<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON May 1, 2000
File No. 811-8572
File No. 33-80514
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 14 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 15 /X/
BISHOP STREET FUNDS
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
C/O THE CT CORPORATION SYSTEM
101 FEDERAL STREET
BOSTON, MASSACHUSETTS 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 1-888-462-5386
KEVIN P. ROBINS
C/O SEI INVESTMENTS COMPANY
OAKS, PENNSYLVANIA 19456
(NAME AND ADDRESS OF AGENT FOR SERVICE)
Copies to:
RICHARD W. GRANT, ESQUIRE
JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET
PHILADELPHIA, PENNSYLVANIA 19103
It is proposed that this filing become effective (check appropriate box)
/X/ immediately upon filing pursuant to paragraph (b)
on May 1, 2000 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.
<PAGE> 2
INSTITUTIONAL CLASS SHARES
BISHOP STREET FUNDS
PROSPECTUS
APRIL 30, 2000
EQUITY FUND
HIGH GRADE INCOME FUND
HAWAII MUNICIPAL BOND FUND
MONEY MARKET FUND
TREASURY MONEY MARKET FUND
INVESTMENT ADVISER:
BISHOP STREET CAPITAL MANAGEMENT
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1 of 33
<PAGE> 3
ABOUT THIS PROSPECTUS
Bishop Street Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Institutional Class Shares of the Bishop Street Funds that you should
know about before investing. Please read this prospectus and keep it for future
reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE NEXT COLUMN, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS.
IF YOU WOULD LIKE MORE DETAILED INFORMATION ABOUT THE FUNDS, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EQUITY FUND........................................................................ 2
HIGH GRADE INCOME FUND............................................................. 4
HAWAII MUNICIPAL BOND FUND......................................................... 6
MONEY MARKET FUND.................................................................. 8
TREASURY MONEY MARKET FUND......................................................... 10
MORE INFORMATION ABOUT RISK........................................................ 12
MORE INFORMATION ABOUT FUND INVESTMENTS............................................ 13
INVESTMENT ADVISER, INVESTMENT TEAM AND SUB-ADVISER................................ 13
PURCHASING, SELLING AND EXCHANGING FUND SHARES..................................... 14
DIVIDENDS AND DISTRIBUTIONS........................................................ 17
TAXES.............................................................................. 17
THE BOARD OF TRUSTEES.............................................................. 18
FINANCIAL HIGHLIGHTS............................................................... 19
HOW TO OBTAIN MORE INFORMATION ABOUT BISHOP STREET FUNDS .......................... Back Cover
</TABLE>
Page 2 of 33
<PAGE> 4
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment manager invests Fund assets in a way that they believe will help the
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in the
Fund, just as you could with other investments. A FUND SHARE IS NOT A BANK
DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY GOVERNMENT
AGENCY.
The value of your investment in a Fund (other than a money market fund) is based
on the market prices of the securities a Fund holds. These prices change daily
due to economic and other events that affect particular companies and other
issuers. These price movements, sometimes called volatility, may be greater or
lesser depending on the types of securities a Fund owns and the markets in which
they trade. The effect on a Fund of a change in the value of a single security
will depend on how widely a Fund diversifies its holdings.
Page 3 of 33
<PAGE> 5
EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks and other equity securities
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of U.S.
equity securities
INVESTOR PROFILE Investors seeking long-term capital
appreciation, who are willing to accept the
risk of share price volatility
INVESTMENT STRATEGY
The Equity Fund primarily invests (at least 65% of its assets) in common stocks
and other equity securities that the Adviser believes have potential for capital
appreciation. Such instruments include convertible securities. Generally, the
Fund invests in securities of companies with market capitalizations in excess of
$2 billion. The Fund seeks to be diversified across issuers and major economic
sectors. In making a determination to buy, sell, or hold a security, the
portfolio management team gives special consideration to the relationship of the
security to the risk/reward measurement of the entire portfolio.
The Fund's investment approach, with its emphasis on common stocks and other
equity securities, is expected to provide returns consistent with the
performance of the U.S. stock market, as generally measured by broad U.S. stock
market indices such as the S&P 500. The Adviser employs a core equity investment
style with a growth bias.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, equity securities,
may underperform other market segments.
Page 4 of 33
<PAGE> 6
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in performance of the Fund's Institutional Class
Shares from year to year.
<TABLE>
<S> <C>
1998 33.05%
1999 24.37%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C> <C>
23.34% -9.11%
(12/31/98) (9/30/98)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE S&P 500 COMPOSITE INDEX AND THE CONSUMER
PRICE INDEX.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
EQUITY FUND 24.37% 27.05%*
S&P 500 COMPOSITE INDEX 21.04% 25.81%*
CONSUMER PRICE INDEX 2.63% 2.04%*
</TABLE>
* Since January 31, 1997
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Composite Index is a widely-recognized,
market value-weighted (higher market value stocks have more influence than lower
market value stocks) index of 500 stocks, designed to mimic the overall equity
market's industry weightings. The Consumer Price Index measures prices of goods
bought by a typical consumer such as food, gas, shelter and clothing. It is
widely used as a cost-of-living benchmark.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Page 5 of 33
<PAGE> 7
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.74%
Other Expenses 0.53%
-----
Total Annual Fund Operating Expenses 1.27%*
</TABLE>
* The Fund's total actual annual fund operating expenses for the most recent
fiscal year were less than the amount shown above because the Adviser waived a
portion of its fees in order to keep total operating expenses at a specified
level. These fee waivers remain in place as of the date of this prospectus, but
the Adviser may discontinue all or part of these waivers at any time. With these
fee waivers, the Fund's actual total operating expenses are expected to be as
follows:
Equity Fund 1.00%
For more information about these fees, see "Investment Adviser, Investment Team
and Sub-Adviser."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$129 $403 $697 $1,534
</TABLE>
Page 6 of 33
<PAGE> 8
HIGH GRADE INCOME FUND
FUND SUMMARY
INVESTMENT GOAL High total return
INVESTMENT FOCUS Corporate and U.S. government debt obligations
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Investing in high grade U.S. debt obligations of
domestic corporations and the U.S. government
INVESTOR PROFILE Conservative investors seeking income, who are
willing to accept some degree of share price
volatility
INVESTMENT STRATEGY
The High Grade Income Fund primarily invests (at least 65% of its assets) in
high grade U.S. dollar-denominated debt obligations of domestic corporations and
the U.S. government. High grade debt obligations are those rated in the three
highest ratings categories by either S&P or other nationally recognized
statistical rating organizations, and include mortgage-backed and variable and
floating rate instruments. In determining to buy, sell, or hold a security, the
portfolio management team analyzes the security in relationship to the risk
characteristics of the portfolio as a whole.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, the volatility of lower rated securities is
even greater than that of higher rated securities. Longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, fixed income
securities, may underperform other market segments.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
Page 7 of 33
<PAGE> 9
The Fund's investment approach, with its emphasis on high quality corporate and
U.S. government obligations of medium maturity, is expected to provide total
return through income and some capital appreciation with moderate risk to
principal and less sensitivity to changing interest rates than longer term or
lower quality bond funds.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in performance of the Fund's Institutional Class
Shares from year to year.
<TABLE>
<S> <C>
1998 9.09%
1999 -4.34%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C>
5.42% -2.37%
(9/30/98) (3/31/99)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS GOVERNMENT/CORPORATE
BOND INDEX AND THE CONSUMER PRICE INDEX.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
HIGH GRADE INCOME FUND -4.34% 4.17%*
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX -2.15% 5.66%*
CONSUMER PRICE INDEX 2.63% 2.04%*
</TABLE>
* Since January 31, 1997
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Government/Corporate Bond Index
is a widely-recognized, market value-weighted (higher market value bonds have
more influence than lower market value bonds) index of U.S. Treasury securities,
U.S. government agency obligations, corporate debt backed by the U.S.
government, and fixed-rate non-convertible corporate debt securities issued or
guaranteed by foreign governments and agencies. All securities in the Index are
rated investment grade (BBB) or higher, with maturities of at least one year.
The Consumer Price Index measures prices of goods bought by a typical consumer
such as food, gas, shelter and clothing. It is widely used as a cost-of-living
benchmark.
Page 8 of 33
<PAGE> 10
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering
price) None
Maximum Deferred Sales Charge (Load) (as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.55%
Other Expenses 0.64%
-----
Total Annual Fund Operating Expenses 1.19%*
</TABLE>
* The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser waived a portion
of its fees in order to keep total operating expenses at a specified level.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser may discontinue all or part of these waivers at any time. With these fee
waivers, the Fund's actual total operating expenses are expected to be as
follows:
<TABLE>
<S> <C>
High Grade Income Fund 0.76%
</TABLE>
For more information about these fees, see "Investment Adviser, Investment Team
and Sub-Adviser."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$121 $378 $654 $1,443
</TABLE>
Page 9 of 33
<PAGE> 11
HAWAII MUNICIPAL BOND FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL High current income exempt from federal and Hawaii
income taxes
INVESTMENT FOCUS Hawaii municipal bonds
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio focused on investment
grade municipal bonds
INVESTOR PROFILE Investors seeking tax-exempt current income who are
willing to accept the risk of investing in a
portfolio of municipal securities
</TABLE>
INVESTMENT STRATEGY
The Hawaii Municipal Bond Fund primarily invests (at least 65% of its assets) in
investment grade municipal bonds, the interest from which is exempt from federal
and Hawaii state income taxes. While the Adviser attempts to maximize the
portion of the Fund's assets invested in Hawaii issues, the Fund may also invest
in the municipal bonds issued by other U.S. states, territories and possessions.
There is no restriction upon the amount of the Fund's assets that may be
invested in obligations that pay income subject to the federal alternative
minimum tax. To the extent that the Fund invests in securities subject to the
alternative minimum tax, the income received from these securities could be
taxable. There are no limits on the average maturity of the Fund's portfolio.
The Adviser will use its judgment to invest in securities that will provide a
high level of current income in light of current market conditions. In making a
determination to buy, sell, or hold a security, the portfolio manager gives
special consideration to the relative value of the security in comparison to the
available alternatives, consistent with the objectives of the portfolio.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, the volatility of lower rated securities is
even greater than that of higher rated securities. Longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, fixed income
securities, may underperform other market segments.
Page 10 of 33
<PAGE> 12
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Hawaii subjects the Fund to economic conditions and government policies within
that state. As a result, the Fund will be more susceptible to factors that
adversely affect issuers of Hawaii obligations than a mutual fund that does not
have as great a concentration in Hawaii.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political/regulatory occurrence affecting one or more
of these issuers, and may experience increased volatility due to its investments
in those securities.
The Fund's investment approach, with its emphasis on investment grade municipal
bonds, is expected to provide current tax-exempt income with moderate risk to
principal. The Fund is not expected to perform as well as a comparable taxable
bond fund, but may do as well or better on an after-tax basis.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in performance of the Fund's Institutional Class
Shares from year to year.
<TABLE>
<S> <C>
1996 4.21%
1997 8.52%
1998 5.84%
1999 -2.65%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C>
3.39% -1.92%
</TABLE>
<TABLE>
<S> <C>
(6/30/97) (6/30/99)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE LEHMAN BROTHERS MUNICIPAL BOND INDEX AND
THE CONSUMER PRICE INDEX.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
HAWAII MUNICIPAL BOND FUND -2.65% 5.12%*
LEHMAN BROTHERS MUNICIPAL BOND INDEX -2.07% 5.91%**
CONSUMER PRICE INDEX 2.63% 2.32%**
</TABLE>
* Since February 15, 1995
** Since February 28, 1995
Page 11 of 33
<PAGE> 13
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Municipal Bond Index is a
widely-recognized index of municipal bonds with maturities of at least one year.
The Consumer Price Index measures prices of goods bought by a typical consumer
such as food, gas, shelter and clothing. It is widely used as a cost-of-living
benchmark.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.35%
Other Expenses 0.64%
-----
Total Annual Fund Operating Expenses 0.99%*
</TABLE>
* The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser waived a portion
of its fees in order to keep total operating expenses at a specified level.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser may discontinue all or part of these waivers at any time. With these fee
waivers, the Fund's actual total operating expenses are expected to be as
follows:
<TABLE>
<S> <C>
Hawaii Municipal Bond Fund 0.45%
</TABLE>
For more information about these fees, see "Investment Adviser, Investment
Team and Sub-Adviser."
Page 12 of 33
<PAGE> 14
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$101 $315 $547 $1,213
</TABLE>
Page 13 of 33
<PAGE> 15
MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal and maintaining liquidity
while providing current income
INVESTMENT FOCUS Short-term money market instruments
SHARE PRICE VOLATILITY Very low
PRINCIPAL INVESTMENT STRATEGY Investing in high quality, U.S. dollar denominated
short-term securities
INVESTOR PROFILE Conservative investors seeking current income
through a low risk liquid investment.
</TABLE>
INVESTMENT STRATEGY
The Money Market Fund is comprised of short-term U.S. dollar denominated debt
obligations that are rated in one of the two highest categories by nationally
recognized rating organizations or securities that the Sub-Adviser determines
are of comparable quality. The Fund invests substantially all of its assets in
short-term securities including: (i) commercial paper and other short-term
corporate obligations of U.S. and foreign issuers (including asset-backed
securities); (ii) certificates of deposit, time deposits, bankers' acceptances,
bank notes and other obligations of U.S. and foreign savings and loan
institutions and commercial banks (including foreign branches of such banks)
that meet certain asset requirements; (iii) short-term obligations issued by
state and local governments; (iv) obligations of foreign governments (including
Canadian and Provincial Government, and Crown Agency Obligations); and (v) U.S.
Treasury obligations and obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government. The Fund may
also enter into fully-collateralized repurchase agreements.
The Adviser has engaged Wellington Management Company, LLP as Sub-Adviser
(Sub-Adviser) to manage the Fund on a day-to-day basis. Using a top-down
strategy and bottom-up security selection process, the Sub-Adviser seeks
securities with an acceptable maturity, that are marketable and liquid, that
offer competitive yields, and that are issued by issuers that are on a sound
financial footing. The Sub-Adviser also considers factors such as the
anticipated level of interest rates and the maturity of individual securities
relative to the maturity of the Fund as a whole. The Fund follows strict SEC
rules about credit quality, maturity and diversification of its investments.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to maintain a
constant price per share of $1.00, you may lose money by investing in the Fund.
Page 14 of 33
<PAGE> 16
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
Obligations issued by some U.S. government agencies are backed by the U.S.
Treasury, while others are backed solely by the ability of the agency to borrow
from the U.S. Treasury or by the agency's own resources.
The Fund's investment approach, with its emphasis on short-term obligations, is
expected to provide current income with low risk to principal and lower exposure
to fluctuations in share price. The Fund can be expected to provide lower
returns than fixed income funds which invest in longer-term securities.
THE MONEY MARKET FUND TRIES TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT
THERE IS NO GUARANTEE THAT THE FUND WILL ACHIEVE THIS GOAL.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in performance of the Fund's Institutional Class
Shares from year to year.
<TABLE>
<S> <C>
1996 5.12%
1997 5.29%
1998 5.26%
1999 4.88%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C>
1.33% 1.12%
(12/31/99) (6/30/99)
</TABLE>
THIS TABLE COMPARES THE FUND'S RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
TO THOSE OF THE IBC/FINANCIAL DATA FIRST TIER INSTITUTIONS-ONLY AVERAGE.
<TABLE>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
MONEY MARKET FUND 4.88% 5.23%*
IBC/FINANCIAL DATA FIRST TIER INSTITUTIONS-ONLY AVERAGE 4.94% 5.33%**
</TABLE>
* Since January 30, 1995
** Since January 31, 1995
For information concerning the Fund's 7-Day Yield, please call 1-800-262-9565.
WHAT IS AN AVERAGE?
An average represents the performance of a specific group of mutual funds with a
particular investment objective. You cannot invest directly in an average. The
IBC/Financial Data First Tier Institutions-Only Average is a composite of mutual
funds with investment goals similar to the Fund's goal.
Page 15 of 33
<PAGE> 17
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.30%
Other Expenses 0.54%
-----
Total Annual Fund Operating Expenses 0.84%*
</TABLE>
* The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser waived a portion
of its fees in order to keep total operating expenses at a specified level.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser may discontinue all or part of these waivers at any time. With these fee
waivers, the Fund's actual total operating expenses are expected to be as
follows:
Money Market Fund 0.50%
For more information about these fees, see "Investment Adviser, Investment
Team and Sub-Adviser."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$86 $268 $466 $1,037
</TABLE>
Page 16 of 33
<PAGE> 18
TREASURY MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal value and maintaining a high
degree of liquidity while providing current income
INVESTMENT FOCUS Money market instruments issued or guaranteed by
the U.S. Treasury
SHARE PRICE VOLATILITY Very low
PRINCIPAL INVESTMENT STRATEGY Investing in U.S. Treasury obligations and
repurchase agreements
INVESTOR PROFILE Conservative investors seeking current income
through a low risk liquid investment
</TABLE>
INVESTMENT STRATEGY
The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.
The Adviser has engaged Wellington Management Company, LLP as Sub-Adviser
(Sub-Adviser) to manage the Fund on a day-to-day basis. Using a top-down
strategy and bottom-up security selection process, the Sub-Adviser seeks
securities with an acceptable maturity, that are marketable and liquid and offer
competitive yields. The Sub-Adviser also considers factors such as the
anticipated level of interest rates and the maturity of individual securities
relative to the maturity of the Fund as a whole. The Fund follows strict
Investment Company Act rules about credit quality, maturity and diversification
of its investments.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.
Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.
An investment in the Fund is not a bank deposit. Although the Fund seeks to
maintain a constant price per share of $1.00, you may lose money by investing in
the Fund.
The Fund's investment approach with its emphasis on short-term U.S. Treasury
obligations is expected to provide current income with low risk to principal and
lower exposure to fluctuations in share price. The Fund can be expected to
provide lower returns than fixed income funds which invest in longer term
securities.
Page 17 of 33
<PAGE> 19
THE TREASURY MONEY MARKET FUND TRIES TO MAINTAIN A CONSTANT PRICE PER SHARE OF
$1.00, BUT THERE IS NO GUARANTEE THAT THE FUND WILL ACHIEVE THIS GOAL.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in performance of the Fund's Institutional Class
Shares from year to year.
<TABLE>
<S> <C>
1997 5.22%
1998 5.10%
1999 4.65%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
------------ -------------
<S> <C> <C>
1.32% 1.08%
(12/31/97) (6/30/99)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE IBC/FINANCIAL DATA U.S. TREASURY & REPO
AVERAGE.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
TREASURY MONEY MARKET FUND 4.65% 5.00%*
IBC/FINANCIAL DATA U.S. TREASURY & REPO AVERAGE 4.36% 4.70%**
</TABLE>
* Since May 1, 1996
** Since May 31, 1996
For more information concerning the Fund's 7-Day Yield, please call
1-800-262-9565.
WHAT IS AN AVERAGE?
An average represents the performance of a specific group of mutual funds with a
particular investment objective. You cannot invest directly in an average. The
IBC/Financial Data U.S. Treasury & Repo Average is a composite of mutual funds
with investment goals similar to the Fund's goal.
Page 18 of 33
<PAGE> 20
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.30%
Other Expenses 0.55%
-----
Total Annual Fund Operating Expenses 0.85%*
</TABLE>
* The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser waived a portion
of its fees in order to keep total operating expenses at a specified level.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser may discontinue all or part of these waivers at any time. With these fee
waivers, the Fund's actual total operating expenses are expected to be as
follows:
Treasury Money Market Fund 0.44%
For more information about these fees, see "Investment Adviser, Investment
Team and Sub-Adviser."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$87 $271 $471 $1,049
</TABLE>
Page 19 of 33
<PAGE> 21
MORE INFORMATION ABOUT RISK
<TABLE>
<S> <C>
MANAGEMENT RISK - The risk that a strategy used by the fund's All Funds
management may fail to produce the intended result.
EQUITY RISK - Equity securities include public and privately Equity Fund
issued equity securities, common and preferred stocks,
warrants, rights to subscribe to common stock and convertible
securities, as well as instruments that attempt to track the
price movement of equity indices. Investments in equity
securities and equity derivatives in general are subject to
market risks that may cause their prices to fluctuate over
time. The value of securities convertible into equity
securities, such as warrants or convertible debt, is also
affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value
of equity securities in which a mutual fund invests will
cause a fund's net asset value to fluctuate. An investment
in a portfolio of equity securities may be more suitable for
long-term investors who can bear the risk of these share
price fluctuations.
FIXED INCOME RISK - The market value of fixed income High Grade Income Fund
investments changes in response to interest rate changes and Hawaii Municipal Bond Fund
other factors. During periods of falling interest rates, the Money Market Fund
values of outstanding fixed income securities generally Treasury Money Market Fund
rise. 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. In addition to these
fundamental risks, different types of fixed income securities
may be subject to the following additional risks:
CALL RISK - During periods of falling interest High Grade Income Fund
rates, certain debt obligations with high interest Hawaii Municipal Bond Fund
rates may be prepaid (or "called") by the Money Market Fund
issuer prior to maturity. This may cause a Fund's
average weighted maturity to fluctuate, and may
require a Fund to invest the resulting proceeds at
lower interest rates.
</TABLE>
Page 20 of 33
<PAGE> 22
<TABLE>
<S> <C>
CREDIT RISK - The possibility that an issuer will be High Grade Income Fund
unable to make timely payments of either principal Hawaii Municipal Bond Fund
or interest. Since the Fund purchases securities Money Market Fund
backed by credit enhancements from banks and other
financial institutions, changes in the credit ratings
of these institutions could cause the Fund to lose money
and may affect the Fund's share price.
EVENT RISK - Securities may suffer declines in High Grade Income Fund
credit quality and market value due to issuer Hawaii Municipal Bond Fund
restructurings or other factors. This risk should Money Market Fund
be reduced because of the Fund's multiple holdings.
MUNICIPAL ISSUER RISK - There may be economic or Hawaii Municipal Bond Fund
political changes that impact the ability of Money Market Fund
municipal issuers to repay principal and to make
interest payments on municipal securities. Changes
to the financial condition or credit rating of
municipal issuers may also adversely affect the
value of the Fund's municipal securities.
Constitutional or legislative limits on borrowing by
municipal issuers may result in reduced supplies of
municipal securities. Moreover, certain municipal
securities are backed only by a municipal issuer's
ability to levy and collect taxes.
In addition, the Hawaii Municipal Bond Fund's concentration
of investments in issuers located in a single state makes
the Fund more susceptible to adverse political or economic
developments affecting that state. The Fund also may be
riskier than mutual funds that buy securities of issuers in
numerous states.
</TABLE>
Page 21 of 33
<PAGE> 23
<TABLE>
<S> <C>
MORTGAGE-BACKED SECURITIES RISK - Mortgage-backed High Grade Income Fund
securities are fixed income securities representing
an interest in a pool of underlying mortgage loans.
They are sensitive to changes in interest rates, but
may respond to these changes differently from other
fixed income securities due to the possibility of
prepayment of the underlying mortgage loans. As a
result, it may not be possible to determine in
advance the actual maturity date or average life of
a mortgage-backed security. Rising interest rates
tend to discourage refinancings, with the result
that the average life and volatility of the security
will increase, exacerbating its decrease in market
price. When interest rates fall, however,
mortgage-backed securities may not gain as much in
market value because of the expectation of
additional mortgage prepayments that must be
reinvested at lower interest rates. Prepayment risk
may make it difficult to calculate the average
maturity of a portfolio of mortgage-backed
securities and, therefore, to assess the volatility
risk of that portfolio.
</TABLE>
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the principal investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to 100%
of its assets in taxable money market instruments, repurchase agreements and
short-term obligations. When a Fund is investing for temporary defensive
purposes, it is not pursuing its investment goal.
Page 22 of 33
<PAGE> 24
INVESTMENT ADVISER, INVESTMENT TEAM AND SUB-ADVISER
INVESTMENT ADVISER
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Adviser oversees the Sub-Adviser to ensure compliance with the Money Market
and Treasury Money Market Funds' investment policies and guidelines, and
monitors the Sub-Adviser's adherence to its investment style. The Adviser pays
the Sub-Adviser out of the Investment Advisory fees it receives (described
below).
The Board of Trustees of the Bishop Street Funds supervises the Adviser and
Sub-Adviser and establishes policies that the Adviser and Sub-Adviser must
follow in their management activities.
Bishop Street Capital Management, a registered investment adviser and
independent subsidiary of First Hawaiian Bank, serves as Adviser to the Funds.
Prior to February 22, 2000, First Hawaiian Bank served as Adviser to the Funds.
As of December 31, 1999, First Hawaiian Bank had approximately $10.9 billion in
assets under management. For the fiscal year ended December 31, 1999, First
Hawaiian Bank received advisory fees at the following rates:
<TABLE>
<S> <C>
Equity Fund 0.71%
High Grade Income Fund 0.42%
Hawaii Municipal Bond Fund 0.07%
Money Market Fund 0.26%
Treasury Money Market Fund 0.17%
</TABLE>
ADDITIONAL COMPENSATION
Bishop Street Capital Management and its affiliates may act as fiduciary or
provide services in various non-fiduciary capacities with respect to plans
subject to the Employee Retirement Income Security Act of 1974 (ERISA) and other
trust and agency accounts that invest in the Funds. Bishop Street Capital
Management may also receive compensation for acting as the Funds' investment
adviser in cases where the compensation is not duplicative of the compensation
those accounts pay for fiduciary and non-fiduciary services. First Hawaiian Bank
and its affiliates also receive compensation in connection with the following:
SHAREHOLDER SERVICING FEES
The Funds have adopted a Shareholder Servicing Plan that allows the Funds to
pay shareholder servicing fees of up to 0.25% of a Fund's average daily net
assets for the servicing of its shares, and for services provided to
shareholders. First Hawaiian Bank or any of its affiliates providing brokerage
or investment-related services may receive shareholder servicing fees, payable
from the Funds' assets, of up to 0.25% of each Fund's average daily net assets.
INVESTMENT TEAM
The Equity and High Grade Income Funds are managed by a team of investment
professionals from the Adviser. No one person is primarily responsible for
making investment recommendations to the team.
Louis M. Levitas has managed the Hawaii Municipal Bond Fund since its inception
in February 1995. He manages the Fund pursuant to an agreement between the
Adviser and Bank of the West. Mr. Levitas has been a municipal bond specialist
since 1970.
INVESTMENT SUB-ADVISER
Wellington Management Company, LLP serves as the Sub-Adviser and manages the
Money Market and Treasury Money Market Funds on a day-to-day basis. The
Sub-Adviser selects, buys and sells securities for the Money Market Fund and
Treasury Money Market Fund under the supervision of the Adviser and the Board of
Trustees. As of December 31, 1999, Wellington Management Company, LLP had
approximately $235 billion in assets under management.
Page 23 of 33
<PAGE> 25
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange shares of the Funds.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- - Mail;
- - Telephone;
- - Wire; or
- - Direct Deposit.
To purchase shares directly from us, complete and send in an account
application. If you need an application or have questions, please call
1-800-262-9565. Write your check, payable in U.S. dollars, to Bishop Street
Funds and mail to Bishop Street Funds, P.O. Box 219721, Kansas City, MO
24121-9721. We cannot accept third-party checks, credit cards, credit card
checks or cash.
Institutional Class Shares may be purchased by: (i) holders of fiduciary,
advisory, agency, custodial and other similar accounts maintained with BancWest
Corporation and its banking and non-banking subsidiaries; (ii) shareholders of
the Bishop Street Funds with an existing Fund account prior to June 14, 1999;
(iii) registered investment advisors, regulated by a federal or state
governmental authority, or financial planners who purchase shares for an account
for which they are authorized to make investment decisions and who are
compensated by their clients for their services; (iv) retirement and other
benefit plans sponsored by governmental entities; and (v) financial
institutions, which may purchase shares on their own account or as record owner
on behalf of their fiduciary, agency or custodial accounts. You may also
purchase Institutional Class Shares of the Bishop Street Money Market Fund
through a representative of BancWest Corporation and its banking and non-banking
subsidiaries.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
Page 24 of 33
<PAGE> 26
A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order. A Fund is
deemed to have received your order upon receipt of a completed account
application and a check or money order. If you already have an existing account,
a Fund is deemed to have received your order upon receipt of your order and your
check or money order.
The Funds calculate each bond and equity fund's NAV once each Business Day at
the regularly-scheduled close of normal trading on the NYSE (normally, 4:00
p.m., Eastern time). So for you to receive the current Business Day's NAV,
generally we must receive your purchase order before 4:00 p.m., Eastern time.
The Funds calculate each money market fund's NAV once each Business Day at 2:00
p.m., Eastern time. So for you to be eligible to receive dividends declared on
the day you submit your purchase order, the Funds generally must receive your
order before 2:00 p.m., Eastern time and federal funds (readily available funds)
before 4:00 p.m., Eastern time.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
In calculating NAV, a Fund generally values its investment portfolio at market
price (except the Money Market Fund and Treasury Money Market Fund). If market
prices are unavailable or a Fund thinks that they are unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.
In calculating NAV for the Money Market Fund and Treasury Money Market Fund, the
Funds generally value their investment portfolios using the amortized cost
valuation method, which is described in detail in our Statement of Additional
Information. If this method is determined to be unreliable during certain market
conditions or for other reasons, a Fund may value its portfolio at market price
or fair value prices may be determined in good faith using methods approved by
the Board of Trustees.
MINIMUM PURCHASES & AUTOMATIC INVESTMENT PLANS
You may open an account with a $1,000 minimum initial investment per Fund ($500
for those investing in retirement plans). The minimum initial investment may be
reduced with an Automatic Investment Plan (AIP).
If you have a checking or savings account, you may establish an AIP and open an
account with a $100 minimum initial investment per Fund. You may then begin
regularly scheduled investments of at least $50 per month through automatic
deductions from your checking or savings accounts.
HOW TO SELL YOUR FUND SHARES
If you own your shares directly, you may sell your shares on any Business Day by
contacting the Fund by mail at P.O. Box 219721, Kansas City, MO 64121-9721 or by
telephone at 1-800-262-9565.
Page 25 of 33
<PAGE> 27
If you are requesting to sell $5,000 or more of your shares, your request must
be in writing and must include a signature guarantee by a bank or other
financial institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
If you are a shareholder of the Treasury Money Market Fund, and hold the shares
directly, you may redeem shares by writing checks for $1,000 or more on an
existing account. You can obtain a checkwriting application by calling
1-800-262-9565. The checks may be made payable to any person or entity and your
account will continue to earn dividends until the check clears. Because of the
difficulty of determining in advance the exact value of your Fund account, you
may not use a check to close your account. There is no fee for the checkwriting
privilege, but if payment on a check is stopped upon your request, or if the
check cannot be honored because of insufficient funds or other valid reasons,
you may be charged a fee by the financial institution where you presented your
check for payment.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in the Equity Fund, High Grade Income Fund or
Hawaii Municipal Bond Fund; or $20,000 in the Money Market Fund or Treasury
Money Market Fund in your account, you may use the Systematic Withdrawal Plan.
Under the plan you may arrange monthly, quarterly, semi-annual or annual
automatic withdrawals of at least $50 from any Fund. The proceeds of each
withdrawal will be mailed to you by check or electronically transferred to your
bank account.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account if your redemption
proceeds are in excess of $500 (subject to a $15 fee) or sent to you by check.
If you recently purchased your shares by check, redemption proceeds may not be
available until your check has cleared (which may take up to 15 days from your
date of purchase).
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) we might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below $1,000 ($500 for those investing in
retirement plans; $100 for officers, directors and employees of BancWest
Corporation and its banking and non-banking subsidiaries who have arranged to
purchase shares through the AIP) because of redemptions you may be required to
sell your shares.
Page 26 of 33
<PAGE> 28
But, we will always give you at least 60 days' written notice to give you time
to add to your account and avoid the sale of your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares during times when trading on
the NYSE is restricted or halted or otherwise as permitted by the SEC. More
information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your Institutional Class Shares for Institutional Class Shares
of any other Bishop Street Fund on any Business Day by contacting us directly by
mail or telephone.
You may also exchange shares through your financial institution by mail or
telephone.
IF YOU RECENTLY PURCHASED SHARES BY CHECK, YOU MAY NOT BE ABLE TO EXCHANGE YOUR
SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE
OF PURCHASE). THIS EXCHANGE PRIVILEGE MAY BE CHANGED OR CANCELED AT ANY TIME
UPON 60 DAYS' NOTICE.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
Page 27 of 33
<PAGE> 29
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income, if any, as follows:
DECLARED DAILY AND PAID MONTHLY
High Grade Income Fund
Hawaii Municipal Bond Fund
Money Market Fund
Treasury Money Market Fund
DECLARED AND PAID QUARTERLY
Equity Fund
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
The Hawaii Municipal Bond Fund intends to distribute income that is exempt from
both federal taxes and Hawaii state taxes. The Fund may invest a portion of its
assets in securities that generate taxable income for federal or state income
taxes. Income exempt from federal tax may be subject to state and local taxes.
Any capital gains distributed by the Fund may be taxable.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 28 of 33
<PAGE> 30
THE BOARD OF TRUSTEES
The Board of Trustees supervises the management and affairs of the Trust. The
Trustees have approved contracts with certain companies that provide us with
essential management services.
The Trustees of the Trust are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS HISTORY
- ---- ----------------
<S> <C>
Martin Anderson Partner, Goodsill Anderson Quinn & Stifel since
1951
Charles E. Carlbom Chairman, BPI, Inc. since 1999; President and CEO,
United Grocers, Inc. (1997-1999); President and
CEO, Western Family Food, Inc., Western Family
Holdings Inc. (1982-1997)
Philip H. Ching Vice Chairman, First Hawaiian Bank (1968-1996)
James L. Huffman Dean and Professor, Lewis & Clark Law School since
1973
Shunichi Kimura Mediator, Mediation Specialists of Hawaii
(1994-1997); Judge, State of Hawaii Judiciary
(1974-1994)
Robert A. Nesher Chairman, SEI Mutual Funds since 1974; Director
and Executive Vice President of the Administrator
and the Distributor (1981-1994)
William S. Richardson Trustee, Kamehameha Schools Bishop Estate
(1982-1992); Chief Justice, Supreme Court of
Hawaii (1966-1983)
Peter F. Sansevero Regional Director of the Northwestern Region and
First Vice President, Merrill Lynch (1958-1997)
Manual R. Sylvester Managing Partner, Coopers & Lybrand L.L.P.
(1978-1992); Executive Partner, Coopers & Lybrand
L.L.P. (1992)
Joyce S. Tsunoda Senior Vice President, University of Hawaii System
since 1989; Chancellor, Community
Colleges-University of Hawaii since 1983
</TABLE>
Page 29 of 33
<PAGE> 31
FINANCIAL HIGHLIGHTS
The tables that follow present performance information about each Fund. This
information is intended to help you understand each Fund's financial performance
for the past five years, or, if shorter, the period of the Fund's operations.
Some of this information reflects financial information for a single Fund share.
The total returns in the table represent the rate that you would have earned (or
lost) on an investment in a Fund, assuming you reinvested all of your dividends
and distributions. This information has been audited by PricewaterhouseCoopers
LLP, independent public accountants. Their report, along with each Fund's
financial statements, appears in the annual report that accompanies our
Statement of Additional Information. You can obtain the annual report, which
contains more performance information, at no charge by calling 1-800-262-9565.
Page 30 of 33
<PAGE> 32
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED DECEMBER 31.
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS FROM
-----------------------------------------------------------
NET RATIO OF
NET REALIZED NET NET EXPENSES
ASSET AND ASSET ASSETS, TO
VALUE NET UNREALIZED NET VALUE END OF AVERAGE
BEGINNING INVESTMENT GAIN INVESTMENT CAPITAL END OF TOTAL PERIOD NET
OF PERIOD INCOME (LOSSES) ON INCOME GAINS PERIOD RETURN (000) ASSETS
INVESTMENTS (LOSSES)
- ---------------------------------------------------------------------------------------------------------------------------
EQUITY FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1999 $15.28 -- $3.68 -- $(1.08) $17.88 24.37% $391,227 1.00%
1998 $12.06 $0.05 $3.88 $(0.05) $(0.66) $15.28 33.05% $101,817 1.00%
1997(1) $10.00 $0.08 $2.06 $(0.08) -- $12.06 21.52%+ $ 69,967 0.99%*
HIGH GRADE
INCOME FUND
1999 $10.43 $0.48 $(0.92) $(0.50) $(0.10) $ 9.39 (4.34)% $127,881 0.80%
1998 $10.23 $0.54 $0.37 $(0.54) $(0.17) $10.43 9.09% $ 24,901 0.80%
1997(1) $10.00 $0.51 $0.26 $(0.51) $(0.03) $10.23 7.94%+ $ 26,242 0.80%*
HAWAII
MUNICIPAL BOND
FUND
1999 $10.77 $0.48 $(0.75) $(0.50) $(0.02) $9.98 (2.65)% $141,341 0.41%
1998 $10.67 $0.51 $ 0.10 $(0.51) -- $10.77 5.84% $ 35,751 0.41%
1997 $10.34 $0.53 $ 0.33 $(0.53) -- $10.67 8.52% $ 29,005 0.34%
1996 $10.47 $0.55 $(0.12) $(0.55) $(0.01) $10.34 4.21% $ 15,408 0.21%
1995(2) $10.00 $0.45 $ 0.47 $(0.45) -- $10.47 10.91%++ $ 9,411 0.27%*
MONEY MARKET
FUND
1999 $1.00 $0.05 -- $(0.05) -- $ 1.00 4.88% $284,291 0.50%
1998 $1.00 $0.05 -- $(0.05) -- $ 1.00 5.26% $268,318 0.50%
1997 $1.00 $0.05 -- $(0.05) -- $ 1.00 5.29% $246,671 0.51%
1996 $1.00 $0.05 -- $(0.05) -- $ 1.00 5.12% $274,125 0.49%
1995(3) $1.00 $0.05 -- $(0.05) -- $ 1.00 5.67%++ $305,120 0.50%*
TREASURY MONEY
MARKET FUND
1999 $1.00 $0.05 -- $(0.05) -- $1.00 4.65% $331,064 0.44%
1998 $1.00 $0.05 -- $(0.05) -- $1.00 5.10% $299,844 0.44%
1997 $1.00 $0.05 -- $(0.05) -- $1.00 5.22% $273,919 0.43%
1996(4) $1.00 $0.03 -- $(0.03) -- $1.00 5.08%++ $180,201 0.42%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET
EXPENSES TO RATIO OF INVESTMENT
AVERAGE NET INCOME TO
NET ASSETS INVESTMENT AVERAGE
EXCLUDING FEE INCOME TO NET ASSETS PORTFOLIO
WAIVERS AND AVERAGE EXCLUDING FEE TURNOVER
REIMBURSEMENTS NET ASSETS WAIVERS AND RATE
REIMBURSEMENTS
- ------------------------------------------------------------------------
EQUITY FUND
<S> <C> <C> <C> <C>
1999 1.27% (0.01)% (0.28)% 58%
1998 1.32% 0.38% 0.06% 41%
1997(1) 1.39%* 0.83%* 0.43%* 30%
HIGH GRADE
INCOME FUND
1999 1.19% 5.12% 4.73% 56%
1998 1.21% 5.21% 4.80% 98%
1997(1) 1.30%* 5.58%* 5.08%* 32%
HAWAII
MUNICIPAL BOND
FUND
1999 0.99% 4.79% 4.21% 14%
1998 1.01% 4.74% 4.14% 21%
1997 0.99% 5.05% 4.40% 29%
1996 0.85% 5.33% 4.68% 27%
1995(2) 1.10%* 5.24%* 4.40%* 68%
MONEY MARKET
FUND
1999 0.84% 4.78% 4.44% n/a
1998 0.81% 5.12% 4.81% n/a
1997 0.85% 5.18% 4.84% n/a
1996 0.60% 5.01% 4.90% n/a
1995(3) 0.66%* 5.50%* 5.34%* n/a
TREASURY MONEY
MARKET FUND
1999 0.85% 4.56% 4.15% n/a
1998 0.84% 4.98% 4.58% n/a
1997 0.86% 5.11% 4.68% n/a
1996(4) 0.65%* 4.96%* 4.74%* n/a
</TABLE>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS
NOT BEEN ANNUALIZED.
++ TOTAL RETURN HAS BEEN ANNUALIZED.
* ANNUALIZED.
AMOUNTS DESIGNATED AS " -- " ARE EITHER $0 OR HAVE BEEN
ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JANUARY 31, 1997.
(2) COMMENCED OPERATIONS ON FEBRUARY 15, 1995.
(3) COMMENCED OPERATIONS ON JANUARY 30, 1995.
(4) COMMENCED OPERATIONS ON MAY 1, 1996.
Page 31 of 33
<PAGE> 33
BISHOP STREET FUNDS
INVESTMENT ADVISER
Bishop Street Capital Management
999 Bishop Street, 10th Floor
Honolulu, Hawaii 96813
SUB-ADVISER
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, includes detailed information about the Bishop
Street Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: CALL 1-800-262-9565
BY MAIL: Write to the Funds
Bishop Street Funds
c/o SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 32 of 33
<PAGE> 34
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Bishop Street Funds, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information on
the operation of the Public Reference Room, call 1-202-942-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102. You may also obtain this information, upon payment of
a duplicating fee, by e-mailing the SEC at the following address:
[email protected]. The Funds' Investment Company Act registration number is
811-08572.
Page 33 of 33
<PAGE> 35
CLASS A SHARES
BISHOP STREET FUNDS
PROSPECTUS
APRIL 30, 2000
EQUITY FUND
HIGH GRADE INCOME FUND
HAWAII MUNICIPAL BOND FUND
INVESTMENT ADVISER:
BISHOP STREET CAPITAL MANAGEMENT
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1 of 30
<PAGE> 36
ABOUT THIS PROSPECTUS
The Bishop Street Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Class A Shares of the Bishop Street Funds that you should know about
before investing. Please read this prospectus and keep it for future reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IN THE NEXT COLUMN, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS.
IF YOU WOULD LIKE MORE DETAILED INFORMATION ABOUT THE FUNDS, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
EQUITY FUND............................................................. 2
HIGH GRADE INCOME FUND.................................................. 4
HAWAII MUNICIPAL BOND FUND.............................................. 6
MORE INFORMATION ABOUT RISK............................................. 8
MORE INFORMATION ABOUT FUND INVESTMENTS................................. 9
INVESTMENT ADVISER AND INVESTMENT TEAM.................................. 9
PURCHASING, SELLING AND EXCHANGING FUND SHARES.......................... 10
DISTRIBUTION OF FUND SHARES............................................. 15
DIVIDENDS AND DISTRIBUTIONS............................................. 15
TAXES................................................................... 15
THE BOARD OF TRUSTEES................................................... 16
FINANCIAL HIGHLIGHTS.................................................... 17
HOW TO OBTAIN MORE INFORMATION ABOUT BISHOP STREET FUNDS................ Back Cover
</TABLE>
Page 2 of 30
<PAGE> 37
RISK/RETURN INFORMATION COMMON TO THE FUNDS
Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
Each Fund has its own investment goal and strategies for reaching that goal. The
investment manager invests Fund assets in a way that they believe will help the
Fund achieve its goal. Still, investing in each Fund involves risk and there is
no guarantee that a Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in the
Fund, just as you could with other investments. A FUND SHARE IS NOT A BANK
DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE FDIC OR ANY GOVERNMENT
AGENCY.
The value of your investment in a Fund is based on the market value of the
securities a Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
effect on a Fund of a change in the value of a single security will depend on
how widely a Fund diversifies its holdings.
Page 3 of 30
<PAGE> 38
EQUITY FUND
FUND SUMMARY
INVESTMENT GOAL Long-term capital appreciation
INVESTMENT FOCUS Common stocks and other equity securities
SHARE PRICE VOLATILITY High
PRINCIPAL INVESTMENT STRATEGY Investing in a diversified portfolio of U.S.
equity securities
INVESTOR PROFILE Investors seeking long-term capital
appreciation, who are willing to accept the
risk of share price volatility
INVESTMENT STRATEGY
The Equity Fund primarily invests (at least 65% of its assets) in common stocks
and other equity securities that the Adviser believes have potential for capital
appreciation. Such instruments include convertible securities. Generally, the
Fund invests in securities of companies with market capitalizations in excess of
$2 billion. The Fund seeks to be diversified across issuers and major economic
sectors. In making a determination to buy, sell, or hold a security, the
portfolio management team gives special consideration to the relationship of the
security to the risk/reward measurement of the entire portfolio.
The Fund's investment approach, with its emphasis on common stocks and other
equity securities, is expected to provide returns consistent with the
performance of the U.S. stock market, as generally measured by broad U.S. stock
market indices such as the S&P 500. The Adviser employs a core equity investment
style with a growth bias.
PRINCIPAL RISKS OF INVESTING
Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.
The Fund is also subject to the risk that its market segment, equity securities,
may underperform other market segments.
Page 4 of 30
<PAGE> 39
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund from year to year.*
The period from June 14, 1999 through December 31, 1999 reflects the performance
of the Class A Shares. Periods prior to June 14, 1999 reflect the performance of
the Fund's Institutional Shares. Institutional Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be substantially
similar. The chart does not reflect Class A Shares' sales charges. If sales
charges had been reflected, returns would be less than those shown below.
<TABLE>
<S> <C>
1998 33.05%
1999 24.21%
BEST QUARTER WORST QUARTER
23.34% -9.11%
(12/31/98) (9/30/98)
</TABLE>
*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
This table compares the fund's average annual total returns for the periods
ended December 31, 1999 to those of the S&P 500 Composite Index and the Consumer
Price Index.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
EQUITY FUND 17.08%* 24.44%*
S&P 500 COMPOSITE INDEX 21.04% 25.81%**
CONSUMER PRICE INDEX 2.63% 2.04%**
</TABLE>
* Class A Shares of the Fund were offered beginning June 14, 1999. The
performance information shown prior to that date represents performance
of the Fund's Institutional Class Shares, which were offered beginning
January 31, 1997. Institutional Class Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be
substantially similar. The performance of the Institutional Class
Shares has been adjusted for the maximum sales charge applicable to
Class A Shares, but has not been adjusted to reflect the Class A
Shares' Rule 12b-1 fees and expenses. Had that adjustment been made,
performance would be lower than that shown.
** Since January 31, 1997
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The S&P 500 Composite Index is a widely-recognized,
market value-weighted (higher market value stocks have more influence than lower
market value stocks) index of 500 stocks, designed to mimic the overall equity
market's industry weightings. The Consumer Price Index measures prices of goods
bought by a typical consumer such as food, gas, shelter and clothing. It is
widely used as a cost-of-living benchmark.
Page 5 of 30
<PAGE> 40
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL CLASS A SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 5.75%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.74%
Distribution Fees (12b-1 fees) 0.25%
Other Expenses 0.53%
----
Total Annual Fund Operating Expenses 1.52%*
</TABLE>
* The Fund's total actual annual fund operating expenses are less than the
amount shown above because the Adviser waived a portion of its fees in order to
keep total operating expenses at a specified level. These fee waivers remain in
place as of the date of this prospectus, but the Adviser may discontinue all or
part of these waivers at any time. With these fee waivers, the Fund's actual
total operating expenses are as follows:
<TABLE>
<S> <C>
Equity Fund 1.25%
</TABLE>
For more information about these fees, see "Investment Adviser and Investment
Team."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of each period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$721 $1,028 $1,356 $2,283
</TABLE>
Page 6 of 30
<PAGE> 41
HIGH GRADE INCOME FUND
FUND SUMMARY
INVESTMENT GOAL High total return
INVESTMENT FOCUS Corporate and U.S. government debt
obligations
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Investing in high grade U.S. debt
obligations of domestic corporations and the
U.S. government
INVESTOR PROFILE Conservative investors seeking income, who
are willing to accept some degree of share
price volatility
INVESTMENT STRATEGY
The High Grade Income Fund primarily invests (at least 65% of its assets) in
high grade U.S. dollar-denominated debt obligations of domestic corporations and
the U.S. government. High grade debt obligations are those rated in the three
highest ratings categories by either S&P or other nationally recognized
statistical rating organizations, and include mortgage-backed and variable and
floating rate instruments. In determining to buy, sell, or hold a security, the
portfolio management team analyzes the security in relationship to the risk
characteristics of the portfolio as a whole.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, the volatility of lower rated securities is
even greater than that of higher rated securities. Longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, fixed income
securities, may underperform other market segments.
The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Fund may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities.
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
Page 7 of 30
<PAGE> 42
The Fund's investment approach, with its emphasis on high quality corporate and
U.S. government obligations of medium maturity, is expected to provide total
return through income and some capital appreciation with moderate risk to
principal and less sensitivity to changing interest rates than longer term or
lower quality bond funds.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund from year to year.*
The period from June 14, 1999 through December 31, 1999 reflects the performance
of the Class A Shares. Periods prior to June 14, 1999 reflect the performance of
the Fund's Institutional Shares. Institutional Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be substantially
similar. The chart does not reflect Class A Shares' sales charges. If sales
charges had been reflected, returns would be less than those shown below.
<TABLE>
<S> <C>
1998 9.09%
1999 -5.04%
BEST QUARTER WORST QUARTER
5.42% -2.37%
(9/30/98) (3/31/99)
</TABLE>
*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers Government/Corporate
Bond Index and the Consumer Price Index.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
HIGH GRADE INCOME FUND -9.55%* 2.18%*
LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX -2.15% 5.66%**
CONSUMER PRICE INDEX 2.63% 2.04%**
</TABLE>
* Class A Shares of the Fund were offered beginning June 14, 1999. The
performance information shown prior to that date represents performance
of the Fund's Institutional Class Shares, which were offered beginning
January 31, 1997. Institutional Class Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be
substantially similar. The performance of the Institutional Class
Shares has been adjusted for the maximum sales charge applicable to
Class A Shares, but has not been adjusted to reflect the Class A
Shares' Rule 12b-1 fees and expenses. Had that adjustment been made,
performance would be lower than that shown.
** Since January 31, 1997
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers
Page 8 of 30
<PAGE> 43
Government/Corporate Bond Index is a widely-recognized, market value-weighted
(higher market value bonds have more influence than lower market value bonds)
index of U.S. Treasury securities, U.S. government agency obligations, corporate
debt backed by the U.S. government, and fixed-rate non-convertible corporate
debt securities issued or guaranteed by foreign governments and agencies. All
securities in the Index are rated investment grade (BBB) or higher, with
maturities of at least one year. The Consumer Price Index measures prices of
goods bought by a typical consumer such as food, gas, shelter and clothing. It
is widely used as a cost-of-living benchmark.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL CLASS A SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.75%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other Distributions
(as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.55%
Distribution Fees (12b-1 fees) 0.25%
Other Expenses 0.64%
----
Total Annual Fund Operating Expenses 1.44%*
</TABLE>
* The Fund's total actual annual fund operating expenses are less than the
amount shown above because the Adviser waived a portion of its fees in order to
keep total operating expenses at a specified level. These fee waivers remain in
place as of the date of this prospectus, but the Adviser may discontinue all or
part of these waivers at any time. With these fee waivers, the Fund's actual
total operating expenses are as follows:
<TABLE>
<S> <C>
High Grade Income Fund 1.01%
</TABLE>
For more information about these fees, see "Investment Adviser and Investment
Team."
Page 9 of 30
<PAGE> 44
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$615 $909 $1,225 $2,117
</TABLE>
Page 10 of 30
<PAGE> 45
HAWAII MUNICIPAL BOND FUND
FUND SUMMARY
INVESTMENT GOAL High current income exempt from federal and
Hawaii income taxes
INVESTMENT FOCUS Hawaii municipal bonds
SHARE PRICE VOLATILITY Medium
PRINCIPAL INVESTMENT STRATEGY Investing in a portfolio focused on
investment grade municipal bonds
INVESTOR PROFILE Investors seeking tax-exempt current income
who are willing to accept the risk of
investing in a portfolio of municipal
securities
INVESTMENT STRATEGY
The Hawaii Municipal Bond Fund primarily invests (at least 65% of its assets) in
investment grade municipal bonds, the interest from which is exempt from federal
and Hawaii state income taxes. While the Adviser attempts to maximize the
portion of the Fund's assets invested in Hawaii issues, the Fund may also invest
in the municipal bonds issued by other U.S. states, territories and possessions.
There is no restriction upon the amount of the Fund's assets that may be
invested in obligations that pay income subject to the federal alternative
minimum tax. To the extent that the Fund invests in securities subject to the
alternative minimum tax, the income received from these securities could be
taxable. There are no limits on the average maturity of the Fund's portfolio.
The Adviser will use its judgment to invest in securities that will provide a
high level of current income in light of current market conditions. In making a
determination to buy, sell, or hold a security, the portfolio manager gives
special consideration to the relative value of the security in comparison to the
available alternatives, consistent with the objectives of the portfolio.
PRINCIPAL RISKS OF INVESTING
The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa. Also, the volatility of lower rated securities is
even greater than that of higher rated securities. Longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.
The Fund is also subject to the risk that its market segment, fixed income
securities, may underperform other market segments.
There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial
Page 11 of 30
<PAGE> 46
condition or credit rating of municipal issuers also may adversely affect the
value of the Fund's securities.
The Fund's concentration of investments in securities of issuers located in
Hawaii subjects the Fund to economic conditions and government policies within
that state. As a result, the Fund will be more susceptible to factors that
adversely affect issuers of Hawaii obligations than a mutual fund that does not
have as great a concentration in Hawaii.
The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political/regulatory occurrence affecting one or more
of these issuers, and may experience increased volatility due to its investments
in those securities.
The Fund's investment approach, with its emphasis on investment grade municipal
bonds, is expected to provide current tax-exempt income with moderate risk to
principal. The Fund is not expected to perform as well as a comparable taxable
bond fund, but may do as well or better on an after-tax basis.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund from year to year.*
The period from June 14, 1999 through December 31, 1999 reflects the performance
of the Class A Shares. Periods prior to June 14, 1999 reflect the performance of
the Fund's Institutional Shares. Institutional Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be substantially
similar. The chart does not reflect Class A Shares' sales charges. If sales
charges had been reflected, returns would be less than those shown below.
<TABLE>
<S> <C>
1996 4.21%
1997 8.52%
1998 5.84%
1999 -2.91%
BEST QUARTER WORST QUARTER
3.39% -2.01%
(6/30/97) (6/30/99)
</TABLE>
* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.
Page 12 of 30
<PAGE> 47
This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers Municipal Bond Index and
the Consumer Price Index.
<TABLE>
1 YEAR SINCE INCEPTION
------ ---------------
<S> <C> <C>
HAWAII MUNICIPAL BOND FUND -7.05%* 4.13%*
LEHMAN BROTHERS MUNICIPAL BOND INDEX -2.07% 5.91%**
CONSUMER PRICE INDEX 2.63% 2.32%**
</TABLE>
* Class A Shares of the Fund were offered beginning June 14, 1999. The
performance information shown prior to that date represents performance
of the Fund's Institutional Class Shares, which were offered beginning
February 15, 1995. Institutional Class Shares are not offered by this
prospectus; however, because they are invested in the same portfolio of
securities, the annual returns for the two classes would be
substantially similar. The performance of the Institutional Class
Shares has been adjusted for the maximum sales charge applicable to
Class A Shares, but has not been adjusted to reflect the Class A
Shares' Rule 12b-1 fees and expenses. Had that adjustment been made,
performance would be lower than that shown.
** Since February 28, 1995
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Municipal Bond Index is a
widely-recognized index of municipal bonds with maturities of at least one year.
The Consumer Price Index measures prices of goods bought by a typical consumer
such as food, gas, shelter and clothing. It is widely used as a cost-of-living
benchmark.
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE SHAREHOLDER FEES THAT YOU MAY PAY IF YOU PURCHASE OR
SELL CLASS A SHARES. YOU WOULD PAY THESE FEES DIRECTLY FROM YOUR INVESTMENT IN
THE FUND.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) 4.25%
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
Page 13 of 30
<PAGE> 48
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.35%
Distribution Fees (12b-1 fees) 0.25%
Other Expenses 0.64%
----
Total Annual Fund Operating Expenses 1.24%*
</TABLE>
* The Fund's total actual annual fund operating expenses are less than the
amount shown above because the Adviser waived a portion of its fees in order to
keep total operating expenses at a specified level. These fee waivers remain in
place as of the date of this prospectus, but the Adviser may discontinue all or
part of these waivers at any time. With these fee waivers, the Fund's actual
total operating expenses are as follows:
<TABLE>
<S> <C>
Hawaii Municipal Bond Fund 0.70%
</TABLE>
For more information about these fees, see "Investment Adviser and Investment
Team."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C>
$546 $802 $1,077 $1,861
</TABLE>
Page 14 of 30
<PAGE> 49
MORE INFORMATION ABOUT RISK
<TABLE>
<S> <C>
MANAGEMENT RISK - The risk that a strategy used by a All Funds
fund's management may fail to produce the intended
result.
EQUITY RISK - Equity securities include public and Equity Fund
privately issued equity securities, common and preferred
stocks, warrants, rights to subscribe to common stock and
convertible securities, as well as instruments that attempt
to track the price movement of equity indices.
Investments in equity securities and equity derivatives in
general are subject to market risks that may cause their
prices to fluctuate over time. The value of securities
convertible into equity securities, such as warrants or
convertible debt, is also affected by prevailing interest
rates, the credit quality of the issuer and any call
provision. Fluctuations in the value of equity securities in
which a mutual fund invests will cause a fund's net asset
value to fluctuate. An investment in a portfolio of equity
securities may be more suitable for long-term investors
who can bear the risk of these share price fluctuations.
FIXED INCOME RISK - The market value of fixed income High Grade Income Fund
investments changes in response to interest rate changes Hawaii Municipal Bond Fund
and other factors. During periods of falling interest rates,
the values of outstanding fixed income securities generally
rise. 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. In addition to these
fundamental risks, different types of fixed income
securities may be subject to the following additional risks:
CALL RISK - During periods of falling interest High Grade Income Fund
rates, certain debt obligations with high interest Hawaii Municipal Bond Fund
rates may be prepaid (or "called") by the issuer prior
to maturity. This may cause a Fund's average weighted
maturity to fluctuate, and may require a Fund to invest
the resulting proceeds at lower interest rates.
</TABLE>
Page 15 of 30
<PAGE> 50
<TABLE>
<S> <C>
CREDIT RISK - The possibility that an issuer will be High Grade Income Fund
unable to make timely payments of either Hawaii Municipal Bond Fund
principal or interest. Since a Fund purchases
securities backed by credit enhancements from
banks and other financial institutions, changes in
the credit ratings of these institutions could cause
a Fund to lose money and may affect a Fund's
share price.
EVENT RISK - Securities may suffer declines in High Grade Income Fund
credit quality and market value due to issuer Hawaii Municipal Bond Fund
restructurings or other factors. The overall risk of
these declines should be reduced because of a
Fund's multiple holdings.
MUNICIPAL ISSUER RISK - There may be economic Hawaii Municipal Bond Fund
or political changes that impact the ability of
municipal issuers to repay principal and to make
interest payments on municipal securities. Changes
to the financial condition or credit rating of
municipal issuers may also adversely affect the
value of the Fund's municipal securities.
Constitutional or legislative limits on borrowing by
municipal issuers may result in reduced supplies of
municipal securities. Moreover, certain municipal
securities are backed only by a municipal issuer's
ability to levy and collect taxes.
In addition, the Hawaii Municipal Bond Fund's
concentration of investments in issuers located in a
single state makes the Fund more susceptible to
adverse political or economic developments
affecting that state. The Fund also may be riskier
than mutual funds that buy securities of issuers in
numerous states.
MORTGAGE-BACKED SECURITIES - Mortgage-backed High Grade Income Fund
securities are fixed income securities representing
an interest in a pool of underlying mortgage loans.
They are sensitive to changes in interest rates, but
may respond to these changes differently from
other fixed income securities due to the possibility
of prepayment of the underlying mortgage loans.
As a result, it may not be possible to determine in
advance the actual maturity date or average life of a
mortgage-backed security. Rising interest rates
</TABLE>
Page 16 of 30
<PAGE> 51
tend to discourage refinancings, with the result that
the average life and volatility of the security will
increase, exacerbating its decrease in market price.
When interest rates fall, however, mortgage-backed
securities may not gain as much in market value because
of the expectation of additional mortgage prepayments
that must be reinvested at lower interest rates.
Prepayment risk may make it difficult to calculate the
average maturity of a portfolio of mortgage-backed
securities and, therefore, to assess the volatility
risk of that portfolio.
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the principal investments and strategies described in this
prospectus, each Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Fund may invest up to 100%
of its assets in taxable money market instruments, repurchase agreements and
short-term obligations. When a Fund is investing for temporary defensive
purposes, it is not pursuing its investment goal.
INVESTMENT ADVISER AND INVESTMENT TEAM
INVESTMENT ADVISER
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers each Fund's respective investment program.
The Board of Trustees of the Bishop Street Funds supervises the Adviser and
establishes policies that the Adviser must follow in its management activities.
Bishop Street Capital Management, a registered investment adviser and
independent subsidiary of First Hawaiian Bank, serves as Adviser to the Funds.
Prior to February 22, 2000, First Hawaiian Bank served as Adviser to the Funds.
As of December 31, 1999, First Hawaiian Bank had approximately $10.9 billion in
assets under management. For the fiscal year ended December 31, 1999, First
Hawaiian Bank received advisory fees at the following rates:
<TABLE>
<S> <C>
Equity Fund 0.71%
High Grade Income Fund 0.42%
Hawaii Municipal Bond Fund 0.07%
</TABLE>
Page 17 of 30
<PAGE> 52
ADDITIONAL COMPENSATION.
Bishop Street Capital Management and its affiliates may act as fiduciary or
provide services in various non-fiduciary capacities with respect to plans
subject to the Employee Retirement Income Security Act of 1974 (ERISA) and
other trust and agency accounts that invest in the Funds. Bishop Street Capital
Management may also receive compensation for acting as the Funds' investment
adviser in cases where the compensation is not duplicative of the compensation
those accounts pay for fiduciary and non-fiduciary services. First Hawaiian
Bank and its affiliates also receive compensation in connection with the
following:
SHAREHOLDER SERVICING FEES. The Funds have adopted a Shareholder Servicing
Plan that allows the Funds to pay shareholder servicing fees of up to 0.25% of
a Fund's average daily net assets for the servicing of its shares, and for
services provided to shareholders. First Hawaiian Bank or any of its affiliates
providing brokerage or investment-related services may receive shareholder
servicing fees, payable from the Funds' assets, of up to 0.25% of each Fund's
average daily net assets.
INVESTMENT TEAM
The Equity and High Grade Income Funds are managed by a team of investment
professionals from the Adviser. No one person is primarily responsible for
making investment recommendations to the team.
Louis M. Levitas has managed the Hawaii Municipal Bond Fund since its inception
in February 1995. He manages the Fund pursuant to an agreement between the
Adviser and Bank of the West. Mr. Levitas has been a municipal bond specialist
since 1970.
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange shares of the Funds.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- - Mail;
- - Telephone;
- - Wire; or
- - Direct Deposit.
To purchase shares directly from us complete and send in an account application.
If you need an application or have questions, please call 1-800-262-9565. Write
your check, payable in U.S. dollars, to Bishop Street Funds and mail to Bishop
Street Funds, P.O. Box 219721, Kansas City, MO 64121-9721. We cannot accept
third-party checks, credit cards, credit card checks or cash.
You may also purchase shares through a representative of BancWest Corporation
and its banking and non-banking subsidiaries, or other financial institutions
that have executed dealer agreements.
Page 18 of 30
<PAGE> 53
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order plus the
applicable front-end sales charge. A Fund is deemed to have received your order
upon receipt of a completed account application and a check or money order. If
you already have an existing account, a Fund is deemed to have received your
order upon receipt of your order and your check or money order.
The Funds calculate each bond and equity fund's NAV once each Business Day at
the regularly scheduled close of normal trading on the NYSE (normally 4:00 p.m.,
Eastern time). So, for you to receive the current Business Day's NAV, generally
we must receive your order before 4:00 p.m., Eastern time.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the net assets of
the Fund.
In calculating NAV, a Fund generally values its investment portfolio at market
price. If market prices are unavailable or a Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.
MINIMUM PURCHASES & AUTOMATIC INVESTMENT PLANS
You may open an account with a $1,000 minimum initial investment per Fund ($500
for those investing in retirement plans and for officers, directors and
employees of BancWest Corporation and its banking and non-banking subsidiaries).
The minimum initial investment may be reduced with an Automatic Investment Plan
(AIP).
If you have a checking or savings account, you may establish an AIP and open an
account with a $100 minimum initial investment per Fund ($50 for officers,
directors and employees of BancWest Corporation and its banking and non-banking
subsidiaries). You may then begin regularly scheduled investments of at least
$50 per month through automatic deductions from your checking or savings
accounts. Purchases made through the AIP are subject to the applicable
front-end sales charge.
Page 19 of 30
<PAGE> 54
SALES CHARGES
FRONT-END SALES CHARGES - CLASS A SHARES
The offering price of Class A Shares is the NAV next calculated after a Fund
receives your request, plus the front-end sales load.
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:
EQUITY FUND
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS A PERCENTAGE YOUR SALES CHARGES AS A
IF YOUR INVESTMENT IS: OF OFFERING PRICE PERCENTAGE OF YOUR NET INVESTMENT
- ---------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Less than $50,000 5.75% 6.10%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over* 0.00% 0.00%
</TABLE>
* Even though you do not pay a sales charge on purchases of $1,000,000 or
more, the Distributor may pay dealers a 1% commission for these
transactions.
HIGH GRADE INCOME FUND
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS A YOUR SALES CHARGES AS A PERCENTAGE
IF YOUR INVESTMENT IS: PERCENTAGE OF OFFERING PRICE OF YOUR NET INVESTMENT
- ---------------------- ---------------------------- ----------------------------------
<S> <C> <C>
Less than $50,000 4.75% 4.99%
$50,000 but less than $100,000 4.50% 4.71%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over* 0.00% 0.00%
</TABLE>
* Even though you do not pay a sales charge on purchases of $1,000,000 or
more, the Distributor may pay dealers a 1% commission for these
transactions.
HAWAII MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
YOUR SALES CHARGE AS A YOUR SALES CHARGES AS A
IF YOUR INVESTMENT IS: PERCENTAGE OF OFFERING PRICE PERCENTAGE OF YOUR NET INVESTMENT
- ---------------------- ---------------------------- ---------------------------------
<S> <C> <C>
Less than $50,000 4.25% 4.44%
$50,000 but less than $100,000 4.00% 4.17%
$100,000 but less than $250,000 3.50% 3.63%
$250,000 but less than $500,000 2.50% 2.56%
$500,000 but less than $1,000,000 2.00% 2.04%
$1,000,000 and over* 0.00% 0.00%
</TABLE>
* Even though you do not pay a sales charge on purchases of $1,000,000 or
more, the Distributor may pay dealers a 1% commission for these
transactions.
Page 20 of 30
<PAGE> 55
WAIVER OF FRONT-END SALES CHARGE -- CLASS A SHARES
The front-end sales charge will be waived on Class A Shares purchased:
- - by reinvestment of dividends and distributions;
- - by persons repurchasing shares they redeemed within the last 30 days
(see "Repurchase of Class A Shares");
- - by investors who purchase shares with redemption proceeds (but only to
the extent of such redemption proceeds) from another investment company
within 30 days of such redemption, provided that, the investors paid
either a front-end or contingent deferred sales charge on the original
shares redeemed;
- - by present and retired Trustees of the Funds and officers, directors
and employees (and members of their immediate family) of BancWest
Corporation and its banking and non-banking subsidiaries;
- - by persons reinvesting distributions from qualified employee benefit
retirement plans and rollovers from individual retirement accounts
("IRAs") previously with BancWest Corporation and its banking and
non-banking subsidiaries;
- - by persons investing an amount less than or equal to the value of an
account distribution when an account for which a bank affiliated with
BancWest Corporation and its banking and non-banking subsidiaries acted
in a fiduciary, administrative, custodial or investment advisory
capacity is closed; or
- - through dealers, retirement plans, asset allocation programs and
financial institutions that, under their dealer agreements with the
Distributor or otherwise, do not receive any portion of the front-end
sales charge.
REPURCHASE OF CLASS A SHARES
You may repurchase any amount of Class A Shares of any Fund at NAV (without the
normal front-end sales charge), up to the limit of the value of any amount of
Class A Shares (other than those which were purchased with reinvested dividends
and distributions) that you redeemed within the past 30 days. In effect, this
allows you to reacquire shares that you may have had to redeem, without
re-paying the front-end sales charge. To exercise this privilege, the Fund must
receive your purchase order within 30 days of your redemption. In addition, you
must notify the Fund when you send in your purchase order that you are
repurchasing shares.
REDUCED SALES CHARGES -- CLASS A SHARES
RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the Class A Shares you already own to the
amount that you are currently purchasing. The Fund will combine the value of
your current purchases with the current value of any Class A Shares you
purchased previously for (i) your account, (ii) your spouse's account, (iii) a
joint account with your spouse, or (iv) your minor children's trust or custodial
accounts. A fiduciary purchasing shares for the same fiduciary account, trust or
estate may also use this right of accumulation. The Fund will only consider the
value of Class A Shares purchased previously that were sold subject to a sales
charge. To be entitled to a reduced sales charge based on shares already owned,
you must ask us for the reduction at the time of purchase. You must provide the
Fund with your account number(s) and, if applicable, the account numbers for
your spouse and/or children (and provide the children's ages). The Fund may
amend or terminate this right of accumulation at any time.
Page 21 of 30
<PAGE> 56
LETTER OF INTENT. You may purchase Class A Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase Class
A Shares of a Fund over a 13-month period and receive the same sales charge as
if you had purchased all the shares at the same time. The Fund will only
consider the value of Class A Shares sold subject to a sales charge. As a
result, Class A Shares purchased with dividends or distributions will not be
included in the calculation. To be entitled to a reduced sales charge based on
shares you intend to purchase over the 13-month period, you must send the Fund a
Letter of Intent. In calculating the total amount of purchases, you may include
in your letter purchases made up to 90 days before the date of the Letter. The
13-month period begins on the date of the first purchase, including those
purchases made in the 90-day period before the date of the Letter. Please note
that the purchase price of these prior purchases will not be adjusted.
You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however, authorize
the Fund to hold in escrow 5% of the total amount you intend to purchase. If you
do not complete the total intended purchase at the end of the 13-month period,
the Fund's transfer agent will redeem the necessary portion of the escrowed
shares to make up the difference between the reduced rate sales charge (based on
the amount you intended to purchase) and the sales charge that would normally
apply (based on the actual amount you purchased).
COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, the Fund will combine same day purchases of Class A Shares
(that are subject to a sales charge) made by you, your spouse and your minor
children (under age 21). This combination also applies to Class A Shares you
purchase with a Letter of Intent.
GENERAL INFORMATION ABOUT SALES CHARGES
Your securities dealer is paid a commission when you buy your shares and is paid
a distribution fee as long as you hold your shares. Your securities dealer or
servicing agent may receive different levels of compensation depending on which
Class of shares you buy.
From time to time, some financial institutions, including brokerage firms
affiliated with the Adviser, may be reallowed up to the entire sales charge.
Firms that receive a reallowance of the entire sales charge may be considered
underwriters for the purpose of federal securities law.
HOW TO SELL YOUR FUND SHARES
If you own your shares directly, you may sell your shares on any Business Day by
contacting the Fund by mail at P.O. Box 219721, Kansas City, MO 64121-9721 or by
telephone at 1-800-262-9565.
If you are requesting to sell $5,000 or more of your shares, your request must
be in writing and include a signature guarantee by a bank or other financial
institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
Page 22 of 30
<PAGE> 57
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in the Equity Fund, High Grade Income Fund or
Hawaii Municipal Bond Fund in your account, you may use the Systematic
Withdrawal Plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or electronically transferred to
your bank account.
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account if your redemption
proceeds are in excess of $500 (subject to a $15 fee) or sent to you by check.
IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK, REDEMPTION PROCEEDS MAY NOT BE
AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR
DATE OF PURCHASE).
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) we might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below $1,000 ($500 for those investing in
retirement plans; $100 for officers, directors and employees of BancWest
Corporation and its banking and non-banking subsidiaries who have arranged to
purchase shares through the AIP) because of redemptions you may be required to
sell your shares.
But, we will always give you at least 60 days' written notice to give you time
to add to your account and avoid the sale of your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares during times when trading on
the NYSE is restricted or halted or otherwise as permitted by the SEC. More
information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your Retail Class A Shares for Retail Class A Shares of any
other Bishop Street Fund contained in this prospectus on any Business Day by
contacting us directly by mail or telephone.
You may also exchange shares through your financial institution by mail or
telephone.
Page 23 of 30
<PAGE> 58
IF YOU RECENTLY PURCHASED SHARES BY CHECK, YOU MAY NOT BE ABLE TO EXCHANGE YOUR
SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE
OF PURCHASE). THIS EXCHANGE PRIVILEGE MAY BE CHANGED OR CANCELED AT ANY TIME
UPON 60 DAYS' NOTICE.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
If you exchange shares that you purchased without a sales charge or with a lower
sales charge into a Fund with a sales charge or with a higher sales charge, the
exchange is subject to an incremental sales charge (e.g., the difference between
the lower and higher applicable sales charges). If you exchange shares into a
Fund with the same, lower or no sales charge there is no incremental sales
charge for the exchange.
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
DISTRIBUTION OF FUND SHARES
Each Fund has adopted a Class A distribution plan that allows the Fund to pay
distribution and service fees for the sale and distribution of its shares, and
for services provided to shareholders. Because these fees are paid out of a
Fund's assets continuously, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
Distribution fees, as a percentage of average daily net assets for the Class A
Shares for each of the Funds is 0.25%.
The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide cash or non-cash
compensation as recognition for past sales or encouragement of future sales that
may include the following: merchandise, travel, expenses, prizes, meals, and
lodgings, and gifts that do not exceed $100 per year, per individual.
Page 24 of 30
<PAGE> 59
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes its income, if any, as follows:
DECLARED DAILY AND PAID MONTHLY
High Grade Income Fund
Hawaii Municipal Bond Fund
DECLARED AND PAID QUARTERLY
Equity Fund
Each Fund makes distributions of capital gains, if any, at least annually. If
you own Fund shares on a Fund's record date, you will be entitled to receive the
distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.
Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
The Hawaii Municipal Bond Fund intends to distribute income that is exempt from
both federal taxes and Hawaii state taxes. The Fund may invest a portion of its
assets in securities that generate taxable income for federal or state income
taxes. Income exempt from federal tax may be subject to state and local taxes.
Any capital gains distributed by the Fund may be taxable.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 25 of 30
<PAGE> 60
THE BOARD OF TRUSTEES
The Board of Trustees supervises the management and affairs of the Trust. The
Trustees have approved contracts with certain companies that provide us with
essential management services.
The Trustees of the Trust are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS HISTORY
<S> <C>
Martin Anderson Partner, Goodsill Anderson Quinn & Stifel since
1951
Charles E. Carlbom Chairman, BPI, Inc., since 1999; President and
CEO, United Grocers, Inc. (1997-1999); President
and CEO, Western Family Food, Inc., Western Family
Holdings Inc. (1982-1997)
Philip H. Ching Vice Chairman, First Hawaiian Bank (1968-1996)
James L. Huffman Dean and Professor, Lewis & Clark Law School since
1973
Shunichi Kimura Mediator, Mediation Specialists of Hawaii
(1994-1997); Judge, State of Hawaii Judiciary
(1974-1994)
Robert A. Nesher Chairman, SEI Mutual Funds since 1974; Director
and Executive Vice President of the Administrator
and the Distributor (1981-1994)
William S. Richardson Trustee, Kamehameha Schools Bishop Estate
(1982-1992); Chief Justice, Supreme Court of Hawaii
(1966-1983)
Peter F. Sansevero Regional Director of the Northwestern Region and
First Vice President, Merrill Lynch (1958-1997)
Manual R. Sylvester Managing Partner, Coopers & Lybrand L.L.P.
(1978-1992); Executive Partner, Coopers & Lybrand
L.L.P. (1992)
Joyce S. Tsunoda Senior Vice President, University of Hawaii System
since 1989; Chancellor, Community
Colleges-University of Hawaii since 1983
</TABLE>
Page 26 of 30
<PAGE> 61
FINANCIAL HIGHLIGHTS
The tables that follow present performance information of the Class A Shares
which commenced operations on June 14, 1999. This information is intended to
help you understand each Fund's financial performance for the past five years,
or, if shorter, the period of the Fund's operations. Some of this information
reflects financial information for a single Fund share. The total returns in the
table represent the rate that you would have earned (or lost) on an investment
in a Fund, assuming you reinvested all of your dividends and distributions. This
information has been audited by PricewaterhouseCoopers LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the annual report, which contains more performance information,
at no charge by calling 1-800-262-9565.
Page 27 of 30
<PAGE> 62
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Periods Ended December 31,
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES Distribution from
-------------------------------------------------------
NET
REALIZED RATIO OF
NET AND NET NET EXPENSES
ASSET UNREALIZED ASSET ASSETS, TO
VALUE NET GAINS NET CAPITAL VALUE END OF AVERAGE
BEGINNING INVESTMENT (LOSSES) INVESTMENT GAINS END OF TOTAL PERIOD NET
OF PERIOD INCOME SECURITIES INCOME (LOSSES) PERIOD RETURN** (000) ASSETS
--------- ---------- ---------- ---------- -------- ------ -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
EQUITY FUND
CLASS A SHARES
1999(1): $15.74 -- $3.19 -- $(1.06) $17.87 20.52%+ $583 1.25%*
HIGH GRADE INCOME FUND
CLASS A SHARES
1999(1): $9.69 $0.19 $(0.19) $(0.24) $(0.10) $9.35 (0.05)%+ $1 1.05%*
HAWAII MUNICIPAL BOND FUND
CLASS A SHARES
1999(1): $10.42 $0.26 $(0.44) $(0.25) $(0.02) $9.97 (1.76)%+ $6,131 0.66%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES TO INCOME TO
AVERAGE RATIO OF AVERAGE
NET ASSETS NET NET ASSETS
EXCLUDING INVESTMENT EXCLUDING
FEE INCOME TO FEE PORTFOLIO
WAIVERS AND AVERAGE WAIVERS AND TURNOVER
REIMBURSEMENTS NET ASSETS REIMBURSEMENTS RATE
-------------- ---------- -------------- ---------
<S> <C> <C> <C> <C>
EQUITY FUND
CLASS A SHARES
1999(1): 1.61%* (0.33)%* (0.69)%* 58%
HIGH GRADE INCOME FUND
CLASS A SHARES
1999(1): 1.87%* 4.89%* 4.07%* 56%
HAWAII MUNICIPAL BOND FUND
CLASS A SHARES
1999(1): 1.24%* 4.89%* 4.31%* 14%
</TABLE>
+ TOTAL RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT THE SALES CHARGE ON CLASS A SHARES. AMOUNTS
DESIGNATED AS " -- " ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JUNE 14, 1999
Page 28 of 30
<PAGE> 63
BISHOP STREET FUNDS
INVESTMENT ADVISER
Bishop Street Capital Management
999 Bishop Street, 10th Floor
Honolulu, Hawaii 96813
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Funds is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000, includes detailed information about the Bishop
Street Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Funds.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: CALL 1-800-262-9565
BY MAIL: Write to the Funds
Bishop Street Funds
c/o SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
Page 29 of 30
<PAGE> 64
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-annual reports,
as well as other information about the Bishop Street Funds, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information on
the operation of the Public Reference Room, call 1-202-942-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102. You may also obtain this information, upon payment of
a duplicating fee, by e-mailing the SEC at the following address:
[email protected]. The Funds' Investment Company Act registration number is
811-08572.
Page 30 of 30
<PAGE> 65
BISHOP STREET FUNDS
PROSPECTUS
APRIL 30, 2000
MONEY MARKET FUND
INVESTMENT ADVISER
BISHOP STREET CAPITAL MANAGEMENT
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Page 1 of 16
<PAGE> 66
ABOUT THIS PROSPECTUS
Bishop Street Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Institutional Class of the Money Market Fund that you should know
about before investing. Please read this prospectus and keep it for future
reference.
THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. IF YOU WOULD LIKE MORE DETAILED INFORMATION
ABOUT THE FUND, PLEASE SEE:
<TABLE>
<CAPTION>
PAGE
<S> <C>
PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES............................ 2
MORE INFORMATION ABOUT RISK......................................... 5
MORE INFORMATION ABOUT FUND INVESTMENTS............................. 6
INVESTMENT ADVISER AND SUB-ADVISER.................................. 6
PURCHASING, SELLING AND EXCHANGING FUND SHARES...................... 7
DIVIDENDS AND DISTRIBUTIONS......................................... 9
TAXES............................................................... 9
THE BOARD OF TRUSTEES............................................... 10
FINANCIAL HIGHLIGHTS................................................ 11
HOW TO OBTAIN MORE INFORMATION ABOUT
BISHOP STREET FUNDS............................................. Back Cover
</TABLE>
Page 2 of 16
<PAGE> 67
BISHOP STREET MONEY MARKET FUND
FUND SUMMARY
<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal and maintaining liquidity
while providing current income
INVESTMENT FOCUS Short-term money market instruments
SHARE PRICE VOLATILITY Very low
PRINCIPAL INVESTMENT STRATEGY Investing in high quality, U.S. dollar denominated
short-term securities
INVESTOR PROFILE Conservative investors seeking current income
through a low risk liquid investment.
</TABLE>
INVESTMENT STRATEGY
The Money Market Fund is comprised of short-term U.S. dollar denominated debt
obligations that are rated in one of the two highest categories by nationally
recognized rating organizations or securities that the Sub-Adviser determines
are of comparable quality. The Fund invests substantially all of its assets in
short-term securities including: (i) commercial paper and other short-term
corporate obligations of U.S. and foreign issuers (including asset-backed
securities); (ii) certificates of deposit, time deposits, bankers' acceptances,
bank notes and other obligations of U.S. and foreign savings and loan
institutions and commercial banks (including foreign branches of such banks)
that meet certain asset requirements; (iii) short-term obligations issued by
state and local governments; (iv) obligations of foreign governments (including
Canadian and Provincial Government, and Crown Agency Obligations); and (v) U.S.
Treasury obligations and obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government. The Fund may
also enter into fully-collateralized repurchase agreements.
The Adviser has engaged Wellington Management Company, LLP as Sub-Adviser
(Sub-Adviser) to manage the Fund on a day-to-day basis. Using a top-down
strategy and bottom-up security selection process, the Sub-Adviser seeks
securities with an acceptable maturity, that are marketable and liquid, that
offer competitive yields, and that are issued by issuers that are on a sound
financial footing. The Sub-Adviser also considers factors such as the
anticipated level of interest rates and the maturity of individual securities
relative to the maturity of the Fund as a whole. The Fund follows strict SEC
rules about credit quality, maturity and diversification of its investments.
PRINCIPAL RISKS OF INVESTING
An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates. A Fund share
is not a bank deposit and is not insured or guaranteed by the FDIC or any
government agency. In addition, although a money market fund seeks to maintain a
constant price per share of $1.00, you may lose money by investing in the Fund.
Page 3 of 16
<PAGE> 68
Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.
The Fund's investment approach, with its emphasis on short-term obligations, is
expected to provide current income with low risk to principal and lower exposure
to fluctuations in share price. The Fund can be expected to provide lower
returns than fixed income funds which invest in longer-term securities.
THE MONEY MARKET FUND TRIES TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT
THERE IS NO GUARANTEE THAT THE FUND WILL ACHIEVE THIS GOAL.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.
This bar chart shows changes in the performance of the Fund's Institutional
Class Shares from year to year.
<TABLE>
<S> <C>
1996 5.12%
1997 5.29%
1998 5.26%
1999 4.88%
BEST QUARTER WORST QUARTER
1.33% 1.12%
(12/31/99) (6/30/99)
</TABLE>
THIS TABLE COMPARES THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDED DECEMBER 31, 1999 TO THOSE OF THE IBC/FINANCIAL DATA FIRST TIER
INSTITUTIONS-ONLY AVERAGE.
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPTION
- ------------------------------------------------------------------------------------
<S> <C> <C>
MONEY MARKET FUND 4.88% 5.23%*
IBC/FINANCIAL DATA FIRST TIER INSTITUTIONS-ONLY AVERAGE 4.94% 5.33%**
</TABLE>
* Since January 30, 1995
** Since January 31, 1995
For information concerning the Fund's 7-Day Yield, please call 1-800-262-9565.
WHAT IS AN AVERAGE?
An average represents the performance of a specific group of mutual funds with a
particular investment objective. You cannot invest directly in an average. The
IBC/Financial Data First Tier Institutions-Only Average is a composite of mutual
funds with investment goals similar to the Fund's goals.
Page 4 of 16
<PAGE> 69
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.
<TABLE>
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load)
(as a percentage of net asset value) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends and other
Distributions (as a percentage of offering price) None
Redemption Fee
(as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>
ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
<TABLE>
<S> <C>
Management Fees 0.30%
Other Expenses 0.54%
-----
Total Annual Fund Operating Expenses 0.84%*
</TABLE>
- -------------------------------------------------------------------------------
* The Fund's total actual annual operating expenses for the most recent fiscal
year were less than the amount shown above because the Adviser waived a portion
of its fees in order to keep total operating expenses at a specified level.
These fee waivers remain in place as of the date of this prospectus, but the
Adviser may discontinue all or part of these waivers at any time. With these fee
waivers, the Fund's actual total operating expenses are expected to be as
follows:
<TABLE>
<S> <C>
Money Market Fund 0.50%
</TABLE>
For more information about these fees, see "Investment Adviser and Sub-Adviser."
EXAMPLE: COST OF INVESTING
This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.
The Example also assumes that each year your investment has a 5% return, Fund
operating expenses remain the same and you reinvest all dividends and
distributions. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$86 $268 $466 $1,037
</TABLE>
Page 5 of 16
<PAGE> 70
MORE INFORMATION ABOUT RISK
The Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.
The Fund has its own investment goal and strategies for reaching that goal. The
investment manager invests Fund assets in a way that they believe will help the
Fund achieve its goal. Still, investing in the Fund involves risk and there is
no guarantee that the Fund will achieve its goal. An investment manager's
judgments about the markets, the economy, or companies may not anticipate actual
market movements, economic conditions or company performance, and these
judgments may affect the return on your investment. In fact, no matter how good
a job an investment manager does, you could lose money on your investment in the
Fund, just as you could with other investments. A Fund share is not a bank
deposit and it is not insured or guaranteed by the FDIC or any government
agency.
MANAGEMENT RISK - The risk that a strategy used by the Fund's management may
fail to produce the intended result.
FIXED INCOME RISK - The market value of fixed income investments changes in
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. 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. In addition to
these fundamental risks, different types of fixed income securities may be
subject to the following additional risks:
CALL RISK - During periods of falling interest rates, certain debt obligations
with high interest rates may be prepaid (or "called") by the issuer prior to
maturity. This may cause a Fund's average weighted maturity to fluctuate, and
may require a Fund to invest the resulting proceeds at lower interest rates.
CREDIT RISK - The possibility that an issuer will be unable to make timely
payments of either principal or interest. Since the Fund purchases securities
backed by credit enhancements from banks and other financial institutions,
changes in the credit ratings of these institutions could cause the Fund to lose
money and may affect the Fund's share price.
EVENT RISK - Securities may suffer declines in credit quality and market value
due to issuer restructurings or other factors. This risk should be reduced
because of the Fund's multiple holdings.
MUNICIPAL ISSUER RISK - There may be economic or political changes that impact
the ability of municipal issuers to repay principal and to make interest
payments on municipal securities. Changes to the financial condition or credit
rating of municipal issuers may also adversely affect the value of the Fund's
municipal securities. Constitutional or legislative limits on borrowing by
municipal issuers may result in reduced supplies of municipal securities.
Moreover, certain municipal securities are backed only by a municipal issuer's
ability to levy and collect taxes.
Page 6 of 16
<PAGE> 71
MORE INFORMATION ABOUT FUND INVESTMENTS
In addition to the principal investments and strategies described in this
prospectus, the Fund also may invest in other securities, use other strategies
and engage in other investment practices. These investments and strategies, as
well as those described in this prospectus, are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that it will
achieve its investment goal.
The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, the Fund may invest up to 100% of
its assets in cash or cash equivalents. When a Fund is investing for temporary
defensive purposes, it is not pursuing its investment goal.
INVESTMENT ADVISER AND SUB-ADVISER
The Investment Adviser oversees the Sub-Adviser to ensure compliance with the
Money Market Fund's investment policies and guidelines and monitors the
Sub-Adviser's adherence to its investment style. The Adviser pays the
Sub-Adviser out of the advisory fees it receives (described below). The Board of
Trustees of the Bishop Street Funds supervises the Adviser and Sub-Adviser and
establishes policies that the Adviser and Sub-Adviser must follow in their
management activities.
Bishop Street Capital Management, a registered investment adviser and
independent subsidiary of First Hawaiian Bank, serves as Adviser to the Fund.
Prior to February 22, 2000, First Hawaiian Bank served as Adviser to the Fund.
As of December 31, 1999, First Hawaiian Bank had approximately $10.9 billion in
assets under management. For the fiscal year ended December 31, 1999, First
Hawaiian Bank received advisory fees from the Money Market Fund at the annual
rate of 0.26%.
ADDITIONAL COMPENSATION
Bishop Street Capital Management and its affiliates may act as fiduciary or
provide services in various non-fiduciary capacities with respect to plans
subject to the Employee Retirement Income Security Act of 1974 (ERISA) and other
trust and agency accounts that invest in the Funds, Bishop Street Capital
Management may also receive compensation for acting as the Funds' investment
adviser in cases where the compensation is not duplicative of the compensation
those accounts pay for fiduciary and non-fiduciary services. First Hawaiian Bank
and its affiliates also receive compensation in connection with the following:
SHAREHOLDER SERVICING FEES. The Funds have adopted a Shareholder Servicing Plan
that allows the Funds to pay shareholder servicing fees of up to 0.25% of a
Fund's average daily net assets for the servicing of its shares, and for
services provided to shareholders. First Hawaiian Bank or any of its affiliates
providing brokerage or investment-related services may receive shareholder
servicing fees, payable from the Funds' assets, of up to 0.25% of each Fund's
average daily net assets.
INVESTMENT SUB-ADVISER
The Sub-Adviser, Wellington Management Company, LLP, serves as the Sub-Adviser
and manages the Money Market Fund on a day-to-day basis. The Sub-Adviser
selects, buys, and sells securities for the Money Market Fund under the
supervision of the Adviser and the Board of Trustees. As of December 31, 1999,
Wellington Management Company, LLP had approximately $235 billion in assets
under management.
Page 7 of 16
<PAGE> 72
PURCHASING, SELLING AND EXCHANGING FUND SHARES
This section tells you how to purchase, sell (sometimes called "redeem") and
exchange shares of the Fund.
HOW TO PURCHASE FUND SHARES
You may purchase shares directly by:
- - Mail;
- - Telephone;
- - Wire; or
- - Direct Deposit.
To purchase shares directly from us, complete and send in an account
application. If you need an application or have any questions, please call
1-800-262-9565. Write your check, payable in U.S. dollars, to Bishop Street
Funds and mail to Bishop Street Funds, P.O. Box 219721, Kansas City, MO
64121-9721. We cannot accept third-party checks, credit cards, credit card
checks or cash.
Institutional Class Shares may be purchased by: (i) holders of fiduciary,
advisory, agency, custodial and other similar accounts maintained with BancWest
Corporation and its banking and non-banking subsidiaries; (ii) shareholders of
the Bishop Street Funds with an existing Fund account prior to June 14, 1999;
(iii) registered investment advisors, regulated by a federal or state
governmental authority, or financial planners who purchase shares for an account
for which they are authorized to make investment decisions and who are
compensated by their clients for their services; (iv) retirement and other
benefit plans sponsored by governmental entities; and (v) financial
institutions, which may purchase shares on their own account or as record owner
on behalf of their fiduciary, agency or custodial accounts. You may also
purchase Institutional Class Shares of the Bishop Street Money Market Fund
through a representative of BancWest Corporation and its banking and non-banking
subsidiaries.
GENERAL INFORMATION
You may purchase shares on any day that the New York Stock Exchange (NYSE) and
the Federal Reserve are open for business (a Business Day).
A Fund may reject any purchase order if it is determined that accepting the
order would not be in the best interests of the Fund or its shareholders.
The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order. A Fund is
deemed to have received your order upon receipt of a completed account
application and a check or money order. If you already have an existing account,
a Fund is deemed to have received your order upon receipt of your order and your
check or money order.
Page 8 of 16
<PAGE> 73
The Money Market Fund calculates its NAV once each business day at 2:00 p.m.,
Eastern time. So, for you to be eligible to receive dividends from the Money
Market Fund declared on the day you submit your purchase order, generally we
must receive your order before 2:00 p.m., Eastern time and federal funds
(readily available funds) before 4:00 p.m., Eastern time.
HOW WE CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.
In calculating NAV for the Money Market Fund, we generally value the Fund's
investment portfolio using the amortized cost valuation method, which is
described in detail in our Statement of Additional Information. If this method
is determined to be unreliable during certain market conditions or for other
reasons, the Fund may value its portfolio at market price or fair value prices
may be determined in good faith using methods approved by the Board of Trustees.
MINIMUM PURCHASES & AUTOMATIC INVESTMENT PLANS
You may open an account with a $1,000 minimum initial investment per fund ($500
for those investing in retirement plans). The minimum initial investment may be
reduced with an Automatic Investment Plan (AIP).
If you have a checking or savings account, you may establish an AIP and open an
account with a $100 minimum initial investment per fund. You may then begin
regularly scheduled investments of at least $50 per month through automatic
deductions from your checking or savings accounts.
HOW TO SELL YOUR FUND SHARES
If you own your shares directly, you may sell your shares on any Business Day by
contacting the Fund by mail at P.O. Box 219721, Kansas City, MO 64121-9721 or by
telephone at 1-800-262-9565.
If you are requesting to sell $5,000 or more of your shares, your request must
be in writing and must include a signature guarantee by a bank or other
financial institution (a notarized signature is not sufficient).
The sale price of each share will be the next NAV determined after the Fund
receives your request.
SYSTEMATIC WITHDRAWAL PLAN
If you have at least $20,000 in the Money Market Fund in your account, you may
use the Systematic Withdrawal Plan. Under the plan you may arrange monthly,
quarterly, semi-annual or annual automatic withdrawals of at least $50 from the
Fund. The proceeds of the withdrawal will be mailed to you by check or
electronically transferred to your bank account.
Page 9 of 16
<PAGE> 74
RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account if your redemption
proceeds are in excess of $500 (subject to a $15 fee) or sent to you by check.
IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK, REDEMPTION PROCEEDS MAY NOT BE
AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR
DATE OF PURCHASE).
REDEMPTIONS IN KIND
The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) we might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). It is highly unlikely that your shares
would ever be redeemed in kind, but if they were you would probably have to pay
transaction costs to sell the securities distributed to you, as well as taxes on
any capital gains from the sale as with any redemption.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below $1,000 ($500 for those investing in
retirement plans; $100 for officers, directors and employees of BancWest
Corporation and its banking and non-banking subsidiaries, who have arranged to
purchase shares through the AIP) because of redemptions, you may be required to
sell your shares.
But, we will always give you at least 60 days' written notice to give you time
to add to your account and avoid the sale of your shares.
SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
The Fund may suspend your right to sell your shares during times when trading on
the NYSE is restricted or halted or otherwise as permitted by the SEC. More
information about this is in our Statement of Additional Information.
HOW TO EXCHANGE YOUR SHARES
You may exchange your Institutional Class Shares for Institutional Class Shares
of any other Bishop Street Fund on any Business Day by contacting us directly by
mail or telephone at 1-800-262-9565. The Bishop Street Funds offers
Institutional Class Shares of the Equity Fund, High Grade Income Fund, Hawaii
Municipal Bond Fund and Treasury Money Market Fund.
You may also exchange shares through your financial institution by mail or
telephone.
IF YOU RECENTLY PURCHASED SHARES BY CHECK, YOU MAY NOT BE ABLE TO EXCHANGE YOUR
SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE
OF PURCHASE). THIS EXCHANGE PRIVILEGE MAY BE CHANGED OR CANCELED AT ANY TIME
UPON 60 DAYS' NOTICE.
When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after the Fund receives your exchange request.
Page 10 of 16
<PAGE> 75
TELEPHONE TRANSACTIONS
Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although the Fund has certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, the Fund is not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with the Fund over the telephone, you will
generally bear the risk of any loss.
DIVIDENDS AND DISTRIBUTIONS
The Fund declares its income, if any, daily and distributes its income monthly.
The Fund makes distributions of capital gains, if any, at least annually. If you
own Fund shares on the Fund's record date, you will be entitled to receive the
distribution.
You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.
TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.
The Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from the Fund may be taxable whether or not you reinvest them. Income
distributions are generally taxable at ordinary income tax rates. Capital gains
distributions are generally taxable at the rates applicable to long-term capital
gains. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE EVENT.
MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.
Page 11 of 16
<PAGE> 76
THE BOARD OF TRUSTEES
The Board of Trustees supervises the management and affairs of the Trust. The
Trustees have approved contracts with certain companies that provide us with
essential management services.
The Trustees of the Trust are as follows:
<TABLE>
<CAPTION>
NAME BUSINESS HISTORY
<S> <C>
Martin Anderson Partner, Goodsill Anderson Quinn & Stifel since
1951
Charles E. Carlbom Chairman, BPI, Inc. since 1999; President and CEO,
United Grocers, Inc. (1997-1999); President and CEO,
Western Family Food, Inc., Western Family Holdings
Inc. (1982-1997)
Philip H. Ching Vice Chairman, First Hawaiian Bank (1968-1996)
James L. Huffman Dean and Professor, Lewis & Clark Law School since
1973
Shunichi Kimura Mediator, Mediation Specialists of Hawaii
(1994-1997); Judge, State of Hawaii Judiciary
(1974-1994)
Robert A. Nesher Chairman, SEI Mutual Funds since 1974; Director
and Executive Vice President of the Administrator
and the Distributor (1981-1994)
William S. Richardson Trustee, Kamehameha Schools Bishop Estate
(1982-1992); Chief Justice, Supreme Court of
Hawaii (1966-1983)
Peter F. Sansevero Regional Director of the Northwestern Region and
First Vice President, Merrill Lynch (1958-1997)
Manual R. Sylvester Managing Partner, Coopers & Lybrand L.L.P.
(1978-1992); Executive Partner, Coopers & Lybrand
L.L.P. (1992)
Joyce S. Tsunoda Senior Vice President, University of Hawaii System
since 1989; Chancellor, Community
Colleges-University of Hawaii since 1983
</TABLE>
Page 12 of 16
<PAGE> 77
FINANCIAL HIGHLIGHTS
The table that follows presents performance information about the Fund. This
information is intended to help you understand the Fund's financial performance
for the period of the Fund's operations. Some of this information reflects
financial information for a single Fund share. The total returns in the table
represent the rate that you would have earned (or lost) on an investment in the
Fund, assuming you reinvested all of your dividends and distributions. This
information has been audited by PricewaterhouseCoopers LLP, independent public
accountants. Their report, along with the Fund's financial statements, appears
in the annual report that accompanies our Statement of Additional Information.
You can obtain the annual report, which contains more performance information,
at no charge by calling 1-800-262-9565.
Page 13 of 16
<PAGE> 78
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT ACTIVITIES DISTRIBUTIONS FROM
------------------------------------- --------------------
NET
REALIZED RATIO OF
NET AND NET NET EXPENSES
ASSET UNREALIZED ASSET ASSETS TO
VALUE NET GAINS NET CAPITAL VALUE END OF AVERAGE
BEGINNING INVESTMENT (LOSSES) INVESTMENT GAINS END OF TOTAL PERIOD NET
OF PERIOD INCOME ON SECURITIES INCOME (LOSSES) PERIOD RETURN (000) ASSETS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MONEY MARKET FUND
1999: $ 1.00 $0.05 -- $(0.05) -- $1.00 4.88% $284,291 0.50%
1998: $ 1.00 $0.05 -- $(0.05) -- $1.00 5.26% $268,318 0.50%
1997: $ 1.00 $0.05 -- $(0.05) -- $1.00 5.29% $246,671 0.51%
1996: $ 1.00 $0.05 -- $(0.05) -- $1.00 5.12% $274,125 0.49%
1995(1): $ 1.00 $0.05 -- $(0.05) -- $1.00 5.67%+ $305,120 0.50%*
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
EXPENSES TO RATIO OF INCOME TO
AVERAGE NET AVERAGE
NET ASSETS INVESTMENT NET ASSETS
EXCLUDING FEE INCOME TO EXCLUDING FEE
WAIVERS AND AVERAGE WAIVERS AND
REIMBURSEMENTS NET ASSETS REIMBURSEMENTS
- -------------------------------------------------------------------
<S> <C> <C> <C>
MONEY MARKET FUND
1999: 0.84% 4.78% 4.44%
1998: 0.81% 5.12% 4.81%
1997: 0.85% 5.18% 4.84%
1996: 0.60% 5.01% 4.90%
1995(1): 0.66%* 5.50%* 5.34%*
</TABLE>
+ TOTAL RETURN HAS BEEN ANNUALIZED.
* ANNUALIZED.
AMOUNTS DESIGNATED AS " -- " ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
(1) COMMENCED OPERATIONS ON JANUARY 30, 1995.
Page 14 of 16
<PAGE> 79
BISHOP STREET FUNDS
INVESTMENT ADVISER
Bishop Street Capital Management
999 Bishop Street, 10th Floor
Honolulu, Hawaii 96813
SUB-ADVISER
Wellington Management Company, LLP
75 State Street
Boston, Massachusetts 02109
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
More information about the Fund is available without charge through the
following:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated April 30, 2000 includes detailed information about the Bishop
Street Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part of
this prospectus.
ANNUAL AND SEMI-ANNUAL REPORTS
These reports list the Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends and their
impact on Fund performance. The reports also contain detailed financial
information about the Fund.
TO OBTAIN AN SAI, ANNUAL OR SEMI-ANNUAL REPORT, OR MORE INFORMATION:
BY TELEPHONE: Call 1-800-262-9565
Page 15 of 16
<PAGE> 80
BY MAIL: Write to the Fund
Bishop Street Funds
c/o SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual reports,
as well as other information about the Bishop Street Funds, from the EDGAR
Database on the SEC's website ("http://www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for information on
the operation of the Public Reference Room, call 1-202-942-8090). You may
request documents by mail from the SEC, upon payment of a duplicating fee, by
writing to: Securities and Exchange Commission, Public Reference Section,
Washington, DC 20549-0102. You may also obtain this information, upon payment of
a duplicating fee, by e-mailing the SEC at the following address:
[email protected]. The Fund's Investment Company Act registration number is
811-08572.
Page 16 of 16
<PAGE> 81
BISHOP STREET FUNDS
A MUTUAL FUND FAMILY ADVISED BY BISHOP STREET CAPITAL MANAGEMENT
EQUITY FUND, HIGH GRADE INCOME FUND, HAWAII MUNICIPAL BOND FUND,
MONEY MARKET FUND AND TREASURY MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
INSTITUTIONAL CLASS SHARES
CLASS A SHARES
APRIL 30, 2000
This Statement of Additional Information is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
Bishop Street Funds. Please read this in conjunction with the Bishop Street
Funds' prospectuses dated April 30, 2000. Prospectuses may be obtained without
charge through the Distributor, SEI Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-262-9565.
TABLE OF CONTENTS
Page
The Trust...................................................... S-2
Description of Permitted Investments........................... S-2
Investment Limitations......................................... S-12
The Adviser.................................................... S-14
The Sub-Adviser................................................ S-15
The Administrator.............................................. S-16
The Distributor................................................ S-17
The Transfer Agent............................................. S-20
The Custodian.................................................. S-20
Independent Auditors........................................... S-20
Legal Counsel.................................................. S-21
Trustees and Officers of the Trust............................. S-21
Reporting...................................................... S-24
Performance.................................................... S-24
Calculation of Total Return.................................... S-26
Purchasing Shares.............................................. S-28
Redeeming Shares............................................... S-28
Determination of Net Asset Value............................... S-28
Taxes.......................................................... S-29
Fund Transactions.............................................. S-35
Description of Shares.......................................... S-39
Voting......................................................... S-39
Shareholder Liability.......................................... S-39
Limitation of Trustees' Liability.............................. S-40
5% and 25% Shareholders........................................ S-40
Financial Information.......................................... S-41
BSF-F-011-01
S-1
<PAGE> 82
THE TRUST
Bishop Street Funds (the "Trust") is an open-ended management
investment company. The Trust is organized under Massachusetts law, as a
Massachusetts business trust, under an Amended and Restated Agreement and
Declaration of Trust dated September 1, 1994. The Agreement and Declaration of
Trust permits the Trust to offer separate series of units of beneficial interest
(the "shares") and separate classes of funds. Shareholders may purchase shares
in certain funds through two separate classes, Class A and Institutional Class,
which provide for variations in sales charges, distribution costs, transfer
agent fees, voting rights and dividends. Except for differences between the
Class A Shares and the Institutional Class Shares pertaining to sales charges,
distribution and shareholder servicing, voting rights, dividends and transfer
agent expenses, each share of each series represents an equal proportionate
interest in that series. Please see "Description of Shares" for more
information.
This Statement of Additional Information relates to the Institutional
Class Shares of the Trust's Equity Fund, High Grade Income Fund, Hawaii
Municipal Bond Fund, Money Market Fund and Treasury Money Market Fund, and the
Class A Shares of the Trust's Equity Fund, High Grade Income Fund and Hawaii
Municipal Bond Fund (the "Funds").
DESCRIPTION OF PERMITTED INVESTMENTS
The following information supplements the information about permitted
investments set forth in the Prospectus.
FUND INVESTMENTS & PRACTICES
LEGEND
% - Maximum percentage permissible. All percentages shown are of total
assets unless otherwise noted.
x - No Policy limitation; Fund may be currently using.
* - Permitted, but not typically used.
- - Not permitted
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
TREASURY
MONEY MARKET MONEY MARKET
FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TRADITIONAL INVESTMENTS
Asset-Backed Securities x(1) -
Bank Obligations x -
Commercial Paper x(1) -
Corporate Debt Obligations x(2) -
Municipal Securities x(3) -
</TABLE>
S-2
<PAGE> 83
<TABLE>
<S> <C> <C>
Repurchase Agreements x x(4)
U.S. Government Agency and Treasury Obligations x x(5)
Zero Coupon Obligations x -
Variable & Floating Rate Instruments x -
Yankee Bonds x -
INVESTMENT PRACTICES
Borrowing 33% 33%
Illiquid Securities 10%(5) 10%(6)
Securities Lending 50% 50%
Standby Commitments 33% 33%
When-Issued Securities 33% 33%
</TABLE>
1. Rated in the highest short-term rating category by S&P or Moody's, or
unrated equivalent.
2. With remaining maturities of not more than 397 days of issuers that issue
commercial paper rated in the highest short-term rating category by S&P or
Moody's, or unrated equivalent.
3. Rated in the two highest ratings categories by S&P or Moody's, or unrated
equivalent.
4. Limited to repurchase agreements involving U.S. Treasury Obligations.
5. Limited to U.S. Treasury Obligations.
6. Percentage based on net assets, not total assets.
NON-MONEY MARKET FUNDS
<TABLE>
<CAPTION>
HAWAII
MUNICIPAL HIGH GRADE
EQUITY FUND BOND FUND INCOME FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRADITIONAL INVESTMENTS
ADRs 35% - x
Asset-Backed Securities - - 35%(7)
Bank Obligations - - 35%(1)
Commercial Paper - - 35%(1)
Convertible Securities 35% - -
Corporate Debt Obligations - 20%(3) x(1),(2)
Equity Securities x - -
Investment Company Shares 10% 10% 10%
Mortgage-Backed Securities - - 35%(4)
</TABLE>
S-3
<PAGE> 84
<TABLE>
<S> <C> <C> <C>
Municipal Securities - x(5) -
Repurchase Agreements 35% 20%(3) 35%
Restricted Securities 15% 15% 15%
Securities of Foreign Issuers * - x(1)
Supranational Agency Obligations - - 35%
U.S. Government Agency and Treasury Obligations - 20%(3) x(6)
Variable & Floating Rate Instruments - x x
Zero Coupon Obligations - x x
INVESTMENT PRACTICES
Borrowing 33% 33% 33%
Illiquid Securities 15%(3) 15%(3) 15%(3)
Securities Lending 15% 15% 50%
Standby commitments 33% 33% 33%
When-Issued Securities 33% 33% 33%
</TABLE>
1. Rated in the two highest ratings category by S&P or Moody's, or unrated
equivalent.
2. May invest up to 5% in securities rated BBB by S&P or BAA by Moody's, or
unrated equivalent.
3. Percentage is based on net assets, not total assets.
4. Includes privately issued mortgage-backed securities rated A or higher by
S&P or Moody's, or unrated equivalents.
5. Will invest at least 65% of its assets in municipal securities issued by
the State of Hawaii. Will invest at least 80% of its net assets in
investment grade securities that pay income exempt from regular federal
income tax.
6. May invest in U.S. Treasury Receipts.
7. Rated in the three highest ratings categories by S&P or Moody's, or unrated
equivalents.
AMERICAN DEPOSITARY RECEIPTS (ADRS) - ADRs are securities typically
issued by U.S. financial institutions (depositaries). ADRs represent ownership
interests in a security, or a pool of securities, issued by a foreign issuer and
deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary. An unsponsored
facility may be established by a depositary without the participation of the
issuer of the underlying security.
ARMS (ADJUSTABLE RATE MORTGAGE SECURITIES) are pass-through
certificates representing ownership in a pool of adjustable rate mortgages. ARMs
make monthly payments based on a pro rata share of interest and principal
payments, and prepayments
S-4
<PAGE> 85
of principal on the pool of underlying mortgages. The adjustable rate feature
reduces, but does not eliminate, price fluctuations in this type of
mortgage-backed security.
ASSET-BACKED SECURITIES are securities backed by non-mortgage assets
such as company receivables, truck and auto loans, leases, and credit card
receivables. These securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in the underlying pools
of assets. Asset-backed securities may also be obligations, 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 the purpose of owning
these assets and issuing debt obligations.
BANK OBLIGATIONS are SHORT-TERM OBLIGATIONS issued by U.S. and foreign
banks, including bankers' acceptances, certificates of deposit, custodial
receipts, and time deposits.
COMMERCIAL PAPER is a term used to describe unsecured short-term
promissory notes issued by municipalities, corporations, and other entities that
have maturities generally from a few days to nine months.
FOREIGN SECURITIES - U.S. dollar denominated obligations of foreign
issuers 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 Deposits, and
investments in Canadian Commercial Paper, foreign securities and Europaper.
American Depositary Receipts have 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.
GNMA SECURITIES - Securities issued by the Government National
Mortgage Association ("GNMA"), a wholly-owned U.S. government corporation,
guarantee 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
S-5
<PAGE> 86
payments, GNMA certificates have a shorter average maturity and, therefore, less
principal volatility than a comparable 30-year bond. Since prepayment rates vary
widely, it is not possible to accurately predict the average maturity of a
particular GNMA pool. 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. The scheduled monthly interest and principal payments
relating to mortgages in the pool are "passed through" to investors. 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.
GOVERNMENT PASS-THROUGH SECURITIES are securities issued or guaranteed
by a U.S. government agency representing an interest in a pool of mortgage
loans. Government and private guarantees do not extend to the securities' value,
which is likely to vary inversely with fluctuations in interest rates.
ILLIQUID SECURITIES are securities that cannot be disposed of within
seven days at approximately the price at which they are being carried on a
mutual fund's books.
INVESTMENT COMPANY SHARES - Shares of other mutual funds which may be
purchased by the Funds to the extent consistent with applicable law. Under these
rules and regulations of the Investment Company Act of 1940 (the "1940 Act"), a
Fund is prohibited from acquiring the securities of other investment companies
if, as a result of such acquisition, the Fund would own more than 3% of the
total voting stock of the company; securities issued by any one investment
company represented more than 5% of the Fund's assets; or securities (other than
treasury stock) issued by all investment companies would represent more than 10%
of the total assets of the Fund. 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 of the Funds would indirectly bear a
proportionate share of the operating expenses of such investment companies,
including advisory fees.
MORTGAGE-BACKED SECURITIES - Two principal types of mortgage-backed
securities are collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). CMOs are securities collateralized by
mortgages, mortgage pass-through certificates, 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 issuers payable out of the
issuers' general funds and additional secured by a first lien on a pool of
single family properties).
S-6
<PAGE> 87
Many CMOs are issued with a number of classes or series which have
different maturities and are retired in sequence. Investors purchasing 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, CMOs in
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 while some
CMOs may be backed by GNMA certificates or other mortgage pass-throughs issued
or guaranteed by U.S. government agencies or instrumentalities, CMOs themselves
are not generally guaranteed by the U.S. government or any other entity.
REMICs, which were authorized under the Tax Reform Act of 1986, are
private entities formed for the purpose of holding a fixed pool of mortgages
secured by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.
MUNICIPAL SECURITIES - Municipal notes include, but are not limited to,
general obligation notes, tax anticipation notes (notes sold to finance working
capital needs of the issuer in anticipation of receiving taxes on a future
date), revenue anticipation notes (notes sold to provide needed cash prior to
receipt of expected non-tax revenues from a specific source), bond anticipation
notes, certificates of indebtedness, demand notes and construction loan notes.
Private activity bonds are issued by or on behalf of states or
political subdivisions thereof to finance privately owned or operated facilities
for business and manufacturing housing, sports, and pollution control and to
finance activities of and facilities for charitable institutions. Private
activity bonds are also used to finance public facilities such as airports, mass
transit systems, ports parking and low income housing. The payment of the
principal and interest on private activity bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and may be
secured by a pledge of real and personal property so financed.
Investments in floating rate instruments will normally involve
industrial development or revenue bonds which provide that the rate of interest
is set as a specific percentage of a designated base rate (such as the prime
rate) at a major commercial bank, and that the Fund can demand payment of the
obligation at all times or at stipulated dates on short notice (not to exceed 30
days) at par plus accrued interest. Such obligations are frequently secured by
letters of credit or other credit support arrangements provided by banks. The
quality of the underlying credit or of the bank, as the case may be, must, in
the Adviser's opinion be equivalent to the long-term bond or commercial paper
ratings stated above. The Adviser will monitor the earning power, cash flow and
liquidity ratios of the issuers of such instruments and the ability of an issuer
of a demand instrument to pay principal and interest on demand. The Adviser may
purchase other types of tax-
S-7
<PAGE> 88
exempt instruments as long as they are of a quality equivalent to the bond or
commercial paper ratings stated above.
The Adviser has the authority to purchase securities at a price which
would result in a yield to maturity lower than that generally offered by the
seller at the time of purchase when they can simultaneously acquire the right to
sell the securities back to the seller, the issuer, or a third party (the
"writer") at an agreed-upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a "standby commitment" or a
"put." The purpose of engaging in transactions involving puts is to maintain
flexibility and liquidity in order to meet redemptions and remain as fully
invested as possible in municipal securities. The right to put the securities
depends on the writer's ability to pay for the securities at the time the put is
exercised. The Funds will limit their put transactions to those with
institutions which the Adviser believes present minimum credit risks, and the
Adviser will use its best efforts to initially determine and thereafter monitor
the financial strength of the put providers by evaluating their financial
statements and such other information as is available in the marketplace. It
may, however, be difficult to monitor the financial strength of the writers
where adequate current financial information is not available. In the event that
any writer is unable to honor a put for financial reasons, the affected Fund
would be a general creditor (i.e., on a parity with all other unsecured
creditors) of the writer. Furthermore, particular provisions of the contract
between a Fund and the writer may excuse the writer from repurchasing the
securities in certain circumstances (for example, a change in the published
rating of the underlying municipal securities or any similar event that has an
adverse effect on the issuer's credit); or a provision in the contract may
provide that the put will not be exercised except in certain special cases, for
example, to maintain portfolio liquidity. A Fund could, however, sell the
underlying portfolio security in the open market or wait until the portfolio
security matures, at which time it should realize the full par value of the
security.
Municipal securities purchased subject to a put may be sold to third
persons at any time, even though the put is outstanding, but the put itself,
unless it is an integral part of the security as originally issued, may not be
marketable or otherwise assignable. Sale of the securities to third parties or
lapse of time with the put unexercised may terminate the right to put the
securities. Prior to the expiration of any put option, a Fund could seek to
negotiate terms for the extension of such an option. If such a renewal cannot be
negotiated on terms satisfactory to a Fund, such Fund could, of course, sell the
portfolio security. The maturity of the underlying security will generally be
different from that of the put. There will be no limit to the percentage of
portfolio securities that the Funds may purchase subject to a put. For the
purpose of determining the "maturity" of securities purchased subject to an
option to put, and for the purpose of determining the dollar-weighted average
maturity of the Funds including such securities, the Trust will consider
"maturity" to be the first date on which it has the right to demand payment from
the writer of the put although the final maturity of the security is later than
such date.
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SPECIAL CONSIDERATIONS RELATING TO HAWAII MUNICIPAL SECURITIES
The ability of issues to pay interest on, and repay principal of,
Hawaii Municipal Securities may be affected by: (1) the general financial
condition of the State of Hawaii; (2) amendments to the Hawaii Constitution and
related statutes that limit the taxing and spending authority of Hawaii
government entities; (3) voter initiatives; (4) civil actions; and (5) a wide
variety of Hawaii laws and regulations.
Municipal securities which are payable only from the revenues derived
from a particular facility may be adversely affected by Hawaii laws or
regulations which make it more difficult for the particular facility to generate
revenues sufficient to pay such interest and principal including, among others,
laws and regulations which limit the amount of fees, rates or other charges
which may be imposed for use of the facility or which increase competition among
facilities of that type or which limit or otherwise have the effect of reducing
the use of such facilities generally, thereby reducing the revenues generated by
the particular facility. Municipal securities, the payment of interest and
principal on which is insured in whole or in part by a Hawaii governmentally
created fund, may be adversely affected by Hawaii laws or regulations which
restrict the aggregate proceeds available for payment of principal and interest
in the event of a default on such municipal securities. Similarly, municipal
securities, the payment of interest and principal on which is secured, in whole
or in part, by an interest in real property may be adversely affected by Hawaii
laws which limit the availability of remedies or the scope of remedies available
in the event of a default on such municipal securities. Because of the diverse
nature of such laws and regulations and the impossibility of either predicting
in which specific municipal securities the Hawaii Municipal Bond Fund will
invest from time to time or predicting the nature or extent of future changes in
existing laws or regulations or the future enactment or adoption of additional
laws or regulations, it is not presently possible to determine the impact of
such laws and regulations on the securities in which the Fund may invest and,
therefore, on the shares of the Fund.
OTHER INVESTMENTS - The Funds are not prohibited from investing in
obligations of banks which are clients of SEI Investments Company ("SEI").
However, the purchase of shares of the Trust by them or by their customers will
not be a consideration in determining which bank obligations the Funds will
purchase. The Funds will not purchase obligations of the Adviser or the
Sub-Adviser.
PRIVATE PASS-THROUGH SECURITIES are mortgage-backed securities issued
by a non-governmental entity, such as a trust. 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.
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REPURCHASE AGREEMENTS are agreements by which a person (e.g., a Fund)
obtains a security and simultaneously commits to return the security to the
seller (a financial institution deemed to present minimal risk of bankruptcy
during the term of the agreement based on guidelines established and
periodically reviewed by the Trustees) at an agreed upon price (including
principal and interest) on an agreed upon date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed upon market rate of interest which is unrelated to
the coupon rate or maturity date of the underlying security. A repurchase
agreement involves the obligation of the seller to pay the agreed upon price,
which obligation is in effect secured by the value of the underlying security.
Repurchase agreements are considered to be loans by the participating
Fund for purposes of its investment limitations. Repurchase agreements entered
into by the Funds will provide that the underlying security at all times shall
have a value at least equal to 102% of the resale price stated in the agreement.
Under all repurchase agreements entered into by the Funds, the Fund takes actual
or constructive possession of the underlying collateral. However, if the seller
defaults, the Fund could realize a loss on the sale of the underlying security
to the extent that the proceeds of sale including accrued interest are less than
the resale price provided in the agreement including interest. In addition, even
though the Bankruptcy Code provides protection for most repurchase agreements,
if the seller should be involved in bankruptcy or insolvency 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.
SECURITIES LENDING - Each of the Funds may lend securities pursuant to
agreements requiring that the loans be continuously secured by cash or liquid
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 a Fund exceed one-third of the
value of its 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 broker-dealers and related expenses from
the interest earned on invested collateral. There may be risks of delay in
receiving additional collateral or risks of delay in recovery of the securities
or even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans are made only to borrowers deemed by the
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.
STANDBY COMMITMENTS AND PUTS permit the holder to sell securities
subject to the standby commitment or put at a fixed price prior to maturity.
Securities subject to a standby commitment or put may be sold at any time at the
current market price. However, unless the standby commitment or put was an
integral part of the security as originally issued, it may not be marketable or
assignable.
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STRIPPED MORTGAGE-BACKED SECURITIES (SMBs) are usually structured with
two classes that receive specified proportions of monthly interest and principal
payments from a pool of mortgage securities. One class may receive all of the
interest payments, and the other class may receive all of the principal
payments. SMBs are extremely sensitive to changes in interest rates because of
the impact of prepayment of principal on the underlying mortgage securities.
SUPRANATIONAL AGENCY OBLIGATIONS are debt obligations established
through the joint participation of several governments, and include the Asian
Development Bank, the Inter-American Development Bank, International Bank for
Reconstruction and Development (World Bank), African Development Bank, European
Economic Community, European Investment Bank, and the Nordic Investment Bank.
U.S. GOVERNMENT AGENCY OBLIGATIONS are obligations issued or guaranteed
by agencies or instrumentalities of the U.S. government. Some of these
securities are supported by the full faith and credit of the U.S. Treasury,
others are supported by the right of the issuer to borrow from the U.S.
Treasury, and others are supported only by the credit of the agency or
instrumentality.
U.S. TREASURY OBLIGATIONS consist of bills, notes, and bonds issued by
the U.S. Treasury. They also consist of separately traded interest and principal
component parts of these obligations that are transferable through the Federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities (STRIPS). Receipts are similar to STRIPS, but are issued by banks or
broker-dealers, and are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the income from the
receipts for the benefit of the receipt owners.
VARIABLE AMOUNT MASTER DEMAND NOTES are debt obligations which may or
may not be backed by bank letters of credit. These notes permit the investment
of fluctuating amounts at varying market rates of interest pursuant to direct
arrangements between the Trust, as lender, and the borrower. Such notes provide
that the interest rate on the amount outstanding varies on a daily, weekly or
monthly basis depending upon a stated short-term interest rate index. Both the
lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes. It is not
generally contemplated that such instruments will be traded.
VARIABLE AND FLOATING RATE INSTRUMENTS involve certain debt obligations
that may carry variable or floating rates of interest, and may involve a
conditional or unconditional demand feature. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market rates
or indices.
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WHEN-ISSUED SECURITIES involve the purchase of debt obligations on a
when-issued basis, in which case delivery and payment normally take place within
45 days after the date of commitment to purchase. The Funds will only make
commitments to purchase obligations on a when-issued basis with the intention of
actually acquiring the securities, but may sell them before the settlement date.
The when-issued securities are subject to market fluctuation, and no interest
accrues on the security to the purchaser during this period. The payment
obligation and the interest rate that will be received on the securities are
each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case
there could be an unrealized loss at the time of delivery.
Segregated accounts will be established with the custodian, and the
Funds will maintain liquid assets in an amount at least equal in value to the
Funds' commitments to purchase when-issued securities. If the value of these
assets declines, the Funds will place additional liquid assets in the account on
a daily basis so that the value of the assets in the account is equal to the
amount of such commitments.
YANKEE BONDS are U.S. dollar denominated debt obligations issued by the
U.S. by foreign banks and corporations.
ZERO COUPON OBLIGATIONS are debt obligations that do not bear any
interest, but instead are issued at a deep discount from face value or par. The
value of a zero coupon obligation increases over time to reflect the interest
accredited. Such obligations will not result in the payment of interest until
maturity, and will have greater price volatility than similar securities that
are issued at face value or par and pay interest periodically.
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations are fundamental policies of each
Fund and cannot be changed with respect to a Fund without the consent of the
holders of a majority of that Fund's outstanding shares. The term "majority of
the outstanding shares" means the vote of (I) 67% or more of a Fund's shares
present at a meeting, if more than 50% of the outstanding shares of a Fund are
present or represented by proxy, or (ii) more than 50% of a Fund's outstanding
shares, whichever is less.
A Fund may not:
1. Invest more than 25% of its assets in any one industry, except that the
money market funds may do so with respect to U.S. government obligations
and U.S. bank obligations. This limitation does not apply to the Hawaii
Municipal Bond Fund, but
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<PAGE> 93
the Fund will not invest more than 25% of its assets in securities of
non-governmental entities that are in the same industry.
2. Invest more than 5% of its assets in the securities of any one issuer
(except for the Hawaii Municipal Bond Fund).
3. Acquire more than 10% of the voting securities of any one issuer, provided
that this limitation shall apply only to 75% of the Fund's net assets
(except that this restriction does not apply to the Hawaii Municipal Bond
Fund).
4. Invest in companies for the purpose of exercising control.
5. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. To the extent
that such borrowing exceeds 5% of the value of the borrowing Fund's assets,
asset coverage of at least 300% is required. No Fund will purchase
securities while its borrowings exceed 5% of its total assets.
6. Make loans, except that (a) each Fund may purchase or hold debt instruments
in accordance with its investment objective and policies; (b) each Fund may
enter into repurchase agreements; and (c) the Equity, High Grade Income,
Hawaii Municipal Bond, Money Market and Treasury Money Market Funds may
engage in securities lending.
7. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by (5) above in aggregate amounts not to exceed 33% of total
assets taken at current value at the time of the incurrence of such loan.
8. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts. However, each of the Funds (other
than the Money Market and Treasury Money Market Funds) may invest in
companies which invest in real estate, and in commodities contracts.
9. Make short sales of securities or purchase securities on margin, except
that each Fund may obtain short-term credits as necessary for the clearance
of security transactions.
10. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
11. Purchase securities of other investment companies, except as permitted by
the 1940 Act and the rules and regulations thereunder.
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12. 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 (the "SEC").
13. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
NON-FUNDAMENTAL POLICY
No Fund may invest in illiquid securities in an amount exceeding, in
the aggregate, 15%of the Fund's net assets (except for all money market funds,
for which the limit is 10%).
The foregoing percentages will apply at the time the Fund
purchases the security and shall not be considered violated unless an excess
occurs or exists immediately after and as a result of a purchase of such
security.
THE ADVISER
The Trust and First Hawaiian Bank entered into an advisory agreement
(the "Advisory Agreement") dated March 31, 1999. BancWest Corporation, the
entity formed by the merger of First Hawaiian, Inc., the parent of First
Hawaiian Bank, and BancWest Corporation, has created an investment advisory
subsidiary entitled Bishop Street Capital Management. On November 9, 1999, the
Board of Trustees of the Trust approved Bishop Street Capital Management as the
new adviser to the Funds. This change became effective on February 22, 2000. The
Advisory Agreement between First Hawaiian Bank and the Bishop Street Funds, and
the obligations contained in that Agreement have been assumed by Bishop Street
Capital Management (the "Adviser"). Bishop Street Capital Management employs the
same investment personnel that managed the Funds under First Hawaiian Bank and
the management and control of the Adviser, as well as the services provided,
remain the same. The Advisory Agreement provides that the Adviser shall not be
protected against any liability to the Trust or its Shareholders by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard of its obligations or
duties thereunder.
The Advisory Agreement provides that if, for any fiscal year, the ratio
of expenses of any Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by any state, the Adviser will bear the amount
of such excess. The Adviser will not be required to bear expenses of the Trust
to an extent which would result in a Fund's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code.
The continuance of the Advisory Agreement, after the first two years,
must be specifically approved at least annually (i) by the vote of a majority of
the Trustees who
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<PAGE> 95
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,
and (ii) by the vote of the Trustees or a majority of outstanding shares of the
Funds, as defined in the 1940 Act. The Advisory Agreement will terminate
automatically in the event of its assignment, and is terminable at any time
without penalty by the Trustees of the Trust or, with respect to the Funds by a
majority of the outstanding shares of the Funds, on not less than 30 days' nor
more than 60 days' written notice to the Adviser, or by the Adviser on 90 days'
written notice to the Trust.
The Adviser is entitled to a fee which is calculated daily and paid
monthly at an annual rate of 0.74% of the daily average net assets of the Equity
Fund, 0.55% of the daily average net assets of the High Grade Income Fund, 0.35%
of the daily average net assets of the Hawaii Municipal Bond Fund, 0.30% of the
daily average net assets of the Money Market Fund and 0.30% of the daily average
net assets of the Treasury Money Market Fund.
For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds
paid the following advisory fees:
<TABLE>
<CAPTION>
ADVISORY FEES PAID ADVISORY FEES WAIVED
------------------ --------------------
FUND 1997 1998 1999 1997 1998 1999
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Equity Fund $311,840 $514,451 $1,309,175 $121,268 $ 75,127 $ 45,745
High Grade Income Fund $ 77,201 $ 94,508 $ 229,757 $ 49,860 $ 47,128 $ 72,395
Hawaii Municipal Bond Fund $ 8,620 $ 16,208 $ 46,278 $ 84,732 $ 94,685 $197,280
Money Market Fund $445,870 $558,662 $ 718,953 $328,496 $209,398 $126,033
Treasury Money Market Fund $192,621 $421,356 $ 537,371 $469,439 $545,821 $437,223
</TABLE>
THE SUB-ADVISER
First Hawaiian Bank entered into a sub-advisory agreement (the
"Sub-Advisory Agreement") with Wellington Management Company, LLP (the
"Sub-Adviser") dated March 31, 1999, relating to the Money Market and Treasury
Money Market Funds. Bishop Street Capital Management, the new investment
advisory subsidiary created by BancWest Corporation, has assumed all investment
advisory duties and responsibilities of First Hawaiian Bank. All obligations and
responsibilities of the Adviser to the Sub-Adviser under the existing
sub-advisory contract have been assumed by Bishop Street Capital Management.
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<PAGE> 96
Under the Sub-Advisory Agreement, the Sub-Adviser is entitled to fees
which are calculated daily and paid monthly at an annual rate of 0.075% of the
aggregate average daily net assets of the Money Market and Treasury Money Market
Funds, respectively, up to $500 million and 0.020% of the aggregate average
daily net assets of the Money Market and Treasury Money Market Funds,
respectively, in excess of $500 million. Such fees are paid by the Adviser and
the Sub-Adviser receives no fees directly from these Funds.
For the fiscal years ended December 31, 1997, 1998 and 1999, the Money
Market and Treasury Money Market Funds paid the following sub-advisory fees:
<TABLE>
<CAPTION>
SUB-ADVISORY FEES PAID SUB-ADVISORY FEES WAIVED
---------------------- ------------------------
FUND 1997 1998 1999 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund $193,585 $172,523 $184,189 $0 $0 $0
Treasury Money Market Fund $165,499 $214,421 $212,117 $0 $0 $0
</TABLE>
THE ADMINISTRATOR
The Trust and SEI Investments Mutual Funds Services (the
"Administrator") have entered into an administration agreement (the
"Administration Agreement") dated January 27, 1995. Under the Administration
Agreement, the Administrator 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 for the Funds.
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 negligence on the part of the Administrator in the performance of its duties
or from reckless disregard by it of its duties and obligations thereunder.
The Administrator is entitled to a fee, calculated daily and paid
monthly, at an annual rate of 0.20% of average daily net assets of each of the
Funds. For the fiscal years ended December 31, 1997, 1998 and 1999, the Funds
paid the following administrative fees:
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<PAGE> 97
<TABLE>
<CAPTION>
ADMINISTRATIVE FEES PAID ADMINISTRATIVE FEES WAIVED
------------------------ --------------------------
1997 1998 1999 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
FUND
Equity Fund $ 78,619 $ 95,607 $182,269 $ 38,478 $ 63,739 $183,926
High Grade Income Fund $ 31,706 $ 30,902 $ 50,012 $ 14,505 $ 20,602 $ 59,861
Hawaii Municipal Bond Fund $ 8,621 $ 15,841 $ 32,391 $ 44,724 $ 47,526 $106,785
Money Market Fund $298,045 $307,224 $151,357 $218,415 $204,816 $411,967
Treasury Money Market Fund $255,368 $386,871 $243,787 $186,006 $257,914 $405,942
</TABLE>
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator. SEI
Investments 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 or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select Funds,
Amerindo Funds, Inc., The Arbor Fund, ARK Funds, Armada Funds, The Armada
Advantage Fund, Boston 1784 Funds(R), CNI Charter Funds, CUFUND, The Expedition
Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., Friends Ivory Funds, HighMark Funds, Huntington
Funds, Huntington VA Fund, The Nevis Fund, Inc., Oak Associates Funds, The
Parkstone Group of Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional International Trust, SEI Institutional
Investments Trust, SEI Institutional Products Trust, SEI Institutional Managed
Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI
Classic Variable Trust, TIP Funds, UAM Funds Trust, UAM Funds, Inc. II, and UAM
Funds, Inc.
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), One Freedom
Valley Drive, Oaks, Pennsylvania 19456 a wholly-owned subsidiary of SEI, serves
as the distributor. 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.
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<PAGE> 98
Class A Shares of the Funds are sold with a front-end sales charge. The
Distributor collected and retained sales charges in the amounts shown for the
fiscal period ended December 31, 1999*:
<TABLE>
<CAPTION>
Fund Dollar Amount of Loads Dollar Amounts of Loads Retained by
SEI Investments
1999 1999
---- ----
<S> <C> <C>
Equity Fund $22,000 $0
High Grade Income Fund $0 $0
Hawaii Municipal Bond Fund $161,000 $0
</TABLE>
*Class A Shares of the Funds were initially offered beginning June 14,
1999.
Depending upon the amount of an investment in the Class A Shares, the
front-end sales load reallowed to dealers will vary:
EQUITY FUND
<TABLE>
<CAPTION>
DEALER REALLOWANCE AS A
INVESTMENT AMOUNT: PERCENTAGE OF OFFERING PRICE
- ----------------------------------------- ------------------------------
<S> <C>
Less than $50,000 5.75%
$50,000 but less than $100,000 4.50%
$100,000 but less than $250,000 3.50%
$250,000 but less than $500,000 2.50%
$500,000 but less than $1,000,000 2.00%
$1,000,000 and over 0.00%
</TABLE>
HIGH GRADE INCOME FUND
<TABLE>
<CAPTION>
DEALER REALLOWANCE AS A
INVESTMENT AMOUNT: PERCENTAGE OF OFFERING PRICE
- ----------------------------------------- ------------------------------
<S> <C>
Less than $50,000 4.75%
$50,000 but less than $100,000 4.50%
$100,000 but less than $250,000 3.50%
$250,000 but less than $500,000 2.50%
$500,000 but less than $1,000,000 2.00%
$1,000,000 and over 0.00%
</TABLE>
HAWAII MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
DEALER REALLOWANCE AS A
INVESTMENT AMOUNT: PERCENTAGE OF OFFERING PRICE
- ----------------------------------------- ------------------------------
<S> <C>
Less than $50,000 4.25%
$50,000 but less than $100,000 4.00%
$100,000 but less than $250,000 3.50%
$250,000 but less than $500,000 2.50%
$500,000 but less than $1,000,000 2.00%
$1,000,000 and over 2.00%
</TABLE>
Each Fund has adopted a shareholder servicing plan (the "Service Plan")
under which a shareholder servicing fee of up to 0.25% of average daily net
assets attributable to each Fund will be paid to the Distributor. Under the
Service Plan, the Distributor may perform, or may compensate other service
providers for performing, the following
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<PAGE> 99
shareholder and administrative services: maintaining client accounts; arranging
for bank wires; responding to client inquiries concerning services provided on
investments; assisting clients in changing dividend options, account
designations and addresses; sub-accounting; providing information on share
positions to clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and processing dividend
payments. Under the Service Plan, the Distributor may retain as profit any
difference between the fee it receives and amount is pays to third parties.
For the fiscal year ended December 31, 1999, the Distributor paid the
entire amount of fees received under the shareholder service plan to First
Hawaiian Bank for shareholder services performed for the Funds.
DISTRIBUTION PLAN
The Trust has adopted a Distribution Plan (the "Plan") for the Class
A shares of each Fund that offers Class A shares (only the Equity Fund, High
Grade Income Fund and Hawaii Municipal Bond Fund) 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. In this regard, the Board of Trustees has
determined that the Plan is in the best interests of the shareholders.
Continuance of the Plan must be approved annually by a majority of the Trustees
of the Trust and by a majority of the Trustees who are not "interested persons"
of the Trust as that term is defined in the 1940 Act, and who have no direct or
indirect financial interest in the operation of a Plan or in any agreements
related thereto ("Qualified Trustees"). The Plan may not be amended to increase
materially the amount that may be spent thereunder without approval by a
majority of the outstanding shares of the Fund or class affected. All material
amendments of the Plans will require approval by a majority of the Trustees of
the Trust and of the Qualified Trustees.
The Plan adopted by the Class A shares provides that the Trust will
pay the Distributor a fee of up to 0.25% of the average daily net assets of a
Fund's Class A shares that the Distributor can use to compensate broker-dealers
and service providers, including affiliates of the Distributor, that provide
distribution-related services to Class A shareholders or to their customers who
beneficially own Class A shares.
Payments may be made under the Plan for distribution services,
including reviewing of purchase and redemption orders, assisting in processing
purchase, exchange and redemption requests from customers, providing certain
shareholder communications requested by the Distributor, forwarding sales
literature and advertisements provided by the Distributor, and arranging for
bank wires.
Except to the extent that the Administrator and/or Adviser benefited
through increased fees from an increase in the net assets of the Trust which may
have resulted in part from the expenditures, no interested person of the Trust
nor any Trustee of the Trust
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<PAGE> 100
who is not an interested person of the Trust has or had a direct or indirect
financial interest in the operation of the Distribution Plan or related
agreements.
For the fiscal year ended December 31, 1999, the Funds' Class A Shares
incurred the following expenses under the plan:
<TABLE>
<CAPTION>
AMOUNT PAID
TO 3RD PARTIES
BY THE
DISTRIBUTOR
FOR
TOTAL DISTRIBUTOR
(AS A % OF NET TOTAL RELATED SALES PRINTING
ASSETS) ($ AMOUNT) SERVICES EXPENSES COSTS OTHER COSTS
FUND ($AMOUNT)
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Equity Fund 0.25% $ 428 $ 428 N/A N/A N/A
High Grade Income Fund 0.25% $ 2 $ 2 N/A N/A N/A
Hawaii Municipal Bond Fund 0.25% $5,178 $5,178 N/A N/A N/A
</TABLE>
Although banking laws and regulations prohibit banks from
distributing shares of open-end investment companies such as the Trust,
according to an opinion issued to the staff of the Securities and Exchange
Commission ("SEC") by the Office of the Comptroller of the Currency, financial
institutions are not prohibited from acting in other capacities for investment
companies, such as providing shareholder services. Should future legislative,
judicial or administrative action prohibit or restrict the activities of
financial institutions in connection with providing shareholder services, the
Trust may be required to alter materially or discontinue its arrangements with
such financial institutions.
THE TRANSFER AGENT
DST Systems, Inc. (the "Transfer Agent"), 330 W. 9th Street, Kansas
City, Missouri 64105 serves as the Funds' transfer agent.
THE CUSTODIAN
Chase Manhattan Bank (the "Custodian"), New York, New York 10041 serves
as the Funds' custodian.
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP, 2400 Eleven Penn Center, Philadelphia,
Pennsylvania 19103 serves as the Funds' independent auditors.
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<PAGE> 101
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia,
Pennsylvania 19103 serves as legal counsel to the Funds.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees
under the laws governing business trusts in the Commonwealth of Massachusetts.
The Trustees and executive officers of the Trust and their principal occupations
for the last five years are set forth below. Unless otherwise noted, the
business address of each Trustee and each Executive Officer is SEI Investments
Company, Oaks, Pennsylvania 19456. Certain officers of the Trust also serve as
officers of some or all of the following: The Achievement Funds Trust, The
Advisors' Inner Circle Fund, Alpha Select Funds, The Arbor Fund, ARK Funds,
Armada Funds, The Armada Advantage Fund, Bishop Street Funds, Boston 1784
Funds(R), CNI Charter Funds, CUFUND, The Expedition Funds, First American Funds,
Inc., First American Investment Funds, Inc., First American Strategy Funds,
Inc., HighMark Funds, Huntington Funds, The Nevis Fund, Inc., Oak Associates
Funds, The Parkstone Group of Funds, The PBHG Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Institutional International Trust, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI
Tax Exempt Trust, STI Classic Funds and STI Classic Variable Trust, each of
which is an open-end management investment company managed by SEI Investments
Mutual Funds Services or its affiliates and distributed by SEI Investments
Distribution Co.
An asterisk (*) indicates an interested person as defined by the 1940
Act.
MARTIN ANDERSON (DOB 11/16/23) - Trustee - Partner, Goodsill, Anderson,
Quinn & Stifel since 1951.
CHARLES E. CARLBOM (DOB 08/20/34) - Trustee - Chairman, BPI, Inc. since
1999; President and CEO, United Grocers Inc. (1997-1999); President and CEO,
Western Family Food Inc., Western Family Holding Inc. (1982-1997).
*PHILIP H. CHING (DOB 01/11/31) - Trustee - Retired since 1996; Vice
Chairman, First Hawaiian Bank (1968-1996).
TODD B. CIPPERMAN (DOB 02/14/66) - Vice President and Assistant
Secretary - General Counsel of SEI Investments since 2000; Vice President and
Assistant Secretary of SEI Investments, the Administrator and the Distributor
since 1995; Associate, Dewey Ballantine (law firm) (1994-1995).
JAMES R. FOGGO (DOB 06/30/64) - Vice President and Assistant
Secretary - Vice President and Assistant Secretary of SEI Investments since
January 1998; Vice President and Secretary of the Adviser, Administrator and
Distributor since
S-21
<PAGE> 102
May 1999; Associate, Paul, Weiss, Rifkind, Wharton & Garrison (law firm), 1998;
Associate, Baker & McKenzie (law firm), (1995-1998); Associate, Battle Fowler
L.L.P. (law firm), (1993-1995).
LYDIA A. GAVALIS (DOB 06/05/64) - Vice President and Assistant
Secretary - Vice President and Assistant Secretary of SEI Investments, the
Administrator and the Distributor since 1998; Assistant General Counsel and
Director of Arbitration, Philadelphia Stock Exchange (1989-1998).
JOHN H. GRADY, JR. (DOB 06/01/61) - Secretary; 1701 Market Street,
Philadelphia, PA 19103, Partner since 1995, Morgan, Lewis & Bockius LLP (law
firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor.
KATHY HEILIG (DOB 12/21/58) - Vice President and Assistant Secretary -
Treasurer of SEI Investments since 1997; Vice President of SEI Investments since
1991; Vice President and Treasurer of the Adviser and the Administrator since
1997; Assistant Controller of SEI Investments and Vice President of the
Distributor since 1995.
JAMES L. HUFFMAN (DOB 03/25/45) - Trustee - Dean and Professor, Lewis &
Clark Law School since 1973.
SHUNICHI KIMURA (DOB 03/15/30) - Trustee - Mediator - Mediation
Specialists of Hawaii from (1994-1997); Regent - University of Hawaii
(1995-1996).
*ROBERT A. NESHER (DOB 08/17/46) - Chairman and President of the Board
of Trustees - Currently performs various services on behalf of SEI Investments
for which Mr. Nesher is compensated; Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, Boston 1784 Funds(R), The Expedition Funds, Oak Associates
Funds, Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, SEI Insurance Products Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust; Chairman SEI Mutual Funds since
1974.
*WILLIAM S. RICHARDSON (DOB 12/22/19) - Trustee - Retired since 1992.
CHRISTOPHER F. SALFI (DOB 11/28/63) - Controller and Chief Financial
Officer - Director, Fund Accounting, SEI Investments since January 1998; Fund
Accounting Manager of SEI Investments, (1994-1997).
PETER F. SANSEVERO (DOB 01/06/33) - Trustee - Regional Director of the
Northwestern Region and First Vice President, Merrill Lynch (1958-1997).
LYNDA J. STRIEGEL (DOB 10/30/48) - Vice President and Assistant
Secretary of SEI Investments, the Adviser, the Administrator and the
Distributor since 1998; Senior Asset Management Counsel, Barnett Banks, Inc.,
1997-1998. Partner, Groom and Nordberg, chartered, 1996-1997. Associate General
Counsel, Riggs Banks, N.A., 1991-1995.
MANUEL R. SYLVESTER (DOB 06/20/30) - Trustee - Retired since 1992.
S-22
<PAGE> 103
JOYCE S. TSUNODA (DOB 01/01/38) - Trustee - Chancellor - Community
Colleges - University of Hawaii since 1983; Senior Vice President - University
of Hawaii System since 1989.
<TABLE>
<CAPTION>
AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION REGISTRANT AND FUND COMPLEX
FROM REGISTRANT PAID TO DIRECTORS FOR FYE
NAME OF PERSON AND POSITION FOR FYE 12/31/99 12/31/99
---------------- --------
<S> <C> <C>
Martin Anderson, Trustee $9,000 $ 9,000 for services on 1 board
Charles E. Carlbom, Trustee $10,000 $10,000 for services on 1 board
Philip H. Ching, Trustee* $10,000 $10,000 for services on 1 board
James L. Huffman, Trustee $10,000 $10,000 for services on 1 board
Shunichi Kimura, Trustee $10,000 $10,000 for services on 1 board
Robert A. Nesher, Trustee* $0 $0 for services on 1 board
William S. Richardson, Trustee* $10,000 $10,000 for services on 1 board
Peter S. Sansevero, Trustee $10,000 $10,000 for services on 1 board
Manuel R. Sylvester, Trustee $10,000 $10,000 for services on 1 board
Joyce S. Tsunoda, Trustee $10,000 $10,000 for services on 1 board
</TABLE>
* Messrs. Ching, Nesher, and Richardson are Trustees who may be deemed to be
"interested" persons of the Trust as the term is defined in the 1940 Act.
The Trustees and officers of the Trust own less than 1% of the
outstanding shares of the Trust.
CODES OF ETHICS
The Board of Trustees of the Trust has adopted a Code of Ethics
pursuant to Rule 17j-1 under the Investment Company Act of 1940. In addition,
the Investment Adviser, Sub-Adviser and Distributor have adopted Codes of Ethics
pursuant to Rule 17j-1. These Codes of Ethics apply to the personal investing
activities of trustees, officers and certain employees ("access persons"). Rule
17j-1 and the Codes are designed to prevent unlawful practices in connection
with the purchase or sale of securities by access persons. Under each Code of
Ethics, access persons are permitted to engage in personal securities
transactions, but are required to report their personal securities transactions
for monitoring purposes. In addition, certain access persons are required to
obtain approval before investing in initial public offerings or private
placements. A copy of the Trust's Code of Ethics is on file with the Securities
and Exchange Commission, and is available to the public.
S-23
<PAGE> 104
REPORTING
The Trust issues unaudited financial information semi-annually and
audited financial statements annually. The Trust furnishes proxy statements and
other shareholder reports to shareholders of record.
PERFORMANCE
YIELDS. Yields are one basis upon which investors may compare the Funds
with other funds; however, yields of other funds and other investment vehicles
may not be comparable because of the factors set forth below and differences in
the methods used in valuing portfolio instruments.
The yield of a money market fund fluctuates, and the annualization of a
week's dividend is not a representation by the Trust as to what an investment in
a money market fund will actually yield in the future. Actual yields will depend
on such variables as asset quality, average asset maturity, the type of
instruments the Fund invests in, changes in interest rates on money market
instruments, changes in the expenses of the Fund and other factors.
MONEY MARKET FUND YIELDS. From time to time the Money Market and
Treasury Money Market Funds advertise their "current yield" and "effective
yield" (also called "effective compound yield"). Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
"current yield" of these Funds refers to the income generated by an investment
in the Funds over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized." That is, the amount of income
generated by the investment during that week is assumed to be generated each
week over a 52-week period and is shown as a percentage of the investment. The
"effective yield" is similarly calculated but, when annualized, the income
earned by an investment in the Funds 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 current yield of the Money Market and Treasury 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 same period to obtain the base period return and multiplying
the result by (365/7). Realized and unrealized gains and losses are not included
in the calculation of the yield.
The effective compound yield of these Funds is determined by computing
the net change, exclusive of capital changes, in the value of a hypothetical
pre-existing account
S-24
<PAGE> 105
having a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula: Effective
Yield = (Base Period Return + 1) to the power of 365/7) - 1. The current and the
effective yields reflect the reinvestment of net income earned daily on
portfolio assets.
For the seven-day period ended December 31, 1999, the seven-day yield
and seven-day effective yield for the Institutional Class Shares of the Money
Market Fund were 5.47% and 5.62%, respectively.
For the seven-day period ended December 31, 1999, the seven-day yield
and seven-day effective yield for the Institutional Class Shares of the Treasury
Money Market Fund were 4.44% and 4.54%, respectively.
OTHER YIELDS. The Hawaii Municipal Bond Fund and the High Grade Income
Fund may advertise a 30-day yield. The Hawaii Municipal Bond Fund also may
advertise a 30-day tax-equivalent yield. Tax equivalent yields are computed by
dividing that portion of the Fund's yield which is tax-exempt by 1 minus a
stated federal and state income tax rate and adding the product to that portion,
if any, of the Fund's yield that is not tax-exempt. (Tax equivalent yields
assume the payment of Federal income taxes at a rate of 31% and Hawaii income
taxes at a rate of 10%.) These figures will be based on historical earnings and
are not intended to indicate future performance. The 30-day 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 period generated each period over one
year and is shown as a percentage of the investment. In particular, yield will
be calculated according to the following formula:
Yield = (2 (a - b/cd + 1) to the power of 6 - 1) where a = dividends
and interest earned during the period; b = expenses accrued for the period (net
of reimbursements); c = the average daily number of shares outstanding during
the period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.
Tax equivalent yields are computed by dividing that portion of a Fund's
yield which is tax-exempt by one minus a stated federal and state income tax
rate and adding the product to that portion, if any, of the Fund's yield that is
not tax-exempt.
For the 30-day period ended December 31, 1999, the 30-day yield and
30-day tax equivalent yield for the Hawaii Municipal Bond Fund were 5.07% and
8.59%, respectively, for the Institutional Class Shares, and 4.62% and 7.83%,
respectively, for the Class A Shares.
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<PAGE> 106
For the 30-day period ended December 31, 1999, the 30-day yield for the
High Grade Income Fund was 5.90 % for the Institutional Class Shares, and 5.14%
for the Class A Shares.
CALCULATION OF TOTAL RETURN
From time to time, certain of the Funds may advertise total return on
an "average annual total return" basis and on an "aggregate total return" basis
for various periods. Average annual total return reflects the average annual
percentage change in the value of an investment in a Fund over a particular
measuring period. Aggregate total return reflects the cumulative percentage
change in value over the measuring period. Aggregate total return is computed
according to a formula prescribed by the SEC. The formula can be expressed as
follows: P (1 + T) to the power of 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 or the life of the
fund. The formula for calculating aggregate total return can be expressed as
(ERV/P) - 1.
The calculation of total return assumes reinvestment of all dividends
and capital gain distribution on the reinvestment dates during the period and
that the entire investment is redeemed at the end of the period. The performance
results listed below refer to results for the fiscal year and the period from
each Fund's inception ended December 31, 1999.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
FUND 1 YEAR INCEPTION
---- ------ ---------
<S> <C> <C>
INSTITUTIONAL CLASS
Equity Fund 24.37% 27.05%(1)
High Grade Income Fund -4.34% 4.17%(1)
Hawaii Municipal Bond Fund -2.65% 5.12%(2)
Money Market Fund 4.88% 5.23%(3)
Treasury Money Market Fund 4.65% 5.00%(4)
CLASS A
Equity Fund 17.08% 24.44%(5)
(with sales loads)
</TABLE>
S-26
<PAGE> 107
<TABLE>
<S> <C> <C>
Equity Fund 24.21% 26.99%
(without sales loads
High Grade Income Fund -9.55% 2.18%(5)
(with sales loads)
High Grade Income Fund -5.04% 3.90%
(without sales loads)
Hawaii Municipal Bond Fund -7.05% 4.13%(5)
(with sales loads)
Hawaii Municipal Bond Fund -2.91% 5.06%
(without sales loads)
</TABLE>
(1) Commenced operations on January 31, 1997.
(2) Commenced operations on February 15, 1995.
(3) Commenced operations on January 30, 1995.
(4) Commenced operations on May 1, 1996.
(5) Commenced operations on June 14, 1999.
The Funds' performance may from time to time be compared to other
mutual funds tracked by mutual fund rating services (such as Lipper Analytical
Services), financial and business publications and periodicals, to broad groups
of comparable mutual funds or to unmanaged indices which may assume investment
of dividends but generally do not reflect deductions for administrative and
management costs. The Funds may quote Morningstar, Inc., a service that ranks
mutual funds on the basis of risk-adjusted performance. The Funds may quote
Ibbotson Associates of Chicago, Illinois, which provides historical returns of
the capitals markets in the U.S. The Funds may use long term performance of
these capital markets to demonstrate general long-term risk vs. reward scenarios
and could include the value of a hypothetical investment in any of the capital
markets. The Funds may also quote financial and business publications and
periodicals as they relate to fund management, investment philosophy, and
investment techniques.
The Funds 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.
S-27
<PAGE> 108
PURCHASING SHARES
Purchases and redemptions of shares of the Funds may be made on any day
the New York Stock Exchange and the Federal Reserve wire system are open for
business. Currently, the weekdays on which the Trust is closed for business are:
New Year's Day, Martin Luther King, Jr.'s Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,
Thanksgiving Day and Christmas Day. Purchases and redemptions will be made in
full and fractional shares that are calculated to three decimal places.
REDEEMING SHARES
It is the Trust's policy to pay for redemptions in cash. The Trust
retains the right, however, to provide for redemptions in whole or in part by a
distribution in-kind of securities held by the Funds in lieu of cash.
Shareholders may incur brokerage charges on the sale of any such securities so
received in payment of redemptions. A Shareholder will at all times be entitled
to aggregate cash redemptions from all Funds of the Trust during any 90-day
period of up to the lesser of $250,000 or 1% of the Trust's net assets.
The Trust reserves the right to suspend the right of redemption and/or
to postpone the date of payment upon redemption for any period on which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of the Fund's securities is not reasonably practicable, or
for such other periods as the SEC has by order permitted. The Trust also
reserves the right to suspend sales of shares of the Funds for any period during
which the New York Stock Exchange, the Adviser, the Administrator and/or the
Custodian are not open for business.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of the Money Market and Treasury 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 these Funds would
receive if they sold the instrument. During periods of declining interest rates,
the daily yield of the Funds 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 these Funds resulted in a
lower aggregate portfolio value on a particular day, a prospective investor in
these Funds would be able to obtain a somewhat higher yield than would
S-28
<PAGE> 109
result from investment in a company utilizing solely market values, and existing
investors in these Funds would experience a lower yield. The converse would
apply in a period of rising interest rates.
The Money Market and Treasury Money Market Funds' use of amortized cost
and the maintenance of these Funds' net asset value at $1.00 are permitted by
regulations promulgated by Rule 2a-7 under the 1940 Act, provided that certain
conditions are met. These conditions currently require that the Funds maintain a
dollar-weighted average maturity of 90 days or less, not purchase any instrument
having a remaining maturity of more than 397 days, and will limit their
investments to those U.S. dollar-denominated instruments which the Trustees
determine to present minimal credit risks and which are of "eligible" quality.
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 the
Funds. Such procedures include the determination of the extent of deviation, if
any, of the Funds' current net asset value per share calculated using available
market quotations from the Funds' amortized cost price per share at such
intervals as the Trustees deem appropriate and reasonable in light of market
conditions and periodic reviews of the amount of the deviation and the methods
used to calculate such deviation. In the event that such deviation exceeds 1/2
of 1%, the Trustees are required to consider promptly what action, if any,
should be initiated, and, if the Trustees believe that the extent of any
deviation may result in material dilution or other unfair results to
Shareholders, the Trustees are required to take such corrective action as they
deem appropriate to eliminate or reduce such dilution or unfair results to the
extent reasonably practicable. Such actions may include the sale of portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends; redeeming shares in kind; or
establishing a net asset value per share by using available market quotations.
In addition, if the Funds incur a significant loss or liability, the Trustees
have the authority to reduce pro rata the number of shares of these Funds in
each shareholder's account and to offset each shareholder's pro rata portion of
such loss or liability from the shareholder's accrued but unpaid dividends or
from future dividends.
The securities of the Equity, High Grade Income and Hawaii Municipal
Bond Funds are valued pursuant to prices and 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, which system considers
such factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.
TAXES
The following is only a summary of certain additional federal income
tax considerations generally affecting the Funds and their shareholders that are
not described in the Funds' prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders, and the
discussion here and in the Funds'
S-29
<PAGE> 110
prospectus is not intended as a substitute for careful tax planning.
Shareholders are urged to consult with their tax advisors with specific
reference to their own tax situation, including their state and local tax
liabilities.
The following general discussion of certain federal income tax
consequences is based on the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations issued thereunder as in effect on the date of this
Statement of Additional Information. New legislation, as well as 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. Each Fund is generally treated as a separate corporation
for federal income tax purposes. Thus, the provisions of the Code generally will
be applied to each Fund separately.
QUALIFICATION AS A REGULATED INVESTMENT COMPANY
Each Fund intends to qualify and elect to be treated as a "regulated
investment company" ("RIC") as defined under Subchapter M of the Code. By
following such a policy, each Fund expects to eliminate or reduce to a nominal
amount the federal taxes to which they may be subject.
In order to qualify as a RIC, a Fund must distribute at least 90% of
its net investment income (that generally includes dividends, taxable interest,
and the excess of net short-term capital gains over net long-term capital losses
less operating expenses) and at least 90% of its net tax exempt interest income,
for each tax year, if any, to its shareholders (the "Distribution Requirement").
In addition, a Fund must meet the following additional requirements: (i) at
least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or foreign currencies, or
other income derived with respect to its business of investing in such stock,
securities, or currencies; (ii) at the close of each quarter of the Fund's
taxable year, at least 50% of the value of its total assets must be represented
by cash and cash items, U.S. government securities, securities of other RICs and
other securities, with such other securities limited, in respect to any one
issuer, to an amount that does not exceed 5% of the value of the Fund's assets
and that does not represent more than 10% of the outstanding voting securities
of such issuer; and (iii) at the close of each quarter of the Fund's taxable
year, not more than 25% of the value of its assets may be invested in securities
(other than U.S. government securities or the securities of other RICs) of any
one issuer or of two or more issuers which the Fund controls and which are
engaged in the same, similar or related trades or businesses. For purposes of
the 90% gross income requirement described in (i) above, foreign currency gains
which are not directly related to a Fund's principal business of investing in
stock or securities ( or options or futures with respect to stock or securities
may be excluded from income that qualifies under the 90% requirement.
Some of the Funds may make investments in securities (such as STRIPS)
that bear "original issue discount" or "acquisition discount" (collectively,
"OID Securities").
S-30
<PAGE> 111
The holder of such securities is deemed to have received interest income even
though no cash payments have been received. Accordingly, OID Securities may not
produce sufficient current cash receipts to match the amount of net investment
income the Funds must distribute to satisfy the distribution requirement. In
some cases, the Funds may have to borrow money or dispose of other investments
in order to make sufficient cash distributions to satisfy the Distribution
Requirement.
Although each Fund intends to distribute substantially all of its net
investment income and may distribute its capital gains for any taxable year,
each Fund will be subject to federal income taxation to the extent any such
income or gains are not distributed.
If the Funds fail to qualify for any taxable year as a RIC, all of
their taxable income will be subject to tax at regular corporate income tax
rates without any deduction for distributions to shareholders and such
distributions generally will be taxable to shareholders as ordinary dividends to
the extent of a Fund's current and accumulated earnings and profits. In this
event, distributions generally will be eligible for the dividends-received
deduction for corporate shareholders.
FUND DISTRIBUTIONS
Distributions of net investment company taxable income will be taxable
to shareholders as ordinary income, regardless of whether such distributions are
paid in cash or are reinvested in additional Shares, to the extent of a Fund's
earnings and profits. Each Fund anticipates that it will distribute
substantially all of its net investment for each taxable year.
Each Fund may either retain or distribute to shareholders its excess of
net long-term capital gains over net short-term capital losses ("net capital
gains"). If such gains are distributed as a capital gains distribution, they are
taxable to shareholders who are individuals at a maximum rate of 20%, regardless
of the length of time the shareholder has held the shares. If any such gains are
retained, a Fund will pay federal income tax thereon, and if the Fund makes an
election, the shareholders will include such undistributed gains in their
income, will increase their tax basis in the Fund's shares by 65% of the amount
included in their income and will be able to claim their share of the tax paid
by the Fund as a refundable credit.
In the case of corporate shareholders, distributions (other than
capital gains distributions) from a RIC generally qualify for the
dividends-received deduction to the extent of the gross amount of qualifying
dividends received by a Fund for the year. Generally, and subject to certain
limitations, a dividend will be treated as a qualifying dividend if it has been
received from a domestic corporation. Accordingly, it is not expected that any
distribution from High Grade Income Fund, Hawaii Municipal Bond Fund, Money
Market Fund, or Treasury Money Market Fund will qualify for the corporate
dividends-received deduction. Conversely, distributions from the Equity Fund
generally will qualify for the corporate dividends-received deduction.
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<PAGE> 112
Ordinarily, investors should include all dividends as income in the
year of payment. However, dividends declared and payable to shareholders of
record in October, November, or December of one year, but paid in January of the
following year, will be deemed for tax purposes to have been received by the
shareholder and paid by the Fund on December 31 of the year in which the
dividends were declared.
Each Fund will provide a statement annually to shareholders as to the
federal tax status of distributions paid (or deemed to be paid) by the Fund
during the year, including the amount of dividends eligible for the corporate
dividends-received deduction.
SALE OR EXCHANGE OF FUND SHARES
Generally, gain or loss on the sale or exchange of a share will be capital gain
or loss that will be long-term if the Share has been held for more than twelve
months and otherwise will be short-term. For individuals, long-term capital
gains are currently taxed at a maximum rate of 20% and short-term capital gains
are currently taxed at ordinary income tax rates. However, if a shareholder
realizes a loss on the sale, exchange or redemption of a Share held for six
months or less and has previously received a capital gains distribution with
respect to the Share (or inclusion of undistributed net capital gains with
respect to such Share), the shareholder must treat the loss as a long-term
capital loss to the extent of the amount of the prior capital gains distribution
(or inclusion of undistributed net capital gains). In addition, any loss
realized on a sale or other disposition of Shares will be disallowed to the
extent an investor repurchases (or enters into a contract or option to
repurchase) Shares within a period of 61 days (beginning 30 days before and
ending 30 days after the disposition of the Shares). This loss disallowance rule
will apply to Shares received through the reinvestment of dividends during the
61-day period.
In certain cases, a Fund will be required to withhold, and remit to the
United States Treasury, 31% of any distributions paid to a shareholder who (1)
has failed to provide a correct taxpayer identification number, (2) is subject
to backup withholding by the Internal Revenue Service, or (3) has failed to
certify to the Fund that such shareholder is not subject to backup withholding.
FEDERAL EXCISE TAX
If a Fund fails to distribute in a calendar year at least 98% of its
ordinary income for the year and 98% of its capital gain net income (the excess
of short and long term capital gains over short and long term capital losses)
for the one-year period ending October 31 of that 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. Each Fund intends to make
sufficient distributions to avoid imposition of this tax, or to retain, at most
its net capital gains and pay tax thereon.
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ADDITIONAL CONSIDERATIONS FOR HAWAII MUNICIPAL BOND FUND
The Fund intends to qualify to pay "exempt interest dividends" to its
shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year at least 50% of the value of its total assets
consist of obligations the interest on which is exempt from federal income tax.
As long as this and certain other requirements are met, dividends derived from
the Fund's net tax-exempt interest income will be "exempt interest dividends"
that may be excluded from shareholders' gross income for federal income tax
purposes. Exempt interest dividends may, however, have collateral deferral
income tax consequences, including alternative minimum tax consequences, as
discussed below.
Exempt-interest dividends may be subject to the alternative minimum tax
imposed by Section 55 of the Code (the "Alternative Minimum Tax"). The
Alternative Minimum Tax is imposed at a rate of up to 28% in the case of
non-corporate taxpayers and at the rate of 20% in the case of corporate
taxpayers, to the extent it exceeds the taxpayer's regular tax liability. The
Alternative Minimum Tax may be affected by the receipt of exempt-interest
dividends 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. The Fund intends, when possible, to avoid investing in private
activity bonds. 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 are 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.
The percentage of income that constitutes exempt-interest dividends
will be determined for each year for the Fund and will be applied uniformly to
all dividends declared with respect to the Fund during that year. This
percentage may differ from the actual percentage for any particular day.
Interest on indebtedness incurred or continued by shareholders to
purchase or carry Shares of the Fund will be limited for federal income tax
purposes to the extent that any portion of such Fund's distributions consist of
exempt-interest dividends. 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 any
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. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's
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"modified adjusted gross income" (which includes exempt-interest dividends) plus
one-half of the Social Security benefits or railroad retirement benefits
received by such individual during that taxable year exceeds the base amount
described in Section 86 of the Code.
Any loss on the sale or exchange of shares of the Fund held for six
months or less will be disallowed to the extent of any exempt-interest dividends
received by the selling shareholder with respect to such shares.
Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
Shares of the Fund. "Substantial user" is defined generally as including a
"non-exempt person" who regularly uses in trade or business a part of such a
facility.
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 Fund to purchase sufficient amounts of tax-exempt securities to
satisfy the Code's requirements for the payment of exempt interest dividends.
Issuers of bonds purchased by the Fund (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 such covenants.
The Fund may not be a suitable investment for tax-exempt shareholders
and plans because such shareholders and plans would not gain any additional tax
benefit from the receipt of exempt-interest dividends.
The state and local tax consequences of an investment in the Fund may
differ from the federal consequences described above and shareholders are urged
to consult their tax advisers with respect to such consequence.
STATE AND LOCAL TAXES
A Fund is not liable for any income or franchise tax in Massachusetts
if it qualifies as a RIC for federal income tax purposes. Depending upon state
and local law, distributions by the Funds to shareholders and the ownership of
shares may be subject to state and local taxes. Shareholders are urged to
consult their tax advisors as to the consequences of these and other state and
local tax rules affecting an investment in the Funds.
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<PAGE> 115
HAWAII TAXATION
The State of Hawaii has specifically adopted Sections 852 through 855
of the Code, which provisions provide for pass-through treatment of exempt
interest dividends and capital gains, i.e., distributions by the Hawaii
Municipal Bond Fund of dividends representing exempt interest and capital gains
retain their original character in the hands of shareholders. As the State of
Hawaii's Department of Taxation has confirmed in response to a request by
special counsel for the Trust, distributions from the Hawaii Municipal Bond Fund
to its shareholders which are attributable to interest on obligations exempt
from income tax in the State of Hawaii will not be subject to Hawaii income tax
in the hands of shareholders so long as at least 50% of the Hawaii Municipal
Bond Fund's assets are invested in securities the interest from which is exempt
from Hawaii state taxation. In addition, the Department of Taxation has
confirmed that interest income on obligations issued by the U.S. government and
its territories is exempt from State of Hawaii income taxation. While the Hawaii
Municipal Bond Fund intends to invest primarily in obligations which produce
tax-exempt interest, if the Fund invests in obligations that are not exempt for
Hawaii purposes, a portion of the Fund's distribution will be subject to Hawaii
income tax.
FUND TRANSACTIONS
Subject to policies established by the Trustees, the Adviser (and,
where applicable, the Sub-Adviser) are responsible for placing the orders to
execute transactions for the Funds. In placing orders, it is the policy of the
Adviser 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
Funds will not necessarily be paying the lowest spread or commission available.
The Funds will not purchase portfolio securities from any affiliated person
acting as principal except in conformity with the regulations of the SEC.
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.
The Trust 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
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<PAGE> 116
provide the service. The primary consideration is to have brokers or dealers
provide transactions at best price and execution for the Trust. Best price and
execution includes 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 advice, either directly or through publications or writings, as
to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Adviser in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the Fund
or account generating the brokerage.
As provided in the Securities Exchange Act of 1934 (the "1934 Act"),
higher commissions may be paid to broker-dealers who provide brokerage and
research services than to broker-dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed to
broker-dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker-dealers are not, in general,
higher than commissions that would be paid to broker-dealers not providing such
services and that such commissions are reasonable in relation to the value of
the brokerage and research services provided. In addition, portfolio
transactions which generate commissions or their equivalent are directed to
broker-dealers who provide daily portfolio pricing services to the Trust.
Subject to best price and execution, commissions used for pricing may or may not
be generated by the Funds receiving the pricing service.
The 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
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<PAGE> 117
to each account or Fund. It is believed that the ability of the accounts to
participate in volume transactions will generally be beneficial to the accounts
and Funds. Although it is recognized that, in some cases, the joint execution of
orders could adversely affect the price or volume of the security that a
particular account or Fund may obtain, it is the opinion of the 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
Funds, 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.
The Funds may execute brokerage or other agency transactions through
the Distributor, which is a registered broker-dealer in conformity with the 1940
Act, the 1934 Act and rules promulgated by the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for the Funds 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 rules further require that commissions paid to the Distributor by
the Trust for exchange transactions not exceed "usual and customary" brokerage
commissions. The rules define "usual and customary" commissions to include
amounts which are "reasonable and fair compared to the commission, fee or other
remuneration received or to be received by other brokers in connection with
comparable transactions involving similar securities being purchased or sold on
a securities exchange during a comparable period of time." In addition, the
Funds 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 Funds' expenses. The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review the
procedures periodically.
Since the Trust does not market its shares through intermediary
broker-dealers, it is not the Trust's practice to allocate brokerage business on
the basis of sales of its shares which may be made through such firms. However,
the Adviser may place Fund orders with qualified broker-dealers who recommend
the Trust 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.
For the fiscal year ended December 31, 1999, the following commissions
were paid on brokerage transactions, pursuant to an agreement or understanding,
to brokers because of research services provided by the brokers:
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<PAGE> 118
<TABLE>
<CAPTION>
Total Dollar Amount of
Total Dollar Amount of Brokerage Transactions Involving Directed
Fund Commissions for Research Services Brokerage Commissions for Research
Services
<S> <C> <C>
Equity Fund $83,568.54 $83,177,406.38
High Grade Income Fund $0 $0
Hawaii Municipal Bond Fund $0 $0
Money Market Fund $0 $0
Treasury Money Market Fund $0 $0
</TABLE>
For the years indicated, the Funds paid the following brokerage commissions:
<TABLE>
<CAPTION>
% of Total
% of Total Brokerage
Total $ Amount of Brokerage Brokerage Transactions
Fund Total $ Amount of Brokerage Commissions Paid to Commissions Effected
Commissions Paid Affiliate Brokers Paid to Through
Affiliated Affiliated
Brokers Brokers
1997 1998 1999 1997 1998 1999 1999 1999
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Fund $40,380 $58,933 $181,838 $6,548 $19,863 $6,265 3% 1%
High Grade Income Fund -- -- -- -- -- -- -- --
Hawaii Municipal Bond Fund -- -- -- -- -- -- -- --
Money Market Fund -- -- -- -- -- -- -- --
Treasury Money Market Fund -- -- -- -- -- -- -- --
</TABLE>
"Regular brokers or dealers" of the Trust are the ten brokers or dealers that,
during the most recent fiscal year, (i) received the greatest dollar amounts of
brokerage commissions from the Trust's portfolio transactions, (ii) engaged as
principal in the largest dollar amounts of portfolio transactions of the Trust,
or (iii) sold the largest dollar amounts of the Trust's shares. On December 31,
1999, the following Funds held securities of the Trust's "regular brokers or
dealers" as follows:
<TABLE>
<CAPTION>
Total $ Amount of Securities of
Each Regular Broker-Dealer
Fund Name of Broker/Dealer Held
- ---- --------------------- --------------------------------
<S> <C> <C>
Money Market Fund* J.P. Morgan $ 4,913,000
Morgan Stanley Dean Witter $ 7,976,000
Paribas Capital Markets $11,879,000
Bear Stearns $ 4,968,000
Goldman Sachs Group $ 7,929,000
Merrill Lynch $ 7,976,000
</TABLE>
<TABLE>
<CAPTION>
Total $ Amount of Securities of
Each Regular Broker-Dealer
Fund Name of Broker/Dealer Held
- ---- --------------------- --------------------------------
<S> <C> <C>
Treasury Money Market Fund** Barclays Capital $70,000,000
J.P. Morgan $40,000,000
Paribas Capital Markets $22,343,000
ABN AMRO $40,000,000
Warburg Dillon $40,000,000
</TABLE>
- ------------
* All of the broker-dealer securities held by the Money Market Fund represent
commercial paper issued by the broker-dealer, with the exception of Paribas
Capital Markets which is a repurchase agreement.
** All of the broker-dealer securities held by the Treasury Money Market Fund
represent repurchase agreements fully collateralized by U.S. Treasury
securities.
The portfolio turnover rate for the Equity Fund was 30% for the fiscal
year ended December 31, 1997, 41% for the fiscal year ended December 31, 1998,
and 58% for the fiscal year ended 1999. The portfolio turnover rate for the
Hawaii Municipal Bond Fund was 29% for the fiscal year ended December 31, 1997,
21% for the fiscal year ended December 31, 1998, and 14% for the fiscal year
ended December 31, 1999. The portfolio turnover rate for the High Grade Income
Fund was 32% for the fiscal year ended December 31, 1997, 98% for the fiscal
year ended December 31, 1998, and 56% for the fiscal year ended December 31,
1999.
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<PAGE> 119
DESCRIPTION OF SHARES
The Agreement and Declaration of Trust ("Declaration of Trust")
authorizes the issuance of an unlimited number of each series. Each share of
each Fund represents an equal proportionate interest in that Fund with each
other share of that Fund. Each share upon liquidation entitles a shareholder to
a pro rata share in the net assets of that Fund, after taking into account
additional distribution and transfer agency expenses attributable to Class A
shares. Shareholders have no preemptive rights. The Agreement and Declaration of
Trust provides that the Trustees of the Trust may create additional series of
shares or separate classes of funds. All consideration received by the Trust for
shares of any additional series or separate class and all assets in which such
consideration is invested would belong to that series or separate class and
would be subject to the liabilities related thereto. Share certificates
representing shares will not be issued.
VOTING
Each share held entitles the shareholder of record to one vote. The
shareholders of each Fund or class will vote separately on matters pertaining
solely to that Fund or class, such as any 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.
Where the Trust's Prospectuses or Statements of Additional Information
state that an investment limitation or a fundamental policy may not be changed
without shareholder approval, such approval means the vote of (1) 67% or more of
the affected Fund's shares present at a meeting if the holders of more than 50%
of the outstanding shares of the Fund are present or represented by proxy, or
(ii) more than 50% of the affected Fund's outstanding shares, whichever is less.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders' incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or
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<PAGE> 120
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 or her 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 or her willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
5% AND 25% SHAREHOLDERS
A shareholder owning of record or beneficially more than 25% of a particular
Fund's shares may be considered to be a "controlling person" of that Fund.
Accordingly, its vote could have a more significant effect on matters presented
at shareholder meetings than the votes of the Fund's other shareholders. As of
April 3, 2000, the following persons were the only persons who were record
owners (or to the knowledge of the Adviser, beneficial owners) of 5% and 25% or
more of the Fund's shares:
<TABLE>
<CAPTION>
FUND SHAREHOLDER %
- ---- ----------- -
<S> <C> <C>
Equity Fund Mark K. Fu TTEE 10.10%
Class A Shares Mark Kealoha QUOC Thin FU Rev
LIV Trust DTD 04/26/93
6430 Hawaii Kai Dr.
Honolulu, HI 96825-1112
BISYS BD Services, Inc. 48.16%
P.O. Box 4054
Concord, CA 94524-4054
Rose Lewis Blalock TR 30.18%
U/A STD 03/19/1984
Rose Lewis Blalock Trust
20503 96th Ave. S.
Kent, WA 98031-1456
</TABLE>
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<PAGE> 121
<TABLE>
<S> <C> <C>
High Grade Income Fund BISYS BD Services, Inc. 80.49%
Class A Shares P.O. Box 4054
Concord, CA 94524-4054
SEI Corporation 9.77%
SEED Account
530 E. Swedesford Rd.
Wayne, PA 19087-1607
Hawaii Municipal Bond Fund BISYS BD Services, Inc. 91.89%
Class A Shares P.O. Box 4054
Concord, CA 94524-4054
Equity Fund FIDAC 58.97%
Institutional Class Shares c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201-2977
Miter & Co. 37.48%
FBO TA
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201-2977
High Grade Income Fund FIDAC 76.31%
Institutional Class Shares c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201-2977
Miter & Co. 18.61%
FBO TA
c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201-2977
Hawaii Municipal Bond Fund FIDAC 86.64%
Institutional Class Shares c/o Marshall & Ilsley Trust Co.
P.O. Box 2977
Milwaukee, WI 53201-2977
Money Market Fund Maril & Co. 75.95%
Institutional C/O First Hawaiian Bank
Class Shares Trust & Investments Division
P.O. Box 3708
Honolulu, HI 96811-3708
Maril & Co. 22.23%
C/O First Hawaiian Bank
Trust & Investments Division
P.O. Box 3708
Honolulu, HI 96811-3708
Treasury Money Market Fund Maril & Co. 64.75%
Institutional Class Shares C/O First Hawaiian Bank
Trust & Investments Division
P.O. Box 3708
Honolulu, HI 96811-3708
Maril & Co. 34.99%
C/O First Hawaiian Bank
Trust & Investments Division
P.O. Box 3708
Honolulu, HI 96811-3708
</TABLE>
FINANCIAL INFORMATION
The Trust's financial statements for the fiscal year ended December 31,
1999, including notes thereto and the report of PricewaterhouseCoopers LLP
thereon, are herein incorporated by reference. A copy of the 1999 Annual Report
must accompany the delivery of this Statement of Additional Information.
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<PAGE> 122
BISHOP STREET FUNDS
PART C: OTHER INFORMATION
ITEM 23. EXHIBITS:
(a)(1) Agreement and Declaration of Trust dated May 25, 1994 as
originally filed with the Registrant's Registration Statement
on Form N-1A (File No. 33-80514) filed with the SEC on June
20, 1994, is incorporated herein by reference to Exhibit 1 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement, as filed February 29, 1996.
(a)(2) Amended and Restated Agreement and Declaration of Trust dated
September 1, 1994 as originally filed with the Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-80514)
filed with the SEC on September 7, 1994, is incorporated
herein by reference to Post-Effective Amendment No. 3 to the
Registrant's Registration Statement, as filed February 29,
1996.
(b)(1) By-Laws of the Registrant as originally filed with the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514) on June 20, 1994, are incorporated
herein by reference to Exhibit 2 of Post-Effective Amendment
No. 3 to the Registrant's Registration Statement, as filed
February 29, 1996.
(b)(2) Amended By-Laws of the Registrant as originally filed with the
Registrant's Pre-Effective Amendment No. 1 filed with the SEC
on Form N-1A (File No. 33-80514) on September 7, 1994, are
incorporated herein by reference to Exhibit 2(a) of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement, as filed February 29, 1996.
(b)(3) Amended By-Laws of the Registrant are incorporated herein by
reference to Exhibit 2(b) of Post-Effective Amendment No. 7 to
the Registrant's Registration Statement filed with the SEC on
Form N-1A (File No. 33-80514), as filed February 26, 1998.
(c) Not applicable.
(d)(1) Investment Advisory Agreement between the Registrant and First
Hawaiian Bank dated January 25, 1995, is incorporated herein
by reference to Exhibit 5(a) of Post-Effective Amendment No. 3
to the Registrant's Registration Statement filed with the SEC
on Form N-1A (File No. 33-80514), as filed February 29, 1996.
(d)(2) Investment Sub-Advisory Agreement by and among the Registrant,
First Hawaiian Bank and Wellington Management Company, LLP
dated January 27, 1995, is incorporated herein by reference to
Exhibit 5(b) of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed February 29, 1996.
(d)(3) Amended and Restated Investment Sub-Advisory Agreement by and
among the Registrant, First Hawaiian Bank and Wellington
Management Company, LLP dated April 30, 1996, is incorporated
herein by reference to Exhibit 5(c) of Post-Effective
Amendment No. 5 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
April 30, 1997.
(d)(4) Schedule B dated April 30, 1996, to the Investment Advisory
Agreement dated January 27, 1995, between the Registrant and
First Hawaiian Bank, is incorporated herein by reference to
Exhibit 5(d) of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed April 30, 1997.
<PAGE> 123
(d)(5) Investment Advisory Agreement between the Registrant and First
Hawaiian Bank dated March 31, 1999, is incorporated herein by
reference to Exhibit (d)5 of Post-Effective Amendment No. 12
to the Registrants Registration Statement filed with the SEC
on Form N-1A (File No. 33-80514), as filed April 30, 1999.
(d)(6) Investment Sub-Advisory Agreement by and among the Registrant,
First Hawaiian Bank and Wellington Management Company, LLP
dated March 31, 1999, is incorporated herein by reference to
Post-Effective Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A (File No. 33-80514), as
filed April 30, 1999.
(d)(7) Assignment and Assumption Agreement between First Hawaiian
Bank and Bishop Street Capital Management dated February 22,
2000 is filed herewith.
(d)(8) Consent to Assignment and Assumption of the Investment
Advisory Agreement between the Bishop Street Funds and First
Hawaiian Bank is filed herewith.
(d)(9) Consent to Assignment and Assumption of the Investment
Sub-Advisory Agreement between First Hawaiian Bank and
Wellington Management Company, LLP is filed herewith.
(e)(1) Distribution Agreement between the Registrant and SEI
Financial Services Company dated January 27, 1995, is
incorporated herein by reference to Exhibit 6 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
(e)(2) Amended and Restated Distribution Agreement between the
Registrant and SEI Investments Distribution Co. dated June 10,
1999, is incorporated herein by reference to Exhibit (e)2 of
Post-Effective Amendment No. 13 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed June 11, 1999.
(f) Not Applicable.
(g) Custodian Agreement between the Registrant and Chemical Bank,
N.A. dated October 24, 1994, is incorporated herein by
reference to Exhibit 8 of Post-Effective Amendment No. 3 to
the Registrant's Registration Statement filed with the SEC on
Form N-1A (File No. 33-80514), as filed February 29, 1996.
(h)(1) Administration Agreement between the Registrant and SEI
Financial Management Corporation dated January 27, 1995, is
incorporated herein by reference to Exhibit 9(a) of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
(h)(2) Transfer Agent Agreement between the Registrant and Supervised
Service Company, Inc. dated January 30, 1995, is incorporated
herein by reference to Exhibit 9(b) of Post-Effective
Amendment No. 3 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
February 29, 1996.
(h)(3) Consent to Assignment and Assumption of the Administration
Agreement between the Trust and SEI Financial Management
Corporation to SEI Fund Resources dated June 1, 1996, is
incorporated herein by reference to Exhibit 9(c) of
Post-Effective Amendment No. 5 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed April 30, 1997.
(i)(1) Opinion and Consent of Counsel as originally filed with the
Registrant's Pre-Effective Amendment No. 1 on September 7,
1994, is incorporated herein by reference to Exhibit
<PAGE> 124
10 of Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
(i)(2) Consent of Counsel is incorporated herein by reference to
Exhibit (i)2 of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed April 30, 1999.
(i)(3) Opinion and Consent of Counsel is filed herewith.
(j) Consent of Independent Auditors (PricewaterhouseCoopers LLP)
is filed herewith.
(k) Not Applicable.
(l) Not Applicable.
(m)(1) 12b-1 Plan (Class B) dated January 27, 1995 as originally
filed with the Registrant's Pre-Effective Amendment No. 1 on
September 7, 1994, is incorporated herein by reference to
Exhibit 15 of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed February 29, 1996.
(m)(2) 12b-1 Plan (Class A) dated January 27, 1995, is incorporated
herein by reference to Exhibit (m)2 of Post-Effective
Amendment No. 13 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
June 11, 1999.
(o)(1) Rule 18f-3 Plan (Class B) as originally filed with the
Registrant's Post-Effective Amendment No. 1 on July 31, 1995,
is incorporated herein by reference to Exhibit 18 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
(o)(2) Rule 18f-3 Plan (Class A) dated May 13, 1999, is incorporated
herein by reference to Exhibit (o)2 of Post-Effective
Amendment No. 13 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
June 11, 1999.
(p)(1) Code of Ethics for the Bishop Street Funds is filed herewith.
(p)(2) Code of Ethics for First Hawaiian Bank is filed herewith.
(p)(3) Code of Ethics for Wellington Management Company, LLP dated
March 1, 2000 is incorporated herein by reference to Exhibit
(p)4 of Post-Effective Amendment No. 26 of the Arbor Fund's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-50718), as filed March 16, 2000.
(q) Powers of Attorney for Martin Anderson, Charles E. Carlbom,
Philip H. Ching, James L. Huffman, Shunichi Kimura, William S.
Richardson, Peter F. Sansevero, Manuel R. Sylvester and Joyce
S. Tsunoda are incorporated herein by reference to Exhibit (p)
of Post-Effective Amendment No. 12 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed April 30, 1999.
<PAGE> 125
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
See the Statement of Additional Information regarding the Registrant's
control relationships. The Administrator is a subsidiary of SEI Investments
Company, which also controls the distributor of the Registrant, SEI Investments
Distribution Co., other corporations engaged in providing various financial and
record keeping services, primarily to bank trust departments, pension plan
sponsors, and investment managers.
ITEM 25. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit
1 to the Registration Statement is incorporated by reference. Insofar as
indemnification liabilities arising under the Securities Act of 1933, as
amended, may be permitted to trustees, directors, officers and controlling
persons of the Registrant by the Registrant pursuant to the Declaration of Trust
or otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND INVESTMENT
SUB-ADVISER:
Other business, profession, vocation, or employment of a substantial
nature in which each director or principal executive officer of the Adviser is
or has been, at any time during the last two fiscal years, engaged for his own
account or in the capacity of director, officer, employee, partner or trustee
are as follows:
FIRST HAWAIIAN BANK
As of February 22, 2000, Bishop Street Capital Management serves as
adviser to the Funds. Bishop Street Capital Management is an investment adviser
registered under the Investment Advisers Act of 1940.
For the fiscal year ended December 31, 1999, First Hawaiian Bank was
the adviser for the Registrant's Equity Fund, High Grade Income Fund, Hawaii
Municipal Bond Fund, Money Market Fund and Treasury Money Market Fund. First
Hawaiian Bank is an investment adviser registered under the Investment Advisers
Act of 1940. The principal business address of First Hawaiian Bank and BancWest
Corporation is 999 Bishop Street, Honolulu, Hawaii 96813. The principal business
address for Bank of the West is 180 Montgomery Street, San Francisco, California
94104. The principal business address for HighMark Capital Management, Inc. is
475 Sansome Street, Suite 1400, San Francisco, CA 94111.
<TABLE>
<CAPTION>
NAME AND POSITION WITH INVESTMENT NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
ADVISER
<S> <C> <C>
Robert A. Alm First Hawaiian Bank Executive Vice President
President
William E. Atwater First Hawaiian Bank Executive Vice President, General
Vice President & Assistant Counsel, Assistant Secretary
Secretary
</TABLE>
<PAGE> 126
<TABLE>
<S> <C> <C>
Walter A. Dods, Jr. BancWest Corporation Chairman & Chief Executive Officer
Director
First Hawaiian Bank Chairman & Chief Executive Officer
James D. Dresser HighMark Capital Management Vice President, Institutional
Vice President & Regional Sales Company, Inc. Sales and Marketing
Manager
Anthony D. Goo First Hawaiian Bank Senior Vice President, Senior
Senior Vice President & Chief Portfolio Manager
Investment Officer
Bradford L. Harrison First Hawaiian Bank Vice President, Institutional
Vice President, Marketing & Client Investment Marketing
Servicing
Donald G. Horner First Hawaiian Bank Vice Chairman
Director
Howard H. Karr First Hawaiian Bank Vice Chairman
Director
Michael R. Masuda First Hawaiian Bank Vice President
Senior Vice President & Senior
Operating Officer
T. Mark McCamley First Hawaiian Bank Investment Officer
Client Service Director
Don J. McGrath BancWest Corporation President & Chief Operating
Director Officer
Bank of the West President & Chief Operating
Officer
John K. Tsui First Hawaiian Bank President & Chief Operating
Director, Chairman & Chief Officer
Executive Officer
Herbert E. Wolff BancWest Corporation Senior Vice President & Secretary
Secretary
First Hawaiian Bank Senior Vice President & Secretary
Albert M. Yamada First Hawaiian Bank Executive Vice President & Chief
Treasurer Financial Officer
</TABLE>
<PAGE> 127
WELLINGTON MANAGEMENT COMPANY, LLP
Wellington Management Company, LLP ("Wellington") is a sub-adviser for
the Registrant's Money Market Fund and Treasury Money Market Fund. The principal
business address of Wellington is 75 State Street, Boston, Massachusetts 02109.
Wellington is an investment adviser registered under the Investment Advisers Act
of 1940. The principal business address for Wellington Hedge Management, Inc.,
Wellington Management International, Wellington Sales Corporation and Wellington
Trust Company, NA is the same as Wellington Management Company. The principal
business for Wellington International Management Company Pte Ltd. is Six Battery
Road, Ste. 17-06, Singapore 049909. The principal business address for
Wellington Global Administrator, Ltd., Wellington Global Holdings, Ltd. and
Wellington Management Global Holdings, Ltd. is Clarendon House, 2 Church Street,
PO Box HM 666, Hamilton HMCX, Bermuda. The principal business address for
Wellington Luxembourg SCA is 33, Boulevard Prince Henri, L-2014 Luxembourg.
<TABLE>
<CAPTION>
NAME AND POSITION WITH INVESTMENT NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
ADVISER
<S> <C> <C>
Kenneth Lee Abrams -- --
General Partner
Nicholas Charles Adams Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
Rand Charles Alexander -- --
General Partner
Deborah Louise Allison Wellington Trust Company, NA Vice President
General Partner
James Halsey Averill -- --
General Partner
Karl E. Bandtel Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Holdings, Ltd. Senior Vice President
Wellington Global Administrator, Ltd. Senior Vice President
Mark James Beckwith -- --
General Partner
Marie-Claude Petit Bernal -- --
General Partner
William Nicholas Booth -- --
General Partner
Paul Braverman Wellington International Director
General Partner Management Company Pte Ltd.
</TABLE>
<PAGE> 128
<TABLE>
<S> <C> <C>
Wellington Management General Partner & CEO
International
Wellington Sales Corporation President & Treasurer
Wellington Trust Company, NA Vice President & Treasurer/Cashier
Wellington Hedge Management, Inc. Senior Vice President & Treasurer
Wellington Global Holdings, Ltd. Senior Vice President & Treasurer
Wellington Global Administrator, Senior Vice President & Treasurer
Ltd.
Wellington Management Global Senior Vice President & Treasurer
Holdings, Ltd.
Robert A. Bruno -- --
General Partner
Maryann Evelyn Carroll -- --
General Partner
Pamela Dippel -- --
General Partner
Robert Lloyd Evans -- --
General Partner
Lisa de la Fuente Finkel Wellington Sales Corporation Senior Vice President & Director
General Partner
Wellington Hedge Management, Inc. Senior Vice President
Charles Townsend Freeman -- --
General Partner
Laurie Allen Gabriel Wellington Hedge Management, Inc. Director
General Partner
Wellington Trust Company, NA Vice President
John Herrick Gooch Wellington Management General Partner
General Partner International
Wellington Trust Company, NA Director & Vice President
Wellington Hedge Management, Inc. President
Wellington Global Holdings, Ltd. Director & President
Wellington Global Administrator, Director & President
Ltd.
</TABLE>
<PAGE> 129
<TABLE>
<S> <C> <C>
Wellington Management Global Director & President
Holdings, Ltd.
Nicholas Peter Greville Wellington Management General Partner
General Partner International
Wellington International Director
Management Company Pte Ltd.
Wellington Global Holdings, Ltd. Senior Vice President
Wellington Administrator, Ltd. Senior Vice President
Paul J. Hammel -- --
General Partner
Lucius Tuttle Hill, III -- --
General Partner
Paul David Kaplan Wellington Global Holdings, Ltd. Director
General Partner
Wellington Global Administrator, Director
Ltd.
Wellington Management Global Director
Holdings, Ltd.
John Charles Keogh Wellington Trust Company, NA Director & Vice President
General Partner
George Cabot Lodge, Jr. Wellington Global Holdings, Ltd. Senior Vice President
General Partner
Wellington Hedge Management, Inc. Senior Vice President
Nancy Therese Lukish Wellington Trust Company, NA Director & Vice President
General Partner
Wellington Hedge Management, Inc. Senior Vice President
Wellington Global Administrator, Senior Vice President
Ltd.
Mark Thomas Lynch Wellington Hedge Management, Inc. Senior Vice President
General Partner
Christine Smith Manfredi Wellington Trust Company, NA Director & Vice President
General Partner
Wellington Hedge Management, Inc. Senior Vice President
Wellington Global Holdings, Ltd. Senior Vice President
Wellington Global Administrator, Senior Vice President
Ltd.
</TABLE>
<PAGE> 130
<TABLE>
<S> <C> <C>
Patrick John McCloskey -- --
General Partner
Earl Edward McEvoy -- --
General Partner
Duncan Mathieu McFarland Wellington Management General Partner
General Partner International
Wellington Trust Company, NA Director & Chairman
Wellington Hedge Management, Inc. Director & Chairman
Wellington International Director
Management Company Pte Ltd.
Wellington Global Holdings, Ltd. Chairman & Director
Wellington Global Administrator, Chairman & Director
Ltd.
Wellington Management Global Chairman & Director
Holdings Ltd.
Paul Mulford Mecray, III -- --
General Partner
Matthew Edward Megargel -- --
General Partner
James Nelson Mordy -- --
General Partner
Diane Carol Nordin Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
Stephen T. O'Brien -- --
General Partner
Edward Paul Owens Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
Saul Joseph Pannell Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
</TABLE>
<PAGE> 131
<TABLE>
<S> <C> <C>
Thomas Louis Pappas -- --
General Partner
Jonathan Martin Payson Wellington Trust Company, NA Director & President
General Partner
Wellington Sales Corporation Senior Vice President
Wellington Global Holdings, Ltd. Director
Wellington Global Administrator, Director
Ltd.
Wellington Management Global Director
Holdings, Ltd.
Stephen Michael Pazuk Wellington Management Partner
General Partner International
Wellington International Director
Management Company Pte Ltd.
Wellington Sales Corporation Senior Vice President
Wellington Trust Company, NA Vice President
Wellington Hedge Management, Inc. Senior Vice President
Wellington Global Holdings, Ltd. Director
Wellington Global Administrator, Director
Ltd.
Wellington Management Global Director
Holdings, Ltd.
Wellington Luxembourg SCA Supervisory Board
Philip H. Perelmuter -- --
General Partner
Robert Douglas Rands Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
Eugene Edward Record, Jr. Wellington Trust Company, NA Vice President
General Partner
James Albert Rullo -- --
General Partner
John Robert Ryan Wellington Hedge Management, Inc. Director
General Partner
</TABLE>
<PAGE> 132
<TABLE>
<S> <C> <C>
Joseph Harold Schwartz -- --
General Partner
Theodore E. Shasta Wellington Hedge Management, Inc. Senior Vice President
General Partner
Binkley Calhoun Shorts -- --
General Partner
Trond Skramstad -- --
General Partner
Catherine Anne Smith Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Administrator, Senior Vice President
Ltd.
Stephen Albert Soderberg -- --
General Partner
Eric Stromquist Wellington Hedge Management, Inc. Senior Vice President
General Partner
Brendan James Swords Wellington Hedge Management, Inc. Senior Vice President
General Partner
Harriett Tee Taggart -- --
General Partner
Perry Marques Traquina -- --
General Partner
Gene Roger Tremblay -- --
General Partner
Michael Aaron Tyler -- --
General Partner
Mary Ann Tynan Wellington Management General Partner & Compliance
General Partner International Officer
Wellington Sales Corporation Senior Vice President, Clerk &
Director
Wellington Trust Company, NA Vice President, Secretary & Trust
Officer
Wellington Hedge Management, Inc. Senior Vice President & Clerk
Wellington Luxembourg SCA Supervisory Board
Clare Villari Wellington Hedge Management, Inc. Senior Vice President
General Partner
</TABLE>
<PAGE> 133
<TABLE>
<S> <C> <C>
Wellington Global Holdings, Ltd. Senior Vice President
Wellington Global Administrator, Senior Vice President
Ltd.
Ernst Hans von Metzsch Wellington Hedge Management, Inc. Senior Vice President
General Partner
Wellington Global Holdings, Ltd. Senior Vice President
Wellington Global Administrator, Senior Vice President
Ltd.
James Leland Walters Wellington Trust Company, NA Director, Senior Trust Officer &
General Partner Trust Counsel
Wellington International Director
Management Company Pte Ltd.
Wellington Sales Corporation Senior Vice President, Assistant
Clerk & Director
Wellington Global Holdings, Ltd. Director & Deputy Chairman
Wellington Global Administrator, Director & Deputy Chairman
Ltd.
Wellington Management Global Director, Senior Vice President &
Holdings, Inc. Deputy Chairman
Wellington Luxembourg SCA Supervisory Board
Kim Williams -- --
General Partner
Francis Vincent Wisneski, Jr. -- --
General Partner
</TABLE>
ITEM 27. PRINCIPAL UNDERWRITER:
(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 Investments Distribution Co. (the
"Distributor"), acts as distributor for:
<TABLE>
<S> <C>
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 Institutional International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
</TABLE>
<PAGE> 134
<TABLE>
<S> <C>
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Huntington Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
Alpha Select Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
CNI Charter Funds April 1, 1999
The Armada Advantage Fund May 1, 1999
Amerindo Funds, Inc. July 13, 1999
Huntington VA Fund October 15, 1999
Friends Ivory Funds December 16, 1999
</TABLE>
The Distributor 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 SEI Investments Distribution Co., Oaks, PA 19456.
<TABLE>
<CAPTION>
Name Position and Office with Underwriter Positions and Offices with Registrant
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of --
Directors
Richard B. Lieb Director, Executive Vice President --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
</TABLE>
<PAGE> 135
<TABLE>
<S> <C> <C>
Hartland J. McKeown Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President & Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Timothy D. Barto Vice President & Assistant Secretary --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President & Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Richard A. Deak Vice President & Assistant Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
James R. Foggo Vice President & Assistant Secretary Vice President & Assistant Secretary
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President & Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Christine M. McCullough Vice President & Assistant Secretary --
Carolyn McLaurin Vice President & Managing Director --
Mark Nagle Vice President --
Joanne Nelson Vice President --
Cynthia M. Parrish Vice President & Secretary --
Rob Redican Vice President --
Maria Rinehart Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President --
Lynda J. Striegel Vice President & Assistant Secretary Vice President & Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31(a)-1(b); (2)(a) and (b);
(3); (6); (8); (12); and 31a-1(d), the required books and records will be
maintained at the offices of Registrant's Custodian:
Chase Manhattan Bank
4 New York Plaza
New York, New York 10004
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1), (4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Administrator:
<PAGE> 136
SEI Investments Mutual Funds Services
Oaks, Pennsylvania 19456
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and
31a-1(f), the required books and records are maintained at the principal offices
of the Registrant's Adviser and Sub-Adviser:
<TABLE>
<S> <C>
Bishop Street Capital Management Wellington Management Company, LLP
999 Bishop Street 75 State Street
Honolulu, Hawaii 96813 Boston, Massachusetts 02109
</TABLE>
ITEM 29. MANAGEMENT SERVICES:
None.
ITEM 30: 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 appropriate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 relating to Shareholder
communications.
Registrant undertakes to furnish each person to whom a prospectus for
any series of the Registrant is delivered with a copy of the Registrant's latest
annual report to shareholders for such series, when such annual report is issued
containing information called for by Item 5A of Form N-1A, upon request and
without charges.
<PAGE> 137
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 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. 14 to Registration Statement No.
33-80514 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Honolulu, State of Hawaii on the 26 day of April,
2000.
By: /s/ Robert A. Nesher
______________________________
Robert A. Nesher
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacity on the
dates indicated.
<TABLE>
<S> <C> <C>
* Trustee April 26, 2000
- ---------------------------------------------
Martin Anderson
* Trustee April 26, 2000
- ---------------------------------------------
Charles E. Carlbom
* Trustee April 26, 2000
- ---------------------------------------------
Philip H. Ching
* Trustee April 26, 2000
- ---------------------------------------------
James L. Huffman
* Trustee April 26, 2000
- ---------------------------------------------
Shunichi Kimura
* Trustee April 26, 2000
- ---------------------------------------------
William S. Richardson
* Trustee April 26, 2000
- ---------------------------------------------
Peter F. Sansevero
* Trustee April 26, 2000
- ---------------------------------------------
Manuel R. Sylvester
* Trustee April 26, 2000
- ---------------------------------------------
Joyce S. Tsunoda
/s/ Christopher F. Salfi Treasurer and Controller April 26, 2000
- ---------------------------------------------
Christopher F. Salfi
/s/ Robert A. Nesher President and Trustee April 26, 2000
- ---------------------------------------------
Robert A. Nesher
</TABLE>
*By: /s/ Robert A. Nesher
___________________________
Robert A. Nesher
Attorney-in-Fact
<PAGE> 138
EXHIBIT INDEX
NAME EXHIBIT
EX-99.A(1) Agreement and Declaration of Trust of the Registrant dated May
25, 1994, as originally filed with the Registrant's
Registration on June 20, 1994, is incorporated herein by
reference to Exhibit 1 of Post-Effective Amendment No. 3 to
the Registrant's Registration Statement filed with the SEC on
Form N-1A (File No. 33-80514), as filed February 29, 1996.
EX-99.A(2) Amended and Restated Agreement and Declaration of Trust as
originally filed with the Registrant's Pre-Effective Amendment
No. 1 on Form N-1A (File No. 33-80514) with the SEC on
September 7, 1994, is incorporated herein by reference to
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement, as filed February 29, 1996.
EX-99.B(1) By-Laws of the Registrant as originally filed with the
Registrant's Registration Statement with SEC on Form N-1A
(File No. 33-80514) on June 20, 1994, are incorporated herein
by reference to Exhibit 2 of Post-Effective Amendment No. 3 to
the Registrant's Registration Statement, as filed February 29,
1996.
EX-99.B(2) Amended By-Laws of the Registrant as originally filed with the
Registrant's Pre-Effective Amendment No. 1 filed with the SEC
on Form N-1A (File No. 33-80514) on September 7, 1994, are
incorporated herein by reference to Exhibit 2(a) of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement, as filed February 29, 1996.
EX-99.B(3) Amended By-Laws of the Registrant are incorporated herein by
reference to Exhibit 2(b) of Post-Effective Amendment No. 7 to
the Registrant's Registration Statement filed with the SEC on
Form N-1A (File No. 33-80514), as filed February 26, 1998.
EX-99.D(1) Investment Advisory Agreement between the Registrant and First
Hawaiian Bank dated January 25, 1995, is incorporated herein
by reference to Exhibit 5(a) of Post-Effective Amendment No. 3
to the Registrant's Registration Statement filed with the SEC
on Form N-1A (File No. 33-80514), as filed February 29, 1996.
EX-99.D(2) Investment Sub-Advisory Agreement by and among the Registrant,
First Hawaiian Bank and Wellington Management Company, LLP
dated January 27, 1995, is incorporated herein by reference to
Exhibit 5(b) of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed February 29, 1996.
EX-99.D(3) Amended and Restated Investment Sub-Advisory Agreement by and
among the Registrant, First Hawaiian Bank and Wellington
Management Company, LLP dated April 30, 1996, is incorporated
herein by reference to Exhibit 5(c) of Post-Effective
Amendment No. 5 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
April 30, 1997.
EX-99.D(4) Schedule B dated April 30, 1996, to the Investment Advisory
Agreement dated January 27, 1995, between the Registrant and
First Hawaiian Bank, is incorporated herein by reference to
Exhibit 5(d) of Post-Effective Amendment No. 5 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed April 30, 1997.
<PAGE> 139
EX-99.D(5) Investment Advisory Agreement between the Registrant and First
Hawaiian Bank dated March 31, 1999, is incorporated herein by
reference to Exhibit (d)5 of Post-Effective Amendment No. 12
to the Registrant's Registration Statement filed with the SEC
on Form N-1A (File No. 33-80514), as filed April 30, 1999.
EX-99.D(6) Investment Sub-Advisory Agreement by and among the Registrant,
First Hawaiian Bank and Wellington Management Company, LLP
dated March 31, 1999, is incorporated herein by reference to
Exhibit (d)6 of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed April 30, 1999.
EX.99.D(7) Assignment and Assumption Agreement between First Hawaiian
Bank and Bishop Street Capital Management dated February 22,
2000 is filed herewith.
EX.99.D(8) Consent to Assignment and Assumption of the Investment
Advisory Agreement between the Bishop Street Funds and First
Hawaiian Bank is filed herewith.
EX.99.D(9) Consent to Assignment and Assumption of the Investment
Sub-Advisory Agreement between First Hawaiian Bank and
Wellington Management Company, LLP is filed herewith.
EX-99.E(1) Distribution Agreement between the Registrant and SEI
Financial Services Company dated January 27, 1995, is
incorporated herein by reference to Exhibit 6 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
EX-99E(2) Amended and Restated Distribution Agreement between the
Registrant and SEI Investments Distribution Co. dated June 10,
1999, is incorporated herein by reference to Exhibit (e)2 of
Post-Effective Amendment No. 13 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed June 11, 1999.
EX.99.G Custodian Agreement between the Registrant and Chemical Bank,
N.A., is incorporated herein by reference to Exhibit 8 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 80514), as filed February 29, 1996.
EX-99.H(1) Administration Agreement between the Registrant and SEI
Financial Management Corporation dated January 20, 1995, is
incorporated herein by reference to Exhibit 9(a) of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
EX-99.H(2) Transfer Agent Agreement between the Registrant and Supervised
Service Company, Inc. dated January 30, 1995, is incorporated
herein by reference to Exhibit 9(b) of Post-Effective
Amendment No. 3 to the Registrant's Registration Statement on
Form N-1A (File No. 33-80514), as filed February 29, 1996.
EX-99.H(3) Consent to Assignment and Assumption of the Administration
Agreement between the Trust and SEI Financial Management
Corporation to SEI Fund Resources dated June 1, 1996, is
incorporated herein by reference to Exhibit 9(c) of
Post-Effective Amendment No. 5 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed April 30, 1997.
<PAGE> 140
EX-99.I(1) Opinion and Consent of Counsel as originally filed with the
Registrant's Pre-Effective Amendment No. 1 on September 7,
1994, is incorporated herein by reference to Exhibit 10 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
EX-99.I(2) Consent of Counsel is incorporated herein by reference to
Exhibit (i)2 of Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on file with the SEC on
Form N-1A (File No. 33-80514), as filed April 30, 1999.
EX-99.I(3) Opinion and Consent of Counsel is filed herewith.
EX-99.J Consent of Independent Auditors (PricewaterhouseCoopers LLP)
is filed herewith.
EX-99.M(1) 12b-1 Plan (Class B) dated January 27, 1995 as originally
filed with the Registrant's Pre-Effective Amendment No. 1 on
September 7, 1994, is incorporated herein by reference to
Exhibit 15 of Post-Effective Amendment No. 3 to the
Registrant's Registration Statement filed with the SEC on Form
N-1A (File No. 33-80514), as filed February 29, 1996.
EX-99.M(2) 12b-1 Plan (Class A) dated January 27, 1995, is incorporated
herein by reference to Exhibit (m)2 of Post-Effective
Amendment No. 13 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
June 11, 1999.
EX-99.O(1) Rule 18f-3 Plan (Class B) as originally filed with the
Registrant's Post-Effective Amendment No. 1 on July 31, 1995,
is incorporated herein by reference to Exhibit 18 of
Post-Effective Amendment No. 3 to the Registrant's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-80514), as filed February 29, 1996.
EX-99.O(2) Rule 18f-3 Plan (Class A) dated May 13, 1999, is incorporated
herein by reference to Exhibit (o)2 of Post-Effective
Amendment No. 13 to the Registrant's Registration Statement
filed with the SEC on Form N-1A (File No. 33-80514), as filed
June 11, 1999.
EX.99.P(1) Code of Ethics for the Bishop Street Funds is filed herewith.
EX.99.P(2) Code of Ethics for First Hawaiian Bank is filed herewith.
EX.99.P(3) Code of Ethics for Wellington Management Company, LLP dated
March 1, 2000 is incorporated herein by reference to Exhibit
(p)4 of Post-Effective Amendment No. 26 of the Arbor Fund's
Registration Statement filed with the SEC on Form N-1A (File
No. 33-50718), as filed March 16, 2000.
EX-99.Q Power of Attorney for Martin Anderson, Charles E. Carlbom,
Philip H. Ching, James L. Huffman, Shunichi Kimura, William S.
Richardson, Peter F. Sansevero, Manuel R. Sylvester and Joyce
S. Tsunoda are incorporated herein by reference to Exhibit (p)
of Post-Effective Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A (File No. 33-80514), as
filed April 30, 1999.
<PAGE> 1
Exhibit (d)(7)
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement"), dated as of
February 22, 2000, is made by and between First Hawaiian Bank ("Assignor") and
Bishop Street Capital Management ("Assignee") with reference to the following
Recitals.
a. Assignor serves as the Adviser to the Bishop Street Funds (the
"Trust") pursuant to an Investment Advisory Agreement with the
Trust dated March 31, 1999 (the "Advisory Agreement");
b. Assignor has agreed to assign all of its rights and delegate
all of its obligations (the "Assignment") under the Advisory
Agreement to Assignee, as of the date first set forth above;
and
c. Assignee has agreed, that at the time of the Assignment, to
assume all rights and obligations of Assignor under the
Advisory Agreement.
NOW THEREFORE, in consideration of the terms and conditions of the
Agreement and other good and valuable consideration, the receipt of which is
hereby acknowledged, and intending to be legally bound, the parties hereto agree
as follows:
a. Assignor hereby grants, sells, conveys, transfers and delivers
to Assignee all of Assignor's right, title and interest in and
to the Advisory Agreement.
b. Assignee hereby assumes and agrees to perform or to pay or
discharge the obligations and liabilities of Assignor
described in the Advisory Agreement and agrees to be liable to
the Trust for any default or breach of the Advisory Agreement
to the extent the default or breach occurs on or after the
date of execution of this Agreement.
c. This Agreement shall inure to the benefit of and shall be
binding upon the successors and assigns of the respective
parties. It is specifically intended that the Trust shall
remain a beneficiary of this Agreement, and it is hereby
acknowledged that the Trust retains all of its rights under
the Advisory Agreement. This Agreement shall be governed and
interpreted in accordance with the law of the State of Hawaii
without reference to the conflicts of law principles of such
state.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have caused this instrument to be duly
executed as of the date first set forth above.
<TABLE>
<CAPTION>
BISHOP STREET CAPITAL MANAGEMENT FIRST HAWAIIAN BANK
<S> <C>
By: /s/ Michael R. Masuda By: /s/ Robert A. Alm
-------------------------------- ------------------------------
Title: Vice President Title: Executive Vice President
-------------------------------- ------------------------------
Date: February 22, 2000 Date: February 22, 2000
-------------------------------- ------------------------------
</TABLE>
<PAGE> 1
Exhibit (d)(8)
CONSENT TO ASSIGNMENT AND ASSUMPTION
1. First Hawaiian Bank ("Assignor") hereby notifies Bishop Street Funds
("Trust") that it intends to assign all of its rights and delegate all
of its obligations under the Investment Advisory Agreement between the
Trust and the Assignor, dated March 31, 1999 (the "Advisory
Agreement"), to Bishop Street Capital Management ("Assignee"), no later
than February 22, 2000, in connection with the transition of Assignor"s
fund advisory business to Assignee;
2. Trust releases Assignor from its rights and obligations under the
Advisory Agreement on or after the date the Assignment and Assumption
Agreement is executed and any liability or responsibility for (i)
breach of the Advisory Agreement by Assignee, or (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 requires
Assignee (i) to assume all rights and obligations of Assignor under the
Advisory Agreement, and (ii) to be liable to the Trust for any default
or breach of the Advisory 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 Advisory Agreement.
The Bishop Street Funds
By: /s/ Lynda J. Striegel
-----------------------------------
Title: Vice President & Assistant Secretary
-----------------------------------
Date: February 22, 2000
-----------------------------------
First Hawaiian Bank
By: /s/ Robert A. Alm
------------------------
Title: Executive Vice President
------------------------
Date: February 22, 2000
------------------------
<PAGE> 1
Exhibit (d)(9)
CONSENT TO ASSIGNMENT AND ASSUMPTION
1. First Hawaiian Bank ("Assignor") hereby notifies Wellington Management
Company, LLP ("WMC") that it intends to assign all of its rights and
delegate all of its obligations under the Sub-Advisory Agreement
between WMC and the Assignor, dated March 31, 1999 (the "Sub-Advisory
Agreement"), to Bishop Street Capital Management ("Assignee"), no later
than February 22, 2000, in connection with the transition of Assignor's
fund advisory business to Assignee;
2. The "assignment" discussed in this Consent does not constitute an
assignment as that term is defined in Section 2(a)(4) of the Investment
Company Act of 1940. The assignment discussed herein falls under the
exception contained in Rule 2a-6 under the 1940 Act because there has
been no change of actual control or management within the meaning of
Rule 2a-6 under the 1940 Act;
3. WMC releases Assignor from its rights and obligations under the
Sub-Advisory Agreement on or after the date the Assignment and
Assumption Agreement is executed and any liability or responsibility
for (i) breach of the Sub-Advisory Agreement by Assignee, or (ii)
demands and claims made against WMC for damages, losses or expenses
incurred by WMC 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.
4. This consent is not a waiver or estoppel with respect to any rights WMC
may have by reason of the past performance or failure to perform by
Assignor.
5. This consent is conditioned upon the execution of an Assignment and
Assumption Agreement between Assignor and Assignee that requires
Assignee (i) to assume all rights and obligations of Assignor under the
Sub-Advisory Agreement, and (ii) to be liable to WMC for any default or
breach of the Sub-Advisory Agreement to the extent the default or
breach occurs on or after the date of execution of the Assignment and
Assumption Agreement.
6. Except as provided herein, neither this consent nor the Assignment and
Assumption Agreement shall alter or modify the terms or conditions of
the Sub-Advisory Agreement.
<TABLE>
<CAPTION>
Wellington Management Company, LLP First Hawaiian Bank
<S> <C>
By: /s/ John Gooch By: /s/ Robert A. Alm
------------------------------ --------------------------------
Title: Senior Vice President Title: Executive Vice President
------------------------------ --------------------------------
Date: March 6, 2000 Date: March 6, 2000
------------------------------ --------------------------------
</TABLE>
<PAGE> 1
April 26, 2000
Bishop Street Funds
Bishop Street Capital Management
999 Bishop Street
Honolulu, Hawaii 96813
Re: Opinion of Counsel regarding Post-Effective Amendment No. 14 to the
Registration Statement filed on Form N-1A under the Securities Act of
1933 (File No. 2-80514).
Ladies and Gentlemen:
We have acted as counsel to Bishop Street Funds, a Massachusetts business trust
(the "Trust"), in connection with the above-referenced Registration Statement
(as amended, the "Registration Statement") which relates to the Trust's units of
beneficial interest, without par value (collectively, the "Shares"). This
opinion is being delivered to you in connection with the Trust's filing of
Post-Effective Amendment No. 14 to the Registration Statement (the "Amendment")
to be filed with the Securities and Exchange Commission pursuant to Rule 485(b)
of the Securities Act of 1933 (the "1933 Act"). With your permission, all
assumptions and statements of reliance herein have been made without any
independent investigation or verification on our part except to the extent
otherwise expressly stated, and we express no opinion with respect to the
subject matter or accuracy of such assumptions or items relied upon.
In connection with this opinion, we have reviewed, among other things, executed
copies of the following documents:
(a) a certificate of the Commonwealth of Massachusetts as to the
existence and good standing of the Trust;
(b) the Agreement and Declaration of Trust for the Trust and all
amendments and supplements thereto (the "Declaration of
Trust");
(c) a certificate executed by Todd B. Cipperman, Vice President
and Assistant Secretary of the Trust, certifying as to, and
attaching copies of, the Trust's Declaration of Trust and
By-Laws (the "By-Laws"), and certain resolutions
<PAGE> 2
Bishop Street Funds
April 26, 2000
Page 2
adopted by the Board of Trustees of the Trust authorizing the
issuance of the Shares; and
(d) a printer's proof of the Amendment.
In our capacity as counsel to the Trust, we have examined the originals, or
certified, conformed or reproduced copies, of all records, agreements,
instruments and documents as we have deemed relevant or necessary as the basis
for the opinion hereinafter expressed. In all such examinations, we have assumed
the legal capacity of all natural persons executing documents, the genuineness
of all signatures, the authenticity of all original or certified copies, and the
conformity to original or certified copies of all copies submitted to us as
conformed or reproduced copies. As to various questions of fact relevant to such
opinion, we have relied upon, and assume the accuracy of, certificates and oral
or written statements of public officials and officers or representatives of the
Fund. We have assumed that the Amendment, as filed with the Securities and
Exchange Commission, will be in substantially the form of the printer's proof
referred to in paragraph (d) above.
Based upon, and subject to, the limitations set forth herein, we are of the
opinion that the Shares, when issued and sold in accordance with the Declaration
of Trust and By-Laws, and for the consideration described in the Registration
Statement, will be legally issued, fully paid and nonassessable under the laws
of the Commonwealth of Massachusetts.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving this consent, we do not concede that we are in
the category of persons whose consent is required under Section 7 of the 1933
Act.
Very truly yours,
/s/ Morgan, Lewis & Bockius LLP
Morgan, Lewis & Bockius LLP
<PAGE> 3
Bishop Street Funds
April 26, 2000
Page 3
Prepared by:
/s/ Ursula Robinson
- ---------------------------
Ursula Robinson
Reviewed by:
/s/ John H. Grady
- ---------------------------
John H. Grady
Signed by:
/s/ Richard W. Grant
- ---------------------------
Richard W. Grant
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated February 15, 2000, relating to the
financial statements and financial highlights which appears in the December 31,
1999 Annual Report to the Board of Trustees and Shareholders of The Bishop
Street Funds, which are also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings "Financial
Highlights", "Experts", "Independent Accountants" and "Financial Statements" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
April 25, 2000
<PAGE> 1
AMENDED CODE OF ETHICS
ADOPTED UNDER RULE 17j-1
While affirming its confidence in the integrity and good faith of all
of its officers and trustees, the Bishop Street Funds (the "Trust"), recognize
that the knowledge of present or future portfolio transactions and, in certain
instances, the power to influence portfolio transactions which may be possessed
by certain of their officers, employees and trustees could place such
individuals, if they engage in personal transactions in securities which are
eligible for investment by the Trust, in a position where their personal
interest may conflict with that of the Trust.
In view of the foregoing and of the provisions of Rule 17j-1(b)(1)
under the Investment Company Act of 1940 (the "1940 Act"), the Trust has
determined to adopt this Code of Ethics to specify and prohibit certain types of
transactions deemed to create conflicts of interest (or at least the potential
for or the appearance of such a conflict), and to establish reporting
requirements and enforcement procedures.
I. STATEMENT OF GENERAL PRINCIPLES.
In recognition of the trust and confidence placed in the Trust by its
shareholders, and to give effect to the Trust's belief that their operations
should be directed to the benefit of their shareholders, the Trust hereby adopts
the following general principles to guide the actions of their trustees,
officers and employees.
(1) The interests of the Trust's shareholders are paramount, and
all of the Trust's personnel must conduct themselves and their
operations to give maximum effect to this tenet by assiduously
placing the interests of the shareholders before their own.
(2) All personal transactions in securities by the Trust's
personnel must be accomplished so as to avoid even the
appearance of a conflict of interest on the part of such
personnel with the interests of the Trust and its
shareholders.
(3) All of the Trust's personnel must avoid actions or activities
that allow (or appear to allow) a person to profit or benefit
from his or her position with respect to the Trust, or that
otherwise bring into question the person's independence or
judgment.
II. DEFINITIONS.
(1) "Access Person" shall mean: (i) each director, trustee or
officer of the Trust; (ii) each employee of the Trust (or of
any company in a control relationship to the Trust) who, in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase
or sale of a security by the Trust or any series thereof
(herein a "Fund"), or whose functions relate to the making of
<PAGE> 2
any recommendations with respect to such purchases or sales;
(iii) each officer, director or general partner of each
adviser or sub-adviser to the Trust and any employee of any
such adviser or sub-adviser who, in connection with his or her
regular functions or duties, makes, participates in, or
obtains information regarding the purchase or sale of a
security by a Fund, or whose functions relate to the making of
any recommendations with respect to such purchases or sales;
(iv) each director, officer or general partner of any
principal underwriter for the Trust, but only where such
person in the ordinary course either makes, participates in,
or obtains information regarding the purchase or sale of
securities by the Fund(s), or whose functions relate to the
making of recommendations regarding securities to the Fund(s);
and (v) any natural person in a control relationship with the
Trust or any of the Trust's advisers or sub-advisers who
obtains information concerning recommendations made to the
Fund(s) with regard to the purchase or sale of a security.
(2) "Beneficial ownership" of a security is to be determined in
the same manner as it is for purposes of Section 16 of the
Securities Exchange Act of 1934 and Rule 16a-1(a)(2)
thereunder. This means that a person should generally consider
himself or herself the beneficial owner of any securities in
which he or she has a direct or indirect pecuniary interest.
In addition, a person should consider himself or herself the
beneficial owner of securities held by his or her spouse, his
or her minor children, a relative who shares his or her home,
or other persons by reason of any contract, arrangement,
understanding or relationship that provides him or her with
sole or shared voting or investment power.
(3) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the 1940 Act. Section 2(a)(9) provides that
"control" means the power to exercise a controlling influence
over the management or policies of a company, unless such
power is solely the result of an official position with such
company. Ownership of 25% or more of a company's outstanding
voting security is presumed to give the holder thereof control
over the company. Such presumption may be countered by the
facts and circumstances of a given situation.
(4) "Independent Trustee" means a Trustee of the Trust who is not
an "interested person" of the Trust within the meaning of
Section 2(a)(19) of the 1940 Act.
(5) "Initial Public Offering" ("IPO") means an offering of
securities registered under the Securities Act of 1933, the
issuer of which, immediately before registration, was not
subject to the reporting requirements of Section 13 or Section
15(d) of the Securities Exchange Act of 1934.
(6) "Special Purpose Investment Personnel" means each Access
Person who, in connection with his or her regular functions
(including, where appropriate,
2
<PAGE> 3
attendance at Board meetings and other meetings at which the
official business of the Trust or any Fund is discussed or
carried on), obtains contemporaneous information regarding the
purchase or sale of a security by a Fund. Special Purpose
Investment Personnel shall occupy this status only with
respect to those securities as to which he or she obtains such
contemporaneous information.
(7) "Private Placement (or Limited Offering)" means an offering
that is exempt from registration under the Securities Act of
1933 pursuant to Section 4(2) or Section 4(6) of the
Securities Act of 1933.
(8) "Purchase or sale of a security" includes, among other things,
the writing of an option to purchase or sell a security.
(9) "Security" shall have the same meaning as that set forth in
Section 2(a)(36) of the 1940 Act, except that it shall not
include securities issued by the Government of the United
States or an agency thereof, bankers' acceptances, bank
certificates of deposit, commercial paper and registered,
open-end mutual funds.
(10) A "Security held or to be acquired" by the Trust (or any Fund)
means any Security, any option to purchase or sell, and any
Security convertible into or exchangeable for any Security
which, within the most recent 15 days, (i) is or has been held
by the Trust (or any Fund), or (ii) is being or has been
considered by the Trust's adviser or sub-adviser for purchase
by the Trust (or any Fund).
(11) A Security is "being purchased or sold" by the Trust from the
time when a purchase or sale program has been communicated to
the person who places the buy and sell orders for the Trust
until the time when such program has been fully completed or
terminated.
III. PROHIBITED PURCHASES AND SALES OF SECURITIES.
(1) No Access Person shall, in connection with the purchase or
sale, directly or indirectly, by such person of a Security
held or to be acquired by any Fund:
(A) employ any device, scheme or artifice to defraud such
Fund;
(B) make to such Fund any untrue statement of a material
fact or omit to state to such Fund a material fact
necessary in order to make the statements made, in
light of the circumstances under which they are made,
not misleading;
(C) engage in any act, practice or course of business
which would operate as a fraud or deceit upon such
Fund; or
3
<PAGE> 4
(D) engage in any manipulative practice with respect to
such Fund.
(2) No Special Purpose Investment Personnel may purchase or sell,
directly or indirectly, any Security as to which such person
is a Special Purpose Investment Personnel in which he or she
had (or by reason of such transaction acquires) any Beneficial
Ownership at any time within seven calendar days before or
after the time that the same (or a related) Security is being
purchased or sold by any Fund.
(3) No Special Purpose Investment Personnel may sell a Security as
to which he or she is a Special Purpose Investment Personnel
within 60 days of acquiring beneficial ownership of that
Security.
(4) Special Purpose Investment Personnel must obtain approval from
the Trust's President before acquiring Beneficial Ownership of
any Securities offered in connection with an IPO or a Private
Placement.
IV. ADDITIONAL RESTRICTIONS AND REQUIREMENTS
(1) No Access Person shall accept or receive any gift of more than
de minimis value from any person or entity that does business
with or on behalf of the Trust.
(2) Each Access Person (other than the Trust's Independent
Trustees and its Trustees and officers who are not currently
affiliated with or employed by the Trust's investment adviser
or principal underwriter) who is not required to provide such
information under the terms of a code of ethics described in
Section VII hereof must provide to the Review Officer a
complete listing of all securities owned by such person as of
December 31, 1997. Thereafter, each such person shall submit a
revised list of such holdings to the Review Officer as of
December 31st of each subsequent year. The initial listing
must be submitted within 10 days of the date upon which such
person first becomes an Access Person of the Trust, and each
update thereafter must be provided no later than 30 days after
the start of the subsequent year.
V. REPORTING OBLIGATION.
(1) Each Access Person (other than the Trust's Independent
Trustees) shall report all transactions in Securities in which
the person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership. Reports shall be
filed with the Review Officer quarterly. The Review Officer
shall submit confidential quarterly reports with respect to
his or her own personal securities transactions to an officer
designated to receive his or her reports ("Alternate Review
Officer"), who shall act in all respects in the manner
prescribed herein for the Review Officer.
4
<PAGE> 5
(2) Every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which
the report relates was effected, and shall contain the
following information:
(A) The date of the transaction, the title and the number
of shares or the principal amount of each security
involved;
(B) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(C) The price at which the transaction was effected;
(D) The name of the broker, dealer or bank with or
through whom the transaction was effected; and
(E) The date the report was signed.
(3) In the event no reportable transactions occurred during the
quarter, the report should be so noted and returned signed and
dated.
(4) An Access Person who would otherwise be required to report his
or her transactions under this Code shall not be required to
file reports pursuant to this Section VI where such person is
required to file reports pursuant to a code of ethics
described in Section VII, hereof.
(5) An Independent Trustee shall report transactions in Securities
only if the Trustee knew at the time of the transaction or, in
the ordinary course of fulfilling his or her official duties
as a Trustee, should have known, that during the 15 day period
immediately preceding or following the date of the
transaction, such security was purchased or sold, or was being
considered for purchase or sale, by any Fund of the Trust.
(The "should have known" standard implies no duty of inquiry,
does not presume there should have been any deduction or
extrapolation from discussions or memoranda dealing with
tactics to be employed meeting the Funds' investment
objectives, or that any knowledge is to be imputed because of
prior knowledge of the Funds' portfolio holdings, market
considerations, or the Trust's investment policies, objectives
and restrictions.)
(6) Any such report may contain a statement that the report shall
not be construed as an admission by the person making such
report that he has any direct or indirect beneficial ownership
in the security to which the report relates.
VI. REVIEW AND ENFORCEMENT.
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(1) The Review Officer shall compare all reported personal
securities transactions with completed portfolio transactions
of the Trust and a list of securities being considered for
purchase or sale by the Trust's adviser(s) to determine
whether a violation of this Code may have occurred. Before
making any determination that a violation has been committed
by any person, the Review Officer shall give such person an
opportunity to supply additional explanatory material.
(2) If the Review Officer determines that a violation of this Code
may have occurred, he or she shall submit his or her written
determination, together with the confidential monthly report
and any additional explanatory material provided by the
individual, to the President of the Trust and outside counsel,
who shall make an independent determination as to whether a
violation has occurred.
(3) If the President and outside counsel find that a violation has
occurred, the President shall impose upon the individual such
sanctions as he or she deems appropriate and shall report the
violation and the sanction imposed to the Board of Trustees of
the Trust.
(4) No person shall participate in a determination of whether he
or she has committed a violation of the Code or of the
imposition of any sanction against himself or herself. If a
securities transaction of the President is under
consideration, any Vice President shall act in all respects in
the manner prescribed herein for the President.
VII. INVESTMENT ADVISER'S, ADMINISTRATOR'S OR PRINCIPAL UNDERWRITER'S CODE
OF ETHICS.
(1) A person who is both a Fund Trustee and an Access Person of an
investment adviser or principal underwriter is only required to report
under and otherwise comply with the adviser's or principal
underwriter's code of ethics. [Note: While persons reporting under an
investment adviser's or principal underwriter's code are subject to
that code's requirements, they are still subject to the principles and
prohibitions contained herein at Sections I and III(1).]
(2) Each investment adviser (including, where applicable, any sub-adviser),
administrator or manager (where applicable), and principal underwriter
of the Trust shall:
(A) Submit to the Board of Trustees of the Trust a copy of its
code of ethics adopted pursuant to Rule 17j-1;
(B) Promptly report to the Trust in writing any material
amendments to such code of ethics;
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(C) Promptly furnish to the Trust upon request copies of any
reports made pursuant to such code of ethics by any person who
is an Access Person as to the Trust; and
(D) Shall immediately furnish to the Trust, without request, all
material information regarding any violation of such code of
ethics by any person who is an Access Person as to the Trust.
VIII. RECORDS.
The Trust shall maintain records in the manner and to the extent set
forth below, which records may be maintained under the conditions described in
Rule 31a-2 under the 1940 Act and shall be available for examination by
representatives of the Securities and Exchange Commission.
(1) A copy of this Code and any other code which is, or at any
time within the past five years has been, in effect shall be
preserved in an easily accessible place;
(2) A record of any violation of this Code and of any action taken
as a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
(3) A copy of each report made by an officer or Trustee pursuant
to this Code shall be preserved for a period of not less than
five years from the end of the fiscal year in which it is
made, the first two years in an easily accessible place;
(4) A list of all persons who are, or within the past five years
have been, required to make reports pursuant to this Code
shall be maintained in an easily accessible place; and
(5) A record of any decision, and the reasons supporting the
decision, to approve the acquisition of securities acquired in
an IPO or a Private Placement, for at least five years after
the end of the fiscal year in which the approval is granted.
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IX. MISCELLANEOUS
(1) Confidentiality. All reports of securities transactions and
any other information filed with the Trust pursuant to this
Code shall be treated as confidential.
(2) Interpretation of Provisions. The Boards of Trustees may from
time to time adopt such interpretations of this Code as it
deems appropriate.
(3) Periodic Review and Reporting. The President of the Trust
shall report to the Board of Trustees at least annually as to
the operation of this Code and shall address in any such
report the need (if any) for further changes or modifications
to this Code.
Adopted December 15, 1994
Revised August 13, 1998
Revised February 10, 2000
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Exhibit P(2)
FIRST HAWAIIAN BANK
INVESTMENT ADVISER
CODE OF ETHICS
ADOPTED AS OF OCTOBER 20, 1994
While affirming its confidence in the integrity and good faith of all
of its employees, officers and directors, First Hawaiian Bank recognizes that
the knowledge of present or future portfolio transactions and the power to
influence portfolio transactions made by or for Bishop Street Funds (the
"Trust") which may be possessed by certain of its personnel could place such
individuals, if they engage in personal transactions in securities which are
eligible for investment by the Trust, in a position where their personal
interest may conflict with that of the Trust.
In view of the foregoing and of the provisions of Rule 17j-1(b)(1)
under the Investment Company Act of 1940 (the "1940 Act"), First Hawaiian Bank
has determined to adopt this Code of ethics to specify and prohibit certain
types of transactions deemed to create conflicts of interest (or at least the
potential for or the appearance of such a conflict), and to establish reporting
requirements and enforcement procedures.
I. STATEMENT OF GENERAL PRINCIPLES.
In recognition of the trust and confidence placed in First Hawaiian
Bank by the Trust and its shareholders, and to give effect to First Hawaiian
Bank's belief that its operations should be directed to the benefit of the
Trust's shareholders First Hawaiian Bank hereby adopts the following general
principles to guide the actions of its employees, officers and directors:
(1) The interests of the Trust's shareholders are paramount, and
all of First Hawaiian Bank's personnel must conduct themselves
and their operations to give maximum effect to this tenet by
assiduously placing the interests of the shareholders before
their own.
(2) All personal transactions in securities by First Hawaiian
Bank's personnel must be accomplished so as to avoid even the
appearance of a conflict of interest on the part of such
personnel with the interests of the Trust and its
shareholders.
(3) All of First Hawaiian Bank's personnel must avoid actions or
activities that allow (or appear to allow) a person to profit
or benefit from his or her position with respect to the Trust,
or that otherwise bring into question the person's
independence or judgment.
II. DEFINITIONS.
(1) "Access Person" shall mean (i) each director or officer of
First Hawaiian Bank, (ii) each employee of First Hawaiian Bank
(or of any company in a control relationship to First Hawaiian
Bank), and (iii) any natural person in a control relationship
to First Hawaiian Bank, but only where such person, with
respect to the Trust, makes any recommendation, participates
in the determination of which
<PAGE> 2
recommendation shall be made, or whose principal function or
duties relate to the determination of which recommendation
shall be made by First Hawaiian Bank with respect to the
purchase or sale of a Security by the Trust, or where such
person, in connection with his or her duties, obtains any
information concerning Securities recommendations being made
by First Hawaiian Bank to the Trust.
(2) "Beneficial ownership" of a Security is to be determined in
the same manner as it is for purposes of Section 16 of the
Securities Exchange Act of 1934. This means that a person
should generally consider himself or herself the beneficial
owner of any Securities in which he or she has a direct or
indirect pecuniary interest. In addition, a person should
consider himself or herself the beneficial owner of Securities
held by his or her spouse, minor children, a relative who
shares his or her home, or other persons by reason of any
contract, arrangement, understanding or relationship that
provides him or her with sole or shared voting or investment
power.
(3) "Control" shall have the same meaning as that set forth in
Section 2(a)(9) of the 1940 Act. Section 2(a)(9) provides that
"control" means the power to exercise a controlling influence
over the management or policies of a company, unless such
power is solely the result of an official position with such
company. Ownership of 25% or more of a company's outstanding
voting Securities is presumed to give the holder thereof
control over the company. Such presumption may be countered by
the facts and circumstances of a given situation.
(4) "Investment Personnel" means all Access Persons who occupy the
position of portfolio manager (or who serve on an investment
committee that carries out the portfolio management function)
with respect to the Trust or any separately-managed series
thereof (a "Fund"), all Access Persons who provide or supply
information and/or advice to any portfolio manager (or
committee), or who execute or help execute any portfolio
manager's (or committee's) decisions, and all Access Persons
who, in connection with their regular functions, obtain
contemporaneous information regarding the purchase or sale of
a Security by or for the Trust.
(5) "Purchase or sale of a Security" includes, among other things,
the writing of an option to purchase or sell a Security.
(6) "Security" shall have the same meaning as that set forth in
Section 2(a)(36) of the 1940 Act, except that it shall not
include securities issued by the Government of the United
States or an agency thereof, bankers' acceptances, bank
certificates of deposit, commercial paper and registered,
open-end mutual funds.
(7) A "Security held or to be acquired" by the Trust (or any Fund)
means any Security which, within the most recent fifteen days,
(i) is or has been held by the Trust (or any Fund), or (ii) is
being or has been considered by First Hawaiian Bank for
purchase by the Trust (or any Fund).
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(8) A Security is "being purchased or sold" by the Trust from the
time when a purchase or sale program has been communicated to
the person who places the buy and sell orders for the Trust
until the time when such program has been fully completed or
terminated.
III. PROHIBITED PURCHASES AND SALES OF SECURITIES.
(1) No Access Person shall, in connection with the purchase or
sale, directly or indirectly, by such person of a Security
held or to be acquired by any Fund:
(A) employ any device, scheme or artifice to defraud such
Fund;
(B) make to such Fund any untrue statement of a material
fact or omit to state to such Fund a material fact
necessary in order to make the statements made, in
light of the circumstances under which they are made,
not misleading;
(C) engage in any act, practice or course of business
which would operate as a fraud or deceit upon such
Fund; or
(D) engage in any manipulative practice with respect to
such Fund.
(2) Subject to Section IV(2) or IV(3) of this Code, no Access
Person shall purchase or sell, directly or indirectly, any
Security in which he or she had or by reason of such
transaction acquires any Beneficial Ownership, within 24 hours
(7 days, in the case of Investment Personnel) before or after
the time that the same (or a related) Security is being
purchased or sold by any Fund.
(3) No Investment Personnel may acquire Securities as part of any
initial public offering by the issuer.
(4) No Investment Personnel may sell a Security within 60 days of
acquiring beneficial ownership of that Security.
IV. PRE-CLEARANCE OF TRANSACTIONS.
(1) Except as provided in Section IV(2), each Access Person must
pre-clear each proposed transaction in Securities with First
Hawaiian Bank's designated Review Officer prior to proceeding
with the transaction. No transaction in Securities may be
effected without the prior written approval of the Review
Officer. In determining whether to grant such clearance, the
Review Officer shall refer to Section IV(3), below.
(2) The requirements of Section IV(1) shall not apply to the
following transactions:
(A) Purchases or sales over which the Access Person has
no direct or indirect influence or control.
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(B) Purchases or sales which are non-volitional on the
part of either the Access Person or any Fund,
including purchases or sales upon exercise of puts or
calls written by the Access Person and sales from a
margin account pursuant to a bona fide margin call.
(C) Purchases which are part of an automatic dividend
reinvestment plan.
(D) Purchases effected upon the exercise of rights issued
by an issuer pro rata to all holders of a class of
its Securities, to the extent such rights were
acquired from such issuer.
(3) The following transactions shall be entitled to clearance from
the Review Officer:
(A) Transactions which appear upon reasonable inquiry and
investigation to present no reasonable likelihood of
harm to the Trust and which are otherwise in
accordance with Rule 17j-1. Such transactions would
normally include purchases or sales of up to 1,000
shares of a Security which is being considered for
purchase or sale by a Fund (but not then being
purchased or sold) if the issuer has a market
capitalization of over $1 billion.
(B) Purchases or sales of Securities which are not
eligible for purchase or sale by any Fund of the
Trust, as determined by reference to the Act and blue
sky laws and regulations thereunder, the investment
objectives and policies and investment restrictions
of the Trust and its series, undertakings made to
regulatory authorities.
(C) Transactions which the Senior Management Committee or
successor committee of senior executive officers of
First Hawaiian Bank as a group and after
consideration of all the facts and circumstances
determine to be in accordance with Section III and to
present no reasonable likelihood of harm to the
Trust.
V. ADDITIONAL RESTRICTIONS AND REQUIREMENTS.
(1) No Access Person shall accept or receive any gift of more than
de minimis value from any person or entity that does business
with or on behalf of First Hawaiian Bank or the Trust.
(2) No Investment Personnel may accept a position as a director,
trustee or general partner of a publicly-traded company or
partnership unless such position has been presented to and
approved by First Hawaiian Bank and by the Trust's Board of
Trustees as consistent with the interests of the Trust and its
shareholders.
(3) Each Access Person must direct each brokerage firm or bank at
which such person maintains a Securities account to promptly
send duplicate copies of such person's statement to the Review
Officer. Compliance with this provision can be effected by the
Access Person providing duplicate copies of all such
statements
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directly to the Review Officer within two business days of
receipt by the Access Persons.
(4) Each Access Person must provide to the Review Officer a
complete listing of all Securities owned by such person as of
June 30, 1994, and thereafter must submit a revised list of
such holdings to the Review Officer as of January 1 of each
subsequent year. The initial listing must be submitted no
later than January 1, 1995 (or within 10 days of the day upon
which such person first became an Access Person of the Trust),
and each update thereafter must be provided no later than 10
days after the start of the subsequent year.
VI. REPORTING OBLIGATION.
(1) First Hawaiian Bank shall create and thereafter maintain a
list of all Access Persons.
(2) Each Access Person shall report all transactions in Securities
in which the person has, or by reason of such transaction
acquires, any direct or indirect beneficial ownership. Reports
shall be filed with the Review Officer each quarter. The
Review Officer shall submit confidential quarterly reports
with respect to his or her own personal Securities
transactions to an officer designated to receive his or her
reports ("Alternate Review Officer"), who shall act in all
respects in the manner prescribed herein for the Review
Officer.
(3) Every report shall be made not later than 10 days after the
end of the calendar quarter in which the transaction to which
the report relates was effected, and shall contain the
following information:
(A) The date of the transaction, the title and the number
of shares or the principal amount of each Security
involved;
(B) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(C) The price at which the transaction was effected;
(D) The name of the broker, dealer or bank with or
through whom the transaction was effected; and
(E) The date the report was signed.
(4) Any such report may contain a statement that the report shall
not be construed as an admission by the person making such
report that he or she has any direct or indirect beneficial
ownership in the Security to which the report relates.
(5) Every Access Person shall report the name of any
publicly-owned company (or any company anticipating a public
offering of its equity securities) and the total
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number of its shares beneficially owned by him or her if such
total ownership is more than 1/2 of 1% of the company's
outstanding shares.
(6) In the event no reportable transactions occurred during the
quarter, the report should be so noted and returned signed and
dated.
VII. REVIEW AND ENFORCEMENT.
(1) The Review Officer shall compare all reported personal
Securities transactions with completed portfolio transactions
of the Trust and a list of Securities being considered for
purchase or sale by First Hawaiian Bank to determine whether a
violation of this Code may have occurred. Before making any
determination that a violation has been committed by any
person, the Review Officer shall give such person an
opportunity to supply additional explanatory material.
(2) If the Review Officer determines that a violation of this Code
may have occurred, he or she shall submit his or her written
determination, together with the confidential monthly report
and any additional explanatory material provided by the
individual, to the President of First Hawaiian Bank, who shall
make an independent determination as to whether a violation
has occurred.
(3) If the President finds that a violation has occurred, the
President shall impose upon the individual such sanctions as
he or she deems appropriate and shall report the violation and
the sanction imposed to the Board of Trustees of the Trust.
(4) No person shall participate in a determination of whether he
or she has committed a violation of the Code or of the
imposition of any sanction against himself or herself. If a
Securities transaction of the President is under
consideration, any Vice Chairman shall act in all respects in
the manner prescribed herein for the President.
VIII. RECORDS.
First Hawaiian Bank shall maintain records in the manner and to the
extent set forth below, which records shall be available for examination by
representatives of the Securities and Exchange Commission.
(1) A copy of this Code and any other code which is, or at any
time within the past five years has been, in effect shall be
preserved in an easily accessible place;
(2) A record of any violation of this Code and of any action taken
as a result of such violation shall be preserved in an easily
accessible place for a period of not less than five years
following the end of the fiscal year in which the violation
occurs;
(3) A copy of each report made by an officer or trustee pursuant
to this Code shall be preserved for a period of not less than
five years from the end of the fiscal year in which it is
made, the first two years in an easily accessible place; and
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(4) A list of all persons who are, or within the past five years
have been, required to make reports pursuant to this code
shall be maintained in an easily accessible place.
IX. MISCELLANEOUS.
(1) All reports of Securities transactions and any other
information filed with the Trust pursuant to this Code shall
be treated as confidential.
(2) First Hawaiian Bank may from time to time adopt such
interpretations of this Code as it deems appropriate.
(3) The President of First Hawaiian Bank shall report to First
Hawaiian Bank and to the Board of Trustees of the Trust at
least annually as to the operation of this Code and shall
address in any such report the need (if any) for further
changes or modifications to this Code.
(4) The Senior Trust Committee of First Hawaiian Bank is hereby
delegated and authorized to review and revise this Code of
Ethics from time to time as it deems necessary or appropriate
for compliance with all applicable laws, rules and
regulations.
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