Currency Contracts
The International Equity Portfolio may invest in forward foreign currency
contracts. Forward foreign currency contracts involve an obligation to purchase
or sell a specified currency at a future date at a price set at the time of the
contract. Forward currency contracts do not eliminate fluctuations in the values
of portfolio securities but rather allow the Portfolio to establish a rate of
exchange for a future point in time.
When entering into a contract for the purchase or sale of a security in a
foreign currency, the Portfolio may enter into a foreign forward currency
contract for the amount of the purchase or sale price to protect against
variations, between the date the security is purchased or sold and the date on
which payment is made or received, in the value of the foreign currency relative
to the United States dollar or other foreign currency.
Also, when a Money Manager anticipates that a particular foreign currency may
decline substantially relative to the United States dollar or other leading
currencies, in order to reduce risk, the Portfolio may enter into a forward
contract to sell, for a fixed amount, the amount of foreign currency
approximating the value of its securities denominated in such
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<PAGE>
foreign currency. With respect to any such forward foreign currency contract, it
will not generally be possible to match precisely the amount covered by that
contract and the value of the securities involved due to changes in the values
of such securities resulting from market movements between the date the forward
contract is entered into and the date it matures. In addition, while forward
currency contracts may offer protection from losses resulting from declines in
value of a particular foreign currency, they also limit potential gains which
might result from increases in the value of such currency. The Portfolio will
also incur costs in connection with forward foreign currency contracts and
conversions of foreign currencies into United States dollars.
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.
Swaps, Caps, Floors and Collars
The International Equity Portfolio may enter into swap, cap, floor and collar
arrangements. In a typical cap or floor agreement, one party agrees to make
payments only under specified circumstances, usually in return for payment of a
fee by the other party. For example, the buyer of an interest rate cap obtains
the right to receive payments to the extent that a specific interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate falls
below an agreed-upon level. An interest rate collar combines elements of buying
a
B-5
<PAGE>
cap and selling a floor.
Swap agreements are sophisticated hedging instruments that typically involve a
small investment of cash relative to the magnitude of risk assumed. As a result,
swaps can be highly volatile and have a considerable impact on the Portfolio's
performance. Swap agreements are subject to risks related to the counterparty's
ability to perform, and may decline in value if the counterparty's
creditworthiness deteriorates. The Portfolio may also suffer losses if it is
unable to terminate outstanding swap agreements or reduce its exposure through
offsetting transactions. Any obligation the Portfolio may have under these types
of arrangements will be covered by setting aside liquid high grade securities in
a segregated account. The Portfolio will enter into swaps only with
counterparties believed to be creditworthy.
Mortgage-Backed Securities
The Government Securities Fund, the Balanced Fund and Strategic Income Bond 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 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 (the "Code"), 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.
B-6
<PAGE>
Asset-Backed Securities
The Government Securities, Balanced and Strategic Income Bond 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 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.
B-7
<PAGE>
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 of the Investment Company Act of 1940 (the "1940
Act"), 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.
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 Federal 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.
B-8
<PAGE>
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
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
B-9
<PAGE>
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
- ----------------
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. A Fund may sell, transfer, or
assign the put only in conjunction with the sale, transfer, or assignment of the
underlying security or securities.
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
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<PAGE>
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 their net 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 -- All
- ---------------------------------------------------------------
general obligations of the State of Louisiana, secured by the full faith and
credit of the State, are payable from the Bond Security and Redemption Fund of
the State and enjoy a first lien and privilege upon the funds in the Bond
Security and Redemption Fund. The State Constitution provides that, subject to
contractual obligations existing on January 1, 1975, all State money deposited
in the State Treasury is to be credited to the Bond Security and Redemption Fund
(except certain enumerated accepted monies) and that in each fiscal year, an
amount be allocated from the Bond Security and Redemption Fund sufficient to pay
all obligations that are secured by the full faith and credit of the State and
that become due and payable within the current fiscal year. For fiscal year
1996-97, the State Constitution prevents the State from issuing net State tax
supported debt in excess of 10.6% of projected State revenue. The latest
issuance of State general obligation bonds was rated "Baa1" and "A-" by Moody's
Investors Service, Inc. and Standard & Poor's Ratings Service, respectively.
According to the Louisiana Department of Economic Development (the
"Department"), Louisiana's economy in 1995, compared to 1994, was in a period of
economic expansion. Overall non-farm employment grew 3% during 1995, adding
52,400 jobs over the year. Growth in several sectors propelled the expansion.
Employment in the special trade contractors segment of construction increased
42% since figures for this segment were first released in 1988. An annual gain
of 7% reflects a continuing demand for workers in this industry. Job gains in
durable goods manufacturing offset small losses in non-durable manufacturing
over the year. Primary metal industries and machinery, except electrical, were
responsible for the increased employment levels in durable goods manufactured by
6%, for an over the year gain of 1600 jobs. Trade grew by 17,300 jobs over the
year. Almost half of the jobs gained were in the restaurant/bar sector. In the
services sector, amusement and recreation services grew 46.8% from the 1994 to
1995 annual average. Growth over the year in miscellaneous repair and business
services, as well as the amusement and recreation services represented 59% of
the total growth in the services sector. The Department predicts that the State
will experience continued modest growth in 1997.
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Louisiana's official forecast of revenues for fiscal year 1996-1997 is $4,676.7
million. The State Office of Planning and Budget has determined that the funding
level required to support continued level budgets for the fiscal year 1996-1997
is $5,524.2 million and, therefore, forecasted revenues would be approximately
$847.5 million short of the amount needed to continue State operations at a
level equivalent to fiscal year 1995-96 on a continuation basis. During the 1996
Regular Session, the Louisiana Legislature continued the suspension of
particular sales tax exemptions, which added approximately $445 million to the
fiscal year 1996-97 revenue estimates. Furthermore, $330 million of the gap
between the continuation budget and the available revenues is related to the
State's Medicaid Program. On April 26, 1996, the U.S. Congress adopted a Budget
Bill which virtually eliminated this part of the budget problem in the short-
term. The State will have to address this issue in the future. The State will
rely on reduction in expenditures by approximately $72.5 million to produce the
balanced budget required by the State Constitution for fiscal year 1996-97. At
the end of fiscal year 1995-96, the General Fund of the State should have a
balance of approximately $76.8 million.
Louisiana's Department of Economic Development has worked to increase
diversification of the State's economy, enhancing economic opportunities from
both new and existing businesses. The Department has sought to reduce the
relative cost of doing business in Louisiana , helping make Louisiana one of the
lowest-cost states in the nations. In today's global economy, Louisiana, more
than most other states, is positioned to profit from ever-expanding trade,
particularly with its neighbors to the South. Louisiana continues to actively
pursue and encourage both private and public economic development research
efforts. Louisiana State University, a Carnegie-Mellon Research I Institution,
has constructed the Center for Advance Microstructures and Devices in Baton
Rouge, and an adjacent research park is envisioned. The Pennington Biomedical
Research Center is a $26 million facility dedicated to nutrition and preventive
medicine and is associated with Louisiana State University, Louisiana State
University Agricultural Center and Louisiana State University Medical Center.
Tourism is the second largest industry in Louisiana, which welcomed a record
number of tourists last year. Some 22.5 million visitors, creating 100,000 jobs,
infused $6.5 billion into the State's economy in 1995 and generated $450 million
in state and local taxes. South and offshore Louisiana continue to experience
activity gains in the oil and gas sector that began in early 1994. Future
activity gains appear assured based on future indicators. Clerk of Court lease
filings continue to increase. State lease bonus monies have gone from $8 million
three years ago to $12 million two years ago and to $20 million last year, and
are expected to reach $25-
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28 million in the current year. Day rates for rigs have risen 50%-100% during
the past two years. Gulf Coast drilling costs have dropped to approximately
$4.20 per barrel of oil equivalent - the lowest level since these industry
surveys have been conducted, and are now less than the worldwide average.
Driving this boom in the oil and gas industry is technology. Three-dimensional
seismic, horizontal drilling technique improvements, side-tracking, etc., have
increased success rates tremendously. Tax incentives for drilling granted by the
State have had an additional positive impact in attracting additional capital
and directly generating 1600 new jobs at an average weekly salary of $793, well
above the State-wide average wage rate.
Given Louisiana's strategic location at the mouth of the Mississippi River and
on the Gulf of Mexico, the Port and maritime industry is one of the State's most
important economic generators. The Louisiana Port system serves as one of the
major gateways not only to Louisiana, but to the entire mid-section of the
United States. The ports create a large number of economic opportunities related
to the servicing of the vessels that call on the ports and also act as a magnet
for attracting warehousing and manufacturing firms that use the ports to import
raw material into the area or export finished products out of the area. The
State's top five ports combined handle more than 457,000,000 tons of cargo
annually. The total economic impact of these ports constitutes 21% of the total
Louisiana gross product and produced 4.7% of all personal income in the State.
The port industry and port users generated a total economic impact of more than
$21.9 billion in the State in 1994. Ports and firms located in the State
generated more than $310 million in State and local taxes during 1994 and port-
related activities generated more than $209 million in tax revenue in the State.
These are recurring revenues that will continue and increase as port activities
increase.
The State of Louisiana General Fund should have a $76.8 million balance after
fiscal year 1995-96. However, Fiscal Year 1996-97 budget projections indicate
that the State will have to rely on reduction in expenditures by approximately
$72.5 million to produce a balanced budget. One of the most severe budget issues
is the Medicaid problem. For fiscal year 1995-96, Louisiana was eligible to
receive $690 million in Medicaid disproportionate share payments for hospitals.
In the past, Louisiana used a portion of the amounts paid to the State public
hospitals to fund the State's portion of the Medicaid program. The 1993
amendments to the federal disproportionate share law severely restrict the
State's ability to continue to help finance health care in this manner. On April
26, 1996, Congress adopted a budget bill that included a two-year funding based
specifically for the State Medicaid Program. This budget bill allows the State
to move forward with the Medicaid Managed Care initiatives without being faced
with severe funding cuts. It is expected, however, that additional program
reductions will be required in order to
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bear a $2.6 billion Federal fund cap and the minimum required State match of
$600 million for fiscal year 1996-97 as allowed by Congress. The State's
executive and legislative leadership is currently revising its overall spending
projections for the years through fiscal year 1999-2000, including projections
for Medicaid requirements. This Medicaid problem will also slow the growth in
the services section of the Louisiana economy.
The Louisiana Economic Development and Gaming Corporation (the "Gaming
Corporation") was created by the Louisiana legislature in 1992 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, the Rivergate Convention Center in New Orleans (the
"casino") as well as a temporary casino until the casino is opened. Voters at
the general election held in November 1996, approved land-based gambling in the
City of New Orleans. Once the casino is in operation, the operator must pay a
minimum of 18 1/2% of gross revenues, or $100 million annually, whichever is
higher, to the Gaming Corporation. The Gaming Corporation must transfer
daily 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 being credited to the Casino
Gaming Proceeds Fund. Money in the Casino Gaming Proceeds Fund may be
allotted or expended only pursuant to legislative appropriation. The operating
contract was awarded to Harrah's Jazz Company, a partnership comprised of three
principals: Harrah's New Orleans, New Orleans/Louisiana Development Corporation
(Jazzville) and Grand Palais Corporation. Construction of the permanent casino
began at the site of the old Rivergate in the spring of 1995. In November 1995,
after unsuccessfully operating a temporary casino at the New Orleans Municipal
Auditorium, Harrah's New Orleans filed voluntary bankruptcy under Chapter 11.
Harrah's New Orleans is in the process of restructuring Harrah's Jazz Company
financing and renegotiating other contractual terms. The temporary casino will
not re-open. It appears at this time that a scaled-down version of the casino
will be opened in the latter part of 1997, but the Governor of the State has
publicly stated that he will not compromise any payments that are due the State
under the enabling legislation and the original contract. At this time, the
situation has not been resolved. The State has not included any revenue from
land-based casino gaming in the official revenue forecast for fiscal year 1996-
97.
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
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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.
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 fluctuates with 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
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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 transaction on a given option at
any particular time or at an acceptable price. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A marketplace may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events, such as volume in excess of trading or clearing capability, were to
interrupt normal market operations. A marketplace may at times find it necessary
to impose restrictions on particular types of options transactions, which may
limit 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 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 and Equity Fund may enter
- ----------------------------
into futures contracts on securities, including securities indexes. 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
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<PAGE>
United States only on commodities exchanges or boards of trade, known as
"contract markets," approved for such trading by the Commodity Futures Trading
Commission, 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.
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 and 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.
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<PAGE>
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 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
correctly predict 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 the 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.
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<PAGE>
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 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. The Strategic Income Bond Fund may invest in
obligations issued by the Canadian Government.
B-19
<PAGE>
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. ADRs 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 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, except for the Value Equity, Growth Equity, Institutional Money
Market, and Treasury Securities Money Market Funds and the International Equity
Portfolio, 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
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<PAGE>
daily basis so that the value of the assets set aside is equal to the amount of
the commitment.
Securities Lending
Each Fund, except the Treasury Security Money Market Fund and Institutional
Money Market 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 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, other than a Feeder Fund
(currently, the Small Cap Equity and International Equity Funds), 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
B-21
<PAGE>
I. Investment Limitations of the Funds
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. The fundamental investment limitations
for each Portfolio are described separately.
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 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
B-22
<PAGE>
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 (except that the
Fixed Income Funds may invest in mortgage-backed securities, including
collateralized mortgage obligations, as disclosed in the Prospectus).
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
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.
10. Make loans, except that the Fund may (i) purchase or hold debt
instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreement; and (iii) engage in securities
lending as described in the Prospectus and this Statement of Additional
Information.
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<PAGE>
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 or oil, gas or mineral leases.
No Fund may purchase securities of any company which has (with its 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.
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.
II. Investment Limitations of the Small Cap Growth Portfolio
The investment limitations of Small Cap Growth Portfolio, the Portfolio in which
the Small Cap Equity Fund expects to invest up to 100% of its assets, are
separate from those of the Small Cap Equity Fund.
B-24
<PAGE>
The Small Cap Growth Portfolio may not:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total assets,
provided that, for purposes of this limitation, investment strategies which
either obligate the Portfolio to purchase securities or require the Portfolio
to segregate assets are not considered to be borrowings. To the extent that
its borrowings exceed 5% of its assets, (i) all borrowings will be repaid
before making additional investments and any interest paid on such borrowings
will reduce income; and (ii) asset coverage of at least 300% is required.
2. Make loans if, as a result, more than 33 1/3% of its total assets would be
loaned to other parties, except that the Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
3. Purchase or sell real estate, physical commodities, or commodities contracts,
except that the Portfolio may purchase (i) marketable securities issued by
companies which own or invest in real estate (including real estate
investment trusts), commodities, or commodities contracts; and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
4. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the Securities and Exchange Commission (the
"SEC").
5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
6. Invest in interests in oil, gas, or other mineral exploration or development
programs and oil, gas or mineral leases.
The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs
immediately after or as a result of a purchase of such security. These
investment limitations and the investment limitations in each of the Portfolio's
Prospectus are fundamental policies of SIMT Trust and may not be changed without
shareholder approval.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of SIMT and
may be changed without shareholder approval.
The Small Cap Growth Portfolio may not:
B-25
<PAGE>
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that the
Portfolio may (i) obtain short-term credits as necessary for the clearance of
security transactions; (ii) provide initial and variation margin payments in
connection with transactions involving futures contracts and options on such
contracts; and (iii) make short sales "against the box" or in compliance with
the SEC's position regarding the asset segregation requirements imposed by
Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets, or consolidations;
or (iii) as otherwise permitted by the 1940 Act.
5. Purchase or retain securities of an issuer if, to the knowledge of SIMT, an
officer, trustee, partner or director of the Trust or any investment adviser
of SIMT owns beneficially more than 1/2 of the 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.
6. 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
the total assets (taken at fair market value) would be invested in such
securities.
7. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less (which
term includes repurchase agreements and time deposits maturing in more than
seven days) if, in the aggregate, more than 15% of its net assets would be
invested in illiquid securities. Unregistered securities sold in reliance on
the exemption from registration in Section 4(2) of the 1933 Act and
securities exempt from registration on re-sale pursuant to Rule 144A of the
1933 Act may be treated as liquid securities under procedures adopted by the
Board of Trustees.
8. Purchase securities which must be registered under the 1933 Act, as amended,
before they may be sold in the public, if, in the aggregate, more than 15% of
its net assets would be invested in such restricted securities, unregistered
securities issued in reliance and the exemption from registration in Section
4(2) of the 1933 Act and securities exempted from registration upon re-sale
by Rule 144A under the 1933 Act are not deemed to be restricted securities
for purposes of this limitation.
B-26
<PAGE>
Under rules and regulations, established by the SEC, the Portfolio is prohibited
from acquiring the securities of other investment companies if, as a result of
such acquisition, the Portfolio owns more than 3% of the total voting stock of
the company; securities issued by any one investment company represent more than
5% of the total Portfolio's assets; or securities (other than treasury stock)
issued by all investment companies represent more than 10% of the total assets
of the Portfolio. The Portfolio's purchase of such investment company securities
results in the bearing of expenses such that shareholders would indirectly bear
a proportionate share of the operating expenses of such investment companies,
including advisory fees.
III. Investment Limitations of the International Equity Portfolio
The investment limitations of the International Equity Portfolio, the Portfolio
in which the International Equity Fund expects to invest up to 100% of its
assets, are separate from those of the International Equity Fund.
The International Equity Portfolio may not:
1. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that the Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
2. Purchase or sell real estate, physical commodities, or commodities contracts,
except that the Portfolio may purchase (i) marketable securities issued by
companies which own or invest in real estate (including real estate
investment trusts), commodities, or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
3. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
4. Issue senior securities (as defined in the 1940 Act), except as permitted by
rule, regulation or order of the SEC.
5. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
Except with regard to the limitation on investing in illiquid securities, the
foregoing percentages will apply at the time of the purchase of a security and
shall not be violated unless an excess or deficiency occurs, immediately after
or as a result of a purchase of such security.
B-27
<PAGE>
These investment limitations and the investment limitations in the Prospectuses
are fundamental policies of SIT and may not be changed without shareholder
approval.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of SIT and may
be changed without shareholder approval.
The International Equity Portfolio may not:
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that the
Portfolio may (i) obtain short-term credits as necessary for the clearance of
security transactions, (ii) provide initial and variation margin payments in
connection with transactions involving futures contracts and options on such
contracts, and (iii) make short sales "against the box" or in compliance with
the SEC's position regarding the asset segregation requirements of Section 18
of the 1940 Act.
4. Purchase securities which must be registered under the 1933 Act, as amended,
before they may be sold to the public, if, in the aggregate, more than 15% of
its total assets would be invested in such restricted securities. Securities
exempted from registration upon resale by Rule 144A under the 1933 Act are
not deemed to be restricted securities for purposes of this limitation.
5. Purchase illiquid securities, i.e., securities that cannot be disposed of for
----
their approximate carrying value in seven days or less (which term includes
repurchase agreements and time deposits maturing in more than seven days) if,
in the aggregate, more than 15% of its total assets would be invested in
illiquid securities. Notwithstanding the foregoing, securities eligible to be
re-sold under Rule 144A of the 1933 Act may be treated as liquid securities
under procedures adopted by the SIT Board of Trustees.
6. Invest its assets in securities of any investment company, except (i) by
purchase in the open market involving only customary brokers' commissions,
(ii) in connection with mergers, acquisitions of assets, or consolidations,
or (iii) as otherwise permitted by the 1940 Act.
7. Purchase or retain securities of an issuer if, to the knowledge of SIT, an
officer, trustee, partner or director of SIT or any investment adviser of SIT
owns beneficially more than
B-28
<PAGE>
1/2 of the 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.
8. 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
the total assets (taken at current value) would be invested in such
securities.
Except with regard to the limitation on investing in illiquid securities, the
foregoing percentages will apply at the time of the purchase of a security and
shall not be violated unless an excess or deficiency occurs, immediately after
or as a result of a purchase of such security.
THE ADVISER AND SUB-ADVISER
The Trust and First National Bank of Commerce in New Orleans (the "Adviser")
have entered into separate advisory agreements (the "Advisory Agreements") dated
as of: November 1, 1996, with respect to the Strategic Income Bond Fund, Small
Cap Equity Fund and International Equity Fund; May 31, 1996, with respect to the
Tax Exempt Money Market Fund; and August 17, 1993, with respect to each of the
Trust's remaining Funds. Each 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.
Each 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 an 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. An 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 appropriate 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.
B-29
<PAGE>
For the fiscal years ended September 30, 1994, 1995 and 1996, the Funds paid the
following advisory fees:
<TABLE>
<CAPTION>
==============================================================================================================================
Advisory Fees Paid Advisory Fees Waived
Fund -------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities Money $1,039,361 $1,460,920 $2,591,388 N/A $478,529 $250,908
Market Fund
- ------------------------------------------------------------------------------------------------------------------------------
Government Securities Fund $359,239 $433,013 $724,413 N/A $148,818 $121,599
- ------------------------------------------------------------------------------------------------------------------------------
Balanced Fund $298,645 $428,912 $678,210 N/A $143,749 $109,685
- ------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income $0 $6,316 $47,758 $28,959 $27,116 $14,575
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund $185,658 $284,586 $539,947 N/A $83,575 $36,348
- ------------------------------------------------------------------------------------------------------------------------------
Growth Equity Fund * * $62,563 * * $9,488
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Money Market * $0 $17,920 N/A $5,924/1/ $25,605
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Tax Exempt Money Market * * $41,381 * * $31,001
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Strategic Income Bond * * * * * *
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund * * * * * *
- ------------------------------------------------------------------------------------------------------------------------------
International Equity Fund * * * * * *
==============================================================================================================================
</TABLE>
* Not in operation during the period.
/1/ In addition to waiving the full advisory fee for 1995, the Adviser contri-
buted $7,691.
The Adviser has entered into a sub-advisory agreement (the "Sub-Advisory
Agreement") with Weiss, Peck & Greer, L.L.C. ("WPG") dated May 31, 1996 and
relating to the Tax Exempt Money Market Fund.
The continuance of a Sub-Advisory Agreement, after the first year, 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 Sub-Advisory
Agreement may be terminated by the Adviser, the Trust's Board of Trustees or by
a vote of the majority of the
B-30
<PAGE>
outstanding voting securities of the Fund at any time, without the payment or
any penalty, on sixty (60) days' written notice to WPG and may be terminated at
any time by ninety (90) days' written notice to the Adviser of the Fund. This
Agreement will immediately terminate in the event of its assignment or upon
termination of the Sub-Advisory Agreement between the Adviser and the Trust with
regard to the Fund (as used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" have the
same meaning of such terms in the 1940 Act).
For the fiscal year ended September 30, 1996, the Adviser paid the following
sub-advisory fees to WPG:
<TABLE>
<CAPTION>
================================================================================
Fund Sub-Advisory Fee Paid Sub-Advisory Fee Waived
- --------------------------------------------------------------------------------
<S> <C> <C>
Tax Exempt Money Market Fund* $12,168 $0
================================================================================
</TABLE>
* WPG has been the Fund's sub-adviser since May 31, 1996.
SFM AND THE MONEY MANAGERS
SFM has received exemptive relief from the SEC that permits SFM, with the
approval of the respective SIT and SIMT Boards of Trustees, to retain Money
Managers (sub-advisers) for a Portfolio without submitting the sub-advisory
agreement to a vote of the Portfolio's shareholders. The relief also permits the
non-disclosure of amounts payable by SFM under such sub-advisory agreements.
Small Cap Growth Portfolio
The SIMT advisory agreement and certain of the sub-advisory agreements provide
that SFM and each Money Manager shall not be protected against any liability to
SIMT 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. In addition, certain of the
sub-advisory agreements provide that the Money Manager shall not be protected
against any liability to SIMT or its shareholders by reason of willful
misfeasance, bad faith or negligence on its part in the performance of its
duties, or from reckless disregard of its obligations or duties thereunder.
SFM acts as the investment adviser to the Small Cap Growth Portfolio and
operates as a "manager of managers." As investment adviser, SFM oversees the
investment advisory services provided to the Small Cap Growth Portfolio and
manages the cash portion of the Portfolio's assets. Pursuant to separate sub-
advisory agreements with SFM, and under the supervision of SFM and SIMT's Board
of Trustees, the Money Managers are responsible for the day-to-day investment
management of all or a discrete portion of the
B-31
<PAGE>
assets of the Small Cap Portfolio. The Money Managers are selected based
primarily upon the research and recommendations of SFM, which evaluates
quantitatively and qualitatively each of the sub-investment adviser's styles and
strategies. Subject to the SIMT's Board review, SFM allocates and, when
appropriate, reallocates the Portfolio's assets among Money Managers, monitors
and evaluates Money Manager performance, and oversees Money Managers compliance
with the Portfolio's investment objective, policies and restrictions. SFM has
the ultimate responsibility for the investment performance of the Small Cap
Growth Portfolio due to its responsibility to oversee Money Managers and
recommend their hiring, termination and replacement.
For the fiscal years ended September 30, 1994, 1995 and 1996, the Portfolio paid
the following fees to SFM and the Money Managers:
<TABLE>
<CAPTION>
====================================================================================================================================
Advisory Fees Paid(000) Advisory Fees Waived(000)
--------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio:
SFM N/A $269 $2,098 N/A $0 $0
Investment Advisers, Inc. $451 $404 N/A $0 $0 N/A
Nicholas-Applegate Capital
Management $411 $406 N/A $0 $0 N/A
Pilgrim Baxter & Associates, Ltd. $420 $414 N/A $0 $0 N/A
====================================================================================================================================
</TABLE>
International Equity Portfolio
The advisory agreement and each sub-advisory agreement with respect to the
International Equity Portfolio provides that SFM and each Money Manager shall
not be protected against any liability to SIT 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.
SFM acts as the investment adviser to the International Equity Portfolio and
operates as a "manager of managers." As investment adviser, SFM oversees the
investment advisory services provided to the International Equity Portfolio and
manages the cash portion of the Portfolio's assets. Pursuant to separate sub-
advisory agreements with SFM, and under the supervision of SFM and the Board of
Trustees, the Money Managers are responsible for the day-to-day investment
management of all or a discrete portion of the assets of the International
Equity Portfolio. The Money Managers are selected based primarily upon the
research and recommendations of SFM, which evaluates quantitatively and
qualitatively each of the sub-investment adviser's styles and strategies.
Subject to the SIT Board's review, SFM allocates and, when appropriate,
reallocates the Portfolio's assets among Money Managers, monitors and evaluates
Money Manager performance, and oversees Money
B-32
<PAGE>
Manager compliance with the Portfolio's investment objective, policies and
restrictions. SFM has the ultimate responsibility for the investment performance
of the International Equity Portfolio due to its responsibility to oversee Money
Managers and recommend their hiring, termination and replacement.
For the fiscal years ended February 28, 1994, February 28, 1995, and February
29, 1996, the International Equity Portfolio paid the following fees to SFM:
<TABLE>
<CAPTION>
====================================================================================================================================
Advisory Fees Paid (000) Advisory Fees Waived (000)
----------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Equity Portfolio $1,063 $1,516 $1,524 $0 $0 $0
====================================================================================================================================
</TABLE>
THE ADMINISTRATOR
The Trust and SEI Fund Resources (the "Administrator") are parties to an
Administration Agreement dated May 13, 1996 (the "Administration Agreement").
The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.
For the fiscal years ended September 30, 1994, 1995 and 1996, the Funds paid the
following administrative fees:
<TABLE>
<CAPTION>
============================================================================================================================
Administrative Fees Paid Administrative Fees Waived
-----------------------------------------------------------------------------------------------
Fund 1994 1995 1996 1994 1995 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Treasury Securities $1,041,063 $1,293,016 $1,568,056 N/A N/A $53,138
Money Market Fund
- ----------------------------------------------------------------------------------------------------------------------------
Government Securities $204,922 $211,577 $239,364 N/A N/A $22,714
Fund
- ----------------------------------------------------------------------------------------------------------------------------
Balanced Fund $132,490 $154,774 $165,548 N/A N/A 15,767
- ----------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free $0.00 $17,558 $26,920 $11,151 $1,546 $2,897
Income Fund
- ----------------------------------------------------------------------------------------------------------------------------
Value Equity Fund $79,890 $99,501 $129,657 N/A N/A $2,460
- ----------------------------------------------------------------------------------------------------------------------------
Growth Equity Fund * * $12,573 * * $2,307
============================================================================================================================
</TABLE>
B-33
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
Administrative Fees Paid Administrative Fees Waived
----------------------------------------------------------------------------------------------
Fund 1994 1995 1996 1994 1995 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Money * $3,949 $29,016 N/A N/A N/A
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------
Tax Exempt Money * * $20,068 * * $4,057
Market Fund
- ----------------------------------------------------------------------------------------------------------------------------
Strategic Income Bond * * * * * *
Fund
- ----------------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund * * * * * *
- ----------------------------------------------------------------------------------------------------------------------------
International Equity * * * * * *
Fund
============================================================================================================================
</TABLE>
* Not in operation during the period.
The Administrator, a Delaware business trust, has its principal business offices
at Oaks, PA 19456. SEI Financial Management Corporation ("SFM"), a wholly-owned
subsidiary of SEI, is the owner of all beneficial interests in the
Administrator. SEI and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The Administrator and
its affiliates also serve as administrator to the following other mutual funds:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, First
American Funds, Inc., First American Investment Funds, First American
Strategy Funds, Inc., FMB Funds, Inc., Monitor Funds, Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., The Pillar Funds, Profit Funds Investment Trust,
Santa Barbara Group of Mutual Funds, Inc., 1784 Funds(R), SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI International Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, Stepstone Funds, STI Classic Funds, STI
Classic Variable Trust and Turner Funds.
THE DISTRIBUTOR
The Distributor -- SEI Financial Services Company serves as distributor (the
- ---------------
"Distributor") to the Trust pursuant to a Distribution Agreement dated as of
August 17, 1993, as amended and restated as of August 8, 1994, (the
"Distribution Agreement"), which 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,
B-34
<PAGE>
cast in person at a meeting called for the purpose of voting on such approval.
The Distribution Agreement will automatically 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 (i) Trust's Trustees,
(ii) vote of a majority of the outstanding shares of such Fund or (iii) 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 are subject to a sales charge when they are redeemed.
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 Treasury
Securities Money Market Fund and a distribution plan dated as of November 13,
1995 for the Retail Class shares of the Tax Exempt Money Market Fund (the
"Retail Class Plans"), a distribution plan dated as of August 8, 1994 for Cash
Sweep Class shares of the Treasury Securities Money Market Fund and a
distribution plan dated as of November 1, 1996 for the Cash Sweep Class shares
of the Tax Exempt Money Market Fund (the "Cash Sweep Class Plans"), 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.
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
B-35
<PAGE>
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 Tax
Exempt and Treasury Securities 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.
For the fiscal year ended September 30, 1996, the Class B Government Securities,
Louisiana Tax-Free Income, Balanced, Value Equity and Growth Equity Funds paid
$2,637, $5,203, $11,889, $20,233, and $264, respectively, in distribution fees.
For the fiscal year ended September 30, 1996, the Retail Class Treasury
Securities Money Market Fund and the Tax Exempt Money Market Fund paid $707,727
and $0, respectively, in distribution fees. Excluding the fees paid for the
Retail Class Treasury Securities Money Market Fund, all of the distribution fees
paid relate exclusively to sales expenses. As of September 30, 1996, the
Strategic Income Bond Fund, Small Cap Equity Fund and International Equity Fund
had not commenced operations.
THE PORTFOLIOS' ADMINSTRATOR AND SHAREHOLDER SERVICING AGENT
SIT and SIMT have each entered into a Management Agreement (each, a "Management
Agreement") with SFM to provide administrative services and act as shareholder
servicing agent. Each Management Agreement provides that SFM shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
SIT or SIMT, respectively, in connection with the matters to which the such
Management Agreement
B-36
<PAGE>
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of SFM in the performance of its duties or from reckless
disregard of its duties and obligations thereunder.
The continuance of each Management Agreement must be specifically approved at
least annually (i) by the vote of a majority of the SIT or SIMT Trustees or by
the vote of a majority of the outstanding voting securities of the Portfolio,
and (ii) by the vote of a majority of the Trustees of SIT or SIMT who are not
parties to the Management Agreement or an "interested person" (as that term is
defined in the 1940 Act) of any party thereto, cast in person at a meeting
called for the purpose of voting on such approval. Each Management Agreement is
terminable at any time as to a Portfolio without penalty by the Trustees of SIT
or SIMT by a vote of a majority of the outstanding shares of a Portfolio or by
SFM on not less than 30 days' nor more than 60 days' written notice.
For the fiscal years ended September 30, 1994, 1995 and 1996, the Small
Cap Growth Portfolio paid the following fees to SFM:
<TABLE>
<CAPTION>
====================================================================================================================================
Management Fees Paid (000) Management Fees Waived(000)
-------------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio $1,023 $1,267 $1,103 $259 $102 $27
====================================================================================================================================
</TABLE>
For the fiscal years ended February 28, 1994, February 28, 1995, and February
29, 1996, the International Equity Portfolio paid the following fees to SFM:
<TABLE>
<CAPTION>
====================================================================================================================================
Management Fees Paid (000) Management Fees Waived (000 )
------------------------------------------------------------------------------------------------
1994 1995 1996 1994 1995 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
International Equity Portfolio $1,586 $2,653 $1,312 $471 $77 $119
====================================================================================================================================
</TABLE>
TRUSTEES AND OFFICERS
The Trust
The Trustees and executive officers of the Marquis Funds(R), their respective
dates of birth 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 principal address of each Trustee and
executive officer is Oaks, PA 19456. Certain officers of the Fund also
serve as officers of The Achievement Funds Trust, The Advisors' Inner Circle,
The Arbor Fund, ARK Funds,
B-37
<PAGE>
Bishop Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc., FMB Funds, Inc., Monitor Funds, Morgan Grenfell Investment Trust,
The PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R), Profit Funds
Investment Trust, 1784 Funds(R), SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Institutional Managed Trust, SEI International Trust, SEI Tax Exempt
Trust, Stepstone Funds, STI Classic Funds, STI Classic Variable Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Investments Trust, Turner
Funds, Profit Funds Investment Trust and Santa Barbara Group of Mutual Funds,
Inc., open-end management investment companies which are managed by SEI
Financial Management Corporation and with the exception of Rembrandt Funds, are
distributed by SEI Financial Services Company.
ROBERT A. NESHER (DOB 08/17/46) -- Chairman of the Board of Trustees* -- Retired
since 1994. Executive Vice President of SEI, 1986-1994. Director and Executive
Vice President of the Administrator and the Distributor, 1981-1994. Trustee of
the Arbor Fund, Marquis Funds(R), Advisors' Inner Circle Fund, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Managed Trust, SEI International Trust, SEI Institutional Investments Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, Insurance Investment Products Trust,
1784 Funds(R), Pillar Funds, Rembrandt Funds, and Stepstone Funds.
JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- 569 N. Post Oak Lane, Houston, TX
77024. Retired since 1992. Formerly Vice Chairman of Ameritrust Texas N.A.,
1989-1992, and MTrust Corp., 1985-1989. Trustee of the Arbor Fund, Marquis
Funds(R), and Advisors' Inner Circle Fund.
WILLIAM M. DORAN (DOB 05/26/40) - Trustee* - 2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius (law firm), counsel to
the Trust, Administrator and Distributor, Director and Secretary of SEI. Trustee
of the Arbor Fund, SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Asset Allocation Trust, SEI Institutional Investments
Trust, Insurance Investment Products Trust, The Advisors' Inner Circle Fund, and
Marquis Funds(R).
FRANK E. MORRIS (DOB 12/30/23) -- 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.
Trustee of The Arbor Fund, Marquis Funds(R), Advisors' Inner Circle Fund, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI International Trust, Insurance
Investment Products Trust, SEI Asset Allocation Trust and SEI Institutional
Investments Trust.
B-38
<PAGE>
ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- 208 Old Main, University
Park, PA 16802. Pennsylvania State University, Senior Vice President, Treasurer
(Emeritus). Financial and Investment Consultant, Professor of Transportation
(1984-present). Vice President-Investments, Treasurer, Senior Vice President
(Emeritus) (1982-1984). Director, Pennsylvania Research Corp.; Member and
Treasurer, Board of Trustees of Grove City College. Trustee of the Arbor Fund,
Marquis Funds(R) and Advisors' Inner Circle Fund.
GENE PETERS (DOB 06/03/29)-- 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 Gene Peters and Associates (import company) (1978-1980).
President and Chief Executive Officer of Jos. Schlitz Brewing Company before
1978. Trustee of the Arbor Fund, Marquis Funds(R) and Advisors' Inner Circle
Fund.
JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price &
Rhoads, from September 1987 - December 1993; Trustee of the Arbor Fund, Marquis
Funds(R), Advisors' Inner Circle Fund, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust,
SEI International Trust, Insurance Investment Products Trust, SEI Asset
Allocation Trust, and SEI Institutional Investments Trust.
BARRY MULROY (DOB 09/01/46) -- Trustee*/** -- First Commerce Corporation, 201
St. Charles Avenue, New Orleans, LA 70170. Marketing and Human Resources
Director of First Commerce Service Corporation from 1993 to present. Marketing
Director, First Commerce Service Corporation (1988-1992).
DAVID G. LEE (DOB 04/16/52) -- President and Chief Executive Officer -- Senior
Vice President of the Administrator and Distributor since 1993. Vice President
of the administrator and distributor, 1991-1993. President, GW Sierra Trust
Funds before 1991.
SANDRA K. ORLOW (DOB 10/18/53) -- Vice President and Assistant Secretary -- Vice
President and Assistant Secretary of the Administrator and Distributor since
1988.
KEVIN P. ROBINS (DOB 04/15/61) -- Vice President and Assistant Secretary --
Senior Vice President, General Counsel and Assistant Secretary of SEI, Senior
Vice President, General Counsel and Secretary of the Administrator and
Distributor since 1994. Vice President and Assistant Secretary of SEI, the
administrator and distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP
(law firm), 1988-1992.
RICHARD W. GRANT (DOB 10/25/45) -- Secretary -- 2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Administrator and Distributor.
B-39
<PAGE>
KATHRYN L. STANTON (DOB 11/19/58) -- Vice President and Assistant Secretary,
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of the Administrator and Distributor since
1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
JOSEPH P. LYDON (DOB 09/27/59) -- Vice President and Assistant Secretary --
Director, Business Administration of Fund Resources, April 1995. Vice President,
Fund Group, Dremen Value Management, LP, President Dremen Financial Services,
Inc. prior to 1995.
STEPHEN G. MEYER (DOB 07/12/65) -- Controller, Chief Financial Officer-Vice
President and Controller of SEI Fund Resources since 1995. Director, Internal
Audit and Risk Management, SEI Corporation, 1992-1995. Senior Associate, Coopers
and Lybrand, 1990-1992.
TODD B. CIPPERMAN (DOB 02/14/66) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of SEI, the Administrator and the
Distributor since 1995. Associate, Dewey Ballantine (law firm) (1994-1995).
Associate, Winston & Strawn (law firm) (1991-1994).
BARBARA A. NUGENT (DOB 06/18/56) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker Biddle & Reath (law firm) (1994-1996). Assistant
Vice President/Administration, Delaware Service Company, Inc. (1992-1993);
Assistant Vice President - Operations of Delaware Service Company, Inc.
(1988-1992).
MARC H. CAHN (DOB 06/19/57) -- Vice President and Assistant Secretary -- Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).
- ------------------------------
*Messrs. Nesher, Doran and Mulroy are Trustees who may be deemed to be
"interested persons" of the Fund as that term is defined in the 1940 Act.
**Messrs. Cooney, Morris, Mulroy, Patterson, Peters and Storey serve as members
of the Audit Committee of the Fund.
B-40
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
Total
Compensation
From Registrant
and Fund
Aggregate Pension or Complex* Paid
Compensation From Retirement Estimated to Trustees for
Registrant for the Benefits Accrued Annual the Fiscal Year
Name of Person, Fiscal Year Ended as Part of Fund Benefits Upon Ended
Position September 30, 1996 Expenses Retirement September 30,
1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney $5,746 N/A N/A $5,746 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
Frank E. Morris $5,746 N/A N/A $5,746 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
Robert Patterson $5,746 N/A N/A $5,746 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
Eugene B. Peters $5,746 N/A N/A $5,746 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
James M. Storey, Esq. $5,746 N/A N/A $5,746 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
William M. Doran, Esq. $0 N/A N/A $0 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
Barry Mulroy $0 N/A N/A $0 for
services on 1
board
- ------------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher $0 N/A N/A $0 for
services on 1
board
====================================================================================================================================
</TABLE>
*The Trust is the only investment company in the "Fund Complex."
SIMT and SIT
Several of these same individuals currently serve as the Trustees and Officers
of SIMT and SIT.
With the exception of the Trustees and executive officers of the Marquis
Funds(R), the Trustees and executive officers of SIMT and SIT, their respective
dates of birth 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 principal address of each Trustee and
executive officer is Oaks, Pennsylvania 19456.
B-41
<PAGE>
For those Trustees and officers who are also Trustees or executive officers of
the Trust, only the name and office of the Trustee or officer is set forth
below.
ROBERT A. NESHER - Chairman of the Board of Trustees.*
GEORGE J. SULLIVAN, JR. - Trustee - General Partner, Teton Partners, L.P., since
1991; Chief Financial Officer, Noble Partners, L.P., since 1991; Treasurer and
Clerk, Peak Asset Management, Inc. since 1991; Trustee, Navigator Securities
Lending Trust since 1995. Trustee of SEI Asset Allocation Trust, SEI Liquid
Asset Trust, SEI Daily Income Trust, SEI Tax Exempt Trust, SEI Index Funds and
SEI Institutional Investments Trust.
WILLIAM M. DORAN - Trustee.*
F. WENDELL GOOCH - Trustee** - P.O. Box 190, Paoli, IN 47454. President, Orange
County Publishing Co., Inc., since October 1981. Publisher of the Paoli News and
the Paoli Republican and Editor of the Paoli Republican since January 1981,
President, H & W Distribution, Inc. since July 1984. Trustee of STI Classic
Funds.
FRANK E. MORRIS - Trustee.
JAMES M. STOREY - Trustee**
DAVID G. LEE - President, Chief Executive Officer.
SANDRA K. ORLOW - Vice President, Assistant Secretary.
KATHRYN L. STANTON - Vice President, Assistant Secretary.
MARC H. CAHN - Vice President, Assistant Secretary.
BARBARA A. NUGENT - Vice President, Assistant Secretary.
JOSEPH M. LYDON - Vice President, Assistant Secretary.
TODD CIPPERMAN - Vice President, Assistant Secretary.
KEVIN P. ROBINS - Vice President, Assistant Secretary.
RICHARD W. GRANT - Secretary.
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the SIT and SIMT Trust as the term is defined in the 1940 Act.
B-42
<PAGE>
**Messrs. Blanchard, Gooch, Morris and Storey serve as members of the Audit
Committee of the Trust.
For the fiscal year ended September 30, 1996, SIMT paid approximately
$99,630 in fees to the Trustees who are not "interested persons" as defined in
the 1940 Act.
<TABLE>
<CAPTION>
=================================================================================================================================
Aggregate Pension or Retirement Estimated Total Compensation from
Compensation Benefits Accrued as Annual Registrant and Fund Complex
From SIMT Part of Fund Benefits Upon Paid to Directors for the Fiscal
Name of Person and Trust for the Fiscal Expenses Retirement Year Ended September 30, 1996
Position Year Ended September 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, $0 $0 $0 $0 for services on 8 boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
George J. Sullivan, $5,614 $0 $0 $22,500 for services on 8 boards
Jr. Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
William M. Doran, $0 $0 $0 $0 for services on 8 boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, $27,001 $0 $0 $90,000 for services on 8 boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Frank E. Morris, Trustee $27,001 $0 $0 $90,000 for services on 8 boards
- ---------------------------------------------------------------------------------------------------------------------------------
James M. Storey, $27,001 $0 $0 $90,000 for services on 8 boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Richard F. Blanchard, $13,013 $0 $0 $45,000 for services on 8 boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
Stephen G. Meyer, $0 $0 $0 $0 for services on 8 board
Controller
- ---------------------------------------------------------------------------------------------------------------------------------
David G. Lee, Chief $0 $0 $0 $0 for services on 8 boards
Executive Officer
=================================================================================================================================
</TABLE>
For the fiscal year ended February 29, 1996, SIT paid approximately $58,085.48
in fees to the Trustees who are not "interested persons" as defined in the 1940
Act.
<TABLE>
<CAPTION>
=================================================================================================================================
Name of Person, Aggregate Pension or Estimated Annual Total Compensation
Position Compensation From Retirement Benefits Benefits Upon From Registrant and
SIT Trust for the Accrues as Part of Retirement Fund Complex Paid
Fiscal Year Ended Fund Expenses to Directors for the Fiscal
February 29, 1996 Year Ended February 29, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard Blanchard, $14,521.37 $0 $0 $ 90,000 for services of 8 Boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, $14,521.37 $0 $0 $ 90,000 for services of 8 Boards
Trustee
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-43
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank Morris, $14,521.37 $0 $0 $ 90,000 for services of
Trustee 8 Boards
- ---------------------------------------------------------------------------------------------------------------------------------
James Storey, $14,521.37 $0 $0 $ 90,000 for services of
Trustee 8 Boards
- ---------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher, $0 $0 $0 $ 0 for services of
Trustee* 8 Boards
- ---------------------------------------------------------------------------------------------------------------------------------
William M. Doran, $0 $0 $0 $ 0 for services of
Trustee* 8 Boards
=================================================================================================================================
</TABLE>
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" as defined in the 1940 Act.
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-44
<PAGE>
The Tax Exempt Money Market Fund may also advertise a "tax-equivalent yield,"
which is calculated by determining the rate of return that would have to be
achieved on a fully taxable investment to produce the after-tax equivalent of
the 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 7-day period ended September 30, 1996, the Treasury Securities Money
Market Fund's 7-day and 7-day effective yields were 4.63% and 4.74%
respectively, for the Retail Class shares and, 4.83% and 4.95%, respectively,
for the Trust Class shares.
For the 7-day period ended September 30, 1996, the Institutional Money Market
Fund's 7-day and 7-day effective yields were 5.10% and 5.23%, respectively.
For the 7-day period ended September 30, 1996, the Tax Exempt Money Market
Fund's 7-day, 7-day effective and 7-day tax equivalent yields were 3.23% and
3.28% and 5.35%, respectively. The tax-equivalent yield was calculated using a
federal income tax rate of 39.6%.
The yields of the Money Market Funds fluctuate, 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.
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. In partic-ular, 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
B-45
<PAGE>
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.
For the 30-day period ended September 30, 1996, the 30-day and 30-day tax-
equivalent yields on the Funds other than the Money Market Funds were as
follows:
<TABLE>
<CAPTION>
=================================================================================================================================
Fund 30-Day Yield 30-Day Tax Equivalent Yield
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government Securities Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A 5.81% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 5.28% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A 3.50% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 2.88% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A 1.72% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 1.05% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A 0.40% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Class B .28% N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Class A 4.44% 7.35% **
- ---------------------------------------------------------------------------------------------------------------------------------
Class B 3.86% 6.39% **
=================================================================================================================================
</TABLE>
* The Strategic Income Bond, Small Cap Equity and International Equity Funds
had not commenced operations as of September 30, 1996.
** The 30-day tax-equivalent yield was calculated using a federal income tax
rate of 39.6%.
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),
B-46
<PAGE>
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 September 30, 1996 and for the one year period ended
September 30, 1996 were as follows:
<TABLE>
<CAPTION>
=================================================================================================================================
Average Annual Total Return
--------------------------------------------
Class/With Load
Fund Without Load
Since
One Year Inception*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Securities Class A with Load/1/ 0.44% 3.09%
- ---------------------------------------------------------------------------------------------------------------------------------
Government Securities Class A without Load 4.10% 4.31%
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Class A with Load/2/ 0.87% 2.28%
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Class A without Load 4.48% 3.50%
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Class A with Load/1/ 5.34% 7.03%
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Class A without Load 9.11% 8.30%
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity Class A with Load/1/ 9.40% 10.45%
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity Class A without Load 13.38% 11.76%
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity Class A with Load/3/ N/A 11.55%
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity Class A without Load N/A 18.59%
- ---------------------------------------------------------------------------------------------------------------------------------
Government Securities Class B with CDSC/1/ (0.27)% 2.87%
- ---------------------------------------------------------------------------------------------------------------------------------
Government Securities Class B without CDSC 3.23% 3.49%
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Class B with CDSC/2/ 0.10% 2.62%
- ---------------------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Class B without CDSC 3.60% 3.27%
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Class B with CDSC/1/ 4.80% 6.93%
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Class B without CDSC 8.30% 7.53%
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity Class B with CDSC/1/ 8.99% 10.83%
- ---------------------------------------------------------------------------------------------------------------------------------
Value Equity Class B without CDSC 12.49% 11.38%
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Equity Class B with CDSC/4/ N/A 11.43%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
B-47
<PAGE>
<TABLE>
=================================================================================================================================
Average Annual Total Return
--------------------------------------------
Class/With Load
Fund Without Load
Since
One Year Inception*
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Class B without CDSC N/A 19.87%
=================================================================================================================================
</TABLE>
The Strategic Income Bond, Small Cap Equity and International Equity Funds had
not commenced operations as of September 30, 1996.
*Returns have been annualized.
/1/ Commenced operations on October 22, 1993.
/2/ Commenced operations on November 22, 1993.
/3/ Commenced operations on March 1, 1996.
/4/ Commenced Operations on April 19, 1996.
- ----------------
Each Feeder Fund may advertise the performance of its corresponding Portfolio
adjusted to reflect applicable sales loads and operating expenses, other than
Rule 12b-1 fees. The data for the Small Cap Growth Portfolio and the
International Equity Portfolio set forth below is adjusted to reflect operating
expenses of .20% and .27%, respectively, and (i) with respect to the Class A
Shares, to take into account a 3.50% sales load; and (ii) with respect to Class
B Shares, to take into account the applicable contingent deferred sales charge.
Investment performance reflects voluntary fee waivers and reimbursements
currently in effect and, with respect to Class B Shares, does not reflect each
Fund's Rule 12b-1 fees. In the absence or reduction of current fee waivers or
reimbursements, or if current Rule 12b-1 fees applicable to Class B Shares were
reflected, Total Return would be reduced.
The following table shows total returns for the Class A Shares of the Small Cap
Growth Portfolio for inception through September 30, 1996 and the Class A Shares
of the International Equity Portfolio for inception through February 29, 1996.
<TABLE>
<CAPTION>
================================================================================================================
Average Annual Total Return
-----------------------------------------
Class/With Load
Portfolio Without Load
One Since
Year Five Inception*
Years
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap Growth (commenced Class A 26.56% ** 24.42%
operations on April 20, 1992)
- ----------------------------------------------------------------------------------------------------------------
International Equity (commenced Class A 17.30% ** 30.90%
operations on December 20, 1989)
================================================================================================================
</TABLE>
Past performance of a Portfolio is no guarantee of the future performance of the
corresponding Feeder Fund.
*Returns have been annualized.
**Not in operation during that period.
PURCHASE AND REDEMPTION OF SHARES
B-48
<PAGE>
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 policy of each of the Trust, SIMT and SIT (collectively, the
"Trusts") to pay for all redemptions in cash. Each 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 its Funds or Portfolios 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 or Portfolios
of the appropriate Trust during any 90-day period of up to the lesser of
$250,000 or 1% of such 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 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; Presidents Day; Good Friday; Memorial Day;
Independence Day; Labor Day; Thanksgiving; and Christmas. In addition, as it
relates to the Money Market Funds, the Federal Reserve observes the following
holidays: Martin Luther King, Jr., Day, Columbus Day and Veterans Day.
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.
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<PAGE>
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, which is
not legally binding on the signer or a Fund and 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 is
- ------------------
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 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
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<PAGE>
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 Fund's
current net asset value per share calculated using available market quotations
from each Fund's 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 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.
The Small Cap Growth Portfolio's securities are valued by SFM pursuant to
valuations provided by an independent pricing service (generally the last quoted
sale price). Portfolio securities listed on a securities exchange for which
market quotations are available are valued at the last quoted sale price on each
Business Day (defined as days on which the New York Stock Exchange is open for
business ("Business Day")) or, if there is no such reported sale, at the most
recently quoted bid price. Unlisted securities for which market quotations are
readily available are valued at the most recently quoted bid price. The pricing
service may also use a matrix system to determine valuations. This system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities in
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<PAGE>
arriving at valuations. The procedures of the pricing service and its valuations
are reviewed by the officers of SIMT under the general supervision of the SIMT
Trustees.
The market value of each portfolio security of the International Equity
Portfolio us obtained by SFM from an independent pricing service. Securities
having maturities of 60 days or less at the time of purchase will be valued
using the amortized cost method, which approximates the securities' market
value. The pricing service may use a matrix system to determine valuations of
equity and fixed income securities. This system considers such factors as
security prices, yields, maturities, call features, ratings and developments
relating to specific securities in arriving at valuations. The pricing service
may also provide market quotations. The procedures used by the pricing service
and its valuations are reviewed by the officers of SIT under the general
supervision of the SIT Trustees. Portfolio securities for which market
quotations are available are valued at the last quoted sale price on each
Business Day or, if there is no such reported sale, at the most recently quoted
bid price.
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 certain Federal income tax consequences
is based on the Internal Revnue 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.
Please note that for purposes of satisfying certain of the requirements for
taxation as a regulated investment company described below, the Small Cap Equity
Fund and International Equity Fund treat themselves as owning a proportionate
share of the assets and gross income of the Small Cap Growth Portfolio and
International Equity Portfolio, respectively, in which the Funds invest up to
100% of their assets. Although the Funds possess niether an opinion of counsel
nor a private letter ruling to this effect, they believe that this treatment is
appropriate, as numerous private rulings (applicable to other taxpayers)
conclude.
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 be relieved
of the Federal income taxes on net investment company taxable income and net
capital gain (the
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<PAGE>
excess of long-term capital gain over net short-term capital loss) distributed
to shareholders.
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, gains from the
sale or other disposition of stock, securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in stock, securities or currencies;
(2) derive less than 30% of its gross income each taxable year from the sale or
other disposition of certain assets held for less than three months ("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, U.S. 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
U.S. 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 exempt interest income (the excess of (i) its tax-exempt interest
income over (ii) certain deductions attributable to that income).
If for any taxable year, a Fund does not qualify as a regulated investment
company under Subchapter M of the Code, all of its taxable income will be
subject to tax at regular corporated tax rates without any deduction for
distributions to shareholders and all such distributions will be taxable to
shareholders as ordinary dividends to the extent of the Fund's current or
accumulated earnings and profits. Such distributions will generally qualify for
the corporated dividends received deduction for corporate shareholders.
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<PAGE>
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. The Fund intends to make sufficient
distributions to avoid imposition of this tax.
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.
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.
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 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.
B-54
<PAGE>
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.
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
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<PAGE>
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
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.
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<PAGE>
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.
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 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.
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<PAGE>
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.
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.
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TRADING PRACTICES AND BROKERAGE
The Trust
The Adviser selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or received
for a security, the commission charged, the promptness and reliability of
execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The Trust's determination of what are reasonably competitive rates
is based upon the professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry. In
some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is a
spread (the difference between the buy and sell price) which is the equivalent
of a commission.
The Trust may allocate out of all commission business generated by all of the
funds and accounts under management by the Adviser, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include (i) 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; (ii) furnishing of analyses and reports
concerning issuers, securities or industries; (iii) 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,
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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 Conduct Rules 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.
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
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the Trust, have adopted procedures for evaluating the reasonableness of
commissions paid to the Distributor and will review these procedures
periodically.
For the fiscal years ended September 30, 1995 and 1996, the Funds paid the
following brokerage commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
========================================================================================================================
% of % of Total
Total Total Total Brokerage
$ Amount $ Amount of Brokerage Transactions
of Brokerage Brokerage Commissions Effected
Commissions Commissions Paid to Through
Fund Paid Paid to Affiliated Affiliated
in Last Year Affiliates Brokers Brokers
in Last Year for Last Year For Last Year
- ------------------------------------------------------------------------------------------------------------------------
1995 1996 1995 1996 1995 1996 1995 1996
---- ---- ---- ---- ---- ---- ---- ----
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Government -- -- N/A N/A N/A N/A N/A N/A
Securities
- ------------------------------------------------------------------------------------------------------------------------
Louisiana -- -- N/A N/A N/A N/A N/A N/A
Tax-Free
Income
- ------------------------------------------------------------------------------------------------------------------------
Balanced 127,294 162,158 14,688 147,931 .12 91.23 .15 12.88
- ------------------------------------------------------------------------------------------------------------------------
Value 161,492 347,666 24,648 314,153 .15 90.33 .62 4.53
Equity
- ------------------------------------------------------------------------------------------------------------------------
Treasury -- -- N/A N/A N/A N/A N/A N/A
Securities
Money
Market
- ------------------------------------------------------------------------------------------------------------------------
Institutional -- -- N/A N/A N/A N/A N/A N/A
Money
Market
- ------------------------------------------------------------------------------------------------------------------------
Growth * 42,444 * 34,368 * 80.97 * 11.96
Equity
- ------------------------------------------------------------------------------------------------------------------------
Tax Exempt * * * * * * * *
Money
Market
- ------------------------------------------------------------------------------------------------------------------------
Strategic * * * * * * * *
Income
Bond Fund
- ------------------------------------------------------------------------------------------------------------------------
Small Cap * * * * * * * *
Equity Fund
- ------------------------------------------------------------------------------------------------------------------------
International * * * * * * * *
Equity Fund
========================================================================================================================
<CAPTION>
===========================================================================
Total
Brokerage
Commissions Total
Paid to SFS $ Amount
in Connection of Brokerage
With Commissions
Fund Repurchase Paid
Agreement for
Transactions Research
For Last Year
- ---------------------------------------------------------------------------
1995 1996 1995 1996
---- ---- ---- ----
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Government N/A N/A N/A N/A
Securities
- ---------------------------------------------------------------------------
Louisiana N/A N/A N/A N/A
Tax-Free
Income
- ---------------------------------------------------------------------------
Balanced 0 0 N/A N/A
- ---------------------------------------------------------------------------
Value 0 0 N/A N/A
Equity
- ---------------------------------------------------------------------------
Treasury N/A N/A N/A N/A
Securities
Money
Market
- ---------------------------------------------------------------------------
Institutional N/A N/A N/A N/A
Money
Market
- ---------------------------------------------------------------------------
Growth * 0 * 0
Equity
- ---------------------------------------------------------------------------
Tax Exempt * * * *
Money
Market
- ---------------------------------------------------------------------------
Strategic * * * *
Income
Bond Fund
- ---------------------------------------------------------------------------
Small Cap * * * *
Equity Fund
- ---------------------------------------------------------------------------
International * * * *
Equity Fund
===========================================================================
</TABLE>
* Had not commenced operations as of the end of the fiscal year.
B-61
<PAGE>
For the fiscal year ended September 30, 1994, the Funds paid the following
brokerage commissions with respect to portfolio transactions:
<TABLE>
<CAPTION>
===================================================================================================================
Total $ Amount of Total $ Amount of Brokerage
Brokerage Commissions Commissions Paid to Affiliates
Fund Paid
1994 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government Securities N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Balanced 158,661 N/A
- -------------------------------------------------------------------------------------------------------------------
Value Equity 257,648 N/A
- -------------------------------------------------------------------------------------------------------------------
Treasury Securities Money Market N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Institutional Money Market N/A N/A
- -------------------------------------------------------------------------------------------------------------------
Growth Equity * *
- -------------------------------------------------------------------------------------------------------------------
Tax Exempt Money Market * *
- -------------------------------------------------------------------------------------------------------------------
Strategic Income Bond Fund * *
- -------------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund * *
- -------------------------------------------------------------------------------------------------------------------
International Equity Fund * *
===================================================================================================================
</TABLE>
* Had not commenced operations as of the end of the fiscal year.
The Portfolios
SIMT - SIMT 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 advisers are responsible for placing orders to
execute Portfolio transactions. In placing orders, it is SIMT's policy to seek
to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), 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 Money
Managers generally seek reasonably competitive spreads or commissions, SIMT will
not necessarily be paying the lowest spread or commission available. SIMT will
not purchase portfolio securities from any affiliated person acting as principal
except in conformity with the regulations of the SEC.
It is expected that the Small Cap Growth Portfolio may execute brokerage or
other agency transactions through the Distributor, a registered broker-dealer,
for a
B-62
<PAGE>
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules and regulations of the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Portfolio on an exchange if a written contract is
in effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by SIMT for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the
Portfolio may direct commission business to one or more designated broker-
dealers, including the Distributor, in connection with such broker-dealer's
payment of certain of the Portfolios' expenses. The Trustees, including those
who are not "interested persons" of SIMT, have adopted procedures for evaluating
the reasonableness of commissions paid to the Distributor and will review these
procedures periodically. In addition, SFM has adopted a policy respecting the
receipt of research and related products and services in connection with
transactions effected for Portfolios operating within the "Manager of Managers"
structure. Under this policy, SFM and the various firms that serve as Money
Managers to certain Portfolios of SIMT, in the exercise of joint investment
discretion over the assets of the Portfolio, will direct a substantial portion
of a Portfolio's brokerage to the Distributor in consideration of the
Distributor's provision of research and related products to SFM for use in
performing its advisory responsibilities. All such transactions directed to the
Distributor must be accomplished in a manner that is consistent with the SIMT's
policy to achieve best net results, and must comply with SIMT's procedures
regarding the execution of transactions through affiliated brokers.
For the fiscal year ended September 30, 1996, the Small Cap Growth Portfolio
paid the following brokerage fees:
<TABLE>
<CAPTION>
=============================================================================================================================
Portfolio Total $ Total $ % of Total Total $ Total $
Amount of Amount of Brokerage Amount of Amount of
Brokerage Brokerage Commissions Brokered Brokerage
Commission Commissions Paid to Transactions Commissions
Paid paid to Affiliates for Research Paid for
Affiliates Research in
1996 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Small Cap Growth $555,149 $15,867 2.88% $ 0 $ 0
Portfolio
=============================================================================================================================
</TABLE>
B-63
<PAGE>
For the fiscal years ended September 30, 1994 and 1995, the Small Cap Growth
Portfolio paid the following brokerage fees:
<TABLE>
<CAPTION>
==========================================================================================================================
Portfolio Total $ Amount Total $ Amount Total $ Amount Total $
of Brokerage of Brokerage of Brokerage Amount of
Commission Commission Commissions Brokerage
Paid Paid Paid to Commissions
Affiliates Paid to
Affiliates
1994 1995 1994 1995
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small Cap $447,356 $0 $47,550 $0
Growth
Portfolio
==========================================================================================================================
</TABLE>
SIT - SIT 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, SFM is responsible for placing orders to execute
Portfolio transactions. In placing orders, it is SIT's policy to seek to obtain
the best net results taking into account such factors as price (including the
applicable dealer spread), 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 SFM generally seeks
reasonably competitive spreads or commissions, the Trust will not necessarily be
paying the lowest spread or commission available. SIT will not purchase
portfolio securities from any affiliated person acting as principal except in
conformity with the regulations of the SEC.
SIT does not expect to use one particular dealer, but, subject to SIT's policy
of seeking the best net results, dealers who provide supplemental investment
research to SFM or the Money Managers may receive orders for transactions by
SIT. Information so received will be in addition to and not in lieu of the
services required to be performed by SFM or the Money Managers under the
Portfolio's advisory agreement and sub-advisory agreement, and the expenses of
the SFM and the Money Managers will not necessarily be reduced as a result of
the receipt of such supplemental information. These research services include
advice, either directly or through publications or writings, as to the value of
securities, the advisability of investing in, purchasing or selling securities,
and the availability of securities or purchasers or sellers of securities;
furnishing of analyses and reports concerning issuers, securities or industries;
B-64
<PAGE>
providing information on economic factors and trends, assisting in determining
portfolio performance evaluation and technical market analyses. Such services
are used by the SFM or the Money Managers in connection with their investment
decision-making process with respect to one or more funds and accounts managed
by them, and may not be used exclusively with respect to the fund or account
generating the brokerage.
The money market securities in which the International Equity Portfolio invests
are traded primarily in the over-the-counter market. Bonds and debentures are
usually traded over-the-counter, but may be traded on an exchange. Where
possible, each Money Manager 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 Portfolio
will primarily consist of dealer spreads and underwriting commissions.
It is expected that the Portfolio may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder. Under these
provisions, the Distributor is permitted to receive and retain compensation for
effecting portfolio transactions for the Portfolio on an exchange if a written
contract is in effect between the Distributor and SIT expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by SIT 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." The Trustees, including
those who are not "interested persons" of SIT, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically.
In addition, SFM has adopted a policy respecting the receipt of research and
related products and services in connection with transactions effected for
Portfolios operating within the "Manager of Managers" structure. Under this
policy, SFM and the various firms that serve as Money Managers to the Portfolio,
in the exercise of joint investment discretion over the assets of the Portfolio,
will direct a substantial portion of the Portfolio's brokerage to the
Distributor in consideration of the Distributor's provision of research and
related products to SFM for use in performing its advisory responsibilities. All
such transactions directed to the Distributor must be accomplished in a manner
that
B-65
<PAGE>
is consistent with SIT's policy to achieve best net results, and must comply
with SIT's procedures regarding the execution of transactions through affiliated
brokers.
For the fiscal year ended February 29, 1996, the Portfolio paid the following
brokerage fees:
<TABLE>
<CAPTION>
=============================================================================================================================
Portfolio Total $ Total $ % of Total Total $ Total $
Amount of Amount of Brokerage Amount of Amount of
Brokerage Brokerage Commissions Brokered Brokerage
Commission Commissions Paid to Transactions Commissions
Paid Paid to Affiliates for Research Paid for
(000) Affiliates Research in
(000)
1996 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
International Equity $1,604 $577 36% $219,268,833 $210,670
Portfolio
=============================================================================================================================
</TABLE>
For the fiscal years ended February 28, 1994 and February 28, 1995, the
Portfolio paid the following brokerage fees:
<TABLE>
<CAPTION>
=============================================================================================================================
Portfolio Total $ Amount of Total $ Amount of Total $ Amount of Total $ Amount
Brokerage Brokerage Brokerage of Brokerage
Commission Paid Commission Commissions Commissions
(000) Paid to Affiliates Paid to Affiliates Paid to Affiliates
(000) (000) (000)
1994 1995 1994 1995
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Internationl Equity $783 $1,482 $49 $171
Portfolio
=============================================================================================================================
</TABLE>
The principal reason for the increase in brokerage commissions paid by the
International Equity Portfolio in the last three fiscal years was the growth of
the assets in the International Equity Portfolio.
SIT is required to identify any securities of its "regular brokers or dealers"
(as such term is defined in the 1940 Act) which the SIT has acquired during its
most recent fiscal year. As of February 29, 1996, the International Equity
Portfolio had entered into a repurchase agreement in the amount of approximately
$12,620,407 with J.P. Morgan Securities Inc. ("J.P. Securities"), a wholly owned
subsidiary of J.P. Morgan Co. Incorporated. J.P. Securities is considered a
"regular broker or dealer" of SIT.
B-66
<PAGE>
Since SIT does not market its shares through intermediary brokers or dealers, it
is not the SIT's practice to allocate brokerage or principal business on the
basis of sales of its shares which may be made through such firms. However, the
SFM may place Portfolio orders with qualified broker-dealers who recommend the
SIT to clients, and may, when a number of brokers and dealers can provide best
price and execution on a particular transaction, consider such recommendations
by a broker or dealer in selecting among broker-dealers.
PORTFOLIO TURNOVER
For the fiscal years ended September 30, 1995 and 1996, the portfolio
turnover rate for each of the Funds was as follows:
<TABLE>
<CAPTION>
================================================================================================================
Turnover Rate
------------------------------------------------
Fund 1995 1996
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Government Securities Fund 18.33% 22.80%
- ----------------------------------------------------------------------------------------------------------------
Balanced Fund 55.06% 57.22%
- ----------------------------------------------------------------------------------------------------------------
Value Equity Fund 97.88% 95.93%
- ----------------------------------------------------------------------------------------------------------------
Louisiana Tax-Free Income Fund 2.31% 8.26%
- ----------------------------------------------------------------------------------------------------------------
Growth Equity Fund * 91.09%/(1)/
- ----------------------------------------------------------------------------------------------------------------
Strategic Income Bond Fund * *
- ----------------------------------------------------------------------------------------------------------------
Small Cap Equity Fund * *
- ----------------------------------------------------------------------------------------------------------------
International Equity Fund * *
================================================================================================================
</TABLE>
* Had not commenced operations as of the end of the fiscal year.
(1) The portfolio turnover rate reflects the rate since the Portfolio commenced
operations on March 1, 1996.
The portfolio turnover rate for the Small Cap Growth Portfolio for the fiscal
years ending September 30, 1995 and 1996 was 113% and 167%, respectively.
The portfolio turnover rate for the International Equity Portfolio for the
fiscal years ended February 29, 1996 and February 29, 1995 was 102% and 64%,
respectively.
The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which the Trust
has acquired during its most recent fiscal year. As of September 30, 1996, the
Institutional Money Market Fund Portfolio held the following debt securities:
$1,000,000 issued by Deutsche Bank AG, $530,000 issued by J.P. Morgan
Securities, Inc., $1,400,000
B-67
<PAGE>
issued by Aubrey G. Lanston & Co., Inc., $1,400,000 issued by Wachovia Bank and
Trust Co., $1,000,000 issued by UBS Securities, Inc., $1,400,000 issued by HSBC
Holdings, $5,989,000 issued by Lehman Brothers and $1,001,000 issued by Merrill
Lynch Government Securities, Inc.; the Treasury Money Market Fund Portfolio held
the following debt securities: $50,126,000 issued by Deutsche Bank AG,
$230,000,000 issued by J.P. Morgan Securities, Inc., $250,000,000 issued by
Lehman Brothers, $50,000,000 issued by Aubrey G. Lanston & Co., Inc.,
$50,000,000 issued by Wachovia Bank and Trust Co., $40,376,000 issued by Merrill
Lynch Government Securities, Inc., $50,000,000 issued by HSBC Holdings and
$50,503,000 issued by UBS Securities, Inc.; the Government Securities Portfolio
held the following debt securities: $498,000 issued by Lehman Brothers, $498,000
issued by Merrill Lynch Government Securities, Inc. and $2,189,000 issued by UBS
Securities, Inc.; the Growth Equity Fund Portfolio held the following debt
security; $1,000 issued by UBS Securities, Inc.; the Balanced Fund Portfolio
held the following equity security: $880,000 issued by J.P. Morgan Securities,
Inc.; and the Value Equity Fund Portfolio held the following debt security:
$2,219,000 issued by UBS Securities, Inc. and the following equity security:
$844,000 issued by J.P. Morgan Securities, Inc.
DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust and was organized pursuant to a
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
Strategic Income Bond Fund, the Balanced Fund, the Value Equity Fund, the Growth
Equity Fund, the Small Cap Equity Fund, the International Equity Fund, the
Treasury Securities 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.
B-68
<PAGE>
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if the Trust were held to be a partnership, however, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification out
of the Trust property for any shareholder held personally liable for the
obligations of the Trust.
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 January 9, 1997 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 Securities Money ENBECEE Company 646,466,191 98.50
Market Fund - Trust Class c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ------------------------------------------------------------------------------------------------
</TABLE>
B-69
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================================
Name and Address Number
of Record of % of
Name of Fund or Beneficial Holder Shares Ownership
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Treasury Securities Money ENBECEE Company 275,815,477 54.80
Market Fund - Retail Class Attn: Cash Sweep
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
National Financial Services Corp. for 227,321,941 45.17
the Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
- ---------------------------------------------------------------------------------------------------------------------
Government Securities ENBECEE 8,269,045 50.30
Fund c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
ENBECEE 7,925,964 48.22
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
=====================================================================================================================
Louisiana Tax-Free ENBECEE Company 1,090,625 47.66
Income Fund c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
Balanced Fund ENBECEE Company 9,122,581 88.44
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
ENBECEE Company 754,117 7.30
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
B-70
<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 Fund ENBECEE Company 3,686,589 46.81
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
ENBECEE Company 3,250,167 43.27
c/o FNBC
Trust Group Services
PO Box 61837
New Orleans, LA 70161-1837
- ---------------------------------------------------------------------------------------------------------------------
Institutional Money Market ENBECEE Company 50,238,574 100.00
Fund Attn: Trust Services
Cash Sweep
PO Box 61837
New Orleans, LA 70161-1837
=====================================================================================================================
</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.
FINANCIAL STATEMENTS
The Trust
The financial statements of the Trust are incorporated by reference into this
Statement of Additional Information. These financial statements have been
audited by Arthur Andersen LLP, independent public accountants to the Trust, as
indicated in The Trust's annual report, and are incorporated herein by reference
in reliance upon their authority as experts in accounting and auditing. A copy
of the Trust's 1996 Annual Report to Shareholders must accompany the delivery of
this Statement of Additional Information.
SIMT and SIT
SIMT's financial statements (as of, and for the fiscal year ended, September 30,
1996) with respect to the Small Cap Growth Portfolio only and SIT's financial
statements (as of, and for the fiscal year ended, February 29, 1996) with
respect to the International Equity Portfolio only, are incorporated by
reference into this Statement of Additional Information. Such financial
statements have been audited by Price Waterhouse LLP, independent accountants to
SIMT and SIT, as indicated in SIMT's and SIT's respective annual reports and are
incorporated herein by reference in reliance upon their authority of said firm
as experts in accounting and auditing. A copy of each of the SIMT and SIT 1996
Annual Reports to Shareholders must accompany the delivery of this Statement of
Additional Information.
B-71
<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 degree of safety regarding timely payment but not as high a
degree as A-1.
Commercial paper rated Prime-1 or Prime-2 by Moody's are judged by Moody's to be
of the "highest" and "higher" quality, respectively, on the basis of relative
repayment capacity.
The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Commercial 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.
Commercial 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. Commercial 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.
A-1
<PAGE>
Bonds rated AAA have the highest rating that S&P assigns to a debt obligation.
Such a rating indicates an extremely strong capacity to pay principal and
interest. Bonds rated AA by S&P also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances bonds rated AA differ from AAA issues only to a 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 medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged" bonds. 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 are 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. 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, 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 considered 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 principal and
interest and repay principal. Whereas debt in this category normally exhibits
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay principal
and 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, and
liable to but only slight market fluctuation other than market fluctuation
caused by 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
A-2
<PAGE>
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. The merits of bonds in this category are not
unlike those of the AAA class, but whose margin of safety is less strikingly
broad. The issue may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more
local type market. Bonds rated A 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 of 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>
PART C
Item 24. Financial Statements and Exhibits
Financial statements and exhibits filed as part of the Registration
Statement:
(a) Part A - Financial Highlights
(b) Part B
(i) The following audited financial statements for the Government
Securities, Louisiana Tax-Free Income, Balanced, Value Equity Treasury
Securities, Tax Exempt and Institutional Money Market Funds for the
fiscal year ended September 30, 1996, including the report of Arthur
Andersen LLP dated November 6, 1996, are incorporated by reference to
the Statement of Additional Information from Form N-30D filed on
November 27, 1996 with Accession Number 0000935069-96-000149.
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(ii) The following audited financial statements for the Small Cap
Growth Portfolio of SEI Institutional Managed Trust for the fiscal
year ended September 30, 1996, including the report of Price
Waterhouse LLP dated November 10, 1996, are incorporated by reference
to the Statement of Additional Information from Form N-30D filed on
November 27, 1996 with Accession Number 0000935069-96-000150.
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(iii) The following audited financial statements for the International
Equity Portfolio of SEI International Trust for the fiscal year ended
February 29, 1996, including the report of Price Waterhouse LLP dated
April 10, 1996, are incorporated by reference to the Statement of
Additional Information from Form N-30D filed on April 25, 1996 with
Accession Number 0000935069-96-000050.
Schedule of Investments
Statement of Net Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(iv) The following unaudited financial statements for the
International Equity Portfolio of SEI International Trust for the
fiscal period ended August 31, 1996 are incorporated by reference to
the Statement of Additional Information from Form N-30D filed on
October 29, 1996 with Accession Number 0000935069-96-000121.
Schedule of Investments
Statement of Net Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
<PAGE>
(c) Exhibits:
(1) Registrant's Agreement and Declaration of Trust dated
June 29, 1993 as originally filed with 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 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on January 29, 1996.
(2) Registrant's By-Laws adopted on June 29, 1993 as originally
filed with 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 are
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(5) Investment Advisory Agreement between the Registrant and
First National Bank of Commerce in New Orleans dated
August 17, 1993 as originally filed with 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 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on January 29, 1996.
(5)(a) Schedule to the Investment Advisory Agreement between
Registrant and First National Bank of Commerce in New Orleans
dated August 10, 1995 with respect to the Institutional Money
Market Fund is filed herewith.
(5)(b) Schedule to the Investment Advisory Agreement between
Registrant and First National Bank of Commerce in New Orleans
dated February 1, 1996 with respect to the Growth Equity Fund
is filed herewith.
(5)(c) Investment Advisory Agreement between Registrant and First
National Bank of Commerce in New Orleans dated May 31, 1996
with respect to the Tax Exempt Money Market Fund is filed
herewith.
(5)(d) Investment Advisory Agreement between Registrant and First
National Bank of Commerce in New Orleans dated November l,
1996 with respect to the Strategic Income Bond Fund, Small
Cap Equity Fund and International Equity Fund is filed
herewith.
(5)(e) Sub-Advisory Agreement between First National Bank of
Commerce in New Orleans and Weiss, Peck & Greer, L.L.C. dated
May 31, 1996 with respect to the Tax Exempt Money Market Fund
is filed herewith.
(6) Distribution Agreement between the Registrant and SEI
Financial Services Company dated August 17, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(6)(a) Distribution Agreement between the Registrant and SEI
Financial Services Company dated August 8, 1994 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(8) Custodian Agreement between the Registrant and First National
Bank of Commerce in New Orleans dated August 17, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(9) Administration Agreement between the Registrant and SEI
Financial Management Corporation dated August 17, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
<PAGE>
(9)(a) Transfer Agent Agreement between the Registrant and
Supervised Service Company dated October 1, 1993 as
originally filed with 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
is incorporated by reference to Post-Effective Amendment No.
5, as filed on January 29, 1996.
(9)(b) Assignment and Assumption Agreement between Marquis Funds and
SEI Financial Management dated June 1, 1996 is filed
herewith.
(10) Opinion and Consent of Counsel dated August 20, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(11) Opinion and Consent of Arthur Andersen LLP is filed herewith.
(11)(a) Opinion and Consent of Price Waterhouse LLP with respect to
SEI Institutional Managed Trust is filed herewith.
(11)(b) Opinion and Consent of Price Waterhouse LLP with respect to
SEI International Trust is filed herewith.
(15) 12b-1 Plan with respect to the Retail Class Shares of the
Treasury Securities Money Market Fund dated August 17, 1993
as originally filed with 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 is
incorporated by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
(15)(a) 12b-1 Plan with respect to the Class B Shares of the
Government Securities, Louisiana Tax-Free, Balanced and Value
Equity Funds dated August 17, 1993 as originally filed with
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 is incorporated by
reference to Post-Effective Amendment No. 5, as filed on
January 29, 1996.
15(b) Distribution Plan with respect to the Class B Shares of the
Treasury Securities Money Market Fund dated August 17, 1993
is filed herewith.
15(c) Schedule to the Distribution Plan with respect to the Class B
Shares of the Treasury Securities Money Market Fund and Tax
Exempt Money Market Fund dated November 13, 1995 is filed
herewith.
15(d) Distribution Plan with respect to the Class C Shares of the
Treasury Securities Money Market Fund dated August 8, 1994 as
originally filed with 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
is incorporated by reference to Post-Effective Amendment No.
5, as filed on January 29, 1996.
15 (e) Schedule to the Distribution Plan with respect to the Class C
Shares of the Treasury Securities Money Market Fund and Tax
Exempt Money Market Fund dated November 1, 1996 is filed
herewith.
(16) Performance Calculations for the Treasury Securities Money
Market Fund for fiscal year ended September 30, 1994 as
originally filed with 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
is incorporated by reference to Post-Effective Amendment No.
5, as filed on January 29, 1996.
(17) Financial Data Schedules are filed herewith.
(18) Rule 18f-3 plan dated May 15, 1995 as originally filed with
Post-Effective Amendment No. 3 to Registrant's Registration
Statement filed with the Securities and Exchange Commission
on May 26, 1995 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on January 29, 1996.
<PAGE>
(24) Powers of Attorney for John T. Cooney, William M. Doran, David
G. Lee, Frank E. Morris, Barry M. Mulroy, Robert A. Patterson,
Gene Peters, Robert A. Nesher and James M. Storey are filed
herewith.
- -------------
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. SEI Financial Management
Corporation a wholly-owned subsidiary of SEI Corporation ("SEI"), is the
owner of all beneficial interest in SEI Fund Resources ("the
Administrator"). SEI and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers.
Item 26. Number of Holders of Securities
The number of record holders of each class as of December 6, 1996:
<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....... 5
Treasury Securities Money Market Fund-Retail Class...... 161
Treasury Securities Money Market Fund-Cash Sweep Class.. 0
Government Securities Fund-Class A...................... 156
Government Securities Fund-Class B...................... 36
Louisiana Tax-Free Income Fund-Class A.................. 327
Louisiana Tax-Free Income Fund-Class B.................. 33
Balanced Fund-Class A................................... 307
Balanced Fund-Class B................................... 195
Value Equity Fund-Class A............................... 523
Value Equity Fund-Class B............................... 435
Growth Equity Fund-Class A.............................. 146
Growth Equity Fund-Class B.............................. 47
Institutional Money Market Fund......................... 4
Tax Exempt Money Market Fund............................ 6
Strategic Income Bond Fund.............................. N/A*
Small Cap Equity Fund................................... N/A*
International Equity Fund............................... N/A*
</TABLE>
* Fund had not proposed operations as of the date indicated.
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
<PAGE>
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 $2.3 billion.
First National Bank's principal place of business is 201 St. Charles
Avenue, New Orleans, Louisiana 70170.
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:
<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 &
Director CEO
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
Director Affairs
Lloyd F. Gaubert L.F. Gaubert & Co. Inc. President
Director
John J. Gelpi, Jr. Industrial Metals of the President
Director South,Inc.
Erik F. Johnsen Central Gulf Lines, Inc. President
Director
J. Merrick Jones, Jr. Canal Barge Co., Inc. President
Director
Edwin Lupberger Energy Corporation Chairman and President
Director
Robert W. Merrick Latter & Blum, Inc. President
Director
</TABLE>
<PAGE>
Name and Position Name of Connection with
with Investment Adviser Other Company Other Company
- ----------------------- ------------- -------------
G. Frank Purvis, Jr. Pan-American Life Chairman of the Board
Director Insurance Co.
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, Chairman of the Board
Director Inc.
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
Suzanne T. Mestayer -- --
Executive Vice President
David T. Spell, Jr. -- --
Executive Vice President
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 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
<PAGE>
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
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, --
President-Investment Services
Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
Steven Kramer Senior Vice President --
David G. Lee Senior Vice President President & Chief
Executive Officer
William Madden Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Kevin P. Robins Senior Vice President, Vice President &
General Counsel & Assistant Secretary
Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Vice President &
Secretary Assistant Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Vice President &
Secretary Assistant Secretary
Robert Crudup Vice President & Managing --
Director
Ed Daly Vice President --
Jeff Drennen Vice President --
Mick Duncan Vice President and Team Assistant Secretary
Leader
Vic Galef Vice President & Managing
Director --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing
Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing
Director --
Robert S. Ludwig Vice President and Team Assistant Secretary
Leader
Vicki Malloy Vice President and Team Assistant Secretary
Leader
Carolyn McLaurin Vice President & Managing
Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Vice President &
Assistant Secretary Assistant Secretary
Sandra K. Orlow Vice President & Vice President &
Assistant Secretary Assistant Secretary
Donald Pepin Vice President & Managing
Director --
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing
Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President &
Assistant Secretary --
Wayne M. Withrow Vice President & Managing
Director --
William Zawaski 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
<PAGE>
books and records are maintained at the offices of Registrant's custodian:
First National Bank of Commerce in New Orleans
201 St. Charles Avenue
New Orleans, Louisiana 70170
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 Fund Resources
Oaks, PA 19456
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 and sub-adviser:
First National Bank of Commerce in New Orleans
201 St. Charles Avenue
New Orleans, Louisiana 70170
Weiss, Peck & Greer L.L.C.
One New York Plaza
New York, N.Y. 10004
Item 31. Management Services
Not Applicable
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.
Registrant hereby undertakes to file a Post-Effective Amendment using
financial statements with respect to the Strategic Income Fund
which need not be certified within four to six months from the
effective date of Post-Effective Amendment No. 7.
Registrant hereby undertakes to file a Post-Effective Amendment using
financial statements with respect to the Small Cap Equity Fund which
need not be certified within four to six months from the effective
date of Post-Effective Amendment No. 7.
<PAGE>
Registrant hereby undertakes to file a Post-Effective Amendment using
financial statements with respect to the International Equity Fund
which need not be certified within four to six months from the
effective date of Post-Effective Amendment No. 7.
<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.
<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
meets all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Post-Effective Amendment No. 8 to the 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 28th day of January,
1997.
The Marquis Funds
By: /s/ David G. Lee
----------------------
David G. Lee
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment has
been signed below by the following persons in the capacity and on the dates
indicated.
* Trustee January 28, 1997
- -------------------------
John T. Cooney
* Trustee January 28, 1997
- -------------------------
William M. Doran
* Trustee January 28, 1997
- -------------------------
Frank E. Morris
* Trustee January 28, 1997
- -------------------------
Barry Mulroy
* Trustee January 28, 1997
- -------------------------
Robert A. Nesher
* Trustee January 28, 1997
- -------------------------
Robert A. Patterson
* Trustee January 28, 1997
- -------------------------
Gene Peters
* Trustee January 28, 1997
- -------------------------
James M. Storey
/s/ David G. Lee President & Chief Executive January 28, 1997
- ------------------------- Officer
David G. Lee
/s/ Stephen G. Meyer Controller & Chief Financial January 28, 1997
- ------------------------- Officer
Stephen G. Meyer
*By /s/ David G. Lee
---------------------
David G. Lee
Attorney in Fact
12
<PAGE>
EXHIBIT INDEX
EX-99.B1 Registrant's Agreement and Declaration of Trust
dated June 29, 1993 as originally filed with
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 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B2 Registrant's By-Laws adopted on June 29, 1993 as
originally filed with 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 are
incorporated by reference to Post-Effective
Amendment No. 5, as filed on January 29, 1996.
EX-99.B5 Investment Advisory Agreement between the
Registrant and First National Bank of Commerce
in New Orleans dated August 17, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective
Amendment No. 5, as filed on January 29, 1996.
EX-99.B5(a) Schedule to the Investment Advisory Agreement
between Registrant and First National Bank of
Commerce in New Orleans dated August 10, 1995
with respect to the Institutional Money Market
Fund is filed herewith.
EX-99.B6(b) Schedule to the Investment Advisory Agreement
between Registrant and First National Bank of
Commerce in New Orleans dated February 1, 1996
with respect to the Growth Equity Fund is filed
herewith.
EX-99.B5(c) Investment Advisory Agreement between Registrant
and First National Bank of Commerce in New
Orleans dated May 31, 1996 with respect to the
Tax Exempt Money Market Fund is filed herewith.
EX-99.B5(d) Investment Advisory Agreement between Registrant
and First National Bank of Commerce in New
Orleans dated November l, 1996 with respect to
the Strategic Income Bond Fund, Small Cap Equity
Fund and International Equity Fund is filed
herewith.
<PAGE>
EX-99.B5(e) Sub-Advisory Agreement between First National
Bank of Commerce in New Orleans and Weiss, Peck
& Greer, L.L.C. dated May 31, 1996 with respect
to the Tax Exempt Money Market Fund is filed
herewith.
EX-99.B6 Distribution Agreement between the Registrant
and SEI Financial Services Company dated August
17, 1993 as originally filed with 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 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B6(a) Distribution Agreement between the Registrant
and SEI Financial Services Company dated
August 8, 1994 is incorporated by reference to
Post-Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B8 Custodian Agreement between the Registrant and
First National Bank of Commerce in New Orleans
dated August 17, 1993 as originally filed with
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 is incorporated by reference to
Post-Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B9 Administration Agreement between the Registrant
and SEI Financial Management Corporation dated
August 17, 1993 as originally filed with 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 is incorporated by reference to
Post-Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B9(a) Transfer Agent Agreement between the Registrant
and Supervised Service Company dated October 1,
1993 as originally filed with 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 is incorporated by reference
to Post-Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B9(b) Assignment and Assumption Agreement between
Marquis Funds and SEI Financial Management dated
June 1, 1996 is filed herewith.
<PAGE>
EX-99.B10 Opinion and Consent of Counsel dated August 20,
1993 as originally filed with 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 is incorporated by reference to Post-
Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B11 Opinion and Consent of Arthur Andersen LLP is
filed herewith.
EX-99.B11(a) Opinion and Consent of Price Waterhouse LLP is
filed herewith with respect to SEI Institutional
Managed Trust is filed herewith.
EX-99.B11(b) Opinion and Consent of Price Waterhouse LLP is
filed herewith with respect to SEI International
Trust is filed herewith.
EX-99.B15 12b-1 Plan with respect to the Retail Class
Shares of the Treasury Securities Money Market
Fund dated August 17, 1993 as originally filed
with 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 is
incorporated by reference to Post-Effective
Amendment No. 5, as filed on January 29, 1996.
EX-99.B15(a) 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 dated August 17, 1993 as
originally filed with 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 is
incorporated by reference to Post-Effective
Amendment No. 5, as filed on January 29, 1996.
EX-99.B15(b) Distribution Plan with respect to the Class B
Shares of the Treasury Securities Money Market
Fund dated August 17, 1993 is filed herewith.
EX-99.B15(c) Schedule to the Distribution Plan with respect
to the Class B Shares of the Treasury Securities
Money Market Fund and Tax Exempt Money Market
Fund dated November 13, 1995 is filed herewith.
EX-99.B15(d) Distribution Plan with respect to the Class C
Shares of the Treasury Securities Money Market
Fund dated August 8, 1994 as originally filed
with Post-Effective Amendment No.
<PAGE>
2 to Registrant's Registration Statement on Form
N-1A, filed with the Securities and Exchange
Commission on November 29, 1994 is incorporated
by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
EX-99.B15(e) Schedule to the Distribution Plan with respect
to the Class C Shares of the Treasury Securities
Money Market Fund and Tax Exempt Money Market
Fund dated November 1, 1996 is filed herewith.
EX-99.B16 Performance Calculations for the Treasury
Securities Money Market Fund for fiscal year
ended September 30, 1994 as originally filed
with 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 is incorporated
by reference to Post-Effective Amendment No. 5,
as filed on January 29, 1996.
EX-99.B18 Rule 18f-3 plan dated May 15, 1995 as originally
filed with Post-Effective Amendment No. 3 to
Registrant's Registration Statement filed with
the Securities and Exchange Commission on
May 26, 1995 is incorporated by reference to
Post-Effective Amendment No. 5, as filed on
January 29, 1996.
EX-99.B24 Powers of Attorney for John T. Cooney,
William M. Doran, David G. Lee, Frank E. Morris,
Barry M. Mulroy, Robert A. Patterson,
Gene Peters, Robert A. Nesher and
James M. Storey are filed herewith.
EX-99.B27 Financial Data Schedules are filed herewith.
<PAGE>
EX-99.5(a)
Schedule B
dated August 10, 1995
to the
Investment Advisory Agreement
dated August 17, 1993
between
Marquis Funds
and
First National Bank of Commerce in New Orleans
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee
- --------- ---
Institutional Money Market Fund .15%
<PAGE>
EX-99.B.5(b)
Schedule C
dated February 1, 1996
to the
Investment Advisory Agreement
dated August 17, 1993
between
Marquis Funds
and
First National Bank of Commerce in New Orleans
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee
- --------- ---
Growth Equity Fund .74%
<PAGE>
EXHIBIT 99.B5(c)
INVESTMENT ADVISORY AGREEMENT
MARQUIS FUNDS
AGREEMENT made this 31st day of May, 1996, by and between Marquis
Funds, a Massachusetts business trust (the "Trust"), and First National Bank of
Commerce in New Orleans, (the "Adviser").
WHEREAS, the Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation
(the "Administrator") to provide administration of the Trust's operations,
subject to the supervision of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its Tax Exempt Money Market Fund and such
other portfolios as the Trust and the Adviser may agree upon from time to time
(the "Portfolios"), and the Adviser is willing to render such services;
WHEREAS, the Adviser, with the approval of the Board of Trustees, may
appoint one or more sub-advisers for the Portfolios;
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. Duties of the Adviser. The Trust employs the Adviser to manage
the investment and reinvestment of the assets, to supervise and
monitor the investment activities of any sub-advisers appointed
for the Portfolios by the Board of Trustees, and to continuously
review, supervise, and administer the investment program of the
Portfolios, to determine in its discretion the securities to be
purchased or sold, to provide the Administrator and the Trust
with records concerning the Adviser's activities which the Trust
is required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning
the Adviser's discharge of the foregoing responsibilities. The
retention of a sub-adviser by the Adviser shall not relieve the
Adviser of its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities
subject to the control of the Board of Trustees of the Trust and
in compliance with such policies as the Trustees may from time to
time establish, and in compliance with the objectives, policies,
and limitations for each such Portfolio set forth in the Trust's
prospectus and statement of additional information as amended
from time to time, and applicable laws and regulations.
<PAGE>
The Adviser accepts such employment and agrees, at its own
expense, to render the services and to provide the office space,
furnishings and equipment and the personnel required by it to
perform the services on the terms and for the compensation
provided herein.
2. Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use
its best efforts to obtain the best net results as described in
the Trust's prospectus and statement of additional information
from time to time. The Adviser will promptly communicate to the
Administrator and to the officers and the Trustees of the Trust
such information relating to portfolio transactions as they may
reasonably request.
It is understood that the Adviser will not be deemed to have
acted unlawfully, or to have breached a fiduciary duty to the
Trust or be in breach of any obligation owing to the Trust under
this Agreement, or otherwise, solely by reason of its having
directed a securities transaction on behalf of the Trust to a
broker-dealer in compliance with the provisions of Section 28(e)
of the Securities Exchange Act of 1934, as amended.
3. Compensation of the Adviser. For the services to be rendered by
the Adviser as provided in Sections 1 and 2 of this Agreement,
the Trust shall pay to the Adviser compensation at the rate
specified in the Schedule(s) which are attached hereto and made a
part of this Agreement. Such compensation shall be paid to the
Adviser at the end of each month, and calculated by applying a
daily rate, based on the annual percentage rates as specified in
the attached Schedule(s), to the assets. The fee shall be based
on the average daily net assets for the month involved.
All rights of compensation under this Agreement for services
performed as of the termination date shall survive the
termination of this Agreement.
4. Other Expenses. The Adviser shall pay all compensation, if any,
of officers or trustees of the Trust who are affiliated persons
of the Adviser or any affiliated corporation of the Adviser, all
expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional
information, and sales literature to prospective clients to the
extent these expenses are not borne by the Trust under a
distribution plan adopted pursuant to Rule 12b-1.
5. Excess Expenses. If the expenses for any Portfolio for any
fiscal year (including fees and other amounts payable to the
Adviser, but excluding interest, taxes, brokerage costs,
litigation, and other extraordinary costs) as calculated every
business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory
authority of any jurisdiction in
<PAGE>
which Shares are qualified for offer and sale, the Adviser shall
bear such excess cost.
However, the Adviser will not bear expenses of the Trust or any
Portfolio which would result in the Trust's inability to qualify
as a regulated investment company under provisions of the
Internal Revenue Code. Payment of expenses by the Adviser
pursuant to this Section 5 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a reduction in the
fee payable to the Adviser for such month pursuant to Section 3
and, if such reduction shall be insufficient to offset such
expenses, by reimbursing the Trust.
6. Reports. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements,
reports to shareholders, certified copies of their financial
statements, and such other information with regard to their
affairs as each may reasonably request.
7. Status of the Adviser. The services of the Adviser to the Trust
are not to be deemed exclusive, and the Adviser shall be free to
render similar services to others so long as its services to the
Trust are not impaired thereby. The Adviser shall be deemed to be
an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent
the Trust in any way or otherwise be deemed an agent of the
Trust.
8. Certain Records. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2
promulgated under the 1940 Act which are prepared or maintained
by the Adviser on behalf of the Trust are the property of the
Trust and will be surrendered promptly to the Trust on request.
9. Limitation of Liability of the Adviser. The duties of the
Adviser shall be confined to those expressly set forth herein,
and no implied duties are assumed by or may be asserted against
the Adviser hereunder. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in carrying out its
duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of reckless disregard of its obligations
and duties hereunder, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or
modified hereby. (As used in this Paragraph 9, the term "Adviser"
shall include directors, officers, employees and other corporate
agents of the Adviser as well as that corporation itself).
So long as the Adviser acts in good faith and with due diligence
and without gross negligence or willful misconduct, the Trust
assumes full responsibility and agrees to and hereby does
indemnify the Adviser and hold it harmless from and against any
and all actions, suits and claims, whether groundless or
otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees
<PAGE>
and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses) arising directly or indirectly
out of said advisory relationship to the Trust or any other
service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive
the termination of this Agreement.
The Adviser's rights hereunder shall include the right to
reasonable advances of defense expenses in the event of any
pending or threatened litigation with respect to which
indemnification hereunder may ultimately be merited if a majority
of the disinterested Trustees or independent legal counsel
determines that there is a reasonable belief that indemnification
ultimately will be permissible. However, if it is ultimately
determined that the Adviser is not entitled to indemnification,
all funds advanced must be returned to the Trust.
In order that the indemnification provision contained herein
shall apply, however, it is understood that if in any case the
Trust may be asked to indemnify or hold the Adviser harmless, a
determination must be made either by a vote of a majority of the
disinterested Trustees or by opinion of independent legal counsel
that indemnification is available. In addition, the Trust shall
be fully and promptly advised of all pertinent facts concerning
the situation in question, and it is further understood that the
Adviser will use all reasonable care to identify and notify the
Trust promptly concerning any situation which presents or appears
likely to present the probability of such a claim for
indemnification against the Trust, but failure to do so in good
faith shall not affect the Adviser's rights hereunder.
10. Permissible Interests. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and
shareholders of the Adviser are or may be interested in the Trust
as Trustees, shareholders or otherwise; and the Adviser (or any
successor) is or may be interested in the Trust as a shareholder
or otherwise. In addition, brokerage transactions for the Trust
may be effected through affiliates of the Adviser or any sub-
adviser if approved by the Board of Trustees, subject to the
rules and regulations of the Securities and Exchange Commission.
11. Duration and Termination. This Agreement, unless sooner
terminated as provided herein, shall remain in effect until two
years from date of execution, and thereafter, for periods of one
year so long as such continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if
the shareholders of any Portfolio fail to approve the Agreement
as provided herein, the Adviser may continue to serve hereunder
in the manner and to the extent permitted
<PAGE>
by the 1940 Act and rules and regulations thereunder. The
foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a
manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor
more than 60 days written notice to the Adviser, or by the
Adviser at any time without the payment of any penalty, on 90
days written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the
other party at any office of such party.
As used in this Section 11, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
1940 Act and the rules and regulations thereunder; subject to
such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
12. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by the
party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to
the Trust, at 680 East Swedesford Road, Wayne, Pennsylvania,
19087, and if to the Adviser at 210 Baronne Street, New Orleans,
Louisiana 70112.
13. Severability. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
<PAGE>
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and are not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
Marquis Funds First National Bank of Commerce in
New Orleans
By: /s/ Marc Cahn By: /s/ Cliff Saik
Attest: [SIGNATURE ILLEGIBLE] Attest: [SIGNATURE ILLEGIBLE]
<PAGE>
Schedule A
to the
Investment Advisory Agreement
between
Marquis Funds
and
First National Bank of Commerce in New Orleans
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Portfolio Fee
--------- ---
Tax Exempt Money Market Fund .45%
<PAGE>
EXHIBIT 99.B5(d)
INVESTMENT ADVISORY AGREEMENT
MARQUIS FUNDS
AGREEMENT made this 1st day of November, 1996, by and between
Marquis Funds, a Massachusetts business trust (the "Trust"), and First National
Bank of Commerce in New Orleans, (the "Adviser").
WHEREAS, the Trust is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), consisting of several series of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation
(the "Administrator") to provide administration of the Trust's operations,
subject to the supervision of the Board of Trustees;
WHEREAS, the Trust has retained the Adviser to render investment
management services with respect to certain of its portfolios, but wishes this
agreement to govern the provision by the Adviser of services to its Investment
Grade Income Fund, Small Cap Equity Fund, and International Equity Fund and such
other portfolios as the Trust and the Adviser may agree upon from time to time
and listed on Schedule A (the "Portfolios"), and the Adviser is willing to
render such services;
WHEREAS, the Adviser is authorized to invest the assets of the Small
Cap Equity Fund or International Equity Fund in another registered investment
company ("Master Fund") or manage the assets directly as it deems appropriate
after consultation with the Trust's Board of Trustees; and
WHEREAS, the Adviser, with the approval of the Board of Trustees, may
appoint one or more sub-advisers for the Portfolios.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. Duties of the Adviser. The Trust employs the Adviser to manage
the investment and reinvestment of the assets, to supervise and
monitor the investment activities of any sub-advisers appointed
by the Advisor and approved by the Board of Trustees and each
affected Portfolio's shareholders, to supervise and monitor the
investment activities of any Master Fund in which the assets of
any Portfolio are invested, and to continuously review,
supervise, and administer the investment program of the
Portfolios, to determine in its discretion the securities to be
purchased or sold, to provide the Administrator and the Trust
with records concerning the Adviser's activities which the Trust
is required to maintain, and to render regular reports to the
Administrator and to the Trust's Officers and Trustees concerning
the Adviser's discharge of the foregoing responsibilities. The
Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of
<PAGE>
Trustees of the Trust and in compliance with such policies as the Trustees
may from time to time establish, and in compliance with the objectives,
policies, and limitations for each such Portfolio set forth in the Trust's
prospectus and statement of additional information as amended from time to
time, and applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on the
terms and for the compensation provided herein.
2. Portfolio Transactions. The Adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities
for the Portfolios and is directed to use its best efforts to obtain the
best net results as described in the Trust's prospectus and statement of
additional information from time to time. The Adviser will promptly
communicate to the Administrator and to the officers and the Trustees of
the Trust such information relating to portfolio transactions as they may
reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having directed a securities transaction
on behalf of the Trust to a broker-dealer in compliance with the provisions
of Section 28(e) of the Securities Exchange Act of 1934, as amended.
3. Subject to the approval of the Trust's Board of Trustees, including a
majority of the disinterested trustees of the Trust, the Adviser may invest
all or substantially all of the assets of a Portfolio in shares of a Master
Fund, or may retain one or more sub-advisers to perform any or all of the
services and assume any of the responsibilities described in Sections 1 and
2 of this Agreement. The investment of a Portfolio's assets in shares of a
Master Fund shall not relieve the Adviser of its responsibilities under
this Agreement to supervise and monitor the investment activities of the
Portfolio, further, the retention of a sub-adviser by the Adviser shall not
relieve the Adviser of its responsibilities under this Agreement to
supervise and monitor the investment activities of any such sub-adviser.
4. Compensation of the Adviser. For the services to be rendered by the Adviser
as provided in Sections 1 and 2 of this Agreement, the Trust shall pay to
the Adviser compensation at the rate specified in the Schedule(s) which are
attached hereto and made a part of this Agreement. Such compensation shall
be paid to the Adviser at the end of each month, and calculated by applying
a daily rate, based on the annual percentage rates as specified in the
attached Schedule(s), to the assets. The fee shall be based on the average
daily net assets for the month involved.
<PAGE>
All rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this Agreement.
5. Other Expenses. The Adviser shall pay all compensation, if any, of officers
or trustees of the Trust who are affiliated persons of the Adviser or any
affiliated corporation of the Adviser, all expenses of preparing (including
typesetting), printing and mailing reports, prospectuses, statements of
additional information, and sales literature to prospective clients to the
extent these expenses are not borne by the Trust under a distribution plan
adopted pursuant to Rule 12b-1.
6. Excess Expenses. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary
costs) as calculated every business day would exceed the expense
limitations imposed on investment companies by any applicable statute or
regulatory authority of any jurisdiction in which Shares are qualified for
offer and sale, the Adviser shall bear such excess cost.
However, the Adviser will not bear expenses of the Trust or any Portfolio
which would result in the a Portfolio's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. Payment
of expenses by the Adviser pursuant to this Section 6 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a reduction in
the fee payable to the Adviser for such month pursuant to Section 4 and, if
such reduction shall be insufficient to offset such expenses, by
reimbursing the Trust.
7. Reports. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of financial statements, and such other
information with regard to their affairs as each may reasonably request.
8. Status of the Adviser. The services of the Adviser to the Portfolios are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Portfolios are not
impaired thereby. The Adviser shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized,
have no authority to act for or represent the Trust in any way or otherwise
be deemed an agent of the Trust.
9. Certain Records. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Adviser on behalf of
the Trust are the property of the Trust and will be surrendered promptly to
the Trust on request.
Limitation of Liability of the Adviser. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be
<PAGE>
asserted against the Adviser hereunder. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in carrying out its duties hereunder,
except a loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties or the duties of any sub-advisers, or by reason
of reckless disregard of its or any sub-adviser's obligations and duties
hereunder , except as may otherwise be provided under provisions of applicable
state law which cannot be waived or modified hereby. (As used in this Paragraph
9, the term "Adviser" shall include directors, officers, employees and other
corporate agents of the Adviser as well as that corporation itself).
So long as the Adviser acts in good faith and with due diligence and
without gross negligence or willful misconduct, the Trust assumes full
responsibility and agrees to and hereby does indemnify the Adviser and hold
it harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees and disbursements, payments,
expenses and liabilities (including reasonable investigation expenses)
arising directly or indirectly out of said advisory relationship to the
Trust or any other service rendered to the Trust hereunder. The indemnity
and defense provisions set forth herein shall indefinitely survive the
termination of this Agreement.
The Adviser's rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately
be merited if a majority of the disinterested Trustees or independent legal
counsel determines that there is a reasonable belief that indemnification
ultimately will be permissible. However, if it is ultimately determined
that the Adviser is not entitled to indemnification, all funds advanced
must be returned to the Trust.
In order that the indemnification provision contained herein shall apply,
however, it is understood that if in any case the Trust may be asked to
indemnify or hold the Adviser harmless, a determination must be made either
by a vote of a majority of the disinterested Trustees or by opinion of
independent legal counsel that indemnification is available. In addition,
the Trust shall be fully and promptly advised of all pertinent facts
concerning the situation in question, and it is further understood that the
Adviser will use all reasonable care to identify and notify the Trust
promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the
Trust, but failure to do so in good faith shall not affect the Adviser's
rights hereunder.
11. Permissible Interests. Trustees, agents, and shareholders of the Trust are
or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees,
<PAGE>
shareholders or otherwise; and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or otherwise. In addition,
brokerage transactions for the Trust may be effected through affiliates of
the Adviser or any sub-adviser , subject to the rules and regulations of
the Securities and Exchange Commission.
12. Duration and Termination. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if the
shareholders of any Portfolio fail to approve the Agreement as provided
herein, the Adviser may continue to serve hereunder in the manner and to
the extent permitted by the 1940 Act and rules and regulations thereunder.
The foregoing requirement that continuance of this Agreement be
"specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty, by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Portfolio on 60 days written notice to the Adviser, or by the Adviser at
any time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately terminate in
the event of its assignment.
As used in this Section 12, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
13. Notice. Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at
the last address furnished by the other party to the party giving notice:
if to the Trust, at 680 East Swedesford Road, Wayne, Pennsylvania 19087,
and if to the Adviser at 210 Baronne Street, New Orleans, Louisiana 70112.
14. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
<PAGE>
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and are not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
Marquis Funds First National Bank of Commerce in
New Orleans
By:/s/ Marc Cahn By:/s/ Kevin P. Reed
Attest: [SIGNATURE ILLEGIBLE] Attest: [SIGNATURE ILLEGIBLE]
<PAGE>
Schedule A
to the
Investment Advisory Agreement
between
Marquis Funds
and
First National Bank of Commerce in New Orleans
Dated: November 1, 1996
Pursuant to Section 4 , the Trust shall pay the Adviser compensation for
advisory services rendered to the following Portfolios at an annual rate as
follows:
During any term of this Agreement while the Portfolio's "investment securities"
are 100% invested in a Master Fund:
Portfolio Fee
--------- ---
Small Cap Equity Fund 40 bps
International Equity Fund 40 bps
During any term of this Agreement while the Portfolio's assets are managed by
the Adviser (either directly or through a sub-adviser):
Portfolio Fee
--------- ---
Strategic Income Bond Fund 74 bps
Small Cap Equity Fund 90 bps
International Equity Fund 110 bps
<PAGE>
EXHIBIT 99.B5(e)
MARQUIS FUNDS MARQUIS FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of May 31, 1996 by and between First National
Bank of Commerce in New Orleans (the "Adviser") and Weiss, Peck & Greer, L.L.C.,
a limited liability Company organized under the laws of the State of Delaware,
an investment advisor registered under the Investment Advisors Act of 1940, as
amended (the "Sub-Adviser").
WHEREAS, the Adviser is the investment manager for Marquis Funds (the
"Trust"), an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser as its agent to
furnish investment advisory services for the Tax-Exempt Money Market Fund, a
diversified investment portfolio of the Trust (the "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to
------------
provide certain investment sub-advisory services to the Fund for the period and
on the terms set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
2. Delivery of Documents. The Adviser has furnished the Sub-Adviser
----------------------
with copies of each of the following:
(a) the Trust's Declaration of Trust, as filed with the Secretary of
State of the State of Massachusetts on June 29, 1993, and all amendments thereto
or restatements thereof (such Declaration of Trust, as presently in effect and
as it shall from time to time be amended or restated, is herein called the
"Declaration of Trust");
(b) the Trust's By-Laws and all amendments thereto;
(c) the resolutions of the Trust's Board of Trustees authorizing the
appointment of the Sub-Adviser and approving this Agreement;
(d) the Trust's Notification of Registration on Form N-8A under the
1940 Act, as filed with the Securities and Exchange Commission (the "SEC") on
June 29, 1993 and all amendments thereto;
(e) the Trust's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act") and under the 1940 Act as
filed with the SEC and all amendments thereto insofar as such Registration
Statement and such amendments relate to the
<PAGE>
Fund;
(f) the Trust's most recent prospectuses and Statement of Additional
Information for the Funds (such prospectuses and Statement of Additional
Information, as presently in effect, and all amendments and supplements thereto
are herein collectively called the "Prospectuses"); and
(g) any other information reasonably needed by the Sub-Adviser to
satisfy its obligations under this Agreement.
The Adviser will furnish the Sub-Adviser from time to time with copies
of all amendments of or supplements to the foregoing and information on changes
to the Trust's service providers.
The Sub-Adviser has furnished the Adviser with a copy of the Sub-
Adviser's Form ADV Part II.
3. Management. Subject always to the supervision of the Trust's
-----------
Board of Trustees and the Adviser, the Sub-Adviser will furnish an investment
program in respect of, and make investment decisions for, all assets of the Fund
and place all orders for the purchase and sale of securities, all on behalf of
the Fund. In the performance of its duties the Sub-Adviser will satisfy its
fiduciary duties to the Fund (as set forth in Section 8 below), and will monitor
the Fund's investments, and will comply with the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Funds as set forth in
the prospectus of the Fund, as amended from time to time. The Sub-Adviser and
the Adviser will each make its officers and employees available to the other
from time to time at reasonable times to review investment policies of the Fund
and to consult with each other regarding the investment affairs of the Fund and
the Sub-Adviser will at all times act consistently with the instructions and
directions given to it by the Adviser. The Sub-Adviser shall also make itself
reasonably available to the Board of Trustees of the Trust at such times as the
Board of Trustees shall request.
The Sub-Adviser represents and warrants that it is in compliance with
all applicable rules and regulations of the SEC pertaining to its investment
advisory activities and agrees that it:
(a) will conform with all applicable rules and regulations of the SEC
pertaining to its investment advisory activities;
(b) will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers or dealers, the Sub-Adviser will attempt to obtain
the best combination of prompt execution of orders in an effective manner and at
the most favorable price. On occasions when the Sub-Adviser deems the purchase
or sale of a security to be in the best interest of the Fund as well as the
other clients of the Sub-Adviser, the Sub-Adviser, to the extent permitted by
applicable laws and
<PAGE>
regulations, may, but shall be under no obligation to, aggregate the securities
to be so purchased or sold in order to obtain the most favorable price or lower
brokerage commissions and efficient execution. Consistent with this obligation,
when the execution and price offered by two or more brokers or dealers are
comparable, the Sub-Adviser may, in its discretion, purchase and sell portfolio
securities to and from brokers and dealers who provide the Sub-Adviser with
research, advice and other services. In no instance will portfolio securities be
purchased from or sold to the Adviser, the Sub-Adviser, SEI Financial Services
Company or any affiliated person of either the Trust, the Adviser, SEI Financial
Services Company or the Sub-Adviser, except as may be permitted under the 1940
Act;
(c) will report regularly to the Adviser and will make appropriate
persons available for the purpose of reviewing at reasonable times with
representatives of the Adviser and the Board of Trustees of the Trust the
management of each of the Funds, including, without limitation, review of the
general investment strategy of each of the Funds, the performance of each of the
Funds in relation to standard industry indices, interest rate considerations and
general conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Adviser;
(d) will maintain books and records with respect to the Trust's
securities transactions which it has affected and will furnish the Adviser and
the Board of Trustees of the Trust such periodic and special reports as the
Board of Trustees or the Adviser may request;
(e) will act upon instructions from the Adviser not inconsistent with
the fiduciary duties hereunder; and
(f) will treat confidentially and as proprietary information of the
Trust all such records and other information relative to the Trust maintained by
the Sub-Adviser, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld where the Sub-Adviser
may be exposed to civil or criminal contempt proceeding for failure to comply,
when requested to divulge such information by duly constituted authorities, or
when so requested by the Trust. The Sub-Adviser further acknowledges and agrees
that (i) the names "Marquis" and " Marquis Funds" are the property of the
Adviser, and (ii) the Sub-Adviser will publicly disseminate information
concerning the Fund and the Trust only if such information has been approved in
advance by the Adviser.
The Sub-Adviser shall have the right to execute and deliver, or cause
its nominee to execute and deliver, all proxies and notices of meetings and
other notices affecting or relating to the securities of the Fund.
The Sub-Adviser hereby warrants that it is not presently, nor has it
been in the past three years, nor has it been advised that it may be in the
future, the subject of a Securities and Exchange Commission investigative
proceeding or a proceeding by any state securities commission, nor the subject
of any disciplinary hearing by a self-regulatory organization or other
governmental or
<PAGE>
quasi-governmental body.
4. Books and Records. In compliance with the requirements of Rule
------------------
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Sub-Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser will
---------
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Trust.
6. Compensation. For the services provided and the expenses
-------------
assumed pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and
the Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory
fee payable monthly, in accordance with Schedule A hereto. The fee shall be
----------
based on the average daily net assets for the month involved.
7. Services to Others. The Adviser understands, and has advised the
-------------------
Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the future
act, as an investment adviser to fiduciary and other managed accounts, and as
investment adviser, sub-investment adviser, and/or administrator to other
investment companies. The Adviser acknowledges that the Sub-Adviser may give
advice and take action in the performance of its duties with respect to any of
its other clients which may differ from advice given, or the time or nature of
action taken, with respect to the Fund, so long as it is the Sub-Adviser's
policy, to the extent practicable, to allocate investment opportunities to the
Fund over a period of time on a fair and equitable basis relative to other
clients. Nothing in this Agreement shall be deemed to impose upon the Sub-
Adviser any obligation to purchase or sell for the Fund any security or property
which the Sub-Adviser, its principals, affiliates or employees may purchase or
sell for its or their own accounts or for the account of any other client, if in
the sole discretion of the Sub-Adviser such transaction or investment appears
unsuitable, impractical or undesirable for the Fund. In addition, the Adviser
understands, and has advised the Trust's Board of Trustees, that the persons
employed by the Sub-Adviser to assist in the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing contained
in this Agreement will be deemed to limit or restrict the right of the Sub-
Adviser or any of its affiliates to engage in and devote time and attention to
other businesses or to render services whatever kind or nature. Provided,
further, that notwithstanding the above, the Sub-Adviser shall provide its
services reasonably, and make itself available to the Adviser or the Board of
Trustees at reasonable times, in accordance with the provisions of paragraph 3.
8. Limitation of Liability. The Adviser will not take any action
------------------------
against the Sub-Adviser to hold the Sub-Adviser liable for any loss suffered by
the Fund in connection with the performance of the Sub-Adviser's duties under
this Agreement, except a loss resulting from the Sub-Adviser's willful
misfeasance, bad faith, or negligence in the performance of its duties under
this Agreement.
<PAGE>
9. Duration and Termination. This Agreement will become effective
-------------------------
as to the Fund on the first day the Fund's shares are offered to the public
provided that it has been approved by vote of a majority of the outstanding
voting securities of the Fund in accordance with the requirements under the 1940
Act, and, unless sooner terminated as provided herein, will continue in effect
for one year.
Thereafter, if not terminated, this Agreement will continue in effect
for successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date of each year, provided that such
--------
continuation is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not
interested persons of the Trust, the Sub-Adviser, or the Adviser, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
vote of a majority of the Trust's Board of Trustees or by the vote of a majority
of all votes attributable to the outstanding shares of the Fund. Notwithstanding
the foregoing, this Agreement may be terminated by the Adviser, the Trust's
Board of Trustees or by a vote of the majority of the outstanding voting
securities of the Fund at any time, without the payment of any penalty, on sixty
(60) days' written notice to the Sub-Adviser and may be terminated by the Sub-
Adviser at any time by ninety (90) days' written notice to the Adviser and the
Fund. This Agreement will immediately terminate in the event of its assignment
or upon termination of the investment advisory agreement between the Adviser and
the Trust with regard to the Fund (As used in this Agreement, the terms
"majority of the outstanding voting securities", "interested persons" and
"assignment" have the same meaning of such terms in the 1940 Act.).
This Agreement will terminate automatically if the advisory agreement
between the Trust and the Adviser is terminated.
10. Amendment of this Agreement. No provision of this Agreement may
----------------------------
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
11. Notice. Any notice required or permitted to be given by either
-------
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Adviser, at 210 Baronne Street, New Orleans, LA 70112, Attention:
President and if to the Sub-Adviser at: 1 New York Plaza, New York, NY 10004-
1950, Attention: Arthur L. Schwarz. The Sub-Adviser shall notify the Adviser of
any change in the membership of the Sub-Adviser's partnership within a
reasonable time after such change.
12. Miscellaneous. The captions in this Agreement are included for
--------------
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and will be governed by the
laws of the state of Massachusetts.
<PAGE>
The name "Marquis Funds" and "Trustees of Marquis Funds" refers
respectively to the Trust created by, and the Trustees, as trustees but not
individually or personally, acting from time to time under, the Articles of
Trust, to which reference is hereby made and a copy of which is on file at the
office of the Secretary of State of Massachusetts and elsewhere as required by
law, and to any and all amendments thereto so filed or hereafter filed. The
obligations of "Marquis Funds" entered in the name or on behalf thereof by any
of the Trustees, representatives or agents are made not individually but only in
such capacities and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and persons dealing with the Fund must look solely to the assets of the Trust
belonging to such Fund for the enforcement of any claims against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
FIRST NATIONAL BANK OF COMMERCE IN
NEW ORLEANS
By:/s/ Kevin P. Reed
Name: Kevin P. Reed
Title: Vice President
WEISS, PECK & GREER, L.L.C.
By:/s/ Arthur L. Schwarz
Name: Arthur L. Schwarz
Title: Principal
<PAGE>
Schedule A
to
Investment Sub-Advisory Agreement
dated
May 31, 1996
The Adviser shall pay to the Sub-Adviser compensation with respect to the Tax-
Exempt Money Portfolio at an annual rate as follows:
.075% of average daily net assets up to $150 million
.05% of average daily net assets between $150 - $500 million
.04% of average daily net assets between $500 million - $1 billion
.03% of average daily net assets over $1 billion
<PAGE>
EXHIBIT 99.B9(b)
CONSENT TO ASSIGNMENT AND ASSUMPTION
1. SEI Financial Management Corporation ("Assignor") hereby notifies Marquis
Funds/(R)/ ("Trust") that it intends to assign all of its rights and
delegate its obligations under the Administration Agreement between the
Trust and SEI Financial Management Corporation, dated May 13, 1996 to SEI
Fund Resources ("Assignee"), no later than June 1, 1996, in connection with
the transition of Assignor's fund administration and distribution business
to Assignee;
2. Trust releases Assignor from its rights and obligations under the Agreement
on or after the date the Assignment and Assumption Agreement is executed and
any liability or responsibility for (i) breach of the Agreement of Assignee
of (ii) demands and claims made against the Trust or damages, losses or
expenses incurred by the Trust on or after the date of the Assignment and
Assumption Agreement, unless such demands, claims, losses, damages or
expenses arose out of or resulted from an act or omission of Assignor prior
to the date of the Assignment and Assumption Agreement.
3. This consent is not a waiver or estoppel with respect to any rights the
Trust may have by reason of the past performance or failure to perform by
Assignor.
4. This consent is conditioned upon the execution of an Assignment and
Assumption Agreement between Assignor and Assignee that require(s) Assignee
(i) to assume all rights and obligations of Assignor under the Agreement and
(ii) to be liable to the Trust for any default or breach of the Agreement to
the extent the default or breach occurs on or after the date of execution of
the Assignment and Assumption Agreement.
5. Except as provided herein, neither this consent nor the Assignment and
Assumption Agreement shall alter or modify the terms or conditions of the
Agreement.
Trust: Marquis Funds/(R)/ Assignor:
By: /s/ Kathryn L. Stanton By: /s/ Kevin P. Robins
---------------------- -------------------
Title: Vice President Title: Vice President
---------------------- -------------------
Date: June 1, 1996 Date: June 1, 1996
---------------------- -------------------
<PAGE>
EX-99.B11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated November 13, 1996, on the September
30, 1996 financial statements of Marquis Funds, included in the Post-Effective
Amendment No. 8 to the Registration Statement on Form N-1A of Marquis Funds (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.
January 24, 1997
<PAGE>
EX-99.B11(a)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 8 to the registration statement on Form N-1A of Marquis Funds
(File 33-65436)(the "Registration Statement") of our report dated November 22,
1996, relating to the financial statements and financial highlights of the Small
Cap Growth Fund appearing in the September 30, 1996 Annual Report to
Shareholders of the SEI Institutional Managed Trust, which are also incorporated
by reference to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Financial Statements" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
Philadelphia, Pennsylvania
January 24, 1997
<PAGE>
EX-99.B11(b)
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 8 to the registration statement on Form N-1A of Marquis Funds
(File 33-65436)(the "Registration Statement") of our report dated April 10,
1996, relating to the financial statements and financial highlights of the
International Equity Fund appearing in the February 29, 1996 Annual Report to
Shareholders of the SEI International Trust, which are also incorporated by
reference to us under the heading "Financial Highlights" in the Prospectus and
under the heading "Financial Statements" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
Philadelphia, Pennsylvania
January 24, 1997
<PAGE>
EXHIBIT 99.B.15(b)
DISTRIBUTION PLAN
Marquis Funds
Class B
WHEREAS, Marquis Funds (the "Trust") is engaged in business as an open-end
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Trust and the owners of units ("shares") of beneficial interest ("Shareholders")
in the Trust;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act.
Section 1. The Trust has adopted this Class B Distribution Plan ("Plan") to
----------
enable the Trust to directly or indirectly bear expenses relating to the
distribution of Class B shares of the Treasury Securities Money Market Fund and
such other Portfolios of the Trust as may be added to the Plan and listed on a
Schedule A attached hereto (each a "Portfolio") of which the Trust is the
issuer.
Section 2. The Trust will pay the Distributor a fee at the annual rate
----------
specified on Schedule A hereto. The Distributor of the Class B shares of each
Portfolio may retain all or a part of this fee as compensation for distribution
or shareholder services it provides or it may use such fees for compensation of
broker/dealers and other financial institutions and intermediaries that provide
distribution or shareholder services as specified by the Distributor. The actual
fee to be paid by the Distributor to broker/dealers and financial institutions
and intermediaries will be negotiated based on the extent and quality of
services provided.
Section 3. This Plan shall not take effect as to a Portfolio until it has
----------
been approved (a) by a vote of at least a majority of the outstanding Class B
shares of such Portfolio; and (b) together with any related agreements, by
votes of the majority of both (i) the Trustees of the Trust and (ii) the
Qualified Trustees (as defined herein), cast in person at a Board of Trustees
meeting called for the purpose of voting on this Plan or such agreement.
Section 4. This Plan shall continue in effect for a period of more than one
----------
year after it takes effect only for so long as such continuance is specifically
approved at least annually in the manner provided in Part (b) of Section 3
herein for the approval of this Plan.
<PAGE>
Section 5. Any person authorized to direct the disposition of monies paid
---------
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
Section 6. This Plan may be terminated at any time by the vote of a
---------
majority of the Qualified Trustees or, with respect to Class B shares of a
Portfolio, by vote of a majority of the Class B shares of the Portfolio.
Termination by the Class B Shareholders of a Portfolio will not affect the
validity of this Plan with respect to Class B shares of any other Portfolio.
Section 7. All agreements with any person relating to implementation of
---------
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or with
respect to Class B shares of a Portfolio, by vote of a majority of the Class B
shares of the Portfolio, on not more than 60 days written notice to any other
party to the agreement; and (b) that such agreement shall terminate
automatically in the event of its assignment.
Section 8. This Plan may be amended in the manner provided in part (b) of
---------
Section 3 herein for the approval of this Plan; provided, however, that the plan
may not be amended to increase materially the amount of distribution expenses
permitted pursuant to Section 2 hereof with respect to the Class B shares of a
Portfolio without the approval of Shareholders holding a majority of the
outstanding Class B shares of such Portfolio of the Trust.
Section 9. While this Plan is in effect, the selection and nomination of
---------
those Trustees who are not interested persons of the Trust Act shall be
committed to the discretion of the Trustees then in office who are not
interested persons of the Trust.
Section 10. As used in this Plan, (a) the term "Qualified Trustees" shall
----------
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
Section 11. This Plan shall not obligate the Trust or any other party to
----------
enter into an agreement with any particular person.
August 17, 1993
2
<PAGE>
SCHEDULE A
to the
Marquis Funds
Class B
Distribution Plan
The Distributor receives a fee, paid on a monthly basis, as set forth below.
This fee is calculated based on the annual rate said below, applied to the
average daily net assets of the Portfolio.
Portfolio Fee
- --------- ---
Treasury Securities Money Market Fund .25%
3
<PAGE>
EXHIBIT 99.B.15(c)
Schedule dated November 13, 1995
to the
Marquis Funds
Class B
Distribution Plan
The Distributor receives a fee, paid on a monthly basis, as set forth below.
This fee is calculated based on the annual rate said below, applied to the
average daily net assets of each Portfolio.
Portfolio Fee
- --------- ---
Treasury Securities Money Market Fund .25%
Tax Exempt Money Market Fund .25%
<PAGE>
EX-99.B15(e)
Schedule B
Dated November 1, 1996
to the
Marquis Funds
Class C
Distribution Plan
The Distributor receives a fee, paid on a monthly basis, as set forth below.
This fee is calculated based on the annual rate said below, applied to the
average daily net assets of the Portfolio.
Portfolio Fee
- --------- ---
Treasury Securities Money Market Fund .75%
Tax-Exempt Money Market Fund .75%
<PAGE>
EXHIBIT-99.B24
MARQUIS FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the Marquis Fund (the "Trust"), a business trust organized under the
laws of The Commonwealth of Massachusetts, hereby constitutes and appoints David
G. Lee, Kevin P. Robins and Carmen V. Romeo, and each of them singly, his or her
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, to sign for him or her in his or her name, place and stead, and
in the capacity indicated below, to sign any or all amendments (including post-
effective amendments) to the Trust's Registration Statement on Form N-1A under
the provisions of the Investment Company Act of 1940 and the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ Barry Mulroy Date: October 19, 1994
- ------------------------- ---------------------
Barry Mulroy
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Kevin P. Robins and Carmen V. Romeo, and each of them
singly, his or her true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him or her in his or her name,
place and stead, and in the capacity indicated below, to sign any or all
amendments (including post-effective amendments) to each Trusts' Registration
Statement on Form N-1A under the provisions of the Investment Company Act of
1940 and the Securities Act of 1933, each such Act as amended, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, acting alone, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said attorneys-
in-fact and agents or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ David G. Lee Date:
- ---------------------------------- -------------------------
David G. Lee
President & Chief Executive Officer
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ John T. Cooney Date: October 19, 1994
- --------------------- -------------------
John T. Cooney
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ William M. Doran Date: October 19, 1994
- ------------------------- ----------------------
William M. Doran
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ Frank E. Morris Date: October 31, 1994
- ------------------------------- ----------------------
Frank E. Morris
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ Robert A. Nesher Date: May 20, 1994
- -------------------------- -------------------
Robert A. Nesher
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ Gene Peters Date: October 20, 1994
- ---------------------- -----------------------
Gene Peters
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ Robert A. Patterson Date: October 31, 1994
- ----------------------------- ------------------------
Robert A. Patterson
Trustee
<PAGE>
INVENTOR FUNDS, INC.
PBHG FUNDS, INC.
MARQUIS FUND
THE ARBOR FUND
FFB LEXICON FUND
THE ADVISORS' INNER CIRCLE FUND
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee/director
and/or officer of the above referenced funds (the "Trusts"), each a business
trust organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints David G. Lee, Kevin P. Robins and Carmen V. Romeo, and
each of them singly, his or her true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution, to sign for him or her in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trusts'
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, acting alone, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and
seal as of the date set forth below.
/s/ James M. Storey Date: October 24, 1994
- ---------------------------- -----------------------
James M. Storey
Trustee
<TABLE> <S> <C>
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<PERIOD-START> OCT-01-1995
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<PAGE>
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<CIK> 0000908731
<NAME> MARQUIS FUNDS
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<NUMBER> 032
<NAME> LOUISIANA TAX FREE INCOME CLASS B
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> MARQUIS FUNDS
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<NUMBER> 041
<NAME> BALANCED FUND CLASS A
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<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> MARQUIS FUNDS
<SERIES>
<NUMBER> 042
<NAME> BALANCED FUND CLASS B
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<S> <C>
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<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> MARQUIS FUNDS
<SERIES>
<NUMBER> 051
<NAME> VALUE EQUITY CLASS A
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> SEP-30-1996
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> MARQUIS FUNDS
<SERIES>
<NUMBER> 052
<NAME> VALUE EQUITY CLASS B
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<S> <C>
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<FISCAL-YEAR-END> SEP-30-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> MARQUIS FUNDS
<SERIES>
<NUMBER> 061
<NAME> INSTITUTIONAL MONEY MARKET CLASS A
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<S> <C>
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<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
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<NAME> GROWTH EQUITY CLASS A
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<S> <C>
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
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<NAME> GROWTH EQUITY CLASS B
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000908731
<NAME> THE MARQUIS FUNDS
<SERIES>
<NUMBER> 080
<NAME> TAX EXEMPT MONEY MARKET
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> JUN-07-1996
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</TABLE>
