FIVE ARROWS SHORT TERM INVESTMENT TRUST, 497, 1997-11-21

FIVE ARROWS SHORT TERM INVESTMENT TRUST
497, 1997-11-21

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FIVE ARROWS SHORT-TERM INVESTMENT TRUST

FIVE ARROWS SHARES
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3435 Stelzer Road
Columbus, Ohio 43219
For current performance, purchase and redemption
information, call (800) 499-3603.

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Five Arrows Short-Term Investment Trust (the "Trust") is an open-end management
investment company designed to offer investors a selection of four separate
funds (the "Funds"): the U.S. Dollar Fund, the Pound Sterling Fund, the Deutsche
Mark Fund, and the Canadian Dollar Fund.

Each Fund seeks to maintain a high level of liquidity, to preserve capital and
stability of principal expressed in the Fund's designated currency ("Designated
Currency") and, consistent with those objectives, to earn current income. Unlike
other mutual funds which acquire and manage their own portfolios of securities,
each Fund seeks to achieve its investment objective by investing all of its
investable assets ("Investable Assets") in a portfolio which is a series of the
International Currency Fund (the "Portfolio Trust") which invests in high
quality, short-term instruments denominated in the Designated Currency of the
relevant Fund. See "Information Concerning the Master-Feeder Structure" on page
12. The Portfolio Trust is also an open-end management investment company which
currently consists of four separate portfolios (the "Portfolios"): the U.S.
Dollar Portfolio, the Pound Sterling Portfolio, the Deutsche Mark Portfolio, and
the Canadian Dollar Portfolio.

The Trust seeks to maintain a constant net asset value expressed in the
Designated Currency for each Fund. Accordingly, the Trust invests only in
securities with short remaining maturities and generally values its securities
at their amortized cost. The net asset value of a Fund's shares, when expressed
in a currency other than the Fund's Designated Currency, will fluctuate,
primarily in response to changes in currency exchange rates between the Fund's
Designated Currency and other currencies, including other Designated Currencies.

The Funds are designed primarily for use as a means of investing short-term cash
reserves in the Funds' Designated Currencies. Investors may also consider
purchasing Fund shares for a number of reasons including satisfying settlement
obligations or delivering a Fund's shares as collateral for a transactional
obligation in a Fund's Designated Currency. Each Fund offers two classes of
shares. The shares offered by this Prospectus are the Five Arrows shares, which
are available for direct purchase in initial aggregate amounts of $500,000 or
more. In addition, the Fund offers by separate Prospectus the Five Arrows
Service shares, which are available for purchase through certain broker-dealers
and other service organizations.

This Prospectus sets forth concisely information about the Five Arrows shares of
the Trust and each Fund that an investor should know before investing. It should
be read and retained for future reference.

A Statement of Additional Information dated February 7, 1997 (as supplemented
August 7, 1997 and November 21, 1997), and as it may be further amended from
time to time, which provides further discussion of certain items in this
Prospectus and other matters, has been filed with the SEC and is incorporated
herein by reference. For a free copy, call 1-800-499-3603 or write to the Trust
at the address for the Trust's distributor listed herein.

AN INVESTMENT IN THE TRUST IS NOT A BANK DEPOSIT OR AN OBLIGATION OF ROTHSCHILD
INTERNATIONAL ASSET MANAGEMENT LIMITED OR ANY OF ITS AFFILIATES AND IS NEITHER
GUARANTEED NOR INSURED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE SYSTEM OR ANY OTHER AGENCY OF THE
UNITED STATES GOVERNMENT. THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE
TO MAINTAIN A CONSTANT NET ASSET VALUE PER SHARE. INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL . IN
ADDITION, THE DIVIDENDS PAID BY A FUND WILL GO UP AND DOWN.

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.

The date of this Prospectus is February 7, 1997 (as supplemented August 7, 1997
and November 21, 1997).

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FUND (AND ALLOCATED PORTFOLIO) FEES AND EXPENSES

Five Arrows shares are offered to shareholders on a no-load basis without any
commissions, distribution ("12b-1 plan") or service charges.

ALL FUNDS

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases................................................................... None
Maximum sales load imposed on reinvested dividends........................................................ None
Redemption fees........................................................................................... None
Exchange fees............................................................................................. None
</TABLE>

<TABLE>
<CAPTION>
ADVISORY OTHER TOTAL FUND
FEES EXPENSES EXPENSES(1)
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<S> <C> <C> <C>

ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AND NET OF REIMBURSEMENTS)
U.S. Dollar.......................................................... .20% .075% .275%
Pound Sterling....................................................... .20% .15% .35%
Deutsche Mark........................................................ .20% .15% .35%
Canadian Dollar...................................................... .20% .15% .35%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------------- ----------
<S> <C> <C>
EXPENSES PER 1,000 SHARE INVESTMENT
U.S. Dollar.......................................................................... $3 $9
Pound Sterling....................................................................... L4 L11
Deutsche Mark........................................................................ DM4 DM11
Canadian Dollar...................................................................... C$4 C$11
</TABLE>

Assuming a hypothetical investment of U.S. $1,000, L1,000, DM1,000, or C$1,000
with a 5% annual return and redemption at the end of each time period, an
investor in the Trust will have paid transaction and operating expenses over the
time period as indicated above.

1. The Investment Adviser has voluntarily agreed to reimburse such portion of
its advisory fee as is necessary to cause the annualized total expenses of
each class of a Fund not to exceed a specified percentage of such class'
average daily net asset value (.275% in the case of the Five Arrows class of
the U.S. Dollar Fund and .35% in the case of the Five Arrows class of each
other Fund). If this reimbursement is not sufficient to cause the total
expenses of any Fund not to exceed the applicable percentage of average daily
net asset value, the Investment Adviser has agreed to pay such other expenses
of the applicable Fund as is necessary to keep total expenses from exceeding
the applicable percentage. This undertaking shall remain in effect for the
fiscal period ended December 31, 1998, and thereafter in the discretion of
the Investment Adviser. The Investment Adviser has reserved the right to
terminate or revise these limitations with respect to any period after
December 31, 1998. To the extent management fees are reimbursed by the
Investment Adviser, or expenses of a Fund are paid by the Investment Adviser,
the total return to shareholders will increase. Total return to shareholder
will decrease to the extent that management fees are no longer reimbursed or
expenses of a Fund are no longer paid.

The above table of fees and expenses is provided to assist investors in
understanding the various costs and expenses which may be borne directly or
indirectly by investors in the Funds. The Trust does not charge a sales load in
connection with the purchase or redemption of its shares. The percentages shown
above are based on an annualized estimate of the expenses to be incurred during
the current fiscal year, after expense reimbursements, and should not be
considered a representation of future costs and expenses or performance. Actual
costs and expenses or performance in future periods may be more or less than
those shown above. For the purpose of the example, assume reinvestment of all
dividends and distributions. The table does not reflect charges for optional
services, such as the fee for remittance of redemption proceeds by wire. For a
more complete discussion of the fees connected with an investment in the Trust
and the services provided to the Trust, see "Management", "How to Buy Five
Arrows Shares" and "How to Redeem Five Arrows Shares."

The Funds invest all of their Investable Assets in the Portfolios. The Trustees
of the Trust believe that, over time, the aggregate per share expenses of each
Fund and its corresponding Portfolio should be approximately equal to, or less
than, the per share expenses the Fund would incur if the Fund were instead to
retain the services of an investment adviser and its assets were invested
directly in the type of securities being held by the Portfolios.

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FINANCIAL HIGHLIGHTS

U.S. DOLLAR FUND, A PORTFOLIO

(UNAUDITED)

The U.S. Dollar Fund was the only series of the Trust which had commenced
operations as of June 30, 1997.

Selected ratios and data for a share of beneficial interest outstanding through
the period:

U.S. DOLLAR FUND

<TABLE>
<CAPTION>
MARCH 26, 1997 TO
JUNE 30, 1997(a)
-----------------
<S> <C>
Net Asset Value, Beginning of Period........................................................... $1.00
Investment Activities:
Net Investment income........................................................................ 0.01
Net realized and unrealized gains (losses) from investment................................... --
Total from investment operations............................................................. 0.01
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Distributions:
Net investment income........................................................................ (0.01)
------
Total distributions.......................................................................... (0.01)
------
Net Asset Value, End of Period............................................................... $1.00
=====
Total Return................................................................................. 1.42%(b)
Ratios/Supplemental Data:
Net Assets, end of period (000)............................................................ $3,062
Ratio of expenses to average net assets.................................................... 0.28%(c)
Ratio of net investment income to average net assets....................................... 5.30%(c)
Ratio of expenses to average net assets*................................................... 7.23%(c)
Ratio of net investment income to average net assets*...................................... (1.65)%(c)
</TABLE>

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* During the period certain fees were voluntarily reduced and expenses
reimbursed. If such voluntary fee reductions and expense reimbursements had
not occurred, the ratios would have been as indicated.

(a) Period from commencement of operations.

(b) Not annualized.

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SUMMARY

The investment objectives of each Fund are to seek to maintain a high level of
liquidity, to preserve capital and stability of principal expressed in the
Fund's Designated Currency and, consistent with those objectives, to earn
current income. A Fund's investment objectives are fundamental and may not be
changed without the approval of its shareholders. Each Fund will seek to achieve
its investment objectives by investing all of its Investable Assets in a
Portfolio which has the same investment objectives as such Fund. There can be no
assurance that the investment objectives of either the Funds or the Portfolios
will be achieved. (See "Investment Objectives" and "Investment Policies and
Restrictions.") An investment in shares of any of the Funds involves certain
risks, as discussed below, and may not be appropriate for all investors.

Rothschild International Asset Management Limited (the "Investment Adviser")
manages the Portfolio Trust's Portfolios and receives an advisory fee from each
Portfolio calculated daily and payable monthly at an annual rate of up to .20%
of average daily net assets of such Portfolio.

BISYS Fund Services Limited Partnership (the "Administrator") acts as the
administrator of the Trust and Portfolio Trust. Its affiliates, Five Arrows Fund
Distributors Inc. (the "Distributor") and BISYS Fund Services, Inc. (the
"Transfer Agent"), act as the distributor and transfer/dividend disbursing agent
of the Trust, respectively, and The Chase Manhattan Bank acts as custodian (the
"Custodian") of the Trust and the Portfolio Trust. See "Management."

The Trust and Portfolio Trust bear all operating costs not agreed to be borne by
the Investment Adviser, the Distributor, the Administrator, the Transfer Agent
or the Custodian including, without limitation, legal and auditing fees and
expenses, expenses of investor reports to be provided to existing shareholders;
registration and reporting fees and expenses; and Trustees' fees and expenses.
The Investment Adviser has voluntarily agreed to reimburse such portion of its
advisory fee as is necessary to cause the annualized total expenses of each
class of a Fund not to exceed a specified percentage of such class' average
daily net asset value (.275% in the case of the Five Arrows class of the U.S.
Dollar Fund and .35% in the case of the Five Arrows class of each other Fund).
If this reimbursement is not sufficient to cause the total expenses of any Fund
not to exceed the applicable percentage of average daily net asset value, the
Investment Adviser has agreed to pay such other expenses of the applicable Fund
as is necessary to keep total expenses from exceeding the applicable percentage.
This undertaking shall remain in effect for the fiscal period ending December
31, 1998, and thereafter in the discretion of the Investment Adviser. The
Investment Adviser has reserved the right to terminate or revise these
limitations with respect to any period after December 31, 1998.

Five Arrows shares will be issued at the net asset value next determined after
receipt by the Trust of an order in proper form and acceptance of that order by
the Trust. The Trust reserves the right to take appropriate action in the event
that Disbursable Funds (as defined

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The Trust seeks to maintain a constant net asset value per share for each Fund,
although no assurances can be given that those per share values will be
maintained. Shares of a Fund may be redeemed by the shareholder from the Trust
at their next-determined net asset value. Each Fund is open for business on any
day on which the New York Stock Exchange (the "Exchange") is open for trading or
banks in New York City are open for business (a "Trust Business Day") from 9:00
a.m. to 5:00 p.m. U.S. Eastern Time ("Trust Hours of Operation"). Thus, the
Trust will be open for business every day except for Saturdays, Sundays, and
holidays which are observed by both the Exchange and New York City banks (The
Trust expects the following holidays to be observed for the remainder of 1997:
Thanksgiving Day and Christmas Day; and for 1998: New Year's Day, Martin Luther
King, Jr. Day, Presidents' Day, Memorial Day, Labor Day, Thanksgiving Day and
Christmas Day.) The value of the investments held by each Fund is determined in
its Designated Currency once every 24 hours during Trust Hours of Operation. See
"Calculation of Net Asset Value" and "How to Redeem Five Arrows Shares."

Dividends of each Fund's net investment income are declared once a day and paid
monthly. Net capital gains, if any, realized by a Fund will be distributed
annually. Dividends paid by a Fund will be automatically reinvested in
additional shares of the Fund. See "Dividends and Distributions" and "Taxation."

DESCRIPTION OF THE TRUST AND PORTFOLIO TRUST

The Trust is an open-end management investment company, registered under the
Investment Company Act of 1940 (the "1940 Act"). Under the terms of the
Agreement and Declaration of Trust establishing the Trust, which is governed by
the laws of Delaware, the Trustees of the Trust are ultimately responsible for
the management of the Funds' business and affairs. The Trust is currently
authorized to offer four individual Funds, each of which represents a separate
series of the Trust's shares of beneficial interest. The Trust's Board of
Trustees is empowered to establish additional Funds at any time without
shareholder approval. The Trustees have authorized shares of the Fund to be
issued in two classes: Five Arrows and Five Arrows Service. Because expenses
will vary between the classes, performance will vary with respect to each class.
Except for differences related to such differential expenses, each share of a
Fund has equal dividend, redemption and liquidation rights with other shares of
such Fund. Each share purchased in compliance with the procedures established by
the Trust will be fully paid and nonassessable.

Each Portfolio is a separate investment series of the Portfolio Trust, a
business trust organized under the laws of the State of Delaware, and intends to
be treated as a partnership for federal tax purposes. Under the terms of the
Portfolio Trust's Declaration of Trust, the affairs of the Portfolios are
managed under the supervision of the Trustees of the Portfolio Trust.

The net asset value of a Fund's shares, when expressed in any currency other
than the Fund's Designated Currency, will fluctuate in response to changes in
the exchange rates between the Fund's Designated Currency and

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other currencies, including the Designated Currencies of other Funds.

INVESTMENT OBJECTIVES

The investment objectives of each Fund are to seek to maintain a high level of
liquidity, preserve capital and stability of principal expressed in the Fund's
Designated Currency and, consistent with those objectives, to earn current
income. A Fund's investment objectives are fundamental and may not be changed
without the approval of its shareholders.

Each Fund will seek to achieve its investment objectives by investing all of its
Investable Assets in a Portfolio which has the same investment objectives as
such Fund. The investment objectives of the Portfolios are not fundamental and
may be changed upon notice to, but without the approval of, the Portfolios'
investors. There can be no assurance that the investment objectives of either
the Funds or the Portfolios will be achieved.

Since the investment characteristics of the Funds will correspond directly to
those of the Portfolio, the following is a discussion of the various investments
and investment policies of the Portfolios. Except as otherwise provided below,
the Funds' investment policies are not "fundamental policies" within the meaning
of the 1940 Act and may, therefore, be changed by the Trust's Board of Trustees
without a shareholder vote.

INVESTMENT POLICIES AND RESTRICTIONS

U.S. DOLLAR PORTFOLIO
The U.S. Dollar Portfolio's investment objective is to seek to maintain a high
level of liquidity, to preserve capital and stability of principal expressed in
U.S. Dollars and, consistent with those objectives, to earn current income. The
U.S. Dollar Portfolio will invest in securities issued or guaranteed as to
principal and interest by the U.S. Government or its agencies or
instrumentalities or by foreign governments or Supranational Organizations (such
as the World Bank, the Inter-American Development Bank, the Asian Development
Bank and the European Bank for Reconstruction and Development) as well as
high-quality, short-term money market instruments such as bank certificates of
deposit, bankers' acceptances, and such short-term corporate debt securities as
commercial paper and master demand notes.

The U.S. Dollar Portfolio invests only in U.S. dollar-denominated high quality
securities as described in this paragraph. All of the U.S. Dollar Portfolio's
assets will consist of United States government securities, and other "first
tier" eligible securities as defined in Rule 2a-7 under the 1940 Act which have
been (i) rated by at least two United States nationally recognized statistical
rating organizations ("NRSRO"s), such as Standard & Poor's Corporation or
Moody's Investors Service, Inc., in the highest rating category for short-term
obligations (or so rated by one such organization if it alone has rated the
security), (ii) issued by an issuer with comparable short-term obligations that
are rated in the highest rating category, or (iii) if unrated, determined to be
comparable to such securities. See the Statement of Additional Information.

All securities in which the U.S. Dollar Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The U.S.
Dollar Portfolio also maintains a value-weighted average portfolio maturity of
90 days or less. The U.S. Dollar Portfolio follows these policies in seeking to
maintain a

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constant net asset value of $1.00 per share, although there is no assurance it
can do so on a continuing basis.

The U.S. Dollar Portfolio may invest in U.S. dollar-denominated high quality
corporate debt securities such as commercial paper and bonds and long-term
unsecured debentures with remaining maturities of thirteen months or less. These
investments may include, for example, obligations issued by U.S. and foreign
corporations, Eurodollar bonds (which are U.S. dollar-denominated obligations of
foreign issuers), and Yankee bonds (which are U.S. dollar-denominated bonds
issued by foreign issuers in the U.S.). Under normal market conditions, the U.S.
Dollar Portfolio will have more than 25% of its total assets invested in the
obligations of issuers in the banking industry. See "Special Investment
Considerations and Risk Factors--Concentration in Obligations of Qualifying
Banks." For further information concerning debt securities ratings and
permissible money market investments of the U.S. Dollar Portfolio, see the
Statement of Additional Information.

Securities issued or guaranteed as to principal and interest by the U.S.
Government or its agencies or instrumentalities in which the U.S. Dollar
Portfolio may invest include direct obligations of the U.S. Treasury, including
bills, bonds and notes; and obligations issued or guaranteed as to principal and
interest by U.S. Government agencies or instrumentalities and supported by any
of (i) the full faith and credit of the U.S. Treasury (e.g., Government National
Mortgage Association participation certificates); (ii) the right of the issuer
to borrow a limited amount from the U.S. Treasury (e.g., securities of the
Farmers Home Administration); (iii) the discretionary authority of the U.S.
Government to purchase certain obligations of the agency or instrumentality
(e.g., securities of the Federal National Mortgage Association); or (iv) the
credit of the agency or instrumentality (e.g., securities of a Federal Home Loan
Bank).

POUND STERLING PORTFOLIO
The Pound Sterling Portfolio's investment objective is to seek to maintain a
high level of liquidity, to preserve capital and stability of principal
expressed in Pounds Sterling and, consistent with those objectives, to earn
current income. The Pound Sterling Portfolio will invest in securities issued or
guaranteed as to principal and interest by the United Kingdom ("U.K.")
Government, local authorities, city corporations and county councils or their
agencies or by non-U.K. governments or Supranational Organizations as well as
high-quality, short-term money market instruments such as bank certificates of
deposit, bankers' acceptances and such short-term corporate debt securities as
commercial paper.

The Pound Sterling Portfolio invests only in Pound Sterling-denominated high
quality securities as described in this paragraph. The Pound Sterling Portfolio
assets will consist of U.K. government securities and other securities, which
have been (i) rated by at least two NRSROs in the highest rating category for
short-term obligations (or so rated by one such organization if it alone has
rated the security), (ii) issued by an issuer with comparable short-term
obligations that are rated in the highest rating category, or (iii) if unrated,
determined to be comparable to such securities.

All securities in which the Pound Sterling Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The Sterling
Portfolio also maintains a value-weighted average portfolio maturity of 90 days
or less. The Pound Sterling Portfolio follows these policies in seeking to
maintain a

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constant net asset value of L1.00 per share, although there is no assurance it
can do so on a continuing basis.

The Pound Sterling Portfolio may invest in Pound Sterling-denominated high
quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of thirteen months or
less. Under normal market conditions, the Pound Sterling Portfolio will have
more than 25% of its total assets invested in the obligations of issuers in the
banking industry. See "Special Investment Considerations and Risk
Factors--Concentration in Obligations of Qualifying Banks."

DEUTSCHE MARK PORTFOLIO
The Deutsche Mark Portfolio's investment objective is to seek to maintain a high
level of liquidity, to preserve capital and stability of principal expressed in
Deutsche Marks and, consistent with those objectives, to earn current income.
The Deutsche Mark Portfolio will invest in securities issued or guaranteed as to
principal and interest by the German Government, by its sub-divisions or their
agencies or by non-German governments or Supranational Organizations, as well as
high-quality, short-term money market instruments such as bank certificates of
deposit and such short-term corporate debt securities as commercial paper.

The Deutsche Mark Portfolio invests only in Deutsche Mark-denominated high
quality securities as described in this paragraph. The Deutsche Mark Portfolio's
assets will consist of German government securities and other securities, which
have been (i) rated by at least two NRSROs in the highest rating category for
short-term obligations (or so rated by one such organization if it alone has
rated the security), (ii) issued by an issuer with comparable short-term
obligations that are rated in the highest rating category, or (iii) if unrated,
determined to be comparable to such securities.

All securities in which the Deutsche Mark Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The Deutsche
Mark Portfolio also maintains a value-weighted average portfolio maturity of 90
days or less. The Deutsche Mark Portfolio follows these policies in seeking to
maintain a constant net asset value of DM1.00 per share, although there is no
assurance it can do so on a continuing basis.

The Deutsche Mark Portfolio may invest in Deutsche Mark-denominated high quality
corporate debt securities such as commercial paper and bonds and long-term
unsecured debentures with remaining maturities of thirteen months or less. Under
normal market conditions, the Deutsche Mark Portfolio will have more than 25% of
its total assets invested in the obligations of issuers in the banking industry.
See "Special Investment Considerations and Risk Factors--Concentration in
Obligations of Qualifying Banks."

CANADIAN DOLLAR PORTFOLIO
The Canadian Dollar Portfolio's investment objective is to seek to maintain a
high level of liquidity, to preserve capital and stability of principal
expressed in Canadian Dollars and, consistent with those objectives, to earn
current income. The Canadian Dollar Portfolio will invest in securities issued
or guaranteed as to principal and interest by the Canadian Government, the
Provinces of Canada, or their agencies or by non-Canadian governments or
Supranational Organizations as well as high-quality, short-term money market
instruments such as bank certificates of deposit and such short-term corporate
debt securities as commercial paper.

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The Canadian Dollar Portfolio invests only in Canadian Dollar-denominated
high-quality securities as described in this paragraph. The Canadian Dollar
Portfolio's assets will consist of Canadian government securities and other
securities which have been (i) rated by at least two NRSROs in the highest
rating category for short-term obligations (or so rated by one such organization
if it alone has rated the security), (ii) issued by an issuer with comparable
short-term obligations that are rated in the highest rating category by an
NRSRO, or (iii) if not rated by an NRSRO, determined to be comparable to such
securities. Presently many high-quality Canadian dollar-denominated securities
are rated only by one or more Canadian rating organizations, rather than by the
U.S. rating organizations which qualify as NRSROs. Accordingly, the Adviser
anticipates that many of the securities held by the Canadian Dollar Portfolio
will be securities which are not rated by an NRSRO but are determined to be
comparable to high-quality NRSRO-rated securities. In making this determination
the Adviser may rely upon ratings given by one or more Canadian rating
organizations. For further information concerning the ratings given by Canadian
rating organizations, see the Statement of Additional Information.

All securities in which the Canadian Dollar Portfolio invests have remaining
maturities of thirteen months or less at the date of acquisition. The Canadian
Dollar Portfolio also maintains a value-weighted average portfolio maturity of
90 days or less. The Canadian Dollar Portfolio follows these policies in seeking
to maintain a constant net asset value of C$1.00 per share, although there is no
assurance it can do so on a continuing basis.

The Canadian Dollar Portfolio may invest in Canadian Dollar-denominated high
quality corporate debt securities such as commercial paper and bonds and
long-term unsecured debentures with remaining maturities of thirteen months or
less. Under normal market conditions, the Canadian Dollar Portfolio will have
more than 25% of its total assets invested in the obligations of issuers in the
banking industry. See "Special Investment Considerations and Risk
Factors--Concentration in Obligations of Qualifying Banks."

ALL PORTFOLIOS
In seeking to obtain its investment objectives, each Portfolio may invest in the
types of securities described below.

VARIABLE AND FLOATING RATE NOTES

Each Portfolio may purchase variable and floating rate instruments. These
instruments may include variable amount master demand notes, which are
instruments under which the indebtedness, as well as the interest rate, varies.
These securities must have the requisite credit quality (as described above) in
order to be eligible to be purchased by a Portfolio. Unless guaranteed by the
the government issuing a Portfolio's Designated Currency, (a "Designated
Government") or one of its agencies or instrumentalities, variable or floating
rate instruments purchased by a Portfolio must permit such Portfolio to demand
payment of the instrument's principal at least once every thirteen months upon
no more than 30 days notice. Because of the absence of a market in which to
resell a variable or floating rate instrument, a Portfolio might have trouble
selling an instrument should the issuer default or during periods when a
Portfolio is not permitted by agreement to demand payment of the instrument, and
for this or other reasons a loss could occur with respect to the instrument.

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REPURCHASE AGREEMENTS
Each Portfolio may invest in repurchase agreements. A repurchase agreement
arises when an investor purchases a security and simultaneously agrees to resell
it to the counterparty on the repurchase agreement at an agreed-upon future
date, normally one day or a few days later. The resale price is greater than the
purchase price, reflecting an agreed-upon rate which is effective for the period
of time the investor's money is invested in the security and which is not
related to the coupon rate on the purchased security. By providing a flexible
investment vehicle, repurchase agreements permit the Portfolios to remain fully
invested pending the purchase of appropriate longer-term investments.

The Portfolios will enter into repurchase agreements only with financial
institutions rated by an NRSRO in the highest rating category for short-term
obligations and deemed to be creditworthy by the Investment Adviser, pursuant to
guidelines established by the Portfolio Trust's Board of Trustees. During the
term of any repurchase agreement, the Investment Adviser will monitor the
creditworthiness of the seller, and the seller must maintain the value of the
securities subject to the agreement in an amount that is greater than the
repurchase price. Default or bankruptcy of the seller would, however, expose the
Portfolios to possible loss because of adverse market action or delays in
connection with the disposition of the underlying obligations. Because of the
seller's repurchase obligations, the securities subject to repurchase agreements
do not have maturity limitations.

WHEN-ISSUED SECURITIES
Each Portfolio may purchase when-issued debt securities, which are traded on a
price or yield basis prior to actual issuance. Such purchases will be made only
to achieve the relevant Portfolio's investment objective and not for leverage.
The when-issued trading period generally lasts only from a few days up to a
month or more; during this period interest will not accrue. Such transactions
may involve a risk of loss if the value of the securities falls below the price
committed to prior to actual issuance. The Custodian will establish a segregated
account for a Portfolio when it purchases securities on a when-issued basis
consisting of cash or liquid securities equal to the amount of the when-issued
commitments.

ILLIQUID SECURITIES
Each Portfolio may invest up to 10% of its net assets in illiquid securities
(i.e. securities which a Portfolio could not reasonably expect to sell within
seven days at approximately the price at which they are valued). Under the
supervision of the Portfolio Trust's Board of Trustees the Investment Adviser
will determine the liquidity of each investment using various factors such as
(1) the frequency of trades and quotations, (2) the number of dealers and
prospective purchasers in the marketplace, (3) dealer undertakings to make a
market, (4) the nature of the security (including any demand or tender features)
and (5) the likelihood of continued marketability and credit quality of the
issuer. If they have a remaining maturity of more than seven days, time deposits
and repurchase agreements will be considered to be illiquid securities.

FUNDAMENTAL POLICIES
Each of the Funds and the Portfolios have adopted certain fundamental policies
which may not be changed without the approval of that Fund's shareholders or
that Portfolios' investors, as the case may be.

The Funds have the same investment restrictions as the Portfolios, except that
each Fund may invest all of its Investable Assets in an

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open-end management investment company with substantially the same investment
objectives as that Fund. Therefore, references below to the Portfolios'
investment restrictions also include the Funds' investment restrictions. In
addition, as a fundamental policy, no Portfolio may: (i) borrow money, except
from the Portfolio Trust's Custodian or from other banks in connection with
redemptions or for temporary or emergency purposes (borrowings by a Portfolio
may not exceed 20% of that Portfolio's net assets computed immediately after the
borrowing; no additional investments may be made while any borrowings exceed 5%
of the Portfolio's total assets), or (ii) make any investment which would cause
more than 25% of the value of such Portfolio's total assets to be invested in
securities of nongovernmental issuers principally engaged in any one industry,
except that under normal market conditions each Portfolio will invest more than
25% of its total assets in obligations of Qualifying Banks (as defined herein).
Additional fundamental policies of the Portfolios are set forth in the Statement
of Additional Information.

If a percentage restriction, including one that is a fundamental policy, is
adhered to at the time of investment, a later increase or decrease in percentage
resulting from a change in values or assets will not constitute a violation of
that restriction.

SPECIAL INVESTMENT CONSIDERATIONS AND RISK FACTORS

POSSIBLE CHANGES IN NET ASSET VALUE AND YIELD
Each Portfolio seeks to maintain a constant net asset value and generally values
its investments at amortized cost. However, the value of each Portfolio may be
affected by changes in interest rates and the credit standing of issuers of the
Portfolios' investments. The value of the investments held by each of the
Portfolios in which the Funds invest generally will vary inversely with changes
in prevailing interest rates, although this variance is expected to be minimal
due to the short maturities of the instruments held by the Portfolios.

Interest rates paid on instruments denominated in a given Designated Currency
may be higher or lower than those paid on instruments denominated in other
Designated Currencies. Investors should recognize that in periods of declining
short-term interest rates the inflow of net new money to a Portfolio from the
continuous sale of its shares will likely be invested in portfolio instruments
producing lower yields than the balance of such Portfolio's investment
portfolio, thereby reducing the current yield of the Portfolio. In the periods
of rising interest rates, the opposite can be true. The securities in which the
Portfolios invest may not produce as high a level of income as could be obtained
from securities with longer maturities or those having a lesser degree of
safety.

INVESTMENTS IN A SINGLE ISSUER
Each Portfolio other than the U.S. Dollar Portfolio is non-diversified under the
1940 Act. These Portfolios intend to comply, however, with the diversification
requirements applicable to regulated investment companies under the United
States Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
Currently, those requirements provide that, as of the last day of each fiscal
quarter, each Portfolio's investments in the securities of any one issuer must
be limited to 25% of its total assets, provided that with respect to at least
50% of its total assets, a Portfolio may not have (a) invested more than 5% of
its total assets in the securities of any one issuer or

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(b) invested more than 10% of the outstanding voting securities of any one
issuer. To the extent a Portfolio is not diversified under the 1940 Act, it may
be more susceptible than a fully diversified Portfolio to adverse developments
affecting a single issuer.

In addition to the foregoing, each of the Portfolios has adopted a
non-fundamental investment restriction which prevents it from investing (i) more
than 5% of the value of its total assets in the securities of any one issuer
(other than repurchase agreements and securities issued by its Designated
Government, and certain of such government's agencies and instrumentalities), or
(ii) more than 25% of the value of its total assets in repurchase agreements
with one counterparty. Securities held solely as collateral for outstanding
repurchase agreements shall be excluded for purposes of computing compliance
with restriction (i). These restrictions may be eliminated or modified at any
time by the Trustees of the Portfolio Trust without a shareholder vote.

CONCENTRATION IN OBLIGATIONS OF QUALIFYING BANKS
Under normal market conditions, each Portfolio will have more than 25% of its
total assets invested in obligations of Qualifying Banks. For the purposes of
this Prospectus, Qualifying Banks are defined as U.S. banks (including savings
banks or savings and loan associations) that are members of the Federal Deposit
Insurance Corporation ("FDIC") and "foreign banks," as defined in Rule 3a-6
under the 1940 Act, provided that any such institution has, at the date of
investment, capital, surplus and undivided profits (as of the date of its most
recently published financial statements) in excess of U.S. $100,000,000 or the
non-U.S. dollar equivalent, as the case may be. This concentration may result in
increased exposure to risks pertaining to the banking industry. These risks
include: a sustained increase in interest rates, which can adversely affect the
availability and cost of funds for a bank's lending activities; exposure to
credit losses during times of economic decline; concentration of loan portfolios
in certain industries; national and local regulatory developments; and
competition within the banking industry as well as from other financial
institutions. In addition, investments in banks located in foreign countries are
subject to risks resulting from the combination in those banks of banking and
securities underwriting and similar activities.

INVESTMENTS IN FOREIGN SECURITIES
Investing in securities issued by entities domiciled in a country other than an
investor's country of residence or denominated in a currency other than the
currency of the investor's country of residence may involve considerations and
possible risks and opportunities not typically encountered by the investor in
making investments in its country of residence and in securities denominated in
that country's currency. These considerations include favorable or unfavorable
changes in interest rates, currency exchange rates and exchange control
regulations, and the costs that may be incurred in connection with conversions
between various currencies. In addition, investments in countries other than the
United States could be affected by other factors generally not thought by
investors to be present in the United States, including less liquid and
efficient securities markets, greater price volatility, less publicly available
information about issuers, the imposition of withholding or other taxes,
restrictions on the expatriation of funds or other assets of a Portfolio,
expropriation of assets, adverse diplomatic developments, higher transaction and
custody costs, delays attendant in settlement procedures and

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difficulties in enforcing contractual obligations.

INFORMATION CONCERNING THE MASTER-FEEDER FUND STRUCTURE

Each of the Funds seeks to achieve its investment objectives by investing all of
its Investable Assets in the Portfolio which has the same investment objectives
as such Fund and invests solely in assets denominated in that Fund's Designated
Currency. These Portfolios in turn invest in securities that are consistent with
those objectives. In addition to selling beneficial interests to the Funds, the
Portfolios may sell beneficial interests to other mutual funds or institutional
investors. Such investors will invest in the Portfolios on the same terms and
conditions and will pay a proportionate share of the Portfolios' expenses.
However, the other investors investing in the Portfolios are not required to
sell their shares at the same public offering price as the Funds due to the
imposition of sales commissions and variations in other operating expenses.
Therefore, investors in the Funds should be aware that these differences may
result in differences in returns experienced by investors in the different funds
that invest in the Portfolios. Such differences in returns are also present in
other mutual fund structures. Information concerning other holders of interests
in the Portfolios is available from the Administrator by calling 1-800-499-3603.

Smaller funds investing in the Portfolios may be materially affected by the
actions of larger funds investing in the Portfolios. For example, if a large
fund withdraws from a Portfolio, the remaining funds investing in that Portfolio
may experience higher pro rata operating expenses, thereby producing lower
returns (however, this possibility exists as well for traditionally structured
funds that have large institutional investors). Additionally, because the
Portfolio would have fewer assets in such a case, it may become less
diversified, resulting in increased portfolio risk. Also, funds with a greater
pro rata ownership in such a Portfolio could have effective voting control of
the operations of that Portfolio. Except as permitted by the SEC, whenever the
Trust is requested to vote on matters pertaining to the Portfolios (other than a
vote by the Funds to continue operations of the Portfolios upon the withdrawal
of another investor in the Portfolios), the Trust will hold a meeting of
shareholders of the Funds and will cast all of its votes in the same proportion
as the votes of the Funds' shareholders. The percentage of the Trust's votes
representing Funds shareholders not voting will be voted by the Trustees or
officers of the Trust in the same proportion as the shareholders of the Funds
who do, in fact, vote. Shareholders of the Funds who do not vote will not affect
the Trust's votes at the Portfolios' meetings.

A Fund may withdraw its investment from a Portfolio at any time, if the Board of
Trustees of the Trust determines that it is in the best interests of the
shareholders of that Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including
investing all the Investable Assets of that Fund in another pooled investment
entity having the same investment objectives as the Fund or retaining Rothschild
International Asset Management Limited or another investment adviser to manage
the Fund's assets directly in accordance with the investment policies described
above with respect to the relevant Portfolio. Any such withdrawal could result
in distributions to such Fund from the Portfolio "in kind" of portfolio
securities (as opposed to a cash distri-

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bution) to the extent permitted by the 1940 Act, or rules adopted thereunder. If
securities are distributed, such Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of that Fund.

The Funds' investment objectives are fundamental policies and may not be changed
without the approval of the Funds' shareholders. The investment objectives of
the Portfolios are not fundamental policies and may be changed without the
approval of the investors in the Portfolio. Shareholders of a Fund will receive
30 days prior written notice with respect to any change in the investment
objective of its corresponding Portfolio. See "Investment Objective" and
"Investment Policies and Restrictions" for a description of the fundamental
policies of the Portfolios that cannot be changed without approval of the "vote
of a majority of the outstanding voting securities" (as defined in the 1940 Act)
of the Portfolios.

For descriptions of the investment objectives, policies and restrictions of the
Portfolios, see "Investment Objectives" and "Investment Policies and
Restrictions." For descriptions of the management of the Portfolios, see
"Management" herein and in the Statement of Additional Information. For
descriptions of the expenses of the Portfolios, see "Management" herein.

MANAGEMENT

Each Fund is a separate series of the Trust, a Delaware business trust under the
terms of the Agreement and Declaration of Trust establishing the Trust, which is
governed by the laws of Delaware. The Trustees of the Trust are ultimately
responsible for the management of its business and affairs.

Each Portfolio is a separate investment series of the Portfolio Trust, which is
also a Delaware business trust under the terms of the Agreement and Declaration
of Trust establishing the Portfolio Trust, which is governed by the laws of
Delaware. Under the terms of the Portfolio Trust's Declaration of Trust, the
affairs of the Portfolio are managed under the supervision of the Trustees of
the Portfolio Trust.

The Boards of Trustees of the Portfolio Trust and the Trust establish their
respective policies and supervise and review the operations and management of
the Portfolio Trust and the Trust, respectively. The day-to-day operations of
the Portfolio Trust and the Trust are administered by officers elected by their
respective Board of Trustees.

A majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) of the Trust and the Portfolio Trust, as the case may be, have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interest arising from the fact that the same individuals are Trustees of the
Trust and of the Portfolio Trust, up to and including creating separate Boards
of Trustees. See "Management of the Trust and Portfolio Trust" in the Statement
of Additional Information for more information about the Trustees and officers
of the Trust and the Portfolio Trust.

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subsidiary of Rothschild Concordia AG of Zug, Switzerland, a holding company
whose subsidiaries manage approximately $28.5 billion of assets, spread across
equities, bonds and currencies.

The Investment Adviser, subject to the supervision and direction of the
Portfolio Trust's Board of Trustees, professionally manages each Portfolio in
accordance with such Portfolio's investment objectives and policies and makes
all investment decisions for those Portfolios. In consideration of these
services, the Portfolio Trust has agreed to pay the Investment Adviser monthly
an annual advisory fee with respect to each Portfolio. The advisory fee for each
Portfolio is calculated daily and payable monthly at an annual rate of up to
.20% of average daily net assets.

The Investment Adviser and the Administrator may, at their own expense, provide
compensation to certain financial institutions whose customers purchase
significant amounts of shares of a Fund. The amount of such compensation may be
made on a one-time and/or periodic basis, and may be up to 100% of the annual
fees that are earned by the Investment Adviser or the Administrator (after
adjustments) and are attributable to shares held by such customers. Such
compensation will not represent an additional expense to the Funds or their
shareholders, since it will be paid from assets of the Investment Adviser and
the Administrator or their affiliates.

The portfolio manager for all of the Portfolios is Thomas Barman, who has been
employed by the Investment Adviser as its Director for Currency Management since
November 1994. He has been primarily responsible for the day-to-day management
of the Portfolios' portfolios since their commencement of operations. He has
over 25 years experience in fund management. From March 1993 to August 1994, Mr.
Barman was a portfolio manager for Glaxo (Bermuda) Limited. From April 1991 to
February 1993, he was a portfolio manager for the U.S. Office of Caisse des
Depots et Consignations. Prior to that time, he served as Foreign Exchange
Officer at the Federal Reserve Bank of New York and was head of U.S. Treasury
investments at Credit Suisse (New York).

Prior to the Trust's commencement of operations, the Investment Adviser and Mr.
Barman had not had previous experience managing a mutual fund registered under
the 1940 Act. However, they have had substantial experience managing publicly
offered European mutual funds.

The Investment Adviser has a Code of Ethics governing personal securities
transactions of certain of its employees. See the Statement of Additional
Information.

DISTRIBUTOR
The Distributor is an affiliate of the Administrator. Mutual funds structured
like the Funds sell shares on a continuous basis. The Funds' Shares are sold
through the Distributor. Certain officers of the Trust are also officers and/or
directors of the Distributor.

ADMINISTRATOR
The Administrator, a wholly-owned subsidiary of The BISYS Group, Inc., is
responsible for coordinating the Funds' efforts and generally assuring the
operation of the Funds' business. It has been providing services to mutual funds
since 1987.

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providing for the calculation of net asset values of Fund shares, dividends and
capital gains distributions to shareholders, and performing other administrative
functions necessary for the smooth operation of the Funds.

The Administrator provides the Portfolio Trust with office space and with
certain clerical services and facilities. The Administrator is entitled to an
administration fee calculated daily and payable monthly at an annual rate of
.10% of the average daily net assets of all of the Funds. The Administrator
serves as such for an initial two year term (with subsequent annual, renewable
terms) pursuant to administration agreements with the Trust and the Portfolio
Trust. Those agreements provide that the Administrator shall receive payment in
full of its fee for the remainder of the relevant term if the Administrator is
terminated without cause prior to the end of such term.

TRANSFER AND DIVIDEND DISBURSING AGENT
Under its agreement with the Trust, BISYS Fund Services, Inc., as Transfer
Agent, provides customary transfer and dividend disbursing agent services,
including processing purchase, redemption and transfer transactions, responding
to shareholder inquiries, automatically investing dividends in Fund shares,
transmitting dividends to shareholders, assisting shareholders in changing
account designations and addresses and transmitting to shareholders proxy
statements, annual reports, prospectuses and other Trust communications. The
Transfer Agent serves as such for an initial two year term (with subsequent
annual, renewable terms) pursuant to a transfer agency agreement with the Trust.
That agreement provides that the Transfer Agent shall receive payment in full of
its fee for the remainder of the relevant term if the Transfer Agent is
terminated without cause prior to the end of such term. The Transfer Agent may
sub-contract any of its duties to another person, including its affiliates. See
"How to Buy Five Arrows Shares" and "How to Change Funds."

Pursuant to a separate agreement, BISYS Fund Services, Inc. also provides fund
accounting services to the Trust. As fund accountant, BISYS Fund Services, Inc.
serves for an initial two year term (with subsequent annual, renewable terms).
That agreement provides that the fund accountant shall receive payment in full
of its fee for the remainder of the relevant term if the fund accountant is
terminated without cause prior to the end of such term.

CUSTODIAN
The Chase Manhattan Bank is the custodian of the Trust and Portfolio Trust (the
"Custodian") and, in that capacity, maintains custody of the Trust's and
Portfolio Trust's assets. In maintaining the custody of assets located outside
the United States, the custodian may use one or more subcustodians.

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Trust's prospectuses, statements of additional information and shareholder
reports and delivering them to shareholders; compensation of Trustees of the
Trust or Portfolio Trust who are not employees of the Distributor or
Administrator or their affiliates and costs of other personnel performing
services for the Trust or Portfolio Trust; costs of corporate meetings;
registration fees and related expenses for the Trust's registration with the SEC
and the securities regulatory authorities of other jurisdictions in which the
Funds' shares are sold; state securities law registration fees and related
expenses and other required registrations and related publication fees; fees
payable to the Investment Adviser under the Investment Advisory Agreement; fees
payable to the Administrator, Transfer Agent and Custodian.

The Investment Adviser has voluntarily agreed to reimburse such portion of its
advisory fee as is necessary to cause the annualized total expenses of each
class of a Fund not to exceed a specified percentage of such class' average
daily net asset value (.275% in the case of the Five Arrows class of the U.S.
Dollar Fund and .35% in the case of the Five Arrows class of each other Fund).
If this reimbursement is not sufficient to cause the total expenses of any Fund
not to exceed the applicable percentage of average daily net asset value, the
Investment Adviser has agreed to pay such other expenses of the applicable Fund
as is necessary to keep total expenses from exceeding the applicable percentage.
This undertaking shall remain in effect for the fiscal period ended December 31,
1998, and thereafter in the discretion of the Investment Adviser. The Investment
Adviser has reserved the right to terminate or revise these limitations with
respect to any period after December 31, 1998.

The Investment Adviser, the Distributor, the Administrator, the Transfer Agent
and the Custodian may also from time to time otherwise voluntarily waive their
respective fees. No fee waivers may be recouped beyond the end of any fiscal
year.

CALCULATION OF NET ASSET VALUE

The net asset value per share of each Fund, expressed in the relevant Fund's
Designated Currency, is determined by dividing the value of the Fund's net
assets (i.e., the value of its investment in its corresponding Portfolio and
other assets, including accrued but undistributed net investment income, less
liabilities) by the total number of shares of the Fund outstanding. Such net
asset values are determined once every Trust Business Day at 11:00 a.m. U.S.
Eastern Time for the U.S. Dollar and Canadian Dollar Funds, 9:00 a.m. U.S.
Eastern Time for the Pound Sterling Fund and 10:00 a.m. Eastern Time for the
Deutsche Mark Fund.

By investing all of their assets in the relevant Portfolio, each Fund seeks to
maintain the following constant net asset value per share:

<TABLE>
<S> <C>
U.S. Dollar Fund........... U.S.$1.00
Pound Sterling Fund........ L1.00
Deutsche Mark Fund......... DM1.00
Canadian Dollar Fund....... C$1.00
</TABLE>

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should be initiated to prevent any adverse effects on the Portfolios'
shareholders. The Portfolio Trust's Board of Trustees will monitor the use of
the amortized cost method of valuation in order to ensure that this method
continues to be in the best interest of the Portfolios' shareholders. There may
be periods during which the stated value of an instrument determined under the
amortized cost method of valuation is higher or lower than the price the
Portfolio would receive if the instrument were sold, and the accuracy of
amortized cost valuation can be affected by changes in interest rates and the
credit standing of issuers of the Portfolio's investments. There is no assurance
that the Portfolios will maintain a stable net asset value per share.

If in the view of the Portfolio Trust's Board of Trustees it is inadvisable to
continue maintaining a constant net asset value for any Portfolio, the Board of
Trustees may discontinue using the amortized cost method of valuation for such
Portfolio. Shareholders of a Portfolio would be notified of a decision by the
Board of Trustees to discontinue the use of the amortized cost method with
respect to such Portfolio. The form of notification would depend on the context
of such a decision and could include, for example, the mailing of written
notifications and/or the issuance of a press release.

HOW TO BUY FIVE ARROWS SHARES

Five Arrows shares of the Funds are sold on a continuous basis by the
Distributor. Investors making an initial purchase of Five Arrows shares must
complete the Application Agreement accompanying this Prospectus, and forward it
to the Transfer Agent for acceptance by the Trust and establishment of an
account number. The investor must also wire funds that are immediately available
to the Trust for investment purposes (Disbursable Funds) to the Distributor in
accordance with the payment instructions and bank account details set out in the
Application Agreement. Subsequent investments may be made by notifying the Trust
of a purchase by telephoning the Distributor during Trust Hours of Operation and
by wiring "Disbursable Funds" to the Distributor in accordance with the payment
instructions and bank account details set out in the Application Agreement.

The minimum initial investment (the "Initial Investment Minimum") is $500,000
for Five Arrows shares (or the equivalent in the relevant Fund's Designated
Currency). The Initial Investment Minimum amount may either be satisfied by
investing such an amount in a single Fund or by aggregating purchases in several
Funds. The minimum subsequent investment ("Subsequent Investment Minimum") for
Five Arrows shares is $5,000 (or the equivalent in the relevant Fund's
Designated Currency). The Trust may, at its discretion, waive the minimum
investment requirements. The purchase of shares of each Fund must be made in the
Designated Currency for such Fund.

Purchases of Five Arrows shares of any of the Funds will be processed in
accordance with the procedures set forth below, at the net asset value per share
of the relevant Fund next determined after the purchase order is duly received.
No sales charge will be imposed at the time of purchase or redemption. The full
amount of the investor's purchase payment received by the Distributor will be
invested in the relevant Fund.

Purchases of shares of a Fund will be effected on Trust Business Days in
accordance with the procedures set forth below and only when the wire system
designated for use in transmitting

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money to the relevant Fund permits the timely transmission of Disbursable Funds.
Additionally, on days when the relevant trading market and/or the Trust's
Custodian or Distributor close early due to a partial holiday or otherwise, the
Trust reserves the right to advance the times at which purchase and redemption
orders must be received. Prospective or current Five Arrows shareholders may
transmit purchase orders by telephoning the Distributor at 1-800-824-3863.

- - Purchase orders for shares of the U.S. Dollar Fund received prior to 11 a.m.
U.S. Eastern Time on a Trust Business Day will settle on that same day (or the
next New York Banking Day (as defined below) if such Trust Business Day is not
a New York Banking Day).

- - Purchase orders for shares of the Canadian Dollar Fund received prior to 11
a.m. U.S. Eastern Time on a Trust Business Day will settle on that same day
(or the next Toronto Banking Day (as defined below) if such Trust Business Day
is not a Toronto Banking Day).

- - Purchase orders for shares of the Pound Sterling Fund received prior to 5 p.m.
U.S. Eastern Time on a Trust Business Day will settle on the following London
Banking Day (as defined below).

- - Purchase orders for shares of the Deutsche Mark Fund received prior to 10 a.m.
U.S. Eastern Time on a Trust Business Day will settle on the following
Frankfurt Banking Day (as defined below) provided, however, that if such a
Trust Business Day is not a Frankfurt Banking Day, the purchase order will
settle on the second following Frankfurt Banking Day.

If a purchase order is not received by the Trust prior to the applicable time
listed above, such purchase order shall be deemed to have been received on the
next following Trust Business Day.

Before placing a purchase order investors should acquaint themselves with the
minimum amounts and other requirements for using the relevant wire system for
the transfer of Disbursable Funds, and should ascertain whether the financial
institution from which the purchase payment is being sent, has access to the
appropriate system. It is essential that complete information, regarding the
investor's account, accompany all wire instructions in order to facilitate the
prompt and accurate handling of investments. Investors may obtain, from their
financial institution, further information about remitting funds by wire and any
fees that may be imposed for so doing. The Trust does not impose a fee for
receiving payment by wire.

Investors will be entitled to any dividends declared or income earned on the day
when their purchase orders settle, provided that Disbursable Funds are received
in the relevant Fund's Designated Currency in the appropriate bank account
(details of which are set out on the Application Agreement) by the close of
business on that same day. If Disbursable Funds, with respect to any purchase
order, are not received by this time by the Distributor, the Trust reserves the
right, in its sole discretion, (a) to accept the order and assess interest on
the overdue payment, or (b) to cancel the order, and to hold the purchaser
responsible for any loss and other costs incurred by the Distributor and/or the
Trust.

The Trust reserves the right to reject any purchase order in whole or in part.
All of a shareholder's accounts will be subject to the

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elections and instructions specified by the shareholder in the Application
Agreement covering the accounts.

United States Federal tax regulations require investors that are United States
persons to provide a certified Taxpayer Identification Number and/or certain
other required certifications within 30 days following the opening or reopening
of an account in order to avoid withholding of taxes on distributions and
proceeds of redemptions.

Ownership of the Trust's shares will be reflected by book-entry, and
certificates for shares will not be issued. Investment in the Trust is not
recommended for any investors who require a stock certificate to evidence their
shares.

All investments must be made in the Designated Currency of the Fund whose shares
are being purchased, as discussed above. Investors may convert other currencies
into the Designated Currency of a Fund through The Chase Manhattan Bank, in
accordance with its customary currency conversion credit and operational
arrangements and at its prevailing rates and fees to customers, or through other
dealers in foreign exchange, in accordance with their customary credit and
operational arrangements and at their prevailing rates and fees. Currency
conversions may result in capital gains or losses to an investor.

Neither the Trust nor its service contractors will be responsible for any loss
or expense for acting upon telephone instructions that are believed to be
genuine. In attempting to confirm that telephone instructions are genuine, the
Trust will use procedures considered reasonable. These procedures include
recording all telephone conversations, sending confirmations to shareholders
within 72 hours of the telephone transaction, verifying the account name and a
shareholder's account number or tax identification number and sending redemption
proceeds only to the address of record or to a previously authorized bank
account. To the extent that the Trust does not use reasonable procedures to form
its belief, it and/or its service contractors may be responsible for
instructions that are fraudulent or unauthorized.

A "New York Banking Day" is every day except Saturdays, Sundays and holidays
observed by New York City banks. (The Trust expects the following holidays to be
observed for the remainder of 1997: Thanksgiving Day and Christmas Day; and for
1998: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Memorial
Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas
Day).

A "London Banking Day" is every day except Saturdays, Sundays and holidays
observed by London banks. (The Trust expects the following holidays to be
observed for the remainder of 1997: Christmas Day and Boxing Day; and for 1998:
New Year's Day, Good Friday, Easter Monday, May Holiday, Spring Holiday, Late
Summer Holiday, Christmas Day and Boxing Day).

A "Frankfurt Banking Day" is every day except Saturdays, Sundays and holidays
observed by Frankfurt banks. (The Trust expects the following holidays to be
observed for the remainder of 1997: Christmas Eve Holiday, Christmas Day, Boxing
Day and New Year's Holiday; and for 1998: New Year's Day, Good Friday, Easter
Monday, Labor Day, Ascension Day, Whit Monday, Corpus Christii, Repentance Day
and Christmas Day).

A "Toronto Banking Day" is every day except Saturdays, Sundays and holidays
observed by Toronto banks. (The Trust expects the following

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holidays to be observed for the remainder of 1997: Remembrance Day, Christmas
Day and Boxing Day; and for 1998: New Year's Day, Good Friday, Easter Monday,
Victoria Day, Canada Day, Labor Day, Thanksgiving Day, Remembrance Day and
Christmas Day).

HOW TO REDEEM FIVE ARROWS SHARES

Five Arrows shareholders will redeem their shares by contacting the Transfer
Agent directly in the manner specified in this prospectus. Subject to the right
of a Fund to make redemptions in kind under certain circumstances, all
redemption requests are treated as requests for redemption in the normal course
in the Fund's Designated Currency.

Redemptions of shares of a Fund will be effected on Trust Business Days in
accordance with the procedures set out below, and only when the wire system
designated for use in transmitting money from the relevant Fund permits the
timely transmission of redemption proceeds. Additionally, as for purchases of
shares, the Trust reserves the right to advance the times at which purchase and
redemption orders must be received (see section headed "How to Buy Five Arrows
Shares" above). Five Arrows shareholders will transmit redemption requests by
telephoning the Transfer Agent at 1-800-824-3863.

- - Redemption requests for shares of the U.S. Dollar Fund received prior to 11
a.m. U.S. Eastern Time on a Trust Business Day will settle on that same day
(or the next New York Banking Day if such Trust Business Day is not a New York
Banking Day).

- - Redemption requests for shares of the Canadian Dollar Fund received prior to
11 a.m. U.S. Eastern Time on a Trust Business Day will settle on that same day
(or the next Toronto Banking Day if such Trust Business Day is not a Toronto
Banking Day).

- - Redemption requests for shares of the Pound Sterling Fund received prior to 5
p.m. U.S. Eastern Time on a Trust Business Day will settle on the following
London Banking Day.

- - Redemption requests for shares of the Deutsche Mark Fund received prior to 10
a.m. U.S. Eastern Time on a Trust Business Day will settle on the following
Frankfurt Banking Day provided, however, that if such a Trust Business Day is
not a Frankfurt Banking Day, the redemption request will settle on the second
following Frankfurt Banking Day.

If a redemption request is not received prior to the applicable time listed
above, such request shall be deemed to have been received on the next following
Trust Business Day. Shareholders shall be entitled to any dividends declared or
income earned up to and including the day before the day on which the redemption
request is scheduled to settle.

If the Investment Adviser believes that market conditions exist which preclude
the Trust from making prompt payment in a Fund's Designated Currency, the Trust
can elect to take up to seven days to pay redemption proceeds or to pay
redemption proceeds wholly or partly in readily marketable portfolio securities.
The Trust is obligated to effect a redemption in currency without regard to
market conditions if requested by a shareholder redeeming no more than either
$250,000 (or in the applicable Designated Currency equivalent thereof) or 1% of
a Fund's net assets during any 90-day period.

Except as provided below, all redemptions in currency will be made by wire
transfer on the settlement day in the Designated Currency of the Fund whose
shares are being redeemed

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through a recognized electronic funds transfer system which handles such
Designated Currency. A charge of $20 (or the equivalent in the relevant Fund's
Designated Currency) against the shareholder's account will be imposed for each
wire redemption. Banks receiving redemption proceeds by wire may also impose a
charge for doing so.

If a redemption request does not meet the minimum amount and other requirements
for sending currency through the electronic funds transfer system employed by
the Fund, redemption proceeds will be paid by check sent by mail. Each
shareholder may pre-designate one bank account per Fund to which redemption
proceeds can be directed.

When redemption proceeds are paid in portfolio securities, brokerage costs may
be incurred by the investor in converting the securities to currency. For
further information concerning redemptions in portfolio securities, shareholders
should telephone the Administrator. Redemption in portfolio securities will be
made by delivery to the shareholder, or to another party at the shareholder's
direction, of portfolio securities (together with a cash payment in the Fund's
Designated Currency equal to the value and in lieu of any fractional securities
required to be delivered) with a value determined at the time the redemption is
made to equal the aggregate net asset value of the Fund shares being redeemed
next determined following receipt of the redemption request.

To the extent permitted by applicable law, the right of redemption with respect
to a Fund may be suspended or the date of payment postponed for more than seven
days when trading in the markets in which the Fund's securities are traded is
restricted or for a period during which an emergency exists as a result of which
disposal by the Fund of its securities is not reasonably practicable or it is
not reasonably practicable for the Fund fairly to determine the value of its
assets. In addition, the right of redemption may be suspended or the date of
payment postponed for such other periods as the SEC by order may permit to
protect the Trust's shareholders.

The Trust will maintain a shareholder's account and the information contained in
the shareholder's Application Agreement in effect until the end of the calendar
year in which the redemption of all the shareholder's shares of the Funds
occurs. The Trust may thereafter require a shareholder to complete a new
Application Agreement in connection with a purchase of shares. This practice
permits a former shareholder to invest in shares of the Funds at any time during
the calendar year without completing a new Application Agreement.

The Trust reserves the right to redeem a shareholder's account at the Trust's
option, upon not less than 60 days' written notice to the shareholder, if for a
period of six months or more the account does not have in any Fund shares with a
net asset value equal to or greater than the Fund's Initial Investment Minimum.
During the 60-day period, a shareholder may avoid automatic redemption by
investing in any Fund an amount sufficient to increase the net asset value of
the account's shares of the Fund to the applicable Initial Investment Minimum.

Again, you should note that neither the Trust nor its service contractors will
be responsible for any loss or expense for acting upon telephone instructions
that are believed to be genuine. In attempting to confirm that telephone
instructions are genuine, the Trust will use procedures considered reasonable,
as described above.

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HOW TO CHANGE FUNDS

A shareholder may change shares of one Fund into shares of another Fund by
redeeming shares of one Fund, converting the redemption proceeds into the
Designated Currency of another Fund and purchasing the shares of the other Fund
with the proceeds of the currency conversion. During the period between the net
asset value determination applicable to the shares being redeemed in one Fund
and the purchase of shares in another Fund, the shareholder will not be the
owner of, or be eligible to receive dividends with respect to, either the shares
which have been redeemed or the shares being acquired.

The length of time for completion of a Fund change will vary depending on the
Funds involved and the time during Trust Hours of Operation when the Fund change
is initiated. In general, the length of time for completion of a Fund change
will depend upon each of the time required to obtain payment of redemption
proceeds from the Fund whose shares are being redeemed and the time required to
effect any foreign exchange transaction which may be necessary for the
shareholder to obtain the currency of the Fund whose shares are being acquired.
The arrangements involved in effecting foreign exchange transactions will
depend, in part, on a shareholder's credit and operating relationships with the
foreign currency exchange dealer the shareholder uses and may shorten the length
of time required for completion of a Fund change. A shareholder is not required
to submit a new Application Agreement for the purchase of shares in connection
with a Fund change.

The Trust does not provide currency exchange services, either directly or
through its agents, and the selection of a foreign exchange dealer in connection
with a change of Funds is within the shareholder's sole discretion. The Trust
has been advised that The Chase Manhattan Bank's foreign exchange department is
available, at its customary currency conversion rates and fees and subject to
its customary credit and other requirements, to provide foreign exchange
services to shareholders changing Funds.

Fund changes may result in recognition of a taxable gain or loss. See
"Taxation."

TAXATION

The following discussion is only a summary of certain tax issues that may be of
interest to shareholders. All shareholders are urged to consult their tax
advisers for further information concerning the tax consequences of investing in
the Trust.

TAXATION OF THE TRUST
Under Subchapter M of the Internal Revenue Code, each Fund of the Trust is to be
treated as a separate corporation for U.S. Federal income tax purposes. It is
intended that each Fund will qualify for each fiscal year as a "regulated
investment company" under the Internal Revenue Code by complying with certain
requirements of the Internal Revenue Code regarding sources of income,
diversification of assets, and distribution of income to shareholders, although
no assurance can be given in this regard. As regulated investment companies, the
Funds will not be liable for U.S. Federal income taxes on the net investment
income and capital gain distributed to shareholders in accordance with the
applicable provisions of the Internal Revenue Code. Since it is intended that
each Fund will distribute all of its net income and net capital gain each year,
each Fund should avoid all U.S. Federal income taxes.

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Under current law, the Trust does not anticipate that interest derived by the
Funds from sources outside the United States will be subject to non-U.S.
withholding taxes. To the extent any such withholding tax does arise, it may be
possible to reduce or eliminate it under the terms of applicable United States
income tax treaties. If it is subject to any such withholding tax, the Trust
intends to undertake the procedural steps required to claim the benefits of any
such treaties. If any non-U.S. taxes are paid by a Fund and, as is expected,
more than 50% in value of the Fund's total assets at the close of any taxable
year consists of securities of non-U.S. banks or corporations, the Fund may
elect to treat any non-U.S. taxes paid by it as paid by its shareholders with
the consequences described under "U.S. Federal Income Taxation of U.S.
Shareholders" below.

Each Fund will determine its income in terms of its Designated Currency and, in
the case of each Fund other than the U.S. Dollar Fund, will translate its net
income for each year from its Designated Currency into U.S. dollars for U.S.
Federal income tax purposes. Under current Treasury regulations, regulated
investment companies are normally required to recognize for U.S. Federal income
tax purposes income or loss attributable to changes in exchange rates between
the U.S. dollar and the Fund's Designated Currency (i.e., currency gain or loss)
absent a ruling to the contrary from the Internal Revenue Service. Recognition
of currency gain in excess of currency loss in any given year would require the
affected Fund to pay dividends in excess of its interest income in order to pay
out all income as calculated for U.S. Federal income tax purposes. In reliance
upon a ruling from the Internal Revenue Service, the Trust calculates the income
of each Fund without recognizing currency gain or loss.

U.S. FEDERAL INCOME TAXATION OF
U.S. SHAREHOLDERS
Dividends paid by each Fund out of its net investment income and net realized
short-term capital gain, if any, are taxable to the U.S. shareholders of the
Fund (i.e., a United States corporation or an individual who is a citizen or
resident of the United States) as ordinary income. Dividends to corporate
shareholders will not be eligible for the dividends-received deduction. To the
extent that the Trust elects to declare certain dividends in October, November
or December and to distribute them to the shareholders the following January,
the dividends would be included in the income of the shareholders as if received
in December.

A U.S. shareholder of a Fund, other than the U.S. Dollar Fund, generally will
recognize gain or loss on a sale or redemption of shares (or on a change of
shares into shares in another Fund) in respect of any appreciation or
depreciation in the U.S. dollar-value of the shares from the time the shares are
acquired to the time of disposition. In general, that gain or loss will be
capital gain or loss. In addition, as discussed above, in the absence of the
continued availability of a ruling from the Internal Revenue Service, each Fund,
other than the U.S. Dollar Fund, would be required to recognize currency gain or
loss. Recognition by a Fund of currency gain in excess of currency loss in any
given year would result in the shareholders of that Fund recognizing ordinary
dividend income in addition to the daily dividends that are attributable to the
Fund's interest income. Any such additional dividends would increase a
shareholder's basis in the shares and would affect the shareholder's calculation
of capital gain or loss on disposition of the shares.

The Trust is required by U.S. Federal law to withhold 31% of reportable payments
(which

24
<PAGE> 25

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may include dividends, capital gains distributions and redemptions) paid to a
non-corporate shareholder unless the shareholder certifies on its Application
Agreement that the social security or tax identification number provided is
correct and that the shareholder is not subject to 31% backup withholding for
prior under-reporting to the Internal Revenue Service.

Each Fund, other than the U.S. Dollar Fund, may be able to elect to pass-through
to its shareholders non-U.S. taxes paid by the Portfolio but does not currently
anticipate doing so. Shareholders of each Fund that so elects will be required
to include in income (in addition to any dividends the shareholders receive)
their proportionate shares of the amount of non-U.S. taxes paid by the Portfolio
and will be entitled to claim either a credit or a deduction for their shares of
such taxes in computing their U.S. Federal income tax liability. Availability of
such a credit or deduction is subject to certain limitations. Shareholders will
be informed each year in which a Fund makes such an election regarding the
amount and nature of non-U.S. taxes to be included in their income. Dividends
from a Fund will be considered to be from U.S. sources if an election to
pass-through non-U.S. taxes is not made. If such an election is made, dividends
from those Funds will be considered to be from non-U.S. sources for purposes of
computing the limitation of the Federal foreign tax credit.

Reports containing appropriate information with respect to the U.S. Federal
income tax status of dividends and distributions paid during the year by each
Fund will be mailed to shareholders shortly after the close of each year.

U.S. FEDERAL INCOME TAXATION OF NON-U.S. SHAREHOLDERS
Non-U.S. shareholders who are not engaged in a U.S. trade or business or whose
distributions from a Fund are not effectively connected with the conduct of such
a trade or business will be generally subject to U.S. withholding tax at the
rate of 30% (or a lower rate under an applicable U.S. income tax treaty) on
dividends of net investment income received from the Trust (including for this
purpose any dividends deemed resulting from a Fund's election to treat non-U.S.
taxes paid by it as paid by its shareholders and, if the Funds are required to
recognize currency gain or loss, any dividends that a Fund, other than the U.S.
Dollar Fund, declares as a consequence of recognizing currency gain in excess of
currency loss for a particular year). Any gains realized from the redemption,
sale or exchange of shares will generally not be subject to U.S. tax for those
non-U.S. shareholders. In the case of individual shareholders who fail to
furnish the Trust with certain required certifications regarding their foreign
status, the Trust may be required to impose backup withholding of U.S. tax at
the rate of 31% on the proceeds of redemptions and exchanges.

If the dividends received from a Fund or gains realized upon the redemption,
exchange or other taxable disposition of Fund shares are effectively connected
with a U.S. trade or business of the shareholder, then all such dividends and
gains will be subject to U.S. Federal income tax at the graduated rates
applicable to U.S. shareholders, although the tax may be eliminated under the
terms of an applicable U.S. income tax treaty. Non- U.S. corporate shareholders
may also be subject to the U.S. branch profits tax in respect of those dividends
and gains.

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<PAGE> 26

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Non-U.S. shareholders are advised to consult their tax advisers for further
information concerning the U.S. Federal and foreign tax consequences of
investing in the Trust.

DIVIDENDS AND DISTRIBUTIONS

Dividends for each Fund are derived from the net investment of its corresponding
Portfolio, which flows from the interest that such Portfolio earns on the money
market and other instruments it holds. Dividends for each Fund are derived from
the net investment of its corresponding Portfolio, which flows from the interest
that such Portfolio earns on the money market and other instruments it holds.
Dividends on each share are determined in the same manner and are paid in the
same amount, regardless of class, except for such differences as are
attributable to differential class expenses.

Dividends will be declared daily and paid monthly with respect to shares of each
Fund. Generally, investors will receive dividends on shares from (and including)
the day upon which their purchase is effective to (but not including) the day
upon which their redemption is effective. See "How to Buy Five Arrows Shares"
and "How to Redeem Five Arrows Shares."

Dividends from each Fund are automatically reinvested in additional shares of
that Fund at net asset value.

PERFORMANCE

From time to time, the Trust may publish a Fund's "yield" and "effective yield".
Both yield figures are based on historical earnings and are not intended to
indicate future performance.

Yield is a way of showing the rate of income a Fund earns on its investments as
a percentage of the Fund's share price. To calculate yield, a Fund takes the
interest income it earned from its investments for a 7-day period (net of
expenses), divides it by the average number of shares entitled to receive
dividends, and expresses the result as an annualized percentage rate based on
the Fund's share price at the end of that period.

The "effective yield" is calculated in a similar manner, but, when annualized,
the income earned by an investment in the Fund is assumed to be reinvested. The
"effective yield" will be slightly higher than the "yield" because of the
compounding effect of this assumed reinvestment.

Calculations of yield may reflect absorbed expenses pursuant to any undertaking
that may be in effect. See "Management."

Performance will vary from time to time and past results are not necessarily
representative of future results. You should remember that performance is a
function of portfolio management in selecting the type and quality of portfolio
securities and is affected by operating expenses. Performance information, such
as that described above, may not provide a basis for comparison with other
investments or other investment companies using a different method of
calculating performance.

Comparative performance information may be used from time to time in advertising
or marketing the Funds' shares, including data from Lipper Analytical Services,
Inc., Standard & Poor's, Morningstar, Inc. and other industry publications.

GENERAL INFORMATION

REGULATORY STATUS

On September 26, 1997, the Trust received a "no-action" letter from the Division
of Investment Management of the Securities and Ex-

26
<PAGE> 27

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change Commission which permits the Pound Sterling Fund, the Deutsche Mark Fund,
and the Canadian Dollar Fund (the "Foreign Currency Funds") to hold themselves
out and otherwise operate as "money market funds" for purposes of compliance
with Rule 2a-7 under the 1940 Act and for purposes of all other rules under the
1940 Act and all other rules and forms under the Securities Act of 1933, as
amended, that are applicable to "money market funds." Notwithstanding the
foregoing, the Foreign Currency Funds generally will not be "money market funds"
for purposes of the investment restrictions applicable to other registered
investment companies. Other entities whose investment activities are regulated,
such as banks and insurance companies, should consult their legal advisers
before concluding that the Foreign Currency Funds will be considered "money
market funds" under any applicable restriction.

ORGANIZATION
The Trust was organized as a Delaware business trust on August 13, 1996. The
Trust is authorized to issue an unlimited number of shares of beneficial
interest, par value of $.0001 per share. The Board of Trustees may, without
shareholder approval, divide the authorized stock into an unlimited number of
separate series, and the costs of doing so will be borne by the Trust.
Currently, the Board of Trustees has authorized four Funds.

Shares issued by the Funds have no preemptive, conversion or subscription
rights. Shareholders of a Fund have equal and exclusive rights to dividends and
distributions declared by that Fund and to the net assets of that Fund upon
liquidation or dissolution, except for such differences as are attributable to
differential class expenses. Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in any election of Trustees can,
if they choose to do so, elect all of the Trustees. All shares when issued in
accordance with the terms of this Prospectus will be fully paid and
nonassessable.

The Trust is not required to hold annual meetings of shareholders. Special
meetings of shareholders may be called from time to time for purposes such as
electing or removing Trustees, changing a fundamental policy or approving an
investment advisory agreement.

If less than two-thirds of the Trustees holding office have been elected by
shareholders, a special meeting of shareholders of the Trust will be called to
elect Trustees. Under the Trust's Master Trust Agreement and the 1940 Act, the
record holders of not less than two-thirds of the outstanding shares of the
Trust may remove a Trustee by votes cast in person or by proxy at a meeting
called for that purpose or by a written declaration filed with the Trust's
custodian bank. Except as described above, the Trustees will continue to hold
office and may appoint successor Trustees. Whenever ten or more shareholders of
the Trust who have been such for at least six months, and who hold in the
aggregate shares having a net asset value of at least $25,000 or which represent
at least 1% of the outstanding shares, whichever is less, apply to the Trustees
in writing stating that they wish to communicate with other shareholders with a
view to obtaining signatures to request a meeting, and such application is
accompanied by a form of communication and request which they wish to transmit,
the Trustees shall within five (5) Trust Business Days after receipt of such
application either afford to such applicants access to a list of the names and
addresses of all shareholders as recorded on the books of the Trust; or inform
such applicants as to the approximate number of shareholders of record and the
approximate

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cost of mailing to them the proposed communication or form of request.

The Portfolios, in which all the Investable Assets of the Funds are invested,
are series of the Portfolio Trust, which is an open-end management investment
company. The Portfolio Trust's Master Trust Agreement provides that the
Portfolio Trust may establish and designate separate series of the Portfolio
Trust. The Portfolio Trust has established four series and may establish
additional series at any time. No series of the Portfolio Trust has any
preference over any other series.

Investors in other series of the Portfolio Trust will not be involved in any
vote involving only Portfolios in which they do not invest. Investors of all of
the series of the Portfolio Trust will, however, vote together to elect Trustees
of the Portfolio Trust and for certain other matters affecting the Portfolio
Trust. As provided by the 1940 Act, under certain circumstances, the
shareholders of one or more series could control the outcome of these votes.

Inquiries concerning the Funds should be made by contacting the Administrator at
the address stated herein or by telephoning 1-800-499-3603.

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<PAGE> 29

INVESTMENT ADVISER:
Rothschild International Asset Management Limited
Five Arrows House, St. Swithin's Lane
London EC4N 8NR United Kingdom

DISTRIBUTOR:
Five Arrows Fund Distributors Inc.
3435 Stelzer Road
Columbus, OH 43219-3035

ADMINISTRATOR:
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, OH 43219-3035

TRANSFER AGENT:
BISYS Fund Services, Inc.
100 First Avenue, Suite 300
Pittsburgh, PA 15222

CUSTODIAN:
The Chase Manhattan Bank
4 Chase Metrotech Center
Brooklyn, NY 11245
AUDITORS:
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
COUNSEL:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND (AND ALLOCATED PORTFOLIO) FEES AND EXPENSES............ 2
FINANCIAL HIGHLIGHTS........................................ 3
SUMMARY..................................................... 4
DESCRIPTION OF THE TRUST AND PORTFOLIO TRUST................ 5
INVESTMENT OBJECTIVES....................................... 6
INVESTMENT POLICIES AND RESTRICTIONS........................ 6
U.S. DOLLAR PORTFOLIO..................................... 6
POUND STERLING PORTFOLIO.................................. 7
DEUTSCHE MARK PORTFOLIO................................... 8
CANADIAN DOLLAR PORTFOLIO................................. 8
ALL PORTFOLIOS............................................ 9
FUNDAMENTAL POLICIES...................................... 10
SPECIAL INVESTMENT CONSIDERATIONS AND RISK FACTORS.......... 11
INFORMATION CONCERNING THE MASTER-FEEDER FUND STRUCTURE..... 13
MANAGEMENT.................................................. 14
CALCULATION OF NET ASSET VALUE.............................. 17
HOW TO BUY FIVE ARROWS SHARES............................... 18
HOW TO REDEEM FIVE ARROWS SHARES............................ 21
HOW TO CHANGE FUNDS......................................... 23
TAXATION.................................................... 23
DIVIDENDS AND DISTRIBUTIONS................................. 26
PERFORMANCE................................................. 26
GENERAL INFORMATION......................................... 26
</TABLE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE TRUST'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY FUND'S SHARES IN ANY STATE IN WHICH, OR TO ANY PERSON
TO WHOM, SUCH OFFERING MAY NOT LAWFULLY BE MADE.

[ROTHSCHILD INTERNATIONAL ASSET MANAGEMENT LOGO]
PROSPECTUS

FEBRUARY 7, 1997

(AS SUPPLEMENTED

AUGUST 7, 1997
AND
NOVEMBER 21, 1997)
FIVE ARROWS
SHORT-TERM
INVESTMENT
TRUST
FIVE ARROWS
SHARES

FIVE ARROWS FUND
DISTRIBUTORS INC.
<PAGE> 30

FIVE ARROWS SHORT-TERM INVESTMENT TRUST

FIVE ARROWS SERVICE SHARES

The Funds are designed primarily for use as a means of investing short-term cash
reserves in the Funds' Designated Currencies. Investors may also consider
purchasing Fund shares for a number of reasons including satisfying settlement
obligations or delivering a Fund's shares as collateral for a transactional
obligation in a Fund's Designated Currency. Each Fund offers two classes of
shares. The shares offered by this Prospectus are the Five Arrows Service
shares, which are available for purchase through certain broker-dealers and
other authorized institutions ("Authorized Firms"). In addition, the Fund offers
by separate Prospectus the Five Arrows shares, which are available for direct
purchase in initial aggregate amounts of $500,000 or more.

This Prospectus sets forth concisely information about the Five Arrows service
shares of the Trust and each Fund that an investor should know before investing.
It should be read and retained for future reference.

AN INVESTMENT IN THE TRUST IS NOT A BANK DEPOSIT OR AN OBLIGATION OF ROTHSCHILD
INTERNATIONAL ASSET MANAGEMENT LIMITED OR ANY OF ITS AFFILIATES AND IS NEITHER
GUARANTEED NOR INSURED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE SYSTEM OR ANY OTHER AGENCY OF THE
UNITED STATES GOVERNMENT. THERE CAN BE NO ASSURANCE THAT ANY FUND WILL BE ABLE
TO MAINTAIN A CONSTANT NET ASSET VALUE PER SHARE. INVESTMENT IN THE FUNDS
INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. IN
ADDITION, THE DIVIDENDS PAID BY A FUND WILL GO UP AND DOWN.

The date of this Prospectus is February 7, 1997 (as supplemented August 7, 1997
and November 21, 1997).

<PAGE> 31

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FUND (AND ALLOCATED PORTFOLIO) FEES AND EXPENSES

FIVE ARROWS SERVICE SHARES

ALL FUNDS

<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales load imposed on purchases.................................................................... None
Maximum sales load imposed on reinvested dividends......................................................... None
Redemption fees............................................................................................ None
Exchange fees.............................................................................................. None
</TABLE>

<TABLE>
<CAPTION>
ADVISORY 12B-1 OTHER TOTAL FUND
FEES FEE(1)(3) EXPENSES EXPENSES(2)(3)
------------- --------- -------------- --------------
<S> <C> <C> <C> <C>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AND NET OF REIMBURSEMENTS)
U.S. Dollar..................................................... .20% .35% .075% .625%
Pound Sterling.................................................. .20% .35% .15% .70%
Deutsche Mark................................................... .20% .35% .15% .70%
Canadian Dollar................................................. .20% .35% .15% .70%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------------- --------------
<S> <C> <C> <C> <C>
EXPENSES PER 1,000 SHARE INVESTMENT
U.S. Dollar.................................................................................. $6 $20
Pound Sterling............................................................................... L7 L22
Deutsche Mark................................................................................ DM7 DM22
Canadian Dollar.............................................................................. C$7 C$22
</TABLE>

1. The Trust's 12b-1 Plan provides for payments to the Distributor of up to .50%
of the average daily net asset value of the Five Arrows Service class of each
Fund. Of this total, .25% represents a service fee and any remaining amount
represents a distribution fee. The Distributor has voluntarily agreed to
waive a portion of these payments so that the total amount paid under the
12b-1 Plan does not exceed 0.35% (on an annual basis) of the average daily
net asset value of the Five Arrows Service class of any Fund.

2. The Investment Adviser has voluntarily agreed to reimburse such portion of
its advisory fee as is necessary to cause the annualized total expenses of
each class of a Fund not to exceed (on an annual basis) a specified
percentage of such class' average daily net asset value (.625% in the case of
the Five Arrows Service class of the U.S. Dollar Fund and .70% in the case of
the Five Arrows Service class of each other Fund). If this reimbursement is
not sufficient to cause the total expenses of any Fund not to exceed the
applicable percentage of average daily net asset value, the Investment
Adviser has agreed to pay such other expenses of the applicable Fund as is
necessary to keep total expenses from exceeding the applicable percentage.

3. The foregoing undertakings shall remain in effect for the fiscal period
ending December 31, 1998, and thereafter in the discretion of the Distributor
and the Investment Adviser, respectively. The Distributor and the Investment
Adviser have reserved the right to terminate or revise their respective
undertakings with respect to any period after December 31, 1998. To the
extent 12b-1 fees are waived by the Distributor, investment management fees
are reimbursed by the Investment Adviser, or expenses of a Fund are paid by
the Investment Adviser, the total return to shareholders will increase. Total
return to shareholder will decrease to the extent that such undertakings are
no longer in effect.

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FINANCIAL HIGHLIGHTS

U.S. DOLLAR FUND, A PORTFOLIO

(UNAUDITED)

The U.S. Dollar Fund was the only series of the Trust which had commenced as of
June 30, 1997.

Selected ratios and data for a share of beneficial interest outstanding through
the period:

U.S. DOLLAR FUND

<TABLE>
<CAPTION>
MARCH 26, 1997 TO
JUNE 30, 1997(A)
-----------------
<S> <C>
Net Asset Value, Beginning of Period...................................... $1.00
INVESTMENT ACTIVITIES:
Net investment income................................................... 0.01
Net realized and unrealized gains (losses) from investments............. --
Total from investment operations........................................ 0.01
DISTRIBUTIONS:
Net investment income................................................... (0.01)
Total distributions..................................................... (0.01)
------
Net Asset Value, End of Period............................................ $1.00
======
Total Return.............................................................. 1.42% (b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ('000)........................................ $ 3,062
Ratio of expenses to average net assets................................. 0.28% (c)
Ratio of net investment income to average net assets...................... 5.30% (c)
Ratio of expenses to average net assets*.................................. 7.23% (c)
Ratio of net investment income to average net assets*..................... (1.65)%(c)
</TABLE>

- ---------------

* During the period certain fees were voluntarily reduced and expenses
reimbursed. If such voluntary fee reductions and expenses reimbursements had
not occurred, the ratios would have been as indicated.

(a) Period from commencement of operations.

(b) Not annualized.

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SUMMARY

The Trust and Portfolio Trust bear all operating costs not agreed to be borne by
the Investment Adviser, the Distributor, the Administrator, the Transfer Agent
or the Custodian including, without limitation, legal and auditing fees and
expenses, expenses of investor reports to be provided to existing shareholders;
registration and reporting fees and expenses; and Trustees' fees and expenses.
The Investment Adviser has voluntarily agreed to reimburse such portion of its
advisory fee as is necessary to cause the annualized total expenses of each
class of a Fund not to exceed a specified percentage of such class' average
daily net asset value (.625% in the case of the Five Arrows Service class of the
U.S. Dollar Fund and .70% in the case of the Five Arrows Service class of each
other Fund). If this reimbursement is not sufficient to cause total expenses of
any Fund not to exceed the applicable percentage of average daily net asset
value, the Investment Adviser has agreed to pay such other expenses of the
applicable Fund as is necessary to keep total expense from exceeding the
applicable percentage. The foregoing undertaking shall remain in effect for the
fiscal period ending December 31, 1998, and thereafter in the discretion of the
Investment Adviser. The Investment Adviser has reserved the right to terminate
or revise this undertaking with respect to any period after December 31, 1998.

Five Arrows Service shares will be issued at the net asset value next determined
after receipt by the Trust of an order in proper form and acceptance of that
order by the Trust. The Trust reserves the right to take appropriate action in
the event that Disbursable Funds (as defined

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below) for the purchase price for the shares being issued are not received on a
timely basis. Disbursable Funds may only be received by the Trust during the
operating times for the wire transmission systems designated for use in
transmitting money to the Funds. The Trust has adopted a Plan pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended (the "1940 Act")
which provides for the payment to the Distributor of up to .50% of the average
daily net asset value of the Five Arrows Service class of each Fund in order to
finance distribution and shareholder servicing activities. The Distributor has
voluntarily agreed to waive such portion of such payments as is necessary to
cause the annualized 12b-1 fee not to exceed 0.35% of the average daily net
asset value of the Five Arrows Service class of any Fund. This undertaking shall
remain in effect for the fiscal period ending December 31, 1997, and thereafter
in the discretion of the Distributor. The Distributor has reserved the right to
terminate or revise this undertaking with respect to any period after December
31, 1997.

The Trust seeks to maintain a constant net asset value per share for each Fund,
although no assurances can be given that those per share values will be
maintained. Shares of a Fund may be redeemed by the shareholder from the Trust
at their next-determined net asset value. Each Fund is open for business on any
day on which the New York Stock Exchange (the "Exchange") is open for trading or
banks in New York City are open for business (a "Trust Business Day") from 9:00
a.m. to 5:00 p.m. U.S. Eastern Time ("Trust Hours of Operation"). Thus, the
Trust will be open for business every day except for Saturdays, Sundays, and
holidays which are observed by both the Exchange and New York City banks (The
Trust expects the following holidays to be observed for the remainder of 1997;
Thanksgiving Day and Christmas Day; and for 1998: New Years' Day, Martin Luther
King, Jr. Day, Presidents' Day, Memorial Day, Labor Day, Thanksgiving Day and
Christmas Day). The value of the investments held by each Fund is determined in
its Designated Currency once every 24 hours during Trust Hours of Operation. See
"Calculation of Net Asset Value" and "How to Redeem Five Arrows Service Shares."

DESCRIPTION OF THE TRUST AND PORTFOLIO TRUST

The Trust is an open-end management investment company, registered under the
1940 Act. Under the terms of the Master Trust Agreement establishing the Trust,
which is governed by the laws of Delaware, the Trustees of the Trust are
ultimately responsible for the management of the Funds' business and affairs.
The Trust is currently authorized to offer four individual Funds, each of which
represents a separate series of the Trust's shares of beneficial interest. The
Trust's Board of Trustees is empowered to establish additional Funds at any time
without shareholder approval. The Trustees have authorized shares of the Fund to
be issued in two classes: Five Arrows and Five Arrows Service. Because expenses
will vary between the classes, performance will vary with respect to each class.
Except for differences related to such differential expenses, each share of a
Fund has equal dividend, redemption and liquidation rights with other shares of

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such Fund. Each share purchased in compliance with the procedures established by
the Trust will be fully paid and nonassessable.

Each Portfolio is a separate investment series of the Portfolio Trust, a
business trust organized under the laws of the State of Delaware, and intends to
be treated as a partnership for federal tax purposes. Under the terms of the
Portfolio Trust's Master Trust Agreement, the affairs of the Portfolios are
managed under the supervision of the Trustees of the Portfolio Trust.

INVESTMENT OBJECTIVES

INVESTMENT POLICIES AND RESTRICTIONS

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nized statistical rating organizations ("NRSRO"s), such as Standard & Poor's
Corporation or Moody's Investors Service, Inc., in the highest rating category
for short-term obligations (or so rated by one such organization if it alone has
rated the security), (ii) issued by an issuer with comparable short-term
obligations that are rated in the highest rating category, or (iii) if unrated,
determined to be comparable to such securities. See the Statement of Additional
Information.

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<PAGE> 38

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try. See "Special Investment Considerations and Risk Factors--Concentration in
Obligations of Qualifying Banks."

The Canadian Dollar Portfolio invests only in Canadian Dollar-denominated
high-quality securities as described in this paragraph. The Canadian Dollar
Portfolio's assets will consist of Canadian government securities and other
securities which have been (i) rated by at least two NRSROs in the highest
rating category for short-term obligations (or so rated by one such organization
if it alone has rated the security), (ii) issued by an issuer with comparable
short-term obligations that are rated in the highest rating category by an
NRSRO, or (iii) if not rated by an NRSRO, determined to be comparable to such
securities. Presently many high-quality Canadian Dollar-denominated securities
are rated only by one or more Canadian rating organizations, rather than by the
U.S. rating organizations which qualify as NRSROs. Accordingly, the Adviser
anticipates that many of the securities held by the Canadian Dollar Portfolio
will be securities which are not rated by an NRSRO but are determined to be
comparable to high-quality NRSRO-rated securities. In making this determination
the Adviser may rely upon ratings given by one or more Canadian rating
organizations. For further information concerning the ratings given by Canadian
rating organizations, see the Statement of Additional Information.

ALL PORTFOLIOS
In seeking to obtain its investment objectives, each Portfolio may invest in the
types of securities described below.

VARIABLE AND FLOATING RATE NOTES
Each Portfolio may purchase variable and floating rate instruments. These
instruments may include variable amount master demand notes, which are
instruments under which the indebtedness, as well as the interest rate, varies.
These securities must have the requisite credit

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quality (as described above) in order to be eligible for purchase by a
Portfolio. Unless guaranteed by the government issuing a Portfolio's Designated
Currency (a "Designated Government") or one of its agencies or
instrumentalities, variable or floating rate instruments purchased by a
Portfolio must permit such Portfolio to demand payment of the instrument's
principal at least once every thirteen months upon no more than 30 days notice.
Because of the absence of a market in which to resell a variable or floating
rate instrument, a Portfolio might have trouble selling an instrument should the
issuer default or during periods when a Portfolio is not permitted by agreement
to demand payment of the instrument, and for this or other reasons a loss could
occur with respect to the instrument.

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<PAGE> 40

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spective purchasers in the marketplace, (3) dealer undertakings to make a
market, (4) the nature of the security (including any demand or tender features)
and (5) the likelihood of continued marketability and credit quality of the
issuer. If they have a remaining maturity of more than seven days, time deposits
and repurchase agreements will be considered to be illiquid securities.

The Funds have the same investment restrictions as the Portfolios, except that
each Fund may invest all of its Investable Assets in an open-end management
investment company with substantially the same investment objectives as that
Fund. Therefore, references below to the Portfolios' investment restrictions
also include the Funds' investment restrictions. In addition, as a fundamental
policy, no Portfolio may: (i) borrow money, except from the Portfolio Trust's
Custodian or from other banks in connection with redemptions or for temporary or
emergency purposes (borrowings by a Portfolio may not exceed 20% of that
Portfolio's net assets computed immediately after the borrowing; no additional
investments may be made while any borrowings exceed 5% of the Portfolio's total
assets), or (ii) make any investment which would cause more than 25% of the
value of such Portfolio's total assets to be invested in securities of
nongovernmental issuers principally engaged in any one industry, except that
under normal market conditions each Portfolio will invest more than 25% of its
total assets in obligations of Qualifying Banks (as defined herein). Additional
fundamental policies of the Portfolios are set forth in the Statement of
Additional Information.

SPECIAL INVESTMENT
CONSIDERATIONS AND RISK FACTORS

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from securities with longer maturities or those having a lesser degree of
safety.

INVESTMENTS IN A SINGLE ISSUER
Each Portfolio other than the U.S. Dollar Portfolio is non-diversified under the
1940 Act. These Portfolios intend to comply, however, with the diversification
requirements applicable to regulated investment companies under the United
States Internal Revenue Code of 1986, as amended (the "Internal Revenue Code").
Currently, those requirements provide that, as of the last day of each fiscal
quarter, each Portfolio's investments in the securities of any one issuer must
be limited to 25% of its total assets, provided that with respect to at least
50% of its total assets, a Portfolio may not (a) have invested more than 5% of
its total assets in the securities of any one issuer or (b) have invested more
than 10% of the outstanding voting securities of any one issuer. To the extent a
Portfolio is not diversified under the 1940 Act, it may be more susceptible than
a fully diversified Portfolio to adverse developments affecting a single issuer.

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currency. These considerations include favorable or unfavorable changes in
interest rates, currency exchange rates and exchange control regulations, and
the costs that may be incurred in connection with conversions between various
currencies. In addition, investments in countries other than the United States
could be affected by other factors generally not thought by investors to be
present in the United States, including less liquid and efficient securities
markets, greater price volatility, less publicly available information about
issuers, the imposition of withholding or other taxes, restrictions on the
expatriation of funds or other assets of a Portfolio, expropriation of assets,
adverse diplomatic developments, higher transaction and custody costs, delays
attendant in settlement procedures and difficulties in enforcing contractual
obligations.

INFORMATION CONCERNING THE MASTER-FEEDER FUND STRUCTURE

A Fund may withdraw its investment from a Portfolio at any time, if the Board of
Trustees of

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the Trust determines that it is in the best interests of the shareholders of
that Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including
investing all the Investable Assets of that Fund in another pooled investment
entity having the same investment objectives as the Fund or retaining Rothschild
International Asset Management Limited or another investment adviser to manage
the Fund's assets directly in accordance with the investment policies described
above with respect to the relevant Portfolio. Any such withdrawal could result
in distributions to such Fund from the Portfolio "in kind" of portfolio
securities (as opposed to a cash distribution) to the extent permitted by the
1940 Act, or rules adopted thereunder. If securities are distributed, such Fund
could incur brokerage, tax or other charges in converting the securities to
cash. In addition, the distribution in kind may result in a less diversified
portfolio of investments or adversely affect the liquidity of that Fund.
Notwithstanding the above, there are other means for meeting redemption
requests, such as borrowing.

MANAGEMENT

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<PAGE> 44

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and of the Portfolio Trust, up to and including creating separate Boards of
Trustees. See "Management of the Trust and Portfolio Trust" in the Statement of
Additional Information for more information about the Trustees and officers of
the Trust and the Portfolio Trust.

INVESTMENT ADVISER AND INVESTMENT ADVISORY AGREEMENT
The Investment Adviser serves pursuant to an Investment Advisory Agreement with
the Portfolio Trust. The Investment Adviser is a British corporation that was
formed in 1975 and is registered under the U.S. Investment Advisers Act of 1940,
as amended. It is an indirect subsidiary of Rothschild Concordia AG of Zug,
Switzerland, a holding company whose subsidiaries manage approximately $28.5
billion of assets, spread across equities, bonds and currencies.

The Investment Adviser has a Code of Ethics governing personal securities
transactions of certain of its employees. See the Statement of Additional
Information.

DISTRIBUTOR
The Distributor is an affiliate of the Administrator. Mutual funds structured
like the Funds sell shares on a continuous basis. The Funds' shares are sold
through the Distributor. Certain officers of the Trust are also officers and/or
directors of the Distributor.

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12B-1 PLAN
As further described below, the Trust has adopted a Plan of Distribution
Pursuant to Rule 12b-1 (the "12b-1 Plan") in accordance with the regulations
promulgated under the 1940 Act. The 12b-1 Plan provides that each Fund will make
certain payments to the Distributor.

The Administrator provides a wide range of services to the Funds, including
maintaining the Funds' offices, providing statistical and research data,
coordinating the preparation of reports to shareholders, calculating and
providing for the calculation of net asset values of Fund shares, dividends and
capital gains distributions to shareholders, and performing other administrative
functions necessary for the smooth operation of the Funds.

The Administrator provides the Portfolio Trust with office space and with
certain clerical services and facilities.

The Administrator is entitled to an administration fee calculated daily and
payable monthly at an annual rate of .05% of the average daily net assets of all
of the Funds and .05% of the average daily net assets of all of the Portfolios.
The Administrator serves as such for an initial two year term (with subsequent
annual, renewable terms) pursuant to administration agreements with the Trust
and the Portfolio Trust. Those agreements provide that the Administrator shall
receive payment in full of its fee for the remainder of the relevant term if the
Administrator is terminated without cause prior to the end of such term. The
Administrator or its affiliates may also act as Authorized Firms (as defined
below).

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EXPENSES
All expenses incurred in the operation of a Fund or a Portfolio are borne by
such Fund or Portfolio except to the extent specifically assumed by the
Investment Adviser, the Distributor, the Administrator, the Custodian, or the
Transfer Agent. Subject to the undertaking of the Investment Adviser to
reimburse the Funds or Portfolios, as the case may be, for certain of their
excess expenses, the Funds or Portfolios, as the case may be, have confirmed
their obligation to pay all their other respective expenses, including: taxes,
brokerage fees and commissions; certain insurance premiums; auditing, legal and
compliance expenses; costs of forming the Trust and Portfolio Trust and
maintaining corporate existence; costs of fund accounting; costs of preparing
and printing the Trust's prospectuses, statements of additional information and
shareholder reports and delivering them to shareholders; compensation of
Trustees of the Trust or Portfolio Trust who are not employees of the
Distributor or Administrator or their affiliates and costs of other personnel
performing services for the Trust or Portfolio Trust; costs of corporate
meetings; registration fees and related expenses for the Trust's registration
with the SEC and the securities regulatory authorities of other jurisdictions in
which the Funds' shares are sold; state securities law registration fees and
related expenses and other required registrations and related publication fees;
fees payable to the Investment Adviser under the Investment Advisory Agreement;
fees payable to the Administrator, Transfer Agent and Custodian and all fees
paid by the Trust pursuant to the 12b-1 Plan.

The Investment Adviser has voluntarily agreed to reimburse such portion of its
advisory fee as is necessary to cause the annualized total expenses of each
class of a Fund not to exceed a specified percentage of such class' average
daily net asset value (.625% in the case of the Five Arrows Service class of the
U.S. Dollar Fund and .70% in the case of the Five Arrows Service class of each
other Fund). If this reimbursement is not sufficient to cause the total expenses
of any Fund not to exceed the applicable percentage of average daily net asset
value, the Investment Adviser has agreed to pay such other expenses of the
applicable Fund as is necessary to keep total expenses from exceeding the
applicable percentage. The foregoing undertaking shall remain in effect for the
fiscal period ending December 31, 1998, and thereafter in the discretion of the
Investment Adviser. The Investment Adviser has reserved the right to terminate
or revise this undertaking with respect to any period after December 31, 1998.

CALCULATION OF NET ASSET VALUE

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uted net investment income, less liabilities) by the total number of shares of
the Fund outstanding. Such net asset values are determined once every Trust
Business Day at 11:00 a.m. U.S. Eastern Time for the U.S. Dollar and Canadian
Dollar Funds, 9:00 a.m. U.S. Eastern Time for the Pound Sterling Fund and 10:00
a.m. Eastern Time for the Deutsche Mark Fund.

By investing all of their assets in the relevant Portfolio, each Fund seeks to
maintain the following constant net asset value per share:

<TABLE>
<S> <C>
U.S. Dollar Fund........... U.S.$1.00
Pound Sterling Fund........ L1.00
Deutsche Mark Fund......... DM1.00
Canadian Dollar Fund....... C$1.00
</TABLE>

It is anticipated that each Portfolio's assets will utilize the amortized cost
method of valuation as a reasonable means of approximating each Portfolio's
market value. This method involves valuing an instrument at its cost and
thereafter assuming a constant amortization or accretion to maturity of any
premium or discount. If at any time, however, the market value of any
Portfolio's total assets deviates more than 1/2 of 1% from their value
determined on an amortized cost basis, the Portfolio Trust's Board of Trustees
will consider whether any action should be initiated to prevent any adverse
effects on the Portfolios' shareholders. The Portfolio Trust's Board of Trustees
will monitor the use of the amortized cost method of valuation in order to
ensure that this method continues to be in the best interest of the Portfolios'
shareholders. There may be periods during which the stated value of an
instrument determined under the amortized cost method of valuation is higher or
lower than the price the Portfolio would receive if the instrument were sold,
and the accuracy of amortized cost valuation can be affected by changes in
interest rates and the credit standing of issuers of the Portfolio's
investments. There is no assurance that the Portfolios will maintain a stable
net asset value per share.

HOW TO BUY FIVE ARROWS
SERVICE SHARES

Shares of the Funds are sold on a continuous basis by the Distributor. Clients
of an Authorized Firm may only purchase Five Arrows Service shares through their
accounts at such Authorized Firm and should contact such Authorized Firm
directly for appropriate purchase instructions. When Five Arrows Service shares
are purchased through such Authorized Firms, an account fee may be charged by
those Authorized Firms for providing services in connection with an Investor's
investment which are not related to the services provided under the 12b-1 Plan.
These fees may include, for example, account maintenance fees, compensating
balance requirements or fees based upon account transactions, assets or income.
Information concerning these services and any charges should be obtained from
these Authorized Firms before a client authorizes the purchase of Fund shares,
and this

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Prospectus should be read in conjunction with any information so obtained.

As set forth above, Five Arrows Service shares of the Funds are offered
exclusively through participating Authorized Firms. All inquiries of beneficial
owners of Five Arrows Service shares should be directed to the Authorized Firm
from which such Five Arrows Service shares were purchased.

Purchases of Five Arrows Service shares of any of the Funds will be processed in
accordance with the procedures set forth below, at the net asset value per share
of the relevant Fund next determined after the purchase order is duly received.
No sales charge is imposed at the time of purchase or redemption. However, as
further described below, shareholders will bear an annual 12b-1 fee.

Because of the costs associated with the 12b-1 Plan, the dividends of the Five
Arrows Service shares of each Fund will be lower than the dividends of the Five
Arrows shares of that Fund.

Purchases of shares of a Fund will be effected on Trust Business Days in
accordance with the procedures set forth below and only when the wire system
designated for use in transmitting money to the relevant Fund permits the timely
transmission of funds that are immediately available to the Trust for investment
purposes ("Disbursable Funds"). Additionally, on days when the relevant trading
market and/or the Trust's Custodian or Distributor close early due to a partial
holiday or otherwise, the Trust reserves the right to advance the times at which
purchase and redemption orders must be received. Prospective or current Five
Arrows Service shareholders must transmit purchase orders through their
Authorized Firm.

- - Purchase orders for shares of the Pound Sterling Fund received prior to 5 p.m.
U.S. Eastern Time on a Trust Business Day will settle on the following London
Banking Day (as defined below).

- - Purchase orders for shares of the Deutsche Mark Fund received prior to 10 a.m.
U.S. Eastern Time on a Trust Business Day will settle on the following
Frankfurt Banking Day (as defined below), provided however that if such a
Trust Business Day is not a Frankfurt Banking Day, the purchase order will
settle on the second following Frankfurt Banking Day.

If a purchase order is not received by the Trust prior to the applicable time
listed above, such purchase order shall be deemed to have been received on the
next following Trust Business Day. Before placing a purchase order investors
should acquaint themselves with the minimum amounts and other requirements for
using the relevant wire system for the transfer of Disbursable Funds, and should
ascertain whether the financial institution from which the purchase payment is
being sent, has access to the appropriate system. It is essential that complete
information, regarding the investor's

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account, accompany all wire instructions in order to facilitate the prompt and
accurate handling of investments. Investors may obtain, from their financial
institution, further information about remitting funds by wire and any fees that
may be imposed for so doing. The Trust does not impose a fee for receiving
payment by wire.

Investors will be entitled to any dividends declared or income earned on the day
when their purchase orders settle provided that Disbursable Funds are received
in the relevant Fund's Designated Currency in the appropriate bank account
(details of which are set out on the Application Agreement) by the close of
business on that same day. If Disbursable Funds, with respect to any purchase
order, are not received by this time by the Distributor, the Trust reserves the
right, in its sole discretion, (a) to accept the order and assess interest on
the overdue payment, or (b) to cancel the order, and to hold the purchaser
responsible for any loss and other costs incurred by the Distributor and/or the
Trust.

Authorized Firms act as agents for their customers and not as agents for the
Trust. It is the responsibility of Authorized Firms to transmit orders for
purchases by their clients promptly to the Trust, and to deliver the required
Disbursable Funds by the time stated above. If Disbursable Funds are not
received by the required time, the order may be cancelled and the Authorized
Firm will be held responsible for any loss and other costs incurred by the
Distributor and/or the Trust.

The Trust reserves the right to reject any purchase order in whole or in part.
All of a shareholder's accounts will be subject to the elections and
instructions specified by the shareholder in the Application Agreement covering
the accounts.

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to a previously authorized bank account. To the extent that the Trust does not
use reasonable procedures to form its belief, it and/or its service contractors
may be responsible for instructions that are fraudulent or unauthorized.

A "London Banking Day" is every day except Saturdays, Sundays and holidays
observed by London banks. (The Trust expects the following holidays to be
observed for the remainder of 1997: Christmas Day and Boxing Day; and for 1998:
New Year's Day, Good Friday, Easter Day, May Holiday, Spring Holiday, Late
Summer Holiday, Christmas Day and Boxing Day).

A "Toronto Banking Day" is every day except Saturdays, Sundays and holidays
observed by Toronto banks. (The Trust expects the following holidays to be
observed for the remainder of 1997: Remembrance Day, Christmas Day and Boxing
Day; and for 1998: New Year's Day, Good Friday, Easter Monday, Victoria Day,
Canada Day, Labor Day, Thanksgiving Day, Remembrance Day and Christmas Day).

12b-1 PLAN
The Trust has adopted the 12b-1 Plan in accordance with the regulations
promulgated under the 1940 Act. The 12b-1 Plan provides that each Fund will make
payments to the Distributor equal to .50% (on an annual basis) of the average
daily value of the net assets of such Fund's Five Arrows Service class of shares
(the "12b-1 fee"). The 12b-1 fee has two components: a service fee and a
distribution fee. The 12b-1 Plan provides that each of these components will be
paid at an annual rate of 0.25% of the average daily value of the net assets of
such Fund's Five Arrows Service class of shares. The Distributor has voluntarily
agreed to waive a portion of the distribution fee component in order to limit
payments of the 12b-1 fee to 0.35% (on an annual basis) of the average daily net
asset value of the Five Arrows Service class of any Fund. This waiver shall
remain in effect for the fiscal period ending December 31, 1997, and thereafter
in the discretion of the Distributor. The Distributor has reserved the right to
terminate or revise this undertaking with respect to any period after December
31, 1997.

Some or all of the service fees are used to compensate Authorized Firms for
providing account administration services to their clients who are beneficial
owners of such shares. One or more affiliates of the Investment Adviser and the
Administrator may act as Authorized Firms. The Distributor will enter into
agreements with Authorized Firms which purchase Five Arrows Service shares on
behalf of their clients ("Service Agreements"). The Service Agreements will
provide for a service fee to the Authorized Firms in an amount up to .25% (on an
annual basis) of the average daily net assets of the Five Arrows Service shares
of the

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applicable Fund attributable to or held in the name of the Authorized Firm for
its clients.

The services provided by the Authorized Firms may include, among other things,
receiving, aggregating and processing shareholder or beneficial owner
(collectively "shareholder") orders; furnishing shareholder subaccounting;
providing and maintaining retirement plan records; communicating periodically
with shareholders; acting as the sole shareholder of record and nominee for
shareholders; maintaining account records for shareholders; answering questions
and handling correspondence from shareholders about their accounts; issuing
various shareholder reports and confirmations for transactions by shareholders;
account and administrative services. Any service fees received by the
Distributor and not allocated to authorized firms may be retained by the
Distributor in consideration of its own role in servicing shareholder accounts.

Authorized Firms that have sold Five Arrows Service shares are eligible for
further compensation commencing as of the time of such sale. It is the
Distributor's current policy to pay a trailer commission to Authorized Firms in
an amount equal to .10% (on an annual basis) of the average daily net assets of
the Five Arrows Service shares of the applicable Fund attributable to or held in
the name of the Authorized Firm for its clients. This trailer commission
arrangement may be terminated or revised by the Distributor at any time. Any
distribution fee received by the Distributor and not allocated to Authorized
Firms may be applied by the Distributor in connection with sales or marketing
efforts (e.g. for advertising costs, the cost of printing and mailing
prospectuses and reports to potential investors) or retained by the Distributor
in consideration of its own role in marketing Five Arrows Service Shares.

Holders of Five Arrows Service shares of a Fund will bear all fees paid under
the 12b-1 Plan with respect to such shares as well as any other expenses which
are directly attributable to such shares.

Authorized Firms may charge other fees to their clients who are the beneficial
owners of Five Arrows Service shares in connection with their client accounts.
These fees would be in addition to any amounts received by the Authorized Firms
would be for services other than those provided under such an Agreement. Under
the terms of such Service Agreements, Authorized Firms are required to provide
their clients with a schedule of fees charged to such clients which relate to
the investment of customers' assets in Five Arrows Service shares at the time of
any investment and whenever changes to the schedule are made.

Each Fund will accrue payments made pursuant to the 12b-1 Plan daily. The 12b-1
payments which are required to be accrued to the Five Arrows Service shares on
any day will not exceed the distributable income to be accrued to such shares on
that day. All inquiries by a beneficial owner of Five Arrows Service shares must
be directed to such owner's Authorized Firm.

HOW TO REDEEM FIVE ARROWS SERVICE SHARES

Five Arrows Service shareholders will redeem their shares according to the
procedures established, if any, by the Authorized Firm through which they
purchased those shares. Thereafter, the relevant Authorized Firm may request
redemption of a Fund's shares at any time in any amount during Trust Hours of
Operation by contacting the Transfer Agent. Subject to the right of a Fund to
make redemptions in kind under certain circumstances, all redemption

22
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requests are treated as requests for redemption in the normal course in the
Fund's Designated Currency.

Redemptions of shares of a Fund will be effected on Trust Business Days in
accordance with the procedures set out below, and only when the wire system
designated for use in transmitting money from the relevant Fund permits the
timely transmission of redemption proceeds. Additionally, as for purchases of
shares, the Trust reserves the right to advance the times at which purchase and
redemption orders must be received. As noted above, Five Arrows Service
shareholders must transmit redemption requests through their respective
Authorized Firm.

- - Redemption requests for shares of the Canadian Dollar Fund received prior to
11 a.m. U.S. Eastern Time on a Trust Business Day will settle that same day
(or the next Toronto Banking Day if such Trust Business Day is not a Toronto
Banking Day).

- - Redemption requests for shares of the Pound Sterling Fund received prior to 5
p.m. U.S. Eastern Time on a Trust Business Day will settle on the following
London Banking Day.

- - Redemption requests for shares of the Deutsche Mark Fund received prior to 10
a.m. U.S. Eastern Time on a Trust Business Day will settle on the following
Frankfurt Banking Day, provided, however, that if such a Trust Business Day is
not a Frankfurt Banking Day, the redemption request will settle on the second
following Frankfurt Banking Day.

If a redemption request is not received by the Trust prior to the applicable
time listed above, such request shall be deemed to have been received on the
next following Trust Business Day. Authorized Firms as agents for their
customers and not as agents for the Trust. It is the responsibility of Service
Organizations to transmit orders for redemptions by their customers promptly to
the Trust. Shareholders shall be entitled to any dividends declared or income
earned up to and including the day before the day on which the redemption
request is scheduled to settle.

Except as provided below, all redemptions in currency will be made by wire
transfer on the settlement day in the Designated Currency of the Fund whose
shares are being redeemed through a recognized electronic funds transfer system
which handles such Designated Currency. A charge of $20 (or the equivalent in
the relevant Fund's Designated Currency) against the shareholder's account will
be imposed for each wire redemption. Banks receiving redemption proceeds by wire
may also impose a charge for doing so.

23
<PAGE> 53

[ROTH LOGO]

If a redemption request does not meet the minimum amount and other requirements
for sending currency through the electronic funds transfer system employed by
the Fund, redemption proceeds will be paid by check sent by mail. Redemption
proceeds will be directed to the shareholder's account at his Authorized Firm.

The Trust reserves the right to redeem a shareholder's account at the Trust's
option, upon not less than 60 days' written notice to the shareholder, if for a
period of six months or more the account does not have in any Fund shares with a
net asset value equal to or greater than $1,500 or the non-U.S. dollar
equivalent, as the case may be. During the 60-day period, a shareholder may
avoid automatic redemption by investing in any Fund an amount sufficient to
increase the net asset value of the account's shares of the Fund to the
applicable Initial Investment Minimum.

HOW TO CHANGE FUNDS

A shareholder may change shares of one Fund into shares of another Fund by
redeeming shares of one Fund, converting the redemption proceeds into the
Designated Currency of another Fund and purchasing the shares of the other Fund
with the proceeds of the currency conversion. All purchase and redemption orders
for Five Arrows Service shares must be made through a shareholder's Authorized
Firm. During the period between the net asset value determination applicable to
the shares being redeemed in one Fund and the purchase of shares in another
Fund, the shareholder will not be the owner of, or be eligible to receive
dividends with respect to, either the shares which have been redeemed or the
shares being acquired.

24
<PAGE> 54

[ROTH LOGO]

Fund changes may result in recognition of a taxable gain or loss. See
"Taxation."

TAXATION

Under current law, the Trust does not anticipate that interest derived by the
Funds from sources outside the United States will be subject to non-U.S.
withholding taxes. To the extent any such withholding tax does arise, it may be
possible to reduce or eliminate it under the terms of applicable United States
income tax treaties. If it is subject to any such withholding tax, the Trust
intends to undertake the procedural steps required to claim the benefits of such
treaties. If any non-U.S. taxes are paid by a Fund and, as is expected, more
than 50% in value of the Fund's total assets at the close of any taxable year
consists of securities of non-U.S. banks or corporations, the Fund may elect to
treat any non-U.S. taxes paid by it as paid by its shareholders with the
consequences de-

25
<PAGE> 55

[ROTH LOGO]

scribed under "U.S. Federal Income Taxation of U.S. Shareholders" below.

The Trust is required by U.S. Federal law to withhold 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) paid
to a non-corporate shareholder unless the shareholder certifies on its
Application Agreement that the social security or tax identification number
provided is correct and that the shareholder is not subject to 31% backup
withholding for prior under-reporting to the Internal Revenue Service.

26
<PAGE> 56

[ROTH LOGO]

their proportionate shares of the amount of non-U.S. taxes paid by the Portfolio
and will be entitled to claim either a credit or a deduction for their shares of
such taxes in computing their U.S. Federal income tax liability. Availability of
such a credit or deduction is subject to certain limitations. Shareholders will
be informed each year in which a Fund makes such an election regarding the
amount and nature of non-U.S. taxes to be included in their income. Dividends
from a Fund will be considered to be from U.S. sources if an election to
pass-through non-U.S. taxes is not made. If such an election is made, dividends
from those Funds will be considered to be from non-U.S. sources for purposes of
computing the limitation of the Federal foreign tax credit.

If the dividends received from a Fund or gains realized upon the redemption,
exchange or other taxable disposition of Fund shares are effectively connected
with a U.S. trade or business of the shareholder, then all such dividends and
gains will be subject to U.S. Federal income tax at the graduated rates
applicable to U.S. shareholders, although the tax may be eliminated under the
terms of an applicable U.S. income tax treaty. Non-U.S. corporate shareholders
may also be subject to the U.S. branch profits tax in respect of those dividends
and gains.

Non-U.S. shareholders are advised to consult their tax advisers for further
information concerning the U.S. Federal and foreign tax consequences of
investing in the Trust.

DIVIDENDS AND DISTRIBUTIONS

Dividends for each Fund are derived from the net investment of its corresponding
Portfolio, which flows from the interest that such Portfolio earns on the money
market and other instruments it holds. Dividends on each share are determined in
the same manner and are paid in the same amount, regardless of class, except for
such differences as are attributable to differential class expenses.

Dividends will be declared daily and paid monthly with respect to shares of each
Fund. Generally, investors will receive dividends on

27
<PAGE> 57

[ROTH LOGO]

shares from (and including) the day upon which their purchase is effective to
(but not including) the day upon which their redemption is effective. See "How
to Buy Five Arrows Service Shares" and "How to Redeem Five Arrows Service
Shares."

Dividends from each Fund are automatically reinvested in additional shares of
that Fund at net asset value.

PERFORMANCE

From time to time, the Trust may publish Fund's yield" and "effective yield".
Both yield figures are based on historical earnings and are not intended to
indicate future performance.

Calculations of yield may reflect absorbed expenses pursuant to any undertaking
that may be in effect. See "Management."

GENERAL INFORMATION

REGULATORY STATUS

On September 26, 1997, the Trust received a "no-action" letter from the Division
of Investment Management of the Securities and Exchange Commission which permits
the Pound Sterling Fund, the Deutsche Mark Fund, and the Canadian Dollar Fund
(the "Foreign Currency Funds") to hold themselves out and otherwise operate as
"money market funds" for purposes of compliance with Rule 2a-7 under the 1940
Act and for purposes of all other rules under the 1940 Act and all other rules
and forms under the Securities Act of 1993, as amended, that are applicable to
"money market funds." Notwithstanding the foregoing, the Foreign Currency Funds
generally will not be "money market funds" for purposes of the investment
restrictions applicable to other registered investment companies. Other entities
whose investment activities are regulated, such as banks and insurance
companies, should consult their legal advisers before concluding that the
Foreign Currency Funds will be considered "money market funds" under any
applicable restriction.

ORGANIZATION
The Trust was organized as a Delaware business trust on August 13, 1996. The
Trust is

28
<PAGE> 58

[ROTH LOGO]

authorized to issue an unlimited number of shares of beneficial interest, par
value of $.0001 per share. The Board of Trustees may, without shareholder
approval, divide the authorized stock into an unlimited number of separate
series, and the costs of doing so will be borne by the Trust. Currently, the
Board of Trustees has authorized four Funds.

Shares issued by the Funds have no preemptive, conversion or subscription
rights. Shareholders of a Fund have equal and exclusive rights to dividends and
distributions declared by that Fund and to the net assets of that Fund upon
liquidation or dissolution, except such differences as are attributable to
differential class expenses. Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in any election of Trustees can,
if they choose to do so, elect all of the Trustees. All shares when issued in
accordance with the terms of this Prospectus will be fully paid and
nonassessable.

29
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 60

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 61

INVESTMENT ADVISER:
Rothschild International Asset Management Limited
Five Arrows House, St. Swithin's Lane
London EC4N 8NR United Kingdom

DISTRIBUTOR:
Five Arrows Fund Distributors Inc.
3435 Stelzer Road
Columbus, OH 43219-3035

ADMINISTRATOR:
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, OH 43219-3035

TRANSFER AGENT:
BISYS Fund Services, Inc.
100 First Avenue, Suite 300
Pittsburgh, PA 15222

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FUND (AND ALLOCATED PORTFOLIO) FEES AND EXPENSES............ 2
FINANCIAL HIGHLIGHTS........................................ 3
SUMMARY..................................................... 4
DESCRIPTION OF THE TRUST AND PORTFOLIO TRUST................ 5
INVESTMENT OBJECTIVES....................................... 6
INVESTMENT POLICIES AND RESTRICTIONS........................ 6
U.S. DOLLAR PORTFOLIO..................................... 6
POUND STERLING PORTFOLIO.................................. 7
DEUTSCHE MARK PORTFOLIO................................... 8
CANADIAN DOLLAR PORTFOLIO................................. 9
ALL PORTFOLIOS............................................ 9
FUNDAMENTAL POLICIES...................................... 11
SPECIAL INVESTMENT CONSIDERATIONS AND RISK FACTORS.......... 11
INFORMATION CONCERNING THE MASTER-FEEDER FUND STRUCTURE..... 13
MANAGEMENT.................................................. 14
CALCULATION OF NET ASSET VALUE.............................. 17
HOW TO BUY FIVE ARROWS SERVICE SHARES....................... 18
HOW TO REDEEM FIVE ARROWS SERVICE SHARES.................... 22
HOW TO CHANGE FUNDS......................................... 24
TAXATION.................................................... 25
DIVIDENDS AND DISTRIBUTIONS................................. 27
PERFORMANCE................................................. 28
GENERAL INFORMATION......................................... 28
</TABLE>

[ROTHSCHILD INTERNATIONAL ASSET MANAGEMENT LOGO]
PROSPECTUS

FEBRUARY 7, 1997

(AS SUPPLEMENTED

AUGUST 7, 1997
AND

NOVEMBER 21, 1997)

FIVE ARROWS
SHORT-TERM
INVESTMENT
TRUST
FIVE ARROWS
SERVICE SHARES

FIVE ARROWS FUND
DISTRIBUTORS INC.
<PAGE> 62

Five Arrows Short-Term Investment Trust
Statement of Additional Information

February 7, 1997
(as supplemented August 7, 1997 and November 21, 1997)

Five Arrows Short-Term Investment Trust (the "Trust") is an open-end
management investment company designed to offer four separate Funds (the
"Funds"): the U.S. Dollar Fund, which is diversified, and the Pound Sterling
Fund, the Deutsche Mark Fund, and the Canadian Dollar Fund, which are not
diversified. Each Fund is described in the Trust's Prospectus dated February 7,
1997 (as supplemented August 7, 1997 and November 21, 1997). This Statement of
Additional Information supplements and should be read in conjunction with the
Prospectus as it may be revised from time to time. To obtain a copy of the
Prospectus, please write to the Trust at 3435 Stelzer Road, Columbus, Ohio
43219-3035, or call Five Arrows Fund Distributors Inc. (the "Distributor"), at
1-800-499-3603.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.

<PAGE> 63

TABLE OF CONTENTS

ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS............................1

MONEY MARKET INSTRUMENTS...................................................2
U.S. Dollar Portfolio.............................................2

ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES FOR ALL PORTFOLIOS..................5

MANAGEMENT OF THE TRUST AND PORTFOLIO TRUST................................9

COMPENSATION OF TRUSTEES AND OFFICERS.....................................10

INVESTMENT ADVISORY, DISTRIBUTION,
AND ADMINISTRATION AGREEMENTS
AND 12b-1 PLANS..................................................11

REDEMPTION OF SHARES......................................................14

CALCULATION OF NET ASSET VALUE............................................14

PERFORMANCE INFORMATION...................................................15

PORTFOLIO TRANSACTIONS....................................................18

INFORMATION ABOUT THE TRUST AND
PORTFOLIO TRUST..................................................18

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING
AGENT, COUNSEL AND INDEPENDENT AUDITORS..........................20

ADDITIONAL INFORMATION....................................................20

INFORMATION ABOUT SECURITIES RATINGS
OF NATIONALLY RECOGNIZED STATISTICAL RATING
ORGANIZATIONS ("NRSROs").........................................21

Financial Statements

<PAGE> 64

ADDITIONAL INVESTMENT POLICIES AND RESTRICTIONS

As described in the Prospectus, each Fund seeks to achieve its
investment objectives by investing all of its Investable Assets in a Portfolio
which has the same investment objectives and restrictions as that Fund.

The Trust's Prospectus describes the investment objectives of the Funds
and the Portfolios and summarizes the investment policies they will follow.
Since the investment characteristics of the Funds will correspond directly with
those of the Portfolios, the following is a discussion of the various investment
policies and restrictions of the Portfolios and should be read in conjunction
with the sections in the Trust's Prospectus entitled "Description of the Trust
and Portfolio Trust," "Investment Objectives" and "Investment Policies and
Restrictions."

All of the Portfolios' fundamental investment restrictions are set
forth below. These fundamental investment restrictions may not be changed except
by the affirmative vote of a majority of the Portfolios outstanding voting
securities as defined in the Investment Company Act of 1940, as amended (the
"1940 Act"). Under the 1940 Act, a "vote of the majority of the outstanding
voting securities" means the vote, at the annual or a special meeting of
security holders duly called, (i) of 67% or more of the voting securities
present at the meeting if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (ii) of more than 50% of the
outstanding voting securities, whichever is less. Under these restrictions, it
is the policy of each Portfolio:

(1) not to invest in a security if the transaction would result in
the Portfolio owning more than 10% of any class of voting
securities of an issuer;

(2) not to issue senior securities, except that the Portfolio may
borrow money in accordance with Restriction 10 below;

(3) not to underwrite or participate in the marketing of securities
of other issuers;

(4) not to purchase or sell real estate in fee simple;

(5) not to invest in commodities or commodity contracts;

(6) not to make loans except that the Portfolio may purchase bonds,
debentures, notes and similar debt obligations, including money
market instruments, directly from the issuer thereof or in the
open market and may engage in repurchase transactions;

(7) not to conduct arbitrage transactions;

(8) not to invest in interests in oil, gas or other mineral
exploration or development programs (provided that the Portfolio
may invest in securities which are based, directly or
indirectly, on the credit of companies which invest in or
sponsor such programs);

(9) not to make any investment which would cause more than 25% of
the value of such Portfolio's total assets to be invested in
securities of nongovernmental issuers principally engaged in any
one industry, except that under normal market conditions each
Portfolio will invest more than 25% of its total assets in
obligations of Qualifying Banks (as defined in the Prospectus)
and further provided that in the event that the diversification
requirements of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code") are revised so as to permit one or
more of the Portfolios to invest more than 25% of its total
assets in government obligations of the country that issues the
relevant Fund's Designated Currency, then each such Portfolio
will under normal market conditions invest more than 25% of its
total assets in such obligations;

<PAGE> 65

(10) not to borrow money except in connection with redemptions or for
temporary and emergency purposes and then not in an amount in
excess of 20% of the value of its net assets, provided that
additional investments will be suspended during any period when
borrowings exceed 5% of the Portfolio's total assets; and

(11) not to purchase securities on margin, make a short sale of any
securities or purchase or deal in puts, calls, straddles or
spreads with respect to any security, except that the Portfolio
may acquire puts in connection with enhancing the liquidity of
its securities.

The following investment restrictions may be changed by vote of a
majority of the Trustees of the Portfolio Trust. Under these restrictions, it is
the policy of each Portfolio:

(1) not to hypothecate, mortgage or pledge any of its assets except
as may be necessary in connection with permitted borrowings;

(2) not to purchase a security issued by another investment company
if, immediately after such purchase, the Portfolio would own, in
the aggregate, (i) more than 3% of the total outstanding voting
stock of such other investment company; (ii) securities issued
by such other investment company having an aggregate value in
excess of 5% of the value of the Portfolio's total assets; or
(iii) securities issued by such other investment company and all
other investment companies (other than treasury stock of the
Portfolio) having an aggregate value in excess of 10% of the
value of the Portfolio's total assets; provided, however, that
the Portfolio may purchase investment company securities without
limit for the purpose of completing a merger, consolidation or
other acquisition of assets;

(3) not to invest in companies for the purpose of exercising control
over their management;

(4) not invest more than 5% of the value of its total assets in any
issuer (other than repurchase agreements and Designated
Government securities (defined as (a) any security issued or
guaranteed by the government issuing the Portfolio's Designated
Currency; (b) any security issued or guaranteed by a person
controlled or supervised by and acting as an instrumentality of
the government of such countries pursuant to authority granted
by the appropriate legislative or executive body in such
countries if, in each case, such Portfolio's investment adviser
shall have determined that such security has a creditworthiness
substantially equivalent to that of a direct obligation of the
applicable government; or (c) any certificate of deposit for any
of the foregoing); and

(5) not to invest more than 25% of its total assets in repurchase
agreements with any one counterparty.

MONEY MARKET INSTRUMENTS

U.S. Dollar Portfolio
---------------------

The following describes further the money market instruments in which
the U.S. Dollar Portfolio will invest and is provided as a supplement to the
discussion appearing in the Prospectus.

<PAGE> 66

Short-Term Corporate Debt Instruments

Short-term corporate debt instruments include commercial paper (i.e.,
short-term, unsecured promissory notes) issued by corporations (including bank
holding companies) to finance short-term credit needs. Commercial paper is
usually sold on a discounted basis and has a maturity at the time of issuance
not exceeding nine months.

Short-term corporate debt instruments also include master demand notes.
Master demand notes are obligations of companies that permit an investor to
invest fluctuating amounts at varying rates of interest pursuant to arrangements
between the investor, as lender, and the companies, as borrowers. The U.S.
Dollar Portfolio will have the right, at any time, to increase the amount lent
up to the full amount provided by a note. Because the U.S. Dollar Portfolio may
also decrease the amount lent at any time, such instruments are highly liquid
and in effect have a maturity of one business day. The borrower will have the
right, at any time, to prepay up to the full amount of the amount borrowed
without penalty. Because the notes are direct lending obligations between the
U.S. Dollar Portfolio and the borrowers, they are generally not traded and there
is no secondary market. Consequently, the U.S. Dollar Portfolio's ability to
receive repayment will depend upon the borrower's ability to pay principal and
interest on the U.S. Dollar Portfolio's demand. The U.S. Dollar Portfolio will
invest only in notes that either have the ratings described below for commercial
paper or (because notes are not typically rated by credit rating agencies)
unrated notes that are issued by companies having the ratings described below
for issuers of commercial paper. The Fund does not expect that the notes will be
backed by bank letters of credit. The Investment Adviser will monitor the value
of the U.S. Dollar Portfolio's investments in commercial paper and master demand
notes, taking into account such factors as the issuer's earning power, cash flow
and other liquidity ratios.

Commercial paper investments at the time of purchase will be rated in
the highest rating category by an NRSRO, such as A-1 by Standard & Poor's
Corporation ("S&P") or Prime-1 by Moody's Investors Service, Inc. ("Moody's"),
or, if not rated, issued by companies having an outstanding debt issue rated at
least AA by S&P or Aa by Moody's or equivalent or determined to be of comparable
quality. See "Information about Securities Ratings of NRSROs" below for further
information.

Under certain limited circumstances, the U.S. Dollar Portfolio may
invest in nonconvertible corporate debt securities (e.g., bonds and debentures
which may be issued by U.S. or non-U.S. corporations) with no more than thirteen
months remaining either to the date of maturity or the date on which, under the
indenture governing the security, it may be sold back to the issuer thereof for
payment of principal and accrued interest. Corporate debt securities with a
remaining maturity of thirteen months or less are liquid (and tend to become
more liquid as their maturities lessen) and are traded as money market
securities. Such securities also tend to have considerably less market value
fluctuation than longer term issues.

Corporate debt and other securities in which the U.S. Dollar Portfolio
invests must be U.S. dollar-denominated Eligible Securities (as defined in Rule
2a-7 under the 1940 Act) that are determined to present minimal credit risks. In
general, the term "Eligible Securities" is limited to:

(i) securities with remaining maturities of 13 months or less that
are rated (or have been issued by an issuer that is rated with
respect to a class of short-term debt obligations, or any
securities within that class, that are comparable in priority
and security with the relevant security) by the requisite number
(i.e., two, if two organizations have issued ratings and one if
only one has issued a rating) of NRSROs in one of the two
highest rating categories for short-term debt obligations
(within which there may be sub-categories or gradations
indicating relative standing), or

<PAGE> 67

(ii) securities that at the time of issuance were long-term
securities (i.e., that had remaining maturities greater than 397
calendar days) but that now have remaining maturities of 397
calendar days or less and which were issued by an issuer that
has received from the requisite NRSROs a rating, with respect to
a class of short-term debt obligations (or any security within
that class) that is comparable in priority and security with the
relevant security, in one of the two highest rating categories
for short-term debt obligations (within which there may be
sub-categories or gradations indicating relative standing), or

(iii) securities which are "unrated" (as defined in Rule 2a-7) but
determined to be of comparable quality to the foregoing by the
Portfolio Trust's Board of Trustees or the Investment Adviser
under their supervision (provided that a security that at the
time of issuance was a long-term security but that has a
remaining maturity of 397 calendar days less and that is an
"unrated" security is not an "Eligible Security" if the security
has a long-term rating from any NRSRO that is not within the
NRSRO's three highest categories (within which there may be
sub-categories or gradations indicating relative standing)).

As indicated in the Prospectus, the U.S. Dollar Portfolio will further
limit its investments to Eligible Securities that are government securities and
"first tier" Eligible Securities as defined in Rule 2a-7 under the 1940 Act.

Bank Money Investments

Bank money investments include but are not limited to certificates of deposit,
bankers' acceptances and time deposits. Certificates of deposit are generally
short-term (i.e., less than one year), interest-bearing negotiable certificates
issued by commercial banks or savings and loan associations against funds
deposited in the issuing institution. A banker's acceptance is a time draft
drawn on a commercial bank by a borrower, usually in connection with an
international commercial transaction (to finance the import, export, transfer
or storage of goods). A banker's acceptance may be obtained from a domestic or
foreign bank including a U.S. branch or agency of a foreign bank. The borrower
is liable for payment as well as the bank, which unconditionally guarantees to
pay the draft at its face amount on the maturity date. Most acceptances have
maturities of six months or less and are traded in secondary markets prior to
maturity. Time deposits are nontransferable deposits made for a fixed period of
time at a stated interest rate. The U.S. Dollar Portfolio will not invest in
any bank money investment unless the investment is issued by a U.S. bank that
is a member of the Federal Deposit Insurance Corporation ("FDIC"), including
any foreign branch thereof, a U.S. branch or agency of a "foreign bank", as
defined under Rule 3a-6 of the 1940 Act, a foreign branch of a foreign bank, or
a savings bank or savings and loan association that is a member of the FDIC and
which at the date of investment has capital, surplus and undivided profits (as
of the date of its most recently published financial statements) in excess of
$100 million or the equivalent in the relevant Fund's Designated Currency (a
"Qualifying Bank").

U.S. branches and agencies of foreign banks are offices of foreign banks
and are not separately incorporated entities. They are chartered and regulated
either federally or under state law. U.S. federal branches or agencies of
foreign banks are chartered and regulated by the Comptroller of the Currency,
while state branches and agencies are chartered and regulated by authorities of
the respective states or the District of Columbia. U.S. branches of foreign
banks may accept deposits and thus are eligible for FDIC insurance; however, not
all such branches elect to obtain FDIC insurance. Unlike U.S. branches of
foreign banks, U.S. agencies of foreign banks may not accept deposits and thus
are not eligible for FDIC insurance. Both branches and agencies can maintain
credit balances, which are funds received by the office incidental to or arising
out of the exercise of their banking powers and can exercise other commercial
functions, such as lending activities.

U.S. Government Securities

<PAGE> 68

U.S. Government securities consist of various types of marketable
securities issued by the U.S. Treasury, i.e., bills, notes and bonds. Such
securities are direct obligations of the U.S. Government and differ mainly in
the lengths of their maturities. Treasury bills, the most frequently issued
marketable government security, have a maturity of up to one year and are issued
on a discount basis.

Government Agency Securities

Government agency securities in which the U.S. Dollar Portfolio may
invest consist of fixed income securities issued or guaranteed by agencies and
instrumentalities of the U.S. Government, including the various types of
instruments currently outstanding or which may be offered in the future.
Agencies and instrumentalities include, among others, the Federal Housing
Administration, Government National Mortgage Association ("GNMA"), Federal
National Mortgage Association, Farmers Home Administration, Export-Import Bank
of the U.S., Federal Maritime Administration, General Services Administration
and Tennessee Valley Authority. Instrumentalities include, for example, the
Central Bank for Cooperatives, Federal Home Loan Banks, Federal Farm Credit
Banks, Student Loan Marketing Association, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks and the U.S.
Postal Service. The U.S. Dollar Portfolio will purchase such securities only so
long as they are backed by any of (i) the full faith and credit of the U.S.
Treasury (e.g., U.S. Treasury bills, bonds and notes and GNMA participation
certificates), (ii) the right of the issuer to borrow a limited amount from the
U.S. Treasury (e.g., securities of the Farmers Home Administration), (iii) the
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality (e.g., securities of the Federal National
Mortgage Association) or (iv) the credit of the agency or instrumentality (e.g.,
securities of a Federal Home Loan Bank).

Custodial Receipts

The U.S. Dollar Portfolio may acquire, subject to the limitations
described herein, custodial receipts that evidence ownership of future interest
payments, principal payments or both on certain U.S. Treasury notes or bonds in
connection with programs sponsored by banks and brokerage firms. Such notes and
bonds are held in custody by a bank on behalf of the owners of the receipts.
These custodial receipts are known by various names, including "Treasury
Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs") and
"Certificates of Accrual on Treasury Securities" (CATS"), and may not be treated
as U.S. Government securities.

ADDITIONAL INFORMATION CONCERNING
CERTAIN INVESTMENT TECHNIQUES FOR ALL PORTFOLIOS

Each Portfolio may invest in the securities or utilize the investment
techniques listed in this section:

Repurchase Agreements

A repurchase agreement is an agreement under which a Portfolio acquires
money market instruments (generally government securities, bankers' acceptances
or certificates of deposit) from a commercial bank, broker or dealer, subject to
resale to the seller at an agreed-upon price and date (normally the next
business day). The resale price reflects an agreed-upon interest rate effective
for the period the instruments are held by a Portfolio and is unrelated to the
interest rate on the instruments. The instruments acquired by a Portfolio
(including accrued interest) must have an aggregate market value in excess of
the resale price and will be held by the Custodian for such Portfolio until they
are repurchased. The Trustees of the Portfolio Trust will monitor the standards
which the Investment Adviser will use in reviewing the creditworthiness of any
party to a repurchase agreement with any of the Portfolios.

<PAGE> 69

The use of repurchase agreements involves certain risks. For example,
if the seller defaults on its obligation to repurchase the instruments acquired
by a Portfolio at a time when their market value has declined, such Portfolio
may incur a loss. If the seller becomes insolvent or subject to liquidation or
reorganization under bankruptcy or other laws, a court may determine that the
instruments acquired by such Portfolio are collateral for a loan by such
Portfolio and therefore are subject to sale by the trustee in bankruptcy.
Finally, it is possible that a Portfolio may not be able to substantiate its
interest in the instruments it acquires. While the Trustees of the Portfolio
Trust acknowledge these risks, it is expected that they can be controlled
through careful documentation and monitoring.

Illiquid Securities

No Portfolio may invest more than 10% of the value of its net assets in
securities that at the time of purchase have legal or contractual restrictions
on resale or are otherwise "illiquid". The Investment Adviser will monitor the
amount of illiquid securities in each Portfolio's portfolio, to ensure
compliance with such Portfolio's investment restrictions.

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 maturity of longer than seven days. Securities which have not been
registered under the 1933 Act are referred to as private placement 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 adverse
effect on the marketability of portfolio securities and the Portfolio might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty in satisfying
redemption requests within seven days. The Portfolio 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 to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.

All of the Portfolios may buy or sell restricted securities in
accordance with Rule 144A under the 1933 Act ("Rule 144A Securities").
Securities may be resold pursuant to Rule 144A under certain circumstances only
to qualified institutional buyers as defined in the rule, and the markets and
trading practices for such securities are relatively new and still developing;
depending on the development of such markets, such Rule 144A Securities may be
deemed to be liquid as determined by or in accordance with methods adopted by
the Trustees of the Portfolio Trust. In all other cases, however, securities
subject to restrictions on resale will be deemed illiquid. Under such methods
the following factors are considered, among others: the frequency of trades and
quotes for the security, the number of dealers and potential purchasers in the
market, marketmaking activity, and the nature of the security and marketplace
trades. Investments in Rule 144A Securities could have the effect of increasing
the level of the relevant Portfolio's illiquidity to the extent that qualified
institutional buyers become, for a time, disinterested in purchasing such
securities. Also, the relevant Portfolio may be adversely impacted by the
possible illiquidity and subjective valuation of such securities in the absence
of a market for them.

<PAGE> 70
Concentration in Obligations of Qualifying Banks

Under normal market conditions, more than 25% of the total assets of
each Portfolio will be invested in obligations of Qualifying Banks as set forth
in the Prospectus.

Obligations of non-U.S. branches of U.S. banks and of non-U.S. banks,
such as certificates of deposit and time deposits, may be general obligations of
the parent banks in addition to the issuing branch, or may be limited by the
terms of a specific obligation and governmental regulation. Such obligations are
subject to different risks than are those of domestic U.S. banks or U.S.
branches of non-U.S. banks. These risks include foreign economic and political
developments, foreign governmental restrictions that may adversely affect
payment of principal and interest on the obligations, foreign exchange controls
and foreign withholding and other taxes on interest income. Non-U.S. branches of
U.S. banks are not necessarily subject to the same or similar regulatory
requirements that apply to U.S. banks such as mandatory reserve requirements,
loan limitations, and accounting, auditing and financial recordkeeping
requirements. In addition, less information may be publicly available about a
non-U.S. branch of a U.S. bank or about a non-U.S. bank than about a U.S. bank.

Investing in Non-U.S. Securities

Each of the Portfolios may invest in non-U.S. securities. Non-U.S.
securities markets generally are not as developed or as efficient as those in
the United States. Securities of some foreign issuers are less liquid and more
volatile than securities of comparable U.S. issuers. Similarly, volume and
liquidity in most foreign securities markets are less than in the United States
and, at times, volatility of prices can be greater than in the United States. In
addition, there may be less publicly available information about a non-U.S.
issuer, and non-U.S. issuers are not generally subject to uniform accounting and
financial reporting standards, practices and requirements comparable to those
applicable to U.S. issuers.

The value of securities purchased with and payable in one Designated
Currency will be affected favorably or unfavorably relative to other currencies
by changes in currency exchange rates and exchange control regulations.
Furthermore, some of the securities may be subject to foreign transaction taxes
which could have the effect of increasing the cost of such investments and which
would reduce the realized gain or increase the realized loss on such securities
at the time of sale. Transaction costs and custodial expenses for a portfolio of
non-U.S. securities generally are higher than for a portfolio of U.S.
securities. Interest payments from certain foreign securities may be subject to
foreign withholding taxes on interest income payable on the securities.

U.S. Government policies have in the past, through taxation and other
restrictions, discouraged certain investments abroad by U.S. investors. While no
material restrictions of that type are currently in effect, they could be
reinstituted. In an extreme case, restrictions of that type could require the
liquidation of a Portfolio (other than the U.S. Dollar Portfolio).

Floating Rate and Variable Rate Demand Notes

Each Portfolio may purchase floating rate and variable rate demand
notes and bonds. These securities may have a stated maturity in excess of one
year, but permit a holder to demand payment of principal plus accrued interest
upon a specified number of days notice. Frequently, such obligations are secured
by letters of credit or other credit support arrangements provided by banks. The
issuer has a corresponding right, after a given period, to prepay in its
discretion the outstanding principal of the obligation plus accrued interest
upon a specific number of days notice to the holders. The interest rate of a
floating rate instrument may be based on a known lending rate, such as a bank's
prime rate, and is reset whenever such rate is adjusted. The interest rate on a
variable rate demand note is reset at specified intervals at a market rate.

<PAGE> 71

Investing in Supranational Organizations

The supranational organizations in which each Portfolio may invest
include, without limitation, the organizations listed below:

The International Bank for Reconstruction and Development (the "World
Bank"), which was established in 1945, is an international institution having as
members a large portion of the world's sovereign governments. The principal
purposes of the World Bank are: (i) to assist in the reconstruction and
development of its member countries by facilitating the investment of capital
for productive purposes, thereby promoting the long-range growth of
international trade and the improvement of standards of living; (ii) to promote
private foreign investment by guarantees of and participation in loans and other
investments made by private investors; and (iii) when private capital is not
available on reasonable terms, to make loans for productive purposes out of its
own resources or funds borrowed by it.

The Inter-American Development Bank, which became effective in 1959,
has a membership comprised primarily of sovereign governments located in the
western hemisphere as well as a number of countries from outside that region.
The principal purposes of the Bank are: (i) to promote the investment of public
and private capital for development purposes in the Americas; (ii) to utilize
its own capital, funds raised by it in financial markets, and other available
resources, for financing development of member countries, giving priority to
those loans and guarantees that will contribute most effectively to their
economic growth; (iii) to encourage private investment in projects, enterprises,
and activities contributing to economic development and to supplement private
investment when private capital is not available on reasonable terms and
conditions; (iv) to cooperate with member countries to orient their development
policies toward a better utilization of their resources, in a manner consistent
with objectives of making their economics more complimentary, and of fostering
orderly growth of their foreign trade; and (v) to provide technical assistance
for preparation, financing and implementation of development plans and projects,
including the study of priorities and the formulation of specific project
proposals.

The Asian Development Bank was established in 1965 and has a membership
comprised primarily of sovereign governments located in Asia, as well as a
number of nations outside the region. The purposes of the Bank are: (i) to
encourage regional economic cooperation in the Asian and Pacific region and (ii)
to encourage economic growth of its developing members by lending funds,
promoting investment and providing technical assistance with special regard to
the needs of smaller or less developed countries.

The European Bank for Reconstruction and Development was established in
1991 and has a membership comprised primarily of sovereign governments, the
European Union and the European Investment Bank. The purpose of the Bank is to
provide project specific direct financing to foster the economic and democratic
transition process and to promote private and entrepreneurial initiatives in
those countries through the provision of loans, equity investments, guarantees
and technical cooperation.

<PAGE> 72

MANAGEMENT OF THE TRUST AND PORTFOLIO TRUST

The Trustees and executive officers of the Trust are listed below. The
Trustees of the Portfolio Trust are identical to the Trustees of the Trust. The
officers of the Portfolio Trust hold the same offices with the Portfolio Trust
as with the Trust. All executive officers of the Trust and the Portfolio Trust
are affiliated persons of Rothschild International Asset Management Limited,
(the "Investment Adviser").

The Trustees and executive officers of the Trust and Portfolio Trust,
together with information as to their principal business occupations during the
last five years, are shown below. Each Trustee who is an "interested person" (as
defined in the 1940 Act) of the Trust or Portfolio Trust is indicated by an
asterisk.

Certain officers and members of the Board of Trustees of the Trust and the
Portfolio Trust are not residents of the United States. Virtually all or a
substantial portion of the assets of such persons are located outside of the
United States. It may not be possible for shareholders to effect service of
process within the United States upon such persons or to enforce in courts
inside or outside the United States judgements obtained against such persons in
courts in jurisdictions outside the United States, in each case, in any action,
including actions predicated upon the civil liability provisions of the United
States securities laws. In addition, it may be difficult for shareholders to
enforce, in original actions brought in courts in jurisdictions outside the
United States, liabilities predicated solely upon the United States securities
laws.

<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION
NAME, ADDRESS AND POSITION HELD DURING PAST
DATE OF BIRTH WITH TRUST 5 YEARS
- ------------- ---------- -------
<S> <C> <C>
Peter B. Collacott* President and Trustee Managing Director,
Five Arrows House Rothschild, Asset
St. Swithin's Lane Management Limited;
London EC4N 8NR U.K. Director, International
Born June 19, 1944 Biotechnology Trust.

Paul R. Freeman* Senior Vice President Director, Rothschild Asset
Five Arrows House and Trustee Management Limited
St. Swithin's Lane (July 1994 to date);
London EC4N 8NR U.K. Product Development
Born September 30, 1955 Director,
Henderson Touche
Remnant Unit Trust
Management Limited
(Oct. 1993 - July 1994);
Prior to October 1993,
Company Secretary and
Head of Product
Development for GT
Management PLC
(Dec. 1988 - Oct. 1993).

Alan T. Jeffers Trustee Private Investor;
51 Clearwater Cove Consultant
Old Dunleary Road to Rothschild Asset
Dun Laoghaire, Management Limited from
County Dublin, Ireland 1986 to September 1996;
Born August 17, 1938 Chairman, Dipcot Holdings
Ltd.; Chairman, Danfay Ltd.;
Director, Hibernian Group
Plc; Founder and Director,
Banking Automation Ltd.;
Chairman, Provita Europe
Ltd.; Chairman, Biotrin
Holdings Ltd.; Chairman,
Capteur Sensors & Analysers
Limited.

Bryan J. Walsh Trustee President and Managing
11 Lower Tuckahoe Road West Director of Salisbury
Richmond, Virginia Research 1991-date.
23233-6129 U.S.A.
Born November 6, 1944

Roger M. Kubarych Trustee General Manager - Henry
65 East 55th Street Kaufman & Company Inc.
New York, NY 10022 overseeing the firm's
Born November 19, 1944 international money
management activities and
financial and economic
consulting services.

Tony Mercure Vice President Director of Client Services,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.
3435 Stelzer Road and has served in a variety
Columbus, OH 43219 of positions within
BISYS Fund Services, Inc.
since 1991.

Adrian Waters Vice President Managing Director,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.,
(Ireland) Limited. May 1993 to present;
Floor 2, Block 2 Manager, Price Waterhouse,
The Harcourt Centre 1989 - May 1993.
Dublin 2 Ireland

Mary Gamble Vice President Associate Director,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.,
First and Market Building, March 1995 to present;
Suite 300 Assistant Vice President,
100 First Avenue Concord Financial Group,
Pittsburgh, PA 15222 July 1987 to March 1995.

Chuck Booth Vice President Vice President, BISYS Fund Services, Inc.
BISYS Fund Services, Inc. and has served in a
3435 Stelzer Road variety of positions within
Columbus, OH 43219 BISYS Fund Services, Inc.
since 1991.

Bill Tomko Treasurer Senior Vice President,
BISYS Fund Services, Inc. BISYS Fund Services, Inc.
3435 Stelzer Road and has served in a
Columbus, OH 43219 variety of positions within
BISYS Fund Services, Inc.
since 1991.

Alaina Metz Assistant Secretary Chief Administrator,
BISYS Fund Services, Inc. Administrative and Regulatory Services,
3435 Stelzer Road BISYS Fund Services, Inc.
Columbus, OH 43219 June 1995 to present; Supervisor,
Mutual Fund Legal Department,
Alliance Capital Management,
May 1989 to June 1995.

Catherine Brady Assistant Treasurer Accounting Services Manager,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.;
(Ireland) Limited March 1994 to present;
Floor 2, Block 2 Supervisor, Price Waterhouse,
The Harcourt Centre 1990 to March 1994.
Dublin 2 Ireland

Louise Egan Assistant Secretary Shareholder Servicing Manager,
BISYS Fund Services BISYS Fund Services (Ireland) LTD.;
(Ireland) Limited February 1994 to present;
Floor 2, Block 2 Financial Controller,
The Harcourt Centre ITI Services Limited,
Dublin 2 Ireland 1990 to February 1994.

</TABLE>

<PAGE> 73

COMPENSATION OF TRUSTEES AND OFFICERS

Each of the Trust and the Portfolio Trust pays no compensation to the
Trustees of the Trust or Portfolio Trust affiliated with the Administrator, the
Distributor or the Investment Adviser, respectively, or the Trust's and
Portfolio Trust's officers.

The following sets forth an estimate of the compensation to be paid to
the Trust's Trustees for the period ending December 31, 1997.

- --------------------------------------------------------------------------------

Aggregate Aggregate Aggregate Aggregate Total
Compensation Compensation Compensation Compensation Compensation
Name of from U.S. from Pound from Deutsche Mark from Canadian from Fund
Trustee Dollar Portfolio Sterling Portfolio Portfolio Dollar Portfolio Complex (a)(b)
------- ---------------- ------------------ --------- ---------------- --------------

<S> <C> <C> <C> <C> <C>
Bryan J. Walsh $12,000 $12,000 $3,000 $3,000 $30,000

Roger M. Kubarych $10,000 $10,000 $2,500 $2,500 $25,000

Alan T. Jeffers $10,000 $10,000 $2,500 $2,500 $25,000

Peter B. Collacott $ 0 $ 0 $ 0 $ 0 $ 0

Paul R. Freeman $ 0 $ 0 $ 0 $ 0 $ 0
- --------------------------------------------------------------------------------

<FN>

(a) Currently the U.S. Dollar Fund, the Pound Sterling Fund, the
Deutsche Mark Fund and the Canadian Dollar Fund and their corresponding
Portfolios are the only funds in the fund complex. No other
compensation, including pension or other retirement benefits, is paid to
the Trustees by the fund complex. The Trustees receive no compensation
for their service as Trustees of the Trust.

(b) Trustees fees will be allocated among the Portfolios in proportion to
their respective net asset values. The allocation shown reflects an
estimate of the relative net asset values of the Portfolios for the
period ending December 31, 1997.
</TABLE>

As of the approximate time of this Statement of Additional Information,
an affiliated person of the Investment Adviser was the beneficial owner of all
or a substantial amount of the outstanding Five Arrows and Five Arrows Service
shares of the Pound Sterling, Deutsche Mark and Canadian Dollar Funds and may
be deemed to be in control of the Pound Sterling, Deutsche Mark and Canadian
Dollar Funds as control is defined in the 1940 Act. Such owner may acquire
additional shares of the Funds. Although sales of the Funds' shares to other
investors will reduce its percentage ownership, so long as 25% of a class of
shares is so owned, the owner will be presumed to be in control of such class
of shares for purposes of voting on certain matters submitted to a vote of
shareholders.

The following persons are the owners of record of 5% or more of the
outstanding shares of the U.S. Dollar Fund as of July 21, 1997:

Percentage
Name Address of Ownership
---- ------- ------------
CEDE & Co. A-C Bank of New York Brussells 39.99%
1 Wall Street
New York, NY

CMB TTEE of the 4 Chase Metrotech Center-18 60.01%
General Motors EMP Brooklyn, NY 11245
Global Group Pension
Trust
Attn: Edward S. Mollahan

INVESTMENT ADVISORY, DISTRIBUTION,
AND ADMINISTRATION AGREEMENTS
AND 12b-1 PLANS

The following information supplements and should be read in conjunction
with the section in the Trust's Prospectus entitled "Management."

Investment Adviser of the Portfolio Trust

The Investment Adviser serves as the investment adviser to the
Portfolios pursuant to a written investment advisory agreement with the
Portfolio Trust (the "Investment Advisory Agreement"). The Investment
Adviser is a British corporation organized in 1975 and is registered under the
U.S. Investment Advisers Act of 1940.

<PAGE> 74

The Investment Adviser is an indirect, wholly-owned subsidiary of
Rothschild Continuation Holdings AG, a Swiss corporation. Twenty percent (20%)
of the equity of such entity is held by Sun Alliance Group Limited, a British
insurance company. The remainder of the equity is held by Rothschild Concordia
A.G., a holding company controlled by members of the Rothschild family.

Certain services provided by the Investment Adviser under the Master
Investment Advisory Agreement are described in the Prospectus. These services
are provided without reimbursement by the Portfolios for any costs incurred.
Under the Investment Advisory Agreement, the Investment Adviser is paid a
fee based upon a percentage of the Portfolios' average daily net asset value
computed as described in the Prospectus. The rate and time at which the fee is
paid is described in the Prospectus.

Pursuant to the Investment Advisory Agreement, the Portfolios bear
expenses of their operations other than those incurred by the Investment Adviser
pursuant to the Investment Advisory Agreement. Among other expenses, the
Portfolios will pay share pricing expenses; custodian fees and expenses;
administration fees; legal and auditing fees and expenses, expenses of investor
reports to be provided to existing shareholders; registration and reporting fees
and expenses; and Trustees' fees and expenses.

Unless terminated as provided below, the Investment Advisory
Agreement continues in full force and effect until October 16, 1998 and for
successive periods of one year thereafter, but only so long as each such
continuance is approved annually (i) by either the Trustees of the Portfolio
Trust or by the "vote of a majority of the outstanding voting securities" of
each Portfolio, and, in either event (ii) by vote of a majority of the Trustees
of the Portfolio Trust who are not parties to the Investment Advisory
Agreement or "interested persons" (as defined int he 1940 Act) of any such
party, cast in person at a meeting called for the purpose of voting on such
approval. The Investment Advisory Agreement may be terminated at any time
without the payment of any penalty by vote of the Trustees of the Portfolio
Trust or by the "vote of a majority of the outstanding voting securities" of the
Portfolio or by the Investment Adviser, on sixty days' written notice to the
other parties. The Investment Advisory Agreement terminates in the event of its
assignment as defined in the 1940 Act.

In an attempt to avoid any potential conflict with portfolio
transactions for the Portfolios, the Investment Adviser, the Trust and the
Portfolio Trust have each adopted extensive restrictions on personal securities
trading by personnel of the Investment Adviser and its affiliates. These
restrictions are a continuation of the basic principle that the interests of the
Fund and its shareholders, and the Portfolio and its investors, come before
those of the Investment Adviser and its employees.

The Investment Advisory Agreement also provides that, with respect to
the Portfolio to which it pertains, the Investment Adviser shall not be liable
for any mistake of judgment or in any event whatsoever in the performance of its
duties to the Portfolio Trust, except for liability resulting from willful
misfeasance, bad faith or gross negligence in the performance of the Investment
Adviser's duties or by reason of reckless disregard of its obligations and
duties under the Investment Advisory Agreement.

The Investment Advisory Agreement provides that the Investment Advisor
may render advisory services to others.

In addition to receiving its advisory fee, the Investment Adviser may
also act and be compensated as investment manager for its clients with respect
to assets which are invested in a Portfolio. In some instances the Investment
Adviser may elect to credit against any investment management fee received from
a client who is also a shareholder in the Portfolio Trust an amount equal to all
or a portion of the fees received by the Investment Adviser or any affiliate of
the Investment Adviser from a Portfolio with respect to the client's assets
invested in the Portfolio.

<PAGE> 75

Distributor of the Trust

Five Arrows Fund Distributors Inc. (the "Distributor"), an affiliate
of the Administrator, serves as the Trust's exclusive principal underwriter
and holds itself available to receive purchase orders for the Funds' shares. In
that capacity, the Distributor has been granted the right, as agent of the
Trust, to solicit and accept orders for the purchase of the Funds' shares in
accordance with the terms of the Distribution Agreement between the Trust and
the Distributor. The Distribution Agreement shall continue in effect with
respect to each Fund until two years after its execution and for successive
periods of one year thereafter only if it is approved at least annually
thereafter (i) by a vote of the holders of a majority of the relevant Fund's
outstanding shares or by the Trustees of the Trust or (ii) by a vote of a
majority of the Trustees of the Trust who are not "interested persons" (as
defined by the 1940 Act) of the parties to the Distribution Agreement, cast in
person at a meeting called for the purpose of voting on such approval. The
Distribution Agreement will terminate automatically if assigned by either party
thereto and is terminable at any time without penalty by a vote of a majority
of the Trustees of the Trust, a vote of a majority of the Trustees who are not
"interested persons" of the Trust, or by a vote of the holders of a majority of
the relevant Fund's outstanding shares, in any case without payment of any
penalty on not more than 60 days' written notice to the other party.

Administrator

BISYS Fund Services Limited Partnership, 3435 Stelzer Road, Columbus,
OH 43219-3035 serves as the administrator to the Funds and the Portfolios (the
"Administrator") pursuant to written administration agreements with the Trust on
behalf of the Funds and the Portfolio Trust on behalf of the Portfolios. Certain
services provided by the Administrator under these administration agreements are
described in the Prospectus. For the services provided to the Funds, each Fund
pays its pro-rata share of an annual fee to the Administrator, computed daily
and payable monthly, of .05% of the Fund's average net assets.

The administration agreement relating to the Funds provides that if the
total expenses of the Funds in any fiscal year exceed the most restrictive
expense limitation applicable to the Funds in any state in which shares of the
Funds are then qualified for sale, the compensation due the Administrator shall
be reduced by the amount of the excess, by a reduction or refund thereof at the
time such compensation is payable after the end of each calendar month during
the fiscal year, subject to readjustment during the year. Currently, the most
restrictive state expense limitation provision limits the Fund's expenses to
2 1/2% of the first $30 million of average net assets, 2% of the next $70
million of such net assets and 1 1/2% of such net assets in excess of $100
million.

The Administrator provides the Portfolio Trust with office space for
managing its affairs and with certain clerical services and facilities. For the
services provided to the Portfolios, each Portfolio pays its pro-rata share of
an annual fee to the Administrator, computed daily and payable monthly, of .05%
of the Portfolio's average daily net assets.

12b-1 Plan

The Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
(the "12b-1 Plan") in accordance with the regulations promulgated under the
1940 Act. The 12b-1 Plan provides that each Fund will make payments to the
Distributor equal to 0.50% (on an annual basis) of the average daily value of
the net assets of such Fund's Five Arrows Service class of shares (the "12b-1
fee"). The 12b-1 fee has two components: a service fee and a distribution fee.
The 12b-1 Plan provides that each of these components will be paid at an annual
rate of 0.25% of the average daily value of the net assets of such Fund's Five
Arrows Service class of shares. The Distributor has voluntarily agreed to
waive a portion of the distribution fee component in order to limit payments of
the 12b-1 fee to 0.35% (on an annual basis) of the average daily net asset value
of the Five Arrows Service shares of any Fund. This waiver shall remain in
effect for the fiscal period ending December 31, 1997, and thereafter in the
discretion of the Distributor. The Distributor has reserved the right to
terminate or revise this undertaking with respect to any period after December
31, 1997.

Some or all of the service fees are used to compensate brokers and
other authorized institutions that sell Five Arrows Service shares ("Authorized
Firms") for providing account administration services to their clients who are
beneficial owners of such shares. One or more affiliates of the Investment
Adviser and the Administrator may act as Authorized Firms. The Trust will enter
into agreements with Authorized Firms which purchase Five Arrows Service shares
on behalf of their clients ("Service Agreements"). The Service Agreements will
provide for compensation to the Authorized Firms in an amount up to 0.25% (on an
annual basis) of the average daily net assets of the Five Arrows Service shares
of the applicable Fund attributable to or held in the name of the Authorized
Firm for its clients.

The services provided by the Authorized Firms may include, among other
things, receiving, aggregating and processing shareholder or beneficial owner
(collectively "shareholder") orders; furnishing shareholder subaccounting;
providing and maintaining retirement plan records; communicating periodically
with shareholders; acting as the sole shareholder of record and nominee for
shareholders; maintaining account records for shareholders; answering questions
and handling correspondence from shareholders about their accounts; issuing
various shareholder reports and confirmations for transactions by shareholders;
performing daily investment ("sweep") functions for shareholders and performing
similar account and administrative services. Any service fees received by the
Distributor and not allocated to Authorized Firms may be retained by the
Distributor in consideration of its own role in servicing shareholder accounts.

Authorized Firms that have sold Five Arrows Service shares are eligible
for further compensation commencing as of the time of such sale. It is the
Distributor's current policy to pay a trailer commission to Authorized Firms in
an amount equal to .10% (on an annual basis) of the average daily net assets of
the Five Arrows Service shares of the applicable Fund attributable to or held
in the name of the Authorized Firm for its clients. This trailer commission
arrangement may be terminated or revised by the Distributor at any time. Any
distribution fee received by the Distributor and not allocated to Authorized
Firms may be applied by the Distributor in connection with sales or
marketing efforts (e.g. for advertising costs, the cost of printing and mailing
prospectuses and reports to potential investors) or retained by the Distributor
in consideration of its own role in marketing Five Arrows Service shares.

<PAGE> 76

Conflict of interest restrictions (including the Employee Retirement
Income Security Act of 1974) may apply to an Authorized Firm's receipt of
compensation paid by the Funds in connection with the investment of fiduciary
funds in Five Arrows Service shares. Authorized Firms, including banks
regulated by the Comptroller of the Currency, the Federal Reserve Board or the
Federal Deposit Insurance Corporation, and investment advisers and other money
managers subject to the jurisdiction of the Securities and Exchange Commission,
the Department of Labor or State Securities Commissions, are urged to consult
legal advisers before investing fiduciary assets in Five Arrows Service shares.
In addition, under some state securities laws, banks and other financial
institutions purchasing Five Arrows Service shares on behalf of their customers
may be required to register as dealers.

The Trustees of the Trust, including a majority of the Trustees who
are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the 12b-1 Plan or the related Service
Agreements, voted to adopt the 12b-1 Plan and Service Agreements at a meeting
called for the purpose of voting on such 12b-1 Plan and Service Agreements on
October 16, 1996. The 12b-1 Plan and Service Agreements will remain in effect
until October 16, 1998 and will continue in effect thereafter only if such
continuance is specifically approved annually by a vote of the Trustees in the
manner described above. All material amendments of the 12b-1 Plan must also be
approved by the Trustees in the manner described above. The 12b-1 Plan may be
terminated at any time by a majority of the Trustees as described above or by
vote of a majority of the outstanding Five Arrows Service shares of the
affected Fund. The Service Agreements may be terminated at any time, without
payment of any penalty, by vote of a majority of the Trustees as described
above or by a vote of a majority of the outstanding Five Arrows Service shares
of the affected Fund on not more than 60 days' written notice to any other
party to the Service Agreements. The Service Agreements shall terminate
automatically if assigned. So long as the 12b-1 Plan is in effect, the
selection and nomination of those Trustees who are not interested persons shall
be committed to the discretion of the non-interested members of the Board of
Trustees. The Trustees have determined that, in their judgment, there is a
reasonable likelihood that the 12b-1 Plan will benefit the Funds and holders of
Five Arrows Service shares of such Funds. In the Trustees' quarterly review of
the 12b-1 Plan and Service Agreements, they will consider their continued
appropriateness and the level of compensation provided therein.

REDEMPTION OF SHARES

Detailed information on redemption of shares is included in the
Prospectus in the section entitled "How to Redeem Shares."

The Trust intends to pay in cash in the Designated Currency of the Fund
from which shares are redeemed for all Fund shares redeemed, but under certain
conditions, the Trust may make payment wholly or partly in portfolio securities
from the Portfolio, in conformity to the applicable rule of the SEC. Portfolio
securities paid upon redemption of Fund shares will be valued at their then
current market value. The Trust, on behalf of each of its series, has elected to
be governed by the provisions of Rule 18f-1 under the 1940 Act

<PAGE> 77

which contains a formula for determining the minimum amount of cash which may be
paid as part of any redemption, limiting cash payments to any shareholder during
any 90-day period to the lesser of $250,000 or 1% of the Fund's net asset value
at the beginning of such period.

An investor may incur brokerage costs in converting portfolio
securities received upon redemption to cash. The Portfolio Trust has advised the
Trust that the Portfolio Trust will not redeem in-kind except in circumstances
in which the Fund is permitted to redeem in-kind or except in the event the Fund
completely withdraws its interest from the Portfolio.

CALCULATION OF NET ASSET VALUE

The net asset value of the Portfolios and of shares of the Funds is
determined by the Administrator (as agent for the Funds and the Portfolios). The
Funds and the Portfolios will only price their respective shares or interests on
Trust Business Days (as such term is defined in the Prospectus).

It is anticipated that each Portfolio will utilize the amortized cost
method of valuation as a reasonable means of approximating the market value of
each Portfolio's assets. With respect to the U.S. Dollar Fund and its
corresponding Portfolio, the valuation of the instruments held by the U.S.
Dollar Portfolio at amortized costs is permitted in accordance with Rule 2a-7
under the 1940 Act. On September 26,1997, the Trust received a "no-action"
letter from the Division of Investment Management of the Securities and Exchange
Commission which permits the Pound Sterling Fund, the Deutsche Mark Fund, and
the Canadian Dollar Fund and their corresponding Portfolios to operate in
accordance with Rule 2a-7, except that each such Portfolio is permitted (a) to
invest in securities denominated in its own Designated Currency, and (b) to
treat Designated Government Securities comparably to the way U.S. government
securities are treated by U.S. Dollar-denominated money market funds (provided
that the applicable government, as to its domestic currency-denominated
short-term obligations, will have a First Tier rating by (a) any two NRSROs that
have issued a rating with respect to such obligations or (b) if only one NRSRO
has issued a rating with respect to such obligations at the time of purchase or
rollover, that NRSRO).

The amortized cost of an instrument is determined by valuing it at cost
originally and thereafter accreting any discount or amortizing any premium from
its face value at a constant rate until maturity, regardless of the effect of
fluctuating interest rates on the market value of the instrument. Although the
amortized cost method provides certainty in valuation, it may result at times in
determinations of value that are higher or lower than the price the Portfolios
would receive if the instruments were sold. Consequently, changes in the market
value of instruments held by the Portfolios during periods of rising or falling
interest rates will not be reflected either in the computation of net asset
value of the Portfolios or in the daily computation of its net investment
income.

The procedures of the Funds and the Portfolios are designed to
facilitate, to the extent reasonably possible, the maintenance of the Funds'
price per share, as computed for the purpose of the distribution and redemption
of shares, at $1.00 in the case of the U.S. Dollar Fund, at (pound) 1.00 in the
case of the Pound Sterling Fund, at DM 1.00 in the case of the Deutsche Mark
Fund and at C$1.00 in the case of the Canadian Dollar Fund (the "Stabilized
Prices"). These procedures include review of the Portfolios' holdings by the
Trustees of the Portfolio Trust and Trust, at such intervals as they may deem
appropriate, to determine whether the Portfolios' net asset values calculated by
using readily available market quotations deviates from the valuation based on
amortized cost, and, if so, whether such deviation may result in material
dilution or is otherwise unfair to existing shareholders. In the event that the
Trustees of the Portfolio Trust and Trust determine that such a deviation
exists, they will take such corrective action as they consider to be necessary
or appropriate, which action could include the sale of instruments held by the
Portfolios prior to maturity (to realize capital gains or losses); the
shortening of average portfolio maturity; withholding dividends; redemption of
shares in kind; or establishing a net asset value per share by using readily
available market quotations.

<PAGE> 78

Since the net investment income of each Fund is declared as a dividend
each time such income is determined, the net asset value per share of each Fund
remains at its respective Stabilized Price immediately after such determination
and dividend declaration. It is expected that each Fund's net investment income
will be positive each time it is determined. However, if because of realized
losses on sales of portfolio investments, a sudden rise in interest rates,
default by an issuer of a portfolio security, or for any other reason the net
investment income of each Portfolio determined at any time is a negative amount,
such Portfolio will offset such amount allocable to each then shareholder's
account from dividends accrued with respect to such account. If at the time of
payment of a dividend (either at the regular dividend payment date, or, in the
case of an interest holder who is withdrawing all or substantially all of such
shareholder's interest in an account, at the time of redemption), such negative
amount exceeds a shareholder's accrued dividends, the relevant Portfolio will
reduce the interest by treating the shareholder as having contributed to the
capital of that Portfolio that amount of its interest which represents the
amount of the excess. Each shareholder is deemed to have agreed to such
contribution in these circumstances by his or her investment in the relevant
Fund.

Should the Portfolios incur or anticipate any unusual or unexpected
significant expense, loss or depreciation which would affect disproportionately
the Funds' net investment income for a particular period, the Trustees of the
Portfolio Trust and Trust would at that time consider whether to adhere to its
daily dividend policy or to revise it in the light of the then prevailing
circumstances. Such expenses, losses or depreciation may nevertheless result in
a shareholder receiving no dividends for the period during which the shares are
held and in receiving upon redemption a price per share lower than the purchase
price of such shares.

PERFORMANCE INFORMATION

Performance will vary from time to time and past results are not
necessarily representative of future results. Investors should remember that
performance is a function of portfolio management in selecting the type and
quality of portfolio securities and is affected by operating expenses.
Performance information, such as that described below, may not provide a basis
for comparison with other investments or other investment companies using a
different method of calculating performance.

Each of the Funds may provide current annualized and effective
annualized yield quotations based on its daily dividends. These quotations may
from time to time be used in advertisements, shareholder reports or other
communications to shareholders.

Any current yield quotation of a Fund which is used in such a manner as
to be subject to the provisions of Rule 482(d) under the Securities Act of 1933,
as amended, shall consist of an annualized historical yield, carried at least to
the nearest hundredth of one percent on a specific seven calendar day period and
shall be calculated by dividing the net change during the seven day period in
the value of an account having a balance of one share at the beginning of the
period by the value of the account at the beginning of the period, and
multiplying the quotient by 365/7. For this purpose, the net change in account
value would reflect the value of additional shares purchased with dividends
declared on the original share and dividends declared on both the original share
and any such additional shares, but would not reflect any realized gains or
losses from the sale of securities or any unrealized appreciation or
depreciation on portfolio securities. In addition, any effective annualized
yield quotation used by the Trust shall be calculated by compounding the current
yield quotation for such period by adding 1 to the product, raising the sum to a
power equal to 365/7, and subtracting 1 from the result. A one day yield
quotation is determined by taking one-seventh of the most recent calculated
seven day yield.

<PAGE> 79

Although published yield information is useful to investors in
reviewing a Fund's performance, investors should be aware that a Fund's yield
fluctuates from day to day and that a Fund's yield for any given period is not
an indication or representation by the Trust of future yields or rates of return
on shares. The yield of each Fund is not fixed or guaranteed. Accordingly, a
Fund's yield information may not necessarily be used to compare its shares with
investment alternatives which, like money market instruments or bank accounts,
may provide a fixed rate of interest. In addition, investments in the Trust are
not insured or guaranteed, so a Fund's yield information may not necessarily be
used to compare such Fund with investment alternatives which are insured or
guaranteed.

Each Fund's investment results will vary from time to time depending
upon market conditions, the composition of the Fund's Corresponding Portfolio's
portfolio and operating expenses of the Fund, so that current or past yield
should not be considered representations of what an investment in a Fund may
earn in any future period. These factors and possible differences in the methods
used in calculating investment results should be considered when comparing a
Fund's investment results with those published for other investment companies
and other investment vehicles. A Fund's results also should be considered
relative to the risks associated with such Fund's investment objectives and
policies. Each Fund and the Distributor may from time to time compare the Funds
with the following:

(1) Various Salomon Brothers World Bond Indices, which measure the total
return performance of high-quality securities in major sections of the worldwide
bond markets.

(2) The Shearson Lehman Government Corporate Bond Index, which is a
comprehensive measure of all

16
<PAGE> 80

public obligations of the U.S. Treasury (excluding flower bonds and foreign
targeted issues), all publicly issued debt of agencies of the U.S. government
(excluding mortgage backed securities), and all public, fixed rate,
non-convertible investment grade domestic corporate debt rated at least Aa by
Moody's or AA by S&P, or, in the case of bonds not rated by Moody's or S&P, BBB
by Fitch Investors Service (excluding Collateralized Mortgage Obligations).

(3) Average of Savings Accounts, which is a measure of all kinds of
savings deposits, including longer-term certificates (based on figures supplied
by the U.S. League of Savings Institutions). Savings accounts offer a guaranteed
rate of return on principal, but no opportunity for capital growth. During a
portion of the period, the maximum rates on some savings deposits were fixed by
law.

(4) The Consumer Price Index, which is a measure of the average change
in prices over time in a fixed market basket of goods and services (e.g., food,
clothing, shelter, fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).

(5) Data and mutual fund rankings and comparisons published and prepared
by Lipper Analytical Data Services, Inc. ("Lipper"), Morningstar Inc.
("Morningstar"), Micropal, Inc. ("Micropal"), CDA Investment Technologies, Inc.
("CDA"), Wiesenberger Investment Company Services ("Wiesenberger") and/or other
companies that rank or compare mutual funds by overall performance, investment
objectives, assets, expense levels, periods of existence and/or other factors.
In this regard, each Fund may be compared to its "peer group" as defined by
Lipper, Morningstar, Micropal, CDA, Wiesenberger and/or other firms, as
applicable or to specific funds or groups of funds within or without such peer
group.

(6) Bear Stearns Foreign Bond Index, which provides simple average
returns for individual countries and a GNP-weighted index, beginning in 1975.
The returns are broken down by local market and currency.

(7) Ibbottson Associates International Bond Index, which provides a
detailed breakdown of local market and currency returns since 1960.

Indices prepared by the research departments of such financial
organizations as Salomon Brothers, Inc.; Merrill Lynch, Pierce, Fenner & Smith,
Inc.; Bear Stearns & Co., Inc.; Morgan Stanley; and Ibbottson Associates may be
used, as well as information provided by the Federal Reserve Board. In addition,
performance rankings and ratings reported periodically in national financial
publications, including but not limited to Money Magazine, Forbes, Business
Week, The Wall Street Journal and Barrons's may also be used.

PORTFOLIO TRANSACTIONS

Portfolio securities are ordinarily purchased directly from the issuer
or from an underwriter or a market maker for the securities. Usually no
brokerage commissions are paid by any Portfolio for such purchases. Purchases
from underwriters of Portfolio securities include a concession paid by the
issuer to the underwriter and the purchase price paid to market makers for the
securities may include the spread between the bid and asked price.

A Portfolio may not always pay the lowest commission or spread
available. Rather, in determining the amount of commission paid in connection
with Portfolio transactions, the Investment Adviser takes into account such
factors as size of the order, difficulty of execution, efficiency of the
executing broker's facilities (including the services described below) and any
risk assumed by the executing broker. The Investment Adviser may also take into
account payments made by brokers effecting transactions with or for a Portfolio
(i) to the Portfolio or (ii) to other persons on behalf of the Portfolio for
services provided to it for which it would be obligated to pay.

17
<PAGE> 81

Investment decisions for the Portfolios will be made independently from
those for any other account or investment company that is or may in the future
become managed by the Investment Adviser or its affiliates. If, however, a
Portfolio and other investment companies or accounts managed by the Investment
Adviser are contemporaneously engaged in the purchase or sale of the same
security, the transactions may be averaged as to price and allocated equitably
to each account. In some cases, this policy might adversely affect the price
paid or received by a Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for a
Portfolio and for other investment companies and accounts managed by the
Investment Adviser occur contemporaneously, the purchase or sale orders may be
aggregated in order to obtain any price advantages available to large
denomination purchases or sales.

No portfolio transactions are executed with the Investment Adviser or
any of its affiliates.

INFORMATION ABOUT THE TRUST AND
PORTFOLIO TRUST

The Funds and Their Shares

The Funds are investment series of the Trust, a newly-formed
unincorporated business trust organized under the laws of the State of Delaware
and operates pursuant to an Amended and Restated Master Trust Agreement dated
October 16, 1996. Under the Master Trust Agreement of the Trust, the Trustees of
the Trust have authority to issue an unlimited number of shares of beneficial
interest, par value $.0001 per share, of the Funds. Each share represents an
equal proportionate interest in the relevant Fund with each other share and is
entitled to such dividends and distributions as are declared by the Trustees.
Upon any liquidation of the Funds, shareholders are entitled to share pro rata
in the net assets available for distribution.

All Fund shares have equal rights with regard to voting, and
shareholders of the Fund have the right to vote as a separate class with respect
to matters as to which their interests are not identical to those of
shareholders of other classes of the Trust, including any change of investment
policy requiring the approval of shareholders.

Except as described below, whenever the Trust is requested to vote on a
fundamental policy of or matters pertaining to the Portfolios, the Trust will
hold a meeting of the Funds' shareholders and will cast its vote proportionately
as instructed by the Funds' shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolios meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees of the Trust in the same proportion as the Fund shareholders who do, in
fact, vote. Subject to applicable statutory and regulatory requirements, the
Funds would not request a vote of their shareholders with respect to (a) any
proposal relating to the Portfolios, which proposal, if made with respect to the
Funds, would not require the vote of the shareholders of the Funds, or (b) any
proposal with respect to the Portfolios that is identical in all material
respects to a proposal that has previously been approved by shareholders of the
Funds. Any proposal submitted to holders in the Portfolios, and that is not
required to be voted on by shareholders of the Funds, would nonetheless be voted
on by the Trustees of the Trust.

The assets received by the Trust from the issue and sale of shares of
each Fund, and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are especially allocated to that Fund and constitute
the underlying assets of such Fund. The underlying assets of each Fund are
required to be segregated on the books of account and are to be charged with the
expenses of the Trust. Any general expenses of the Trust not readily
identifiable as belonging to a particular Fund shall be allocated by or under
the direction of the Trustees in such a manner as the Trustees determine to be
fair and equitable, taking into consideration, among other things, the nature
and the type of expense and the relative size of the Funds.

18
<PAGE> 82

Each share of a Fund has equal dividend, redemption and liquidation
rights with other shares of that Fund and when issued is fully paid and
non-assessable. Under the Trust's Agreement and Declaration of Trust
("Declaration of Trust"), no annual or regular meeting of shareholders is
required. Thus, there will ordinarily be no annual shareholders meeting unless
otherwise required by the 1940 Act. The initial shareholder elected the initial
Board of Trustees on October 16, 1996. Thereafter, the Board will be a
self-perpetuating body until fewer than 50% of the Trustees serving as such are
Trustees who were elected by shareholders. At that time, another meeting of
shareholders will be called to elect Trustees. Under the Declaration of Trust,
any Trustee may be removed by votes of two-thirds of the outstanding Trust
shares, and holders of ten percent or more of the outstanding shares of the
Trust can require the Trustees to call a meeting of shareholders for the
purpose of the removal of one or more Trustees. Whenever ten or more
shareholders of the Trust who have been such for at least six months, and who
hold in the aggregate shares having a net asset value of at least $25,000 or
which represent at least 1% of the outstanding shares, whichever is less, apply
to the Trustees in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request a meeting, and such
application is accompanied by a form of communication and request which they
wish to transmit, the Trustees shall within five (5) Trust Business Days after
receipt of such application either (1) afford to such applicants access to a
list of the names and addresses of all shareholders as recorded on the books of
the Trust; or (2) inform such applicants as to the approximate number of
shareholders of record and the approximate cost of mailing to them the proposed
communication or form of request.

Shares do not have cumulative voting rights, which means that in
situations in which shareholders elect Trustees, holders of more than 50% of the
shares voting for the election of Trustees can elect 100% of the Trust's
Trustees, and the holders of less than 50% of the shares voting for the election
of Trustees will not be able to elect any person as a Trustee.

The Portfolio and its Investors

The Portfolios are series of the International Currency Fund (the
"Portfolio Trust"), which is a newly-formed business trust and, like the Trust,
an open-end management investment company under the 1940 Act. The Portfolio
Trust was organized as a Delaware business trust under the laws of the State of
Delaware on August 13, 1996.

Interests in the Portfolios have no preemptive or conversion rights,
and are fully paid and non-assessable, except as set forth below. The
Portfolio Trust normally will not hold meetings of holders of such interests
except as required under the 1940 Act. The Portfolio Trust would be required
to hold a meeting of holders in the event that at any time less than a majority
of its Trustees holding office had been elected by holders. The Trustees of the
Portfolio Trust continue to hold office until their successors are elected and
have qualified. A Trustee of the Portfolio Trust may be removed upon a majority
vote of the interests held by holders in the Portfolio Trust qualified to vote
in the election. The 1940 Act requires the Portfolio Trust to assist its
holders in calling such a meeting. Upon liquidation of a Portfolio, holders in
the Portfolio would be entitled to share pro rata in the net assets of the
Portfolio Trust available for distribution to holders.

Each holder in a Portfolio is entitled to vote in proportion to its
percentage interest in such Portfolio.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING
AGENT, COUNSEL AND INDEPENDENT AUDITORS

The Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, NY 11245,
acts as the Trust's and Portfolio Trust's Custodian. Rules adopted under the
1940 Act permit the Funds and Portfolios to maintain their foreign securities
and cash in the custody of certain eligible foreign banks. Sub-custodians
holding any foreign securities and cash on behalf of the Funds and Portfolios
will be approved by the Board of Trustees of

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<PAGE> 83

the Trust or Portfolio Trust, as the case may be, in accordance with the
regulations of the Securities and Exchange Commission.

BISYS Fund Services, Inc., 100 First Avenue, Suite 300, Pittsburgh, PA
15222, provides customary transfer, dividend disbursing and shareholder
servicing agent services.

Goodwin, Procter & Hoar LLP, Exchange Place, Boston, MA 02019-2881, is
legal counsel for the Trust and the Portfolio Trust.

Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109,
independent auditors, have been selected to examine the annual financial
statements of the Trust and Portfolio Trust. The Trust and the Portfolio Trust
will send audited annual and unaudited semiannual financial statements to all
its shareholders of record.

ADDITIONAL INFORMATION

A Registration Statement, of which this Statement of Additional
Information is a part, in respect of the Fund's shares has been filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933, as amended.

This Statement of Additional Information omits certain information
contained in the Registration Statement. Items which are thus omitted, including
contracts and other documents referred to or summarized herein and therein, may
be inspected at the offices of the Securities and Exchange Commission or
obtained from the Securities and Exchange Commission upon payment of the
prescribed fees.

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<PAGE> 84

INFORMATION ABOUT SECURITIES RATINGS OF UNITED STATES
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS ("NRSROs")

Ratings of Long-Term Corporate Debt Securities
- -----------------------------------------------

MOODY'S INVESTORS SERVICE, INC. Aaa-Best quality. These securities
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." 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-High quality by all standards. They are rated lower than the best bond
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 made the long-term risks appear somewhat greater.

STANDARD & POOR'S CORPORATION. AAA-Highest grade. They possess the
ultimate degree of protection as to principal and interest. Marketwise, they
move with interest rates, and hence provide the maximum safety on all counts.
AA-High grade. Generally, these bonds differ from AAA issues only in a small
degree. Here, too, prices move with the long-term money market.

FITCH INVESTORS SERVICE, INC. AAA-High grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions, and liable to
but slight market fluctuation other than through changes in the money rate. The
prime feature of an "AAA" bond is the showing of earnings several times or many
times interest requirements for such stability of applicable interest that
safety is beyond reasonable question whenever changes occur in conditions.
Other features may be considered, such as a wide margin of protection through
collateral, security or direct lien on specific property. Sinking funds or
voluntary reduction of debt by call or purchase are often factors, while
guarantee or assumption by parties other than the original debtor may influence
their rating. AA-Of safety virtually beyond question and readily salable. Their
merits are not greatly unlike those of "AAA" class but a bond so rated may be
junior though it has a strong lien, or the margin of safety may be less
strikingly broad. The issue may be the obligation of a small company, strongly
secured, but influenced as to rating by the lesser financial power of the
enterprise and more local type of market.

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<PAGE> 85

Rating of Short-Term Corporate Debt Securities
- ---------------------------------------------

MOODY's

Moody's Commercial Paper ratings, which are also applicable to
municipal paper investments permitted to be made by the Fund, are opinions of
the ability of issuers to repay punctually their promissory obligations not
having an original maturity in excess of nine months. Moody's employs the
following designations, all judged to be investment grade, to indicate the
relative repayment capacity of rated issuers:

P-1 (Prime-1): Superior capacity for repayment.

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<PAGE> 86

P-2 (Prime-2): Strong capacity for repayment.

S&P's

S&P's ratings are a current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded into four categories, ranging from "A" for the highest quality
obligations to "D" for the lowest. Issues within the "A" category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety, as
follows:

A-1: This designation indicates the degree of safety regarding timely payment is
very strong. A "plus" (+) designation indicates an even stronger likelihood of
timely payment.

A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as overwhelming as
for issues designated A-1.

A-3: Issues carrying this designation have an adequate capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.

IBCA LIMITED/IBCA INC.

Short-term obligations, including commercial paper, rated A-1+ by IBCA
Limited or its affiliate IBCA Inc. are obligations supported by the highest
capacity for timely repayment. Obligations rated A-1 have a very strong capacity
for timely repayment. Obligations rated A-2 have a strong capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.

FITCH INVESTORS SERVICES, INC.

Fitch Investors Services, Inc. employs the rating F-1+ to indicate
issues regarded as having the strongest degree of assurance for timely payment.
The rating F-1 reflects an assurance of timely payment only slightly less in
degree than issues rated F-1+, while the rating F-2 indicates a satisfactory
degree of assurance for timely payment, although the margin of safety is not as
great as indicated by the F-1+ and F-1 categories.

DUFF & PHELPS INC.

Duff & Phelps Inc. employs the designation of Duff 1 with respect to
top grade commercial paper and bank money instruments. Duff 1+ indicates the
highest certainty of timely payment: Short-term liquidity is clearly
outstanding, and safety is just below risk-free U.S. Treasury short-term
obligations. Duff 1- indicates high certainty of time payment. Duff 2 indicates
good certainty of timely payment: liquidity factors and company fundamentals are
sound.

THOMSON BANKWATCH, INC. ("BANKWATCH")

BankWatch will assign both short-term debt ratings and issuer ratings
to the issuers it rates. BankWatch will assign a short-term rating ("TBW-1,"
"TBW-2," "TBW-3," or "TBW-4") to each class of debt (e.g., commercial paper or
non-convertible debt), having a maturity of one year or less, issued by a
holding company structure or an entity within the holding company structure that
is rated by BankWatch. Additionally, BankWatch will assign an issuer rating
("A," A/B," "B," "B/C, "C," "C/D," "D," "D/E," and "E") to each issuer that it
rates.

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<PAGE> 87

Note: Certain NRSROs utilize rankings within rating categories
indicated by a + or -. The Fund, in accordance with industry practice,
recognizes such rankings with categories as graduations, viewing for example
S&P's rating of A-1+ and A-1 as being in S&P's highest rating category.

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<PAGE> 88

INFORMATION ABOUT SECURITIES RATINGS OF CANADIAN
RATING ORGANIZATIONS

Ratings of Long-Term Debt Securities
- ------------------------------------

CANADIAN BOND RATING SERVICE ("CBRS")
- -------------------------------------

A++ -- Highest Quality. This category encompasses bonds of outstanding quality.
They possess the highest degree of protection of principal and interest.
Companies with debt rated A++ are generally large national and/or multinational
corporations whose products or services are essential to the Canadian economy.
These companies are the acknowledged leaders in their respective industries and
have clearly demonstrated their ability to best withstand adverse economic or
trade conditions either national or international in scope. Characteristically,
these companies have had a long and credible history of superior debt
protection, in which the quality of their assets and earnings has been
constantly maintained or improved, with strong evidence that this will continue.

A+ -- Very Good Quality. Bonds rated A+ are similar in characteristics to those
rated A++ and can also be considered superior in quality. These companies have
demonstrated a long and satisfactory history of growth with above-average
protection of principal and interest on their debt securities. These bonds are
generally rated lower in quality because the margin of assets or earnings
protection may not be as large or as stable as those rated A++. In both these
categories the nature and quality of the asset and earning coverages are more
important than numerical values of the ratios.

A -- Good Quality. Bonds rated A are considered to be good quality securities
and to have favorable long-term investment characteristics. The main feature
that distinguishes them from the higher rated securities is that these companies
are more susceptible to adverse trade or economic conditions. Consequently, the
protection is lower than for the categories A++ and A+. In all cases the A rated
companies have maintained a history of adequate asset and earnings protection.
There may be certain elements that may impair this protection sometime in the
future. Confidence that the current overall financial position will be
maintained or improved is slightly lower than for the securities rated above.

DOMINION BOND RATING SERVICE LIMITED ("DBRS")
- ---------------------------------------------

AAA -- highest credit quality. The degree of protection afforded principal and
interest is of the highest order. Earnings are relatively stable, the structure
of the industry in which the entity operates is very strong, and the outlook
for future profitability is extremely favorable. There are few qualifying
factors present which would detract from the performance of the entity, and the
strength of liquidity and coverage ratios is unquestioned.

AA -- superior credit quality. Protection of interest and principal is
considered high. In many cases, they differ from bonds rated AAA to a small
degree.

<PAGE> 89

A -- upper medium grade credit quality. Protection of interest and principal is
still substantial, but the degree of strength is less than with AA rated
entities. Entities in the A category may be more susceptible to adverse
economic conditions and have greater cyclical tendencies.

Ratings of Short-Term Debt Securities
- -------------------------------------

CBRS
- ----

A-1+ -- Highest Quality. Corporate and government organizations with short-term
debt rated A-1+ are considered to be of outstanding credit quality. In general,
these organizations maintain a strong liquidity and capital position and have a
strong level of revenues/earnings/cash flow to meet all current and long-term
obligations. Characteristically, these organizations have a long and creditable
record of excellent performance. These organizations also have the ability to
maintain their performance over an extended period. Although these
organizations may experience a decline in revenues/earnings/cash flow during
recessionary periods, their ability to restore performance in subsequent
periods is very good. These organizations are generally well established and a
significant factor in their fields. Management has clearly demonstrated its
competence and reliability.

A-1 -- Very Good Quality. Corporate and government organizations with
short-term debt rated A-1 are also very well established and have a creditable
operating history. However, their credit-risk profiles are not as strong as
those organizations in the A-1+ category. These organizations generally
maintain very good financial performance measurements throughout the economic
cycle; however, they are more vulnerable to economic and competitive conditions.

A-1 (Low) -- Good Quality. Corporate and government organizations with
short-term debt rated A-1 (Low) have a creditable operating history. However,
their credit-risk profiles are not as strong as those organizations rated in
the A-1 or A-1+ category. These organizations generally maintain good financial
performance measurements throughout the economic cycle. However, they are more
vulnerable to economic and competitive conditions. Moreover, the level of debt
protection as measured by their access to capital, debt service coverage
ratios, and capital underpinning, is relatively lower.

DBRS
- ----

R-1 -- high-grade prime credit. The entity's ability to repay its current
liabilities as they fall due is very high. The strength of the various
liquidity ratios is unquestioned, and alternative sources of funds to
commercial paper such as bank lines, ability to do long-term financing and a
strong parent exist. Furthermore, the outlook for future liquidity and the
trend of these ratios should be favorable. The level of profitability has been
reasonable and relatively stable, with only modest fluctuations. No substantial
qualifying negative factors exist, and the firm is of sufficient size to be a
strong influence in its industry.

<PAGE> 90
R-2 -- medium grade credit. The liquidity ratios of entities in this
classification are not as strong as those in the R-1 category, and the past and
future trend may suggest some deterioration in the strength of these ratios.
Alternative sources of liquidity support are considered strong; however, even
the strongest liquidity support will not improve the commercial paper rating of
the issuer. The size of the entity may restrict its flexibility, and its
relative position in the industry is not as strong as an R-1. Profitability
trends, past and future, may be less favorable, earnings not as stable, and
there may be some negative qualifying factors present.

Ratings of Government Debt Securities
- -------------------------------------

CBRS
- ----

AAA -- Highest Quality. Debt securities rated AAA are considered to be of the
highest quality and have a history of excellent protection of both principal
and interest. The issuer has enjoyed excellent management with its debt load
well within its capacity to service debt even during periods of economic
decline.

AA -- Very Good Quality. Issues rated AA are also considered to be of very good
quality and have recorded much of the same level of protection as those rated
AAA. However, the extent or margin of protection is slightly less than the
above category and there may be certain elements present which could cause a
decline in the quality.

A -- Good Quality. Issues rated A are regarded as being good quality
securities. Management is also considered good and has recorded a history of
providing good protection and stewardship. However, there are weaknesses
present which, under adverse economic circumstances, would impair the issuer's
ability to continue to maintain a good level of protection for its debt.

NOTE: CBRS's Commercial Paper ratings refer to an issuer's
commercial paper, short-term promissory notes, short-
term deposits, banker's acceptances, letters of
credit, treasury bills and/or other short-term
indebtedness with an original term of one year or
less.

(High) and (Low) designations after a rating indicate
an issuer's relative strength within a rating category.

<PAGE> 91
FIVE ARROWS SHORT TERM INVESTMENT TRUST
===============================================================================
Statements of Assets and Liabilities (local currencies) (unaudited)
June 30, 1997
===============================================================================

<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
FUND FUND* * * FUND * * * FUND * * *
------------- --------- ---------- ------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
ASSETS:
Investment in International Currency Fund............ 3,073,433 -- -- --
Deferred organizational costs........................ 61,000 37,000 82,000 99,000
Receivable from Administrator........................ 11,887 -- -- --
----------- ------ ------ ------
Total Assets.............................................. 3,146,320 37,000 82,000 99,000
----------- ------ ------ ------

LIABILITIES:
Amounts payable to Manager........................... 61,000 37,000 82,000 99,000
Distribution payable from net investment income...... 13,327 -- -- --
Shareholder service fees payable..................... 3,280
Administration fees payable.......................... 39 -- -- --
Other accrued expenses............................... 7,048 -- -- --
----------- ------ ------ ------
Total Liabilities......................................... 84,694 37,000 82,000 99,000
----------- ------ ------ ------
NET ASSETS................................................ 3,061,627 -- -- --
=========== ====== ====== ======

Net Assets
Five Arrows shares................................... 3,061,627 -- -- --
Five Arrows Service shares........................... -- -- -- --
----------- ------ ------ ------
3,061,627 -- -- --
=========== ====== ====== ======

Shares Outstanding
Five Arrows shares................................... 3,061,627 -- -- --
Five Arrows Service shares........................... -- -- -- --
----------- ------ ------ ------
Total Shares Outstanding 3,061,627 -- -- --
=========== ====== ====== ======

NET ASSET VALUE, OFFERING & REDEMPTION PRICE PER SHARE.... 1.00 1.00 1.00 1.00
=========== ====== ====== ======

COMPOSITION OF NET ASSETS:
Shares of common stock, at par....................... 306 -- -- --
Additional paid-in capital........................... 3,061,321 -- -- --
----------- ------ ------ ------
NET ASSETS, JUNE 30, 1997................................ 3,061,627 -- -- --
=========== ====== ====== ======
</TABLE>

* * * not yet commenced operations

See notes to financial statements.

<PAGE> 92

FIVE ARROWS SHORT TERM INVESTMENT TRUST
===============================================================================
Statements of Operations (local currencies) (unaudited)
For the Period Ended June 30, 1997
===============================================================================

<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
FUND * FUND * * * FUND* * * FUND* * *
------------- ---------- --------- ------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Investment Income from International Currency Fund............ 26,249 -- -- --

Expenses...................................................... 6,959 -- -- --
Less: Fee waivers and expense reimbursements.................. (6,959) -- -- --
-------- ---- ---- ----
-- -- -- --
-------- ---- ---- ----

Net Investment Income from International Currency Fund.................. 26,249 -- -- --
-------- ---- ---- ----

EXPENSES:
Administration fees........................................... 235 -- -- --
Shareholder servicing fees.................................... 4,871 -- -- --
Legal fees.................................................... 10,088 -- -- --
Amortization of organization costs............................ 3,880 -- -- --
Registration fees............................................. 3,395 -- -- --
Printing fees................................................. 1,649 -- -- --
Audit fees.................................................... 1,344 -- -- --
Other operating expenses...................................... 1,649 -- -- --
-------- ---- ---- ----
TOTAL EXPENSES ............................................... 27,111 -- -- --
Less Fee waivers and reimbursements by the Administrator.. (25,816) -- -- --
-------- ---- ---- ----
TOTAL NET EXPENSES ........................................... 1,295 -- -- --
-------- ---- ---- ----

NET INVESTMENT INCOME................................................... 24,954 -- -- --
-------- ---- ---- ----

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................... 24,954 -- -- --
======== ==== ==== ====
</TABLE>

* for period March 26, 1997 (commencement of operations) to June 30, 1997.
* * * not yet commenced operations

See notes to financial statements.

<PAGE> 93

FIVE ARROWS SHORT TERM INVESTMENT TRUST
===============================================================================
Statements of Changes in Net Assets (local currencies) (unaudited)
For the period ended June 30, 1997
================================================================================
<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
FUND * FUND* * * FUND* * * FUND* * *
------------- ---------- --------- ------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:

OPERATIONS:
Net investment income................................ 24,954 -- -- --
--------- ---- ---- ----
Change in net assets resulting from operations................ 24,954 -- -- --
--------- ---- ---- ----

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income - Five Arrows shares........... (24,954) -- -- --
Net investment income - Five Arrows Service shares... -- -- -- --
Change in net assets from shareholder distributions........... (24,954) -- -- --
---------

CAPITAL SHARE TRANSACTIONS:
Proceeds from shares sold............................ 3,100,000 -- -- --
Dividends reinvested................................. 11,627 -- -- --
Cost of shares redeemed.............................. (50,000) -- -- --
--------- ---- ---- ----
Change in net assets from capital share transactions.......... 3,061,627 -- -- --
--------- ---- ---- ----

CHANGE IN NET ASSETS.......................................... 3,061,627 -- -- --

NET ASSETS:
Beginning of period.................................. -- -- -- --
--------- ---- ---- ----
End of period ....................................... 3,061,627 -- -- --
========= ==== ==== ====
</TABLE>
* for period March 26, 1997 (commencement of operations) to June 30, 1997.
* * * not yet commenced operations

See notes to financial statements.

<PAGE> 94

FIVE ARROWS SHORT TERM INVESTMENT TRUST
===============================================================================
Financial Highlights (unaudited)
For the period ended June 30, 1997
===============================================================================

<TABLE>
<CAPTION>
UNITED STATES DOLLAR FUND
FIVE ARROWS FIVE ARROWS
CLASS SERVICE
SHARES * SHARES * * *
----------- ------------
<S> <C> <C>
NET ASSET VALUE PER SHARE, BEGINNING OF PERIOD .............. 1.00 --
----- ----

INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................... 0.01 --
----- ----
Total income from investment operations...................... 0.01 --
----- ----

LESS DISTRIBUTIONS:
Net investment income............................... (0.01) --
----- ----
NET ASSET VALUE PER SHARE, END OF PERIOD..................... 1.00 --
===== ====

TOTAL RETURN................................................. 1.42%(b) --

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period ('000)............................. 3,062 --
Ratio of expenses to average net assets .................... 0.28%(c) --
Ratio of net investment income to average net assets ........ 5.30%(c) --
Ratio of expenses to average net assets (a)................. 7.23%(c) --
Ratio of net investment income to average net assets (a)..... (1.65)%(c) --

- -------------------------------------------------------------------------------------------------
</TABLE>

* for period March 26, 1997 (commencement of operations) to June 30, 1997.
* * * not yet commenced operations

(a) During the period, certain fees were voluntarily reduced and expenses
reimbursed. If such voluntary fee reductions and expense reimbursements
had not occured the ratios would have been as indicated.

(b) Not annualized

See notes to financial statements.

<PAGE> 95

INTERNATIONAL CURRENCY FUND
===============================================================================
Statements of Assets and Liabilities (local currencies) (unaudited)
June 30, 1997
================================================================================

<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
PORTFOLIO PORTFOLIO PORTFOLIO* * * PORTFOLIO* * *
------------- ---------- -------------- --------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at amortized cost 24,475,000 96,013,295 -- --
(original cost $24,475,000, (pound)95,964,208
c$0 and Dem 0, respectively)
Deferred organizational costs................... 75,000 45,000 100,000 121,000
Cash............................................ 42,851 815 -- --
Interest receivable............................. 6,759 131,856 -- --
Prepaid expenses................................ 4,237 3,845 -- -
---------- ---------- ------- -------
Total Assets............................................. 24,603,847 96,194,811 100,000 121,000
---------- ---------- ------- -------

LIABILITIES:
Amounts Payable to Manager...................... 75,000 45,000 100,000 121,000
Administration fees payable..................... 702 2,479 -- --
Transaction fees payable........................ 33,216 6,815 -- --
Trustees fees payable........................... 10,572 7,854 -- --
Legal fees payable ............................. 9,603 7,378 -- --
Audit fees payable.............................. 3,201 2,499 -- --
Fund accounting fees payable.................... 723 2,400 -- --
Custodian fees payable.......................... 482 1,877 -- --
Other accrued expenses.......................... 2,127 1,653 -- --
---------- ---------- ------- -------
Total Liabilities........................................ 135,626 77,955 100,000 121,000
---------- ---------- ------- -------

NET ASSETS, JUNE 30, 1997................................ 24,468,221 96,116,856 -- --
===============================================================
</TABLE>

* * * not yet commenced operations

See notes to financial statements.

<PAGE> 96

INTERNATIONAL CURRENCY FUND
===============================================================================
Statements of Operations (local currencies) (unaudited)
For the period ended June 30, 1997
===============================================================================
<TABLE>
<CAPTION>
United States Pound Canadian
Dollar Sterling Dollar Deutschemark
Portfolio * Portfolio * * Portfolio* * * Portfolio* * *
------------- ------------- -------------- --------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income............................... 267,731 1,104,314 -- --
Other Income.................................. 741 -- -- --
------- --------- ---- ----
Total Income ................................. 268,472 1,104,314 -- --
------- --------- ---- ----

EXPENSES:
Advisory fees................................. 9,645 36,144 -- --
Administration fees........................... 2,411 9,036 -- --
Transactions fees............................. 33,216 6,815 -- --
Trustees fees................................. 10,572 7,854 -- --
Legal fees.................................... 9,603 7,378 -- --
Amortization of organization costs............ 4,850 3,453 -- --
Audit fees.................................... 3,201 2,499 -- --
Fund accounting fees and expenses............. 964 3,614 -- --
Custodian fees and expenses................... 482 1,877 -- --
Other operating expenses...................... 5,927 2,246 -- --
------- --------- ---- ----
TOTAL EXPENSES ............................... 80,871 80,916 -- --
Fee waivers ................................. (9,645) (36,144) -- --
------- --------- ---- ----
Total Net Expenses ........................... 71,226 44,772 -- --
------- --------- ---- ----

NET INVESTMENT INCOME.................................. 197,246 1,059,542 -- --
------- --------- ---- ----

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... 197,246 1,059,542 -- --
======= ========= ==== ====
</TABLE>
* for period from March 26, 1997 (commencement of operations) to June 30,
1997.
* * for period from March 3, 1997 (commencement of operations) to June 30,
1997.
* * * not yet commenced operations

See notes to financial statements.

<PAGE> 97

INTERNATIONAL CURRENCY FUND
===============================================================================
Statements of Changes in Net Assets (local currencies) (unaudited)
For the period ended June 30, 1997
===============================================================================

<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
PORTFOLIO * PORTFOLIO * * PORTFOLIO* * * PORTFOLIO* * *
------------- ------------- -------------- --------------
$ (pound) C$ DM
<S> <C> <C> <C> <C>
INVESTMENT ACTIVITIES:

OPERATIONS:
Net investment income............................. 197,246 1,059,542 -- --
----------- ----------- ---- ----
Change in net assets resulting from operations............. 197,246 1,059,542 -- --
----------- ----------- ---- ----

CAPITAL TRANSACTIONS:
Contributions..................................... 34,968,496 103,891,390 -- --
Withdrawals....................................... (10,697,521) (8,834,076) -- --
----------- ----------- ---- ----
Change in net assets resulting from capital transactions... 24,270,975 95,057,314 -- --
----------- ----------- ---- ----

Change in Net Assets ...................................... 24,468,221 96,116,856 -- --

NET ASSETS:
Beginning of period............................... -- -- -- --
----------- ----------- ---- ----
End of period..................................... 24,468,221 96,116,856 -- --
=========== =========== ==== ====
</TABLE>

* for period from March 26, 1997 (commencement of operations) to June 30,
1997.
* * for period from March 3, 1997 (commencement of operations) to June 30,
1997.
* * * not yet commenced operations

See notes to financial statements.

<PAGE> 98

INTERNATIONAL CURRENCY FUND
===============================================================================
Supplementary Data (unaudited)
For the period ended June 30, 1997
===============================================================================
<TABLE>
<CAPTION>
UNITED STATES POUND CANADIAN
DOLLAR STERLING DOLLAR DEUTSCHEMARK
PORTFOLIO * PORTFOLIO * * PORTFOLIO* * * PORTFOLIO* * *
------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net assets, end of period ('000)........................... 24,468 96,117 -- --

Ratio of expenses to average net assets ................... 1.48%(b) 0.25%(b) -- --

Ratio of net investment income to average net assets ...... 4.09%(b) 5.86%(b) -- --

Ratio of expenses to average net assets (a)................ 1.68%(b) 0.45%(b) -- --

Ratio of net investment income to average net assets (a)... 3.89%(b) 5.66%(b) -- --
Total Return since inception............................... 0.81%(c) 1.11%(c)
</TABLE>
* from March 26, 1997 (commencement of operations) to June 30, 1997.
* * from March 3, 1997 (commencement of operations) to June 30, 1997.
* * * not yet commenced operations

(a) During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occured the ratios would have been as
indicated.

(b) Annualized

See notes to financial statements.

<PAGE> 99

INTERNATIONAL CURRENCY FUND
UNITES STATES DOLLAR PORTFOLIO
===============================================================================
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL MATURITY MOODYS AMORTIZED
AMOUNT DESCRIPTION RATE DATE S&P COST
------ ----------- ---- ---- --- ----
<S> <C> <C> <C> <C> <C>
TIME DEPOSITS --- 75.2%
BANKS
1,100,000 Australia & New Zealand Bank Group................. 6.00% 07/01/97 P1/A1 $1,100,000
1,100,000 Bank of Montreal ................................... 6.00% 07/01/97 P1/A1+ 1,100,000
1,000,000 Barclays Bank ...................................... 5.50% 07/01/97 P1/A1+ 1,000,000
1,100,000 Bayerische VereinsBank ............................. 6.00% 07/01/97 P1/A1+ 1,100,000
1,100,000 Canadian Imperial Bank of Commerce ................. 6.00% 07/01/97 P1/A1+ 1,100,000
1,100,000 Commerzbank London ................................. 6.00% 07/01/97 P1/A1+ 1,100,000
1,100,000 Credit Anstalt Bankverein London ................... 6.13% 07/01/97 P1/A1 1,100,000
1,100,000 Den Danske Bank London ............................. 6.00% 07/01/97 P1/A1 1,100,000
1,000,000 Deutsche Bank ...................................... 5.44% 07/01/97 P1/A1+ 1,000,000
1,100,000 Dresdner Bank ...................................... 6.00% 07/01/97 P1/A1+ 1,100,000
1,100,000 Kredietbank ........................................ 6.13% 07/01/97 A1+ 1,100,000
1,100,000 Lloyds Bank London ................................. 6.13% 07/01/97 P1/A1+ 1,100,000
1,100,000 NationsBank ........................................ 5.88% 07/01/97 A1+ 1,100,000
1,100,000 Royal Bank Of Canada ............................... 5.88% 07/01/97 P1/A1+ 1,100,000
1,100,000 Svenska Handelsbanken .............................. 6.13% 07/01/97 P1/A1 1,100,000
1,100,000 Toronto Dominion Bank London ....................... 6.06% 07/01/97 P1/A1+ 1,100,000
1,000,000 Westdeutsche Landesbank............................. 5.50% 07/01/97 P1/A1 1,000,000
-----------
TOTAL COMMERCIAL PAPER 18,400,000
-----------

REPURCHASE AGREEMENTS --- 24.83%
6,075,000 Credit Suisse First Boston dated 30/03/97, with a
maturity value of $6,075,987 (Collateralized by
$6,585,000 zero coupon various U.S. Government
Farm Credit Discount Notes due 1997--1998 market
value $6,274,332.................................... 5.85% 07/01/97 P1 6,075,000
-----------
TOTAL REPURCHASE AGREEMENTS 6,075,000
-----------

TOTAL INVESTMENTS AT AMORTIZED COST---100.03% 24,475,000
Liabilities in excess of other assets--0.03% (6,779)
-----------
NET ASSETS--100.0% $24,468,221
-----------
</TABLE>

(a) The Moody's or Standard & Poor's rating indicated are believed to be the
most recent ratings available for the securities listed. Ratings are
generally ascribed to securities at the time of issuance. While agencies
may from time to time revise such ratings, they undertake no obligation to
do so, and the ratings do not necessarily represent what the agencies would
ascrib to these securities as at June 30, 1997.
These ratings are unaudited.

<PAGE> 100

INTERNATIONAL CURRENCY FUND
POUND STERLING PORTFOLIO
===============================================================================
PORTFOLIO OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PRINCIPAL MATURITY MOODYS AMORTIZED
AMOUNT DESCRIPTION RATE DATE S&P (A) COST
------ ----------- ---- ---- ------- ----
<S> <C> <C> <C> <C> <C>
TIME DEPOSITS --- 13.08%
BANKS
4,573,000 Credit Anstalt Bankverein................................. 6.88% 07/01/97 P1/A1 (pound)4,573,000
4,000,000 Den Danske Bank.......................................... 6.75% 07/01/97 P1/A1 4,000,000
4,000,000 Royal Bank Of Canada ..................................... 6.44% 07/17/97 P1/A1+ 4,000,000
----------
TOTAL TIME DEPOSITS 12,573,000
----------

CERTIFICATE OF DEPOSIT --- 22.89%
BANKS
2,500,000 Bank of Nova Scotia ...................................... 6.25% 07/11/97 P1/A1+ 2,500,000
2,500,000 Bank of Scotland ......................................... 6.25% 07/11/97 P1/A1 2,500,000
4,000,000 Dresdner Bank ............................................ 6.44% 07/10/97 P1/A1+ 4,000,000
4,000,000 NationsBank .............................................. 6.47% 07/16/97 A1+ 4,000,000
2,500,000 Rabobank London .......................................... 6.25% 07/11/97 P1/A1+ 2,500,000
2,500,000 Royal Bank of Scotland London............................ 6.25% 07/17/97 P1/A1+ 2,500,000
4,000,000 Svenska Handelsbanken .................................... 6.50% 07/24/97 P1/A1+ 4,000,000
----------
TOTAL CERTIFICATE OF DEPOSIT 22,000,000
----------

COMMERCIAL PAPER --- 18.14%
UTILITIES
4,000,000 Scottish Hydro Electric .................................. 6.68% 08/22/97 A1 3,962,332
BANKS
3,500,000 Australia New Zealand Melbourne .......................... 6.43% 07/02/97 P1/A1 3,499,387
TELECOMMUNICATIONS
1,000,000 Vodafone Group Plc....................................... 6.50% 07/21/97 A1 996,455
3,000,000 Vodafone Group Plc....................................... 6.43% 07/04/97 A1 2,998,422
INSURANCE
4,000,000 Commercial Union ......................................... 6.49% 07/14/97 A1+ 3,990,800
DIVERSIFIED FOOD
2,000,000 Nestle ................................................... 6.50% 07/21/97 A1+ 1,992,910
----------
TOTAL COMMERCIAL PAPER 17,440,306
----------

REPURCHASE AGREEMENTS --- 45.78%
21,999,999 Credit Suisse First Boston dated 30/06/97, with a
maturity value of (pound)22,003,917 (Collateralized by
(pound)18,619,403 9% due 2012 U.K. Government Gilts
market value (pound)22,439,999)........................... 6.50% 07/01/97 P1/A1+ 21,999,999

21,999,990 Goldman Sachs, dated 30/06/97 with a maturity
value of (pound)22,003,848 (Collateralized by
(pound)19,599,100 9.75% due 2002 U.K Government
Gilts market value
(pound)22,439,989)........................................ 6.40% 07/01/97 A1+ 21,999,990
----------
TOTAL REPURCHASE AGREEMENTS 43,999,989
----------

TOTAL INVESTMENTS AT AMORTIZED COST--99.89% 96,013,295
Other assets in excess of liablilities 0.11% 103,561
----------
NET ASSETS--100.0% (pound)96,116,856
==========
</TABLE>

(a) The Moody's or Standard & Poor's rating indicated are believed to be the
most recent ratings available for the securities listed. Ratings are
generally ascribed to securities at the time of issuance. While agencies
may from time to time revise such ratings, they undertake no obligation
to do so, and the ratings do not necessarily represent what the agencies
would ascrib to these securities as at June 30, 1997.
These ratings are unaudited.

<PAGE> 101

FIVE ARROWS SHORT TERM INVESTMENT TRUST
Notes to Financial Statements

NOTE 1--ORGANIZATION

Five Arrows Short Term Investment Trust, a Delaware business trust
("the Trust"), is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company. At June 30,
1997 the Trust consisted of four funds; the U.S. Dollar Fund, the Pound Sterling
Fund, the Canadian Dollar Fund and the Deutschemark Fund, (individually a "Fund"
and collectively the "Funds").

Each Fund seeks to achieve its investment objective by investing substantially
all of its assets in the corresponding portfolio of the International Currency
Fund, (individually a "Portfolio" and collectively the "Portfolios" ), that
has the same investment objectives as that of such Fund. The value of each
Fund's investment in each Portfolio included in the accompanying statements of
assets and liabilities reflects each Fund's proportionate beneficial interest
in the net assets of that Portfolio. At June 30, 1997, the Funds held
proportionate interests in the corresponding Portfolios in the following
amounts:

<TABLE>
<S> <C>
U.S. Dollar Fund............................................. 12.5%
Pound Sterling Fund.......................................... 00.0%
Canadian Dollar Fund......................................... 00.0%
Deutschemark Fund............................................ 00.0%
</TABLE>

The financial statements of each Portfolio, including its portfolio of
investments, are included elsewhere within this report and should be read in
conjunction with each Fund's financial statements.

BISYS Fund Services Limited Partnership ("BISYS") serves as the Trust's
administrator. Its affiliates, Five Arrows Fund Distributors Incorporated, (the
"Distributor") and BISYS Fund Services Inc., (the "Transfer Agent"), act as the
distributor and transfer/dividend disbursing agent to the Funds, respectively.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed
by the Funds in the preparation of their financial statements. The policies are
in conformity with U.S. generally accepted accounting principles. The
preparation of financial statements requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.

VALUATION OF INVESTMENTS:
The Funds record respective investments in the Portfolios of
International Currency Fund at value. The valuation of securities held by the
International Currency Fund is discussed in the notes to the International
Currency Fund Financial Statements included elsewhere in this report.

INVESTMENT INCOME AND EXPENSES:
The Funds record their proportionate share of the investment income,
expenses and realized gains and losses recorded by the corresponding Portfolio
on a daily basis. The investment income, expenses and realized gains and losses
are allocated daily to investors in each Portfolio based upon the value of their
investments in each Portfolio. Such investments are adjusted on a daily basis.

Expenses directly attributable to each Fund are charged directly to the
respective Fund, while general Trust expenses attributable to more than one Fund
of the Trust are allocated among the respective Funds.

<PAGE> 102

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
The Funds' net investment income, if any, is declared daily in respect
of each class of share and paid monthly to shareholders of record on the date of
declaration. Dividends from each class of share are automatically reinvested in
additional shares of that class at net asset value unless the shareholders
specifically elect to receive dividends in the form of cash. Net realized gains
on portfolio securities, if any, are distributed at least annually. The amount
of dividends from net investment income and of distributions from net realized
gains are determined in accordance with U.S. federal income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for net operating losses,
expiring capital loss carryforwards, and deferral of certain losses.

FEDERAL INCOME TAXES:

Under Subchapter M of the Internal Revenue Code (the "Code"), the Funds will be
treated as separate corporations for federal income tax purposes. It is
intended that each Fund will qualify for each fiscal year as a "regulated
investment company" under the Code by complying with certain requirements of
the Code regarding sources of income, diversification of assets, and
distribution of income to shareholders, although no assurance can be given in
this regard. As regulated investment companies, the Funds will not be liable
for U.S. federal income taxes on the net investment income and capital gains
distributed to shareholders in accordance with the applicable provisions of the
Code. Since it is intended that each Fund will distribute all of its net income
and net capital gain each year, each Fund should avoid all U.S. federal income
taxes.

Each Fund will determine its income in terms of its Designated Currency
and, in the case of each Fund other than the U.S. Dollar Fund, will translate
its net income for each year from its Designated Currency into U.S. dollars for
U.S. Federal income tax purposes. Under current Treasury regulations, regulated
investment companies are normally required to recognize for U.S. Federal income
tax purposes income or losse attributable to changes in exchange rates between
the U.S. dollar and the Fund's Designated Currency. (i.e.,currency gain or loss)
absent a ruling to the contrary from the Internal Revenue service. Recognition
of currency gain in excess of currency loss in any given year would require the
affected fund to pay dividends in excess of its interest income in order to pay
out all income as calculated for U.S. Federal income tax purposes. In reliance
upon a ruling from the U.S. Internal Revenue Service, the Trust calculates the
income of each Fund without recognizing currency gain or loss.

ORGANIZATIONAL EXPENSES:
The Funds incurred certain costs in connection with their organization.
The Funds are expected to reimburse the Rothschild International Asset
Management Limited (the "Manager"), for the payment of these expenses made in
advance by the Manager. These costs have been deferred and are being amortized
on a straight-line basis over five years from the date from the commencement of
operations by the Funds.

NOTE 3--AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

The Funds have an Administration Agreement with BISYS and a
Distribution Agreement with the Distributor.

As Administrator, BISYS is responsible for coordinating the Funds'
efforts and generally administering the operation of the Funds' business.
Pursuant to the terms of the Administration Agreement, BISYS is entitled to a
fee, accrued daily and payable monthly, at an annual rate of 0.05% of each
Fund's average daily net assets. BISYS has agreed to provide a wide range of
services to the Funds, including maintaining the Funds offices, providing
statistical and research data, coordinating the preparation of reports to
shareholders, calculating and providing for the calculation of net asset values
of Fund shares, dividends and capital gains distributions to shareholders and
performing other administrative functions necessary for the smooth operation of
the Funds.

The Investment Adviser has voluntarily agreed to waive such portion of
its advisory fee as is necessary to cause the annualized total expenses of each
class of share of a Fund not to exceed a specified percentage of such class'
average net daily net asset value (0.275% in the case of the Five Arrows share
class of the U.S. Dollar Fund and 0.35% in the case of the Five Arrows share
class of each

<PAGE> 103

other Fund). Similarly, for the Five Arrows Service share class these
percentages are 0.625% for the U.S. Dollar Fund and 0.70% for the other three
Funds. If this reimbursement is not sufficient to cause the total expenses of
any Fund not to exceed the applicable percentage of average daily net asset
value, the Administrator has agreed to pay such other expenses of the applicable
Fund as is necessary to keep total expenses from exceeding the applicable
percentage. This undertaking shall remain in effect for the fiscal period ended
December 31, 1997, and thereafter at the discretion of the Investment Adviser.
The Administrator waived fees and reimbursed expenses in the following amounts
so that the Funds could meet these expense limitations:

<TABLE>
<S> <C>
United States Dollar Fund.................................... $32,775
Pound Sterling Fund.......................................... nil
Canadian Dollar Fund......................................... nil
Deutschemark Fund............................................ nil
</TABLE>

The Distributor, the Transfer Agent and the Custodian may also from
time to time otherwise voluntarily waive their respective fees. No fee waivers
may be recouped beyond the end of any fiscal year.

The Funds have adopted a 12b-1 Plan (the "Plan") in accordance with the
regulations promulgated under the 1940 Act. The Plan provides that each Fund
will make payments to the Distributor equal to 0.50% (on an annual basis) of the
average daily value of the net assets of such Fund's Five Arrows Service class
of shares. The 12b-1 fee has two components: a service fee and a distribution
fee. The plan provides that each of these components will be paid at an annual
rate of 0.25% of the average daily value of the net assets of such Fund's Five
Arrows Service class of shares.

The Distributor has voluntarily agreed to waive a portion of the
distribution fee component in order to limit payments of the 12b-1 fee to 0.35%
(on an annual basis) of the average daily net asset value of the Five Arrows
Service class shares of any Fund. This waiver shall remain in effect for the
fiscal period ending December 31, 1997 and thereafter at the discretion of the
Distributor. The Distributor has reserved the right to terminate or revise this
undertaking with respect to any period after December 31, 1997. For the period
ended June 30, 1997, the Funds paid the following amounts to the Distributor in
connection with the Plan:

<TABLE>
<S> <C>
United States Dollar Fund.................................... $00,000
Pound Sterling Fund.......................................... nil
Canadian Dollar Fund......................................... nil
Deutschemark Fund............................................ nil
</TABLE>

NOTE 4--TRUSTEES' FEES

The Trust has to date paid paid no compensation to the Trustees of the
Trust and it will not pay any compensation to those Trustees affiliated with the
Investment Adviser, the Administrator or the Distributor. The Trust will not pay
any compensation to the Trusts officers.

NOTE 5--CAPITAL SHARE TRANSACTIONS

Transactions in shares of the Funds for the period ended June 30, 1997
are summarized below:

<TABLE>
<CAPTION>
U.S. POUND CANADIAN
DOLLARS STERLING DOLLAR DEUTSCHEMARK
<S> <C> <C> <C> <C>
Shares subscribed............................. 3,100,000 nil nil nil
Shares issued to shareholders in reinvestment
of dividends.................................. 11,627 nil nil nil
Shares redeemed............................... (50,000) nil nil nil
--------- --- --- ---
Net increase.................................. 3,061,627 nil nil nil
</TABLE>

<PAGE> 104

INTERNATIONAL CURRENCY FUND
Notes to Financial Statements

NOTE 1--ORGANIZATION

International Currency Fund (the "Portfolio Trust"), a Delaware
business trust, is registered under the Investment Company Act of 1940, as
amended (the "Act"), as an open-end management investment company. At June 30,
1997 the Portfolio Trust consisted of four portfolios; the U.S. Dollar Portfolio
(the "U.S. Dollar Portfolio"), the Pound Sterling Portfolio (the "Pound Sterling
Portfolio"), the Canadian Dollars Portfolio (the "Canadian Dollar Portfolio" and
the Deutschemark Portfolio (the "Deutschemark Portfolio") (collectively the
"Portfolios").

The investment objectives of each Portfolio are to seek to maintain a
high level of liquidity, preserve capital and stability of principal expressed
in the Portfolio's designated currency and, consistent with those objectives, to
earn current income. A Portfolio's investment objectives are fundamental and may
not be changed without the approval of its shareholders.

Rothschild International Asset Management Limited (the " Investment
Adviser") serves as the Portfolio Trust's Investment Adviser. BISYS Fund
Services, Limited Partnership ("BISYS") acts Administrator as the to the
Portfolios' Trust's Portfolios.

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed
by the Portfolios in the preparation of their financial statements. The policies
are in conformity with U.S. generally accepted accounting principles. The
preparation of financial statements, requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. Actual results could differ from those estimates.

PORTFOLIO VALUATIONS:

The securities of the Portfolios are valued at amortized cost, which
approximates market value. The amortized cost method involves valuing a security
at its cost on the date of purchase and thereafter assuming a constant
amortization to maturity of the difference between the principal amount due at
maturity and cost. In addition, the Portfolios may not (a) purchase any
instrument with a remaining maturity greater than thirteen months, or (b)
maintain a weighted average maturity which exceeds 90 days.

SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable, the amortization of premium or accretion
of discount. Gains or losses realised on sales of securities are determined by
comparing the amortized cost of the security sold with the net sale proceeds.

EXPENSES:
Expenses directly attributable to a Portfolio are charged to that
Portfolio, while general Portfolio Trust expenses are allocated among the
respective Portfolios of the Trust.

REPURCHASE AGREEMENTS:
The Portfolios will enter into repurchase agreements only with
financial institutions rated by a U.S. nationally recognized statistical rating
organization (NRSRO) in the highest rating category for short term obligations
and deemed to be creditworthy by the Investment Adviser, pursuant to guidelines
established by the Portfolio Trust's Board of Trustees. During the term of any
repurchase agreement, the Investment Advisor will monitor the creditworthiness
of the seller, and the seller must maintain the value of the securities subject
to the agreement in an amount that is greater than the repurchase price. Default
or bankruptcy of the seller would, however

<PAGE> 105

expose the Portfolios to possible loss because of adverse market action or
delays in connection with the disposition of the underlying obligations. Because
of the seller's repurchase obligations, the securities subject to repurchase
agreements do not have maturity limitations.

ORGANIZATIONAL EXPENSES:
The deferred organization costs were by the Portfolios in connection
with their organization. The Portfolios are expected to reimburse Rothschild
International Asset Management Limited (the "Manager"), for the payment of these
costs made in advance by the Manager. The costs have been deferred and will be
amortized on a straight line basis over a five year period from the commencement
of operations by the Portfolios.

FEDERAL INCOME TAXES:
The Portfolios will be treated as a partnership for U.S. federal income
tax purposes. As such, each U.S. investor in the Portfolios will be taxed on its
share of the Portfolio's ordinary income and capital gains. It is intended that
the Portfolios will be managed in such a way that if necessary, an investor will
be able to satisfy the requirements of the U.S.
Internal Revenue Code applicable to regulated investment companies.

NOTE 3--AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES

The Portfolio Trust acting on behalf of each of the Portfolios has an
Investment Advisory Agreement with Rothschild and an Administration Agreement
with BISYS.

The Investment Adviser, Rothschild is responsible for managing the
investment of the assets of the Portfolios in conformity with the stated
objectives and policies of the Portfolios. Pursuant to the terms of the
Investment Advisory Agreement, Rothschild is entitled to a fee, which is accrued
daily and payable monthly, at an annual rate of 0.20% of the average daily net
assets of each Portfolio of the Trust. For the period ended June 30, 1997,
Rothschild waived its entire fees as Investment Adviser for each Portfolio in
the following amounts.

<TABLE>
<S> <C>
United States Dollar......................................... $9,645
Pound Sterling............................................... (pound)36,144
Canadian Dollar.............................................. nil
Deutschemark................................................. nil
</TABLE>

As Administrator, BISYS assists in supervising the operations of the
Portfolios. Pursuant to the terms of the Administration Agreement, BISYS is
entitled to a fee from each Portfolio which is accrued daily and payable
monthly, at an annual rate of 0.05% of each of the Portfolio's average daily net
assets. For the period ended June 30, 1997, BISYS earned the following fees as
Administrator for each Portfolio.

<TABLE>
<S> <C>
United States Dollar......................................... $2,411
Pound Sterling............................................... (pound)9,036
Canadian Dollar.............................................. nil
Deutschemark................................................. nil
</TABLE>

<PAGE> 106

NOTE 4--TRUSTEES AND OFFICERS COMPENSATION.

The Portfolio Trust has to date paid no compensation to the Trustees of
the Portfolio Trust. The Portfolio Trust will not pay compensation to the
Trustees of the Portfolio Trust affiliated with the Investment Adviser or the
Administrator nor will it pay any compensation to the Trustees who are officers
of the Trust .

NOTE 5--SECURITIES TRANSACTIONS

During the period ended June 30, 1997, each Portfolio purchased and
matured portfolio securities, in the following amounts:

<TABLE>
<CAPTION>
PURCHASES MATURITIES
--------- ----------
<S> <C> <C>
UNITED STATES DOLLAR PORTFOLIO
Total.............................. $590,089,000 $565,614,000

POUND STERLING PORTFOLIO
Total................................ (pound)2,255,744,102 (pound)2,159,917,674

CANADIAN DOLLARS PORTFOLIO
Total................................ nil nil

DEUTSCHEMARK PORTFOLIO
Total................................ nil nil
</TABLE>