<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO, AMONG OTHER THINGS, THIS PROSPECTUS HAS +
+BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. SECURITIES OF THE +
+PORTFOLIO REFERENCED IN THIS PROSPECTUS MAY NOT BE SOLD NOR MAY OFFERS TO BUY +
+SUCH SECURITIES BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF SECURITIES +
+REFERENCED HEREIN IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO SUCH REGISTRATION OR QUALIFICATION UNDER THE +
+SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS DATED JANUARY 4, 1996
SUBJECT TO COMPLETION
PROSPECTUS
BISHOP STREET FUNDS
INVESTMENT ADVISER:
FIRST HAWAIIAN BANK
BISHOP STREET FUNDS (the "Trust") is a mutual fund that seeks to provide a
convenient means of investing in one or more professionally managed portfolios
of securities. This Prospectus relates to the following Fund:
BISHOP STREET TREASURY MONEY MARKET FUND
The Bishop Street Treasury Money Market Fund (the "Fund") is composed of Retail
Class B and Institutional Class A shares. Retail Class B shares are sold with
distribution fees. Institutional Class A shares are sold without distribution
fees. First Hawaiian Bank, the Fund's investment adviser, is an affiliate of
First Hawaiian, Inc.
Institutional Class A shares are offered primarily to agency, fiduciary,
custodial and advisory clients of FIRST HAWAIIAN BANK. Retail Class B shares
are offered primarily to individuals and to cash sweep customers of FIRST
HAWAIIAN BANK.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, INCLUDING FIRST HAWAIIAN BANK OR ITS AFFILIATES. 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 PRINCIPAL.
AS WITH ANY MUTUAL FUND, AN INVESTMENT IN THE BISHOP STREET TREASURY MONEY
MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT. THERE CAN
BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE
OF $1.00 PER SHARE.
This Prospectus sets forth concisely the basic information about the Fund and
the Trust that a prospective investor should know before investing. Investors
are advised to read this Prospectus and retain it for future reference. A
Statement of Additional Information dated January 30, 1995 has been filed with
the Securities and Exchange Commission and is available without charge by
calling 1-800-262-9565. The Statement of Additional Information is incorporated
into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
FEBRUARY 17, 1996
<PAGE>
2
SUMMARY
BISHOP STREET FUNDS (the "Trust") is an open-end management investment company
which provides a convenient way to invest in professionally managed portfolios
of securities. This Summary provides basic information about the Retail Class B
and Institutional Class A shares of the Trust's Treasury Money Market Fund (the
"Fund").
WHAT ARE 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. See "Investment Objectives and Policies" and
"Description of Permitted Investments and Risk Factors."
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE FUND? The Fund seeks to
maintain a net asset value of $1.00 per share, but there can be no assurance
that the Fund will be able to do so on a continuous basis. There are other
risks involved in the ownership of money market mutual funds. See "Description
of Permitted Investments and Risk Factors."
WHO IS THE ADVISER? First Hawaiian Bank serves as the Adviser of the Fund.
Wellington Management Company serves as the Sub-Adviser of the Fund. See
"Expense Summary" and "The Adviser" and "The Sub-Adviser."
WHO IS THE ADMINISTRATOR? SEI Financial Management Corporation serves as the
Administrator and shareholder servicing agent of the Trust. See "Expense
Summary" and "The Administrator."
WHO IS THE TRANSFER AGENT? DST Systems, Inc. serves as transfer agent and
dividend disbursing agent for the Trust. See "The Transfer Agent."
WHO IS THE DISTRIBUTOR? SEI Financial Services Company serves as distributor of
the Trust's shares. See "The Distributor."
HOW DO I PURCHASE, EXCHANGE OR REDEEM SHARES? Purchases, exchanges or
redemptions of shares may be made on any day on which both the New York Stock
Exchange and Federal Reserve wire system are open for business ("Business
Days") except for Hawaii state banking holidays. A purchase, exchange or
redemption order will be executed at a per share price equal to the net asset
value per share next determined after the receipt of the purchase, exchange or
redemption order. Orders must be placed prior to 1:00 p.m., New York Time, on
any Business Day for the order to be effective that day. The minimum initial
investment is $1,000 ($500 for IRAs and $500 for officers, directors, or
employees of First Hawaiian Bank and its affiliates). Subsequent purchases of
shares must be at least $100. Net asset value is determined as of 1:00 p.m.,
New York Time, on each Business Day. See "Purchase of Shares," "Exchange of
Shares," and "Redemption of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of the Fund is declared daily and distributed in
the form of monthly dividends. Any capital gain is distributed at least
annually. Distributions are paid in additional shares unless the Shareholder
elects to take the payment in cash. See "Dividends."
<PAGE>
3
EXPENSE SUMMARY
<TABLE>
<CAPTION>
RETAIL CLASS B
SHAREHOLDER TRANSACTION EXPENSES SHARES
- -------------------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of of-
fering price).................................................. None
Maximum Sales Load Imposed on Reinvested Dividends (as a
percentage of offering price).................................. None
Maximum Contingent Deferred Sales Charge........................ None
Exchange Fee.................................................... None
Wire Redemption Fee............................................. $15
<CAPTION>
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
- -------------------------------------------------------------------------------
<S> <C>
Advisory Fees (after fee waivers)(1)............................ .18%
Rule 12b-1 Fees................................................. .10%
Other Expenses(2)............................................... .26%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)(3)................. .54%
===============================================================================
</TABLE>
(1) The Adviser has agreed to waive a portion of its fees. The Adviser reserves
the right to terminate the waiver at any time in its sole discretion.
Absent such fee waivers, advisory fees would be .30% for the Fund.
(2) These amounts represent estimates for the current fiscal year.
(3) Absent the Adviser's and the Administrator's voluntary fee waivers, total
operating expenses would be .73% for the Fund.
EXAMPLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 YR. 3 YRS.
- -----------------------------------------------------------------------------
<S> <C> <C>
An investor in the Retail Class B shares of the Fund would pay
the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time peri-
od............................................................. $6 $17
=============================================================================
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense 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 the Fund. A person who purchases shares through a financial
institution may be charged separate fees by that institution. See "Purchase of
Shares."
<PAGE>
4
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS A
SHAREHOLDER TRANSACTION EXPENSES SHARES
- --------------------------------------------------------------------------------
<S> <C>
Exchange Fee.............................................. None
Wire Redemption Fee....................................... None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
- --------------------------------------------------------------------------------
Advisory Fees (after fee waivers)(1)...................... .18%
Other Expenses(2)......................................... .26%
- --------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers)(3)........... .44%
================================================================================
</TABLE>
(1) The Adviser has agreed to waive a portion of its fees. The Adviser reserves
the right to terminate the waiver at any time in its sole discretion.
Absent such fee waivers, advisory fees would be .30% for the Fund.
(2) These amounts represent estimates for the current fiscal year.
(3) Absent the Adviser's and the Administrator's voluntary fee waivers, total
operating expenses would be .63% for the Fund.
EXAMPLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 YR. 3 YRS.
- --------------------------------------------------------------------------------
<S> <C> <C>
An investor in the Institutional Class A shares of the Fund would
pay the following expenses on a $1,000 investment assuming (1) 5%
annual return and (2) redemption at the end of each time period.. $5 $14
- --------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense 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 the Fund. A person who purchases Institutional Class A shares
through a First Hawaiian Bank agency, fiduciary, custodial or advisory account
will pay a separate fee for those services. See "Purchase of Shares."
<PAGE>
5
THE TRUST
BISHOP STREET FUNDS (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in the Fund through
separate Classes (Retail Class B and Institutional Class A), which provide for
variations in sales charges, distribution costs, voting rights and dividends.
Except for these differences, each share of each Fund represents an undivided,
proportionate interest in the Fund. This Prospectus offers shares of the
Trust's Treasury Money Market Fund. Information regarding the Trust's High
Grade Income Fund, Hawaii Tax-Free Fund, Equity Fund and Money Market Fund is
contained in separate prospectuses that may be obtained by calling 1-800-262-
9565.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Treasury Money Market Fund is to preserve
principal value and maintain a high degree of liquidity while providing current
income. There can be no assurance that the investment objective of the Fund
will be met.
Under normal conditions the Fund invests exclusively in U.S. Treasury
obligations and repurchase agreements involving such obligations.
The Fund intends to comply with regulations of the Securities and Exchange
Commission ("SEC") applicable to money market funds. These regulations impose
certain quality, maturity and diversification restraints on investments by the
Fund. The Fund intends to use its best efforts to maintain a constant net asset
value of $1.00 per share, but there can be no assurance that the Fund will be
able to do so on a continuing basis.
INVESTMENT LIMITATIONS
The Fund may not:
1. Purchase securities of any issuer (except securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities, and repurchase
agreements involving such securities) if, as a result more than 5% of total
assets of the Fund would be invested in the securities of such issuer;
provided, however, that the Fund may invest up to 25% of its total assets
without regard to this restriction as permitted by Rule 2a-7.
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 (a) domestic banks and (b)
obligations issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, and repurchase agreements involving such securities.
The foregoing percentage limitations will apply at the time of the purchase of
a security. Additional investment limitations are set forth in the Statement of
Additional Information.
FUNDAMENTAL POLICIES
The Fund's investment objective and the foregoing investment limitations are
fundamental policies. 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 ADVISER
First Hawaiian Bank (the "Adviser") acts as the investment adviser for the
Fund. The Adviser makes investment decisions for the assets of the Fund, and
continuously reviews, supervises and administers the Fund's investment program.
The Adviser discharges its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust.
The Adviser is a wholly-owned subsidiary of First Hawaiian, Inc. Prior to
January, 1995, the Adviser had not previously served as an investment adviser
to a mutual fund. The Adviser and its corporate predecessors have provided
trust and asset management services in Hawaii for over 70 years. As of August
31, 1995, the Adviser had assets under management of approximately $1.9 billion
for trust and agency clients.
<PAGE>
6
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 from time to time waive all or a portion of its fee in order to limit the
operating expenses of a Fund. Any such waiver is voluntary and may be
terminated at any time in the Adviser's sole discretion.
THE SUB-ADVISER
Wellington Management Company (the "Sub- Adviser") serves as the investment
sub-adviser for the Fund pursuant to a sub-advisory agreement (the "Sub-
Advisory Agreement") with the Trust and the Adviser. Under the Sub-Advisory
Agreement, the Sub-Adviser manages the investments of the Fund, selects
investments, and places all orders for purchases and sales of the Fund's
securities, subject to the general supervision of the Trustees of the Trust and
the Adviser.
For the services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, the Sub-Adviser is entitled to receive from the Adviser a fee,
computed daily and paid monthly, at the annual rate of .075% of the aggregate
average daily net assets of the Fund and the Trust's Money Market Fund up to
$500 million, and .020% of the aggregate average daily net assets of the Funds
in excess of $500 million.
The Sub-Adviser is a professional investment counseling firm which provides
investment services to investment companies, employee benefit plans,
endowments, foundations, and other institutions and individuals. As of
September 30, 1995 Wellington had discretionary management authority with
respect to approximately $102.4 billion of assets. The Sub-Adviser and its
predecessor organizations have provided investment advisory services to
investment companies since 1933 and to investment counseling clients since
1960. Wellington Management Company, 75 State Street, Boston, MA 02109, is a
Massachusetts general partnership, of which the following persons are managing
partners: Robert W. Doran, Duncan M. McFarland and John B. Neff.
THE ADMINISTRATOR
SEI Financial Management Corporation (the "Administrator"), a wholly-owned
subsidiary of SEI Corporation ("SEI"), provides the Trust with administrative
services, including fund accounting, regulatory reporting, necessary office
space, equipment, personnel, and facilities. The Administrator also acts as
shareholder servicing agent of the Fund.
The Administrator is entitled to a fee, calculated daily and paid monthly, at
an annual rate of .20% of the average daily net assets of the Fund.
THE TRANSFER AGENT
DST Systems, Inc. (the "Transfer Agent"), P.O. Box 419721, Kansas City,
Missouri 64141-6721, serves as the Transfer Agent and dividend disbursing agent
for the Trust.
THE DISTRIBUTOR
SEI Financial Services Company (the "Distributor"), a wholly-owned subsidiary
of SEI, serves as distributor. The Retail Class B shares of the Trust have a
Rule 12b-1 Distribution Plan (the "Retail Class B Plan"), under which such
shares of the Fund bear distribution expenses and related service fees at the
annual rate of up to .10% of their average daily net assets. Financial
institutions that are the record owner of shares for the account of their
customers may impose separate fees for account services to their customers.
The Fund may execute repurchase agreements through the Distributor, for which
the Distributor receives compensation.
HOW TO PURCHASE SHARES
GENERAL INFORMATION
Shares of the Fund are available for sale in the State of Hawaii and Guam.
You may purchase shares of the Fund on any day on which both the New York Stock
Exchange and
<PAGE>
7
Federal Reserve wire system are open for business ("Business Days") except for
Hawaii state banking holidays. However, shares of the Fund cannot be purchased
by Federal Reserve wire on Federal holidays restricting wire transfers. The
minimum initial investment in the Fund is $1,000 ($500 for IRAs and $500 for
officers, directors, or employees of First Hawaiian Bank or its affiliates).
The Distributor may waive the minimum investment at its discretion. Subsequent
purchases of shares must be at least $100.
A purchase order for shares will be effective as of the Business Day received
by the Transfer Agent if the Transfer Agent receives the order and payment
before 1:00 p.m., New York time. The purchase price (the "Offering Price") is
the net asset value next determined after the purchase order is effective.
The net asset value per share of the Fund is determined as of 1:00 p.m., New
York time on each Business Day by dividing the total market value of the Fund's
investments and other assets, less any liabilities, by the total outstanding
shares of the Fund. The Fund values its portfolio securities using the
amortized cost method of valuation, approximating market value. 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, the
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.
The Trust reserves the right to reject a purchase order for shares when the
Distributor determines that it is not in the best interest of the Trust and/or
its Shareholders to accept such order.
Shareholders who own their shares of record and who desire to transfer
registration of their shares should contact the Transfer Agent at 1-800-262-
9565 for further instructions.
HOW TO PURCHASE INSTITUTIONAL CLASS A SHARES
Institutional Class A shares may only be purchased by First Hawaiian Bank in
its capacity as Agent, Fiduciary, Custodian or Adviser.
HOW TO PURCHASE RETAIL CLASS B SHARES
Retail Class B shares of the Fund may be purchased directly from the Transfer
Agent by mail, by wire or through an automatic investment plan ("AIP"). Shares
may also be purchased through broker-dealers that have established a dealer
agreement with the Distributor.
HOW TO PURCHASE BY MAIL
You may purchase shares of the Fund by completing and signing an Account
Application form and mailing it, along with a check (or other negotiable bank
instrument or money order) payable to "Bishop Street Treasury Money Market
Fund," to the Transfer Agent at P.O. Box 419721, Kansas City, Missouri 64141-
6721. You may purchase more shares at any time by mailing payment to the
Transfer Agent at the above address. 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.
You may obtain Account Application Forms by calling the Distributor at 1-800-
262-9565.
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
the Transfer Agent at 1-800-262-9565 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 wires
funds to the Transfer Agent prior to 1:00 p.m., New York time. If the Transfer
Agent does not receive the wire by 1:00 p.m., New York time, the order will be
executed on the next Business Day.
<PAGE>
8
HOW TO PURCHASE THROUGH AN AUTOMATIC INVESTMENT PLAN ("AIP")
You may arrange for periodic additional investments in the Fund through
automatic deductions by Automated Clearing House ("ACH") from a checking
account by completing an AIP Application Form. The minimum pre-authorized
investment amount is $50 per month. An AIP Application Form may be obtained by
contacting the Distributor at 1-800-262-9565. The AIP is available only for
additional investments to an existing account.
HOW TO PURCHASE THROUGH FINANCIAL INSTITUTIONS
Shares may be purchased through financial institutions, including the Adviser,
that provide distribution assistance or shareholder services. 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 such change.
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.
EXCHANGE OF SHARES
You may exchange Retail Class B or Institutional Class A shares of the Treasury
Money Market Fund for Retail Class B or Institutional Class A shares,
respectively, of the High Grade Income, Hawaii Tax-Free, Equity or Money Market
Funds of the Trust at net asset value plus any applicable sales charge.
Exchanges of Retail Class B or Institutional Class A shares of any other Fund
of the Trust for Retail Class B shares or Institutional Class A shares of the
Treasury Money Market Fund will be made at net asset value.
Exchanges will be made only after instructions in writing or by telephone (an
"Exchange Request") are received by the Transfer Agent. In order to effect an
exchange of shares by telephone, you must elect the telephone exchange option
on your Account Application Form. If an Exchange Request in good order is
received by the Transfer Agent on any Business Day, the exchange will occur on
that day. The exchange privilege may be exercised only in those states where
the class of shares of the "new" Fund may legally be sold.
Customers who beneficially own shares held 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 sixty days' notice.
REDEMPTION OF SHARES
You may redeem your shares without charge on any Business Day. There is,
however, a $15 charge for wiring redemption proceeds to a shareholder's
designated account. Shares may be redeemed by mail, by telephone or through a
pre-arranged systematic withdrawal plan. Investors who own shares held 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, P.O.
Box 419721, Kansas City, Missouri 64141-6721 in order to constitute a valid
redemption request.
<PAGE>
9
If the redemption request exceeds $5,000, or if the request directs the
proceeds to be sent or wired to an address different from that of 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. Notaries public cannot guarantee signatures. The
signature guarantee requirement will be waived if all of the following
conditions apply: (1) the redemption is for not more than $5,000 worth of
shares, (2) the redemption check is payable to the shareholder(s) of record,
and (3) the redemption check is mailed to the shareholder(s) at his or her
address of record.
BY TELEPHONE
You may redeem your shares by calling the Transfer Agent at 1-800-262-9565.
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 $15 charge for wiring
redemption proceeds.
You may request a wire redemption for redemptions in excess of $500 by calling
the Transfer Agent at 1-800-262-9565, who will deduct a wire charge of $15 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 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. Such procedures may include taping of telephone conversations.
If market conditions are extraordinarily active or other extraordinary
circumstance exist, and you experience difficulties placing redemption orders
by telephone, you may consider placing your order by mail.
SYSTEMATIC WITHDRAWAL PLAN ("SWP")
The Fund offers 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 $20,000 or more. You may elect to
receive automatic payments via check or ACH of $50 or more on a monthly,
quarterly, semi-annual or annual basis. You may obtain an SWP Application Form
by contacting the Distributor at 1-800-262-9565.
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. The Transfer Agent may require that the signature
on the written notice be guaranteed.
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. Net asset value per
share is determined as of 1:00 p.m., New York time, on each Business Day.
Payment to shareholders for shares redeemed will be made within seven days
after the Transfer Agent receives the valid redemption request. At various
times, however, the Fund may be requested to redeem shares for which it has not
yet received good payment; collection of payment may take ten or more days. In
such circumstances, the redemption request will be rejected by the Fund. Once
the Fund has received good payment for the shares a shareholder may submit
another request for redemption.
<PAGE>
10
Due to the relatively high costs of handling small investments, the Fund
reserves the right to redeem your shares at net asset value, if, your account
in any Fund has a value of less than the minimum initial purchase amount.
Accordingly, if you purchase shares of the Fund in only the minimum investment
amount, you may be subject to involuntary redemption if you redeem any shares.
Before the Fund exercises its right to redeem 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 the Fund
in an amount which will increase the value of the account to at least the
minimum amount.
PERFORMANCE
From time to time, the Fund may advertise its current yield and effective
yield. These figures are based on historical earnings and are not intended to
indicate future performance. No representation can be made concerning actual
future yields or returns.
The "current yield" of the Fund refers to the income generated by an investment
in the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" (also called "effective compound 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 current yield because of the compounding effect of this assumed
reinvestment.
For the Fund, the performance of Institutional Class A shares will be higher
than that of Retail Class B shares because of the distribution expenses charged
to Retail Class B shares.
The Fund may periodically compare its performance to that of other mutual funds
tracked by mutual funds rating services (such as Lipper Analytical), 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.
The Fund may quote Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. The Fund may use long-term performance of
these capital market indices 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.
TAXES
The following summary of Federal income tax consequences is based on current
tax laws and regulations, which may be changed by legislative, judicial or
administrative action. No attempt has been made to present a detailed
explanation of the Federal, state, or local income tax treatment of the Fund or
its Shareholders. Accordingly, Shareholders are urged to consult their tax
advisers regarding specific questions as to Federal, state and local income
taxes. State and local tax consequences of an investment in the Fund may differ
from the Federal income tax consequences described below. Additional
information concerning taxes is set forth in the Statement of Additional
Information.
TAX STATUS OF THE FUND
The Fund is treated as a separate entity for Federal income tax purposes and is
not combined with the
<PAGE>
11
Trust's other portfolios. The Fund intends to continue to qualify for the
special tax treatment afforded regulated investment companies ("RICs") under
Subchapter M of the Internal Revenue Code of 1986, as amended, so as to be
relieved of Federal income tax on net investment company taxable income and net
capital gains (the excess of net long-term capital gains over net short-term
capital losses) distributed to Shareholders.
TAX STATUS OF DISTRIBUTIONS
The Fund distributes substantially all of its net investment income (including
net short-term capital gains) and net capital gains to Shareholders. Dividends
from the Fund's net investment company taxable income are taxable to its
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 the
Fund to corporate Shareholders will qualify for the deduction for dividends
received by corporations to the extent attributable to dividends received by
the Fund by domestic corporations. Distributions of net capital gains do not
qualify for that deduction and are taxable to Shareholders as long-term capital
gains, regardless of how long Shareholders have held their shares and
regardless of whether the distributions are received in cash or in additional
shares. The Fund provides annual reports to Shareholders of the Federal income
tax status of all distributions.
Because this Fund will invest exclusively in United States Treasury
obligations, its dividends are free from state and local income taxes in the
vast majority of states. Potential investors in this Fund should consult their
tax advisers with specific reference to their own tax situations.
Dividends declared by the Fund in October, November or December of any year and
payable to Shareholders of record on a date in such a month, 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.
The Fund intends to make sufficient distributions to avoid liability for the
Federal excise tax.
With respect to investments which are sold at original issue discount and thus
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.
Sale, exchange or redemption of Fund Shares is a taxable transaction to the
Shareholder.
GENERAL INFORMATION
THE TRUST
The Trust was organized as a Massachusetts business trust under Declaration of
Trust dated May 25, 1994. The Declaration of Trust permits the Trust to offer
separate portfolios of shares and different classes of each portfolio. In
addition to the Fund, the Trust consists of the following portfolios: Bishop
Street High Grade Income, Hawaii Tax-Free, Equity and Money Market Funds. 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 the liabilities related
thereto.
The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation
materials and reports to Shareholders, costs of custodial services and
registering the shares under Federal and state securities laws, pricing,
insurance expenses, litigation and other extraordinary expenses, brokerage
costs, interest charges, taxes and organization expenses.
<PAGE>
12
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management services to the Trust.
The Trustees of the Trust are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS HISTORY
- ---- ----------------
<S> <C>
Mr. Martin Anderson Attorney--Goodsill,
Anderson, Quinn &
Stifel
Mr. Philip H. Ching Vice Chairman--First
Hawaiian Bank
Honorable Shunichi Kimura Judge--State of
Hawaii Judiciary
1974-1994
Honorable William S. Trustee--Kamehameha
Richardson Schools Bishop Estate
(through 1992); Chief
Justice--Supreme
Court of Hawaii,
(through 1983)
Lieutenant Governor--
State of Hawaii
(1962-1966)
Mr. Manuel R. Sylvester Managing and
Executive Partner--
Coopers & Lybrand
(through 1992)
Dr. Joyce S. Tsunoda Educator and
Administrator--
University of Hawaii
Mr. David G. Lee Senior Vice
President--SEI
Financial Management
Corporation
</TABLE>
VOTING RIGHTS
Each share held entitles the Shareholder of record to one vote for each dollar
invested. In other words, each Shareholder of record is entitled to one vote
for each dollar of net asset value of the shares held on the record date for
the meeting. The Shareholders of each Fund will vote separately on matters
pertaining solely to that Fund. The Shareholders of each class of each Fund
will vote separately on matters pertaining to its distribution plan. As a
Massachusetts business trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances.
In addition, a Trustee may be removed by the remaining Trustees or by
Shareholders at a special meeting called upon written request of Shareholders
owning at least 10% of the outstanding shares of the Trust. In the event that
such a meeting is requested the Trust will provide appropriate assistance and
information to the Shareholders requesting the meeting.
REPORTING
The Trust issues unaudited financial information semi-annually and audited
financial statements annually. The Trust furnishes proxy statements and other
reports to Shareholders of record.
SHAREHOLDER INQUIRIES
Shareholders should direct inquiries to Bishop Street Funds at P.O. Box 419721,
Kansas City, MO 64141-6721 or by calling 1-800-262-9565.
DIVIDENDS
Substantially all of the net investment income (exclusive of capital gains) of
the Fund is declared daily and distributed in the form of monthly dividends.
Shareholders of record on the last Business Day of each month will be entitled
to receive the dividend. If any net capital gains are realized, they will be
distributed by the Fund at least annually.
Shareholders automatically receive all income dividends and capital gains
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 the form of cash. Shareholders may change their election by
providing written notice to the Bishop Street Funds at P.O. Box 419721, Kansas
City, MO 64141-6721 at least 15 days prior to the distribution. Shareholders
may receive payments for cash distributions in the form of a check, by Federal
Reserve wire transfer or ACH.
<PAGE>
13
Dividends and distributions of the Fund are paid on a per-share basis. The
value of each share will be reduced by the amount of any such payment. If
shares are purchased shortly before the record date for a dividend or the
distribution of capital gains, a Shareholder will pay the full price for the
shares and receive some portion of the price back as a taxable dividend or
distribution.
The dividends on Retail Class B Shares of the Fund will be lower than those on
Institutional Class A Shares because of the distribution expenses charged to
Retail Class B Shares.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Coopers & Lybrand
L.L.P. serves as the independent accountant of the Trust.
CUSTODIAN
Chemical Bank, (the "Custodian"), acts as custodian of the Trust's assets. The
Custodian holds cash, securities and other assets of the Trust as required by
the 1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments for the Fund and
the various risk factors associated therewith:
REPURCHASE AGREEMENTS--Agreements by which a financial institution agrees to
sell a security to the Fund and commits to repurchase the security at an agreed
upon price (including principal and interest) on an agreed upon date within a
number of days from the date of purchase. The securities purchased by the Fund
will be held as collateral in the actual or constructive possession of the Fund
and will be equal to at least 102% of the repurchase price. Repurchase
agreements are considered to be loans by the Fund. The Trust bears a risk of
loss in the event the other party defaults on its obligations and the Trust is
delayed or prevented from its right to dispose of the collateral securities or
if the Trust realizes a loss on the sale of the collateral securities. The
Adviser will enter into repurchase agreements on behalf of the Trust only with
financial institutions deemed to present minimal risk of bankruptcy during the
term of the agreement based on guidelines established and periodically reviewed
by the Trustees. Repurchase agreements are considered loans under the
Investment Company Act of 1940, as amended.
U.S. TREASURY OBLIGATIONS--Bills, notes and bonds issued by the U.S. Treasury,
and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known
as Separately Traded Registered Interest and Principal Securities ("STRIPS").
RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS--Investments by money market
funds are subject to limitations imposed under regulations adopted by the SEC.
These regulations generally require money market funds to acquire only U.S.
dollar obligations maturing in 397 days or less and to maintain a dollar-
weighted average portfolio maturity of 90 days or less. In addition, such funds
may acquire only obligations that present minimal credit risks and that are
"eligible securities" which means they are (i) rated, at the time of
investment, by at least two nationally recognized security rating organizations
(one if it is the only organization rating such obligation) in the highest
short-term rating category or, if unrated, determined to be of comparable
quality (a "first tier security"), or (ii) rated according to the foregoing
criteria in the second highest short-term rating category or, if unrated,
determined to be of comparable quality ("second tier security"). A security is
not considered to be unrated if its issuer has outstanding obligations of
comparable priority and security that have a short-term-rating. A taxable money
market fund may also hold more than 5% of its assets in first tier securities
of a single issuer for three "business days" (that is, any day other than a
Saturday, Sunday or customary business holiday).
<PAGE>
14
WHEN-ISSUED SECURITIES--Securities purchased on a when-issued basis are subject
to settlement within 45 days of the purchase date. The price and yield on these
securities is fixed as of the purchase date and no interest accrues to the Fund
before settlement. These securities are therefore subject to market fluctuation
due to changes in market interest rates, and, although the purchase of
securities on a when-issued basis is not considered leveraging, it has the
effect of leveraging the Fund's assets. The Fund will maintain with the
Custodian a separate account with liquid high grade securities or cash in an
amount at least equal to these commitments.
<PAGE>
TABLE OF CONTENTS
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Summary..................................................................... 2
Expense Summary............................................................. 3
The Trust................................................................... 5
Investment Objective and Policies........................................... 5
Investment Limitations...................................................... 5
Fundamental Policies........................................................ 5
The Adviser................................................................. 5
The Sub-Adviser............................................................. 6
The Administrator........................................................... 6
</TABLE>
<TABLE>
<S> <C>
The Transfer Agent.......................................................... 6
The Distributor............................................................. 6
How to Purchase Shares...................................................... 6
Exchange of Shares.......................................................... 8
Redemption of Shares........................................................ 8
Performance................................................................. 10
Taxes....................................................................... 10
General Information......................................................... 11
Description of Permitted Investments and Risk Factors....................... 13
</TABLE>
