FTI FUNDS, 497, 1999-04-21

FTI FUNDS
497, 1999-04-21

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FTI Funds
Prospectus
March 31, 1999

Not part of the Prospectus
FTI Funds
Table of Contents

Summary of Fund Goals, Strategies, Performance 2
and Risk
Fees and Expenses of the Funds 10
Investment Strategies for the Funds 19
Investment Securities and Techniques Used by the Funds 23
Principal Investment Risks of the Funds 31
What Shares Cost 36
Share Purchases 37
How the Funds Are Distributed/Sold 38
Redemptions and Exchanges 39
Account and Share Information 42
Management of FTI Funds 44
Financial Information 48

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus, and any representation to the contrary is a criminal offense.

Prospectus

March 31, 1999

Revised April 19, 1999

Summary of Fund Goals, Strategies, Performance and Risk

FTI Funds offer investment opportunities to a wide range of investors.

Mutual Fund--

A registered investment company that offers an affordable, diversified and
professionally managed way for people to invest in the financial marketplace. A
mutual fund pools the money of its shareholders to invest in a "mix" of
securities, called a portfolio, that pursues a specific objective. The money
earned from the portfolio of investments is distributed back to shareholders as
dividends, or, if any securities are sold at a profit, as capital gains.
Shareholders can reinvest their earnings to purchase additional shares of the
fund, or receive their earnings in cash.

FTI Municipal Bond Fund
(Municipal Bond Fund)
Goal: The Fund's goal is total return with emphasis on income.

Strategy: To seek its goal, the Fund invests in high quality municipal
securities of intermediate duration and fixed income securities so that at least
80% of its annual interest income is exempt from federal regular income tax.
(Federal regular income tax does not include the federal individual alternative
minimum tax or the federal alternative minimum tax for corporations.) The Fund
may invest in obligations subject to alternative minimum tax without limit.
Under normal market conditions, at least 80% of the Fund's assets are invested
in investment grade securities or unrated securities deemed by the Adviser to be
of comparable quality to investment grade securities. No more than 20% of the
assets may be invested in securities rated as low as B. In selecting securities
for the Fund, the Adviser assesses the impact of anticipated interest rates and
market risks. The Adviser actively allocates securities among market sectors.

FTI Bond Fund
(Bond Fund)
Goal: The Fund's goal is total return with emphasis on income.

Strategy: To seek its goal, the Fund invests in fixed income securities so that,
under normal market conditions, at least 80% of its assets are invested in
investment grade securities or unrated securities deemed by the Adviser to be of
comparable quality to investment grade securities. In selecting securities for
the Fund, the Adviser evaluates the impact of economic and political trends and
market risks. Up to 30% of the assets may be invested in securities of foreign
issuers, provided that the securities are denominated in U.S. dollars. In order
to control risks, the Adviser manages domestic bond and foreign markets as
distinct asset classes. The securities in which the Fund invests may be of any
maturity, but under normal market conditions the Fund's duration is within one
and a half years of the Lehman Brothers Aggregate Bond Index which is currently
about four and one half years.

FTI Large Capitalization Growth Fund

(Large Capitalization Growth Fund)

Goal: The Fund's goal is long-term growth of principal.

Strategy: To seek its goal, the Fund invests in equity securities of companies
with market capitalizations in excess of $5 billion at the time of purchase,
that the Adviser believes are of above-average financial quality and offer the
prospect for above-average growth of earnings, cash flow, or assets relative to
the companies that comprise the Standard & Poor's 500 Composite Stock Price
Index (S&P 500). In selecting securities for the Fund, the Adviser considers
earnings growth, relative valuation measures and quality of company management.

Risk--
The chance that the value of an investment could decline or that income from the
investment could be different than expected. There are several types of risk
that vary according to the type of investment.

FTI Large Capitalization
Growth and Income Fund
(Large Capitalization Growth and Income Fund)

Goal: The Fund's goal is long-term growth of principal and income.

Strategy: To seek its goal, the Fund invests in dividend-paying equity
securities of companies, with market capitalizations in excess of $5 billion at
the time of purchase, that the Adviser believes will approximate the dividend
yield of the companies which comprise the S&P 500, while attempting to keep
taxable capital gains distributions relatively low. In selecting securities for
the Fund, the Adviser uses methods very similar to those described above for
Large Capitalization Growth Fund. However, for the Fund, the Adviser focuses on
a company's securities' dividend paying prospects in an effort to generate
income.

A Tax-Sensitive Approach to Investing: In pursuing its goal, the Fund will be
managed in an attempt to keep its distributions of capital gains relatively low.
For example, it will generally buy securities that it intends to hold for a
number of years and avoid short-term trading. In deciding which securities to
sell, the Adviser will consider their capital gain or loss situation, and may
attempt to offset capital gains by timing its sales of securities that have gone
down in value. Also, the Adviser will consider selling any security that has not
met growth expectations, in which case the capital gain, if any, would be
relatively small. Successful application of this strategy may result in
shareholders incurring relatively larger amounts of capital gains when they
ultimately sell their shares.

FTI Small Capitalization Equity Fund
(Small Capitalization Equity Fund)

Goal: The Fund's goal is to provide growth of principal.

Strategy: To seek its goal, the Fund invests in the common stock of companies,
with market capitalizations below $1.5 billion at the time of purchase, that the
Adviser believes are undervalued in the marketplace or have earnings that might
be expected to grow faster than the U.S. economy in general. In selecting
securities for the Fund, the Adviser focuses on companies with unique franchise
opportunities, and companies that have high barriers of entry to competitors,
strong balance sheets and cash flows, and superior management.

FTI International Equity Fund

(International Equity Fund)

Goal: The Fund's goal is to provide growth of principal.

Strategy: To seek its goal, the Fund invests in the equity and debt obligations
of issuers in at least three countries outside the United States so that at
least 65% of its assets are invested in securities denominated in foreign
currencies and at least 65% of its assets are invested in equity securities.
Under normal market conditions, the Adviser invests substantially all of the
Fund's assets in equity securities either denominated in foreign currencies or
issued by issuers located in at least three countries outside of the United
States. In selecting securities for the Fund, the Adviser uses fundamental
research and value screening to select underpriced quality growth companies from
higher growth regions of the world.

Investment Risks of the Funds

In addition to the risks set forth below that are specific to an investment in a
particular Fund, there are risks common to mutual funds. For example, a Fund's
share price may decline and an investor could lose money, perhaps even your
entire investment. Also, there is no assurance that a Fund will achieve its
investment objective. You should be aware that the shares offered by this
prospectus are not deposits or obligations of any bank, are not endorsed or
guaranteed by any bank and are not insured or guaranteed by the U.S. government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any
other government agency. An investment in any one or all of the Funds does not
necessarily constitute a balanced investment program for any one investor.
Finally, all of the Funds bear the risk of Year 2000 readiness.

Risks Related to Municipal Bond Large Cap Large Cap Small Cap International
Fixed Income Securities Bond Growth Growth & Income Equity
<S> <C> <C> <C> <C> <C> <C>
Equity
Bond Market x x
Credit x x
Call x x
Prepayment x x
Liquidity x x
Sector x x
Non-Investment Grade Securities x x
Complicated CMOs x
Currency
Euro
Foreign Investing x x
Emerging Market Countries
Leveraging
Tax Risks x

Risks Related to Equity Securities:
Stock Market x x x x
Sector x x x x
Liquidity x x x x
Investing for Growth x x x x
Investing for Value
Company Size x
Currency x
Euro x
Foreign Investing x
Emerging Market Countries
Leveraging
</TABLE>

For an explanation of risks related to equity securities and fixed income
securities, see "Principal Investment Risks of the Funds" which begins on page
31.

FTI Small Capitalization Equity Fund

Risk/Return Bar Chart
[Graphic]
The bar chart shows the variability of the Fund's actual total return on a
yearly basis. The Fund does not impose a sales charge. Hence, the total return
displayed above is based on net asset value.

Within the period shown in the Chart, the Fund's highest quarterly return was
24.04% (quarter ended December 31, 1998). Its lowest quarterly return was -
21.53% (quarter ended September 30, 1998).

Average Annual Return for the Fund
compared to the Russell 2000 Growth Index.

Calendar Period Fund Russell 2000 Growth Index
<S> <C> <C>
1 Year 3.03% 1.23%
Since Inception* 14.27% 8.96%
</TABLE>

* The Fund's inception date was December 22, 1995.

The table shows the Fund's average annual total returns compared to the Russell
2000 Growth Index, which includes those Russell 2000 companies with higher than
average price-to-book ratios and higher than average forecasted growth values.

While past performance does not necessarily predict future performance, this
information provides historical performance information so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

FTI International Equity Fund

Within the period shown in the Chart, the Fund's highest quarterly return was
20.47% (quarter ended March 31, 1998). Its lowest quarterly return was -19.01%
(quarter ended September 30, 1998).

Average Annual Return for the Fund, compared to the Morgan Stanley Capital
International Europe, Australia and Far East Index (MSCI EAFE)

Calendar Period Fund MSCI EAFE
<S> <C> <C>
1 Year 12.86% 20.00%
Since Inception* 12.87% 9.00%
</TABLE>

* The Fund's inception date was December 22, 1995.

The table shows the Fund's average annual total returns compared to the MSCI
EAFE, a market capitalization-weighted foreign securities index, which is widely
used to measure the performance of European, Australian, New Zealand, and Far
Eastern stock markets. Indices are unmanaged and investments cannot be made in
an index.

While past performance does not necessarily predict the future performance, this
information provides historical performance information so that you can analyze
whether the Fund's investment risks are balanced by its potential rewards.

Fees and Expenses of the Funds
FTI Municipal Bond Fund
Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI Municipal Bond Fund.

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees (Fees Paid Directly From Your Investment)
Maximum Sales Charge (Load)
Imposed on Purchases (as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
(as a percentage of original purchase price or redemption proceeds, as
applicable) None

Maximum Sales Charge (Load) None Imposed on Reinvested Dividends (and other
Distributions) (as a percentage of offering price) Redemption Fee (as a
percentage of amount redeemed, if applicable) None Exchange Fee None

Annual Fund Operating Expenses (Before Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee (2) 0.50%
Shareholder Services Fee (3) 0.25%
Distribution (12b-1) Fee (3) 0.75%
Other Expenses (4) 0.47%
Total Annual Fund Operating Expenses
(before waiver) (5) 1.97%
</TABLE>

1 Although not contractually obligated to do so, the Adviser, Distributor and
Shareholder Services provider have agreed to waive certain amounts. These are
shown below along with the net expenses the Fund is expected to actually pay
for the fiscal year ending November 30, 1999.
<TABLE>
<S> <C>
Waiver of Fund Expenses 1.15%
Total Expected Annual Fund Operating Expenses (after waiver) 0.82%
2 The Adviser will waive a portion of the management fee. The Adviser can
terminate this voluntary waiver at any time. The management fee the Fund is
expected to pay (after the voluntary waiver) is 0.35% for the year ending
November 30, 1999.
3 The Fund has no present intention of paying or accruing the Distribution
(12b-1) fee or Shareholder Services fee during the fiscal year ending
November 30, 1999.
4 Other Expenses are based on estimated amounts for the fiscal year ending
November 30, 1999.
5 As noted above in (2) and (3), certain fees are being voluntarily waived or
are not currently being accrued.
</TABLE>

Example

This Example is intended to help you compare the cost of investing in FTI
Municipal Bond Fund with the cost of investing in other mutual funds.

Management Fee--
This is a basic fee associated with all mutual funds. It is the fee paid by the
fund to the investment adviser who makes all the day-to-day investment decisions
for the fund.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses are before waivers as shown in the table and remain
the same. Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
FTI Municipal Bond Fund $200 $618
</TABLE>

FTI Bond Fund

Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI Bond Fund.

<TABLE>
<CAPTION>
Shareholder Fees (Fees Paid Directly From Your Investment)
<S> <C>
Maximum Sales Charge (Load) None
Imposed on Purchases (as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
(as a percentage of original purchase price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) None
Imposed on Reinvested Dividends (and other Distributions) (as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
</TABLE>

<TABLE>
<CAPTION>
Annual Fund Operating Expenses (Before Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
<S> <C>
Management Fee 0.50%
Shareholder Services Fee (2) 0.25%
Distribution (12b-1) Fee (2) 0.75%
Other Expenses (3) 0.48%
Total Annual Fund Operating Expenses
(before waiver) (4) 1.98%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Although not contractually obligated to do so, the Distributor and
Shareholder Services provider have agreed to waive certain amounts. These are
shown below along with the net expenses the Fund is expected to actually pay
for the fiscal year ending November 30, 1999.
<TABLE>
<S> <C> Waiver of Fund Expenses 1.00% Total Expected Annual Fund Operating
Expenses (after waiver) 0.98% 2 The Fund has no present intention of paying or
accruing the Distribution (12b-
1) fee or Shareholder Services fee during the fiscal year ending November 30,
1999.
3 Other Expenses are based on estimated amounts for the fiscal year ending
November 30, 1999.
4 As noted above in (2), certain fees are being voluntarily waived or are not
currently being accrued.
</TABLE>

Example

This Example is intended to help you compare the cost of investing in FTI Bond
Fund with the cost of investing in other mutual funds.

1 Year 3 Years
<S> <C> <C>
FTI Bond Fund $201 $621
</TABLE>

FTI Large Capitalization Growth Fund

Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI Large Capitalization Growth Fund.

<TABLE>
<CAPTION>
<S> <C>
Shareholder Fees (Fees Paid Directly From Your Investment)
Maximum Sales Charge (Load) None
Imposed on Purchases (as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
(as a percentage of original purchase price
or redemption proceeds, as applicable)
Maximum Sales Charge (Load) None
Imposed on Reinvested Dividends (and other Distributions)
(as a percentage of offering price)
Redemption Fee (as a percentage of amount redeemed, if applicable) None
Exchange Fee None
Annual Fund Operating Expenses (Before Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 0.75%
Shareholder Services Fee (2) 0.25%
Distribution (12b-1) Fee (2) 0.75%
Other Expenses (3) 0.61%
Total Annual Fund Operating Expenses
(before waiver) (4) 2.36%
</TABLE>

1 Although not contractually obligated to do so, the Distributor and
Shareholder Services provider have agreed to waive certain amounts. These are
shown below along with the net expenses the Fund is expected to actually pay
for the fiscal year ending November 30, 1999.
<TABLE>
<S> <C>
Waiver of Fund Expenses 1.00%
Total Expected Annual Fund Operating Expenses (after waiver) 1.36%
2 The Fund has no present intention of paying or accruing the Distribution (12b-
1) fee or Shareholder Services fee during the fiscal year ending November 30,
1999.
3 Other Expenses are based on estimated amounts for the fiscal year ending
November 30, 1999.
</TABLE>
4 As noted above in (2), certain fees are being voluntarily waived or are not
currently being accrued.

Example

This Example is intended to help you compare the cost of investing in FTI Large
Capitalization Growth Fund with the cost of investing in other mutual funds.

1 Year 3 Years

FTI Large Capitalization Growth Fund $239 $736

FTI Large Capitalization Growth and Income Fund

Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI Large Capitalization Growth & Income Fund

Shareholder Fees (Fees Paid Directly From Your Investment)

Annual Fund Operating Expenses (Before Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)

<TABLE>
<S> <C>
Management Fee 0.75%
Shareholder Services Fee (2) 0.25%
Distribution (12b-1) Fee (2) 0.75%
Other Expenses (3) 0.33%
Total Annual Fund Operating Expenses
(before waiver) (4) 2.08%
</TABLE>

1 Although not contractually obligated to do so, the Distributor and
Shareholder Services provider have agreed to waive certain amounts. These are
shown below along with the net expenses the Fund is expected to actually pay
for the fiscal year ending November 30, 1999.
<TABLE>
<S> <C> Waivers of Fund Expenses 1.00% Total Expected Annual Fund Operating
Expenses (after waiver) 1.08% 2 The Fund has no present intention of paying or
accruing the Distribution (12b-
1) fee or Shareholder Services fee during the fiscal year ending November 30,
1999.
3 Other Expenses are based on estimated amounts for the fiscal year ending
November 30, 1999.
4 As noted above in (2), certain fees are being voluntarily waived or are not
currently being accrued.
</TABLE>

Example

This Example is intended to help you compare the cost of investing in FTI Large
Capitalization Growth and Income Fund with the cost of investing in other mutual
funds.

1 Year 3 Years
<S> <C> <C>
FTI Large Capitalization Growth & Income Fund $211 $652
</TABLE>

FTI Small Capitalization Equity Fund

Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI Small Capitalization Equity Fund.

Shareholder Fees (Fees Paid Directly From Your Investment)

<TABLE>
<CAPTION>
<S> <C>
Maximum Sales Charge (Load) None
Imposed on Purchases (as a percentage of offering price)
Maximum Deferred Sales Charge (Load) None
(as a percentage of original purchase
price or redemption proceeds, as applicable)
Maximum Sales Charge (Load) None
Imposed on Reinvested Dividends
(and other Distributions) (as a percentage of offering
price)
Redemption Fee (as a percentage of None
amount redeemed, if applicable)
Exchange Fee None
Annual Fund Operating Expenses
(Before Reimbursement and Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)
Management Fee 1.00%
Shareholder Services Fee (2) 0.25%
Distribution (12b-1) Fee (2) 0.75%
Other Expenses (3) 0.51%
Total Annual Fund Operating Expenses
(before reimbursement and waiver) (4) 2.51%
</TABLE>

1 Although not contractually obligated to do so, the Adviser, Distributor and
Shareholder Services provider waived and reimbursed certain amounts. These
are shown below along with the net expenses the Fund actually paid for the
fiscal year ended November 30, 1998.
<TABLE>
<S> <C>
Reimbursement and Waiver of Fund Expenses 1.01%
Total Actual Annual Fund Operating Expenses
(after reimbursement and waiver) 1.50%
2 The Fund did not pay or accrue the Distribution (12b-1) fee or the
Shareholder Services fee during the fiscal year ended November 30, 1998. The
Fund has no present intention of paying or accruing the Distribution (12b-1)
fee or Shareholder Services fee during the fiscal year ending November 30,
1999.
3 The Adviser voluntarily reimbursed certain operating expenses of the Fund.
The Adviser can terminate this voluntary reimbursement at any time. Total
other expenses paid by the Fund (after the voluntary reimbursement) was 0.50%
for the fiscal year ended November 30, 1998.
4 As noted above in (2), certain fees are being voluntarily waived or are not
currently being accrued.
</TABLE>

Example

This Example is intended to help you compare the cost of investing in FTI Small
Capitalization Equity Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses are before reimbursements and waivers as shown in the
table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
FTI Small Capitalization Equity Fund $254 $782 $1,335 $2,846
</TABLE>

FTI International Equity Fund

Fees And Expenses

This table describes the fees and expenses that you may pay if you buy and hold
shares of the FTI International Equity Fund.

Shareholder Fees (Fees Paid Directly From Your Investment)

Annual Fund Operating Expenses
(Before Reimbursement and Waiver) (1)
Expenses That Are Deducted From Fund Assets
(as a percentage of average net assets)

<TABLE>
<S> <C>
Management Fee 1.00%
Shareholder Services Fee (2) 0.25%
Distribution (12b-1) Fee (2) 0.75%
Other Expenses (3) 0.49%
Total Annual Fund Operating Expenses
(before reimbursement and waiver) (4) 2.49%
</TABLE>

1 Although not contractually obligated to do so, the Adviser, Distributor and
Shareholder Services provider waived and reimbursed certain amounts. These
are shown below along with the net expenses the Fund actually paid for the
fiscal year ended November 30, 1998.
<TABLE>
<S> <C>
Reimbursement and Waiver of Fund Expenses 1.10%
Total Actual Annual Fund Operating Expenses
(after reimbursement and waiver) 1.39%
2 The Fund did not pay or accrue the Distribution (12b-1) fee or the
Shareholder Services fee during the fiscal year ended November 30, 1998. The
Fund has no present intention of paying or accruing the Distribution (12b-1)
fee or Shareholder Services fee during the fiscal year ending November 30,
1999.
3 The Adviser voluntarily reimbursed certain operating expenses of the Fund.
The Adviser can terminate this voluntary reimbursement at any time. Total
other expenses paid by the Fund (after the voluntary reimbursement) was 0.39%
for the year ended November 30, 1998.

4 As noted above in (2), certain fees are being voluntarily waived or are not
currently being accrued.
</TABLE>

Example

This Example is intended to help you compare the cost of investing in FTI
International Equity Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses are before reimbursements and waivers as shown in the
table and remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
FTI International Equity Fund $252 $776 $1,326 $2,826
</TABLE>

Investment
Strategies
for the Funds
Municipal Bond Fund

Strategy: The Adviser's strategy is to produce tax-exempt income, seek
opportunities for capital appreciation and control risks of capital losses. To
seek total return, the Adviser invests primarily in high quality securities of
intermediate (5-15 years) duration. To seek capital appreciation, the Adviser
uses moderate interest rate anticipation, active sector allocation and
disciplined security selection. The Adviser employs a gradual approach when
shifting a portfolio's duration with a local market. As confirmations of
forecasts are received, the Adviser begins a gradual process of lengthening or
shortening duration. The Adviser relies on historical data as well as investment
research. The focus of the Adviser's research process is identifying and
quantifying the risks inherent in specific bond market sectors and securities
within those sectors.

The Municipal Bond Fund generally seeks to provide tax-exempt income, whereas
the Bond Fund seeks to generate taxable income.

To enhance after-tax total return, the Adviser may, from time to time, select
taxable securities such as U.S. Treasury securities. The Adviser may purchase
Treasury securities as a short-term investment while it seeks other buying
opportunities, or to capitalize on a market rally. Treasury securities possess
superior performance and generally outperform municipal securities in an up
market.

The Fund does not intend to purchase securities if, as a result of such
purchase, more than 25% of the value of its total assets would be invested in
the securities of governmental subdivisions located in any one state, territory
or possession of the United States.

As noted, the Fund seeks to produce total return, with emphasis on tax exempt
income. Total return measures the overall change in the value of an investment
in the Fund (assuming reinvestment of dividend and capital gain distributions).
Two factors make up total return: income produced by the Fund's investments (at
least 80% of which will be exempt from federal regular income tax), and the
change in value of the Fund's investments (which will be reflected in changes in
the value of the Fund's shares). A positive change in value is called capital
appreciation. Capital appreciation of securities the Fund continues to hold is
known as "unrealized" appreciation, and is reflected in an increase in the value
of the Fund's shares. When the Fund sells such a security, it "realizes" the
capital appreciation (or "capital gains"). The Fund must distribute capital
gains (which are taxable) to shareholders. When the Fund makes distributions,
its share price will decline by the amount of the per share distribution.

Bond Fund

Strategy: The Adviser's strategy is to produce income, seek opportunities for
capital appreciation and control risks of capital losses. To seek capital
appreciation, the Adviser evaluates economic and political trends to assess the
expected distribution of returns. As a general matter, the Fund's investments
are expected to produce income in the form of interest payments to the Fund. As
investment strategies are implemented, the Adviser's forecasts are continually
reviewed to confirm investment views. The Adviser reviews forecast returns to
determine preferred markets. The Adviser actively manages sector allocation,
duration targets and issue selection.

The average credit quality of the portfolio is a minimum of AA. No more than 20%
of the assets may be invested in securities rated as low as B. Under normal
market conditions, the Fund's duration is within one and a half years of the
Lehman Brothers Aggregate Bond Index which is currently about four and one half
years. Lehman Brothers Aggregate Bond Index is comprised of U.S. Treasury
obligations, U.S. agency obligations, foreign obligations, U.S. investment-grade
corporate debt and mortgage-backed obligations.

Large Capitalization Growth Fund

Strategy: Investments are allocated among different industries and companies and
these holdings are adjusted based on long-term investment considerations. Under
normal market conditions, at least 65% of the total assets of the Fund's
portfolio will be invested in the common stock of large capitalization
companies, which the Fund defines as those having a market value capitalization
in excess of $5 billion. The Fund emphasizes U.S. securities but may also invest
up to 10% of its net assets in equity securities of foreign growth companies
which meet the criteria applicable to U.S. securities and up to 20% of its net
assets in American Depositary Receipts (ADRs). In selecting securities, the
Adviser considers earnings growth, relative valuation measures and company
management. When analyzing earnings growth, the Adviser looks for strong,
sustainable internal growth and a high proportion of recurring revenues. The
Adviser also evaluates the quality of an issuer's earnings and the probability
of retaining or widening profitability. In analyzing relative valuation, the
Adviser performs a risk/reward analysis and a review of price/earnings ratios,
growth estimates and return on invested capital. The Adviser's management
analysis favors management with a proven track record, wide equity ownership and
incentive programs.

Large Capitalization Growth and Income Fund

Strategy: In pursuing its goal, the Adviser uses methodologies very similar to
those described above for Large Capitalization Growth Fund, except that it will
manage the Large Capitalization Growth and Income Fund with a greater focus on
dividends. The Fund is expected to have fewer holdings than Large Capitalization
Growth Fund and may commit a larger portion of its assets to a single holding.
Under normal market conditions, at least 65% of the total assets of the Fund's
portfolio will be invested in the common stock of large capitalization
companies, which the Fund defines as those having a market value capitalization
in excess of $5 billion. The Fund may invest up to 10% of its net assets in
equity securities of foreign growth companies which meet the criteria applicable
to U.S. securities.

Growth and Income is managed with a sensitivity to incurring taxes Large
Capitalization Growth and Income Fund seeks to minimize capital gains tax
implications by applying a buy-and-hold approach to managing the portfolio.

Small Capitalization Equity Fund

Strategy: The Fund invests in common stock of small capitalization companies
that have a market capitalization below $1.5 billion at the time of purchase.
Under normal market conditions, at least 65% of the total assets of the Fund's
portfolio will be invested in these securities. The Fund may also invest up to
10% of its net assets in foreign securities traded publically in the United
States. The Adviser seeks companies that are undervalued in the market place, or
that have earnings that are expected to grow faster than the U.S. economy. The
Adviser also seeks stocks of companies whose expected growth rates exceed their
current price-earnings ratio. Such companies typically possess a relatively high
rate of return on invested capital so that future growth can be internally
financed. They may offer the potential for accelerating earnings growth because
they offer an opportunity to participate in new products, services and
technologies. The Adviser also selects companies that have unique franchise
opportunities, high barriers to competition, strong balance sheets and cash
flows and superior management.

International Equity Fund

Fundamental Research--
A standard way to analyze the strength of a stock, this form of analysis focuses
on the basic financial and operating strength of the company issuing the stock.

Strategy: Through fundamental research and a value screen, the Adviser
identifies foreign equity securities determined to be underpriced. Through
meetings with company management and on-site visits, the Adviser evaluates the
company's recent price performance earnings estimate together with consensus
sell-side analysts' estimates, cash flow, valuation multiples, the Fund's price
targets and total return potential. The Adviser uses fundamental analysis to
assess world economies and make projections regarding future trends in economic
activity. The Adviser then determines whether it believes that current
securities prices reflect these projected trends, selecting for purchase those
securities whose near-term growth and long-term growth prospects are not
perceived fully valued in the market place. The Adviser seeks to create a
diversified portfolio of underpriced quality growth companies from higher growth
regions of the world. The Adviser selects securities from foreign industrialized
countries that comprise the Morgan Stanley Capital International EAFE Index
(Europe, Australia and the Far East). The Fund may invest up to 20% of its total
assets in common stocks of issuers located in emerging market nations. The Fund
may also invest up to 35% of its total assets in debt securities.

Investment Securities and
Techniques Used by the Funds

Following is a table that indicates which types of securities are a:
P = Principal investment of a Fund; (shaded in chart)
A = Acceptable (but not principal) investment of a Fund; or
N = Not an acceptable investment of a Fund.

<TABLE>
<CAPTION>
Securities in Large Large Cap
which the Municipal Cap Growth Small Cap International
Funds Invest: Bond Bond Growth & Income Equity Equity
<S> <C> <C> <C> <C> <C> <C>
Equity Securities N N P P P P
Common Stocks N N P P P P
Preferred Stocks N A A A A A
Real Estate N N A A A N
Investment Trusts
Warrants N N A A A A
Fixed Income P P A A A A
Securities
Treasury Securities A P A A A A
Agency Securities A P A A A A
Corporate Debt
Securities A P A A A A
Commercial A A A A A A
Paper
Demand A A A A N N
Instruments
Taxable Municipal
Securities A P N N N N
Mortgage Backed A P N N N N
Securities
Collateralized A A N N N N
Mortgage
Obligations
(CMOs)
Sequential A A N N N N
CMOs
PACs, TACs & A A N N N N
Companion
Classes
IOs and POs N A N N N N

</TABLE>

<TABLE>
<CAPTION>
Securities in Municipal Bond Large Large Cap Small Cap International Equity
which the Bond Cap Growth Equity
Funds Invest: Growth & Income
<S> <C> <C> <C> <C> <C> <C>
Floaters N A N N N N
and Inverse
Floaters
Z Classes N A N N N N
and Residual
Classes
Asset Backed A A N N N N
Securities
Zero Coupon A A A A A A
Securities
Bank Instruments A A A A A A
Credit P A N N N N
Enhancement
Convertible N A A A A A
Securities
Tax Exempt P A N N N N
Securities
General P A N N N N
Obligation Bonds
Special P A N N N N
Revenue Bonds
Private A A N N N N
Activity Bonds
Tax Increment A A N N N N
Financing Bonds
Municipal Notes A A N N N N
Variable Rate A A N N A N
Demand
Instruments
Municipal P A N N N N
Leases
Foreign A A A A A P
Securities
Depository N N A A A A
Receipts
Foreign N N N N N A
Exchange
Contracts
Foreign A A N N N A
Government
Securities

</TABLE>

<TABLE>
<CAPTION>
Securities in Municipal Bond Large Large Cap Small Cap International Equity
which the Bond Cap Growth Equity Municipal
Funds Invest: Growth & Income Bond
<S> <C> <C> <C> <C> <C> <C>
Derivative A A A A A A
Contracts
Futures A A A A N A
Contracts
Options A A A A A A
Swaps N A N N N N
Interest Rate N A N N N N
Swaps
Currency N A N N N N
Swaps
Caps & Floors N A N N N N
Total Return N A N N N N
Swaps
Hybrid N A N N N N
Instruments
Special Transactions A A A A A A
Repurchase A A A A A A
Agreements
Reverse A A A A A A
Repurchase
Agreements
Delayed A A A A A A
Delivery
Transactions
To Be A A N N N N
Announced
Securities
(TBAs)
Dollar Rolls A A N N N N
Securities A A A A A A
Lending
Asset Coverage A A N N N N
Shares of A A A A A A
Other
Investment
Companies
Restricted A A A A A A
and Illiquid
Securities
</TABLE>

Other securities and techniques used by the Funds to meet their respective goals
are described in the Statement of Additional Information.
Equity Securities

Equity securities represent a share of an issuer's earnings and assets, after
the issuer pays its liabilities. A Fund cannot predict the income it will
receive from equity securities because issuers generally have discretion as to
the payment of any dividends or distributions. However, equity securities offer
greater potential for appreciation than many other types of securities, because
their value increases directly with the value of the issuer's business.

The following describes the types of equity securities in which the Funds invest
as noted in the chart.

Common Stocks

Common stocks are the most prevalent type of equity security. Common stocks
receive the issuer's earnings after the issuer pays its creditors and any
preferred stockholders. As a result, changes in an issuer's earnings directly
influence the value of its common stock.

30-Day SEC Yield--

The Securities and Exchange Commission (SEC) has standardized this way to
calculate the yield of a mutual fund. It is calculated by dividing the net
investment income per share earned by the fund over a 30-day period by the share
price on that date. The figure is compounded and annualized.

Preferred Stocks

Preferred stocks have the right to receive specified dividends or distributions
before the issuer makes payments on its common stock. Some preferred stocks also
participate in dividends and distributions paid on common stock. Preferred
stocks may also permit the issuer to redeem the stock. A Fund may also treat
such redeemable preferred stock as a fixed income security.

Fixed Income Securities

Fixed income securities pay interest, dividends or distributions at a specified
rate. The rate may be a fixed percentage of the principal or adjusted
periodically. In addition, the issuer of a fixed income security must repay the
principal amount of the security, normally within a specified time. Fixed income
securities provide more regular income than equity securities. However, the
returns on fixed income securities are limited and normally do not increase with
the issuer's earnings. This limits the potential appreciation of fixed income
securities as compared to equity securities.

A security's yield measures the annual income earned on a security as a
percentage of its price. A security's yield will increase or decrease depending
upon whether it costs less (a discount) or more (a premium) than the principal
amount. If the issuer may redeem the security before its scheduled maturity, the
price and yield on a discount or premium security may change based upon the
probability of an early redemption. Securities with higher risks generally have
higher yields.

The following describes the types of fixed income securities in which the Funds
invest as noted in the chart.

Investment Grade Bonds--

Corporate and municipal bonds rated within the top four categories (Baa or
higher by Moody's or BBB or higher by Standard & Poor's) based on the issuer's
ability to pay the interest and principal. Bonds rated lower are more
speculative. U.S. Treasury and government agency bonds are not rated because the
payment of principal and interest are guaranteed directly by the U.S. government
or the issuing agency.

Treasury Securities

Treasury securities are direct obligations of the federal government of the
United States. Treasury securities are generally regarded as having the lowest
credit risks.

Agency Securities

Agency securities are issued or guaranteed by a federal agency or other
government sponsored entity acting under federal authority (a GSE). The United
States supports some GSEs with its full faith and credit. Other GSEs receive
support through federal subsidies, loans or other benefits. A few GSEs have no
explicit financial support, but are regarded as having implied support because
the federal government sponsors their activities. Agency securities are
generally regarded as having low credit risks, but not as low as treasury
securities.

A Fund treats mortgage backed securities guaranteed by GSEs as agency
securities. Although a GSE guarantee protects against credit risks, it does not
reduce the market and prepayment risks of these mortgage backed securities.

Corporate Debt Securities

Corporate debt securities are fixed income securities issued by businesses.
Notes, bonds, debentures and commercial paper are the most prevalent types of
corporate debt securities. A Fund may also purchase interests in bank loans to
companies. The credit risks of corporate debt securities vary widely among
issuers.

In addition, the credit risk of an issuer's debt security may vary based on its
priority for repayment. For example, higher ranking (senior) debt securities
have a higher priority than lower ranking (subordinated) securities. This means
that the issuer might not make payments on subordinated securities while
continuing to make payments on senior securities. In addition, in the event of
bankruptcy, holders of senior securities may receive amounts otherwise payable
to the holders of subordinated securities. Some subordinated securities, such as
trust preferred and capital securities notes, also permit the issuer to defer
payments under certain circumstances. For example, insurance companies issue
securities known as surplus notes that permit the insurance company to defer any
payment that would reduce its capital below regulatory requirements.

Municipal Securities

Municipal securities are issued by states, counties, cities and other political
subdivisions and authorities. Although many municipal securities are exempt from
federal income tax, a Fund may invest in taxable municipal securities.

Mortgage Backed Securities

Mortgage backed securities represent interests in pools of mortgages. The
mortgages that comprise a pool normally have similar interest rates, maturities
and other terms. Mortgages may have fixed or adjustable interest rates.
Interests in pools of adjustable rate mortgages are known as ARMs.

Mortgage backed securities come in a variety of forms. Many have extremely
complicated terms. The simplest form of mortgage backed securities are
pass-through certificates. An issuer of pass-through certificates gathers
monthly payments from an underlying pool of mortgages. Then, the issuer deducts
its fees and expenses and passes the balance of the payments onto the
certificate holders once a month. Holders of pass-through certificates receive a
pro rata share of all payments and pre-payments from the underlying mortgages.
As a result, the holders assume all the prepayment risks of the underlying
mortgages.

Credit Enhancement

Credit enhancement consists of an arrangement in which a company agrees to pay
amounts due on a fixed income security if the issuer defaults. In some cases the
company providing credit enhancement makes all payments directly to the security
holders and receives reimbursement from the issuer. Normally, the credit
enhancer has greater financial resources and liquidity than the issuer. For this
reason, the Adviser usually evaluates the credit risk of a fixed income security
based solely upon its credit enhancement.

Common types of credit enhancement include guarantees, letters of credit, bond
insurance and surety bonds. Credit enhancement also includes arrangements where
securities or other liquid assets secure payment of a fixed income security. If
a default occurs, these assets may be sold and the proceeds paid to security's
holders. Either form of credit enhancement reduces credit risks by providing
another source of payment for a fixed income security.

Convertible Securities

Convertible securities are fixed income securities that a Fund has the option to
exchange for equity securities at a specified conversion price. The option
allows a Fund to realize additional returns if the market price of the equity
securities exceeds the conversion price. For example, a Fund may hold fixed
income securities that are convertible into shares of common stock at a
conversion price of $10 per share. If the market value of the shares of common
stock reached $12, a Fund could realize an additional $2 per share by converting
its fixed income securities.

Convertible securities have lower yields than comparable fixed income
securities. In addition, at the time a convertible security is issued the
conversion price exceeds the market value of the underlying equity securities.
Thus, convertible securities may provide lower returns than non-convertible
fixed income securities or equity securities depending upon changes in the price
of the underlying equity securities. However, convertible securities permit a
Fund to realize some of the potential appreciation of the underlying equity
securities with less risk of losing its initial investment.

Tax Exempt Securities

Tax exempt securities are fixed income securities that pay interest that is not
subject to regular federal income taxes. Typically, states, counties, cities and
other political subdivisions and authorities issue tax exempt securities. The
market categorizes tax exempt securities by their source of repayment.

General Obligation Bonds

General obligation bonds are supported by the issuer's power to exact property
or other taxes. The issuer must impose and collect taxes sufficient to pay
principal and interest on the bonds. However, the issuer's authority to impose
additional taxes may be limited by its charter or state law.

Special Revenue Bonds

Special revenue bonds are payable solely from specific revenues received by the
issuer such as specific taxes, assessments, tolls, or fees. Bondholders may not
collect from the municipality's general taxes or revenues. For example, a
municipality may issue bonds to build a toll road, and pledge the tolls to repay
the bonds. Therefore, a shortfall in the tolls normally would result in a
default on the bonds.

Municipal Leases

Municipalities may enter into leases for equipment or facilities. In order to
comply with state public financing laws, these leases are typically subject to
annual appropriation. In other words, a municipality may end a lease, without
penalty, by not providing for the lease payments in its annual budget. After the
lease ends, the lessor can resell the equipment or facility but may lose money
on the sale.

ADR vs. Foreign-Listed Stocks

American Depositary Receipts (ADRs) are interests in underlying securities
issued by a foreign company. Unlike other foreign securities, ADRs are:

.traded in U.S. markets; and
.denominated in U.S. dollars.
ADRs involve many of the same risks as investing directly in foreign securities.

A Fund may invest in securities supported by pools of municipal leases. The most
common type of lease backed securities are certificates of participation (COPs).
However, the Fund may also invest directly in individual leases.

Investment Ratings for Investment Grade Securities

The Adviser will determine whether a security is investment grade based upon the
credit ratings given by one or more nationally recognized rating services. For
example, Standard and Poor's, a rating service, assigns ratings to investment
grade securities (AAA, AA, A, and BBB) based on their assessment of the
likelihood of the issuer's inability to pay interest or principal (default) when
due on each security. Lower credit ratings correspond to higher credit risk. If
a security has not received a rating, the Fund must rely entirely upon the
Adviser's credit assessment that the security is comparable to investment grade.

Foreign Securities

Foreign securities are securities of issuers based outside the United States. A
Fund considers an issuer to be based outside the United States if:

. it is organized under the laws of, or has a principal office located in,
another country;

. the principal trading market for its securities is in another country; or

. it (or its subsidiaries) derived in its most current fiscal year at least 50%
of its total assets, capitalization, gross revenue or profit from goods
produced, services performed, or sales made in another country.

Foreign securities are primarily denominated in foreign currencies. Along with
the risks normally associated with domestic securities of the same type, foreign
securities are subject to currency risks and risks of foreign investing. Trading
in certain foreign markets is also subject to liquidity risks.

Portfolio Turnover

The Large Capitalization Growth and Income Fund's approach to portfolio turnover
has been discussed above. The following discussion relates to the other Funds.

Although the Funds do not intend to invest for the purpose of seeking short-term
profits, securities in their portfolios will be sold whenever the Adviser
believes it is appropriate to do so in light of each Fund's investment
objective, without regard to the length of time a particular security may have
been held. The rate of portfolio turnover for each Fund may exceed that of
certain other mutual funds with the same investment objective. A higher rate of
portfolio turnover involves correspondingly greater transaction expenses which
must be borne directly by a Fund and, thus, indirectly by its shareholders. In
addition, a high rate of portfolio turnover may result in the realization of
larger amounts of capital gains which, when distributed to a Fund's
shareholders, are taxable to them. (Further information is contained in the
Trust's Statement of Additional Information under the sections "Brokerage
Transactions" and "Tax Information.") Nevertheless, transactions for each Fund's
portfolio will be based only upon investment considerations and will not be
limited by any other considerations when the Adviser deems it appropriate to
make changes in a Fund's portfolio. A portfolio turnover rate exceeding 100% is
considered to be high.

Principal Investment
Risks of
the Funds

Risks Related to Fixed Income Securities

Interest Rate Risks

. Prices of fixed income securities rise and fall in response to changes in the
interest paid by similar securities. Generally, when interest rates rise,
prices of fixed income securities fall. However, market factors, such as the
demand for particular fixed income securities, may cause the price of certain
fixed income securities to fall while the prices of other securities rise or
remain unchanged. (If the bond was held to maturity, no loss or gain normally
would be realized.)

. Interest rate changes have a greater effect on the price of fixed income
securities with longer durations. Duration measures the price sensitivity of
a fixed income security to changes in interest rates.

Credit Risks

. Credit risk is the possibility that an issuer will default on a security by
failing to pay interest or principal when due. If an issuer defaults, a Fund
will lose money.

. Many fixed income securities receive credit ratings from services such as
Standard & Poor's and Moody's Investor Services, Inc. These services assign
ratings to securities by assessing the likelihood of issuer default. Lower
credit ratings correspond to higher credit risk. If a security has not
received a rating, a Fund must rely entirely upon the Adviser's credit
assessment.

. Fixed income securities generally compensate for greater credit risk by
paying interest at a higher rate. The difference between the yield of a
security and the yield of a U.S. Treasury security with a comparable maturity
(the spread) measures the additional interest paid for risk. Spreads may
increase generally in response to adverse economic or market conditions. A
security's spread may also increase if the security's rating is lowered, or
the security is perceived to have an increased credit risk. An increase in
the spread will cause the price of the security to decline.

. Credit risk includes the possibility that a party to a transaction involving
a Fund will fail to meet its obligations. This could cause a Fund to lose the
benefit of the transaction or prevent a Fund from selling or buying other
securities to implement its investment strategy.

Prepayment Risks

. Generally, homeowners have the option to prepay their mortgages at any time
without penalty. Homeowners frequently refinance high interest rate mortgages
when mortgage rates fall. This results in the prepayment of mortgage backed
securities with higher interest rates. Conversely, prepayments due to
refinancings decrease when mortgage rates increase. This extends the life of
mortgage backed securities with lower interest rates. As a result, increases
in prepayments of high interest rate mortgage backed securities, or decreases
in prepayments of lower interest rate mortgage backed securities, may reduce
their yield and price. This relationship between interest rates and mortgage
prepayments makes the price of mortgage backed securities more volatile than
most other types of fixed income securities with comparable credit risks.

Tax Risks

. In order to be tax-exempt, municipal securities must meet certain legal
requirements. Failure to meet such requirements may cause the interest
received and distributed by a Fund to shareholders to be taxable.

. Changes or proposed changes in federal tax laws may cause the prices of
municipal securities to fall.

Sector Risks

. A substantial part of the Municipal Bond Fund's portfolio may be comprised of
securities issued or credit enhanced by companies in similar businesses, or
with other similar characteristics. As a result, the Fund will be more
susceptible to any economic, business, political, or other developments which
generally affect these issuers.

Risks Related to Equity Securities

Stock Market Risks

. The value of equity securities in a Fund's portfolio will rise and fall.
These fluctuations could be a sustained trend or a drastic movement and a
Fund's share price may decline.

Risks Related to Investing for Growth

. Due to their relatively high valuations, growth stocks are typically more
volatile than value stocks. For instance, the price of a growth stock may
experience a larger decline on a forecast of lower earnings, a negative
fundamental development, or an adverse market development. Further, growth
stocks may not pay dividends or may pay lower dividends than value stocks.
This means they depend more on price changes for returns and may be more
adversely affected in a down market compared to value stocks that pay higher
dividends.

Risks Related to Investing for Value

. Due to their relatively low valuations, value stocks are typically less
volatile than growth stocks. For instance, the price of a value stock may
experience a smaller increase on a forecast of higher earnings, a positive
fundamental development, or positive market development. Further, value
stocks tend to have higher dividends than growth stocks. This means they
depend less on price changes for returns and may lag behind growth stocks in
an up market.

Risks Related to Company Size

. Generally, the smaller the market capitalization of a company, the fewer the
number of shares traded daily, the less liquid its stock and the more
volatile its price. Market capitalization is determined by multiplying the
number of its outstanding shares by the current market price per share.

. Companies with smaller market capitalizations also tend to have unproven track
records, a limited product or service base and limited access to capital.
These factors also increase risks and make these companies more likely to fail
than companies with larger market capitalization.

The Euro Countries: The 11 countries initially participating in the euro
currency are:
. Austria
. Belgium
. Finland
. France
. Germany
. Ireland
. Italy
. Luxembourg
. Netherlands
. Portugal
. Spain

Risks Related to Foreign Investing

Currency Risks

. Exchange rates for currencies fluctuate daily. The combination of currency
risk and market risk tends to make securities traded in foreign markets more
volatile than securities traded exclusively in the U.S.

Euro Risks

. A Fund may make significant investments in securities denominated in the
Euro, the new single currency of the European Monetary Union (EMU).
Therefore, the exchange rate between the Euro and the U.S. dollar will have a
significant impact on the value of a Fund's investments.

. With the advent of the Euro, the participating countries in the EMU can no
longer follow independent monetary policies. This may limit these countries'
ability to respond to economic downturns or political upheavals, and
consequently reduce the value of their foreign government securities.

Risks of Foreign Investing

. Foreign securities pose additional risks because foreign economic or
political conditions may be less favorable than those of the United States.
Securities in foreign markets may also be subject to taxation policies that
reduce returns for U.S. investors.

. Foreign countries may have restrictions on foreign ownership or may impose
exchange controls, capital flow restrictions or repatriation restrictions
which could adversely affect a Fund's investments.

. Foreign financial markets may have fewer investor protections than U.S.
markets. For instance, there may be less publicly available information about
foreign companies, and the information that is available may be difficult to
obtain or may not be current. In addition, foreign countries may lack
financial controls and reporting standards, or regulatory requirements,
comparable to those applicable to U.S. companies.

. Due to these risk factors, foreign securities may be more volatile and less
liquid than similar securities traded in the U.S.

Year 2000 Readiness

The "Year 2000" problem is the potential for computer errors or failures because
certain computer systems may be unable to interpret dates after December 31,
1999. The Year 2000 problem may cause systems to process information incorrectly
and could disrupt businesses that rely on computers, like the Funds.

While it is impossible to determine in advance all of the risks to a Fund, a
Fund could experience interruptions in basic financial and operational
functions. Fund shareholders could experience errors or disruptions in Fund
share transactions or Fund communications.

The Funds' service providers are making changes to their computer systems to fix
any Year 2000 problems. In addition, they are working to gather information from
third-party providers to determine their Year 2000 readiness.

Year 2000 problems would also increase the risks of the Funds' investments. To
assess the potential effect of the Year 2000 problem, the Adviser is reviewing
information regarding the Year 2000 readiness of issuers of securities a Fund
may purchase. However, this may be difficult with certain issuers. For example,
Funds dealing with foreign service providers or investing in foreign securities
will have difficulty determining the Year 2000 readiness of those entities. This
is especially true of entities or issuers in emerging markets.

The financial impact of these issues for a Fund is still being determined. There
can be no assurance that potential Year 2000 problems would not have a material
adverse effect on the Funds.

What Shares Cost

An investor can purchase, redeem, or exchange shares, without a sales charge,
any day the New York Stock Exchange (NYSE) and the Federal Reserve Wire System
are open. Investors who purchase, redeem, or exchange shares through a financial
intermediary may be charged a service fee by that financial intermediary. When a
Fund receives your transaction request in proper form, it is processed at the
next calculated net asset value (NAV), otherwise known as a Fund's public
offering price. NAV is determined at the end of regular trading (normally 4 p.m.
Eastern time) each day the NYSE is open.

Trading in Foreign Securities

If a Fund owns foreign securities that trade in foreign markets on days the NYSE
is closed, the value of a Fund's assets may change on days you cannot purchase,
redeem or exchange shares. In computing its NAV, the Fund values foreign
securities at the latest closing price on the exchange on which they are traded
immediately prior to the closing of the NYSE. Certain foreign currency exchange
rates may also be determined at the latest rate prior to the closing of the
NYSE. Foreign securities quoted in foreign currencies are translated into U.S.
dollars at current rates. Occasionally, events that affect these values and
exchange rates may occur between the times at which they are determined and the
closing of the NYSE. If such events materially affect the value of portfolio
securities, these securities may be valued at their fair value as determined in
good faith by a Fund's Board, although the actual calculation may be done by
others.

Minimum Investment Amount

The required minimum initial investment for Fund shares is $10,000. Minimum
investments for clients of financial intermediaries (such as brokers and
dealers) will be calculated by combining all accounts maintained in a Fund by
the intermediary. This prospectus should be read together with any account
agreement maintained for required minimum investment amounts imposed by
Fiduciary Trust Company International or its affiliates. The required minimum
investment amount may be waived for employees of the Adviser or its affiliates.

Share Purchases

Shares of the Funds may be purchased through Fiduciary International, Inc. or
through authorized broker/dealers. The Funds reserve the right to reject any
purchase request. In connection with the sale of shares of the Funds, Edgewood
Services, Inc. may, from time to time, offer certain items of nominal value to
any shareholder or investor.

Through Fiduciary International, Inc.

To place an order to purchase shares of a Fund, an investor (except residents of
Texas) may write or call Fiduciary International, Inc. Purchase orders must be
received by Fiduciary International, Inc. before 3:00 p.m. (Eastern time) by
calling 1-888-FIDUCIARY. Payment is normally required on the next business day.
Payment may be made either by mail or by wire. Texas residents must purchase
shares through Edgewood Services, Inc. at 1-800-356-2805.

By Mail

To purchase shares of a Fund by mail, send a check made payable to FTI Funds
(and identify the appropriate Fund) to:

FTI Funds

c/o Federated Shareholder Services Company
P.O. Box 8609
Boston, MA 02266-8609

Orders by mail are considered received after payment by check is converted into
federal funds. This is normally the next business day after the Fund receives
the check.

By Wire

To purchase shares of a Fund by wire, call 1-888-FIDUCIARY. Representatives are
available from 9:00 a.m. to 5:00 p.m. (Eastern time). Shares of the Funds cannot
be purchased on holidays when wire transfers are restricted. Fiduciary Trust
Company International is on-line with the Federal Reserve Bank of New York.
Accordingly, to purchase shares of the Funds by wire, wire funds as follows:

Fiduciary Trust Company International
ABA #026007922
Credit: Account Number 550000100
Further credit to: (Name of Fund)
Re: (customer name)

Payment by wire must be received by Fiduciary International, Inc. before 3:00
p.m. (Eastern time) on the next business day after placing the order.

Through Authorized Broker/Dealers

An investor may place an order through authorized brokers and dealers to
purchase shares of a Fund. These brokers and dealers may designate others to
receive purchase orders on the Funds' behalf. Shares will be purchased at the
net asset value next calculated after the Fund receives the purchase request. A
Fund will be deemed to have received a purchase order when an authorized broker
or its designee receives the order. The order will be priced at the next
calculated NAV after it is received by the Fund, the broker, or the broker's
designee, as applicable. Purchase requests through authorized brokers and
dealers must be received before 3:00 p.m. (Eastern time) in order for shares to
be purchased at that day's NAV.

Through an Exchange

A shareholder may exchange shares of one Fund for shares of any of the other
Funds in the Trust by calling 1-888-FIDUCIARY or by writing to Fiduciary
International, Inc. Shares purchased by check are eligible for exchange after
seven days.

How the Funds are Distributed/Sold

The Fund's Distributor, Edgewood Services, Inc., markets the shares described in
this prospectus to institutions or individuals, directly or through investment
professionals. When the Distributor receives marketing fees, it may pay some or
all of them to investment professionals. The Distributor and its affiliates may
pay out of their assets other amounts (including items of material value) to
investment professionals for marketing and servicing shares. The Distributor is
a subsidiary of Federated Investors, Inc. (Federated).

Rule12B-1 Plan

The Trust has adopted a Rule 12b-1 Plan (Plan), which allows it to pay marketing
fees to the Distributor and investment professionals for the sale, distribution
and customer servicing of the Funds' shares. The Trust has no present intention
to activate the Plan and the Distributor has no present intention to collect any
fees pursuant to the Plan. Once a Fund begins accruing the 12b-1 fee, Fund
expenses will rise. If the Trust were to activate the Plan, it would be
permitted to pay up to 0.75% of the average net assets of a Fund as a
distribution fee to the Distributor and up to 0.25% of the average net assets of
a Fund as a fee to Shareholder Services providers.

Redemptions and Exchanges

Tax Information on Redemptions and Exchanges:
Redemptions and exchanges are taxable sales.
Please consult with your tax adviser regarding your federal, state, and local
tax liability.

By Telephone

To redeem or exchange shares of a Fund by telephone, call Fiduciary
International, Inc. at 1-888-FIDUCIARY. An authorization form for telephone
transactions must first be completed. If not completed with an investor's
initial application, the forms can be obtained from the Funds. The Funds reserve
the right to reject any exchange request. If you call before 3:00 p.m., you will
receive a redemption amount based on the next calculated NAV. Although Fiduciary
International, Inc. does not charge for telephone redemptions, it reserves the
right to charge a fee for the cost of wire-transferred redemptions of less than
$5,000, or in excess of one per month.

Through Authorized Broker/Dealers

Submit your redemption or exchange request to your broker by the end of regular
trading on the NYSE(normally 4:00 p.m. Eastern time). These brokers and dealers
may designate others to receive redemption and exchange requests on the Funds'
behalf. A Fund will be deemed to have received a redemption or exchange request
when an authorized broker or its designee receives the request. The redemption
amount you receive is based upon the next calculated NAV after it is received by
the Fund, the broker, or the broker's designee, as applicable.

By Mail

To redeem or exchange shares by mail send a written request to:

Federated Shareholder Services Company
P.O. Box 8609
Boston, MA 02266-8609

If share certificates have been issued, they should be sent by insured mail with
the written request. You will receive a redemption amount based on the NAV on
the day your written request is received in proper form.

All requests must include:

. Fund name, registered account name and number;

. amount to be redeemed or exchanged;

. signatures of all shareholders exactly as registered; and

. if exchanging, the Fund name, registered account name and number into which
you are exchanging.

Signature Guarantees

Signatures must be guaranteed if:

. a redemption is to be sent to an address other than the address of record;

. a redemption is to be sent to an address of record that was changed within
the last thirty days;

. a redemption is payable to someone other than the shareholder(s) of record;
or

. if exchanging (transferring) into another fund with a different shareholder
registration.

Your signature can be guaranteed by any federally insured financial institution
(such as a bank or credit union) or a broker/dealer that

is a domestic stock exchange member, but not by a notary public.

Limitations on Redemption Proceeds

Redemption proceeds normally are wired or mailed within one business day after
receiving a request in proper form. However, payment may be delayed up to seven
days:

. to allow your purchase payment to clear;

. during periods of market volatility; or

. when a shareholder's trade activity or amount adversely impacts a Fund's
ability to manage its assets.

Redemption in Kind

Although the Funds intend to pay redemptions in cash, they reserve the right to
pay the redemption price in whole or in part by a distribution of their
respective portfolio securities.

Exchange Privileges

Investors may exchange shares of a Fund into shares of another Fund in the Trust
or certain money market funds for which affiliates or subsidiaries of Federated
serve as investment adviser and/or principal underwriter (Federated Money
Funds). Exchanges are made at net asset value and none of the Funds impose
additional fees on exchanges. To do this, an investor must:

. complete an authorization form permitting a Fund to accept telephone exchange
requests;

. meet any minimum initial investment requirements; and

. receive a prospectus if the exchange is into a Federated Money Fund. Further
information on the exchange privilege and prospectuses for the Federated
Money Funds are available by contacting the Trust.

An exchange is treated as a redemption and a subsequent purchase, and is a
taxable transaction.

The Trust may modify or terminate the exchange privilege at any time. The
Trust's management or Adviser may determine from the amount, frequency and
pattern of exchanges that a shareholder is engaged in excessive trading which is
detrimental to a Fund and other shareholders. If this occurs, the Trust may
terminate the availability of exchanges to that shareholder and may bar that
shareholder from purchasing shares of other Funds.

Additional Conditions

Telephone Transactions

A Fund will record your telephone instructions. If the Fund does not follow
reasonable procedures, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. The Fund will notify you if it changes
telephone transaction privileges.

Account and Share Information

Confirmation and Account Statements

You will receive confirmation of purchases, redemptions and exchanges. In
addition, you will receive periodic statements reporting all account activity,
dividends and capital gains paid. The Funds do not issue share certificates.

Dividends and Capital Gains

The Municipal Bond Fund and Bond Fund declare any dividends daily and pay them
monthly to shareholders. If you purchase shares by wire, you begin earning
dividends on the day your wire is received. If you purchase shares by check, you
begin earning dividends on the business day after the Fund receives your check.
In either case, you earn dividends through the day your redemption request is
received.

Dividend--
In a mutual fund, money paid to shareholders which the fund has earned from the
income on its investments.

The Large Capitalization Growth Fund and Large Capitalization Growth and Income
Fund declare and pay any dividends quarterly to shareholders. The Small
Capitalization Fund and International Equity Fund declare and pay any dividends
semi-annually to shareholders. Dividends are paid to all shareholders invested
in a Fund on the record date. The record date is the date on which a shareholder
must officially own shares in order to earn a dividend.

In addition, the Fund pays any capital gains at least annually. Your dividends
and capital gains distributions will be automatically reinvested in additional
shares without a sales charge, unless you elect cash payments.

Accounts with Low Balances

Due to the high cost of maintaining accounts with low balances, accounts may be
closed if redemptions or exchanges cause the account balance to fall below the
minimum initial investment amount of $10,000. Before an account is closed, you
will be notified and allowed 30 days to purchase additional shares to meet the
minimum.

Tax Information

The Funds send an annual statement of your account activity to assist you in
completing your federal, state and local tax returns. For all Funds (except
Municipal Bond Fund), Fund distributions of dividends and capital gains are
taxable to you whether paid in cash or reinvested in the Fund. Dividends are
taxable as ordinary income; capital gains are taxable at different rates
depending upon the length of time a Fund has held the securities on which gains
are realized.

Capital Gain--
Profits realized on the sale of an investment. In a mutual fund, profits from
the sale of securities in the fund's portfolio are usually distributed to
shareholders annually.

With respect to Municipal Bond Fund, it is anticipated that Fund distributions
will be primarily dividends that are exempt from federal regular income tax,
although a portion of the Fund's dividends may not be exempt. Additionally, the
Municipal Bond Fund may invest in obligations subject to the alternative minimum
tax without limit. Shareholders should consult their own tax advisers. Whether
or not dividends are exempt from federal income tax, they may be subject to
state and local taxes. Capital gains and non-exempt dividends are taxable
whether paid in cash or reinvested in the Fund.

Fund distributions are expected to be as follows:

Fund Distributions are
expected to be primarily:
<S> <C>
Municipal Bond Fund Dividends
Bond Fund Dividends
Large Capitalization Growth Fund Capital Gains
Large Capitalization Growth Capital Gains
& Income Fund
Small Capitalization Equity Fund Capital Gains
International Equity Fund Capital Gains

</TABLE>

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under federal, state, local, and foreign tax laws, including
treatment of distributions as income or return of capital.

Capital Gains Considerations for Municipal Bond Fund, Bond Fund, Large
Capitalization Growth Fund, and Large Capitalization Growth and Income Fund

Each of these Funds is the successor of one or more common trust funds ("CTFs" )
previously managed by Fiduciary Trust Company International ("FTCI"). These
Funds acquired the portfolio securities of the CTFs in a tax-free transaction,
and therefore, will calculate the gain or loss upon sale of those securities
based on the CTF's original purchase cost of the security. Because many of the
CTFs' securities had risen in value before being acquired by the Funds,
unusually large capital gains may be realized by the Funds (and distributed to
shareholders) when the Funds sell these securities. As noted, shareholders must
pay taxes on capital gains distributions.

Management of FTI Funds

The Board of Trustees governs the Trust. The Board selects and oversees the
Adviser, Fiduciary International, Inc. The Adviser manages the Funds' assets,
including buying and selling portfolio securities. The Adviser's address is Two
World Trade Center, New York, New York 10048-0772.

Advisory Fees

The Adviser receives an annual investment advisory fee equal to 0.50% of each of
Municipal Bond Fund's and Bond Fund's respective average daily net assets, 0.75%
of each of Large Capitalization Growth Fund's and Large Capitalization Growth
and Income Fund's respective average daily net assets, and 1.00% of each of the
Small Capitalization Equity Fund's and International Equity Fund's respective
average daily net assets. The investment advisory contract provides for the
voluntary waiver of expenses by the Adviser from time to time. The Adviser can
terminate this voluntary waiver of expenses at any time with respect to a Fund
at its sole discretion.

The Investment Adviser's Background

Fiduciary International, Inc. ("FII") is a New York corporation that was
organized in 1982 as Fir Tree Advisers, Inc. FII is a wholly-owned subsidiary of
Fiduciary Investment Corporation, which, in turn, is a wholly-owned subsidiary
of FTCI. FTCI has more than 60 years of investment management experience,
including more than 30 years experience in managing pooled investment vehicles
which invest in the international markets. FTCI is a New York state-chartered
bank specializing in investment management activities. As of December 31, 1998,
FTCI had total assets under management of approximately $45 billion. These
assets included investments managed for individuals and institutional clients,
including employee benefit plans of corporations, public retirement systems,
unions, endowments, foundations and others.

FII was formed to act as investment adviser to mutual funds. The Adviser has
three clients which are registered investment companies and one client which is
a collective fund established by a limited purpose trust company. Assets under
management as of December 31, 1998 were $779.5 million.

FII is a registered investment adviser under the Investment Advisers Act of
1940. The Adviser and its officers, affiliates, and employees may act as
investment managers for parties other than the Trust, including other investment
companies.

Portfolio Managers for FTI Funds

Municipal Bond Fund

Ronald Sanchez and Jon S. Mastrandrea have been primarily responsible for the
day-to-day investment management of the Municipal Bond Fund since its inception,
December 11, 1998. Mr. Sanchez, Certified Financial Analyst and Senior Vice
President of FTCI, is a manager of tax-exempt fixed income portfolios. Mr.
Sanchez received a B.S. degree from C.W. Post College. He joined FTCI in 1993
with six years prior experience as a fixed income portfolio manager with Public
Service Mutual Insurance Company. Mr. Mastrandrea, Vice President of FTCI, is a
manager of tax exempt fixed income portfolios. Mr. Mastrandrea received a B.A.
degree from State University of New York at Binghamton, attended Brunel
University, London, England, and received an M.B.A. from the Stern School of
Business, New York University. He joined FTCI in 1998 with twelve years
experience in tax-exempt financing and was most recently an executive director
at CIBC-Oppenheimer in their public finance division.

Bond Fund

Michael Rohwetter and Michael Materasso have been primarily responsible for the
day-to-day investment management of the Bond Fund since its inception, December
11, 1998. Mr. Rohwetter, Senior Vice President of FTCI, is a manager of
institutional domestic fixed income portfolios. Mr. Rohwetter received a B.B.A.
degree from Pace University. He joined FTCI in 1983 from the New York Mercantile
Exchange. Mr. Materasso, Senior Vice President of FTCI, is head of the Domestic
Fixed Income Group. He is a member of the Global Investment Committee and
Investment Policy Committee. Mr. Materasso received a B.A. degree from Baruch
College. He joined FTCI in 1988 with sixteen years experience at Chase Manhattan
Bank, Sterling National and Glickenhaus & Co.

Large Capitalization Growth Fund

Thomas Dempsey, Coleen Barbeau, and John Hartz have been primarily responsible
for the day-to-day investment management of the Large Capitalization Growth Fund
since its inception, December 11, 1998. Mr. Dempsey, Vice President of FTCI, is
responsible for managing institutional portfolios in the large capitalization
growth equity sector.Mr. Dempsey received a B.A. degree from Georgetown
University in 1988, and joined FTCI the same year. Mr. Dempsey was previously
responsible for the sales and marketing of all of Fiduciary Trust's
institutional equity products. Ms. Barbeau, Senior Vice President of FTCI, is
responsible for managing institutional and individual portfolios. She is a
member of the Global Investment Committee, Investment Policy Committee and Co-
chair of the Large Capitalization Equity Committee. Ms. Barbeau received a B.A.
degree from Montclair University in 1981. Prior to joining FTCI in 1983, she was
with Shearson/American Express. Mr. Hartz, Senior Vice President of FTCI,
manages institutional large capitalization equity portfolios. Mr. Hartz received
a B.A. degree from Trinity College in 1959 and an M.B.A. from Columbia Business
School in 1962. Prior to joining FTCI in 1987, he was an investment manager for
26 years at several leading institutions, most recently as vice president of the
Investment Advisory Division of MONY Financial Services. He is a member of the
Investment Policy Committee and Co-chair of the Large Capitalization Committee.

Large Capitalization Growth and Income Fund

S. Mackintosh Pulsifer and Carl Scaturo have been primarily responsible for the
day-to-day investment management of the Large Capitalization Growth and Income
Fund since its inception, December 11, 1998. Mr. Pulsifer, Senior Vice President
of FTCI, manages individual and trust portfolios and is a member of the
Investment Policy Committee. Mr. Pulsifer received an A.B. degree from Bowdoin
College and an M.B.A. from New York University Graduate School of Business
Administration. He joined FTCI in 1988 after 15 years of investment experience
with a New York City based private, independent investment counseling firm. Mr.
Scaturo, Senior Vice President of FTCI, is responsible for managing individual
and trust portfolios. Mr. Scaturo received a B.A. degree in Business
Administration from the University of Southern Connecticut in 1985 and is
presently attending New York University. Prior to joining FTCI in 1990, he was
with Citibank.

Small Capitalization Equity Fund

Helen Degener, Grant Babyak and Yvette Bockstein are primarily responsible for
the day-to-day investment management of the Small Capitalization Equity Fund.
Ms. Degener, Senior Vice President of FTCI, has managed the Fund since its
inception, December 22, 1995, and, along with Mr. Babyak and Ms. Bockstein,
serves on its Small Cap Investment Committee. Ms. Degener has been with FTCI
since 1994 during which time she has managed individual and institutional
portfolios in small cap and special situation sectors. Prior to FTCI, she spent
thirteen years at Morgan Guaranty Trust Company as a Vice President and manager
of several small capitalization equity funds. Mr. Babyak is a Senior Vice
President of FTCI and has been with the Adviser since 1996 managing individual
and institutional portfolios in small cap and special situation sectors. Prior
to joining Fiduciary, Mr. Babyak worked for six years at Avatar Associates as an
institutional portfolio manager and two years at United States Trust Company as
an analyst. Ms. Bockstein, Senior Vice President of FTCI, has been with the
Adviser since 1978, and manages institutional and individual portfolios in the
small capitalization and special situations sectors.

International Equity Fund

Steven Miller, Sheila Coco, and William Yun have been primarily responsible for
the day-to-day investment management of the International Equity Fund since its
inception, December 22, 1995. Mr. Miller joined FTCI in 1994 and is a Senior
Vice President responsible for managing institutional portfolios. Previously, he
had spent seven years with Vital Forsikring, a Norwegian life insurance company,
and Heller Financial. Ms. Coco and Mr. Yun are both Executive Vice Presidents of
FTCI and Chartered Financial Analysts. Along with Mr. Miller, they serve on the
Adviser's Global Investment Committee. Ms. Coco has been with FTCI since 1980
with responsibility for institutional global equity accounts and had previously
spent four years in the investment division of Morgan Guaranty Trust Company.
Mr. Yun joined Fiduciary in 1992, managing institutional global equity accounts
and has nine years of prior investment experience with CB Commercial Holdings,
The First Boston Corp. and Blyth Eastman Paine Webber, Inc. He is a member of
the New York Society of Security Analysts.

Financial Information

Financial Highlights

(For a share outstanding thoughout each period)

The following table has been audited by Ernst & Young LLP, the Fund's
independent auditors. Their report dated January 20, 1999, on the Fund's
financial statements for the period ended November 30, 1998, and on the
following table for the periods presented, is included in the Annual Report,
which is incorporated by reference. This table should be read in conjunction
with the Funds' financial statements and notes thereto, which may be obtained
free of charge.

<TABLE>
<CAPTION>
Distributions
Net Net Realized from Net
Investment and Unrealized Realized Gain
Net Asset Income/ Gain/(Loss) on Distributions on Investments
Value, (Net Investments Total from from Net and Foreign
Year Ended Beginning Operating and Foreign Investment Investment Currency
November 30, of Period Loss) Currency Operations Income Transactions
<S> <C> <C> <C> <C> <C> <C>
Small
Capitalization Fund
1996(a) $10.00 (0.04) 2.12 2.08 -- --
1997 $12.08 (0.09) 2.38 2.29 -- --
1998 $14.37 (0.15)(b) (0.61) (0.76) -- (0.35)
International
Equity Fund
1996(a) $10.00 0.01(b) 0.99 1.00 (0.01) --
1997 $10.99 0.02 1.39 1.41 (0.20) --
1998 $12.20 0.04 1.73 1.77 (0.12) --
</TABLE>
(a) Reflects operations for the period from December 22, 1995 (start of
performance) to November 30, 1996.
(b) Per share information is based on average shares outstanding. (c) Based on
net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income (net operating loss) ratios shown above.

<TABLE>
<CAPTION>
Ratios Average Net Assets
Expense
Net Asset Waiver/
Value, Net Reim- Net Assets,
Total End of Total Investment burse- End of Period Portfolio
Distributions Period Return(c) Expenses Income ment(e) (000 omitted) Turnover

FTI Municipal Bond Fund

FTI Bond Fund

FTI Large Capitalization Growth Fund

FTI Municipal Bond Fund

FTI Bond Fund

FTI International Equity Fund

Portfolios of FTI FUNDS

A Statement of Additional Information (SAI) dated March 31, 1999 contains
additional information about the Funds and is incorporated by reference into
this prospectus. Additional information about the FTI Small Capitalization
Equity Fund's and International Equity Fund's investments is available in the
Funds' annual report to shareholders. The annual report discusses market
conditions and investment strategies that significantly affected the Funds'
performance during their last fiscal year. To obtain the SAI, the annual report
and other information without charge, call your investment professional or the
Funds at 1-888-FIDUCIARY.

Internet Address: www.fiduciarytrust.com

You can obtain information about the Funds (including the SAI) by visiting or
writing the Public Reference Room of the Securities and Exchange Commission in
Washington, D.C. 20549-6009 or from the Commission's Internet site at
http://www.sec.gov. You can call 1-800-SEC-0330 for information on the Public
Reference Room's operations and copying charges.

Not part of the Prospectus

FTI Funds
FTI Municipal Bond Fund
FTI Bond Fund
FTI Large Capitalization
Growth Fund
FTI Large Capitalization
Growth and Income Fund
FTI Small Capitalization
Equity Fund
FTI International Equity Fund

Cusip 302927504 MBF Cusip 302927603 BF Cusip 302927702 LCGF Cusip 302927801
LCGIF Cusip 302927108 SCEF Cusip 302927207 IEF

G01548-04(3/99) 811-7369