AMERIPRIME FUNDS, 485APOS, 1997-03-31

AMERIPRIME FUNDS
485APOS, 1997-03-31

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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
--

Pre-Effective Amendment No. / /

Post-Effective Amendment No. 7 /X/

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT / /
OF 1940

Amendment No. 8 /X/

(Check appropriate box or boxes.)

AmeriPrime Funds - File Nos. 33-96826 and 811-9096

1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
- -------------------------------------------------------------------
(Address of Principal Executive Offices) Zip Code

Registrant's Telephone Number, including Area Code: (817) 431-2197

Kenneth Trumpfheller, 1793 Kingswood Drive, Suite 200, Southlake, Texas 76092
(Name and Address of Agent for Service)

With copy to:
Donald S. Mendelsohn, Brown, Cummins & Brown Co., L.P.A.
3500 Carew Tower, Cincinnati, Ohio 45202

Release Date: , 1995

It is proposed that this filing will become effective:

/ / immediately upon filing pursuant to paragraph (b)
/ / on ____________________ pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/X/ 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant continues its election made by the filing of its
Registration Statement, effective November 6, 1995, to register an indefinite
number and amount of its securities under Rule 24f-2 of the Investment Company
Act. Registrant filed, pursuant to paragraph b(1) of Rule 24f-2, a Form 24F-2
for the fiscal year ended October 31, 1996 on December 30, 1996.

<PAGE>

AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A

FOR CORBIN SMALL-CAP VALUE FUND

ITEM SECTION IN PROSPECTUS

1.............................. Cover Page
2.............................. Summary of Fund Expenses
3.............................. None
4.............................. The Fund, Investment Objective and
Strategies and Risk Considerations,
Investment Policies and Techniques,
Operation of the Fund, General
Information
5.............................. Operation of the Fund
5A............................. None
6.............................. Cover Page, Dividends and
Distributions, Taxes, Operation of
the Fund, General Information
7.............................. Cover Page, How to Invest in the
Fund, Share Price Calculation,
Operation of the Fund,
8.............................. How to Redeem Shares
9.............................. None
13.............................. General Information
15.............................. General Information

SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION

10.............................. Cover Page
11.............................. Table of Contents
12.............................. None
13.............................. Additional Information About Fund
Investments and Risk Considerations,
Investment Limitations
14.............................. Trustees and Officers
15.............................. None
16.............................. The Investment Adviser, Custodian,
Transfer Agent, Accountants
17.............................. Portfolio Transactions and Brokerage
18.............................. Description of the Trust
19.............................. Determination of Share Price
20.............................. None
21.............................. Distributor
22.............................. Investment Performance
23.............................. None

<PAGE>

AmeriPrime Funds
CROSS REFERENCE SHEET
FORM N-1A

FOR COMMONWEALTH BOND FUND AND COMMONWEALTH GROWTH FUND

ITEM SECTION IN COMBINED PROSPECTUS

1.............................. Cover Page
2.............................. Summary of Fund Expenses
3.............................. None
4.............................. The Funds, Investment Objective and
Strategies, Investment Policies and
Techniques, Risk Considerations,
Operation of the Funds, General
Information
5.............................. Operation of the Funds
5A............................. None
6.............................. Cover Page, Dividends and
Distributions, Taxes, Operation of
the Funds, General Information
7.............................. Cover Page, How to Invest in the
Funds, Share Price Calculation,
Operation of the Funds,
8.............................. How to Redeem Shares
9.............................. None
13.............................. General Information
15.............................. General Information

SECTION IN STATEMENT OF
ITEM ADDITIONAL INFORMATION

10.............................. Cover Page
11.............................. Table of Contents
12.............................. None
13.............................. Additional Information About Fund
Investments and Risk Considerations,
Investment Limitations
14.............................. Trustees and Officers
15.............................. None
16.............................. The Investment Advisor, Custodian,
Transfer Agent, Accountants
17.............................. Fund Transactions and Brokerage
18.............................. Description of the Trust
19.............................. Determination of Share Price
20.............................. None
21.............................. Distributor
22.............................. Investment Performance
23.............................. None

<PAGE>

PROSPECTUS_____________, 1997

CORBIN SMALL-CAP VALUE FUND

1320 S. University Drive
Suite 406
Fort Worth, Texas 76107

For Information, Shareholder Services and Requests:
(800) ______________

The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Fund's advisor, Corbin & Company (the "Advisor"), seeks to achieve this
objective by investing primarily in small capitalization stocks (those with
market capitalizations of $2 billion or less) selling at attractive valuations
versus the market. The Advisor believes its value-oriented approach will
mitigate risk while enhancing potential returns.

The Fund is "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. The Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.

This Prospectus provides the information a prospective investor ought
to know before investing and should be retained for future reference. A
Statement of Additional Information dated ___________, 1997 has been filed with
the Securities and Exchange Commission (the "SEC"), is incorporated herein by
reference, and can be obtained without charge by calling the Fund at the phone
number listed above. The SEC maintains a Web Site (http://www.sec.gov) that
contains the Statement of Additional Information, material incorporated by
reference, and other information regarding registrants that file electronically
with the SEC.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

SUMMARY OF FUND EXPENSES

The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.

Shareholders should be aware that the Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Fund. In addition, the Fund does not
charge a 12b-1 fee. Unlike most other mutual funds, the Fund does not pay
directly for transfer agency, pricing, custodial, auditing or legal services,
nor does it pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of the Fund except
brokerage, taxes, interest, fees and expenses of non-interested person trustees
and extraordinary expenses.
<TABLE>
<S> <C>

SHAREHOLDER TRANSACTION EXPENSES

Sales Load Imposed on Purchases.............................NONE
Sales Load Imposed on Reinvested Dividends..................NONE
Deferred Sales Load.........................................NONE
Redemption Fees.............................................NONE
Exchange Fees...............................................NONE

ANNUAL FUND OPERATING EXPENSES (as a percentage
of average net assets)(1)

Management Fees............................................1.25%
12b-1 Charges...............................................NONE
Other Expenses(2)..........................................0.00%
Total Fund Operating Expenses..............................1.25%
<FN>

1 The Fund's total operating expenses are equal to the management fee paid
to the Advisor because the Advisor pays all of the Fund's operating
expenses (except as described in footnote 2).

2 The Fund estimates that other expenses (fees and expenses of the trustees
who are not "interested persons" as defined in the Investment Company Act)
will be less than .001% of average net assets for the first fiscal year.
</FN>
</TABLE>

The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
the Fund.

Example

You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:

1 Year 3 Years
------ -------
$13 $40

<PAGE>

THE FUND

Corbin Small-Cap Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds, an Ohio business trust (the "Trust"), on ___________, 1997,
and commenced operations on ___________, 1997. This prospectus offers shares of
the Fund and each share represents an undivided, proportionate interest in the
Fund. The investment advisor to the Fund is Corbin & Company (the "Advisor").

INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS

The investment objective of the Corbin Small-Cap Value Fund (the
"Fund") is to provide long term capital appreciation to its shareholders. The
Advisor seeks to achieve this objective by investing primarily in small
capitalization stocks (those with market capitalizations of $2 billion or less)
selling at attractive valuations versus the market. The Advisor believes its
value-oriented approach will mitigate risk while enhancing potential returns.

The Advisor selects securities using a model known as the value score.
A security's value score is determined by a formula that consists of three
variables: the security's five-year estimated earnings growth rate, its dividend
yield, and its price/earnings ratio based on the current year's estimated
earnings. Securities with value scores 50% greater than the market are
considered candidates for purchase. They are then analyzed based on five
additional factors: management, financial position, long-term industry
fundamentals, contrarianism, and complexity of business. The Advisor selects
securities with the intention of holding them for 3 to 5 years, during which
time the Advisor believes they will reach their full value.

The Advisor generally plans to stay fully invested (subject to
liquidity requirements) in common stocks, preferred stocks, and common stock
equivalents (such as securities convertible into common stocks), regardless of
price movements. The Fund may also invest up to 5% of its assets in foreign
companies meeting its investment criteria. For temporary defensive purposes
under abnormal market or economic conditions, the Fund may hold all or a portion
of its assets in money market instruments, securities of other no-load
registered investment companies or U.S. government repurchase agreements. The
Fund may also invest in such instruments at any time to maintain liquidity or
pending selection of investments in accordance with its policies. If the Fund
acquires securities of another investment company, the shareholders of the Fund
will be subject to additional management fees.

By investing primarily in small capitalization companies, the Fund will
be subject to the risks associated with such companies. Smaller capitalization
companies may experience higher growth rates and higher failure rates than do
larger capitalization companies. Companies in which the Fund is likely to invest
may have limited product lines, markets or financial resources and may lack
management depth. The trading volume of securities of smaller capitalization
companies is normally less than that of larger capitalization companies, and,
therefore, may disproportionately affect their market price, tending to make
them rise more in response to buying demand and fall more in response to selling
pressure than is the case with larger capitalization companies. The Advisor
seeks to reduce risk by having at least twenty different securities in the
portfolio; however, substantial concentrations in economic sectors might occur,
and some issues may have liquidity concerns.

As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, the Fund cannot give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund and the Fund has no
operating history. Rates of total return quoted by the Fund may be higher or
lower than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques and Risk
Considerations" for a more detailed discussion of the Fund's investment
practices.

HOW TO INVEST IN THE FUND

The Fund is "no-load" and shares of the Fund are sold directly to
investors on a continuous basis, subject to a minimum initial investment of
$2,000 and minimum subsequent investments of $50. These minimums may be waived
by the Advisor for accounts participating in an automatic investment program.
Investors choosing to purchase or redeem their shares through a securities
dealer or broker/dealer may be charged a fee by that institution. Investors
choosing to purchase or redeem shares directly from the Fund will not incur
charges on purchases or redemptions.

<PAGE>

INITIAL PURCHASE

BY MAIL - You may purchase shares of the Fund by completing and signing
the investment application form which accompanies this Prospectus and mailing
it, in proper form, together with a check (subject to the above minimum amounts)
made payable to Corbin Small-Cap Value Fund, and sent to the address listed
below.

Mail or Overnight to:
Corbin Small-Cap Value Fund
c/o American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11760

Your purchase of shares of the Fund will be effected at the next share
price calculated after receipt of your investment.

BY WIRE - You may also purchase shares of the Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-___-____ to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:

Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
Attn: Corbin Small-Cap Value Fund
D.D.A. # __________________
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)

You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Fund, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Fund. Any delays which may
occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Fund or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Fund.

ADDITIONAL INVESTMENTS

You may purchase additional shares of the Fund at any time (subject to
minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to Corbin Small-Cap Value Fund and should be sent to the address
listed above. A bank wire should be sent as outlined above.

AUTOMATIC INVESTMENT PLAN

You may make regular investments in the Fund with an Automatic
Investment Plan by completing the appropriate section of the account application
and attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $50 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.

TAX SHELTERED RETIREMENT PLANS

Since the Fund is oriented to longer term investments, shares of the
Fund may be an appropriate investment medium for tax sheltered retirement plans,
including: individual retirement plans (IRAs); simplified employee pensions
(SEPs); 401(k) plans; qualified corporate pension and profit sharing plans (for
employees); tax deferred investment plans (for employees of public school
systems and certain types of charitable organizations); and other qualified

<PAGE>

retirement plans. You should contact the Transfer Agent for the procedure to
open an IRA or SEP plan, as well as more specific information regarding these
retirement plan options. Consultation with an attorney or tax advisor regarding
these plans is advisable. Custodial fees for an IRA will be paid by the
shareholder by redemption of sufficient shares of the Fund from the IRA unless
the fees are paid directly to the IRA custodian. You can obtain information
about the IRA custodial fees from the Transfer Agent.

OTHER PURCHASE INFORMATION

Dividends begin to accrue after you become a shareholder. The Fund does
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Fund and the Fund's Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Fund. If your check or wire
does not clear, you will be responsible for any loss incurred by the Fund. If
you are already a shareholder, the Fund can redeem shares from any identically
registered account in the Fund as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Fund.

HOW TO REDEEM SHARES

All redemptions will be made at the net asset value determined after
the redemption request has been received by the Transfer Agent in proper order.
Shareholders may receive redemption payments in the form of a check or federal
wire transfer. The proceeds of the redemption may be more or less than the
purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Fund reserves the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a securities dealer may be charged a fee by that institution.

BY MAIL - You may redeem any part of your account in the Fund at no
charge by mail. Your request should be addressed to:

Corbin Small-Cap Value Fund
c/o American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11760

"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the Fund
requires that signatures be guaranteed by a bank or member firm of a national
securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of the Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.

BY TELEPHONE - You may redeem any part of your account in the Fund by
calling the Transfer Agent at (800) ___-____. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Fund, the Transfer Agent and the Custodian are not
liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.

The telephone redemption and exchange procedures may be terminated at
any time by the Fund or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Fund, although neither the Fund nor the Transfer Agent has ever
experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Fund by telephone, you may request a redemption or exchange by mail.

<PAGE>

ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Fund may suspend redemptions or
postpone payment dates.

Because the Fund incurs certain fixed costs in maintaining shareholder
accounts, the Fund reserves the right to require any shareholder to redeem all
of his or her shares in the Fund on 30 days' written notice if the value of his
or her shares in the Fund is less than $2,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in the Fund to the minimum amount within the 30 day
period. Each share of the Fund is subject to redemption at any time if the Board
of Trustees determines in its sole discretion that failure to so redeem may have
materially adverse consequences to all or any of the shareholders of the Fund.

SHARE PRICE CALCULATION

The value of an individual share in the Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.

Securities which are traded on any exchange or on the NASDAQ
over-the-counter market are valued at the last quoted sale price. Lacking a last
sale price, a security is valued at its last bid price except when, in the
Advisor's opinion, the last bid price does not accurately reflect the current
value of the security. All other securities for which over-the-counter market
quotations are readily available are valued at their last bid price. When market
quotations are not readily available, when the Advisor determines the last bid
price does not accurately reflect the current value or when restricted
securities are being valued, such securities are valued as determined in good
faith by the Advisor, subject to review of the Board of Trustees of the Trust.

Fixed income securities generally are valued by using market
quotations, but may be valued on the basis of prices furnished by a pricing
service when the Advisor believes such prices accurately reflect the fair market
value of such securities. A pricing service utilizes electronic data processing
techniques based on yield spreads relating to securities with similar
characteristics to determine prices for normal institutional-size trading units
of debt securities without regard to sale or bid prices. When prices are not
readily available from a pricing service, or when restricted or illiquid
securities are being valued, securities are valued at fair value as determined
in good faith by the Advisor, subject to review of the Board of Trustees. Short
term investments in fixed income securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
by using the amortized cost method of valuation, which the Board has determined
will represent fair value.

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.

<PAGE>

business days after the payable date. If you withdraw your entire account, all
dividends accrued to the time of withdrawal, including the day of withdrawal,
will be paid at that time. You may elect to have distributions on shares held in
IRAs and 403(b) plans paid in cash only if you are 59 1/2 years old or
permanently and totally disabled or if you otherwise qualify under the
applicable plan.

TAXES

The Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended. By so qualifying,
the Fund will not be subject to federal income taxes to the extent that it
distributes substantially all of its net investment income and any realized
capital gains.

For federal income tax purposes, dividends paid by the Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
capital gains to individuals are taxed at the same rate as ordinary income. All
distributions of net capital gains to corporations are taxed at regular
corporate rates. Any distributions designated as being made from net realized
long term capital gains are taxable to shareholders as long term capital gains
regardless of the holding period of the shareholder.

The Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from the Fund.

On the application or other appropriate form, the Fund will request the
shareholder's certified taxpayer identification number (social security number
for individuals) and a certification that the shareholder is not subject to
backup withholding. Unless the shareholder provides this information, the Fund
will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, the Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the Fund may
make a corresponding charge against the account.

OPERATION OF THE FUND

The Fund is a diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Fund. Like
other mutual funds, the Fund retains various organizations to perform
specialized services. The Fund retains Corbin & Company, 1320 S. University
Drive, Suite 406, Fort Worth, Texas 76107 (the "Advisor") to manage the assets
of the Fund. The Advisor, a Texas corporation, is a Fort Worth based independent
investment advisor founded in 1992 and controlled by David A. Corbin, CFA. The
Advisor currently manages over $150 million in assets and specializes in the
management of assets for clients seeking a value-oriented, contrarian investment
style, including individual investors, personal trusts, all types of tax-exempt
organizations and ERISA plans, such as foundations, endowments, defined benefit
plans, defined contribution plans and union plans. David A. Corbin is President
and Chief Investment Officer of the Advisor, and is primarily responsible for
the day-to-day management of the Fund's portfolio. Prior to founding Corbin &
Company, Mr. Corbin was a trust investment portfolio manager with
Ameritrust/Mtrust, where his responsibilities included investment analysis and
investment oversight for personal trust accounts, employee benefit plans, and
endowments. He was also the Portfolio Manager of the William C. Conner
Foundation at Texas Christian University, where he received his Bachelor of
Science degree in Economics. Mr. Corbin has been published and quoted on a
variety of investment management topics in such publications as The Wall Street
Journal and The Wall Street Transcript, and is a Chartered Financial Analyst
(CFA).

The Fund is authorized to pay the Advisor a fee equal to an annual
average rate of 1.25% of its average daily net assets. The Advisor pays all of
the operating expenses of the Fund except brokerage, taxes, interest, fees and
expenses of non-interested person trustees and extraordinary expenses. In this
regard, it should be noted that most investment companies pay their own
operating expenses directly, while the Fund's expenses, except those specified
above, are paid by the Advisor.

<PAGE>

The Fund retains AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Fund's business affairs and provide the Fund with
administrative services, including all regulatory reporting and necessary office
equipment, personnel and facilities. The Administrator receives a monthly fee
from the Fund equal to an annual average rate of 0.10% of the Fund's average
daily net assets up to fifty million dollars, 0.075% of the Fund's average daily
net assets from fifty to one hundred million dollars and 0.050% of the Fund's
average daily net assets over one hundred million dollars (subject to a minimum
annual payment of $30,000). In addition, the Advisor will reimburse the
Administrator for organizational expenses advanced by the Administrator. The
Fund retains American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11760 (the "Transfer Agent") to serve as transfer agent,
dividend paying agent and shareholder service agent. The Trust retains
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of the Fund's shares. Kenneth D. Trumpfheller, officer and sole shareholder of
the Administrator and the Distributor, is an officer and trustee of the Trust.
The services of the Administrator, Transfer Agent and Distributor are operating
expenses paid by the Advisor.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
the Fund as a factor in the selection of brokers and dealers to execute
portfolio transactions.

INVESTMENT POLICIES AND TECHNIQUES

This section contains general information about various types of
securities and investment techniques that the Fund may purchase or employ.

EQUITY SECURITIES. Equity securities consist of common stock, preferred
stock and common stock equivalents (such as convertible preferred stock, rights
and warrants). Common stocks, the most familiar type, represent an equity
(ownership) interest in a corporation. Warrants are options to purchase equity
securities at a specified price for a specific time period. Rights are similar
to warrants, but normally have a short duration and are distributed by the
issuer to its shareholders. Although equity securities have a history of
long-term growth in value, their prices fluctuate based on changes in a
company's financial condition and on overall market and economic conditions.
Equity securities also include common stocks and common stock equivalents of
domestic real estate investment trusts and other companies which operate as real
estate corporations or which have a significant portion of their assets in real
estate. The Fund will not acquire any direct ownership of real estate.

The Fund may invest in foreign equity securities, including, but not
limited to, the purchase of American Depository Receipts. American Depository
Receipts are dollar-denominated receipts that are generally issued in registered
form by domestic banks, and represent the deposit with the bank of a security of
a foreign issuer. To the extent that the Fund does invest in foreign securities,
such investments may be subject to special risks, such as changes in
restrictions on foreign currency transactions and rates of exchange, and changes
in the administrations or economic and monetary policies of foreign governments.
The Fund will not invest more than 5% of its net assets at the time of purchase
in foreign securities.

CONVERTIBLE SECURITIES. A convertible security is a bond or preferred
stock which may be converted at a stated price within a specific period of time
into a specified number of shares of common stock of the same or different
issuer. Convertible securities are senior to common stock in a corporation's
capital structure, but usually are subordinated to non-convertible debt
securities. While providing a fixed income stream generally higher in yield than
in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.

In general, the market value of a convertible security is the higher of
its investment value (its value as a fixed income security) or its conversion
value (the value of the underlying shares of common stock if the security is
converted). As a fixed income security, the market value of a convertible
security generally increases when interest rates decline and generally decreases
when interest rates rise; however, the price of a convertible security generally
increases as the market value of the underlying stock increases, and generally
decreases as the market value of the underlying stock declines. Investments in
convertible securities generally entail less risk than investments in the common
stock of the same issuer.

<PAGE>

PREFERRED STOCK. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, for example common
stock, at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for a Fund. The Advisor expects, however, that generally the
preferred stocks in which a Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.

REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements
fully collateralized by U.S. Government obligations. A repurchase agreement is a
short-term investment in which the purchaser (i.e., the Fund) acquires ownership
of a U.S. Government obligation (which may be of any maturity) and the seller
agrees to repurchase the obligation at a future time at a set price, thereby
determining the yield during the purchaser's holding period (usually not more
than seven days from the date of purchase). Any repurchase transaction in which
the Fund engages will require full collateralization of the seller's obligation
during the entire term of the repurchase agreement. In the event of a bankruptcy
or other default of the seller, the Fund could experience both delays in
liquidating the underlying security and losses in value. However, the Fund
intends to enter into repurchase agreements only with Star Bank, N.A. (the
Fund's Custodian), other banks with assets of $1 billion or more and registered
securities dealers determined by the Advisor (subject to review by the Board of
Trustees) to be creditworthy. The Advisor monitors the creditworthiness of the
banks and securities dealers with which the Fund engages in repurchase
transactions.

GENERAL. The Fund may invest up to 5% of its net assets at the time of
purchase in each of the following financial services industry obligations:
certificates of deposit, time deposits and banker's acceptances. The Statement
of Additional Information provides information about these securities. The Fund
may also invest up to 5% of its net assets in illiquid securities, including
repurchase agreements maturing in more than seven days.

GENERAL INFORMATION

FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
Fund. The investment objective of the Fund may be changed without the
affirmative vote of a majority of the outstanding shares of the Fund. Any such
change may result in the Fund having an investment objective different from the
objective which the shareholders considered appropriate at the time of
investment in the Fund.

PORTFOLIO TURNOVER. The Fund does not intend to purchase or sell
securities for short term trading purposes. However, if the objectives of the
Fund would be better served, short-term profits or losses may be realized from
time to time. It is anticipated that the Fund will hold most securities from 1
to 5 years at a time and that portfolio turnover will average less than ____%.

SHAREHOLDER RIGHTS. Any Trustee of the Trust may be removed by vote of
the shareholders holding not less than two-thirds of the outstanding shares of
the Trust. The Trust does not hold an annual meeting of shareholders. When
matters are submitted to shareholders for a vote, each shareholder is entitled
to one vote for each whole share he owns and fractional votes for fractional
shares he owns. All shares of the Fund have equal voting rights and

<PAGE>

liquidation rights. Prior to the offering made by this Prospectus, ____________
purchased for investment all of the outstanding shares of the Fund. As a result,
______________ may be deemed to control the Fund.

PERFORMANCE INFORMATION

The Fund may periodically advertise "average annual total return." The
"average annual total return" of the Fund refers to the average annual
compounded rate of return over the stated period that would equate an initial
amount invested at the beginning of a stated period to the ending redeemable
value of the investment. The calculation of "average annual total return"
assumes the reinvestment of all dividends and distributions.

The Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for the Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.

The Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index or the Dow Jones Industrial Average.

The advertised performance data of the Fund is based on historical
performance and is not intended to indicate future performance. Rates of total
return quoted by the Fund may be higher or lower than past quotations, and there
can be no assurance that any rate of total return will be maintained. The
principal value of an investment in the Fund will fluctuate so that a
shareholder's shares, when redeemed, may be worth more or less than the
shareholder's original investment.

INVESTMENT ADVISOR ADMINISTRATOR
Corbin & Company AmeriPrime Financial Services, Inc.
1320 S. University Drive, Suite 406 1793 Kingswood Drive, Suite 200
Fort Worth, Texas 76107 Southlake, Texas 76092

CUSTODIAN DISTRIBUTOR
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
P.O. Box 1118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45201 Southlake, Texas 76092

<PAGE>

TRANSFER AGENT (ALL PURCHASES AND INDEPENDENT AUDITORS
ALL REDEMPTION REQUESTS) McCurdy & Associates CPA's, Inc.
American Data Services, Inc. 27955 Clemens Road
Hauppauge Corporate Center Westlake, Ohio 44145
150 Motor Parkway
Hauppauge, NY 11760

No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
the Fund. This Prospectus does not constitute an offer by the Fund to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.

<PAGE>

TABLE OF CONTENTS

Page

SUMMARY OF FUND EXPENSES............................................. 1

Shareholder Transaction Expenses............................. 1
Annual Fund Operating Expenses............................... 1

THE FUND ............................................................. 2

INVESTMENT OBJECTIVE AND STRATEGIES AND RISK CONSIDERATIONS........... 2

HOW TO INVEST IN THE FUND............................................. 2

Initial Purchase............................................. 3
Additional Investments....................................... 3
Automatic Investment Plan.................................... 3
Tax Sheltered Retirement Plans............................... 3
Other Purchase Information................................... 4

HOW TO REDEEM SHARES.................................................. 4

By Mail .................................................... 4
By Telephone................................................. 4
Additional Information....................................... 5

SHARE PRICE CALCULATION............................................... 5

DIVIDENDS AND DISTRIBUTIONS........................................... 5

TAXES ............................................................. 6

OPERATION OF THE FUND................................................. 6

INVESTMENT POLICIES AND TECHNIQUES ................................... 7

Equity Securities............................................ 7
Convertible Securities....................................... 7
Preferred Stock.............................................. 8
Repurchase Agreements........................................ 8
General .................................................... 8

GENERAL INFORMATION................................................... 8

Fundamental Policies......................................... 8
Portfolio Turnover........................................... 8
Shareholder Rights........................................... 8

PERFORMANCE INFORMATION............................................... 9

<PAGE>

COMMONWEALTH ADVISOR FUNDS

PROSPECTUS _____________, 1997

247 Florida Street
Baton Rouge, LA 70801

For Information, Shareholder Services and Requests:
(800) ______________

COMMONWEALTH BOND FUND. The investment objective of the CommonWealth
Bond Fund is to provide total return to its shareholders over the long term. The
Fund's investment advisor, CommonWealth Advisors, Inc. (the "Advisor"), seeks to
achieve this objective by investing primarily in a portfolio of high yield,
non-investment grade securities issued in many of the world's securities
markets. Under normal circumstances, the Fund will invest at least 65% of its
net assets in bonds and other fixed income investments, and thus it is expected
that the Fund will generate a high level of current income. However, the Advisor
will also consider the potential for capital appreciation in making investments
for the Fund's portfolio, and may invest in preferred stock, convertible bonds
and other securities (including equity securities) without regard to yield
characteristics.

COMMONWEALTH GROWTH FUND. The investment objective of the CommonWealth
Growth Fund is to provide total return to its shareholders over the long term.
The Advisor seeks to achieve this objective by investment primarily in a
portfolio of equity securities that the Advisor believes are undervalued by the
market place. However, the Fund may also invest in bonds and other fixed income
securities that the Advisor believes are consistent with the Fund's objective.

The Funds are "no-load," which means that investors incur no sales
charges, commissions or deferred sales charges on the purchase or redemption of
their shares. Each Fund is one of the mutual funds comprising AmeriPrime Funds,
an open-end management investment company, distributed by AmeriPrime Financial
Securities, Inc.

The CommonWealth Bond Fund may invest up to 100% of its assets in
non-investment grade securities, commonly known as "junk bonds," that entail
greater risks, including default risks, than those found in investment grade
securities. The CommonWealth Growth Fund may also invest in junk bonds.
Investors should carefully consider these risks before investing. See
"Investment Objective and Strategies," page ____; "Risk Considerations, page
______; and "Investment Policies and Techniques," page _______.

<PAGE>

SUMMARY OF FUND EXPENSES

The tables below are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund. The expense information is based on estimated amounts for the current
fiscal year. The expenses are expressed as a percentage of average net assets.
The Example should not be considered a representation of future Fund performance
or expenses, both of which may vary.

Shareholders should be aware that each Fund is a no-load fund and,
accordingly, a shareholder does not pay any sales charge or commission upon
purchase or redemption of shares of the Funds. In addition, the Funds do not
have a 12b-1 Plan. Unlike most other mutual funds, neither Fund pays directly
for transfer agency, pricing, custodial, auditing or legal services, nor does
either Fund pay directly any general administrative or other significant
operating expenses. The Advisor pays all of the expenses of each Fund except
brokerage, taxes, interest, fees and expenses of non-interested person
trustees and extraordinary expenses.

<PAGE>

SHAREHOLDER TRANSACTION EXPENSES COMMONWEALTH COMMONWEALTH EQUITY
INCOME FUND FUND

Sales Load Imposed on Purchases NONE NONE
Sales Load Imposed on Reinvested Dividends NONE NONE
Deferred Sales Load NONE NONE
Redemption Fees NONE NONE
Exchange Fees NONE NONE

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees 1.10% 1.35%
12b-1 Charges NONE NONE
Other Expenses 0.00% 0.00%
Total Fund Operating Expenses 1.10% 1.35%

<FN>

1 Each Fund's total operating expenses are equal to the management fee
paid to the Advisor because the Advisor pays all of the Fund's
operating expenses (except as described in footnote 2).

2 Each Fund estimates that other expenses (fees and expenses of the
trustees who are not "interested persons" as defined in the Investment
Company Act) will be less than of .001% of average net assets for the
first fiscal year.
</FN>
</TABLE>

The tables above are provided to assist an investor in understanding
the direct and indirect expenses that an investor may incur as a shareholder in
each Fund.

Example

You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:

1 Year 3 Years
------ -------
CommonWealth Income Fund $11 $35
CommonWealth Equity Fund $14 $43
</TABLE>

THE FUNDS

CommonWealth Bond Fund and CommonWealth Growth Fund (each a "Fund" or
collectively the "Funds") were organized as non-diversified series of AmeriPrime
Funds, an Ohio business trust (the "Trust"), on ___________, 1997, and commenced
operations on ___________, 1997. This prospectus offers shares of each Fund and
each share

-2-

<PAGE>

represents an undivided, proportionate interest in a Fund. The
investment advisor to each Fund is CommonWealth Advisors, Inc. (the "Advisor").
The Funds are referred to, and may conduct business as, the "CommonWealth
Advisor Funds."

INVESTMENT OBJECTIVE AND STRATEGIES

COMMONWEALTH BOND FUNd

The investment objective of the CommonWealth Bond Fund is to provide
total return to its shareholders over the long term. The Advisor seeks to
achieve this objective by investing primarily in a portfolio of high yield,
non-investment grade securities issued in many of the world's securities
markets. Under normal circumstances, the Fund will invest at least 65% of its
net assets in bonds and other fixed income investments, and thus it is expected
that the Fund will generate a high level of current income. However, the Advisor
will also consider the potential for capital appreciation in making investments
for the Fund's portfolio, and may invest in preferred stock, convertible bonds
and other securities (including equity securities) without regard to yield
characteristics.

The Fund intends to invest in Brady bonds and other sovereign debt and
in high risk, lower quality debt securities commonly referred to as "junk
bonds", as well as in the debt securities of issuers located in emerging
markets. Junk bonds are regarded as predominantly speculative with respect to
the issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligation. It is anticipated that the Fund's assets will
primarily be invested in high yield, non-investment grade debt securities of
both governmental and corporate issuers in both the major industrialized markets
and the so-called "emerging markets." The use of junk bonds, foreign
securities (particularly from emerging markets) and certain other investments
and investment techniques will subject the Fund to greater risk than is typical
for most bond funds. There also is additional risk because the Fund is
non-diversified. See "Investment Policies and Techniques" and "Risk
Considerations".

The Fund generally invests in securities which are rated BB or lower by
S&P or Baa or lower by Moody's or, if unrated, of comparable quality in the
opinion of the Advisor. Securities which are rated BB by S&P or Baa by Moody's
possess some speculative characteristics. A description of the rating categories
is contained in the Appendix herein. There is no lower limit with respect to the
rating categories for securities in which the Fund may invest. See "Risk
Factors: Risks of Investing In High Yield Securities ("Junk Bonds") herein.

The Fund is not required to dispose of debt securities whose credit
quality declines at some point after the security is purchased; however, no more
than 25% of the Fund's assets will be invested at any time in securities rated
less than CCC by S&P or Caa by Moody's or, if unrated, of comparable quality in
the opinion of the Advisor. S&P's lowest rating for bonds is CI, which is
reserved for income bonds on which no interest is being paid, and D, which is
reserved for debt in default and in respect of which payment of interest or
repayment of principal is in arrears. Moody's lowest rating is C, which is
applied to bonds which have extremely poor prospects for ever attaining any real
investment standing. The Fund may, from time to time, purchase defaulted debt
securities if, in the opinion of the Advisor, the issuer may resume interest
payments in the near future. The Fund will not invest more than 15% of its total
assets (at the time of purchase) in defaulted debt securities, which may be
illiquid. Other than as set forth above, there is no restriction on the
percentage of the Fund's assets which may be invested in bonds of a particular
rating.

The Fund invests in debt obligations allocated among diverse markets
and denominated in various currencies, including multi-currency units such as
European Currency Units. The Fund may purchase securities that are issued by the
government or a company or financial institution of one country but denominated
in the currency (or multi- currency unit) of another country.

COMMONWEALTH GROWTH FUND

The investment objective of the CommonWealth Growth Fund is to provide
total return to its shareholders over the long term. The Advisor seeks to
achieve this objective by investment primarily in a portfolio of equity
securities that the Advisor believes are undervalued by the market place.
However, the Fund may also invest in bonds and other fixed income securities
that the Advisor believes are consistent with the Fund's objective. Certain
investments eligible for purchase by the Fund entail risks. There also is
additional risk because the Fund is non-diversified. See "Investment Policies
and Techniques" and "Risk Considerations".

-3-
<PAGE>

In searching for investments for the Fund, the Advisor employs a "value
style" that focuses on a low current price relative to the Advisor's view
regarding long-term future value. The Advisor gauges the ability of a company to
build long-term value while minimizing long-term investment risk, assesses the
quality and quantity of a company's resources, and estimates how those resources
might be converted into earnings over time.

GENERAL

For temporary defensive purposes under abnormal market or economic
conditions, either Fund may hold all or a portion of its assets in money market
instruments, securities of other no-load registered investment companies or U.S.
government repurchase agreements. Either Fund may also invest in such
instruments at any time to maintain liquidity or pending selection of
investments in accordance with its policies. If a Fund acquires securities of
another investment company, the shareholders of the Fund will be subject to
additional management fees.

As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, neither Fund can give any assurance that its investment objective
will be achieved. In addition, it should be noted that the Advisor has not
previously managed assets organized as a mutual fund, and the Funds have no
operating history. Rates of total return quoted by a Fund may be higher or lower
than past quotations, and there can be no assurance that any rate of total
return will be maintained. See "Investment Policies and Techniques" and
"Risk Considerations" for a more detailed discussion of each Fund"s
investment practices and the risks involved in such practices.

HOW TO INVEST IN THE FUNDS

Each Fund is "no-load" and shares of each Fund are sold directly to
investors on a continuous basis, subject to the following minimums: minimum
initial investment of $1,000 and minimum subsequent investments of $100. These
minimums may be waived by the Advisor for accounts participating in an automatic
investment program. Investors choosing to purchase or redeem their shares
through a securities dealer or broker/dealer may be charged a fee by that
institution. Investors choosing to purchase or redeem shares directly from the
Funds will not incur charges on purchases or redemptions.

INITIAL PURCHASE

BY MAIL - You may purchase shares of each Fund by completing and
signing the investment application form which accompanies this Prospectus and
mailing it, in proper form, together with a check (subject to the above minimum
amounts) made payable to CommonWealth Advisors Funds, and sent to the address
listed below.

Mail or Overnight to:
CommonWealth Advisor Funds
c/o American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11760

Please identify the Fund(s) in which you wish to invest. Your purchase of shares
of a Fund will be effected at the next share price calculated after receipt of
your investment.

BY WIRE - You may also purchase shares of a Fund by wiring federal
funds from your bank, which may charge you a fee for doing so. If money is to be
wired, you must call the Transfer Agent at 800-___-____ to set up your account
and obtain an account number. You should be prepared at that time to provide the
information on the application. Then, you should provide your bank with the
following information for purposes of wiring your investment:

Star Bank, N.A. Cinti/Trust
ABA #0420-0001-3
for CommonWealth Income Fund D.D.A. # __________________
for CommonWealth Equity Fund D.D.A. # __________________
Account Name _________________ (write in shareholder name)
For the Account # ______________ (write in account number)

-4-

<PAGE>

You are required to mail a signed application to the Custodian at the
above address in order to complete your initial wire purchase. Wire orders will
be accepted only on a day on which the Funds, Custodian and Transfer Agent are
open for business. A wire purchase will not be considered made until the wired
money is received and the purchase is accepted by the Funds. Any delays which
may occur in wiring money, including delays which may occur in processing by the
banks, are not the responsibility of the Funds or the Transfer Agent. There is
presently no fee for the receipt of wired funds, but the right to charge
shareholders for this service is reserved by the Funds.

ADDITIONAL INVESTMENTS

You may purchase additional shares of either Fund at any time (subject
to minimum investment requirements) by mail, wire, or automatic investment. Each
additional mail purchase request must contain your name, the name of your
account(s), your account number(s), and the name of the Fund. Checks should be
made payable to CommonWealth Advisors Funds and should be sent to the above
listed address. A bank wire should be sent as outlined above.

AUTOMATIC INVESTMENT PLAN

You may make regular investments in a Fund with an Automatic Investment
Plan by completing the appropriate section of the account application and
attaching a voided personal check. Investments may be made monthly to allow
dollar-cost averaging by automatically deducting $100 or more from your bank
checking account. You may change the amount of your monthly purchase at any
time.

TAX SHELTERED RETIREMENT PLANS

Since the Funds are oriented to longer term investments, shares of the
Funds may be an appropriate investment medium for tax sheltered retirement
plans, including: individual retirement plans (IRAs); simplified employee
pensions (SEPs); 401(k) plans; qualified corporate pension and profit sharing
plans (for employees); tax deferred investment plans (for employees of public
school systems and certain types of charitable organizations); and other
qualified retirement plans. You should contact the Transfer Agent for the
procedure to open an IRA or SEP plan, as well as more specific information
regarding these retirement plan options. Consultation with an attorney or tax
advisor regarding these plans is advisable. Custodial fees for an IRA will be
paid by the shareholder by redemption of sufficient shares of the Funds from the
IRA unless the fees are paid directly to the IRA custodian. You can obtain
information about the IRA custodial fees from the Transfer Agent.

OTHER PURCHASE INFORMATION

Dividends begin to accrue after you become a shareholder. The Funds do
not issue share certificates. All shares are held in non-certificate form
registered on the books of the Funds and the Funds' Transfer Agent for the
account of the shareholder. The rights to limit the amount of purchases and to
refuse to sell to any person are reserved by the Funds. If your check or wire
does not clear, you will be responsible for any loss incurred by the Funds. If
you are already a shareholder, the Funds can redeem shares from any identically
registered account in the Funds as reimbursement for any loss incurred. You may
be prohibited or restricted from making future purchases in the Funds.

HOW TO REDEEM SHARES

All redemptions will be made at the net asset value next determined
after the redemption request has been received by the Transfer Agent in proper
order. Shareholders may receive redemption payments in the form of a check or
federal wire transfer. The proceeds of the redemption may be more or less than
the purchase price of your shares, depending on the market value of the Fund's
securities at the time of your redemption. Presently there is no charge for wire
redemptions; however, the Funds reserve the right to charge for this service.
Any charges for wire redemptions will be deducted from the shareholder's Fund
account by redemption of shares. Investors choosing to purchase or redeem their
shares through a securities dealer may be charged a fee by that institution.

-5-

<PAGE>

By Mail - You may redeem any part of your account in a Fund at no charge
by mail. Your request should be addressed to:

CommonWealth Advisor Funds
c/o American Data Services, Inc.
Hauppauge Corporate Center
150 Motor Parkway
Hauppauge, NY 11760

"Proper order" means your request for a redemption must include your
letter of instruction, including the Fund name, account number, account name(s),
the address and the dollar amount or number of shares you wish to redeem. This
request must be signed by all registered share owner(s) in the exact name(s) and
any special capacity in which they are registered. For all redemptions, the
Funds require that signatures be guaranteed by a bank or member firm of a
national securities exchange. Signature guarantees are for the protection of
shareholders. At the discretion of a Fund or American Data Services, Inc., a
shareholder, prior to redemption, may be required to furnish additional legal
documents to insure proper authorization.

BY TELEPHONE - You may redeem any part of your account in a Fund by
calling the Transfer Agent at (800) ___-____. You must first complete the
Optional Telephone Redemption and Exchange section of the investment application
to institute this option. The Funds, the Transfer Agent and the Custodian are
not liable for following redemption or exchange instructions communicated by
telephone that they reasonably believe to be genuine. However, if they do not
employ reasonable procedures to confirm that telephone instructions are genuine,
they may be liable for any losses due to unauthorized or fraudulent
instructions. Procedures employed may include recording telephone instructions
and requiring a form of personal identification from the caller.

The telephone redemption and exchange procedures may be terminated at
any time by the Funds or the Transfer Agent. During periods of extreme market
activity it is possible that shareholders may encounter some difficulty in
telephoning the Funds, although neither the Funds nor the Transfer Agent has
ever experienced difficulties in receiving and in a timely fashion responding to
telephone requests for redemptions or exchanges. If you are unable to reach the
Funds by telephone, you may request a redemption or exchange by mail.

BY SYSTEMATIC WITHDRAWAL PLAN - As another convenience, the Funds offer
a Systematic Withdrawal Program whereby shareholders may request that a check
drawn in a predetermined amount be sent to them each month or calendar quarter.
A shareholders account must have Fund shares with a value of at least $10,000 in
order to start a systematic Withdrawal Program, and the minimum amount that may
be withdrawn each month or quarter under the Systematic Withdrawal program is
$100. This Program may be terminated by a shareholder or the Funds at any time
without charge or penalty and will become effective five business days following
receipt of your instructions. Shares will be sold within three business days
before month-end. A withdrawal under the Systematic Withdrawal Program involves
a redemption of shares, and may result in a gain or loss for federal income tax
purposes. In addition, if the amount withdrawn exceeds the dividends credited to
the shareholder's account, the account ultimately may be depleted.

ADDITIONAL INFORMATION - If you are not certain of the requirements for
a redemption please call the Transfer Agent at (800) ___-____. Redemptions
specifying a certain date or share price cannot be accepted and will be
returned. You will be mailed the proceeds on or before the fifth business day
following the redemption. However, payment for redemption made against shares
purchased by check will be made only after the check has been collected, which
normally may take up to fifteen days. Also, when the New York Stock Exchange is
closed (or when trading is restricted) for any reason other than its customary
weekend or holiday closing or under any emergency circumstances, as determined
by the Securities and Exchange Commission, the Funds may suspend redemptions or
postpone payment dates.

Because the Funds incur certain fixed costs in maintaining shareholder
accounts, each Fund reserves the right to require any shareholder to redeem all
of his or her shares in a Fund on 30 days' written notice if the value of his or
her shares in the Fund is less than $1,000 due to redemption, or such other
minimum amount as the Fund may determine from time to time. An involuntary
redemption constitutes a sale. You should consult your tax advisor concerning
the tax consequences of involuntary redemptions. A shareholder may increase the
value of his or her shares in each Fund to the minimum amount within the 30 day
period. Each share of each Fund is subject to redemption at any time if the
Board of Trustees determines in its sole discretion that failure to so redeem
may have materially adverse consequences to all or any of the shareholders of
the Funds.

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SHARE PRICE CALCULATION

The value of an individual share in a Fund (the net asset value) is
calculated by dividing the total value of the Fund's investments and other
assets (including accrued income), less any liabilities (including estimated
accrued expenses), by the number of shares outstanding, rounded to the nearest
cent. Net asset value per share is determined as of the close of the New York
Stock Exchange (4:00 p.m., Eastern time) on each day that the exchange is open
for business, and on any other day on which there is sufficient trading in the
Fund's securities to materially affect the net asset value. The net asset value
per share of the Fund will fluctuate.

DIVIDENDS AND DISTRIBUTIONS

Each Fund intends to distribute substantially all of its net investment
income as dividends to its shareholders on an annual basis, and intends to
distribute its net long term capital gains and its net short term capital gains
at least once a year.

Income dividends and capital gain distributions are automatically
reinvested in additional shares at the net asset value per share on the
distribution date. An election to receive a cash payment of dividends and/or
capital gain distributions may be made in the application to purchase shares or
by separate written notice to the Transfer Agent. Shareholders will receive a
confirmation statement reflecting the payment and reinvestment of dividends and
summarizing all other transactions. If cash payment is requested, a check
normally will be mailed within five business days after the payable date. If you
withdraw your entire account, all dividends accrued to the time of withdrawal,
including the day of withdrawal, will be paid at that time. You may elect to
have distributions on shares held in IRAs and 403(b) plans paid in cash only if
you are 59 1/2 years old or permanently and totally disabled or if you otherwise
qualify under the applicable plan.

TAXES

Each Fund intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). By so
qualifying, a Fund will not be subject to federal income taxes to the extent
that it distributes substantially all of its net investment income and any
realized capital gains.

For federal income tax purposes, dividends paid by each Fund from
ordinary income are taxable to shareholders as ordinary income, but may be
eligible in part for the dividends received deduction for corporations. Pursuant
to the Tax Reform Act of 1986 (the "Tax Reform Act"), all distributions of net
capital gains to individuals are taxed at the same rate as ordinary income. All
distributions of net capital gains to corporations are taxed at

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regular corporate rates. Any distributions designated as being made from net
realized long term capital gains are taxable to shareholders as long term
capital gains regardless of the holding period of the shareholder.

Each Fund will mail to each shareholder after the close of the calendar
year a statement setting forth the federal income tax status of distributions
made during the year. Dividends and capital gains distributions may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisors regarding specific questions as to federal, state or local taxes
and the tax effect of distributions and withdrawals from a Fund.

On the application or other appropriate form, the Funds will request
the shareholder's certified taxpayer identification number (social security
number for individuals) and a certification that the shareholder is not subject
to backup withholding. Unless the shareholder provides this information, each
Fund will be required to withhold and remit to the U.S. Treasury 31% of the
dividends, distributions and redemption proceeds payable to the shareholder.
Shareholders should be aware that, under regulations promulgated by the Internal
Revenue Service, a Fund may be fined $50 annually for each account for which a
certified taxpayer identification number is not provided. In the event that such
a fine is imposed with respect to a specific account in any year, the applicable
Fund may make a corresponding charge against the account.

OPERATION OF THE FUNDS

Each Fund is a non-diversified series of AmeriPrime Funds, an open-end
management investment company organized as an Ohio business trust on August 8,
1995. The Board of Trustees supervises the business activities of the Funds.
Like other mutual funds, the Funds retain various organizations to perform
specialized services. The Funds retain CommonWealth Advisors, Inc., 247 Florida
Street, Baton Rouge, LA 70801 (the "Advisor") to manage the assets of each Fund.
The CommonWealth Bond Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.10% of the Fund's average daily net assets, and the
CommonWealth Growth Fund is authorized to pay the Advisor a fee equal to an
annual average rate of 1.35% of the Fund's average daily net assets. The Advisor
pays all of the operating expenses of the Funds except brokerage, taxes,
interest, fees and expenses of non-interested person trustees and extraordinary
expenses. In this regard, it should be noted that most investment companies pay
their own operating expenses directly, while the Funds' expenses, except
those specified above, are paid by the Advisor.

The Advisor, a Louisiana corporation, is an independent investment
advisory firm that has provided investment supervisory services and financial
planning to individuals, financial institutions, corporations, trusts, estates,
charitable organizations, and retirement plans since 1991. Walter A. Morales is
responsible for the day-to-day management of the CommonWealth Income Fund. Mr.
Morales began privately managing individual common stocks in 1984, and has
served as the Advisor's president and chief investment manager since its
founding in 1991. Mr. Morales has a Masters in Business Administration and a
B.S. degree in Chemistry from Louisiana State University and previously worked
as a Vice President and Senior Trust Investment Officer for Baton Rouge Bank and
Trust, and as an Investment Broker for A.G. Edwards and Sons, Inc. Richard L.
Chauvin, Jr. is responsible for the day-to-day management of the CommonWealth
Equity Fund. Mr. Chauvin is Senior Vice President and Fund Manager of the
Advisor. Prior to joining the Advisor in 1996, Mr. Chauvin served as Regional
Director of Portfolio Management at Bank One Investment Advisors
("BOIA") where he managed a $100 million equity mutual fund and numerous
accounts for individuals and foundations. Mr. Chauvin joined the Trust Division
of the former Louisiana National Bank ("LNB") in 1978. LNB became
Premier Investment Advisors which became BOIA.

The Funds retain AmeriPrime Financial Services, Inc. (the
"Administrator") to manage the Funds' business affairs and provide each Fund
with administrative services, including all regulatory reporting and necessary
office equipment, personnel and facilities. For the CommonWealth Income Fund,
the Administrator receives a monthly fee from the Fund equal to an annual
average rate of 0.050% of the Fund's average daily net assets (subject to a
minimum annual payment of $25,000). For the CommonWealth Equity Fund, the
Administrator receives a monthly fee from the Fund equal to an annual average
rate of 0.10% of the Fund's average daily net assets up to fifty million
dollars, 0.075% of the Fund's average daily net assets from fifty to one hundred
million dollars and 0.050% of the Fund's average daily net assets over one
hundred million dollars (subject to a minimum annual payment of $25,000). The
Funds retain American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11760 (the "Transfer Agent") to serve as transfer agent,
dividend paying agent and shareholder service agent. The Trust retains
AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092 (the "Distributor") to act as the principal distributor
of each Fund's shares. Kenneth D. Trumpfheller, officer and sole

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shareholder of the Administrator and the Distributor, is an officer and trustee
of the Trust. The services of the Administrator, Transfer Agent and Distributor
are operating expenses paid by the Advisor.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to its obligation of seeking best
qualitative execution, the Advisor may give consideration to sales of shares of
a Fund as a factor in the selection of brokers and dealers to execute Fund
transactions.

RISK CONSIDERATIONS

RISKS OF INVESTING IN HIGH YIELD SECURITIES ("JUNK BONDS"). Lower-rated
long-term securities, including securities rated from BB to D by S&P or Ba to C
by Moody's or, if unrated, of comparable quality in the opinion of the Advisor,
will usually offer higher yields than higher-rated securities. However, there is
more risk associated with these investments. This is because of the reduced
creditworthiness and increased risk of default that these securities carry.
Lower-rated long-term securities generally tend to reflect short-term corporate
and market developments to a greater extent than higher-rated securities which
react primarily to fluctuations in the general level of interest rates. Lower
rated long-term securities also involve greater sensitivity to significant
increases in interest rates. Short-term corporate and market developments
affecting the prices and liquidity of lower-rated long-term securities could
include adverse news impacting major issues or underwriters or dealers in
lower-rated long-term or unrated securities. In addition, since there are fewer
investors in lower-rated long-term securities, it may be harder to sell
securities at an optimum time.

An economic downturn may adversely affect the value of some lower-rated
long-term bonds. Such a downturn may especially affect highly leveraged
companies or companies in cyclically sensitive industries, where deterioration
in a company's cash flow may impair its ability to meet its obligation to pay
principal and interest to bondholders in a timely fashion. From time to time, as
a result of changing conditions, issuers of lower-rated long-term bonds may seek
or may be required to restructure the terms and conditions of the securities
they have issued. As a result of these restructurings, holders of lower-rated
long-term securities may receive less principal and interest than originally
expected at the time such bonds were purchased. In the event of a restructuring,
the Funds may bear additional legal or administrative expenses in order to
maximize recovery from an issuer. The secondary trading market for lower-rated
long-term bonds is generally less liquid than the secondary trading market for
higher-rated bonds.

The risk of loss due to default by the issuer is significantly greater
for the holders of high yield securities because such securities are generally
unsecured and are often subordinated to other obligations of the issuer. During
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience financial stress and
may not have sufficient revenues to meet their interest payment obligations. An
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, its inability to meet specific projected
business forecasts, or the unavailability of additional financing.

Factors adversely affecting the market value of high yield and other
Fund securities will adversely affect the corresponding Fund's net asset value.
In addition, a Fund may incur additional expenses to the extent it is required
to seek recovery upon a default in the payment of principal or interest on its
Fund holdings.

Risks of Investing in Foreign Securities. Investors should realize that
investing in securities of foreign issuers involves considerations not typically
associated with investing in securities of companies organized and operated in
the United States. Investments may be adversely affected by changes in political
or social conditions, diplomatic relations, confiscatory taxation,
expropriation, nationalization, limitation on the removal of funds or assets, or
imposition of (or change in) exchange control or tax regulations in foreign
countries. In addition, changes in government administrations or economic or
monetary policies in the United States or abroad could result in appreciation or
depreciation of Fund securities and could favorably or unfavorably affect a
Fund's operations. Furthermore, the economies of individual foreign nations may
differ from the U.S. economy, whether favorably or unfavorably, in areas such as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position. It may also be more
difficult to obtain and enforce a judgment against a foreign issuer. In general,
less information is publicly available with respect to foreign issuers than is
available with respect to U.S. companies. Most foreign companies are also not
subject to the uniform accounting and financial reporting requirements
applicable to issuers in the United States. Any foreign investments made by a
Fund must be

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<PAGE>

made in compliance with U.S. and foreign currency restrictions and tax laws
restricting the amounts and types of foreign investments.

Because foreign securities generally are denominated and pay dividends
or interest in foreign currencies, the value of the net assets of a Fund as
measured in U.S. dollars will be affected favorably or unfavorably by changes in
exchange rates. In order to protect against uncertainty in the level of future
foreign currency exchange rates, each Fund is also authorized to enter into
certain foreign currency exchange transactions. Furthermore, a Fund's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. The settlement periods
for foreign securities, which are often longer than those for securities of U.S.
issuers, may affect Fund liquidity. Finally, there may be less government
supervision and regulation of securities exchanges, brokers and issuers in
foreign countries than in the United States.

RISK OF INVESTING IN EMERGING MARKETS. The world's industrialized
markets generally include but are not limited to the following: Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland,
Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Singapore,
Spain, Sweden, Switzerland, the United Kingdom, and the United States. The
world's emerging markets generally include but are not limited to the following:
Argentina, Bolivia, Brazil, Bulgaria, Chile, China, Colombia, Costa Rica, the
Czech Republic, Ecuador, Egypt, Greece, Hungary, India, Indonesia, Israel, the
Ivory Coast, Jordan, Malaysia, Mexico, Morocco, Nicaragua, Nigeria, Pakistan,
Peru, the Philippines, Poland, Portugal, Romania, Russia, Slovakia, Slovenia,
South Africa, South Korea, Sri Lanka, Taiwan, Thailand, Turkey, Uruguay,
Venezuela, Vietnam and Zimbabwe.

Investment in securities of issuers based in underdeveloped emerging
markets entails all of the risks of investing in securities of foreign issuers
outlined in this section to a heightened degree. These heightened risks include:
(i) greater risks of expropriation, confiscatory taxation, nationalization, and
less social, political and economic stability; (ii) the smaller size of the
market for such securities and a low or nonexistent volume of trading, resulting
in lack of liquidity and in price volatility; (iii) certain national policies
which may restrict a Fund's investment opportunities including restrictions on
investing in issuers or industries deemed sensitive to relevant national
interests; and (iv) in the case of Eastern Europe and in China and other Asian
countries, the absence of developed capital markets and legal structures
governing private or foreign investment and private property and the possibility
that recent favorable economic and political developments could be slowed or
reversed by unanticipated events. So long as the Communist Party continues to
exercise a significant or, in some countries, dominant role in Eastern European
countries or in China and other Asian countries, investments in such countries
will involve risks of nationalization, expropriation and confiscatory taxation.
The Communist governments of a number of Eastern European countries expropriated
large amounts of private property in the past, in many cases without adequate
compensation. There may be no assurance that such expropriation will not occur
in the future in either the Eastern European countries or other countries. In
the event of such expropriation, a Fund could lose a substantial portion of any
investments it has made in the affected countries. Further, no accounting
standards exist in Eastern European countries. Finally, even though certain
Eastern European currencies may be convertible into U.S. dollars, the conversion
rates may be artificial to the actual market values and may be adverse to Fund
shareholders.

In addition to brokerage commissions, custodial services and other
costs relating to investment in emerging markets are generally more expensive
than in the United States. Such markets have been unable to keep pace with the
volume of securities transactions, making it difficult to conduct such
transactions. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive investment
opportunities. Inability to dispose of a security due to settlement problems
could result either in losses to the Fund due to subsequent declines in the
value of the security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser.

Non-Diversified Investment Company. Each Fund is classified as a
"non-diversified" investment company and, as such, each may invest a greater
proportion of its assets in the securities of a smaller number of issuers and
therefore may be subject to greater market and credit risk than a more broadly
diversified fund. As each Fund intends to comply with Subchapter M of the Code,
each Fund may invest up to 50% of its assets at the end of each quarter of its
fiscal year in as few as two issuers, provided that no more than 25% of the
assets are invested in one issuer. With respect to the remaining 50% of its
assets at the end of each quarter, it may invest no more than 5% in one issuer.

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ADDITIONAL INVESTMENT INFORMATION. Neither Fund will have more than 25%
of the current value of its total assets invested in any single industry. This
restriction does not apply to debt securities issued or guaranteed by the U.S.
government or its agencies or instrumentalities.

INVESTMENT POLICIES AND TECHNIQUES

This section contains general information about various types of
securities and investment techniques that each Fund may purchase or employ.

EQUITY SECURITIES. As used herein, "equity securities" are defined as
common stock, preferred stock, trust or limited partnership interests, rights
and warrants to subscribe to or purchase such securities, sponsored or
unsponsored American Depository Receipts ("ADRs"), European Depository Receipts
("EDR"), Global Depository Receipts ("GDRs"), and convertible securities
consisting of debt securities or preferred stock that may be converted into
common stock or that carry the right to purchase common stock. Common stocks,
the most familiar type, represent an equity (ownership) interest in a
corporation. Although equity securities have a history of long-term growth in
value, their prices fluctuate based on changes in a company's financial
condition and on overall market and economic conditions. Smaller companies are
especially sensitive to these factors.

Each Fund stresses four criteria in selecting equity investments:

(1) A strong financial position, as measured not only by balance sheet
data but also measured by off-balance sheet liabilities and contingencies (as
disclosed in footnotes to financial statements and as determined through
research of public information)

(2) Responsible management and control groups, as gauged by managerial
competence as operators and investors as well as by an apparent absence of
intent to profit at the expense of stockholders.

(3) Availability of comprehensive and meaningful financial and related
information. The availability of financial statements and information which
provide the Advisor with reliable benchmarks to aid in understanding the
business, its values and its dynamics.

(4) Availability of the security at a market price which the Advisor
believes is at a substantial discount to the Advisor's estimate of what the
issuer is worth as a private company or as a takeover or merger and acquisition
candidate, or based on other measures the Advisor believes reflect the
security's value such as price to earnings, price to sales, price to cash
flow, price to book value.

DEBT SECURITIES. Each Fund may buy debt securities of all types and
qualities issued by both domestic and foreign issuers. Bonds and other debt
instruments are used by issuers to borrow money from investors. The issuer pays
the investor a fixed or variable rate of interest, and must repay the amount
borrowed at maturity. Some debt securities, such as zero coupon bonds, do not
pay current interest, but are purchased at a discount from their face values.
Debt securities, loans, and other direct debt have varying degrees of quality
and varying levels of sensitivity to changes in interest rates. Longer-term
bonds are generally more sensitive to interest rate changes than short-term
bonds.

Lower-quality foreign government securities are often considered to be
speculative and involve greater risk of default or price changes, or they may
already be in default. These risks are in addition to the general risks
associated with foreign securities.

Each Fund intends to invest for the most part in debt securities which
the Advisor believes will provide above-average current yields or yields to
maturity. When selecting debt instruments, the Advisor stresses:

(1) Strong investor protection in the form of covenants contained in loan
agreements and other contracts that establish the terms of the debt instrument;
and

(2) Appraisals of the business' financial position and operating outlook,
as well as the Advisor's appraisal of values that might be realized in a
reorganization or upon the sale of assets or the liquidation of the issuer.

The Advisor will also use its best judgment as to the most favorable
range of maturities. In general, a Fund will acquire debt issues which have a
senior position in an issuer's capitalization.

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PREFERRED STOCK. Preferred stock has a preference in liquidation (and,
generally dividends) over common stock but is subordinated in liquidation to
debt. As a general rule the market value of preferred stocks with fixed dividend
rates and no conversion rights varies inversely with interest rates and
perceived credit risk, with the price determined by the dividend rate. Some
preferred stocks are convertible into other securities, (for example, common
stock) at a fixed price and ratio or upon the occurrence of certain events. The
market price of convertible preferred stocks generally reflects an element of
conversion value. Because many preferred stocks lack a fixed maturity date,
these securities generally fluctuate substantially in value when interest rates
change; such fluctuations often exceed those of long-term bonds of the same
issuer. Some preferred stocks pay an adjustable dividend that may be based on an
index, formula, auction procedure or other dividend rate reset mechanism. In the
absence of credit deterioration, adjustable rate preferred stocks tend to have
more stable market values than fixed rate preferred stocks. All preferred stocks
are also subject to the same types of credit risks of the issuer as corporate
bonds. In addition, because preferred stock is junior to debt securities and
other obligations of an issuer, deterioration in the credit rating of the issuer
will cause greater changes in the value of a preferred stock than in a more
senior debt security with similar yield characteristics. Preferred stocks may be
rated by S&P and Moody's although there is no minimum rating which a preferred
stock must have (and a preferred stock may not be rated) to be an eligible
investment for a Fund. The Advisor expects, however, that generally the
preferred stocks in which a Fund invests will be rated at least CCC by S&P or
Caa by Moody's or, if unrated, of comparable quality in the opinion of the
Advisor. Preferred stocks rated CCC by S&P are regarded as predominantly
speculative with respect to the issuer's capacity to pay preferred stock
obligations and represent the highest degree of speculation among securities
rated between BB and CCC; preferred stocks rated Caa by Moody's are likely to be
in arrears on dividend payments. Moody's rating with respect to preferred stocks
does not purport to indicate the future status of payments of dividends.

CONVERTIBLE SECURITIES. A convertible security is a bond or preferred
stock which may be converted at a stated price within a specific period of time
into a specified number of shares of common stock of the same or different
issuer. Convertible securities are senior to common stock in a corporation's
capital structure, but usually are subordinated to non-convertible debt
securities. While providing a fixed income stream generally higher in yield than
in the income derived from a common stock but lower than that afforded by a
non-convertible debt security, convertible security also affords an investor the
opportunity, through its conversion feature, to participate in the capital
appreciation of common stock into which it is convertible.

WARRANTS. Warrants are instruments which entitle the holder to buy
underlying equity securities at a specific price for a specific period of time.
A warrant tends to be more volatile than its underlying securities and ceases to
have value if it is not exercised prior to its expiration date. In addition,
changes in the value of a warrant do not necessarily correspond to changes in
the value of its underlying securities.

MORTGAGE-BACKED SECURITIES. Each Fund may invest in mortgage-backed
securities and derivative mortgage-backed securities, including "principal only"
(but not "interest only") components. Mortgage-backed securities are securities
that directly or indirectly represent a participation in, or are secured by and
payable from, mortgage loans on real property. These securities have special
risk characteristics. The Advisor intends to invest in these securities only
when it believes, after analysis, that there is unlikely to ever be a default by
either the issuer or the guarantor of these securities. These securities do,
nonetheless, entail considerable market risk (i.e., fluctuations in quoted
prices for the instruments), interest rate risk, prepayment risk and inflation
risk.

The Funds may invest in residential mortgage-backed securities
representing participation interests in pools of one-to-four family residential
mortgage loans originated by private mortgage originators including stripped
mortgage-backed securities ("SMBS") of the U.S. Government and certain of its
agencies and instrumentalities. An SMBS is described as "stripped" because some
of the equity or interest components of the security is removed from the
package. The Fund will not invest in non-investment grade subordinated classes
of residential mortgage-backed securities and does not intend to invest in
commercial mortgage-backed securities.

SMBS are structured with two or more classes of securities that receive
different proportions of the interest and principal distributions on a pool of
mortgage assets. A common type of SMBS will have at least one class receiving
none or only a small portion of the interest and all or a larger portion of the
principal from the mortgage assets, while the other classes will receive
primarily or entirely interest and none or only a small portion of the
principal.

Prepayments of principal generally may be made at any time without
penalty on residential mortgage-backed securities. Prepayment rates are
influenced by changes in current interest rates and a variety of economic,
geographic, social and other factors. Changes in prepayment rates may change the
yield to maturity of the security and amounts available for reinvestment from
such securities by the Fund are likely to be greater during periods of
relatively low or declining interest rates and therefore are likely to be
reinvested at lower rates than during a period of relatively high interest
rates. As a result, the high credit quality of many of these securities may
provide little or no protection against loss in market value. Due to the
unprecedented volatility of prepayment and interest rates during the past two
years, many mortgage-backed securities have experienced substantial losses in
market value. The Fund's Advisor believes that many of these securities are
currently trading at prices below their inherent value on a risk-

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adjusted basis and believes that selective purchases by the Fund could provide
high yield and total return in comparison to risk levels.

Current federal income tax law requires that companies such as the
Funds which seek to qualify for pass-through federal income tax treatment as
regulated investment companies distribute substantially all of their net
investment income each year, including non-cash income such as income from
principal only mortgage-backed securities. Accordingly, the Fund may be required
to distribute to its shareholders each year the interest it is deemed to earn on
principal only mortgage-backed securities even though it receives no cash
interest payments.

U.S. GOVERNMENT SECURITIES are high-quality debt securities issued or
guaranteed by the U.S. Treasury or by an agency or instrumentality of the U.S.
government. Not all U.S. government securities are backed by the full faith and
credit of the United States. For example, securities issued by the Farm Credit
Banks or by the Federal National Mortgage Association are supported by the
instrumentality's right to borrow money from the U.S. Treasury under certain
circumstances. However, securities issued by other agencies or instrumentalities
are supported only by the credit of the entity that issued them.

ADRS, GDRS AND EDRS are certificates evidencing ownership of shares of
a foreign-based issuer held in trust by a bank or similar financial institution.
Designed for use in U.S. and European securities markets, respectively, ADRs,
GDRs and EDRs are alternatives to the purchase of the underlying securities in
their national markets and currencies. ADRs, GDRs and EDRs are subject to the
same risks as the foreign securities to which they relate. See "Risks of
Investing in Foreign Securities" herein.

PUTS. Each Fund may purchase bonds or notes together with the right to
resell them at an agreed price or yield within a specified period prior to
maturity. This right to resell is known as a put. The aggregate price paid for
securities with puts may be higher than the price which otherwise would be paid.
Consistent with the investment objectives of the Fund and subject to the
supervision of the Trustees of the Fund, the purpose of this practice is to
permit a Fund to be fully invested in securities while maintaining the necessary
liquidity to purchase securities on a when-issued basis, to meet unusually large
redemptions, to purchase at a later date securities other than those subject to
the put and to facilitate the Advisor's ability to manage the Fund actively. The
principal risk of puts is that the put writer may default on its obligation to
repurchase. The Advisor will monitor each writer's ability to meet its
obligations under puts. The amortized cost method is used by the Funds to value
securities with maturities of less than 60 days; when these securities are
subject to puts separate from the underlying securities, no value is assigned to
the puts. The cost of any such put is carried as an unrealized loss from the
time of purchase until it is exercised or expires.

ZERO COUPON SECURITIES. Each Fund may invest in zero coupon securities
which are debt securities issued or sold at a discount from their face value
which do not entitle the holder to any periodic payment of interest prior to
maturity or a specified redemption date (or cash payment date). These involve
risks that are similar to those of other debt securities, although they may be
more volatile, and certain zero coupon securities move in the same direction as
interest rates. The amount of the discount varies depending on the time
remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and perceived credit quality of the issuer. Zero
coupon securities also may take the form of debt securities that have been
stripped of their unmatured interest coupons, the coupons themselves

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and receipts or certificates representing interests in such stripped debt
obligations and coupons. The market prices of zero coupon securities generally
are more volatile than the market prices of interest-bearing securities and are
likely to respond to a greater degree to changes in interest rates than
interest-bearing securities having similar maturities and credit qualities.

STRIPS. The Federal Reserve creates STRIPS (Separate Trading of
Registered Interest and Principal of Securities) by separating the coupon
payments and the principal payment from an outstanding Treasury security and
selling them as individual securities. To the extent a Fund purchases the
principal portion of the STRIP, the Fund will not receive regular interest
payments. Instead they are sold at a deep discount from their face value. A Fund
will accrue income on such STRIPS for tax and accounting purposes, in accordance
with applicable law, which income is distributable to shareholders. Because no
cash is received at the time such income is accrued, a Fund may be required to
liquidate other Fund securities to satisfy its distribution obligations. Because
the principal portion of the STRIP does not pay current income, its price can be
very volatile when interest rates change. In calculating its dividend, a Fund
takes into account as income a portion of the difference between the principal
portion of the STRIP's purchase price and its face value.

FLOATING RATE BONDS may have interest rates that move in tandem with a
benchmark, helping to stabilize their prices.

SOVEREIGN AND SUPRANATIONAL DEBT OBLIGATIONS. Debt instruments issued
or guaranteed by foreign governments, agencies, and supranational organizations
("sovereign debt obligations"), especially sovereign debt obligations of
developing countries, may involve a high degree of risk, and may be in default
or present the risk of default. The issuer of the obligation or the governmental
authorities that control the repayment of the debt may be unable or unwilling to
repay principal and interest when due, and may require renegotiation or
rescheduling of debt payments. In addition, prospects for repayment of principal
and interest may depend on political as well as economic factors.

BRADY BONDS. "Brady bonds" are bonds issued as a result of a
restructuring of a country's debt obligations to commercial banks under the
"Brady plan." Brady bonds have been issued by the governments of
Argentina, Costa Rica, Mexico, Nigeria, Uruguay, Venezuela, Brazil and the
Philippines, as well as other emerging market countries. Most Brady bonds are
currently rated below BBB by S&P or Baa by Moody's. While the Advisor is not
aware of the occurrence of any payment defaults on Brady bonds, investors should
recognize that these debt securities have been issued only recently and,
accordingly, do not have a long payment history. Brady bonds may be
collateralized or uncollateralized, are issued in various currencies (primarily
the U.S. dollar) and are actively traded in the secondary market for Latin
American debt.

RULE 144A SECURITIES are securities in the United States that are not
registered for sale under Federal securities laws but which can be resold to
institutions under SEC Rule 144A. Provided that a dealer or institutional
trading market in such securities exists, these restricted securities are
treated as exempt from the 15% limit on illiquid securities. Under the
supervision of the Board of Trustees of each Fund, the Advisor determines the
liquidity of restricted securities and, through reports from the Advisor, the
Board will monitor trading activity in restricted securities. If institutional
trading in restricted securities were to decline, the liquidity of a Fund could
be adversely affected.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Fund until
settlement takes place. The Fund maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments.

REPURCHASE AGREEMENTS. In a repurchase agreement, a Fund buys a
security at one price and simultaneously agrees to sell it back at a higher
price at a future date. Delays or losses could result if the other party to the
agreement defaults or becomes insolvent.

REVERSE REPURCHASE AGREEMENTS. In a reverse repurchase agreement, a
Fund temporarily transfers possession of a Fund instrument to another party in
return for cash. This could increase the risk of fluctuation in the

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Fund's yield or in the market value of its assets. A reverse repurchase
agreement is a form of borrowing and will be counted towards each Fund's
borrowing restrictions. See "Leverage" below.

INVESTMENT COMPANIES. The Funds may invest without limitation in other
registered investment companies. With respect to certain countries in which
capital markets are either less developed or not easily accessed, investments by
each Fund may be made through investment in other registered investment
companies that in turn are authorized to invest in the securities of such
countries. Investment in other investment companies is limited in amount by the
Investment Company Act of 1940, as amended (the "1940 Act"), will involve the
indirect payment of a portion of the expenses, including advisory fees, of such
other investment companies and may result in a duplication of fees and expenses.

SECURITIES LENDING. Each Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows the
Fund to retain ownership of the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied, should the borrower
fail financially, loans will be made only to parties whose creditworthiness has
been reviewed and deemed satisfactory by the Advisor. Furthermore, they will
only be made if, in the judgment of the Advisor, the consideration to be earned
from such loans would justify the risk.

The Advisor understands that it is the current view of the staff of the
Securities and Exchange Commission ("SEC") that a Fund may engage in loan
transactions only under the following conditions: (1) a Fund must receive 100%
collateral in the form of cash, cash equivalents (e.g., U.S. Treasury bills or
notes) or other high grade liquid debt instruments from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities loaned (determined on a daily basis) rises above the value of the
collateral; (3) after giving notice, the Fund must be able to terminate the loan
at any time; (4) the Fund must receive reasonable interest on the loan or a flat
fee from the borrower, as well as amounts equivalent to any dividends, interest,
or other distributions on the securities loaned and to any increase in market
value; (5) the Fund may pay only reasonable custodian fees in connection with
the loan; and (6) the Board of Trustees must be able to vote proxies on the
securities loaned, either by terminating the loan or by entering into an
alternative arrangement with the borrower.

Cash received through loan transactions may be invested in any security
in which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).

LEVERAGE. Each Fund may borrow up to one-third of the value of its
total assets, from banks or through the use of reverse repurchase agreements, to
increase its holdings of Fund securities. Under the 1940 Act, each Fund is
required to maintain continuous asset coverage of 300% with respect to such
borrowings and to sell (within three days) sufficient Fund holdings to restore
such coverage if it should decline to less than 300% due to market fluctuations
or otherwise, even if such liquidations of a Fund's holdings may be
disadvantageous from an investment standpoint.

Leveraging by means of borrowing may exaggerate the effect of any
increase or decrease in the value of each Fund's securities and the
corresponding Fund's net asset value and money borrowed by a Fund will be
subject to interest and other costs (which may include commitment fees and/or
the cost of maintaining minimum average balances) which may or may not exceed
the income received from the securities purchased with borrowed funds.

FLOATING RATE, INVERSE FLOATING RATE, AND INDEX OBLIGATIONS. Each Fund
may invest in debt securities with interest payments or maturity values that are
not fixed, but float in conjunction with (or inversely to) an underlying index
or price. These securities may be backed by U.S. Government or corporate
issuers, or by collateral such as mortgages. The indices and prices upon which
such securities can be based include interest rates, currency rates and
commodities prices. However, the Funds will not invest in any instrument whose
value is computed based

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on a multiple of the change in price or value of an asset or an index of or
relating to assets in which the Fund cannot or will not invest.

Floating rate securities pay interest according to a coupon which is
reset periodically. The reset mechanism may be formula based, or reflect the
passing through of floating interest payments on an underlying collateral pool.
Inverse floating rate securities are similar to floating rate securities except
that their coupon payments vary inversely with an underlying index by use of a
formula. Inverse floating rate securities tend to exhibit greater price
volatility than other floating rate securities. The Funds will not invest more
than 5% of its total assets in inverse floating rate securities. Floating rate
obligations generally exhibit a low price volatility for a given stated maturity
or average life because their coupons adjust with changes in interest rates.
Interest rate risk and price volatility on inverse floating rate obligations can
be high, especially if leverage is used in the formula. Index securities pay a
fixed rate of interest, but have a maturity value that varies by formula, so
that when the obligation matures a gain or loss may be realized. The risk of
index obligations depends on the volatility of the underlying index, the coupon
payment and the maturity of the obligation.

TRADE CLAIMs. Each Fund may invest in trade claims. Trade claims are
interests in amounts owed to suppliers of goods or services and are purchased
from creditors of companies in financial difficulty. For purchasers such as the
Fund, trade claims offer the potential for profits since they are often
purchased at a significant discount from face value and, consequently, may
generate capital appreciation in the event that the market value of the claim
increases as the debtor's financial position improves or the claim is paid.

An investment in trade claims is speculative and carries a high degree
of risk. Trade claims are illiquid securities which generally do not pay
interest and there can be no guarantee that the debtor will ever be able to
satisfy the obligation on the trade claim. The markets in trade claims are not
regulated by federal securities laws or the SEC. Because trade claims are
unsecured, holders of trade claims may have a lower priority in terms of payment
than certain other creditors in a bankruptcy proceeding.

INVESTMENT IN RELATIVELY NEW ISSUES. Each Fund may invest in the common
stock and debt securities of selected new issuers (i.e., those having continuous
operating histories of less than three years). If a Fund invests in debt
securities of new issuers, it will only be in those issues where the Advisor
believes there are strong contractual protections for the holder. If issuers
meet the investment criteria discussed above, the Funds may invest in securities
without respect to the age of the issuer. Investments in new issuers may carry
special risks and may be more speculative because such companies are relatively
unseasoned. Such companies may also lack sufficient resources, may be unable to
generate internally the funds necessary for growth and may find external
financing to be unavailable on favorable terms or even totally unavailable.
Those companies will often be involved in the development or marketing of a new
product with no established market, which could lead to significant losses.

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Fund may invest in fixed and
floating rate loans arranged through private negotiations between a borrower and
one or more lending institutions. The majority of the Funds' investments in
loans in emerging markets is expected to be in the form of participations in
loans ("Participations") and assignments of portions of loans from third parties
("Assignments"). The Funds may also invest in loans, Participations or
Assignments of loans to borrowers located in the industrialized world.
Participations typically will result in a Fund having a contractual relationship
only with the lender, not the borrower. The Fund will have the right to receive
payments of principal, interest and any fees to which it is entitled only from
the lender selling the Participation and only upon receipt by the lender of the
payments from the borrower. In connection with purchasing Participations, the
Fund generally will have no right to enforce compliance by the borrower with the
terms of the loan agreement relating to the loan, nor any rights of set-off
against the borrower, and the Fund may not directly benefit from any collateral
supporting the loan in which it has purchased the Participation. As a result,
the Fund will assume the credit risk of both the borrower and the lender that is
selling the Participation. In the event of the insolvency of the lender selling
the Participation, the Fund may be treated as a general creditor of the lender
and may not benefit from any set-off between the lender and the borrower. The
Funds will acquire Participations only if the lender interpositioned between the
Fund and the borrower is determined by the Advisor to be creditworthy. When a
Fund purchases Assignments from lenders, the Fund will acquire direct rights
against the borrower on the loan; however, since Assignments are arranged
through private negotiations between the potential assignees and assignors, the
rights and obligations acquired by the Fund as the purchaser of an Assignment
may differ from, and be more limited than, those held by the assigning lender.

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<PAGE>

A Fund may have difficulty disposing of Assignments and Participations.
The liquidity of such securities is limited and the Funds anticipate that such
securities could only be sold to a limited number of institutional investors.
The lack of a liquid secondary market could have an adverse impact on the value
of such securities and on the Funds' ability to dispose of particular
Assignments or Participations when necessary to meet liquidity needs or in
response to a specific economic event, such as a deterioration in the
creditworthiness of the borrower. The lack of a liquid secondary market for
Assignments and Participations also may make it more difficult in valuing the
Funds and, therefore, calculating the net asset value per share of the Funds.
All Assignments and Participations shall be considered to be illiquid securities
by the Funds. The investment by a Fund in illiquid securities, including
Assignments and Participations, is limited to a total of 15% of its net assets.

DERIVATIVES. Each Fund may invest in various instruments that are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset, or market index. Some "derivatives" such as mortgage-related
and other asset-backed securities are in many respects like any other
investment, although they may be more volatile or less liquid than more
traditional debt securities. There are, in fact, many different types of
derivatives and many different ways to use them. There are a range of risks
associated with those uses. Futures and options are commonly used for
traditional hedging purposes to attempt to protect a fund from exposure to
changing interest rates, securities prices, or currency exchange rates and as a
low cost method of gaining exposure to a particular securities market without
investing directly in those securities. However, some derivatives are used for
leverage, which tends to magnify the effects of an instrument's price changes as
market conditions change. Leverage involves the use of a small amount of money
to control a large amount of financial assets, and can in some circumstances,
lead to significant losses. The Advisor will use derivatives only in
circumstances where they offer the most efficient means of improving the
risk/reward profile of a Fund and when consistent with a Fund's investment
objective and policies. The use of derivatives for non-hedging purposes may be
considered speculative.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. Each Fund may enter into
foreign currency exchange transactions to convert to and from different foreign
currencies and to convert foreign currencies to and from the U.S. dollar. A Fund
either enters into these transactions on a spot (i.e., cash) basis at the spot
rate prevailing in the foreign currency exchange market or uses forward
contracts to purchase or sell foreign currencies. A forward foreign currency
exchange contract is an obligation by a Fund to purchase or to sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract. Forward foreign currency exchange contracts establish an
exchange rate at a future date. These contracts are transferable in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward foreign currency exchange
contract generally has no deposit requirement and is traded at a net price
without commission. Neither spot transactions nor forward foreign currency
exchange contracts eliminate fluctuations in the prices of a Fund's securities
or in foreign exchange rates, or prevent loss if the prices of these securities
should decline.

A Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Although these transactions tend to minimize
the risk of loss due to a decline in the value of the hedged currency, at the
same time they tend to limit any potential gain that might be realized should
the value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

OPTIONS ON FOREIGN CURRENCIES. Each Fund may write covered put and call
options and purchase put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. dollar value of Fund securities and
against increases in the U.S. dollar cost of securities to be acquired. A Fund
may use options on foreign currency to cross-hedge, which involves writing or
purchasing options on one currency to hedge against changes in exchange rates
for a different, but related currency. As with other types of options, however,
the writing of an option on a foreign currency will constitute only a partial
hedge up to the amount of the premium received, and a Fund could be required to
purchase or sell a foreign currency at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may be used to
hedge against fluctuations in exchange rates although, in the event of exchange
rate movements adverse to a Fund's position, it may forfeit the entire amount of
the premium plus

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related transaction costs. In addition, a Fund may purchase call options on a
foreign currency when the investment Advisor anticipates that the currency will
appreciate in value.

There is no assurance that a liquid secondary market will exist for any
particular option, or at any particular time. If a Fund is unable to effect a
closing purchase transaction with respect to covered options it has written, the
Fund will not be able to sell the underlying currency or dispose of assets held
in a segregated account until it closes out the options or the options expire or
are exercised. Similarly, if the Fund is unable to close out options it has
purchased, it would have to exercise the options in order to realize any profit
and will incur transaction costs. The Funds pay brokerage commissions or spreads
in connection with options transactions.

As in the case of forward contracts, certain options on foreign
currencies are traded over-the-counter and involve liquidity and credit risks
which may not be present in the case of exchange-traded currency options. The
Funds' ability to terminate over-the-counter options ("OTC Options") will be
more limited than with exchange-traded options. It is also possible that
broker-dealers participating in OTC Options transactions will not fulfill their
obligations. Until such time as the staff of the SEC changes its position, the
Funds will treat purchased OTC Options and assets used to cover written OTC
Options as illiquid securities. With respect to options written with primary
dealers in U.S. government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the repurchase formula.

OPTIONS ON STOCKS, BONDS AND STOCK AND BOND INDICES. Each Fund may
write and purchase covered and uncovered options on stocks or bonds. A call
option gives the purchaser of the option the right to buy, and obligates the
writer to sell, the underlying security at the exercise price at any time during
the option period. Similarly, a put option gives the purchaser of the option the
right to sell, and obligates the writer to buy the underlying security at the
exercise price at any time during the option period. A covered call option with
respect to which a Fund owns the underlying security sold by the Fund exposes
the Fund during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying security or to
possible continued holding of a security which might otherwise have been sold to
protect against depreciation in the market price of the security. A covered put
option sold by a Fund exposes the Fund during the term of the option to a
decline in price of the underlying security.

Each Fund may purchase and write put and call options on stock or bond
indices listed on domestic and foreign stock exchanges, in lieu of direct
investment in the underlying securities or for hedging purposes. A stock or bond
index fluctuates with changes in the market values of the securities included in
the index. Options on securities indices are generally similar to options on
stocks except that the delivery requirements are different. Instead of giving
the right to take or make delivery of securities at a specified price, an option
on a stock or bond index gives the holders the right to receive a cash "exercise
settlement amount" equal to (a) the amount, if any, by which the fixed exercise
price of the option exceeds (in the case of a put) or is less than (in the case
of a call) the closing value of the underlying index on the date of the
exercise, multiplied by (b) a fixed "index multiplier."

Successful use by a Fund of options will be subject to the Advisor"s
ability to predict correctly movement in the direction of the security market
generally or of a particular industry. This requires different skills and
techniques than predicting changes in the price of individual securities.

FUTURES CONTRACTS ON STOCK AND BOND INDICES. Each Fund may enter into
contracts providing for the making and acceptance of a cash settlement based
upon changes in the value of an index of domestic or foreign securities
("Futures Contracts"). This investment technique may be used as a low-cost
method of gaining exposure to a particular securities market without investing
directly in those securities or to hedge against anticipated future changes in
general market prices which otherwise might either adversely affect the value of
securities held by the Fund or adversely affect the prices of securities which
are intended to be purchased at a later date for the Fund. A Futures Contract
may also be entered into to close out or offset an existing futures position.

When used for hedging purposes, each transaction in Futures Contracts
involves the establishment of a position which will move in a direction opposite
to that of the investment being hedged. If these hedging transactions are
successful, the futures position taken for the Fund will rise in value by an
amount which approximately offsets the decline in value of the portion of the
Fund's investments that is being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized. The risks of Futures Contracts also include
a potential lack of liquidity in the secondary market and incorrect assessments
of market. Brokerage costs will be incurred and "margin" will be
required to be posted and

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<PAGE>

maintained as a good faith deposit against performance of obligations
under Futures Contracts written for a Fund. A Fund may not purchase or sell a
Futures Contract if immediately thereafter its margin deposits on its
outstanding Futures Contracts, other than Futures Contracts used for hedging
purposes, would exceed 5% of the market value of the Fund's total assets.

OPTIONS ON FUTURES CONTRACTs. Each Fund may invest in options on
futures contracts for similar purposes. There can be no assurance that the use
of these Fund strategies will be successful.

ASSET COVERAGE. To assure that a Fund's use of futures and related
options, as well as when-issued and delayed-delivery securities and foreign
currency exchange transactions, are not used to achieve investment leverage, a
Fund will cover such transactions, as required by the SEC, either by owning the
underlying securities, entering into an offsetting transaction, or by
segregating with the Fund's custodian liquid securities in an amount at all
times equal to or exceeding the Fund's commitment with respect to these
instruments or contracts.

SHORT SALES. Each Fund may sell a security short in anticipation of a
decline in the market value of the security. When a Fund engages in a short
sale, it sells a security which it does not own. To complete the transaction,
the Fund must borrow the security in order to deliver it to the buyer. The Fund
must replace the borrowed security by purchasing it at the market price at the
time of replacement, which may be more or less than the price at which the Fund
sold the security. The Fund will incur a loss as a result of the short sale if
the price of the security increases between the date of the short sale and the
date on which the Fund replaces the borrowed security. The Fund will realize a
profit if the security declines in price between those dates.

In connection with its short sales, a Fund will be required to maintain
a segregated account with its Custodian of cash or high grade liquid debt assets
equal to the market value of the securities sold less any collateral deposited
with its broker. However, the segregated account and deposits will not
necessarily limit the Fund's potential loss on a short sale, which is unlimited.

ILLIQUID SECURITIES. Each Fund may contain illiquid securities.
Illiquid securities generally include securities which cannot be disposed of
promptly and in the ordinary course of business without taking a reduced price.
Securities may be illiquid due to contractual or legal restrictions on resale or
lack of a ready market. The following securities are considered to be illiquid:
repurchase agreements maturing in more than seven days, nonpublicly offered
securities and restricted securities. Neither Fund will invest more than 15% of
its net assets in illiquid securities.

GENERAL. Each Fund may invest up to 5% of its net assets in each of the
following: municipal bonds, certificates of deposit, time deposits and banker's
acceptances.

GENERAL INFORMATION

FUNDAMENTAL POLICIES. The investment limitations set forth in the
Statement of Additional Information as fundamental policies may not be changed
without the affirmative vote of the majority of the outstanding shares of the
applicable Fund. The investment objective of each Fund may be changed without
the affirmative vote of a majority of the outstanding shares of the Fund. Any
such change may result in the Fund having an investment objective different from
the objective which the shareholders considered appropriate at the time of
investment in the Fund.

FUND TURNOVER. Neither Fund intends to purchase or sell securities for
short term trading purposes. However, if the objectives of a Fund would be
better served, short-term profits or losses may be realized from time to time.
It is anticipated that portfolio turnover will average less than 200% for the
CommonWealth Income Fund and less than 100% for the CommonWealth Equity Fund.
The brokerage commissions incurred by the CommonWealth Income Fund will
generally be higher than those incurred by a fund with a lower portfolio
turnover rate. The CommonWealth Income Fund does not anticipate any adverse tax
consequences as a result of its portfolio turnover rate, although substantial
net capital gains could be realized, and any distributions derived from such
gains may be ordinary income for federal tax purposes. Actual holding period
will vary by type of security and market conditions.

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PERFORMANCE INFORMATION

Each Fund may periodically advertise "average annual total return." The
"average annual total return" of a Fund refers to the average annual compounded
rate of return over the stated period that would equate an initial amount
invested at the beginning of a stated period to the ending redeemable value of
the investment. The calculation of "average annual total return" assumes the
reinvestment of all dividends and distributions.

Each Fund may also periodically advertise its total return over various
periods in addition to the value of a $10,000 investment (made on the date of
the initial public offering of the Fund's shares) as of the end of a specified
period. The "total return" for each Fund refers to the percentage change in the
value of an account between the beginning and end of the stated period, assuming
no activity in the account other than reinvestment of dividends and capital
gains distributions.

Each Fund may also include in advertisements data comparing performance
with other mutual funds as reported in non-related investment media, published
editorial comments and performance rankings compiled by independent
organizations and publications that monitor the performance of mutual funds
(such as Lipper Analytical Services, Inc., Morningstar, Inc., Fortune or
Barron's). Performance information may be quoted numerically or may be presented
in a table, graph or other illustration. In addition, Fund performance may be
compared to well-known indices of market performance including the Standard &
Poor's (S&P) 500 Index, the Dow Jones Industrial Average, the Merrill Lynch High
Yield Index and _______________ Emerging Market Index.

The advertised performance data of each Fund is based on historical performance
and is not intended to indicate future performance. Rates of total return quoted
by a Fund may be higher or lower than past quotations, and there can be no
assurance that any rate of total return will be maintained. The principal value
of an investment in each Fund will fluctuate so that a shareholder's shares,
when redeemed, may be worth more or less than the shareholder's original
investment.

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APPENDIX A
DESCRIPTION OF CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES

The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform any audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information or for other circumstances.

The ratings are based, in varying degrees, on the following
considerations:

I. Likelihood of default-capacity and willingness of the obliger as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.

II. Nature and provisions of the obligation.

III. Protection afforded by, and relative position of the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.

AAA - Debt rated "AAA" has the highest rating assigned by Standard
& Poor's. Capacity to pay interest and repay principal is extremely strong.

AA - Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.

A - Debt rated "A" has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

BBB - Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

BB, B, CCC, CC, C - Debt rated "BB", "B", "CCC", "CC", and "C" is regarded,
on balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "C" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

BB - Debt rate "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB" rating.

B - Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.

CCC - Debt rated "CCC" has a currently identifiable vulnerability to
default, and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The "CCC" rating category
is also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.

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CC - The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

C - The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

C1 - The rating "C1" is reserved for income bonds on which no interest is
being paid.

D - Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.

Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.

MOODY'S INVESTORS SERVICE, INC.

Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa - Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities, fluctuation of protective
elements may be of greater amplitude, or there may be other elements present
which make the long-term risk appear somewhat greater than the Aaa securities.

A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper- medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the future.

Baa - Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba - Bonds which are rated Ba are judged to have speculative elements:
their future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B - Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa - Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C - Bonds which are rated C are the lowest rated class of bonds, and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Moody's applies numerical modifiers: 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the

-22-

<PAGE>

higher end of its generic rating category, the modifier 2 indicates a mid-range
ranking, and the modifier 3 indicates that the issue ranks in the lower end of
its generic rating category.

-23-

<PAGE>

INVESTMENT ADVISOR ADMINISTRATOR
CommonWealth Advisors, Inc. AmeriPrime Financial Services, Inc.
247 Florida Street 1793 Kingswood Drive, Suite 200
Baton Rouge, LA 70801 Southlake, Texas 76092

CUSTODIAN DISTRIBUTOR
Star Bank, N.A. AmeriPrime Financial Securities, Inc.
P.O. Box 1118 1793 Kingswood Drive, Suite 200
Cincinnati, Ohio 45264 Southlake, Texas 76092

No person has been authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering contained in this Prospectus, and if given or made, such
information or representations must not be relied upon as being authorized by
each Fund. This Prospectus does not constitute an offer by the Funds to sell its
shares in any state to any person to whom it is unlawful to make such offer in
such state.

<PAGE>

TABLE OF CONTENTS

SUMMARY OF FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . 2

Shareholder Transaction Expenses . . . . . . . . . . . . . . . 2
Annual Fund Operating Expenses . . . . . . . . . . . . . . . . 2

THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

INVESTMENT OBJECTIVE AND STRATEGIES. . . . . . . . . . . . . . . . . . 3

General. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

HOW TO INVEST IN THE FUND. . . . . . . . . . . . . . . . . . . . . . . 4

Initial Purchase . . . . . . . . . . . . . . . . . . . . . . . 4
Additional Investments . . . . . . . . . . . . . . . . . . . . 5
Automatic Investment Plan. . . . . . . . . . . . . . . . . . . 5
Tax Sheltered Retirement Plans . . . . . . . . . . . . . . . . 5
Other Purchase Information . . . . . . . . . . . . . . . . . . 5

HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 5

By Mail. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
By Telephone . . . . . . . . . . . . . . . . . . . . . . . . . 6
By Systematic Withdrawal Plan. . . . . . . . . . . . . . . . . 6
Additional Information . . . . . . . . . . . . . . . . . . . . 6

SHARE PRICE CALCULATION. . . . . . . . . . . . . . . . . . . . . . . . 7

DIVIDENDS AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . 7

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

OPERATION OF THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 8

RISK CONSIDERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 9

INVESTMENT POLICIES AND TECHNIQUES . . . . . . . . . . . . . . . . . 11

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 19

Fundamental Policies . . . . . . . . . . . . . . . . . . . . 19
Fund Turnover. . . . . . . . . . . . . . . . . . . . . . . . 19
Shareholder Rights . . . . . . . . . . . . . . . . . . . . . 19

PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . 20

<PAGE>

CORBIN SMALL-CAP VALUE FUND

STATEMENT OF ADDITIONAL INFORMATION

_____________, 1997

This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of Corbin Small-Cap Value Fund dated
______________, 1997. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11760, or by calling 1-800-____-____.

<PAGE>

TABLE OF CONTENTS

PAGE

DESCRIPTION OF THE TRUST.......................................... -3-

ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS............................... -3-

INVESTMENT LIMITATIONS............................................ -4-

THE INVESTMENT ADVISOR............................................ -6-

TRUSTEES AND OFFICERS............................................. -7-

PORTFOLIO TRANSACTIONS AND BROKERAGE.............................. -8-

DETERMINATION OF SHARE PRICE...................................... -9-

INVESTMENT PERFORMANCE............................................ -9-

CUSTODIAN......................................................... -10-

TRANSFER AGENT.................................................... -10-

ACCOUNTANTS....................................................... -10-

DISTRIBUTOR....................................................... -11-

-2-

<PAGE>

DESCRIPTION OF THE TRUST

Corbin Small-Cap Value Fund (the "Fund") was organized as a series of
AmeriPrime Funds (the "Trust"). The Trust is an open-end investment company
established under the laws of Ohio by an Agreement and Declaration of Trust
dated August 8, 1995 (the "Trust Agreement"). The Trust Agreement permits the
Trustees to issue an unlimited number of shares of beneficial interest of
separate series without par value. The Fund is one of a series of funds
currently authorized by the Trustees.

Each share of a series represents an equal proportionate interest in the
assets and liabilities belonging to that series with each other share of that
series and is entitled to such dividends and distributions out of income
belonging to the series as are declared by the Trustees. The shares do not have
cumulative voting rights or any preemptive or conversion rights, and the
Trustees have the authority from time to time to divide or combine the shares of
any series into a greater or lesser number of shares of that series so long as
the proportionate beneficial interest in the assets belonging to that series and
the rights of shares of any other series are in no way affected. In case of any
liquidation of a series, the holders of shares of the series being liquidated
will be entitled to receive as a class a distribution out of the assets, net of
the liabilities, belonging to that series. Expenses attributable to any series
are borne by that series. Any general expenses of the Trust not readily
identifiable as belonging to a particular series are allocated by or under the
direction of the Trustees in such manner as the Trustees determine to be fair
and equitable. No shareholder is liable to further calls or to assessment by the
Trust without his or her express consent.

For information concerning the purchase and redemption of shares of the
Fund, see "How to Invest in the Fund" and "How to Redeem Shares" in the Fund's
Prospectus. For a description of the methods used to determine the share price
and value of the Fund's assets, see "Share Price Calculation" in the Fund's
Prospectus.

ADDITIONAL INFORMATION ABOUT FUND INVESTMENTS AND RISK CONSIDERATIONS

This section contains a more detailed discussion of some of the investments
the Fund may make and some of the techniques it may use, as described in the
Prospectus (see "Investment Objectives and Strategies and Risk Considerations"
and "Investment Policies and Techniques").

A. Foreign Securities. The Fund may invest up to 5% of its net assets in
foreign equity securities including common stock, preferred stock and common
stock equivalents issued by foreign companies. Purchases of foreign securities
are usually made in foreign currencies and, as a result, the Fund may incur
currency conversion costs and may be affected favorably or unfavorably by
changes in the value of foreign currencies against the U.S. dollar. In addition,
there may be less information publicly available about a foreign company then
about a U.S. company, and foreign companies are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the U.S. Other risks associated with investments in foreign
securities include changes in restrictions on foreign currency transactions and
rates of exchanges, changes in the administrations or economic and monetary
policies of foreign governments, the imposition of exchange control regulations,
the possibility of expropriation decrees and other adverse foreign governmental
action, the imposition of foreign taxes, less liquid markets, less government
supervision of exchanges, brokers and issuers, difficulty in enforcing
contractual obligations, delays in settlement of securities transactions and
greater price volatility. In addition, investing in foreign securities will
generally result in higher commissions than investing in similar domestic
securities.

-3-

<PAGE>

B. Financial Services Industry Obligations. The Fund may invest up to 5%
of its net assets in each of the following obligations of the financial services
industry:

(1) Certificate of Deposit. Certificates of deposit are
negotiable certificates evidencing the indebtedness of a commercial
bank or a savings and loan association to repay funds deposited with
it for a definite period of time (usually from fourteen days to one
year) at a stated or variable interest rate.

(2) Time Deposits. Time deposits are non-negotiable deposits
maintained in a banking institution or a savings and loan association
for a specified period of time at a stated interest rate.

(3) Bankers' Acceptances. Bankers' acceptances are credit
instruments evidencing the obligation of a bank to pay a draft which
has been drawn on it by a customer, which instruments reflect the
obligation both of the bank and of the drawer to pay the face amount
of the instrument upon maturity.

C. Illiquid Securities. The portfolio of the Fund may contain
illiquid securities. Illiquid securities generally include securities which
cannot be disposed of promptly and in the ordinary course of business without
taking a reduced price. Securities may be illiquid due to contractual or legal
restrictions on resale or lack of a ready market. The following securities are
considered to be illiquid: repurchase agreements maturing in more than seven
days, nonpublicly offered securities and restricted securities. The Fund will
not invest more than 5% of its net assets in illiquid securities.

INVESTMENT LIMITATIONS

Fundamental. The investment limitations described below have been adopted
by the Trust with respect to the Fund and are fundamental ("Fundamental"), i.e.,
they may not be changed without the affirmative vote of a majority of the
outstanding shares of the Fund. As used in the Prospectus and this Statement of
Additional Information, the term "majority" of the outstanding shares of the
Fund means the lesser of (1) 67% or more of the outstanding shares of the Fund
present at a meeting, if the holders of more than 50% of the outstanding shares
of the Fund are present or represented at such meeting; or (2) more than 50% of
the outstanding shares of the Fund. Other investment practices which may be
changed by the Board of Trustees without the approval of shareholders to the
extent permitted by applicable law, regulation or regulatory policy are
considered non-fundamental ("Non-Fundamental").

1. Borrowing Money. The Fund will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.

2. Senior Securities. The Fund will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or

-4-

<PAGE>

interpretations of the Securities and Exchange Commission or its staff and (b)
as described in the Prospectus and this Statement of Additional Information.

3. Underwriting. The Fund will not act as underwriter of securities issued
by other persons. This limitation is not applicable to the extent that, in
connection with the disposition of portfolio securities (including restricted
securities), the Fund may be deemed an underwriter under certain federal
securities laws.

4. Real Estate. The Fund will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude the Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).

5. Commodities. The Fund will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude the Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.

6. Loans. The Fund will not make loans to other persons, except (a)
loaning portfolio securities, (b) by engaging in repurchase agreements, or (c)
by purchasing nonpublicly offered debt securities. For purposes of this
limitation, the term "loans" shall not include the purchase of a portion
of an issue of publicly distributed bonds, debentures or other securities.

7. Concentration. The Fund will not invest 25% or more of its total assets
in a particular industry. This limitation is not applicable to investments in
obligations issued or guaranteed by the U.S. government, its agencies and
instrumentalities or repurchase agreements with respect thereto.

With respect to the percentages adopted by the Trust as maximum limitations
on its investment policies and limitations, an excess above the fixed percentage
will not be a violation of the policy or limitation unless the excess results
immediately and directly from the acquisition of any security or the action
taken. This paragraph does not apply to the borrowing policy set forth in
paragraph 1 above.

Notwithstanding any of the foregoing limitations, any investment company,
whether organized as a trust, association or corporation, or a personal holding
company, may be merged or consolidated with or acquired by the Trust, provided
that if such merger, consolidation or acquisition results in an investment in
the securities of any issuer prohibited by said paragraphs, the Trust shall,
within ninety days after the consummation of such merger, consolidation or
acquisition, dispose of all of the securities of such issuer so acquired or such
portion thereof as shall bring the total investment therein within the
limitations imposed by said paragraphs above as of the date of consummation.

Non-Fundamental. The following limitations have been adopted by the Trust
with respect to the Fund and are Non-Fundamental (see "Investment Restrictions"
above).

1. Pledging. The Fund will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of the Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.

-5-

<PAGE>

2. Borrowing. The Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding. The Fund will not enter into reverse repurchase
agreements.

3. Margin Purchases. The Fund will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by the Fund for the clearance of purchases and sales or
redemption of securities, or to arrangements with respect to transactions
involving options, futures contracts, short sales and other permitted
investments and techniques.

4. Short Sales. The Fund will not effect short sales of securities.

5. Options. The Fund will not purchase or sell puts, calls, options or
straddles, except as described in the Prospectus and this Statement of
Additional Information.

6. Illiquid Investments. The Fund will not invest more than 5% of its net
assets in securities for which there are legal or contractual restrictions on
resale and other illiquid securities.

THE INVESTMENT ADVISOR

The Fund's investment advisor is Corbin & Company, 1320 S. University
Drive, Suite 406, Fort Worth, Texas (the "Advisor"). David A. Corbin may be
deemed to be a controlling person of the Advisor due to his ownership of the
shares of the corporation, and his position as Chairman and President of the
Advisor.

Under the terms of the management agreement (the "Agreement"), the Advisor
manages the Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of the Fund except brokerage, taxes, interest, fees and
expenses of the non-interested person trustees and extraordinary expenses. As
compensation for its management services and agreement to pay the Fund's
expenses, the Fund is obligated to pay the Advisor a fee computed and accrued
daily and paid monthly at an annual rate of 1.25% of the average daily net
assets of the Fund. The Advisor may waive all or part of its fee, at any time,
and at its sole discretion, but such action shall not obligate the Advisor to
waive any fees in the future.

The Advisor retains the right to use the name "Corbin" in connection with
another investment company or business enterprise with which the Advisor is or
may become associated. The Trust's right to use the name "Corbin" automatically
ceases ninety days after termination of the Agreement and may be withdrawn by
the Advisor on ninety days written notice.

-6-

<PAGE>

shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. The Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for the Fund, no preference will be shown for such
securities.

TRUSTEES AND OFFICERS

The names of the Trustees and executive officers of the Trust are shown
below. Each Trustee who is an "interested person" of the Trust, a defined in the
Investment Company Act of 1940, is indicated by an asterisk.

NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING

PAST 5 YEARS
- ---------------------- -------- ----------------------------

* Kenneth D. Trumpfheller President and President, Treasurer and Secretary of
Age: 37 Trustee AmeriPrime Financial Services, Inc., the
1793 Kingswood Drive Fund's administrator, and AmeriPrime Financial
Suite 200 Securities, Inc., the Fund's distributor.
Southlake, Texas 76092 Prior to December, 1994, a senior
client executive with SEI Financial Services.

Kelli D. Shomaker, C.P.A. Secretary, Manager of Compliance of AmeriPrime Financial
Age: 33 Treasurer Services, Inc.; Vice President,
1793 Kingswood Drive Chief Accounting Officer, Treasurer and
Suite 200 Controller of United Services Advisors,
Southlake, Texas 76092 from 1994 to 1995; Vice President,
Inc. and United Services Insurance Funds Chief Accounting Officer, Treasurer,
and Controller of Accolade Funds and
Pauze/Swanson United Services Funds from
1993 to 1995; Controller from 1987 to
1995 and Vice President, Chief Accounting
Officer and Treasurer from 1990 to
1995 of United Services Funds; Director
of Security Trust & Financial Company
from 1993 to 1995.

Steve L. Cobb Trustee President of Clare Energy, Inc.,
Age: 37 oil and gas exploration company; International
140 Mockingbird Lane Marketing Manager of Carbo Ceramics Inc.,
Coppell, Texas 76019 oil field manufacturing/supply company.

-7-

<PAGE>

Gary E. Hippenstiel Trustee President and Director of Heritage Trust
Age: 48 Company; Vice President and Chief
600 Jefferson Street Investment Officer of Legacy Trust Company;
Houston, Texas 70002 Vice President and Manager of Investments
of Kanaly Trust Company from 1988 to 1992.

</TABLE>

Trustee fees are Trust expenses and each series of the Trust pays a portion
of the Trustee fees. The compensation paid to the Trustees for the fiscal year
ended October 31, 1996 is set forth in the following table:

NAME TOTAL COMPENSATION FROM TRUST
(THE TRUST IS NOT IN A FUND COMPLEX)

Kenneth D. Trumpfheller 0

Steve L. Cobb $4,000

Gary E. Hippenstiel $4,000
</TABLE>

PORTFOLIO TRANSACTIONS AND BROKERAGE

Subject to policies established by the Board of Trustees of the Trust, the
Advisor is responsible for the Fund's portfolio decisions and the placing of the
Fund's portfolio transactions. In placing portfolio transactions, the Advisor
seeks the best qualitative execution for the Fund, taking into account such
factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. The Advisor generally seeks favorable prices and commission
rates that are reasonable in relation to the benefits received.

The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Fund and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.

-8-

<PAGE>

the Fund. Although research services and other information are useful to the
Fund and the Advisor, it is not possible to place a dollar value on the research
and other information received. It is the opinion of the Board of Trustees and
the Advisor that the review and study of the research and other information will
not reduce the overall cost to the Advisor of performing its duties to the Fund
under the Agreement.

Over-the-counter transactions will be placed either directly with principal
market makers or with broker-dealers, if the same or a better price, including
commissions and executions, is available. Fixed income securities are normally
purchased directly from the issuer, an underwriter or a market maker. Purchases
include a concession paid by the issuer to the underwriter and the purchase
price paid to a market maker may include the spread between the bid and asked
prices.

When the Fund and another of the Advisor's clients seek to purchase or sell
the same security at or about the same time, the Advisor may execute the
transaction on a combined ("blocked") basis. Blocked transactions can produce
better execution for the Fund because of the increased volume of the
transaction. If the entire blocked order is not filled, the Fund may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Fund may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular portfolio security if the other client desires to sell the same
portfolio security at the same time. In the event that the entire blocked order
is not filled, the purchase or sale will normally be allocated by random client
selection, grouping discretionary and non-discretionary accounts, and in a
manner to reduce custodian transaction costs.

DETERMINATION OF SHARE PRICE

The price (net asset value) of the shares of the Fund is determined as of
4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in the Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. For a description of the methods used to determine
the net asset value (share price), see "Share Price Calculation" in the
Prospectus.

INVESTMENT PERFORMANCE

"Average annual total return," as defined by the Securities and Exchange
Commission, is computed by finding the average annual compounded rates of return
for the period indicated that would equate the initial amount invested to the
ending redeemable value, according to the following formula:

P(1+T)n=ERV

Where: P = a hypothetical $1,000 initial investment
T = average annual total return
N = number of years

-9-

<PAGE>

ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.

The computation assumes that all dividends and distributions are reinvested
at the net asset value on the reinvestment dates and that a complete redemption
occurs at the end of the applicable period.

The Fund's investment performance will vary depending upon market
conditions, the composition of the Fund's portfolio and operating expenses of
the Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing the Fund's performance to those of other investment companies or
investment vehicles. The risks associated with the Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.

From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of the Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the portfolio holdings of the Fund or
considered to be representative of the stock market in general. The Fund may use
the Russell 2000 Index or the ________________________________.

In addition, the performance of the Fund may be compared to other groups of
mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.

CUSTODIAN

Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian of
the Fund's investments. The Custodian acts as the Fund's depository, safekeeps
its portfolio securities, collects all income and other payments with respect
thereto, disburses funds at the Fund's request and maintains records in
connection with its duties.

TRANSFER AGENT

American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11760, acts as the Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of the Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, American Data Services, Inc. provides the Fund with certain monthly
reports, record-keeping and other management-related services.

-10-

<PAGE>

ACCOUNTANTS

The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake, Ohio
44145, has been selected as independent public accountants for the Trust for the
fiscal year ending October 31, 1997. McCurdy & Associates performs an annual
audit of the Fund's financial statements and provides financial, tax and
accounting consulting services as requested.

DISTRIBUTOR

AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of the
Fund. The Distributor is obligated to sell the shares of the Fund on a best
efforts basis only against purchase orders for the shares. Shares of the Fund
are offered to the public on a continuous basis.

-11-

<PAGE>

COMMONWEALTH ADVISOR FUNDS

STATEMENT OF ADDITIONAL INFORMATION

________________, 1997

This Statement of Additional Information is not a prospectus. It should
be read in conjunction with the Prospectus of CommonWealth Advisor Funds dated
___________, 1997. A copy of the Prospectus can be obtained by writing the
Transfer Agent at Hauppauge Corporate Center, 150 Motor Parkway, Hauppauge, NY
11760, or by calling 1-800-____-____.

<PAGE>

TABLE OF CONTENTS

Page

DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . -1-

ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS. . . . . . . . . . . . . . . . -1-

INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . -21-

THE INVESTMENT ADVISOR . . . . . . . . . . . . . . . . . . . . . . -24-

TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . -24-

FUND TRANSACTIONS AND BROKERAGE. . . . . . . . . . . . . . . . . . -26-

DETERMINATION OF SHARE PRICE . . . . . . . . . . . . . . . . . . . -27-

INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . -27-

CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-

TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . -28-

ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-

DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . -28-

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DESCRIPTION OF THE TRUST

CommonWealth Bond Fund and Commonwealth Growth Fund (each a "Fund" or
collectively the "Funds") were organized as series of AmeriPrime Funds (the
"Trust"). The Trust is an open-end investment company established under the laws
of Ohio by an Agreement and Declaration of Trust dated August 8, 1995 (the
"Trust Agreement"). The Trust Agreement permits the Trustees to issue an
unlimited number of shares of beneficial interest of separate series without par
value. Each Fund is one of a series of funds currently authorized by the
Trustees, and are referred to, and may conduct business as, the "CommonWealth
Advisor Funds."

For information concerning the purchase and redemption of shares of the
Funds, see "How to Invest in the Funds" and "How to Redeem Shares" in the Funds"
Prospectus. For a description of the methods used to determine the share price
and value of each Fund's assets, see "Share Price Calculation" in the Funds'
Prospectus.

ADDITIONAL INFORMATION ABOUT FUND
INVESTMENTS AND RISK CONSIDERATIONS

This section contains a more detailed discussion of some of the
investments each Fund may make and some of the techniques it may use, as
described in the Prospectus (see "Investment Objectives and Strategies",
"Risk Considerations" and "Investment Policies and Techniques").

A. Lower Quality Debt Securities. Each Fund may purchase lower quality
debt securities, or unrated debt securities, that have poor protection of
payment of principal and interest. These securities often are considered to be
speculative and involve greater risk of default and of price changes due to
changes in the issuer's creditworthiness. Market prices of these securities may
fluctuate more than higher quality debt securities and may decline significantly
in periods of general economic difficulty which may follow periods of rising
rates. While the market for high yield corporate debt securities has been in
existence for many years and has weathered previous economic downturns, the
market in recent years has experienced a dramatic increase in the large-scale
use of such securities to fund highly leveraged corporate acquisitions and
restructurings. Accordingly, past experience may not provide an accurate
indication of future performance of the high yield bond market, especially
during periods of economic recession. A Fund may invest in securities which are
of lower quality or are unrated if the Advisor determines that the securities
provide the opportunity

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of meeting a Fund's objective without presenting excessive risk. The Advisor
will consider all factors which it deems appropriate, including ratings, in
making investment decisions for a Fund and will attempt to minimize investment
risks through diversification, investment analysis and monitoring of general
economic conditions and trends. To the extend a Fund invests in lower quality
securities, achievement of its investment objective may be more dependent on the
Advisor's credit analyses than is the case for higher quality bonds. While the
Advisor may refer to ratings, it does not rely exclusively on ratings, but makes
its own independent and ongoing review of credit quality.

The market for lower quality securities may be thinner and less active
than that for higher quality securities, which can adversely affect the prices
at which these securities can be sold. If there is not established retail
secondary market and market quotations are not available, these securities are
valued in accordance with procedures established by the Board of Trustees,
including the use of outside pricing services. Judgment plays a greater role in
valuing high yield corporate debt securities than is the case for securities for
which external sources for quotations and last-sale information are available.
Adverse publicity and changing investor perceptions may affect the ability of
outside pricing services used by a Fund to value as Fund securities, and a
Fund's ability to dispose of these lower quality debt securities.

Lower quality securities present risks based on payment expectations. For
example, high yield bonds may contain redemption or call provisions. If an
issuer exercises the provisions in a declining interest rate market, a Fund
would have to replace the security with a lower yielding security, resulting in
a decreased return for investors. Conversely, a high yield bond's value will
decrease in a rising interest rate market, as will the value of a Fund's assets.
If a Fund experiences unexpected net redemptions, this may force it to sell its
high yield bonds, without regard to their investment merits, thereby decreasing
the asset base upon which the Fund's expenses can be spread and possibly
reducing the Fund's rate of return.

Since the risk of default is higher for lower quality securities and
sometimes increases with the age of these securities, the Advisor's research and
credit analysis are an integral part of managing any securities of this type
held by a Fund. In considering investments for a Fund, the Advisor attempts to
identify those issuers of high-yielding securities whose financial condition is
adequate to meet future obligations, has improved or is expected to improve in
the future. The Advisor's analysis focuses on relative values based on such
factors as interest or dividend coverage, asset coverage, earning prospects, and
the experience and managerial strength of the issuer.

B. BRADY BONDS. Each Fund may invest in "Brady bonds," which have
been issued by the governments of Argentina, Brazil, Costa Rica, Mexico,
Nigeria, Philippines, Uruguay and Venezuela. Most Brady bonds are currently
rated below BBB by S&P or Baa by Moody's.

The Brady Plan was conceived by the U.S. Treasury in the 1980's in an
attempt to produce a debt restructuring program which would enable a debt
country to (i) reduce the absolute level of debt of its creditor banks, and (ii)
reschedule its external debt repayments, based upon its ability to service such
debts by persuading its creditor banks to accept a debt write-off by offering
them a selection of options, each of which represented an attractive substitute
for the nonperforming debt. Although it was envisaged that each debtor country
would agree to a unique package of options with its creditor banks, the plan was
that these options would be based upon the following:(i) a discount bond
carrying a market rate of interest (whether fixed or floating), with principal
collateralized by

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the debtor country with cash or securities in an amount equal to at
least one year of rolling interest; (ii) a par bond carrying a low rate of
interest (whether fixed or floating), collateralized in the same way as in (i)
above; and (iii) retention of existing debt (thereby avoiding a debt write-off)
coupled with an advance of new money or subscription of new bonds.

Each Fund may invest in either collateralized or uncollateralized Brady
bonds. U.S. dollar-denominated, collateralized Brady bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on such bonds generally are collateralized by cash or
securities in an amount that in the case of fixed rate bonds, is equal to at
least one year of rolling interest payments or, in the case of floating rate
bonds, initially is equal to at least one year's rolling interest payments based
on the applicable interest rate at the time and is adjusted at regular intervals
thereafter.

C. MUNICIPAL BONDS. Municipal bonds generally fund longer-term capital
needs than municipal notes and have maturities exceeding one year when issued.
Municipal bonds include:

General Obligation Bonds. Issuers of general obligation bonds include
states, counties, cities, towns and regional districts. The proceeds of these
obligations are used to fund a wide range of public projects, including
construction or improvement of schools, highways and roads, and water and sewer
systems. The basic security behind general obligation bonds is the issuer's
pledge of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the payment of debt
service may be limited or unlimited as to the rate or amount of special
assessments.

REVENUE BONDS. The principal security for a revenue bond is generally the
net revenues derived from a particular facility, group of facilities or, in some
cases, the proceeds of a special excise tax or other specific revenue source.
Revenue bonds are issued to finance a wide variety of capital projects,
including electric, gas, water and sewer systems; highways, bridges, and
tunnels; port and airport facilities; colleges and universities; and hospitals.
Although the principal security behind these bonds may vary, many provide
additional security in the form of a debt service reserve fund that may be used
to make principal and interest payments on the issuer's obligations. Housing
finance authorities have a wide range of security, including partially or fully
insured mortgages, rent subsidized and/or collateralized mortgages, certificates
of deposit and/or the net revenues from housing or other public projects. Some
authorities provide further security in the form of a state's ability
(without obligation) to make up deficiencies in the debt service reserve fund.

PRIVATE ACTIVITY BONDS. Private activity bonds, which are considered
municipal obligations if the interest paid thereon is excluded from gross income
for Federal income tax purposes but is a specific tax preference item for
Federal individual and corporate alternative minimum tax purposes, are issued by
or on behalf of public authorities to raise money to finance various
privately-operated facilities such as manufacturing facilities, certain hospital
and university facilities and housing projects. These bonds are also used to
finance public facilities such as airports, mass transit systems and ports. The
payment of the principal and interest on these bonds is dependent solely on the
ability of the facility's user to meet its financial obligations and
generally the pledge, if any, of real and personal property so financed as
security for payment.

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MUNICIPAL NOTES. Municipal notes generally fund short-term capital needs.
Each Fund may invest in municipal notes, which include:

TAX ANTICIPATION NOTES. Tax anticipation notes are issued to finance
working capital needs of municipalities. Generally, they are issued in
anticipation of various seasonal tax revenue, such as income, sales, use and
business taxes, and are payable from these specific future taxes.

REVENUE ANTICIPATION NOTES. Revenue anticipation notes are issued in
expectation of receipt of other types of revenue, such as Federal revenues
available under Federal revenue sharing programs.

BOND ANTICIPATION NOTES. Bond anticipation notes are issued to provide
interim financing until long-term financing can be arranged. In most cases, the
long-term bonds provide funds for the repayment of these notes.

MISCELLANEOUS, TEMPORARY AND ANTICIPATORY INSTRUMENTS. These instruments
may include notes issued to obtain interim financing pending entering into
alternate financial arrangements, such as receipt of anticipated Federal, state
or other grants or aid, passage of increased legislative authority to issue
longer-term instruments or obtaining other refinancing.

CONSTRUCTION LOAN NOTES. Construction loan notes are sold to provide
construction financing. Permanent financing, the proceeds of which are applied
to the payment of construction loan notes, is sometimes provided by a commitment
of the Government National Mortgage Association ("GNMA") to purchase
the loan, accompanied by a commitment by the Federal Housing Administration to
insure mortgage advances thereunder. In other instances, permanent financing is
provided by commitments of banks to purchase the loan. Each Fund will only
purchase construction loan notes that are subject to permanent GNMA or bank
purchase commitments.

TAX EXEMPT COMMERCIAL PAPER. Each Fund may invest in tax-exempt commercial
paper. Tax-exempt commercial paper is a short-term obligation with a stated
maturity of 365 days or less. It is issued by agencies of state and local
governments to finance seasonal working capital needs or as short-term financing
in anticipation of longer-term financing.

STANDBY COMMITMENTS. Each Fund may acquire standby commitments or
"puts" solely to facilitate Fund liquidity; the Fund intends to exercise
its rights thereunder for trading purposes. The maturity of a municipal
obligation is not to be considered shortened by any standby commitment to which
the obligation is subject. Thus, standby commitments do not affect the
dollar-weighted average maturity of the Fund.

When municipal obligations are subject to puts separate from the
underlying securities, no value is assigned to the put. Because of the
difficulty of evaluating the likelihood of exercise or the potential benefit of
a put, the Board of Trustees has determined that puts shall have a fair market
value of zero, regardless of whether any direct or indirect consideration was
paid.

Since the value of the put is partly dependent on the ability of the put
writer to meet its obligation to repurchase, the Fund's policy is to enter into
put transactions only with put writers who are approved by Advisor. It is the
Fund's general policy to enter into put transactions only with those put writers
which are determined to present minimal credit risks. In connection with this

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determination, the Board of Trustees will review regularly Advisor's list of
approved put writers, taking into consideration, among other things, the
ratings, if available, of their equity and debt securities, their reputation in
the municipal securities markets, their net worth, their efficiency in
consummating transactions and any collateral arrangements, such as letters of
credit securing the puts written by them. Commercial banks normally will be
members of the Federal Reserve System, and other dealers will be members of the
National Association of Securities Dealers, Inc. or members of a national
securities exchange. Other put writers will have outstanding debt rated Aa or
better by Moody's Investors Services, Inc. ("Moody's") or AA or better by
Standard & Poor's Ratings Group ("S&P"), or will be of comparable quality in
Advisor's opinion, or such put writers' obligations will be collateralized and
of comparable quality in Advisor's opinion. The Board of Trustees has directed
Advisor not to enter into put transactions with any put writer that, in the
judgment of Advisor using the above-described criteria, is or becomes a
recognizable credit risk. The Trust is unable to predict whether all or any
portion of any loss sustained could subsequently be recovered from a put writer
in the event that a put writer should default on its obligation to repurchase an
underlying security.

D. FOREIGN SECURITIES. Each Fund may invest in foreign equity securities
including common stock, preferred stock and common stock equivalents issued by
foreign companies, and foreign fixed income securities. Foreign fixed income
securities include corporate debt obligations issued by foreign companies and
debt obligations of foreign governments or international organizations. This
category may include floating rate obligations, variable rate obligations,
Yankee dollar obligations (U.S. dollar denominated obligations issued by foreign
companies and traded on U.S. markets) and Eurodollar obligations (U.S. dollar
denominated obligations issued by foreign companies and traded on foreign
markets).

Foreign government obligations generally consist of debt securities
supported by national, state or provincial governments or similar political
units or governmental agencies. Such obligations may or may not be backed by the
national government's full faith and credit and general taxing powers.
Investments in foreign securities also include obligations issued by
international organizations. International organizations include entities
designated or supported by governmental entities to promote economic
reconstruction or development as well as international banking institutions and
related government agencies. Examples are the International Bank for
Reconstruction and Development (the World Bank), the European Coal and Steel
Community, the Asian Development Bank and the InterAmerican Development Bank. In
addition, investments in foreign securities may include debt securities
denominated in multinational currency units of an issuer (including
international issuers). An example of a multinational currency unit is the
European Currency Unit. A European Currency Unit represents specified amounts of
the currencies of certain member states of the European Economic Community, more
commonly known as the Common Market.

Purchases of foreign securities are usually made in foreign currencies
and, as a result, a Fund may incur currency conversion costs and may be affected
favorably or unfavorably by changes in the value of foreign currencies against
the U.S. dollar. In addition, there may be less information publicly available
about a foreign company then about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the U.S. Other risks associated with
investments in foreign securities include changes in restrictions on foreign
currency transactions and rates of exchanges, changes in the administrations or
economic and monetary policies of foreign governments, the imposition of

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exchange control regulations, the possibility of expropriation decrees and other
adverse foreign governmental action, the imposition of foreign taxes, less
liquid markets, less government supervision of exchanges, brokers and issuers,
difficulty in enforcing contractual obligations, delays in settlement of
securities transactions and greater price volatility. In addition, investing in
foreign securities will generally result in higher commissions than investing in
similar domestic securities.

E. FINANCIAL SERVICES INDUSTRY OBLIGATIONS. Each Fund may invest up to 5%
of its net assets in each of the following obligations of the financial services
industry:

(1) Certificate of Deposit. Certificates of deposit are negotiable
certificates evidencing the indebtedness of a commercial bank or a savings
and loan association to repay funds deposited with it for a definite
period of time (usually from fourteen days to one year) at a stated or
variable interest rate.

(2) Time Deposits. Time deposits are non-negotiable deposits maintained
in a banking institution or a savings and loan association for a specified
period of time at a stated interest rate.

(3) Bankers' Acceptances. Bankers' acceptances are credit instruments
evidencing the obligation of a bank to pay a draft which has been drawn on
it by a customer, which instruments reflect the obligation both of the
bank and of the drawer to pay the face amount of the instrument upon
maturity.

F. REPURCHASE AGREEMENTS. A repurchase agreement is a short-term
investment in which the purchaser (i.e., a Fund) acquires ownership of a U.S.
Government obligation (which may be of any maturity) and the seller agrees to
repurchase the obligation at a future time at a set price, thereby determining
the yield during the purchaser's holding period (usually not more than seven
days from the date of purchase). Any repurchase transaction in which a Fund
engages will require full collateralization of the seller's obligation during
the entire term of the repurchase agreement. In the event of a bankruptcy or
other default of the seller, a Fund could experience both delays in liquidating
the underlying security and losses in value. However, each Fund intends to enter
into repurchase agreements only with the Custodian, other banks with assets of
$1 billion or more and registered securities dealers determined by the Advisor
(subject to review by the Board of Trustees) to be creditworthy. The Advisor
monitors the creditworthiness of the banks and securities dealers with which a
Fund engages in repurchase transactions.

G. MORTGAGE-BACKED SECURITIES. Mortgage-backed securities represent
participation interests in pools of one-to-four family residential mortgage
loans originated by private mortgage originators. Traditionally, residential
mortgage-backed securities have been issued by governmental agencies such as
Fannie Mae, Freddie Mac and Ginnie Mae. The Fund intends to invest only in those
securities guaranteed by governmental agencies. The Fund does not intend to
invest in commercial mortgage-backed securities. Non-governmental entities that
have issued or sponsored residential mortgage-backed securities offerings
include savings and loan associations, mortgage banks, insurance companies,
investment banks and special purpose subsidiaries of the foregoing.

While residential loans do not typically have prepayment penalties or
restrictions, they are often structured so that subordinated classes may be
locked out of prepayments for a period of time. However, in a period of
extremely rapid prepayments, during which senior classes may be

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retired faster than expected, the subordinated classes may receive unscheduled
payments of principal and would have average lives that, while longer than the
average lives of the senior classes, would be shorter than originally expected.
The types of residential mortgage-backed securities which the Fund may invest
in may include the following:

GUARANTEED MORTGAGE PASS-THROUGH SECURITIES. Each Fund may invest in
mortgage pass-through securities representing participation interests in pools
of residential mortgage loans originated by the U.S. government and guaranteed,
to the extent provided in such securities, by the U.S. government or one of its
agencies or instrumentalities. Such securities, which are ownership interests in
the underlying mortgage loans, differ from conventional debt securities, which
provide for periodic payment of interest in fixed amounts (usually
semi-annually) and principal payments at maturity or on specified call dates.
Mortgage pass-through securities provide for monthly payments that are a
"pass-through" of the monthly interest and principal payments (including
any prepayments) made by the individual borrowers on the pooled mortgage loans,
net of any fees paid to the guarantor of such securities and the servicer of the
underlying mortgage loans. The guaranteed mortgage pass-through securities in
which the Fund will invest are those issued or guaranteed by Ginnie Mae, Fannie
Mae and Freddie Mac.

GINNIE MAE CERTIFICATES. Ginnie Mae is a wholly-owned corporate
instrumentality of the United States Government within the Department of Housing
and Urban Development. The National Housing Act of 1934, as amended (the
"Housing Act"), authorizes Ginnie Mae to guarantee the timely payment of
the principal of and interest on certificates that are based on and backed by a
pool of mortgage loans insured by the Federal Housing Administration under the
Housing Act, or Title V of the Housing Act of 1949 ("FHA Loans"), or
guaranteed by the Veterans' Administration under the Servicemen's
Readjustment Act of 1944, as amended ("VA Loans"), or by pools of other
eligible mortgage loans. The Housing Act provides that the full faith and credit
of the U.S. government is pledged to the payment of all amounts that may be
required to be paid under any guarantee. In order to meet its obligations under
such guarantee, Ginnie Mae is authorized to borrow from the U.S. Treasury with
no limitations as to amount.

The Ginnie Mae Certificates will represent a pro rata interest in one or
more pools of the following types of mortgage loans: (i) fixed rate level
payment mortgage loans; (ii) fixed rate graduated payment mortgage loans; (iii)
fixed rate growing equity mortgage loans; (iv) fixed rate mortgage loans secured
by manufactured (mobile) homes; (v) mortgage loans on multifamily residential
properties under construction; (vi) mortgage loans on completed multifamily
projects; (vii) fixed rate mortgage loans as to which escrowed funds are used to
reduce the borrower's monthly payments during the early years of the mortgage
loans ("buydown" mortgage loans); (viii) mortgage loans that provide for
adjustments in payments based on periodic changes in interest rates or in other
payment terms of the mortgage loans; and (ix) mortgage-backed serial notes. All
of these mortgage loans will be FHA Loans or VA Loans and, except as otherwise
specified above, will be fully-amortizing loans secured by first liens on
one-to-four family housing units.

FANNIE MAE CERTIFICATES. Fannie Mae is a federally chartered and privately
owned corporation organized and existing under the Federal National Mortgage
Association Charter Act. Fannie Mae was originally established in 1938 as a U.S.
government agency to provide supplemental liquidity to the mortgage market and
was transformed into a stockholder owned and

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privately managed corporation by legislation enacted in 1968. Fannie Mae
provides funds to the mortgage market primarily by purchasing home mortgage
loans from local lenders, thereby replenishing their funds for additional
lending. Fannie Mae acquires funds to purchase home mortgage loans from many
capital market investors that may not ordinarily invest in mortgage loans
directly, thereby expanding the total amount of funds available for housing.

Each Fannie Mae Certificate entitles the registered holder thereof to
receive amounts representing such holder's pro rata interest in scheduled
principal payments and interest payments (at such Fannie Mae Certificate's
pass-through rate, which is net of any servicing and guarantee fees on the
underlying mortgage loans), and any principal prepayments on the mortgage loans
in the pool represented by such Fannie Mae Certificate and such holder's
proportionate interest in the full principal amount of any foreclosed or
otherwise finally liquidated mortgage loan. The full and timely payment of
principal of and interest on each Fannie Mae Certificate will be guaranteed by
Fannie Mae, which guarantee is not backed by the full faith and credit of the
U.S. government.

Each Fannie Mae Certificate will represent a pro rata interest in one
or more pools of FHA Loans, VA Loans or conventional mortgage loans (i.e.,
Mortgage Loans that are not insured or guaranteed by any governmental agency) of
the following types; (i) fixed rate level payment mortgage loans; (ii) fixed
rate growing equity mortgage loans; (iii) fixed rate graduated payment mortgage
loans; (iv) variable rate California mortgage loans; (v) other adjustable rate
mortgage loans; and (vi) fixed rate mortgage loans secured by multifamily
projects.

FREDDIE MAC CERTIFICATES. Freddie Mac is a corporate instrumentality of
the United States Government created pursuant to the Emergency Home Finance Act
of 1970, as amended (the "FHLMC Act"). Freddie Mac was established primarily for
the purpose of increasing the availability of mortgage credit for the financing
of needed housing. The principal activity of Freddie Mac currently consists of
the purchase of first lien, conventional, residential mortgage loans and
participation interests in such mortgage loans and the resale of the mortgage
loans so purchased in the form of mortgage securities, primarily Freddie Mac
Certificates.

Freddie Mac guarantees to each registered holder of a Freddie Mac
Certificate the timely payment of interest at the rate provided for by such
Freddie Mac Certificate, whether or not received. Freddie Mac also guarantees to
each registered holder of a Freddie Mac Certificate ultimate collection of all
principal of the related mortgage loans, without any offset or deduction, but
does not generally guarantee the timely payment of scheduled principal. Freddie
Mac may remit the amount due on account of its guarantee of collection of
principal at any time after default on an underlying mortgage loan, but not
later than 30 days following (i) foreclosure sale, (ii) payment of a claim by
any mortgage insurer, or (iii) the expiration of any right of redemption,
whichever occurs later, but in any event no later than one year after demand has
been made upon the mortgagor for acceleration of payment of principal. The
obligations of Freddie Mac under its guarantee are obligations solely of Freddie
Mac and are not backed by the full faith and credit of the U.S. government.

Freddie Mac Certificates represent a pro rata interest in a group of
mortgage loans (a "Freddie Mac Certificate group") purchased by Freddie Mac. The
mortgage loans underlying the Freddie Mac Certificates will consist of fixed
rate or adjustable rate mortgage loans with

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original terms to maturity of between ten and thirty years, substantially all
of which are secured by first liens on one-to-four family residential properties
or multifamily projects. Each mortgage loan must meet the applicable standards
set forth in the FHLMC Act. A Freddie Mac Certificate group may include whole
loans, participation interests in whole loans and undivided interests in whole
loans and participations comprising another Freddie Mac Certificate group.

PRIVATE MORTGAGE PASS-THROUGH SECURITIES. Private mortgage pass-through
securities ("Private Pass-Throughs") are structured similarly to the
Ginnie Mae, Fannie Mae and Freddie Mac mortgage pass-through securities
described above and are issued by originators of and investors in mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing.
Private Pass-Throughs are usually backed by a pool of conventional fixed rate or
adjustable rate mortgage loans.

Since Private Pass-Throughs typically are not guaranteed by an entity
having the credit status of Ginnie Mae, Fannie Mae or Freddie Mac, such
securities generally are structured with one or more types of credit
enhancement.

COLLATERALIZED MORTGAGE OBLIGATIONS. Collateralized mortgage
obligations or "CMOs" are debt obligations collateralized by mortgage
loans or mortgage pass-through securities. Typically, CMOs are collateralized by
Ginnie Mae, Fannie Mae or Freddie Mac Certificates, but also may be
collateralized by whole loans or Private Pass-Throughs (such collateral
collectively hereinafter referred to as "Mortgage Assets").

STRIPPED MORTGAGE-BACKED SECURITIES. Multi-class pass-through securities
are equity interests in a fund composed of Mortgage Assets. Unless the context
indicates otherwise, all references herein to CMOs include multi-class
pass-through securities. Payments of principal of and interest on the Mortgage
Assets, and any reinvestment income thereon, provide the funds to pay debt
service on the CMOs or make scheduled distributions on the multi-class
pass-through securities. CMOs may be sponsored by agencies or instrumentalities
of the U.S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing. Under
current law, every newly created CMO issuer must elect to be treated for federal
income tax purposes as a Real Estate Mortgage Investment Conduit (a "REMIC").

In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a"tranche", is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal prepayments on the Mortgage Assets may cause the CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates. Interest is paid or accrues on all classes of the CMOs on a monthly,
quarterly or semi-annual basis. The principal of and interest on the Mortgage
Assets may be allocated among the several classes of a series of a CMO in
innumerable ways. In one structure, payments of principal, including any
principal prepayments, on the Mortgage Assets are applied to the classes of a
CMO in the order of their respective stated maturities or final distribution
dates, so that no payment of principal will be made on any class of CMOs until
all other classes having an earlier stated maturity or final distribution date
have been paid in full. The Fund may also invest in, among others, parallel pay
CMOs and Planned Amortization Class CMOs ("PAC Bonds"). Parallel pay CMOs are
structured to provide payments of

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principal on each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated maturity date or
final distribution date of each class, which, as with other CMO structures,
must be retired by its payments of a specified amount of principal on each
payment date.

MULTI-CLASS PASS-THROUGH SECURITIES. Stripped mortgage-backed
securities ("SMBS") may be issued by agencies or instrumentalities of the
U.S. Government, or by private originators of, or investors in, mortgage loans,
including savings and loan associations, mortgage banks, commercial banks,
investment banks and special purpose subsidiaries of the foregoing. SMBS issued
by parties other than agencies or instrumentalities of the U.S. Government are
considered, under current guidelines of the staff of the Securities and Exchange
Commission, to be illiquid securities. The Fund will only invest in stripped
mortgage-backed securities of the U.S. Government and certain of its agencies
and instrumentalities. SMBS are structured with two or more classes of
securities that receive different proportions of the interest and principal
distributions on a pool of Mortgage Assets. A common type of SMBS will have at
least one class receiving none or only a small portion of the interest and all
or a larger portion of the principal from the Mortgage Assets, while the other
classes will receive primarily or entirely interest and only a small portion of
the principal.

RTC SECURITIES. The Resolution Trust Corporation ("RTC") was organized by
the U.S. Government in connection with the savings and loan crisis. RTC holds
assets of failed savings and loans either as conservator or receiver for such
institutions or acquires such assets in its corporate capacity. These assets
include, among other things, single family and multifamily mortgage loans as
well as commercial mortgage loans. In order to dispose of such assets in an
orderly manner, RTC has established a vehicle registered with the Securities and
Exchange Commission ("SEC") through which it sells credit-enhanced
Mortgage-Backed Securities ("RTC Securities"). These securities represent pro
rata interests in pools of single family and multifamily mortgage loans which
RTC holds or has acquired as described above. It is expected that commercial
mortgage loans may also be included in discrete pools in the near future. Credit
enhancement of RTC Securities is obtained from external sources (including pool
insurance policies, letters of credit and surety guarantees), internal sources
(including subordination and spread accounts) and independent sources (including
reserve funds and cash collateral accounts).

FLOATING RATE, INVERSE FLOATING RATE AND INDEX OBLIGATIONs. Each Fund may
invest in debt securities with interest payments or maturity values that are not
fixed, but float in conjunction with (or inversely to) an underlying index or
price.

These securities may be backed by U.S. Government or corporate issuers, or
by collateral such as mortgages. In certain cases, a change in the underlying
index or price may have a leveraging effect on the periodic coupon payments,
creating larger possible swings in the prices of such securities than would be
expected when taking into account their maturities alone. The indices and prices
upon which such securities can be based include interest rates, currency rates
and commodities prices. However, the Fund will not invest in any instrument
whose value is computed based on a multiple of the change in price or value of
an asset or an index of or relating to assets in which the Fund cannot invest.

Floating rate securities pay interest according to a coupon which is reset
periodically. The reset mechanism may be formula based, or reflect the passing
through of floating interest

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payments on an underlying collateral pool. The coupon is usually reset daily,
weekly, monthly, quarterly or semi-annually, but other schedules are possible.
Floating rate obligations generally exhibit a low price volatility for a given
stated maturity or average life because their coupons adjust with changes in
interest rates. If their underlying index is not an interest rate, or the reset
mechanism lags the movement of rates in the current market, greater price
volatility may be experienced.

Inverse floating rate securities are similar to floating rate securities
except that their coupon payments vary inversely with an underlying index by use
of a formula. Inverse floating rate securities tend to exhibit greater price
volatility than other floating rate securities. Because the changes in the
coupon are usually negatively correlated with changes in overall interest rates,
interest rate risk and price volatility on inverse floating rate obligations can
be high, especially if leverage is used in the formula. Index securities pay a
fixed rate of interest, but have a maturity value that varies by formula, so
that when the obligation matures, a gain or loss is realized. The risk of index
obligations depends on the volatility of the underlying index, the coupon
payment and the maturity of the obligation.

H. FUTURE CONTRACTS AND OPTIONS ON FUTURE CONTRACTS. The successful use of
such instruments draws upon the Advisor's skill and experience with respect
to such instruments and usually depends on the Advisor's ability to forecast
interest rate and currency exchange rate movements correctly. Should interest or
exchange rates move in an unexpected manner, a Fund may not achieve the
anticipated benefits of futures contracts or options on futures contracts or may
realize losses and thus will be in a worse position than if such strategies had
not been used. In addition, the correlation between movements in the price of
futures contracts or options on futures contracts and movements in the price of
the securities and currencies hedged or used for cover will not be perfect and
could produce unanticipated losses.

Futures Contracts. Each Fund may enter into contracts for the purchase
or sale for future delivery of fixed-income securities, foreign currencies, or
contracts based on financial indices including any index of U.S. government
securities, foreign government securities or corporate debt securities. U.S.
futures contracts have been designed by exchanges which have been designated
"contracts markets" by the Commodity Futures Trading Commission
("CFTC"), and must be executed through a futures commission merchant, or
brokerage firm, which is a member of the relevant contract market. Futures
contracts trade on a number of exchange markets, and, through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange. A Fund may enter into futures contracts
which are based on debt securities that are backed by the full faith and credit
of the U.S. Government, such as long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association ("GNMA") modified pass-through
mortgage-backed securities and three-month U.S. Treasury Bills. A Fund may also
enter into futures contracts which are based on bonds issued by entities other
than the U.S. government. At the same time a futures contract is purchased or
sold, the Fund must allocate cash or securities as a deposit payment
("initial deposit"). It is expected that the initial deposit would be
approximately 1 1/2% to 5% of a contract's face value. Daily thereafter, the
futures contract is valued and the payment of "variation margin" may be
required, since each day the Fund would provide or receive cash that reflects
any decline or increase in the contract's value. At the time of delivery of
securities pursuant to such a contract, adjustments are made to recognize
differences in value arising from the delivery of securities with a different
interest rate

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<PAGE>

from that specified in the contract. In some (but not many) cases, securities
called for by a futures contract may not have been issued when the
contract was written.

Although futures contracts by their terms call for the actual delivery or
acquisition of securities, in most cases the contractual obligation is fulfilled
before the date of the contract without having to make or take delivery of the
securities. The offsetting of a contractual obligation is accomplished by buying
(or selling, as the case may be) on a commodities exchange an identical futures
contract calling for delivery in the same month. Such a transaction, which is
effected through a member of an exchange, cancels the obligation to make or take
delivery of the securities. Since all transactions in the futures market are
made, offset or fulfilled through a clearinghouse associated with the exchange
on which the contracts are traded, the Fund will incur brokerage fees when it
purchases or sells futures contracts.

The purpose of the acquisition or sale of a futures contract, in the case
of a Fund which holds or intends to acquire fixed-income securities, is to
attempt to protect the Fund from fluctuations in interest or foreign exchange
rates without actually buying or selling fixed-income securities or foreign
currencies. For example, if interest rates were expected to increase, the Fund
might enter into futures contracts for the sale of debt securities. Such a sale
would have much the same effect as selling an equivalent value of the debt
securities owned by the Fund. If interest rates did increase, the value of the
debt security in the Fund would decline, but the value of the futures contracts
to the Fund would increase at approximately the same rate, thereby keeping the
net asset value of the Fund from declining as much as it otherwise would have.
The Fund could accomplish similar results by selling debt securities and
investing in bonds with short maturities when interest rates are expected to
increase. However, since the futures market is more liquid than the cash market,
the use of futures contracts as an investment technique allows the Fund to
maintain a defensive position without having to sell its Fund securities.

Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
debt securities at higher prices. Since the fluctuations in the value of futures
contracts should be similar to those of debt securities, a Fund could take
advantage of the anticipated rise in the value of debt securities without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Fund could then buy debt securities on the
cash market. To the extent a Fund enters into futures contracts for this
purpose, the assets in the segregated asset account maintained to cover the
Fund's obligations with respect to such futures contracts will consist of
cash, cash equivalents or high quality liquid debt securities from its Fund in
an amount equal to the difference between the fluctuating market value of such
futures contracts and the aggregate value of the initial and variation margin
payments made by the Fund with respect to such futures contracts.

The ordinary spreads between prices in the cash and futures market, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of

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<PAGE>

the futures market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of speculators, the margin
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price distortions. Due to
the possibility of distortion, a correct forecast of general interest rate
trends by the Advisor may still not result in a successful transaction.

In addition, futures contracts entail risks. Although the Advisor believes
that use of such contracts will benefit the Funds, if the Advisor's
investment judgment about the general direction of interest rates is incorrect,
a Fund's overall performance would be poorer than if it had not entered into
any such contract. For example, if a Fund has hedged against the possibility of
an increase in interest rates which would adversely affect the price of debt
securities held in its Fund and interest rates decrease instead, the Fund will
lose part or all of the benefit of the increased value of its debt securities
which it has hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if a Fund has insufficient cash, it
may have to sell debt securities from its Fund to meet daily variation margin
requirements. Such sales of bonds may be, but will not necessarily be, at
increased prices which reflect the rising market. A Fund may have to sell
securities at a time when it may be disadvantageous to do so.

OPTIONS ON FUTURES CONTRACTS. Each Fund may purchase and write options on
futures contracts for hedging purposes. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option on
an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying debt securities, it may or may not be less risky than ownership
of the futures contract or underlying debt securities. As with the purchase of
futures contracts, when a Fund is not fully invested it may purchase a call
option on a futures contract to hedge against a market advance due to declining
interest rates.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable upon exercise of the futures contract. If the futures price at
expiration of the option is below the exercise price, a Fund will retain the
full amount of the option premium which provides a partial hedge against any
decline that may have occurred in the Fund's holdings. The writing of a put
option on a futures contract constitutes a partial hedge against increasing
prices of the security or foreign currency which is deliverable upon exercise of
the futures contract. If the futures price at expiration of the option is higher
than the exercise price, the Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call option the Fund
has written is exercised, the Fund will incur a loss which will be reduced by
the amount of the premium it receives. Depending on the degree of correlation
between changes in the value of its Fund securities and changes in the value of
its futures positions, the Fund's losses from existing options on futures
may to some extent be reduced or increased by changes in the value of Fund
securities.

The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on Fund securities. For
example, a Fund may purchase a put option on a futures contract to hedge against
the risk of rising interest rates.

The amount of risk a Fund assumes when it purchases an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the option purchased.

The Board of Trustees of each Fund has adopted a further restriction that
the Fund will not enter into any futures contracts or options on futures
contracts if immediately thereafter the amount of margin deposits on all the
futures contracts of the Fund and premiums paid on outstanding options on
futures contracts owned by the Fund (other than those entered into for bona fide
hedging purposes) would exceed 5% of the market value of the total assets of the
Fund.

OPTIONS ON FOREIGN CURRENCY. Each Fund may purchase and write options on
foreign currencies for hedging purposes in a manner similar to that in which
futures contracts on foreign currencies, or forward contracts, will be utilized.
For example, a decline in the dollar value of a foreign currency in which Fund
securities are denominated will reduce the dollar value of such securities, even
if their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of Fund securities, the Fund may purchase
put options on the foreign currency. If the value of the currency does decline,
a Fund will have the right to sell such currency for a fixed amount in dollars
and will thereby offset, in whole or in part, the adverse effect on its Fund
which otherwise would have resulted.

Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Fund may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Fund deriving from purchases of foreign currency
options will be reduced by the amount of the premium and related transaction
costs. In addition, where currency exchange rates do not move in the direction
or to the extent anticipated, the Fund could sustain losses on transactions in
foreign currency options which would require it to forego a portion or all of
the benefits of advantageous changes in such rates. Each Fund may write options
on foreign currencies for the same types of hedging purposes. For example, where
a Fund anticipates a decline in the dollar value of foreign currency denominated
securities due to adverse fluctuations in exchange rates it could, instead of
purchasing a put option, write a call option on the relevant currency. If the
expected decline occurs, the options will most likely not be exercised, and the
diminution in value of Fund securities will be offset by the amount of the
premium received.

Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the Fund
could write a put option on the relevant currency

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which, if rates move in the manner projected, will expire unexercised and allow
the Fund to hedge such increased cost up to the amount of the premium. As in the
case of other types of options, however, the writing of a foreign currency
option will constitute only a partial hedge up to the amount of the premium, and
only if rates move in the expected direction. If this does not occur, the option
may be exercised and the Fund would be required to purchase or sell the
underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on foreign currencies, the Fund also may
be required to forego all or a portion of the benefits which might otherwise
have been obtained from favorable movements in exchange rates.

ADDITIONAL RISKS OF OPTIONS ON FUTURES CONTRACTS AND FORWARD CONTRACTS.
Unlike transactions entered into by a Fund in futures contracts, options on
forward contracts are not traded on contract markets regulated by the CFTC or by
the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers, subject to SEC regulation. In an
over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option writer and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.

In addition, futures contracts, options on futures contracts, forward
contracts and options on foreign currencies may be traded on foreign exchanges.
Such transactions are subject to the risk of governmental actions affecting
trading in or the prices of foreign currencies or securities. The value of such
positions also could be adversely affected by: (i) other complex foreign
political and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the
Fund's ability to act upon economic events occurring in foreign markets
during nonbusiness hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.

OPTIONS ON SECURITIES. Each Fund may write (sell) call and put options to
a limited extent on its Fund securities in an attempt to increase income.
However, the Fund may forgo the benefits of appreciation on securities sold or
may pay more than the market price on securities acquired pursuant to call and
put options written by the Fund.

When a Fund writes a call option, it gives the purchaser of the option the
right to buy the underlying security at the price specified in the option (the
"exercise price") by exercising the option at any time during the option period.
If the option expires unexercised, the Fund will realize income in an amount
equal to the premium received for writing the option. If the option is
exercised, a decision over which the Fund has no control, the Fund must sell the
underlying security to the option holder at the exercise price. By writing a
call option, the Fund forgoes, in exchange for the premium less the commission
("net premium"), the opportunity to profit during the option period from an
increase in the market value of the underlying security above the exercise
price.

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<PAGE>

When a Fund writes a put option, it gives the purchaser of the option the
right to sell the underlying security to the Fund at the specified exercise
price at any time during the option period. If the option expires unexercised,
the Fund will realize income in the amount of the premium received for writing
the option. If the put option is exercised, a decision over which the Fund has
no control, the Fund must purchase the underlying security from the option
holder at the exercise price. By writing a put option, the Fund, in exchange for
the net premium received, accepts the risk of a decline in the market value of
the underlying security below the exercise price.

A Fund may terminate its obligation as the writer of a call or put option
by purchasing an option with the same exercise price and expiration date as the
option previously written. This transaction is called a "closing purchase
transaction." The Fund will realize a profit or loss for a closing purchase
transaction if the amount paid to purchase an option is less or more, as the
case may be, than the amount received from the sale thereof. To close out a
position as a purchaser of an option, the Fund, may make a "closing sale
transaction" which involves liquidating the Fund's position by selling the
option previously purchased. Where the Fund cannot effect a closing purchase
transaction, it may be forced to incur brokerage commissions or dealer spreads
in selling securities it receives or it may be forced to hold underlying
securities until an option is exercised or expires.

When a Fund writes an option, an amount equal to the net premium received
by the Fund is included in the liability section of the Fund's Statement of
Assets and Liabilities as a deferred credit. The amount of the deferred credit
will be subsequently marked to market to reflect the current market value of the
option written. The current market value of a traded option is the last sale
price or, in the absence of a sale, the mean between the closing bid and asked
price. If an option expires on its stipulated expiration date or if the Fund
enters into a closing purchase transaction, the Fund will realize a gain (or
loss if the cost of a closing purchase transaction exceeds the premium received
when the option was sold), and the deferred credit related to such option will
be eliminated. If a call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security and the proceeds of the sale will
be increased by the premium originally received. The writing of covered call
options may be deemed to involve the pledge of the securities against which the
option is being written. Securities against which call options are written will
be segregated on the books of the Custodian for the Fund.

A Fund may purchase call and put options on any securities in which it may
invest. The Fund would normally purchase a call option in anticipation of an
increase in the market value of such securities. The purchase of a call option
would entitle the Fund, in exchange for the premium paid, to purchase a security
at a specified price during the option period. The Fund would ordinarily have a
gain if the value of the securities increased above the exercise price
sufficiently to cover the premium and would have a loss if the value of the
securities remained at or below the exercise price during the option period.

A Fund would normally purchase put options in anticipation of a decline
in the market value of securities in its Fund ("protective puts") or
securities of the type in which it is permitted to

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invest. The purchase of a put option would entitle the Fund, in exchange for
the premium paid, to sell a security, which may or may not be held in the Fund's
holdings, at a specified price during the option period. The purchase of
protective puts is designed merely to offset or hedge against a decline in the
market value of the Fund's holdings. Put options also may be purchased by the
Fund for the purpose of affirmatively benefiting from a decline in the price of
securities which the Fund does not own. The Fund would ordinarily recognize a
gain if the value of the securities decreased below the exercise price
sufficiently to cover the premium and would recognize a loss if the value of the
securities remained at or above the exercise price. Gains and losses on the
purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying Fund securities.

The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent that the
option markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying securities
markets that cannot be reflected in the option markets. It is impossible to
predict the volume of trading that may exist in such options, and there can be
no assurance that viable exchange markets will develop or continue.

A Fund may engage in over-the-counter options transactions with
broker-dealers who make markets in these options. At present, approximately ten
broker-dealers, including several of the largest primary dealers in U.S.
government securities, make these markets. The ability to terminate
over-the-counter option positions is more limited than with exchange-traded
option positions because the predominant market is the issuing broker rather
than an exchange, and may involve the risk that broker-dealers participating in
such transactions will not fulfill their obligations. To reduce this risk, the
Fund will purchase such options only from broker-dealers who are primary
government securities dealers recognized by the Federal Reserve Bank of New York
and who agree to (and are expected to be capable of) entering into closing
transactions, although there can be no guarantee that any such option will be
liquidated at a favorable price prior to expiration. The Advisor will monitor
the creditworthiness of dealers with whom the Fund enters into such options
transactions under the general supervision of the Funds' Board of Trustees.

OPTIONS ON SECURITIES INDICES. In addition to options on securities, each
Fund may also purchase and write (sell) call and put options on securities
indices. Such options give the holder the right to receive a cash settlement
during the term of the option based upon the difference between the exercise
price and the value of the index. Such options will be used for the purposes
described above under "Options on Securities."

Options on securities indices entail risks in addition to the risks of
options on securities. The absence of a liquid secondary market to close out
options positions on securities indices is more likely to occur, although the
Fund generally will only purchase or write such an option if the Advisor
believes the option can be closed out.

Use of options on securities indices also entails the risk that trading in
such options may be interrupted if trading in certain securities included in the
index is interrupted. The Fund will not

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purchase such options unless the Advisor believes the market is sufficiently
developed such that the risk of trading in such options is no greater than the
risk of trading in options on securities.

Price movements in a Fund's holdings may not correlate precisely with
movements in the level of an index and, therefore, the use of options on indices
cannot serve as a complete hedge. Because options on securities indices require
settlement in cash, the Advisor may be forced to liquidate Fund securities to
meet settlement obligations.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. Because each Fund may buy and
sell securities denominated in currencies other than the U.S. dollar and
receives interest, dividends and sale proceeds in currencies other than the U.S.
dollar, a Fund from time to time may enter into foreign currency exchange
transactions to convert to and from different foreign currencies and to convert
foreign currencies to and from the U.S. dollar. A Fund either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
foreign currency exchange market or uses forward contracts to purchase or sell
foreign currencies.

A forward foreign currency exchange contract is an obligation by a Fund to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract. Forward foreign currency exchange
contracts establish an exchange rate at a future date. These contracts are
transferable in the interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. A forward foreign currency
exchange contract generally has no deposit requirement and is traded at a net
price without commission. Each Fund maintains with its custodian a segregated
account of high grade liquid assets in an amount at least equal to its
obligations under each forward foreign currency exchange contract. Neither spot
transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of the Fund's securities or in foreign exchange
rates, or prevent loss if the prices of these securities should decline.

Each Fund may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely affect a Fund position or
an anticipated investment position. Since consideration of the prospect for
currency parities will be incorporated into the Advisor's long-term investment
decisions, a Fund will not routinely enter into foreign currency hedging
transactions with respect to security transactions. However, the Advisor
believes that it is important to have the flexibility to enter into foreign
currency hedging transactions when it determines that the transactions would be
in the Fund's best interest. Although these transactions tend to minimize the
risk of loss due to a decline in the value of the hedged currency, at the same
time they tend to limit any potential gain that might be realized should the
value of the hedged currency increase. The precise matching of the forward
contract amounts and the value of the securities involved will not generally be
possible because the future value of such securities in foreign currencies will
change as a consequence of market movements in the value of such securities
between the date the forward contract is entered into and the date it matures.
The projection of currency market movements is extremely difficult, and the
successful execution of a hedging strategy is highly uncertain.

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While these contracts are not presently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event
the Fund's ability to utilize forward contracts in the manner set forth in the
Prospectus may be restricted. Forward contracts may reduce the potential gain
from a positive change in the relationship between the U.S. dollar and foreign
currencies. Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it had not entered into such contracts.
The use of foreign currency forward contracts may not eliminate fluctuations in
the underlying U.S. dollar equivalent value of the prices of or rates of return
on a Fund's foreign currency denominated Fund securities and the use of such
techniques will subject a Fund to certain risks.

The matching of the increase in value of a forward contract and the
decline in the U.S. dollar equivalent value of the foreign currency denominated
asset that is the subject of the hedge generally will not be precise. In
addition, a Fund may not always be able to enter into foreign currency forward
contracts at attractive prices and this will limit the Fund's ability to use
such contracts to hedge or cross-hedge its assets. Also, with regard to a
Fund's use of cross-hedges, there can be no assurance that historical
correlations between the movement of certain foreign currencies relative to the
U.S. dollar will continue. Thus, at any time poor correlation may exist between
movements in the exchange rates of the foreign currencies underlying a
Fund's cross- hedges and the movements in the exchange rates of the foreign
currencies in which the Fund's assets that are the subject of such
cross-hedges are denominated.

I. SHORT-TERM INSTRUMENTS. When a Fund experiences large cash inflows
through the sale of securities and desirable equity securities, that are
consistent with the Fund's investment objective, which are unavailable in
sufficient quantities or at attractive prices, each Fund may invest in
short-term instruments for a limited time pending availability of such Fund
securities. Short-term instruments consist of foreign or domestic: (i)
short-term obligations of sovereign governments, their agencies,
instrumentalities, authorities or political subdivisions; (ii) other short-term
debt securities rated AA or higher by Standard & Poor's Rating Group
("S&P") or Aa or higher by Moody's Investors Services, Inc.
("Moody's") or, if unrated, of comparable quality in the opinion of
Advisor; (iii) commercial paper; (iv) bank obligations, including negotiable
certificates of deposit, time deposits and banker's acceptances; and (v)
repurchase agreements. At the time the Fund invests in commercial paper, bank
obligations or repurchase agreements, the issuer of the issue's parent must
have outstanding debt rated AA or higher by S&P or Aa or higher by Moody's
or outstanding commercial paper or bank obligations rated A-1 by S&P or Prime-1
by Moody's; or, if no such ratings are available, the instrument must be of
comparable quality in the opinion of Advisor. These instruments may be
denominated in U.S. dollars or in foreign currencies.

J. ILLIQUID SECURITIES. Historically, illiquid securities have included
securities subject to contractual or legal restrictions on resale because they
have not been registered under the Securities Act of 1933, as amended (the "1933
Act"), securities which are otherwise not readily marketable and repurchase
agreements having a remaining maturity of longer than seven days. Securities
which have not been registered under the 1933 Act are referred to as private
placements or restricted securities and are purchased directly from the issuer
or in the secondary market. Mutual funds do not typically hold a significant
amount of these restricted or other illiquid securities because of the potential
for delays on resale and uncertainty in valuation. Limitations on resale may
have an

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adverse effect on the marketability of Fund securities and a mutual
fund might be unable to dispose of restricted or other illiquid
securities promptly or at reasonable prices and might thereby experience
difficulty satisfying redemptions within seven days. A mutual fund might also
have to register such restricted securities in order to dispose of them
resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the 1933 Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact
that there are contractual or legal restrictions on resale of such investments
to the general public or to certain institutions may not be indicative of their
liquidity.

The Securities and Exchange Commission the (the "SEC") has adopted
Rule 144A, which allows a broader institutional trading market for securities
otherwise subject to restriction on their resale to the general public. Rule
144A establishes a "safe harbor" from the registration requirements of
the 1933 Act of resales of certain securities to qualified institutional buyers.
The Advisor anticipates that the market for certain restricted securities such
as institutional commercial paper will expand further as a result of this
regulation and the development of automated systems for the trading, clearance
and settlement of unregistered securities of domestic and foreign issuers, such
as the PORTAL System sponsored by the National Association of Securities
Dealers, Inc.

The Advisor will monitor the liquidity of Rule 144A securities in each
Fund's holdings under the supervision of the Fund's Board of Trustees. In
reaching liquidity decisions, the Advisor will consider, among other things, the
following factors: (1) the frequency of trades and quotes for the security; (2)
the number of dealers and other potential purchasers or sellers of the security;
(3) dealer undertakings to make a market in the security and (4) the nature of
the security and of the marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers and the mechanics of the
transfer).

K. RESTRICTED SECURITIES. Restricted securities generally can be sold in
privately negotiated transactions, pursuant to an exemption from registration
under the Securities Act of 1933, or in a registered public offering. Where the
registration is required, a Fund holding restricted securities may be obligated
to pay all or part of the registration expense and a considerable period may
elapse between the time it decides to seek registration and the time the Fund
may be permitted to sell a security under an effective registration statement.
If, during such a period, adverse market conditions were to develop, the Fund
might obtain a less favorable price than prevailed when it decided to seek
registration of the security.

Each Fund may choose, at its expense or in conjunction with others, to
pursue litigation or otherwise exercise its rights as security holder to seek to
protect the interests of security holders if it determines this to be in the
best interests of the Fund shareholders.

-20-

L. SECURITIES LENDING. Each Fund may lend securities to parties such as
broker-dealers, banks, or institutional investors. Securities lending allows a
Fund to retain ownership of the securities loaned and, at the same time, to earn
additional income. Since there may be delays in the recovery of loaned
securities, or even a loss of rights in collateral supplied, should the borrower
fail financially, loans will be made only to parties whose creditworthiness has
been reviewed and deemed satisfactory by the Advisor. Furthermore, they will
only be made if, in the judgment of the Advisor, the consideration to be earned
from such loans would justify the risk.

Cash received through loan transactions may be invested in any security in
which the Fund is authorized to invest. Investing this cash subjects that
investment, as well as the security loaned, to market forces (i.e., capital
appreciation or depreciation).

M. LEVERAGING. Leveraging a Fund creates an opportunity for increased net
income but, at the same time, creates special risk considerations. For example,
leveraging may exaggerate changes in the net asset value of Fund shares and in
the yield on a Fund's Fund. Although the principal of such borrowings will be
fixed, a Fund's assets may change in value during the time the borrowing is
outstanding. Leveraging will create interest expenses for the Fund which can
exceed the income from the assets retained. To the extent the income derived
from securities purchased with borrowed funds exceeds the interest the Fund will
have to pay, the Fund's net income will be greater than if leveraging were not
used. Conversely, if the income from the assets retained with borrowed funds is
not sufficient to cover the cost of leveraging, the net income of the Fund will
be less than if leveraging were not used, and therefore the amount available for
distribution to shareholders will be reduced.

INVESTMENT LIMITATIONS

FUNDAMENTAL. The investment limitations described below have been
adopted by the Trust with respect to each Fund and are fundamental
("Fundamental"), i.e., they may not be changed without the affirmative vote of a
majority of the outstanding shares of the Fund. As used in the Prospectus and
this Statement of Additional Information, the term "majority" of the outstanding
shares of the Fund means the lesser of (1) 67% or more of the outstanding shares
of the Fund present at a meeting, if the holders of more than 50% of the
outstanding shares of the Fund

-21-

<PAGE>

are present or represented at such meeting; or (2) more than 50% of the
outstanding shares of the Fund. Other investment practices which may
be changed by the Board of Trustees without the approval of shareholders to
the extent permitted by applicable law, regulation or regulatory policy
are considered non-fundamental ("Non-Fundamental").

1. BORROWING MONEY. The Funds will not borrow money, except (a) from a
bank, provided that immediately after such borrowing there is an asset coverage
of 300% for all borrowings of the Fund; or (b) from a bank or other persons for
temporary purposes only, provided that such temporary borrowings are in an
amount not exceeding 5% of the Fund's total assets at the time when the
borrowing is made. This limitation does not preclude the Fund from entering into
reverse repurchase transactions, provided that the Fund has an asset coverage of
300% for all borrowings and repurchase commitments of the Fund pursuant to
reverse repurchase transactions.

2. SENIOR SECURITIES. The Funds will not issue senior securities. This
limitation is not applicable to activities that may be deemed to involve the
issuance or sale of a senior security by the Fund, provided that the Fund's
engagement in such activities is (a) consistent with or permitted by the
Investment Company Act of 1940, as amended, the rules and regulations
promulgated thereunder or interpretations of the Securities and Exchange
Commission or its staff and (b) as described in the Prospectus and this
Statement of Additional Information.

3. UNDERWRITING. The Funds will not act as underwriter of securities
issued by other persons. This limitation is not applicable to the extent that,
in connection with the disposition of Fund securities (including restricted
securities), a Fund may be deemed an underwriter under certain federal
securities laws.

4. REAL ESTATE. The Funds will not purchase or sell real estate. This
limitation is not applicable to investments in marketable securities which are
secured by or represent interests in real estate. This limitation does not
preclude a Fund from investing in mortgage-related securities or investing in
companies engaged in the real estate business or that have a significant portion
of their assets in real estate (including real estate investment trusts).

5. COMMODITIES. The Funds will not purchase or sell commodities unless
acquired as a result of ownership of securities or other investments. This
limitation does not preclude a Fund from purchasing or selling options or
futures contracts, from investing in securities or other instruments backed by
commodities or from investing in companies which are engaged in a commodities
business or have a significant portion of their assets in commodities.

6. LOANS. The Funds will not make loans to other persons, except (a) by
loaning Fund securities, (b) by engaging in repurchase agreements, or (c) by
purchasing nonpublicly offered debt securities. For purposes of this limitation,
the term "loans" shall not include the purchase of a portion of an issue of
publicly distributed bonds, debentures or other securities.

-22-

<PAGE>

7. CONCENTRATION. Each Fund will not invest 25% or more of its total
assets in a particular industry. This limitation is not applicable to
investments in obligations issued or guaranteed by the U.S. government, its
agencies and instrumentalities or repurchase agreements with respect thereto.

With respect to the percentages adopted by the Trust as maximum
limitations on its investment policies and limitations, an excess above the
fixed percentage will not be a violation of the policy or limitation unless the
excess results immediately and directly from the acquisition of any security or
the action taken. This paragraph does not apply to the borrowing policy set
forth in paragraph 1 above.

NON-FUNDAMENTAL. The following limitations have been adopted by the Trust
with respect to each Fund and are Non-Fundamental (see "Investment Restrictions"
above).

i. PLEDGING. The Funds will not mortgage, pledge, hypothecate or in any
manner transfer, as security for indebtedness, any assets of a Fund except as
may be necessary in connection with borrowings described in limitation (1)
above. Margin deposits, security interests, liens and collateral arrangements
with respect to transactions involving options, futures contracts, short sales
and other permitted investments and techniques are not deemed to be a mortgage,
pledge or hypothecation of assets for purposes of this limitation.

ii. BORROWING. Each Fund will not purchase any security while borrowings
(including reverse repurchase agreements) representing more than 5% of its total
assets are outstanding.

iii. MARGIN PURCHASES. The Funds will not purchase securities or evidences
of interest thereon on "margin." This limitation is not applicable to short term
credit obtained by a Fund for the clearance of purchases and sales or redemption
of securities, or to arrangements with respect to transactions involving
options, futures contracts, short sales and other permitted investments and
techniques.

iv. ILLIQUID SECURITIES. Neither Fund will invest more than 15% of its net
assets in illiquid securities.

-23-

<PAGE>

THE INVESTMENT ADVISOR

The Funds' investment advisor is CommonWealth Advisors, Inc., 247 Florida
Street, Baton Rouge, LA 70801 (the "Advisor"). Walter A. Morales may be deemed
to be a controlling person of the Advisor due to his ownership of the shares of
the Advisor.

Under the terms of the management agreement (the "Agreement"), the Advisor
manages each Fund's investments subject to approval of the Board of Trustees and
pays all of the expenses of each Fund except brokerage, taxes, interest, fees
and expenses of the non-interested person trustees and extraordinary expenses.
As compensation for its management services and agreement to pay the Funds'
expenses, the Funds are obligated to pay the Advisor a fee computed and accrued
daily and paid monthly at an annual rate of 1.10% of the average daily net
assets of the CommonWealth Income Fund, and 1.35% of the average daily net
assets of the CommonWealth Equity Fund. The Advisor may waive all or part of its
fee, at any time, and at its sole discretion, but such action
shall not obligate the Advisor to waive any fees in the future.

The Advisor retains the right to use the name "CommonWealth" in connection
with another investment company or business enterprise with which the Advisor is
or may become associated. The Trust's right to use the name "CommonWealth"
automatically ceases ninety days after termination of the Agreement and may be
withdrawn by the Advisor on ninety days written notice.

The Advisor may make payments to banks or other financial institutions
that provide shareholder services and administer shareholder accounts. The
Glass-Steagall Act prohibits banks from engaging in the business of
underwriting, selling or distributing securities. Although the scope of this
prohibition under the Glass-Steagall Act has not been clearly defined by the
courts or appropriate regulatory agencies, management of the Funds believes that
the Glass-Steagall Act should not preclude a bank from providing such services.
However, state securities laws on this issue may differ from the interpretations
of federal law expressed herein and banks and financial institutions may be
required to register as dealers pursuant to state law. If a bank were prohibited
from continuing to perform all or a part of such services, management of the
Funds believes that there would be no material impact on a Fund or its
shareholders. Banks may charge their customers fees for offering these services
to the extent permitted by applicable regulatory authorities, and the overall
return to those shareholders availing themselves of the bank services will be
lower than to those shareholders who do not. Each Fund may from time to time
purchase securities issued by banks which provide such services; however, in
selecting investments for a Fund, no preference will be shown for such
securities.

TRUSTEES AND OFFICERS

NAME, AGE AND ADDRESS POSITION PRINCIPAL OCCUPATIONS DURING
PAST 5 YEARS
- ---------------------- -------- ----------------------------

</TABLE>

-25-

<PAGE>

NAME TOTAL COMPENSATION FROM TRUST
(THE TRUST IS NOT IN A FUND COMPLEX)

Kenneth D. Trumpfheller 0

Steve L. Cobb $4,000

Gary E. Hippenstiel $4,000
</TABLE>

FUND TRANSACTIONS AND BROKERAGE

Subject to policies established by the Board of Trustees of the Trust, the
Advisor is responsible for each Fund's Fund decisions and the placing of each
Fund's Fund transactions. In placing Fund transactions, the Advisor seeks the
best qualitative execution for each Fund, taking into account such factors as
price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer. The Advisor generally seeks favorable prices and commission rates that
are reasonable in relation to the benefits received.

The Advisor is specifically authorized to select brokers or dealers who
also provide brokerage and research services to the Funds and/or the other
accounts over which the Advisor exercises investment discretion and to pay such
brokers or dealers a commission in excess of the commission another broker or
dealer would charge if the Advisor determines in good faith that the commission
is reasonable in relation to the value of the brokerage and research services
provided. The determination may be viewed in terms of a particular transaction
or the Advisor's overall responsibilities with respect to the Trust and to other
accounts over which it exercises investment discretion.

Research services include supplemental research, securities and economic
analyses, statistical services and information with respect to the availability
of securities or purchasers or sellers of securities and analyses of reports
concerning performance of accounts. The research services and other information
furnished by brokers through whom a Fund effects securities transactions may
also be used by the Advisor in servicing all of its accounts. Similarly,
research and information provided by brokers or dealers serving other clients
may be useful to the Advisor in connection with its services to the Funds.
Although research services and other information are useful to the Funds and the
Advisor, it is not possible to place a dollar value on the research and other
information received. It is the opinion of the Board of Trustees and the Advisor
that the review and study of the research and other information will not reduce
the overall cost to the Advisor of performing its duties to the Funds under the
Agreement.

Over-the-counter transactions will be placed either directly with
principal market makers or with broker-dealers, if the same or a better price,
including commissions and executions, is available. Fixed income securities are
normally purchased directly from the issuer, an underwriter or a market maker.
Purchases include a concession paid by the issuer to the underwriter and the
purchase price paid to a market maker may include the spread between the bid and
asked prices.

-26-

<PAGE>

To the extent that the Trust and another of the Advisor's clients seek
to acquire the same security at about the same time, the Trust may not be able
to acquire as large a position in such security as it desires or it may have to
pay a higher price for the security. Similarly, the Trust may not be able to
obtain as large an execution of an order to sell or as high a price for any
particular Fund security if the other client desires to sell the same Fund
security at the same time. On the other hand, if the same securities are bought
or sold at the same time by more than one client, the resulting participation in
volume transactions could produce better executions for the Trust. In the event
that more than one client wants to purchase or sell the same security on a given
date, the purchases and sales will normally be made pro rata or by random client
selection.

DETERMINATION OF SHARE PRICE

The price (net asset value) of the shares of each Fund is determined as of
4:00 p.m., Eastern time on each day the Trust is open for business and on any
other day on which there is sufficient trading in each Fund's securities to
materially affect the net asset value. The Trust is open for business on every
day except Saturdays, Sundays and the following holidays: New Year's Day,
President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. For a description of the methods used to determine
the net asset value (share price), see "Share Price Calculation" in the
Prospectus.

INVESTMENT PERFORMANCE

P(1+T)n=ERV

Where: P = a hypothetical $1,000 initial investment
T = average annual total return
n = number of years
ERV = ending redeemable value at the end of the
applicable period of the hypothetical $1,000
investment made at the beginning of the
applicable period.

The computation assumes that all dividends and distributions are
reinvested at the net asset value on the reinvestment dates and that a complete
redemption occurs at the end of the applicable period.

Each Fund's investment performance will vary depending upon market
conditions, the composition of each Fund's Fund and operating expenses of each
Fund. These factors and possible differences in the methods and time periods
used in calculating non-standardized investment performance should be considered
when comparing a Fund's performance to those of other investment companies or
investment vehicles. The risks associated with each Fund's investment objective,
policies and techniques should also be considered. At any time in the future,
investment performance may be higher or lower than past performance, and there
can be no assurance that any performance will continue.

-27-

<PAGE>

From time to time, in advertisements, sales literature and information
furnished to present or prospective shareholders, the performance of each Fund
may be compared to indices of broad groups of unmanaged securities considered to
be representative of or similar to the Fund holdings of the Fund or considered
to be representative of the market in general.

In addition, the performance of each Fund may be compared to other groups
of mutual funds tracked by any widely used independent research firm which ranks
mutual funds by overall performance, investment objectives and assets, such as
Lipper Analytical Services, Inc. or Morningstar, Inc. The objectives, policies,
limitations and expenses of other mutual funds in a group may not be the same as
those of the Fund. Performance rankings and ratings reported periodically in
national financial publications such as Barron's and Fortune also may be used.

CUSTODIAN

Star Bank, N.A., 425 Walnut Street, Cincinnati, Ohio 45202, is Custodian
of each Funds investments. The Custodian acts as each Fund's depository,
safekeeps its Fund securities, collects all income and other payments with
respect thereto, disburses funds at a Fund's request and maintains
records in connection with its duties.

TRANSFER AGENT

American Data Services, Inc., Hauppauge Corporate Center, 150 Motor
Parkway, Hauppauge, NY 11760, acts as each Fund's transfer agent and, in such
capacity, maintains the records of each shareholder's account, answers
shareholders' inquiries concerning their accounts, processes purchases and
redemptions of each Fund's shares, acts as dividend and distribution disbursing
agent and performs other accounting and shareholder service functions. In
addition, American Data Services, Inc. provides each Fund with certain monthly
reports, record-keeping and other management-related services.

ACCOUNTANTS

The firm of McCurdy & Associates, CPA's, 27955 Clemens Road, Westlake,
Ohio 44145, has been selected as independent public accountants for the Trust
for the fiscal year ending October 31, 1997. McCurdy & Associates performs an
annual audit of each Fund's financial statements and provides financial, tax and
accounting consulting services as requested.

DISTRIBUTOR

AmeriPrime Financial Securities, Inc., 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the exclusive agent for distribution of shares of
each Fund. The Distributor is obligated to sell the shares of each Fund on a
best efforts basis only against purchase orders for the shares. Shares of each
Fund are offered to the public on a continuous basis.

<PAGE>

AmeriPrime Funds

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Included in Part A:

None.

Included in Part B:

None.

(b) Exhibits

(1) (i) Copy of Registrant's Declaration of Trust,
which was filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.

(ii) Copy of Amendment No. 1 to Registrant's
Declaration of Trust, which was filed as an
Exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by
reference.

(iii) Copy of Amendment No. 2 to Registrant's
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 1, is hereby incorporated by
reference.

(iv) Copy of Amendment No. 3 to Registrant's
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 4, is hereby incorporated by
reference.

<PAGE>

(v) Copy of Amendment No. 4 to Registrant's
Declaration of Trust, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 4, is hereby incorporated by
reference.

(2) Copy of Registrant's By-Laws, which was
filed as an Exhibit to Registrant's
Registration Statement, is hereby
incorporated by reference.

(3) Voting Trust Agreements - None.

(4) Specimen of Share Certificates - None.

(5) (i) Copy of Registrant's Management Agreement with
Carl Domino Associates, L.P., Adviser to Carl
Domino Equity Income Fund, which was filed as
an Exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by
reference.

(ii) Copy of Registrant's Management
Agreement with Jenswold, King &
Associates, Adviser to Fountainhead
Special Value Fund, which was filed
as an Exhibit to Registrant's Pre-
Effective Amendment No. 1, is hereby
incorporated by reference.

(iii) Copy of Registrant's Management Agreement with
Advanced Investment Technology, Inc., Adviser
to AIT Vision U.S. Equity Portfolio, which was
filed as an Exhibit to Registrant's Post-
Effective Amendment No. 6, is hereby
incorporated by reference.

(iv) Copy of Registrant's Management Agreement with
GLOBALT, Inc., Adviser to GLOBALT Growth Fund,
which was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.

(v) Copy of Registrant's Management Agreement with
Newport Investment Advisors, Inc., Adviser to
The MAXIM Contrarian Fund, which was filed as
an Exhibit to Registrant's Post-Effective
Amendment No. 2, is hereby incorporated by
reference.

(vi) Copy of Registrant's Management Agreement with
IMS Capital Management, Inc., Adviser to the
IMS Capital Value Fund, which was filed as an
Exhibit to Registrant's Post-Effective
Amendment No. 2, is hereby incorporated by
reference.

<PAGE>

(vii) Copy of Registrant's proposed
Management Agreement with
CommonWealth Advisors, Inc., Adviser
to CommonWealth ond und and
CommonWealth Growth Fund, s filed
herewith.

(viii) Copy of Registrant's proposed
Management Agreement with Corbin &
Company, Adviser to Corbin
Small-Cap Fund, is filed herewith.

(6) Copy of Registrant's Underwriting Agreement
with AmeriPrime Financial Securities, Inc.,
which was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.

(7) Bonus, Profit Sharing, Pension or Similar
Contracts for the benefit of Directors or
Officers - None.

(8) Copy of Registrant's Agreement with the
Custodian, Star Bank, N.A., which was filed
as an Exhibit to Registrant's Pre-Effective
Amendment No. 1, is hereby incorporated by
reference.

(9) Copy of Registrant's Agreement with the
Administrator, AmeriPrime Financial Services,
Inc., which was filed as an Exhibit to
Registrant's Pre-Effective Amendment No. 1,
is hereby incorporated by reference.

(10) Opinion and Consent of Brown, Cummins & Brown
Co., L.P.A. is filed herewith.

(11) Consent of independent public accountants
- None.

(12) Financial Statements Omitted from Item 23
- None.

(13) Copy of Letter of Initial Stockholders, which
was filed as an Exhibit to Registrant's
Pre-Effective Amendment No. 1, is hereby
incorporated by reference.

(14) Model Plan used in Establishment of any
Retirement Plan - None.

(15) (i) Copy of Registrant's Rule 12b-1 Distribution
Plan for The MAXIM Contrarian Fund, which was
filed as an Exhibit to Registrant's Post-
Effective Amendment No. 1, is hereby
incorporated by reference.

(ii) Copy of Registrant's Rule 12b-1 Service
Agreement for The MAXIM Contrarian Fund, which
was filed as an Exhibit to Registrant's

<PAGE>

Post-Effective Amendment No. 1, is hereby
incorporated by reference.

(16) Schedule for Computation of Each Performance
Quotation - None.

(17) Financial Data Schedule - None.

(18) Rule 18f-3 Plan - None.

(19) (i) Power of Attorney for Registrant and
Certificate with respect thereto, which were
filed as an Exhibit to Registrant's Post-
Effective Amendment No. 5, are hereby
incorporated by reference.

(ii) Powers of Attorney for Trustees and Officers
which were filed as an Exhibit to Registrant's
Post-Effective Amendment No. 5, are hereby
incorporated by reference.

Item 25. Persons Controlled by or Under Common Control with the
Registrant (As of March 1, 1997)

The Carl Domino Associates, L.P., Profit Sharing Trust may be
deemed to control the Carl Domino Equity Income Fund, Roger E. King may
be deemed to control the Fountainhead Special Value Fund, and Cheryl
and Kenneth Holeski may be deemed to control The MAXIM Contrarian Fund,
as a result of their respective beneficial ownership of those Funds.

Item 26. Number of Holders of Securities (as of March 1, 1997)

Title of Class Number of Record Holders

Carl Domino Equity Income Fund 42
Fountainhead Special Value Fund 28
AIT Vision U.S. Equity Portfolio 26
GLOBALT Growth Fund 51
The MAXIM Contrarian Fund 44
IMS Capital Value Fund 152
The CommWealth Income Fund 0
The CommonWealth Equity Fund 0
Corbin Small-Cap Value Fund 0

Item 27. Indemnification

(a) Article VI of the Registrant's Declaration of Trust
provides for indemnification of officers and Trustees
as follows:

<PAGE>

Section 6.4 Indemnification of
Trustees, Officers, etc. Subject to and
except as otherwise provided in the
Securities Act of 1933, as amended, and the
1940 Act, the Trust shall indemnify each of
its Trustees and officers (including persons
who serve at the Trust's request as
directors, officers or trustees of another
organization in which the Trust has any
interest as a shareholder, creditor or
otherwise (hereinafter referred to as a
"Covered Person") against all liabilities,
including but not limited to amounts paid in
satisfaction of judgments, in compromise or
as fines and penalties, and expenses,
including reasonable accountants' and
counsel fees, incurred by any Covered Person
in connection with the defense or
disposition of any action, suit or other
proceeding, whether civil or criminal,
before any court or administrative or

<PAGE>

legislative body, in which such Covered
Person may be or may have been involved as a
party or otherwise or with which such person
may be or may have been threatened, while in
office or thereafter, by reason of being or
having been such a Trustee or officer,
director or trustee, and except that no
Covered Person shall be indemnified against
any liability to the Trust or its
Shareholders to which such Covered Person
would otherwise be subject by reason of
willful misfeasance, bad faith, gross
negligence or reckless disregard of the
duties involved in the conduct of such
Covered Person's office.

Section 6.5 Advances of Expenses.
The Trust shall advance attorneys' fees or
other expenses incurred by a Covered Person
in defending a proceeding to the full extent
permitted by the Securities Act of 1933, as
amended, the 1940 Act, and Ohio Revised Code
Chapter 1707, as amended. In the event any
of these laws conflict with Ohio Revised
Code Section 1701.13(E), as amended, these
laws, and not Ohio Revised Code Section
1701.13(E), shall govern.

Section 6.6 Indemnification Not
Exclusive, etc. The right of indemnification
provided by this Article VI shall not be
exclusive of or affect any other rights to
which any such Covered Person may be
entitled. As used in this Article VI,
"Covered Person" shall include such person's
heirs, executors and administrators. Nothing
contained in this article shall affect any
rights to indemnification to which personnel
of the Trust, other than Trustees and
officers, and other persons may be entitled
by contract or otherwise under law, nor the
power of the Trust to purchase and maintain
liability insurance on behalf of any such
person.

The Registrant may not pay for insurance which
protects the Trustees and officers against
liabilities rising from action involving willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of
their offices.

(b) The Registrant may maintain a standard mutual fund
and investment advisory professional and directors
and officers liability policy. The policy, if
maintained, would provide coverage to the Registrant,
its Trustees and officers, and could cover its
Advisers, among others. Coverage under the policy
would include losses

<PAGE>

by reason of any act, error, omission, misstatement,
misleading statement, neglect or breach of duty.

(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
trustees, officers and controlling persons of the
Registrant pursuant to the provisions of Ohio law and
the Agreement and Declaration of the Registrant or the
By-Laws of the Registrant, or otherwise, the Registrant
has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, 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 a trustee, officer or controlling person of
the Trust in the successful defense of any action, suit
or proceeding) is asserted by such trustee, officer or
controlling person in connection with the securities
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
issue.

Item 28. Business and Other Connections of Investment Adviser

A. Carl Domino Associates, L.P., 580 Village Boulevard,
Suite 225, West Palm Beach, Florida 33409, ("CDA"),
adviser to the Carl Domino Equity Income Fund, is a
registered investment adviser.

(1) CDA has engaged in no other business during the
past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
partners and officers of CDA during the past
two years.

(a) Penn Independent Corp., a partner in
CDA, is an insurance holding company
that operates a premium finance
company, a surplus lines insurance
company and a wholesale insurance
agency.

(b) James E. Heerin, Jr., an officer of CDA, is
vice president and general counsel of Penn
Independent Corp. and an officer and director
of Shrimp Culture II, Inc., both at 420 South
York Road, Hatboro, PA 19040. Shrimp
Culture II, Inc. raises and sells shrimp.

<PAGE>

(d) Saltzman Partners, a partner in CDA, is a
limited partnership that invests in companies
and businesses.

(e) Cango Inversiones, SA, a partner in CDA, is a
foreign business entity that invests in U.S.
companies and businesses.

B. Jenswold, King & Associates, Inc., 1980 Post Oak
Boulevard, Suite 2400, Houston, Texas 77056-3898
("JKA"), adviser to the Fountainhead Special Value
Fund, is a registered investment adviser.

(1) JKA has engaged in no other business during the
past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
directors and officers of JKA during the
past two years.

(a) John Servis, a director of JKA, is
a licensed real estate broker.

C. Advanced Investment Technology, Inc., 311 Park Place
Boulevard, Suite 250, Clearwater, Florida 34619
("AIT"), adviser to AIT Vision U.S. Equity Portfolio,
is a registered investment adviser.

(1) AIT has engaged in no other business during
the past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
directors and officers of AIT during the
past two fiscal years.

(a) Dean S. Barr, director and the CEO
of AIT, was the managing director of
LBS Capital Management, Inc., 311
Park Place Blvd., Clearwater,
Florida from 1989-1996.

(b) Mani Ganesh, a director and the vice
president of AIT, was the vice president of
LBS Capital Management, Inc. from 1989-1996.

(d) Raymond L. Killian, a director of AIT and the
chief executive officer of Investment

<PAGE>

Technology Group, Inc., 900 3rd Avenue, New
York, New York.

(e) David C. Cushing, a director of AIT and a
registered representative of Investment
Technology Group, Inc.

(f) Lisa A. Sloan, chief operating
officer of AIT was director of
operations of LBS Capital
Management, Inc., 311 Park Place
Blvd., Suite 330, Clearwater,
Florida. From 1995-1996 she was a
technical controller with Salomon
Brothers, Inc., 8800 Hidden River
Parkway, Tampa, Florida.

D. GLOBALT, Inc., 3060 Peachtree Road, N.W., One
Buckhead Plaza, Suite 225, Atlanta, Georgia 30305
("GLOBALT"), adviser to GLOBALT Growth Fund, is a
registered investment adviser.

(1) GLOBALT has engaged in no other business during
the past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
officers and directors of GLOBALT during the
past two years.

(a) Gregory S. Paulette, an officer of GLOBALT,
is the president of GLOBALT Capital
Management, a division of GLOBALT.

E. Newport Investment Advisors, Inc., 20600 Chagrin
Boulevard, Suite 1020, Shaker Heights, Ohio 44122
("Newport"), adviser to The MAXIM Contrarian Fund,
is a registered investment adviser.

(1) Newport has engaged in no other business during
the past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
officers and directors of Newport during the
past two years.

(a) Kenneth Holeski, president of Newport, is
the vice president of Newport Evaluation
Services, Inc., a fiduciary consulting
business at 20600 Chagrin Boulevard, Shaker
Heights, Ohio 44122, and a registered
representative of WRP Investments, Inc.,
4407 Belmont Avenue, Youngstown, Ohio
44505, a registered broker/dealer.

<PAGE>

(b) Donn M. Goodman, vice president of Newport,
is the president of Newport Evaluation
Services, Inc.

F. IMS Capital Management, Inc., 10159 S.E. Sunnyside
Road, Suite 330, Portland, Oregon 97015, ("IMS"),
Adviser to the IMS Capital Value Fund, is a registered
investment adviser.

(1) IMS has engaged in no other business during the
past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
directors and officers of IMS during the
past two years - None.

G. CommonWealth Advisors, Inc., 929 Government Street,
Baton Rouge, Louisiana 70802, ("CommonWealth"),
Adviser to the CommonWealth Bond Fund and the
CommonWealth Growth Fund, is a registered investment
adviser.

(1) CommonWealth has engaged in no other business
during the past two fiscal years.

(2) The following list sets forth other
substantial business activities of the
directors and officers of CommonWealth
during the past two years.

(a) Walter A. Morales, President/Chief Investment
Officer of CommonWealth was the Director of
an insurance/broadcasting corporation,
Guaranty Corporation, 929 Government Street,
Baton Rouge, Louisiana 70802 from August
1994 to February 1996. From September 1994
through the present, a registered
representative of a Broker/Dealer company,
Securities Service Network, 2225 Peters Road,
Knoxville, Tennessee 37923. Beginning
August 1995 through the present, an
instructor at the University of Southwestern
Louisiana in Lafayette, Louisiana.

H. Corbin & Company, 320 S. University Drive, Suite 406,
Fort Worth, Texas 76107, ("Corbin"), Adviser to the
Corbin Small-Cap Value Fund, is a registered investment
adviser.

(1) Corbin has engaged in no other business during the
past two fiscal years.

<PAGE>

(2) The following list sets forth other
substantial business activities of the
directors and officers of Corbin during the
past two years.

(a) Barbara E. Shields, Vice President
for Legal Affairs of Corbin, was the
Vice President and a trust officer
for Central Bank & Trust, P.O. Box
2138, Fort Worth, Texas from June
1994 to December 1995.

(b) Jeffrey D. Ressetar, the Chief
Financial Officer of Corbin, was a
securities analyst/operations
manager for a private foundation,
the William C. Conner Educational
Fund, at Texas Christian University
in Fort Worth, Texas from June 1995
to December 1995.

Item 29. Principal Underwriters

A. AmeriPrime Financial Securities, Inc., is the
Registrant's principal underwriter. Kenneth D.
Trumpfheller, 1793 Kingswood Drive, Suite 200,
Southlake, Texas 76092, is the President, Secretary
and Treasurer of the underwriter and the President and
a Trustee of the Registrant.

Item 30. Location of Accounts and Records

Accounts, books and other documents required to be maintained
by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder will be maintained by the
Registrant at 1793 Kingswood Drive, Suite 200, Southlake,
Texas 76092 and/or by the Registrant's Custodian, Star Bank,
N.A., 425 Walnut Street, Cincinnati, Ohio 45202, and/or
transfer and shareholder service agent, American Data
Services, Inc., Hauppauge Corporate Center, 150 Motor Parkway,
Hauppauge, New York 11760.

Item 31. Management Services Not Discussed in Parts A or B

None.

Item 32. Undertakings

(a) Not Applicable.

(b) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>

need not be certified, within four to six months from
the effective date of the Fountainhead Special Value
Fund registration.

(d) The Registrant hereby undertakes to file a Post-
Effective Amendment, using financial statements which
need not be certified, within four to six months from
the effective date of the CommonWealth Growth Fund,
the CommonWealth Bond Fund, and the Corbin Small-Cap
Value Fund registration.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Cincinnati, State of Ohio, on the 28th day of March,
1997.

AmeriPrime Funds

By:/s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Attorney-in-Fact

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Kenneth D. Trumpfheller,
President and Trustee By:/s/ Donald S. Mendelsohn
Donald S. Mendelsohn,
Kelli D. Shomaker, Treasurer Attorney-in-Fact

Steve L. Cobb, Trustee March 28, 1997

Gary E. Hippenstiel, Trustee

<PAGE>

EXHIBIT INDEX

EXHIBIT

1. Management Agreement with CommonWealth Advisors, Inc........EX-99.B5.1

2. Management Agreement with Corbin & Company..................EX-99.B5.1

3. Opinion of Brown, Cummins & Brown Co., L.P.A. ..............EX-99.B10

MANAGEMENT AGREEMENT

TO: CommonWealth Advisors, Inc.
247 Florida Street
Baton Rouge, LA 70801

Dear Sirs:

AmeriPrime Funds (the "Trust") herewith confirms our agreement with
you.

The Trust has been organized to engage in the business of an
investment company. The Trust currently offers several series of shares to
investors, two of which are the CommonWealth Bond Fund and the CommonWealth
Growth Fund (individually a "Fund," collectively the "Funds").

You have been selected to act as the sole investment adviser of the
Funds and to provide certain other services, as more fully set forth below, and
you are willing to act as such investment adviser and to perform such services
under the terms and conditions hereinafter set forth. Accordingly, the Trust
agrees with you as follows effective upon the date of the execution of this
Agreement.

1. ADVISORY SERVICES

You will regularly provide the Funds with such investment
advice as you in your discretion deem advisable and will furnish a continuous
investment program for the Funds consistent with the respective Funds'
investment objectives and policies. You will determine the securities to be
purchased for each Fund, the portfolio securities to be held or sold by each
Fund and the portion of each Fund's assets to be held uninvested, subject always
to the Fund's investment objectives, policies and restrictions, as each of the
same shall be from time to time in effect, and subject further to such policies
and instructions as the Board may from time to time establish. You will advise
and assist the officers of the Trust in taking such steps as are necessary or
appropriate to carry out the decisions of the Board and the appropriate
committees of the Board regarding the conduct of the business of the Funds.

2. ALLOCATION OF CHARGES AND EXPENSES

You will pay all operating expenses of the Funds, including
the compensation and expenses of any employees of the Funds and of any other
persons rendering any services to the Funds; clerical and shareholder service
staff salaries; office space and other office expenses; fees and expenses
incurred by the Funds in connection with membership in investment company
organizations; legal, auditing and accounting expenses; expenses of registering
shares under federal and state securities laws, including expenses incurred by
the Funds in connection with the organization and initial registration of shares
of the Funds; insurance expenses; fees and expenses of the custodian, transfer
agent, dividend disbursing agent, shareholder service agent, plan agent,
administrator, accounting and pricing services agent and underwriter of the
Funds; expenses, including clerical expenses, of issue, sale, redemption or
repurchase of shares of the Fund; the cost of preparing and distributing reports
and notices to shareholders, the cost of printing or preparing prospectuses and
statements of additional information for delivery to each Fund's current and

<PAGE>

prospective shareholders; the cost of printing or preparing stock certificates
or any other documents, statements or reports to shareholders; expenses of
shareholders' meetings and proxy solicitations; advertising, promotion and other
expenses incurred directly or indirectly in connection with the sale or
distribution of the Funds' shares; and all other operating expenses not
specifically assumed by the Funds.

Each Fund will pay all of its respective brokerage fees and
commissions, taxes, interest, fees and expenses of the non-interested person
trustees and such extraordinary or non-recurring expenses as may arise,
including organizational expenses, and litigation to which the Fund may be a
party and indemnification of the Trust's trustees and officers with respect
thereto. You may obtain reimbursement from a Fund, at such time or times as you
may determine in your sole discretion, for any of the expenses advanced by you,
which the Fund is obligated to pay, and such reimbursement shall not be
considered to be part of your compensation pursuant to this Agreement.

Notwithstanding anything herein to the contrary, each Fund
will only be liable for organizational expenses when the Fund reaches
$10,000,000 in assets or when the Fund has been in existence for at least one
year, and until such time, you are liable for such expenses. You will cause such
expenses to be advanced on behalf of each Fund and may obtain reimbursement from
the Fund after the Fund becomes liable.

3. COMPENSATION OF THE ADVISER

For all of the services to be rendered and payments to be made
as provided in this Agreement, as of the last business day of each month, the
CommonWealth Bond Fund will pay you a fee at the annual rate of 1.10% of the
average value of its daily net assets, and the CommonWealth Growth Fund will pay
you a fee at the annual rate of 1.35% of the average value of its daily net
assets.

The average value of the daily net assets of a Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of a Fund is suspended for any
particular business day, then for the purposes of this paragraph, the value of
the net assets of the Fund as last determined shall be deemed to be the value of
the net assets as of the close of the business day, or as of such other time as
the value of the Fund's net assets may lawfully be determined, on that day. If
the determination of the net asset value of a Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).

4. EXECUTION OF PURCHASE AND SALE ORDERS

In connection with purchases or sales of portfolio securities
for the account of each Fund, it is understood that you will arrange for the
placing of all orders for the purchase and sale of portfolio securities for the
account with brokers or dealers

- 15 -

<PAGE>

selected by you, subject to review of this selection by the Board from time to
time. You will be responsible for the negotiation and the allocation of
principal business and portfolio brokerage. In the selection of such brokers or
dealers and the placing of such orders, you are directed at all times to seek
for the Funds the best qualitative execution, taking into account such factors
as price (including the applicable brokerage commission or dealer spread), the
execution capability, financial responsibility and responsiveness of the broker
or dealer and the brokerage and research services provided by the broker or
dealer.

You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Funds and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Funds and to accounts over which you exercise investment
discretion. The Funds and you understand and acknowledge that, although the
information may be useful to the Funds and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by each Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution
as described above, you may give consideration to sales of shares of the Funds
as a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.

Subject to the provisions of the Investment Company Act of 1940, as
amended, and other applicable law, you, any of your affiliates or any affiliates
of your affiliates may retain compensation in connection with effecting the
Funds' portfolio transactions, including transactions effected through others.
If any occasion should arise in which you give any advice to clients of yours
concerning the shares of a Fund, you will act solely as investment counsel for
such client and not in any way on behalf of the Fund. Your services to the Funds
pursuant to this Agreement are not to be deemed to be exclusive and it is
understood that you may render investment advice, management and other services
to others, including other registered investment companies.

- 16 -

<PAGE>

5. LIMITATION OF LIABILITY OF ADVISER

You may rely on information reasonably believed by you to be accurate
and reliable. Except as may otherwise be required by the Investment Company Act
of 1940 or the rules thereunder, neither you nor your shareholders, officers,
directors, employees, agents, control persons or affiliates of any thereof shall
be subject to any liability for, or any damages, expenses or losses incurred by
the Trust in connection with, any error of judgment, mistake of law, any act or
omission connected with or arising out of any services rendered under, or
payments made pursuant to, this Agreement or any other matter to which this
Agreement relates, except by reason of willful misfeasance, bad faith or gross
negligence on the part of any such persons in the performance of your duties
under this Agreement, or by reason of reckless disregard by any of such persons
of your obligations and duties under this Agreement.

Any person, even though also a director, officer, employee,
shareholder or agent of you, who may be or become an officer, director, trustee,
employee or agent of the Trust, shall be deemed, when rendering services to the
Trust or acting on any business of the Trust (other than services or business in
connection with your duties hereunder), to be rendering such services to or
acting solely for the Trust and not as a director, officer, employee,
shareholder or agent of you, or one under your control or direction, even though
paid by you.

6. DURATION AND TERMINATION OF THIS AGREEMENT

This Agreement shall take effect on the date of its execution and
shall remain in force for a period of two (2) years from the date of its
execution with respect to each Fund, and from year to year thereafter, subject
to annual approval by (i) the Board or (ii) a vote of a majority (as defined in
the Investment Company Act of 1940) of the outstanding voting securities of such
Fund, provided that in either event continuance is also approved by a majority
of the trustees who are not "interested persons," as defined in the Investment
Company Act of 1940, of you or the Trust, by a vote cast in person at a meeting
called for the purpose of voting such approval.

If the shareholders of a Fund fails to approve the Agreement in the
manner set forth above, upon request of the Board, you will continue to serve or
act in such capacity for the Fund for the period of time pending required
approval of the Agreement, of a new agreement with you or a different adviser or
other definitive action; provided that the compensation to be paid by the Fund
to you for your services to and payments on behalf of the Fund will be equal to
the lesser of your actual costs incurred in furnishing such services and
payments or the amount you would have received under this Agreement for
furnishing such services and payments.

This Agreement may, on sixty days written notice, be terminated with
respect to a Fund, at any time without the payment of any penalty, by the Board,
by a vote of a majority of the outstanding

- 17 -

<PAGE>

voting securities of the Fund, or by you. This Agreement shall
automatically terminate in the event of its assignment.

7. USE OF NAME

The Trust and you acknowledge that all rights to the name
"CommonWealth" belongs to you, and that the Trust is being granted a limited
license to use such words in the Fund names or in any name of any class of Fund.
In the event you cease to be the adviser to a Fund, the Trust's right to the use
of the name "CommonWealth" with respect to that Fund shall automatically cease
on the ninetieth day following the termination of this Agreement. The right to
the name may also be withdrawn by you during the term of this Agreement upon
ninety (90) days' written notice by you to the Trust. Nothing contained herein
shall impair or diminish in any respect, your right to use the name
"CommonWealth" in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use these names.

8. AMENDMENT OF THIS AGREEMENT

No provision of this Agreement may be changed, waived, discharged or
terminated orally, and no amendment of this Agreement shall be effective until
approved by the Board, including a majority of the trustees who are not
interested persons of you or of the Trust, cast in person at a meeting called
for the purpose of voting on such approval, and (if required under current
interpretations of the Act by the Securities and Exchange Commission) by vote of
the holders of a majority of the outstanding voting securities of the series to
which the amendment relates.

9. LIMITATION OF LIABILITY TO TRUST PROPERTY

The term "AmeriPrime Funds" means and refers to the Trustees from time
to time serving under the Trust's Declaration of Trust as the same may
subsequently thereto have been, or subsequently hereto be, amended. It is
expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the trustees, shareholders, nominees, officers, agents or
employees of the Trust personally, but bind only the trust property of the
Trust, as provided in the Declaration of Trust of the Trust. The execution and
delivery of this Agreement have been authorized by the trustees and shareholders
of the Trust and signed by officers of the Trust, acting as such, and neither
such authorization by such trustees and shareholders nor such execution and
delivery by such officers shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Declaration of
Trust. A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Ohio.

- 18 -

<PAGE>

10. SEVERABILITY

In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.

11. QUESTIONS OF INTERPRETATION

(a) This Agreement shall be governed by the laws of the State of Ohio.

(b) Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the Investment Company Act of 1940, as amended (the "Act") shall be resolved
by reference to such term or provision of the Act and to interpretation thereof,
if any, by the United States courts or in the absence of any controlling
decision of any such court, by rules, regulations or orders of the Securities
and Exchange Commission issued pursuant to said Act. In addition, where the
effect of a requirement of the Act, reflected in any provision of this Agreement
is revised by rule, regulation or order of the Securities and Exchange
Commission, such provision shall be deemed to incorporate the effect of such
rule, regulation or order.

12. NOTICES

Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Trust is 1793 Kingswood
Drive, Suite 200, Southlake, Texas 76092, and your address for this purpose
shall be 247 Florida Street, Baton Rouge, LA 70801.

13. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

14. BINDING EFFECT

Each of the undersigned expressly warrants and represents that he has
the full power and authority to sign this Agreement on behalf of the party
indicated, and that his signature will operate to bind the party indicated to
the foregoing terms.

15. CAPTIONS

The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

- 19 -

<PAGE>

If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract
upon the date thereof.

Yours very truly,

AmeriPrime Funds

ATTEST:

By /s/ Kenneth D. Trumpfheller, President
Name/Title: Kenneth D. Trumpfheller - President

___________________________
Dated: , 1997

ACCEPTANCE

The foregoing Agreement is hereby accepted.

ATTEST: CommonWealth Advisors, Inc.

__________________________ By
Name/Title: Name/Title:

Dated: ____________ , 1997

- 20 -

MANAGEMENT AGREEMENT

TO: Corbin and Company
1320 South University Drive
Suite 406
Fort Worth, Texas 76107

Dear Sirs:

AmeriPrime Funds (the "Trust") herewith confirms our agreement with you.

The Trust has been organized to engage in the business of an investment
company. The Trust currently offers several series of shares to investors, one
of which is the Corbin Small-Cap Value Fund (the "Fund").

You have been selected to act as the sole investment adviser of the Fund
and to provide certain other services, as more fully set forth below, and you
are willing to act as such investment adviser and to perform such services under
the terms and conditions hereinafter set forth. Accordingly, the Trust agrees
with you as follows effective upon the date of the execution of this Agreement.

1. ADVISORY SERVICES

You will regularly provide the Fund with such investment advice as
you in your discretion deem advisable and will furnish a continuous investment
program for the Fund consistent with the Fund's investment objectives and
policies. You will determine the securities to be purchased for the Fund, the
portfolio securities to be held or sold by the Fund and the portion of the
Fund's assets to be held uninvested, subject always to the Fund's investment
objectives, policies and restrictions, as each of the same shall be from time to
time in effect, and subject further to such policies and instructions as the
Board may from time to time establish. You will advise and assist the officers
of the Trust in taking such steps as are necessary or appropriate to carry out
the decisions of the Board and the appropriate committees of the Board regarding
the conduct of the business of the Fund.

2. ALLOCATION OF CHARGES AND EXPENSES

You will pay all operating expenses of the Fund, including the
compensation and expenses of any employees of the Fund and of any other persons
rendering any services to the Fund; clerical and shareholder service staff
salaries; office space and other office expenses; fees and expenses incurred by
the Fund in connection with membership in investment company organizations;
legal, auditing and accounting expenses; expenses of registering shares under
federal and state securities laws, including expenses incurred by the Fund in
connection with the organization and initial registration of shares of the Fund;
insurance expenses; fees and expenses of the custodian,

- 21 -

<PAGE>

transfer agent, dividend disbursing agent, shareholder service agent, plan
agent, administrator, accounting and pricing services agent and underwriter of
the Fund; expenses, including clerical expenses, of issue, sale, redemption or
repurchase of shares of the Fund; the cost of preparing and distributing reports
and notices to shareholders, the cost of printing or preparing prospectuses and
statements of additional information for delivery to the Fund's current and
prospective shareholders; the cost of printing or preparing stock certificates
or any other documents, statements or reports to shareholders; expenses of
shareholders' meetings and proxy solicitations; advertising, promotion and other
expenses incurred directly or indirectly in connection with the sale or
distribution of the Fund's shares; and all other operating expenses not
specifically assumed by the Fund.

The Fund will pay all brokerage fees and commissions, taxes, interest,
fees and expenses of the non-interested person trustees and such extraordinary
or non-recurring expenses as may arise, including organizational expenses, and
litigation to which the Fund may be a party and indemnification of the Trust's
trustees and officers with respect thereto. You may obtain reimbursement from
the Fund, at such time or times as you may determine in your sole discretion,
for any of the expenses advanced by you, which the Fund is obligated to pay, and
such reimbursement shall not be considered to be part of your compensation
pursuant to this Agreement.

Notwithstanding anything herein to the contrary, the Fund will only be
liable for organizational expenses when the Fund reaches $10,000,000 in assets
or when the Fund has been in existence for at least one year, and until such
time, you are liable for such expenses. You will cause such expenses to be
advanced on behalf of the Fund and may obtain reimbursement from the Fund after
the Fund becomes liable.

3. COMPENSATION OF THE ADVISER

For all of the services to be rendered and payments to be made as
provided in this Agreement, as of the last business day of each month, the Fund
will pay you a fee at the annual rate of 1.25% of the average value of its daily
net assets.

The average value of the daily net assets of the Fund shall be
determined pursuant to the applicable provisions of the Declaration of Trust of
the Trust or a resolution of the Board, if required. If, pursuant to such
provisions, the determination of net asset value of the Fund is suspended for
any particular business day, then for the purposes of this paragraph, the value
of the net assets of the Fund as last determined shall be deemed to be the value
of the net assets as of the close of the business day, or as of such other time
as the value of the Fund's net assets may lawfully be determined, on that day.
If the determination of the net asset value of the Fund has been suspended for a
period including such month, your compensation payable at the end of such month
shall be computed on the basis of the value of the net assets of the Fund as
last determined (whether during or prior to such month).

- 22 -

<PAGE>

4. EXECUTION OF PURCHASE AND SALE ORDERS

In connection with purchases or sales of portfolio securities for the
account of the Fund, it is understood that you will arrange for the placing of
all orders for the purchase and sale of portfolio securities for the account
with brokers or dealers selected by you, subject to review of this selection by
the Board from time to time. You will be responsible for the negotiation and the
allocation of principal business and portfolio brokerage. In the selection of
such brokers or dealers and the placing of such orders, you are directed at all
times to seek for the Fund the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer.

You should generally seek favorable prices and commission rates that
are reasonable in relation to the benefits received. In seeking best qualitative
execution, you are authorized to select brokers or dealers who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Fund and/or the other accounts over
which you exercise investment discretion. You are authorized to pay a broker or
dealer who provides such brokerage and research services a commission for
executing a Fund portfolio transaction which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if you determine in good faith that the amount of the commission is
reasonable in relation to the value of the brokerage and research services
provided by the executing broker or dealer. The determination may be viewed in
terms of either a particular transaction or your overall responsibilities with
respect to the Fund and to accounts over which you exercise investment
discretion. The Fund and you understand and acknowledge that, although the
information may be useful to the Fund and you, it is not possible to place a
dollar value on such information. The Board shall periodically review the
commissions paid by the Fund to determine if the commissions paid over
representative periods of time were reasonable in relation to the benefits to
the Fund.

Consistent with the Rules of Fair Practice of the National Association
of Securities Dealers, Inc., and subject to seeking best qualitative execution
as described above, you may give consideration to sales of shares of the Fund as
a factor in the selection of brokers and dealers to execute Fund portfolio
transactions.

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<PAGE>

Your services to the Fund pursuant to this Agreement are not to be deemed to be
exclusive and it is understood that you may render investment advice, management
and other services to others, including other registered investment companies.

5. LIMITATION OF LIABILITY OF ADVISER

6. DURATION AND TERMINATION OF THIS AGREEMENT

This Agreement shall take effect on the date of its execution, and
shall remain in force for a period of two (2) years from the date of its
execution, and from year to year thereafter, subject to annual approval by (i)
the Board or (ii) a vote of a majority (as defined in the Investment Company Act
of 1940) of the outstanding voting securities of the Fund, provided that in
either event continuance is also approved by a majority of the trustees who are
not "interested persons," as defined in the Investment Company Act of 1940, of
you or the Trust, by a vote cast in person at a meeting called for the purpose
of voting such approval.

If the shareholders of the Fund fail to approve the Agreement in the
manner set forth above, upon request of the Board, you will continue to serve or
act in such capacity for the Fund for the period of time pending required
approval of the Agreement, of a new agreement with you or a different adviser or
other definitive action; provided that the compensation to be paid by the Fund
to you for your services to and payments on behalf of the Fund will be equal to
the lesser of your actual costs incurred in furnishing such

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<PAGE>

services and payments or the amount you would have received under this Agreement
for furnishing such services and payments.

This Agreement may, on sixty days written notice, be terminated with
respect to the Fund, at any time without the payment of any penalty, by the
Board, by a vote of a majority of the outstanding voting securities of the Fund,
or by you. This Agreement shall automatically terminate in the event of its
assignment.

7. USE OF NAME

The Trust and you acknowledge that all rights to the name "Corbin"
belongs to you, and that the Trust is being granted a limited license to use
such words in its Fund name or in any class name. In the event you cease to be
the adviser to the Fund, the Trust's right to the use of the name "Corbin" shall
automatically cease on the ninetieth day following the termination of this
Agreement. The right to the name may also be withdrawn by you during the term of
this Agreement upon ninety (90) days' written notice by you to the Trust.
Nothing contained herein shall impair or diminish in any respect, your right to
use the name "Corbin" in the name of, or in connection with, any other business
enterprises with which you are or may become associated. There is no charge to
the Trust for the right to use these names.

8. AMENDMENT OF THIS AGREEMENT

9. LIMITATION OF LIABILITY TO TRUST PROPERTY

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<PAGE>

Declaration of Trust of the Trust is on file with the Secretary of the State of
Ohio.

10. SEVERABILITY

In the event any provision of this Agreement is determined to be void
or unenforceable, such determination shall not affect the remainder of this
Agreement, which shall continue to be in force.

11. QUESTIONS OF INTERPRETATION

(a) This Agreement shall be governed by the laws of the State of Ohio.

12. NOTICES

13. COUNTERPARTS

This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

14. BINDING EFFECT

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<PAGE>

15. CAPTIONS

The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.

Yours very truly,

AmeriPrime Funds

ATTEST:

___________________________ By /s/ Kenneth D. Trumpfheller, President
Name/Title: Kenneth D. Trumpfheller, President

Dated: __________ , 1997

ACCEPTANCE

The foregoing Agreement is hereby accepted.

ATTEST: Corbin & Company

___________________________ By ___________________________________
Name/Title: Name/Title:

Dated: _______________ , 1997

- 27 -

BROWN, CUMMINS & BROWN CO., L.P.A.
ATTORNEYS AND COUNSELORS AT LAW
3500 CAREW TOWER
J. W. BROWN (1911-1995) 441 VINE STREET
JAMES R. CUMMINS CINCINNATI, OHIO 45202
ROBERT S BROWN TELEPHONE (513) 381-2121 OF COUNSEL
DONALD S. MENDELSOHN TELECOPIER (513) 381-2125 GILBERT BETTMAN
LYNNE SKILKEN
AMY G. APPLEGATE
KATHRYN KNUE PRZYWARA
MELANIE S. CORWIN
JOANN M. STRASSER

March 28, 1997

AmeriPrime Funds
1793 Kingswood Drive, Suite 200
Southlake, Texas 76092

Gentlemen:

This letter is in response to your request for our opinion in
connection with the filing of Post-Effective Amendment No. 7 of AmeriPrime Funds
(the "Trust").

We have examined a copy of the Trust's Agreement and Declaration of
Trust, the Trust's By-Laws, the Trust's record of the various actions by the
Trustees thereof, and all such agreements, certificates of public officials,
certificates of officers and representatives of the Trust and others, and such
other documents, papers, statutes and authorities as we deem necessary to form
the basis of the opinion hereinafter expressed. We have assumed the genuineness
of the signatures and the conformity to original documents of the copies of such
documents supplied to us as original or photostat copies.

Based upon the foregoing, we are of the opinion that, after
registration is effective for purposes of federal and applicable state
securities laws, the shares of each series of the Trust, if issued in accordance
with the then current Prospectus and Statement of Additional Information of the
Trust, will be legally issued, fully paid and non-assessable.

We herewith give you our permission to file this opinion with the
Securities and Exchange Commission as an exhibit to Post-Effective Amendment No.
7 referred to above.

Very truly yours,

BROWN, CUMMINS & BROWN CO., L.P.A.

BCB:tms