BRAZOS MUTUAL FUNDS
N-1/A, 1996-12-02
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM N-1A

   
                         SEC File 333-14943 and 811-7881

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                     |_|
         Pre-Effective Amendment No.    1                                   |X|
                                     -------
         Post-Effective Amendment No. ________                              |_|
                                     and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940             |X|
         Amendment No.    1
                        ----
                        (Check appropriate box or boxes.)
    

                               Brazos Mutual Funds
               (Exact Name of Registrant as Specified in Charter)

                          5949 Sherry Lane, Suite 1560
                               Dallas, Texas 75225
           (Address of Principal Executive Offices)       (Zip Code)

           with a copy of communications to:

                      Audrey C. Talley, Esquire
                      Stradley, Ronon, Stevens & Young, LLP
                      2600 One Commerce Square
                      Philadelphia, PA  19103-7098

        Registrant's Telephone Number, including Area Code (214) 365-5203

        John D. McStay, 5949 Sherry Lane, Suite 1560, Dallas, Texas 75225
                     (Name and Address of Agent for Service)

     Approximate Date of Proposed Public Offering: Upon effective date of this
registration statement It is proposed that this filing will become effective
(check appropriate box)

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

If appropriate, check the following box:

          |_| This post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

        Calculation of Registration Fee Under the Securities Act of 1933:

An indefinite number of securities is being registered under the Securities Act
of 1933 pursuant to Rule 24f-2 thereunder.

<PAGE>

The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said section 8(a)
may determine.


                                       -2-

<PAGE>

                                TABLE OF CONTENTS


Part A   INFORMATION REQUIRED IN A PROSPECTUS

Part B   INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

Part C   OTHER INFORMATION


                                       -3-

<PAGE>

                            FORM N-1A CROSS REFERENCE

<TABLE>
<CAPTION>
PART A INFORMATION REQUIRED IN A PROSPECTUS

Form N-1A
Item Number                                                 Location in Prospectus
<S>                                                         <C>

Item 1.   Cover Page........................................Cover Page

Item 2.   Synopsis..........................................Fund Expenses; Prospectus
                                                            Summary; Risk Factors

Item 3.   Condensed Financial Information...................Financial Highlights (to be
                                                            added by amendment);
                                                            Performance Calculations

Item 4.   General Description of Registrant.................Prospectus Summary; Risk
                                                            Factors; Investment
                                                            Objective; Investment
                                                            Policies; Other Investment
                                                            Policies; Investment
                                                            Limitations

Item 5.   Management of the Fund............................Prospectus Summary;
                                                            Investment Adviser;
                                                            Administrative Services;
                                                            Portfolio Transactions

Item 5A.  Management's Discussion of Fund Performance.......To be provided in
                                                            Registrant's Annual Report
                                                            to Shareholders

Item 6.   Capital Stock and other Securities................Purchase of Shares;
                                                            Dividends, Capital Gains
                                                            Distributions and Taxes;
                                                            General Information

   
Item 7.   Purchase of Securities Being Offered..............Purchase of Shares;
                                                            Distributor; Shareholder
                                                            Services; Valuation of
                                                            Shares
    

Item 8.   Redemption or Repurchase..........................Redemption of Shares;
                                                            Shareholder Services

Item 9.   Legal Proceedings.................................Not Applicable


PART B INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

 Form N-1A                                                  Location in Statement
Item Number                                                 of Additional Information

Item 10.  Cover Page........................................Cover Page


                                       -4-

<PAGE>


Item 11.  Table of Contents.................................Cover Page; Table of
                                                            Contents

Item 12.  General Information and History...................General Information

Item 13.  Investment Objectives and Policies................Investment Objectives and
                                                            Policies; Investment
                                                            Limitations

Item 14.  Management of the Registrant......................Management of the Fund;
                                                            Investment Adviser

Item 15.  Control Persons and Principal 
          Holders of Securities.............................Management of the Fund

Item 16.  Investment Advisory and Other Services............Investment Adviser

Item 17.  Brokerage Allocation..............................Portfolio Transactions

Item 18.  Capital Stock and Other Securities................General Information

Item 19.  Purchase, Redemption and Pricing of 
          Securities Being Offered..........................Purchase of Shares;
                                                            Redemption of Shares;
                                                            Shareholder Services

Item 20.  Tax Status........................................General Information

Item 21.  Underwriters......................................Management of the Fund

Item 22.  Calculation of Performance Data...................Performance Calculations

Item 23.  Financial Statements..............................Financial Statements (to be
                                                            supplied by amendment)
</TABLE>


PART C OTHER INFORMATION

Information required to be included in Part C is set forth under the appropriate
item so numbered in Part C to this Registration Statement.

    Form N-1A
   Item Number

     Item 24.  Financial Statements and Exhibits

     Item 25.  Persons Controlled by or Under Common Control

     Item 26.  Number of Holders of Securities

     Item 27.  Indemnification

     Item 28.  Business and Other Connections of Investment Adviser

     Item 29.  Principal Underwriters

     Item 30.  Location of Accounts and Records

     Item 31.  Management Services

     Item 32.  Undertakings


                                       -5-

<PAGE>

   
                   BRAZOS/JMIC Small/Emerging Growth Portfolio
                              [INSERT PHONE NUMBER]
    

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

                                   PROSPECTUS


INVESTMENT OBJECTIVES

   
     Brazos Mutual Funds (the "Fund") is an open-end, management investment
company known as a "mutual fund." The Fund consists of multiple series of shares
(known as "Portfolios") each of which has different investment objectives and
investment policies. The BRAZOS/JMIC Small/Emerging Growth Portfolio currently
offers only one class of shares. The securities offered in this Prospectus are
shares of one diversified, no-load Portfolio managed by John McStay Investment
Counsel.

BRAZOS/JMIC Small/Emerging Growth Portfolio. The objective of the BRAZOS/JMIC
Small/Emerging Growth Portfolio (the "Portfolio") is to provide maximum capital
appreciation, consistent with reasonable risk to principal, by investing
primarily in small and middle market capitalization companies.
    

     There can be no assurance that the Portfolio will meet its stated
objective.

ABOUT THIS PROSPECTUS

     Keep this Prospectus for future reference. It contains information you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the
Securities and Exchange Commission. Such Statement is dated ___________________,
1996 and has been incorporated by reference into this Prospectus. For a free
copy of the SAI write to the Fund or call the Fund's Administrator at the
telephone number above.

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 OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


                                       -1-
<PAGE>

                                  FUND EXPENSES

   
     The following table illustrates expenses and fees a shareholder of the
Portfolio will incur. Additional transaction fees may be charged if a
broker-dealer or other financial intermediary deals with the Fund on your
behalf. Please see "Purchase of Shares" for further information.
    

                        Shareholder Transaction Expenses

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


     The table below shows the expenses an investor in the Portfolio would bear
directly or indirectly. The expenses and fees listed are based on estimates of
the Portfolio's operating costs to be incurred during the fiscal period ending
September 30, 1997.

                         Annual Fund Operating Expenses
                     (As a Percentage of Average Net Assets)

Investment Advisory Fees.................................................   .90%
Administrative Fees......................................................  0.10%
12b-1 Fees...............................................................   NONE
Other Expenses...........................................................   .42%
Total Operating Expenses (After Fee Waivers)............................. 1.35%*


     The fees set forth above are estimated amounts for its first year of
operations assuming average daily net assets of $40 million.

* The Adviser has voluntarily agreed to waive a portion of its advisory fees and
to assume expenses otherwise payable by the Portfolio (if necessary) in order to
keep the expense ratio from exceeding 1.35% of its average daily net assets. The
Fund will not reimburse the Adviser for any advisory fees that are waived or
Portfolio expenses that the Adviser may bear on behalf of a Portfolio.

     The following example shows the expenses that a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio charges
no redemption fees of any kind.


                                                       1 Year            3 Years

BRAZOS/JMIC Small/Emerging 
  Growth Portfolio..............................         $__               $__


     This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown.

                                       -2-

<PAGE>

                               PROSPECTUS SUMMARY

INVESTMENT ADVISER

     John McStay Investment Counsel (the "Adviser"), an investment counseling
firm founded in 1983, is the investment adviser to the Portfolio. The Adviser
currently manages approximately $2.0 billion in assets for institutional clients
and high net worth individuals. See "INVESTMENT ADVISER."

PURCHASE OF SHARES

     Shares of the Portfolio are offered through Rodney Square Distributors,
Inc. (the "Distributor" or "RSD"). The shares are available to investors at net
asset value without a sales commission. Shares can be purchased by sending
investments directly to the Fund. The minimum initial investment is $10,000. The
minimum for subsequent investments is $1,000. Certain exceptions to the initial
or minimum investment amounts may be made by Fund officers. See "PURCHASE OF
SHARES."

DIVIDENDS AND DISTRIBUTIONS

   
     The Portfolio will normally distribute substantially all of its net
investment income in annual dividends. It will also annually distribute any
realized net capital gains. Distributions will automatically be reinvested in
Portfolio shares unless an investor elects to receive cash distributions. See
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES."
    

REDEMPTIONS AND EXCHANGES

     Shares of the Portfolio may be redeemed without cost at any time, at the
net asset value of the Portfolio next determined after receipt of the redemption
request. The redemption price may be more or less than the purchase price. See
"REDEMPTION OF SHARES."

ADMINISTRATIVE SERVICES

     Rodney Square Management Corporation (the "Administrator" or "Rodney
Square"), is responsible for performing and overseeing administration, fund
accounting, dividend disbursing and transfer agent services for the Fund. See
"ADMINISTRATIVE SERVICES."


RISK FACTORS

     Prospective investors should consider the following: (1) the small
capitalization corporations in which the Portfolio will invest are more
vulnerable to financial and other risks than larger corporations and the
securities of such small capitalization corporations may involve a higher degree
of risk and price volatility than investments in the general equity markets. (2)
The Portfolio may invest a portion of its assets in derivatives including
futures contracts and options. (See "FUTURES CONTRACTS AND OPTIONS.") (3) The
Portfolio may invest in securities of foreign issuers, which may be subject to


                                       -3-

<PAGE>

   
additional risks. (See "FOREIGN SECURITIES.") (4) High rates of Portfolio
Turnover may result in additional cost and the realization of capital gains.
(See "PORTFOLIO Turnovers") (5) The Portfolio may use various investment
practices, including investing in repurchase agreements, when issued, forward
delivery and delayed settlement securities. (See "OTHER INVESTMENT POLICIES.").
Generally, the value of securities held by the Portfolio can be expected to vary
inversely with changes in interest rates; as interest rates decline, market
value tends to increase and vice versa.
    

                              INVESTMENT OBJECTIVE

   
     The objective of the Portfolio is to provide maximum capital appreciation,
consistent with reasonable risk to principal, by investing primarily in small
and middle market capitalization companies.
    

                               INVESTMENT POLICIES

     The Portfolio will invest (under normal circumstances) at least 65% of its
total assets in equity securities of a diverse spectrum of companies which have
market capitalizations at the time of purchase from $40 million to $2 billion.
The equity securities in which the Portfolio will invest consist of common
stocks and securities convertible into common stocks, including convertible
preferred stocks and convertible bonds, and ADRs.

     The Adviser selects companies based on their potential for strong growth in
revenue, earnings and cash flow, strong management, leading products or services
and potential for improvement. The list of potential investments is further
filtered by the use of traditional fundamental security analysis and valuation
methods including, but not limited to, analysis of relative returns on capital
and equity, reward to risk ratios and earnings per share growth rates relative
to price earnings ratios. The Adviser believes that many companies with smaller
capitalizations have greater potential than their larger counterparts to deliver
above-average revenue and earnings growth rates that may not have yet been
recognized by investors.

   
     The Adviser expects that a majority of investments in the Portfolio will be
in U.S. based companies, however shares of foreign based companies may be
purchased if they meet the Portfolio's investment criteria. Under normal
circumstances, investments in foreign based companies will comprise no more than
15% of total portfolio assets. The Portfolio may invest up to 20% of its assets
at the time of purchase in securities of companies that have (with predecessors)
a continuous operating history of less than 3 years. Such investments may be
characterized as potentially possessing higher business risks as well as greater
stock market risks and price volatility. Such companies may face special risks
that their products or services may not prove to be commercially successful.

     It is anticipated that cash reserves will represent a relatively small
percentage of total portfolio assets (less than 10% under most circumstances).
In unusual circumstances, or for temporary defensive purposes when market or
economic conditions warrant, the Portfolio may invest all or a portion of its
assets in short-term investments, cash and cash equivalents. When the Portfolio
is in a defensive position, it may not be pursuing its investment objective.
    



                                       -4-

<PAGE>

                            OTHER INVESTMENT POLICIES

SHORT-TERM INVESTMENTS

     Occasionally, the Portfolio may invest a portion of its assets in the
following money market instruments, consistent with the Portfolio's investment
policies.

     (1)  Time deposits, certificates of deposit (including marketable variable
          rate certificates of deposit) and bankers' acceptances issued by a
          commercial bank or savings and loan association.

     Time deposits are nonnegotiable deposits maintained in a banking
institution for a specified period of time (not longer than seven days) at a
stated interest rate. Time deposits maturing from two business days through
seven calendar days will not exceed 10% of the total assets of a Portfolio under
most circumstances.

     Certificates of deposit are negotiable short-term obligations issued by
commercial banks or savings and loan associations collateralized by funds
deposited in the issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity based upon a specified market rate. A bankers'
acceptance is a time draft drawn on a commercial bank by a borrower, usually in
connection with an international commercial transaction.

     The Portfolio will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion, or the equivalent
in other currencies, (ii) in the case of U.S. banks, it is a member of the
Federal Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an investment
quality comparable to other debt securities which may be purchased by the
Portfolio;

     (2)  Commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
          Moody's or, if not rated, issued by a corporation having an
          outstanding unsecured debt issue rated A or better by Moody's or by
          S&P;

     (3)  Short-term corporate obligations rated A or better by Moody's or by
          S&P;

     (4)  U.S. Government obligations including, bills, notes, bonds and other
          debt securities issued by the U.S. Treasury. These are direct
          obligations of the U.S. Treasury, supported by the full faith and
          credit pledge of the U.S. Government and differ mainly in interest
          rates, maturities and dates of issue;

     (5)  U.S. Government agency securities issued or guaranteed by U.S.
          Government sponsored instrumentalities and Federal agencies; and

     (6)  Repurchase agreements collateralized by securities listed above.


                                       -5-

<PAGE>

REPURCHASE AGREEMENTS

     The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities. In addition, the Portfolio may invest in repurchase
agreements collateralized by certificates of deposit, and certain bankers'
acceptances and other securities outlined above under "Short-Term Investments."
In a repurchase agreement, a Portfolio buys a security and simultaneously
commits to sell that security back at an agreed upon price plus an agreed upon
market rate of interest. Under a repurchase agreement, the seller will be
required to maintain the value of the securities subject to the agreement at not
less than the repurchase price if such securities mature in one year or less, or
101% of the repurchase price if such securities mature in more than one year.

     The use of repurchase agreements involves certain risks. While the Fund's
management acknowledges these risks, it is expected that they can be controlled
through stringent security selection criteria and careful monitoring procedures.

LENDING OF SECURITIES

     The Portfolio may lend its investment securities to qualified institutional
investors as a means of earning income. The Portfolio will not loan securities
to the extent that greater than one-third of its assets at fair market value
would be committed to loans. During the term of a loan, the Portfolio is subject
to a gain or loss depending on any increase or decrease in the market price of
the securities loaned. Lending of securities is subject to review by the Fund's
Board of Trustees. All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions about securities lending.

     An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.

WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES

   
     The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement" or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more
before delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by a Portfolio until it receives
payment or delivery from the other party to any of the above transactions. The
Portfolio will maintain a separate account of cash, U.S. Government securities,
other high grade debt obligations or other liquid securities at least equal to
the value of purchase commitments until payment is made. Such segregated
securities will either mature or, if necessary, be sold on or before the
settlement date. Typically, no income accrues on securities purchased on a
delayed delivery basis prior to the time delivery is made, although the
Portfolio may earn income on securities it has deposited in a segregated
account.
    

                                       -6-

<PAGE>


     The Portfolio may engage in when-issued transactions to obtain what is
considered to be an advantageous price and yield at the time of the transaction.
When the Portfolio engages in when-issued or forward delivery transactions, it
does so to acquire securities consistent with its investment objective and
policies and not for the purpose of investment leverage.

PORTFOLIO TURNOVER

     It is expected that the annual portfolio turnover rate for the Portfolio
will not exceed 300%. In addition to Portfolio trading costs, higher rates of
portfolio turnover may result in the realization of capital gains. See
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for information on taxation.

INVESTMENT COMPANIES

     The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in securities of other open-end or
closed-end investment companies. No more than 5% of the investing Portfolio's
total assets may be invested in securities of any one investment company nor may
it acquire more than 3% of the voting securities of any investment company. The
Portfolio will indirectly bear its proportionate share of any management fees
paid by an investment company in which it invests in addition to the advisory
fee paid by the Portfolio.

FOREIGN INVESTMENTS

     It is expected that generally, the Portfolio will invest in common stocks
of companies listed on foreign stock exchanges, but it may also invest in stocks
traded in the over-the-counter market. Common stocks for this purpose also
include securities having common stock characteristics such as rights and
warrants to purchase common stocks. The Portfolio may also invest in foreign
equity securities in the form of American Depositary Receipts (ADRs) and other
similar global instruments. ADRs (sponsored or unsponsored) are receipts
typically issued by a U.S. bank or trust company evidencing ownership of the
underlying foreign securities. Most ADRs are traded on a U.S. stock exchange.
Issuers of unsponsored ADRs are not contractually obligated to disclose material
information in the U.S. and, therefore, there may not be a correlation between
such information and the market value of the unsponsored ADR.

     Investing in foreign companies may involve additional risks and
considerations which are not typically associated with investing in U.S.
companies. Since stocks of foreign companies are normally denominated in foreign
currencies, the Portfolio may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and may incur costs in
connection with conversions between various currencies.

     As non-U.S. companies are not generally subject to uniform accounting,
auditing and financial reporting standards and practices comparable to those
applicable to U.S. companies, comparable information may not be readily
available about certain foreign companies. Securities of some non-U.S. companies
may be less liquid and more volatile than securities of comparable U.S.
companies. In addition,

                                       -7-

<PAGE>


in certain foreign countries, there is the possibility of expropriation or
confiscatory taxation, political or social instability, or diplomatic
developments which could affect U.S. investments in those countries.

FUTURES CONTRACTS AND OPTIONS

     In order to remain fully invested and to reduce transaction costs, the
Portfolio may invest in appropriate futures contracts and options (also known as
derivatives). Because transaction costs associated with futures and options may
be lower than the costs of investing in stocks and bonds directly, it is
expected that use of index futures and options to facilitate cash flows may
reduce a Portfolio's overall transaction costs. The Portfolio may enter into
futures contracts provided that not more than 5% of the Portfolio's assets are
required as margin deposit to secure obligations under such contracts. A
Portfolio will engage in futures and options transactions for hedging purposes
only.

     Futures and options can be volatile and involve various degrees and types
of risk. If the Portfolio judges market conditions incorrectly or employs a
strategy that does not correlate well with its investments, use of futures and
options contracts could result in a loss. The Portfolio could also suffer losses
if it is unable to liquidate its position due to an illiquid secondary market.
In the opinion of the Trustees of the Fund, the risk that the Portfolio will be
unable to close out a futures position or options contract will be minimized by
only entering into futures contracts or options transactions traded on national
exchanges and for which there appears to be a liquid secondary market.

RESTRICTED SECURITIES

     The Portfolio may purchase restricted securities that are not registered
for sale to the general public but which are eligible for resale to qualified
institutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the
liquidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these
restricted securities are not treated as illiquid securities for purposes of a
Portfolio's investment limitations. A Portfolio will invest no more than 15% of
its net assets in illiquid securities. The prices realized from the sales of
these securities could be less than those originally paid by the Portfolio or
less than what would be considered the fair value of such securities.

     Except as specified above and as described under "INVESTMENT LIMITATIONS,"
the foregoing investment policies are not fundamental and the Trustees may
change such policies without an affirmative vote of a majority of the
outstanding voting securities of a Portfolio, as defined in the 1940 Act.



                                       -8-

<PAGE>

                             INVESTMENT LIMITATIONS

     The Portfolio will not:

          (a)  with respect to 75% of its assets, invest more than 5% of its
               total assets at the time of purchase in the securities of any
               single issuer (other than obligations issued or guaranteed as to
               principal and interest by the government of the U.S. or any
               agency or instrumentality thereof);

          (b)  with respect to 75% of its assets, purchase more than 10% of any
               class of the outstanding voting securities of any issuer;

          (c)  acquire any securities of companies within one industry if, as a
               result of such acquisition, more than 25% of the value of the
               Portfolio's total assets would be invested in securities of
               companies within such industry; provided, however, that there
               shall be no limitation on the purchase of obligations issued or
               guaranteed by the U.S. Government, its agencies or
               instrumentalities, or instruments issued by U.S. banks when a
               Portfolio adopts a temporary defensive position;

          (d)  make loans except (i) by purchasing bonds, debentures or similar
               obligations which are publicly distributed, and (ii) by lending
               its portfolio securities to banks, brokers, dealers and other
               financial institutions so long as such loans are not inconsistent
               with the 1940 Act or the rules and regulations or interpretations
               of the SEC thereunder;

          (e)  borrow, except from banks and as a temporary measure for
               extraordinary or emergency purposes and then, in no event, in
               excess of 331/3% of the Portfolio's gross assets valued at the
               lower of market or cost, and a Portfolio may not purchase
               additional securities when borrowings exceed 5% of total gross
               assets; or

          (f)  pledge, mortgage or hypothecate any of its assets to an extent
               greater than 331/3% of its total assets at fair market value.

   
     The investment limitations described here and certain of the investment
limitations in the SAI are fundamental policies and may be changed only with the
approval of the holders of a majority of the outstanding shares of the Portfolio
of the Fund. If a percentage limitation on investment or utilization of assets
as set forth above is adhered to at the time an investment is made, a later
change in percentage resulting from changes in the value or total cost of the
Portfolio's assets will not be considered a violation of the restriction.
    

                               PURCHASE OF SHARES

     Shares of the Portfolio may be purchased without sales commission, at the
net asset value per share next determined after an order is received by the Fund
and payment is received by the Custodian. (See


                                       -9-

<PAGE>


"VALUATION OF SHARES.") The minimum initial investment required is $10,000.
Certain exceptions may be made by the officers of the Fund.

INITIAL INVESTMENTS

         BY MAIL

         o        Complete and sign an Account Registration Form and
                  mail it together with a check, drawn on a U.S. bank,
                  made payable to Brazos Mutual Funds, to:

                  Brazos Mutual Funds
                  c/o Rodney Square Management Corporation
                  P.O. Box 8987
                  Wilmington, DE 19890

                  A purchase order sent by overnight mail should be sent to:

                  1100 North Market Street, 19th Floor
                  Wilmington, DE 19801

     Payment for the purchase of shares received by mail will be credited to
your account at the net asset value per share of the Portfolio next determined
after receipt. Payment does not need to be converted into Federal Funds (moneys
credited to the Fund's Custodian Bank by a Federal Reserve Bank) before the Fund
will accept it for investment. Make certain that you specify the Portfolio in
which you wish to invest on the Account Registration Form.

         BY WIRE

         o        As soon as possible, telephone Rodney Square at
                  __________________ and provide the account name, address,
                  telephone number, social security or taxpayer identification
                  number, Portfolio selected, amount being wired and the name of
                  the bank wiring the funds. An account number will then be
                  provided to you. Next,

         o        instruct your bank to wire the specified amount to:

                      RODNEY SQUARE MANAGEMENT CORPORATION
                          C/O WILMINGTON TRUST COMPANY
                                 WILMINGTON, DE
                                   ABA #_____
                         ATTENTION: Brazos Mutual Funds
                      REF: PORTFOLIO NAME ________________
                                DDA Acct. #_____
              FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]



                                      -10-
<PAGE>



          o    Forward a completed Account Registration Form to the Fund at the
               address shown on the form. Federal Funds purchases will be
               accepted only on a day on which both the New York Stock Exchange
               and the Custodian Bank are open for business.

ADDITIONAL INVESTMENTS

     Additional investments can be made at any time. The minimum additional
investment is $1,000. Shares can be purchased at net asset value by mailing a
check to the Fund c/o Rodney Square at the address above (payable to "Brazos
Mutual Funds") or by wiring money to the Fund using the instructions outlined
above. When making additional investments, be sure that: the account name and
number is identified on the check or wire and the Portfolio to be purchased is
specified.

     Prior to wiring additional investments, notify the Fund by calling the
number on the cover of this prospectus. Mail orders should include, when
possible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.

OTHER PURCHASE INFORMATION

   
     Investments received by 4 p.m. ET (the close of the New York Stock Exchange
("NYSE")) will be invested at the price calculated after the NYSE closes that
day. Orders received after 4 p.m. ET will receive the price calculated on the
next business day. The Fund reserves the right, in its sole discretion, to
suspend the offering of shares of the Portfolio or reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interest of the Fund. Purchases of shares will be made in full and fractional
shares of the Portfolio calculated to three decimal places. Certificates for
fractional shares will not be issued. Certificates for whole shares will not be
issued except at the written request of the shareholder.
    

     Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which deal with the Fund on
behalf of their customers. Service Agents may impose additional or different
conditions on the purchase or redemption of Portfolio shares and may charge
transaction or other account fees. Each Service Agent is responsible for
transmitting to its customers a schedule of any such fees and information
regarding any additional or different purchase and redemption conditions.
Shareholders who are customers of Service Agents should consult their Service
Agent for information regarding these fees and conditions. Amounts paid to
Service Agents may include transaction fees and/or service fees paid by the Fund
from the Fund assets attributable to the Service Agent, and which would not be
imposed if shares of the Portfolio were purchased directly from the Fund or the
Distributor. The Service Agents may provide shareholder services to their
customers that are not available to a shareholder dealing directly with the
Fund. A salesperson and any other person entitled to receive compensation for
selling or servicing Portfolio shares may receive different compensation with
respect to one particular class of shares over another in the Fund.

     Service Agents may enter confirmed purchase orders on behalf of their
customers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive the investment order before the close of trading on the NYSE
and transmit it to the Fund's Transfer Agent prior to the close of their


                                      -11-

<PAGE>

business day to receive that day's share price. Proper payment for the order
must be received by the Transfer Agent no later than the time when the Portfolio
is priced on the following business day. Service Agents are responsible to their
customers and the Fund for timely transmission of all subscription and
redemption requests, investment information, documentation and money.

IN-KIND PURCHASES

     If accepted by the Fund, shares of the Portfolio may be purchased in
exchange for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as set forth under "VALUATION OF SHARES" at the time of
the next determination of net asset value after such acceptance. Shares issued
by a Portfolio in exchange for securities will be issued at net asset value
determined as of the same time. All dividends, interest, subscription, or other
rights pertaining to such securities shall become the property of the Portfolio
and must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for investment
and not for immediate resale.

     The Fund will not accept securities in exchange for shares of a Portfolio
unless:

          o    at the time of the exchange, such securities are eligible to be
               included in the Portfolio and current market quotations are
               readily available for such securities;

          o    the investor represents and agrees that all securities offered to
               be exchanged are not subject to any restrictions upon their sale
               by the Portfolio under the Securities Act of 1933, or otherwise;
               and

          o    the value of any such securities (except U.S. Government
               securities) being exchanged together with other securities of the
               same issuer owned by the Portfolio will not exceed 5% of the net
               assets of the Portfolio immediately after the action.

     Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of
securities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.

                              REDEMPTION OF SHARES

     Shares of the Portfolio may be redeemed by mail or telephone, at any time,
without cost, at the net asset value of the Portfolio next determined after
receipt of the redemption request. Shareholders are charged a $12.00 fee for
redemptions by wire. Otherwise, there is no charge for redemptions. Any
redemption may be more or less than the purchase price of your shares depending
on the market value of the investment securities held by the Portfolio.


                                      -12-
<PAGE>

BY MAIL

     The Portfolio will redeem its shares at the net asset value next determined
on the date the request is received in "good order." Address requests for
redemption to the Fund c/o Rodney Square Management Corporation, P.O. Box 8987,
Wilmington, DE 19890. A request to redeem shares must include:

          o    share certificates, if issued;

          o    a letter of instruction or a stock assignment specifying the
               number of shares or dollar amount to be redeemed, signed by all
               registered owners of the shares in the exact names in which they
               are registered;

          o    any required signature guarantees (see "SIGNATURE GUARANTEES");
               and

          o    any other necessary legal documents, if required, in the case of
               estates, trusts, guardianships, custodianships, corporations,
               pension and profit sharing plans and other organizations.

     Shareholders who are uncertain of requirements for redemption should
contact Rodney Square at ------------.

BY TELEPHONE

         In order to make a redemption request by telephone, you must:

          o    establish the telephone redemption privilege (and if desired, the
               wire redemption privilege) by completing appropriate sections of
               the Account Registration Form; and

          o    call the Fund and instruct that the redemption proceeds be mailed
               to you or wired to your bank.

         The following tasks cannot be accomplished by telephone:

          o    changing the name of the commercial bank or the account
               designated to receive redemption proceeds (this can be
               accomplished only by a written request signed by each
               shareholder, with each signature guaranteed);

          o    redemption of certificated shares by telephone.


     The Fund and the Fund's Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may be
liable for any losses if they fail to do so. These procedures include requiring
the investor to provide certain personal identification at the time an account
is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded and
investors may be required to provide additional


                                      -13-
<PAGE>

telecopied written instructions of such transaction requests. The Fund or
Transfer Agent may be liable for any losses due to unauthorized or fraudulent
telephone instructions if the Fund or Transfer Agent does not employ the
procedures described above. Neither the Fund nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for following instructions
received by telephone that it reasonably believes to be genuine.

     Please contact Rodney Square at ________________ for further details.

SIGNATURE GUARANTEES

Signature guarantees are required for the following redemptions:

          o    redemptions where the proceeds are to be sent to someone other
               than the registered shareowner(s);

          o    redemptions where the proceeds are to be sent to someplace other
               than the registered address; or

          o    share transfer requests.

     The purpose of signature guarantees is to verify the identity of the party
who has authorized a redemption. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital of
at least $100,000. Credit unions must be authorized to issue signature
guarantees.

OTHER REDEMPTION INFORMATION

     Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after receipt
of the request. The Fund may suspend the right of redemption or postpone the
date at times when both the NYSE and Custodian Bank are closed, or under any
emergency circumstances as determined by the SEC.

     If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of remaining shareholders of the Fund to make payment wholly
or partly in cash, the Fund may pay the redemption proceeds in whole or in part
by a distribution in-kind of liquid securities held by a Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur
brokerage charges on the sale of portfolio securities so received in payment of
redemptions.


                                      -14-

<PAGE>

                              SHAREHOLDER SERVICES

EXCHANGE PRIVILEGE

   
     Shares of the Portfolio may be exchanged for shares of any other Portfolio
included in the Brazos Mutual Funds. Exchange requests should be made by writing
to the Fund c/o Rodney Square Management Corporation, P.O. Box 8987, Wilmington,
DE 19890 or calling _______________.
    

     Any exchange will be based on the net asset values of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Contact
Rodney Square at __________________ for a copy of the Prospectus for the
Portfolio(s). Exchanges can only be made with Portfolios that are registered for
sale in a shareholder's state of residence. Exchange requests may be made either
by mail or telephone. Telephone exchanges will be accepted only if the
certificates for the shares to be exchanged have not been issued to the
shareholder and if the registration of the two accounts will be identical.
Requests for exchanges with other Portfolios received prior to 4 p.m. (ET) will
be processed as of the close of business on the same day. Requests received
after that time will be processed on the next business day. The Board of
Trustees may limit frequency and amount of exchanges permitted. For additional
information regarding responsibility for the authenticity of telephoned
instructions, see "REDEMPTION OF SHARES BY TELEPHONE" above. An exchange into
another Portfolio of the Fund is a sale of shares and may result in a capital
gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.

TRANSFER OF REGISTRATION

     You may transfer the registration of any of your Fund shares to another
person by writing to the Fund at the above address. As in the case of
redemptions, the written request must be received in good order before any
transfer can be made. (See "REDEMPTION OF SHARES" for a definition of "good
order.")

                                RETIREMENT PLANS

     Shares of the Fund are available for use in certain tax-deferred plans
(such as Individual Retirement Accounts ("IRAs"), defined contribution, 401(k)
and 403(b)(7) plans).

Individual Retirement Accounts

     Application forms and brochures for IRAs can be obtained from Rodney Square
by calling ---------------.

     Wilmington Trust Company ("WTC") makes available its services as an IRA
custodian for each shareholder account that is established as an IRA. For these
services, WTC receives an annual fee of $10.00 per account, which fee is paid
directly to WTC by the IRA shareholder. If the fee is not paid by


                                      -15-

<PAGE>


   
the date due, shares of the Fund owned by the IRA will be redeemed automatically
for purposes of making the payment. In addition, a $10 fee is charged to
shareholders transferring out of a Fund IRA.
    

                               VALUATION OF SHARES

     The net asset value of the Portfolio is determined by dividing the sum of
the total market value of the Portfolio's investments and other assets, less any
liabilities, by the total number of shares outstanding. Net asset value per
share of the Portfolio is determined as of the close of the NYSE on each day
that the NYSE is open for business.

   
     The Portfolio uses the last quoted trading price as the market value for
equity securities. For listed securities, the Fund uses the price quoted by the
exchange on which the security is primarily traded. Unlisted securities and
listed securities which have not been traded on the valuation date or for which
market quotations are not readily available are valued at the average between
the last price asked and the last price bid. For valuation purposes, quotations
of foreign securities in a foreign currency are converted to U.S. dollar
equivalents based upon the latest available bid price of such currencies against
U.S. dollars quoted by any major bank or by a broker.
    

     Bonds and other fixed income securities are valued according to the
broadest and most representative market which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed income
securities, which is accrued daily. Bonds and other fixed income securities may
be valued on the basis of prices provided by a pricing service when such prices
are believed to reflect the fair market value of such securities. Securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost when the Board of Trustees determines that amortized cost reflects fair
value.

     The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Trustees.

                            PERFORMANCE CALCULATIONS

     The Portfolio may advertise or quote total return data. Total return is
calculated on an average annual total return basis, and may also be calculated
on an aggregate total return basis, for various periods. Average annual total
return reflects the average annual percentage change in value of an investment
in a Portfolio over a period. Aggregate total return reflects the total
percentage change in value over a period. Both methods assume dividends and
capital gains distributions are reinvested in Portfolio shares.

   
     The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported in
financial and industry publications, and various indices, all as further
described in the Portfolio's SAI.
    

     The Portfolio will provide information about past performance together with
a comparison to an appropriate index in its Annual Report to Shareholders.
Following the end of the Portfolio's fiscal year, a free copy of the Portfolio's
Annual Report to Shareholders will be available upon request by writing or
calling the Fund at the address or phone number on the cover of this Prospectus.


                                      -16-

<PAGE>

                DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

     The Portfolio will distribute annually to shareholders substantially all of
its net investment income, together with any net realized capital gains.
Dividends paid shortly after the purchase of shares by an investor, although in
effect a return of capital, are taxable to shareholders. The Portfolio's
dividends and capital gains distributions will be automatically reinvested in
additional shares of the Portfolio unless the Fund is notified in writing that
the shareholder elects to receive distributions in cash.

FEDERAL TAXES

     The Portfolio intends to declare and pay dividend and capital gains
distributions so as to avoid imposition of the Federal Excise Tax. To do so, the
Portfolio expects to distribute an amount no less than:

          o    98% of its calendar year ordinary income;

          o    98% of its capital gains net income (the excess of short and
               long-term capital gains over short and long-term capital losses);
               and

          o    100% of any undistributed ordinary or capital gain net income
               from the prior year.

     Dividends paid by a Portfolio from net investment income, either in cash or
reinvested in shares, will be taxable to shareholders as ordinary income.
Dividends paid from the Portfolio will generally qualify in part for the 70%
dividends received deduction for corporations, but the portion of the dividends
so qualified depends on the ratio of the aggregate taxable qualifying dividend
income received by the Portfolio from domestic (U.S.) sources to the total
taxable income of the Portfolio, exclusive of long-term capital gains.

     Distributions paid by a Portfolio from long-term capital gains, either in
cash or additional shares of the Portfolio (and regardless of the length of time
the shares in the Portfolio have been owned by the shareholder), are taxable to
shareholders as such. These distributions are not eligible for the dividends
received deduction. Shareholders are notified annually by the Fund as to Federal
tax status of dividends and distributions paid by a Portfolio. Dividends and
distributions may also be subject to state and local taxes. Dividends declared
in October, November, or December to shareholders on record in such month will
be deemed to have been paid by the Fund and received by the shareholders on
December 31 of such calendar year, provided that the dividends are paid before
February 1 of the following year.

     Redemptions of shares in a Portfolio are taxable events for Federal income
tax purposes.

STATE AND LOCAL TAXES


                                      -17-

<PAGE>


     Shareholders may also be subject to state and local taxes on distributions
and redemptions. Shareholders should consult with their tax advisers regarding
the tax status of distributions in their state and locality.

                               INVESTMENT ADVISER

     John McStay Investment Counsel is a limited partnership formed in 1983 and
located at 5949 Sherry Lane, Suite 1560, Dallas, Texas 75225. The Adviser
provides investment management services to institutions and individuals. The
Adviser currently has approximately $2.0 billion in assets under management.
John D. McStay may be deemed to control the Adviser as a result of ownership of
a majority interest in John McStay & Associates ("JMA"), the general partner of
the Adviser. JMA owns a majority interest in the Adviser.

     An investment policy committee is responsible for the day-to-day management
of the Portfolio's investments.

     Under an Investment Advisory Agreement with the Fund, dated as of , the
Adviser manages the investment and reinvestment of the assets of the Portfolios.
The Adviser must adhere to the stated investment objectives and policies of the
Portfolios, and is subject to the control and supervision of the Fund's Board of
Trustees.

     As compensation for its services as an Adviser, the Portfolio pays the
Adviser an annual fee, in monthly installments, of 0.90% of the Portfolio's
average daily net assets for the month.

     The Adviser has voluntarily agreed to keep operating expenses from
exceeding 1.35% of average daily net assets. The Fund will not reimburse the
Adviser for any advisory fees that are waived or Portfolio expenses that the
Adviser may bear on behalf of a Portfolio.

     The Adviser may compensate its affiliated companies for referring investors
to the Portfolios. The Adviser, or any of its affiliates, may, at its own
expense, compensate a Service Agent or other person for marketing, shareholder
servicing, record-keeping and/or other services performed with respect to the
Fund or a Portfolio. Payments made for any of these purposes may be made from
the paying entity's revenues, its profits or any other source available to it.
When such service arrangements are in effect, they are made generally available
to all qualified service providers.

                        ADVISER'S HISTORICAL PERFORMANCE

     Set forth below are performance data provided by the Adviser pertaining to
the composite of separately managed accounts of the Adviser that are managed
with substantially similar (although not necessarily identical) objectives,
policies and strategies as those of the Portfolio. The investment returns of the
Portfolio may differ from those of the separately managed accounts because such
separately managed accounts may have fees and expenses that differ from those of
the Portfolio. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements and other restrictions
imposed by the Investment Company Act of 1940 and Internal Revenue Code; such
conditions,


                                      -18-

<PAGE>


if applicable, may have lowered the returns for the separately managed accounts.
The results presented are not intended to predict or suggest the return of the
Portfolio or the return an investor might achieve by investing in the Portfolio.

   
      John McStay Investment Counsel Small Capitalization Growth Portfolios
               (Percentage Returns Net of Average Management Fees)
    

<TABLE>
<CAPTION>
   Calendar Years             Institutional Equity Accounts              S&P 400 Index                  Russell 2000
<C>                                   <C>                                  <C>                           <C> 
1987*                                     25.6%                               -2.0%                         -8.8%
1988*                                     24.5%                               20.9%                         24.9%
1989*                                     31.9%                               35.6%                         16.2%
1990*                                     -4.0%                               -5.1%                        -19.5%
1991*                                     68.9%                               50.1%                         46.1%
1992*                                      8.7%                               11.9%                         18.4%
1993                                      15.3%                               14.0%                         18.9%
1994                                      -0.1%                               -3.6%                         -1.8%
1995                                      30.1%                               30.9%                         28.4%
Year to Date                              34.9%                               12.4%                         10.8%
(9/30/96)
Annualized                                22.7%                              15.67%                        12.16%
Cumulative                               634.9%                             313.59%                       206.23%
Nine-Year Mean                            22.7%                               17.0%                         13.6%
Value of $1 invested during
9 3/4years (1/1/87-9/30/96)              $7.35                               $4.14                         $3.06

<FN>
*    Numbers are AIMR compliant from 1/1/93 forward; numbers before that time
     are equal weighted.

Notes:
1.   The annualized return is calculated from monthly data, allowing for
     compounding. The formula used is in accordance with the acceptable methods
     set forth by the Association for Investment Management Research, The Bank
     Administration Institute, and the Investment Counsel Association of
     America. Market value of the account was the sum of the account's total
     assets, including cash, cash equivalents, short term investments, and
     securities valued at current market prices.
2.   The cumulative return means that $1 invested in the composite account on
     January 1, 1987 had grown to 7.35 by 9/30/96.
3.   The nine-year mean is the arithmetic average of the annual returns for the
     years listed.
4.   The S&P 400 and Russell 2000 are unmanaged indices which assume
     reinvestment of dividends and are generally considered representative of
     securities similar to those invested in by the Adviser for the purpose of
     the composite performance numbers set forth above.
5.   The Adviser's average annual management fee over the nine-year period
     (1987-1995) was 1% or 100 basis points. During the period, fees on the
     Adviser's individual accounts ranged from 1% to 1 1/2% (100 basis points to
     150 basis points). Net returns to investors vary depending on the
     management fee.
</FN>
</TABLE>


                                      -19-

<PAGE>

                             ADMINISTRATIVE SERVICES

     Rodney Square Management Corporation, 1100 N. Market Street, Wilmington, DE
19890-001, serves as Administrator, Transfer Agent and Dividend Paying Agent of
the Fund and also provides accounting services to the Fund.

   
     As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies, executive
and administrative services, internal auditing and regulatory compliance
services. Rodney Square also assists in the preparation of reports to
shareholders, prepares proxy statements, updates prospectuses and makes filings
with the Securities and Exchange Commission and state securities authorities.
Rodney Square performs certain budgeting and financial reporting and compliance
monitoring activities. For the services provided as Administrator, Rodney Square
receives an annual fee from the Fund equal to the greater of: (1) a minimum
annual fee of $32,500 for each of the first two single-class Portfolios plus
$15,000 for any additional Portfolio, or second or additional class of a
Portfolio; or (2) an asset-based fee, equal to a percentage of the average daily
net assets of the Fund, on a Fund-wide basis, according to the following
schedule:
         0.15% of the first $50 million in assets; plus 
         0.15% of assets between $50 million and $200 million; plus 
         0.07% of assets in excess of 200 million.
The Administrator's fee shall be payable monthly, as soon as practicable after
the last day of each month, based on the Fund's average daily net assets as
determined at the close of business on each business day day throughout the
month. Rodney Square also serves as Transfer Agent and Dividend Paying Agent of
the Fund.
    

     Rodney Square also serves as an Accounting Agent to the Fund. As Accounting
Agent, Rodney Square determines the Fund's net asset value per share and
provides accounting services to the Fund pursuant to an Accounting Services
Agreement with the Fund.

                                   DISTRIBUTOR

     Rodney Square Distributors, Inc., 1100 N. Market Street, Wilmington, DE
19890, has been engaged pursuant to a distribution agreement dated ___________,
1996, to assist in securing purchasers for shares of the Fund. RSD also
directly, or through its affiliates, provides investor support services. RSD
will receive no compensation for distribution of shares of the Fund, except for
reimbursement of out-of-pocket expenses.

     Banking laws limit deposit-taking institutions and certain of their
affiliates from underwriting or distributing securities. RSD is an affiliate of
WTC, the Fund's custodian bank for its domestic assets. RSD believes that it may
perform the services contemplated by its agreement with the Fund without
violation of applicable banking laws or regulations. If RSD were prohibited from
performing these services, it is expected that the Board of Trustees would
consider entering into agreements with other entities. It is not expected that
shareholders would suffer any adverse financial consequences as a result of such
an occurrence.


                                      -20-

<PAGE>

                             PORTFOLIO TRANSACTIONS

     The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio. The Agreement directs the Adviser to use its best
efforts to obtain the best available price and most favorable execution for all
transactions of the Portfolio. The Adviser may buy and sell securities for the
account of the portfolio through the Adviser's affiliated broker-dealer. In such
instances, the affiliated broker-dealer will complete transactions pursuant to
procedures designed to ensure that charges for the transactions do not exceed
usual and customary levels obtainable from other, unaffiliated broker-dealers.
Such transactions and the procedures are supervised by the Fund's Board of
Trustees. It is understood that the affiliated broker-dealer will not be
utilized in situations where, in the Adviser's judgment, the brokerage services
of another security firm would be in the best interest of the Portfolio. If
consistent with the interests of the Portfolio, the Adviser may select brokers
on the basis of research, statistical and pricing services these brokers provide
to the Portfolio. Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be performed by the
Adviser under the Investment Advisory Agreement. Such brokers may be paid a
higher commission than that which another qualified broker would have charged
for effecting the same transaction, provided that such commissions are paid in
compliance with the Securities Exchange Act of 1934, as amended, and that the
Adviser determines in good faith that the commission is reasonable in terms
either of the transaction or the overall responsibility of the Adviser to the
Portfolio and the Adviser's other clients. Although not a typical practice, the
Adviser may place portfolio orders with qualified broker-dealers who refer
clients to the Adviser. If a purchase or sale of securities is consistent with
the investment policies of a Portfolio and one or more other clients served by
the Adviser is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the allocations are subject to periodic review by
the Funds Trustees.

                               GENERAL INFORMATION

DESCRIPTION OF SHARES AND VOTING RIGHTS

   
     The Fund was organized as a Delaware Business Trust on October 24, 1996.
The Trustees have the power to designate one or more series of shares of
beneficial interest and to classify or reclassify any unissued shares without
further action by shareholders. At its discretion, The Board of Trustees may
create additional Portfolios and classes of shares.
    

     The shares of each Portfolio are fully paid and nonassessable, have no
preference as to conversion, exchange, dividends, retirement or other features
and have no pre-emptive rights. They have noncumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
Trustees can elect 100% of the Trustees. A shareholder is entitled to one vote
for each full share held (and a fractional vote for each fractional share held),
then standing in his name on the books of the Fund.


                                      -21-

<PAGE>


     Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Fund. The Fund will assist
shareholder communications in such matters.

CUSTODIAN

     Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, serves as Custodian of the Fund's assets.

INDEPENDENT ACCOUNTANTS

   
     Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, PA 19103,
is the independent accountants for the Fund.
    

REPORTS

   
     Shareholders receive unaudited semi-annual financial statements and annual
financial statements audited by Coopers & Lybrand L.L.P.
    

SHAREHOLDER INQUIRIES

     Shareholder inquiries may be made by contacting the Fund c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19890, or by calling the
telephone number listed on the cover of this Prospectus.

LITIGATION

     The Fund is not involved in any litigation.


                                      -22-

<PAGE>

                                   PROSPECTUS
                                      Dated

                               Investment Adviser
                         JOHN MCSTAY INVESTMENT COUNSEL
                                5949 Sherry Lane
                                   Suite 1560
                                Dallas, TX 75225



                                   Distributor


                                TABLE OF CONTENTS

Fund Expenses...................................................................
Prospectus Summary..............................................................
Risk Factors....................................................................
Investment Objective............................................................
Investment Policies.............................................................
Other Investment Policies.......................................................
Investment Limitations..........................................................
Purchase of Shares..............................................................
Redemption of Shares............................................................
Shareholder Services............................................................
Valuation of Shares.............................................................
Performance Calculations........................................................
Dividends, Capital Gains Distribution and Taxes.................................
Investment Adviser..............................................................
Administrative Services.........................................................
Distributor.....................................................................
Portfolio Transactions..........................................................
General Information.............................................................

     No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Fund's Statement of
Additional Information, in connection with the offering made by this Prospectus
and, if given or made, such information or its representations must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offering by the Fund in any jurisdiction in which such offering
may not lawfully be made.


                                      -23-

<PAGE>


                  BRAZOS/JMIC Real Estate Securities Portfolio

                              [INSERT PHONE NUMBER]

                                   ----------

                                   PROSPECTUS


INVESTMENT OBJECTIVES

   
     Brazos Mutual Funds (the "Fund") is an open-end, management investment
company known as a "mutual fund." The Fund consists of multiple series of shares
(known as "Portfolios") each of which has different investment objectives and
investment policies. The BRAZOS/JMIC Real Estate Securities Portfolio currently
offers only one class of shares. The securities offered in this Prospectus are
shares of one diversified, no-load Portfolio managed by John McStay Investment
Counsel.
    

BRAZOS/JMIC Real Estate Securities Portfolio. The objective of the BRAZOS/JMIC
Real Estate Securities Portfolio (the "Portfolio") is to provide a balance of
income and appreciation (with reasonable risk to principal) by investing
primarily in equity securities of companies which are principally engaged in the
real estate industry.

   
     There can be no assurance that the Portfolio will meet its stated
objective.
    

ABOUT THIS PROSPECTUS

     Keep this Prospectus for future reference. It contains information you
should know before you invest. A "Statement of Additional Information" ("SAI")
containing additional information about the Fund has been filed with the
Securities and Exchange Commission. Such Statement is dated _________________
1996 and has been incorporated by reference into this Prospectus. For a free
copy of the SAI write to the Fund or call the Fund's Administrator at the
telephone number above.

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 OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


                                       -1-

<PAGE>

                                  FUND EXPENSES

     The following table illustrates expenses and fees a shareholder of the
Portfolio will incur. Additional transaction fees may be charged if a
broker-dealer or other financial intermediary deals with the Fund on your
behalf. Please see "Purchase of Shares" for further information.

                        Shareholder Transaction Expenses


Sales Load Imposed on Purchases.............................................NONE

Sales Load Imposed on Reinvested Dividends..................................NONE

Deferred Sales Load.........................................................NONE

Redemption Fees............................................................. 1%*

Exchange Fees...............................................................NONE


*    Shares held 90 days or more may be redeemed without cost. Shares held less
     than 90 days are subject to a 1% redemption fee which is retained by the
     Fund for the benefit of the remaining shareholders. The fee is intended to
     encourage long-term investment in the Portfolio to avoid transaction and
     other expenses caused by early redemption, and to facilitate portfolio
     management.

     The table below shows the expenses an investor in the Portfolio would bear
directly or indirectly. The expenses and fees listed are based on estimates of
the Portfolio's operating costs to be incurred during the fiscal period ending
September 30, 1997.

                         Annual Fund Operating Expenses
                     (As a Percentage of average Net Assets)


Investment Advisory Fees..................................................  .90%

Administrative Fees....................................................... 0.15%

12b-1 Fees................................................................  NONE

Other Expenses............................................................  .55%

Advisory Fees Waived......................................................  .35%

Total Operating Expenses (After Fee Waivers)..............................1.25%*


     The fees set forth above are estimated amounts for its first year of
operations assuming average daily net assets of $20 million.

*    The Adviser has voluntarily agreed to waive a portion of its advisory fees
     and to assume expenses otherwise payable by the Portfolio (if necessary) in
     order to keep the expense ratio from exceeding 1.25% of its average daily
     net assets. If it were not for the fee waiver, the Portfolio's total annual
     operating expenses would be 1.60% of average daily net assets. The Fund
     will not reimburse the Adviser for any advisory fees that are waived or
     Portfolio expenses that the Adviser may bear on behalf of a Portfolio.


                                       -2-

<PAGE>

     The following example shows the expenses that a shareholder would pay on a
$1,000 investment over various time periods assuming (1) a 5% annual rate of
return and (2) redemption at the end of each time period. The Portfolio charges
no redemption fees if shares are held for at least 90 days.

                                                  1 Year               3 Years

BRAZOS/JMIC Real Estate 
  Securities Portfolio.......................       $13                  $40


     This example should not be considered a representation of past or future
expenses or performance. Actual expenses may be greater or lesser than those
shown.


                               PROSPECTUS SUMMARY

INVESTMENT ADVISER

     John McStay Investment Counsel (the "Adviser"), an investment counseling
firm founded in 1983, is the investment adviser to the Portfolio. The Adviser
currently manages approximately $2 billion in assets for institutional clients
and high net worth individuals. See "INVESTMENT ADVISER."

PURCHASE OF SHARES

     Shares of the Portfolio are offered through Rodney Square Distributors,
Inc. (the "Distributor" or "RSD"). The shares are available to investors at net
asset value without a sales commission. Shares can be purchased by sending
investments directly to the Fund. The minimum initial investment is $10,000. The
minimum for subsequent investments is $1,000. Certain exceptions to the initial
or minimum investment amounts may be made by Fund officers. See "PURCHASE OF
SHARES."

DIVIDENDS AND DISTRIBUTIONS

     The Portfolio will normally distribute substantially all of its net
investment income in quarterly dividends. It will also annually distribute any
realized net capital gains. Distributions will automatically be reinvested in
Portfolio shares unless an investor elects to receive cash distributions. See
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES."

REDEMPTIONS AND EXCHANGES

     Shares of the Portfolio may be redeemed at any time, at the net asset value
of the Portfolio next determined after receipt of the redemption request. Shares
held 90 days or more may be redeemed without additional fees. Shares held less
than 90 days are subject to a 1% redemption fee. The redemption price may be
more or less than the purchase price. See "REDEMPTION OF SHARES."


ADMINISTRATIVE SERVICES


                                       -3-

<PAGE>

     Rodney Square Management Corporation (the "Administrator" or "Rodney
Square"), is responsible for performing and overseeing administration, fund
accounting, dividend disbursing and transfer account services for the Fund. See
"ADMINISTRATIVE SERVICES."

RISK FACTORS

Prospective investors should consider the following:

   
     Because the Fund invests primarily in the real estate industry, it could
conceivably own real estate directly as a result of a default on debt securities
it owns. If the Fund has rental income or income from the disposition of real
property, the receipt of such income may adversely affect its ability to retain
its tax status as a regulated investment company. The Portfolio's investments
may be subject to certain risks associated with the direct ownership of real
estate. These risks include: declines in the value of real estate, risks related
to general and local economic conditions, overbuilding, possible geographic
concentration and increased competition, increases in property taxes and
operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high yielding securities and increase
the costs of obtaining financing, which could decrease the value of the
portfolio's investments. The Portfolio's share price, yield and total returns
fluctuate, and your investment may be worth more or less than your original cost
when you redeem your shares.
    

     In addition, equity real estate investment trusts may be affected by
changes in the value of the underlying property owned by the trusts, while
mortgage real estate investment trusts may be affected by the quality of credit
extended. Equity and mortgage real estate investment trusts are dependent upon
management skill, are not diversified and are subject to the risks of financing
projects. Such trusts are also subject to heavy cash flow dependency, defaults
by borrowers, self liquidation and the possibility of failing to qualify for
tax-free pass-through of income under the Internal Revenue Code and to maintain
exemption from the Investment Company Act of 1940. Changes in interest rates may
also affect the value of the debt securities in the Fund's portfolio. By
investing in real estate investment trusts indirectly through the Fund, a
Shareholder will bear not only his proportionate share of the expenses of the
Fund, but also, indirectly, similar expenses of the real estate investment
trusts.

                              INVESTMENT OBJECTIVE

     The objective of the Portfolio is to provide a balance of income and
appreciation (with reasonable risk to principal) by investing primarily in
equity securities of companies which are principally engaged in the real estate
industry.

                               INVESTMENT POLICIES

     Under normal circumstances, the Portfolio will invest at least 65% of its
total assets in equity securities of companies which are principally engaged in
the real estate industry. The equity securities in which the Portfolio will
invest consist of common stocks and securities convertible into common stocks,
including convertible preferred stocks and convertible bonds.


                                       -4-

<PAGE>


     A company is "principally engaged in the real estate industry" if at least
50% of its assets (marked- to-market) gross income or net profits are
attributable to ownership, construction, management or sale of residential,
commercial or industrial real estate. Real estate industry companies include:
equity real estate investment trusts, which pool investors' funds for investment
primarily in commercial real estate properties; mortgage real estate investment
trusts, which invest pooled funds principally in real estate related loans such
as construction, development and long-term mortgage loans, brokers or real
estate developers; hybrid real estate investment trusts, which hold properties
and mortgages; and issuers with substantial real estate holdings such as paper
and lumber producers and hotel and entertainment companies.

   
     The Portfolio may invest up to 20% of its total assets at the time of
purchase in securities of companies that have (with predecessors) a continuous
operating history of less than 3 years. Such investments may be characterized as
potentially possessing higher business risks as well as greater stock market
risks and price volatility. Such companies may face special risks that their
products or services may not prove to be commercially successful. There is no
limitation on the operating history of real estate investment trusts.
    

     The Adviser selects companies based on their strong cash flow, strong
management, dividend yield, dividend growth potential and financial strength.
The list of potential investments is further filtered by the use of traditional
fundamental security analysis and valuation methods including, but not limited
to, analysis of relative returns on capital and equity, reward to risk ratios
and earnings and cash flow per share growth rates relative to valuation
measures.

   
     It is anticipated that cash reserves will represent a relatively small
percentage of total portfolio assets (less than 10% under most circumstances).
In unusual circumstances, or for temporary defensive purposes when market or
economic conditions warrant, the Portfolio may invest all or a portion of its
assets in short-term investments, cash and cash equivalents. When the Portfolio
is in a defensive position, it may not be pursuing its investment objective.
    

                            OTHER INVESTMENT POLICIES

SHORT-TERM INVESTMENTS

     Occasionally, the Portfolio may invest a portion of its assets in the
following money market instruments, consistent with the Portfolio's investment
policies.

     (1)  Time deposits, certificates of deposit (including marketable variable
          rate certificates of deposit) and bankers' acceptances issued by a
          commercial bank or savings and loan association.

     Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time (not longer than seven days) at a
stated interest rate. Time deposits maturing from two business days through
seven calendar days will not exceed 10% of the total assets of a Portfolio under
most circumstances.


                                       -5-

<PAGE>


     Certificates of deposit are negotiable short-term obligations issued by
commercial banks or savings and loan associations collateralized by funds
deposited in the issuing institution. Variable rate certificates of deposit are
certificates of deposit on which the interest rate is periodically adjusted
prior to their stated maturity based upon a specified market rate. A bankers'
acceptance is a time draft drawn on a commercial bank by a borrower, usually in
connection with an international commercial transaction.

     The Portfolio will not invest in any security issued by a commercial bank
unless (i) the bank has total assets of at least $1 billion, or the equivalent
in other currencies, (ii) in the case of U.S. banks, it is a member of the
Federal Deposit Insurance Corporation, and (iii) in the case of foreign branches
of U.S. banks, the security is, in the opinion of the Adviser, of an investment
quality comparable to other debt securities which may be purchased by the
Portfolio;

     (2)  Commercial paper rated A-1 or A-2 by S&P or Prime-1 or Prime-2 by
          Moody's or, if not rated, issued by a corporation having an
          outstanding unsecured debt issue rated A or better by Moody's or by
          S&P;

     (3)  Short-term corporate obligations rated A or better by Moody's or by
          S&P;

     (4)  U.S. Government obligations including bills, notes, bonds and other
          debt securities issued by the U.S. Treasury. These are direct
          obligations of the U.S. Treasury, supported by the full faith and
          credit pledge of the U.S. Government and differ mainly in interest
          rates, maturities and dates of issue;

     (5)  U.S. Government agency securities issued or guaranteed by U.S.
          Government sponsored instrumentalities and Federal agencies; and

     (6)  Repurchase agreements collateralized by securities listed above.

REPURCHASE AGREEMENTS

     The Portfolio may invest in repurchase agreements collateralized by U.S.
Government securities. In addition, the Portfolio may invest in repurchase
agreements collateralized by certificates of deposit and certain bankers'
acceptances and other securities outlined above under "Short-Term Investments."
In a repurchase agreement, a Portfolio buys a security and simultaneously
commits to sell that security back at an agreed upon price plus an agreed upon
market rate of interest. Under a repurchase agreement the seller will be
required to maintain the value of the securities subject to the agreement at not
less than the repurchase price if such securities mature in one year or less or
101% of the repurchase price if such securities mature in more than one year.

     The use of repurchase agreements involves certain risks. While the Fund's
management acknowledges these risks, it is expected that they can be controlled
through stringent security selection criteria and careful monitoring procedures.

LENDING OF SECURITIES


                                       -6-

<PAGE>


     Each Portfolio may lend its investment securities to qualified
institutional investors as a means of earning income. A Portfolio will not loan
securities to the extent that greater than one-third of its assets at fair
market value would be committed to loans. During the term of a loan, the
Portfolio is subject to a gain or loss depending on any increase or decrease in
the market price of the securities loaned. Lending of securities is subject to
review by the Fund's Board of Trustees. All relevant facts and circumstances,
including the creditworthiness of the broker, dealer or institution, will be
considered in making decisions about securities lending.

     An investment company may pay reasonable negotiated fees in connection with
loaned securities so long as such fees are set forth in a written contract and
approved by its Board of Trustees. The Portfolio will continue to retain any
voting rights with respect to loaned securities. If a material event occurs
affecting an investment on a loan, the loan must be called and the securities
voted.

WHEN-ISSUED, FORWARD DELIVERY AND DELAYED SETTLEMENT SECURITIES

     The Portfolio may purchase and sell securities on a "when-issued," "delayed
settlement" or "forward delivery" basis. "When-issued" or "forward delivery"
refers to securities whose terms and indenture are available, and for which a
market exists, but which are not available for immediate delivery. When-issued
and forward delivery transactions may be expected to occur a month or more
before delivery is due. Delayed settlement is a term used to describe settlement
of a securities transaction in the secondary market which will occur sometime in
the future. No payment or delivery is made by a Portfolio until it receives
payment or delivery from the other party to any of the above transactions. The
Portfolio will maintain a separate account of cash, U.S. Government securities,
other high grade debt obligations or other liquid securities at least equal to
the value of purchase commitments until payment is made. Such segregated
securities will either mature or, if necessary, be sold on or before the
settlement date. Typically, no income accrues on securities purchased on a
delayed delivery basis prior to the time delivery is made, although the
Portfolio may earn income on securities it has deposited in a segregated
account.

     The Portfolio may engage in when-issued transactions to obtain what is
considered to be an advantageous price and yield at the time of the transaction.
When the Portfolio engages in when-issued or forward delivery transactions, it
does so to acquire securities consistent with its investment objective and
policies -- not for investment leverage.

PORTFOLIO TURNOVER

     It is expected that the annual portfolio turnover rate for the Portfolio
will not exceed 300%. In addition to the Portfolio trading costs, higher rates
of portfolio turnover may result in the realization of capital gains. See
"DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES" for information on taxation.

INVESTMENT COMPANIES

     The Portfolio reserves the right to invest up to 10% of its total assets,
calculated at the time of investment, in securities of other open-end or
closed-end investment companies. No more than 5% of the


                                       -7-

<PAGE>


investing the Portfolio's total assets may be invested in securities of any one
investment company nor may it acquire more than 3% of the voting securities of
any investment company. The Portfolio will indirectly bear its proportionate
share of any management fees paid by an investment company in which it invests
in addition to the advisory fee paid by the Portfolio.

FUTURES CONTRACTS AND OPTIONS

     In order to remain fully invested and to reduce transaction costs, the
Portfolio may invest in appropriate futures contracts and options (also known as
derivatives). Because transaction costs associated with futures and options may
be lower than the costs of investing in stocks and bonds directly, it is
expected that use of index futures and options to facilitate cash flows may
reduce a Portfolios overall transaction costs. The Portfolio may enter into
futures contracts provided that not more than 5% of the Portfolio's assets are
required as margin deposit to secure obligations under such contracts. A
Portfolio will engage in futures and options transactions for hedging purposes
only.

     Futures and options can be volatile and involve various degrees and types
of risk. If the Portfolio judges market conditions incorrectly or employs a
strategy that does not correlate well with its investments, use of futures and
options contracts could result in a loss. The Portfolio could also suffer losses
if it is unable to liquidate its position due to an illiquid secondary market.
In the opinion of the Trustees of the Fund, the risk that the Portfolio will be
unable to close out a futures position or options contract will be minimized by
only entering into futures contracts or options transactions traded on national
exchanges and for which there appears to be a liquid secondary market.

RESTRICTED SECURITIES

     The Portfolio may purchase restricted securities that are not registered
for sale to the general public but which are eligible for resale to qualified
institutional investors under Rule 144A of the Securities Act of 1933. Under the
supervision of the Fund's Board of Trustees, the Adviser determines the
liquidity of such investments by considering all relevant factors. Provided that
a dealer or institutional trading market in such securities exists, these
restricted securities are not treated as illiquid securities for purposes of a
Portfolio's investment limitations. A Portfolio will invest no more than 15% of
its net assets in illiquid securities. The prices realized from the sales of
these securities could be less than those originally paid by the Portfolio or
less than what would be considered the fair value of such securities.

COMPANIES WITH LIMITED OPERATING HISTORIES

     The Fund's portfolio may include securities of companies which have limited
operating histories and may not yet be profitable. The investments in such
companies offer opportunities for capital gains, but entail significant risks
including, but not limited to, the volatility of the stock price and the
viability of the firm's operations. The Fund will not invest in companies which
together with predecessors have operating histories of less than three years if
immediately thereafter and as a result of such investment the value of the
Fund's holdings of such securities (other than securities of companies
principally engaged in the real estate industry) exceeds 20% of the value of the
Fund's total assets. Although not an investment policy of the Fund, it is
anticipated that under normal circumstances, approximately 10% to 15% of the
companies


                                       -8-

<PAGE>


principally engaged in the real estate industry in which the Fund invests will
have operating histories of less than three years.

     Except as specified above and as described under "INVESTMENT LIMITATIONS,"
the foregoing investment policies are not fundamental and the Trustees may
change such policies without an affirmative vote of a majority of the
outstanding voting securities of a Portfolio, as defined in the 1940 Act.

                             INVESTMENT LIMITATIONS

The Portfolio will not:

     (a)  with respect to 75% of its assets, invest more than 5% of its total
          assets at the time of purchase in the securities of any single issuer
          (other than obligations issued or guaranteed as to principal and
          interest by the government of the U.S. or any agency or
          instrumentality thereof;

     (b)  with respect to 75% of its assets, purchase more than 10% of any class
          of the outstanding voting securities of any issuer;

     (c)  make loans except (i) by purchasing bonds, debentures or similar
          obligations which are publicly distributed, and (ii) by lending its
          portfolio securities to banks, brokers, dealers and other financial
          institutions so long as such loans are not inconsistent with the 1940
          Act or the rules and regulations or interpretations of the SEC
          thereunder;

     (d)  borrow, except from banks and as a temporary measure for extraordinary
          or emergency purposes and then, in no event in excess of 331/3% of the
          Portfolio's gross assets valued at the lower of market or cost, and a
          Portfolio may not purchase additional securities when borrowings
          exceed 5% of total gross assets; or

     (e)  pledge, mortgage or hypothecate any of its assets to an extent greater
          than 331/3% of its total assets at fair market value.

   
     The investment limitations described here and certain of the investment
limitations in the Statement of Additional Information are fundamental policies
and may be changed only with the approval of the holders of a majority of the
outstanding shares of the Portfolio. If a percentage limitation on investment or
utilization of assets as set forth above is adhered to at the time an investment
is made, a later change in percentage resulting from changes in the value or
total cost of the Portfolio's assets will not be considered a violation of the
restriction.
    

                               PURCHASE OF SHARES

     Shares of the Portfolio may be purchased without sales commission, at the
net asset value per share next determined after an order is received by the Fund
and payment is received by the Custodian. (See


                                       -9-

<PAGE>


"VALUATION OF SHARES.") The minimum initial investment required is $10,000.
Certain exceptions may be made by the officers of the Fund.


INITIAL INVESTMENTS

         BY MAIL

          o    Complete and sign an Account Registration Form and mail it 
               together with a check, drawn on a U.S. bank, made payable to 
               Brazos Mutual Funds, to:

               Brazos Mutual Funds
               c/o Rodney Square Management Corporation
               P.O. Box 8987
               Wilmington, DE 19890

               A purchase order sent by overnight mail should be sent to:

               1100 North Market Street, 19th Floor
               Wilmington, DE 19801

     Payment for the purchase of shares received by mail will be credited to
your account at the net asset value per share of the Portfolio next determined
after receipt. Payment does not need to be converted into Federal Funds (moneys
credited to the Fund's Custodian Bank by a Federal Reserve Bank) before the Fund
will accept it for investment. Make certain that you specify the Portfolio in
which you wish to invest on the Account Registration Form.

         BY WIRE

          o    As soon as possible, telephone Rodney Square at
               __________________ and provide the account name,
               address, telephone number, social security or taxpayer
               identification number, Portfolio selected, amount being
               wired and the name of the bank wiring the funds. An
               account number will then be provided to you. Next,

          o    instruct your bank to wire the specified amount to:

                      RODNEY SQUARE MANAGEMENT CORPORATION
                          C/O WILMINGTON TRUST COMPANY
                                 WILMINGTON, DE
                                   ABA #_____
                         ATTENTION: Brazos Mutual Funds
                      REF: PORTFOLIO NAME ________________
                                DDA Acct. #_____
              FURTHER CREDIT [SHAREHOLDER NAME AND ACCOUNT NUMBER]


                                      -10-

<PAGE>


          o    Forward a completed Account Registration Form to the Fund at the
               address shown on the form. Federal Funds purchases will be
               accepted only on a day on which both the New York Stock Exchange
               and the Custodian Bank are open for business.

ADDITIONAL INVESTMENTS

     Additional investments can be made at any time. The minimum additional
investment is $1,000. Shares can be purchased at net asset value by mailing a
check to the Fund c/o Rodney Square at the address above (payable to "Brazos
Mutual Funds") or by wiring money to the Fund using the instructions outlined
above. When making additional investments, be sure that: the account name and
number is identified on the check or wire and the Portfolio to be purchased is
specified.

     Prior to wiring additional investments, notify the Fund by calling the
number on the cover of this prospectus. Mail orders should include, when
possible, the "Invest by Mail" stub which accompanies any Fund confirmation
statement.

OTHER PURCHASE INFORMATION

   
     Investments received by 4 p.m. ET (the close of the New York Stock Exchange
("NYSE")) will be invested at the price calculated after the NYSE closes that
day. Orders received after 4 p.m. ET will receive the price calculated on the
next business day. The Fund reserves the right, in its sole discretion, to
suspend the offering of shares of the Portfolio or reject purchase orders when,
in the judgment of management such suspension or rejection is in the best
interest of the Fund. Purchases of shares will be made in full and fractional
shares of the Portfolio calculated to three decimal places. Certificates for
fractional shares will not be issued. Certificates for whole shares will not be
issued except at the written request of the shareholder.
    

     Shares of the Portfolio may be purchased by customers of broker-dealers or
other financial intermediaries ("Service Agents") which deal with the Fund on
behalf of their customers. Service Agents may impose additional or different
conditions on the purchase or redemption of Portfolio shares and may charge
transaction or other account fees. Each Service Agent is responsible for
transmitting to its customers a schedule of any such fees and information
regarding any additional or different purchase and redemption conditions.
Shareholders who are customers of Service Agents should consult their Service
Agent for information regarding these fees and conditions. Amounts paid to
Service Agents may include transaction fees and/or service fees paid by the Fund
from the Fund assets attributable to the Service Agent and which would not be
imposed if shares of the Portfolio were purchased directly from the Fund or the
Distributor. The Service Agents may provide shareholder services to their
customers that are not available to a shareholder dealing directly with the
Fund. A salesperson and any other person entitled to receive compensation for
selling or servicing Portfolio shares may receive different compensation with
respect to one particular class of shares over another in the Fund.

     Service Agents may enter confirmed purchase orders on behalf of their
customers. If shares of a Portfolio are purchased in this manner, the Service
Agent must receive the investment order before the close of trading on the NYSE
and transmit it to the Fund's Transfer Agent prior to the close of their


                                      -11-

<PAGE>


business day to receive that day's share price. Proper payment for the order
must be received by the Transfer Agent no later than the time when the Portfolio
is priced on the following business day. Service Agents are responsible to their
customers and the Fund for timely transmission of all subscription and
redemption requests, investment information, documentation and money.

IN-KIND PURCHASES

     If accepted by the Fund, shares of the Portfolio may be purchased in
exchange for securities which are eligible for acquisition by the Portfolio, as
described in this Prospectus. Securities to be exchanged which are accepted by
the Fund will be valued as set forth under "VALUATION OF SHARES" at the time of
the next determination of net asset value after such acceptance. Shares issued
by a Portfolio in exchange for securities will be issued at net asset value
determined as of the same time. All dividends, interest, subscription, or other
rights pertaining to such securities shall become the property of the Portfolio
and must be delivered to the Fund by the investor upon receipt from the issuer.
Securities acquired through an in-kind purchase will be acquired for investment
and not for immediate resale.

     The Fund will not accept securities in exchange for shares of the Portfolio
unless:

          o    at the time of the exchange, such securities are eligible to be
               included in the Portfolio and current market quotations are
               readily available for such securities;

          o    the investor represents and agrees that all securities offered to
               be exchanged are not subject to any restrictions upon their sale
               by the Portfolio under the Securities Act of 1933, or otherwise;
               and

          o    the value of any such securities (except U.S. Government
               securities) being exchanged together with other securities of the
               same issuer owned by the Portfolio will not exceed 5% of the net
               assets of the Portfolio immediately after the transaction.

     Investors who are subject to Federal taxation upon exchange may realize a
gain or loss for Federal income tax purposes depending upon the cost of
securities or local currency exchanged. Investors interested in such exchanges
should contact the Adviser.

                              REDEMPTION OF SHARES

     Shares of the Portfolio may be redeemed by mail or telephone, at any time,
at the net asset value of the Portfolio next determined after receipt of the
redemption request. Any redemption may be more or less than the purchase price
of your shares depending on the market value of the investment securities held
by the Portfolio. Shares held 90 days or more may be redeemed without cost
except for a $12 fee charged to shareholders for wire redemptions. Shares held
less than 90 days will be subject to a 1% redemption fee which is retained by
the Fund for the benefit of the remaining shareholders and is intended to
encourage long-term investment in the Portfolio to avoid transaction and other
expenses caused by early redemption and to facilitate portfolio management.


                                      -12-

<PAGE>

BY MAIL

     The Portfolio will redeem its shares at the net asset value next determined
on the date the request is received in "good order." Address requests for
redemption to Rodney Square at P.O. Box 8987, Wilmington, DE 19890. A request to
redeem shares must include:

          o    share certificates, if issued;

          o    a letter of instruction or a stock assignment specifying the
               number of shares or dollar amount to be redeemed, signed by all
               registered owners of the shares in the exact names in which they
               are registered;

          o    any required signature guarantees (see "SIGNATURE GUARANTEES");
               and

          o    any other necessary legal documents, if required, in the case of
               estates, trusts, guardianships, custodianships, corporations,
               pension and profit sharing plans and other organizations.

     Shareholders who are uncertain of requirements for redemption should
contact Rodney Square by calling _________________.

BY TELEPHONE

     In order to make a redemption request by telephone, you must:

          o    establish the telephone redemption privilege (and if desired, the
               wire redemption privilege) by completing appropriate sections of
               the Account Registration Form; and

          o    call the Fund and instruct that the redemption proceeds be mailed
               to you or wired to your bank.

     The following tasks cannot be accomplished by telephone:

          o    changing the name of the commercial bank or the account
               designated to receive redemption proceeds (this can be
               accomplished only by a written request signed by each
               shareholder, with each signature guaranteed);

          o    redemption of certificated shares by telephone.

     The Fund and the Fund's Transfer Agent will employ reasonable procedures to
confirm that instructions communicated by telephone are genuine, and they may be
liable for any losses if they fail to do so. These procedures include requiring
the investor to provide certain personal identification at the time an account
is opened, as well as prior to effecting each transaction requested by
telephone. In addition, all telephone transaction requests will be recorded and
investors may be required to provide additional telecopied written instructions
of such transaction requests. The Fund or Transfer Agent may be liable for


                                      -13-

<PAGE>


any losses due to unauthorized or fraudulent telephone instructions if the Fund
or Transfer Agent does not employ the procedures described above. Neither the
Fund nor the Transfer Agent will be responsible for any loss, liability, cost or
expense for following instructions received by telephone that it reasonably
believes to be genuine.

     Please contact Rodney Square at ______________________ for further details.

SIGNATURE GUARANTEES

     Signature guarantees are required for the following redemptions:

          o    redemptions where the proceeds are to be sent to someone other
               than the registered shareowner(s);

          o    redemptions where the proceeds are to be sent to someplace other
               than the registered address; or

          o    share transfer requests.

     The purpose of signature guarantees is to verify the identity of the party
who has authorized a redemption. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. Eligible guarantor institutions include banks, brokers, dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. Broker-dealers guaranteeing
signatures must be a member of a clearing corporation or maintain net capital of
at least $100,000. Credit unions must be authorized to issue signature
guarantees.

OTHER REDEMPTION INFORMATION

     Normally, the Fund will make payment for all shares redeemed under proper
procedures within one business day of and no more than seven days after receipt
of the request. The Fund may suspend the right of redemption or postpone the
date at times when both the NYSE and Custodian Bank are closed, or under any
emergency circumstances as determined by the SEC.

     If the Fund's Board of Trustees determines that it would be detrimental to
the best interests of remaining shareholders of the Fund to make payment wholly
or partly in cash, the Fund may pay the redemption proceeds in whole or in part
by a distribution in-kind of liquid securities held by a Portfolio in lieu of
cash in conformity with applicable rules of the SEC. Investors may incur
brokerage charges on the sale of portfolio securities so received in payment of
redemptions.


                                      -14-

<PAGE>


                              SHAREHOLDER SERVICES

EXCHANGE PRIVILEGE

   
     Shares of the Portfolio may be exchanged for shares of any other Portfolio
included in the Brazos Mutual Funds. Exchange requests should be made by writing
to the Fund c/o Rodney Square Management Corporation, P.O. Box 8987, Wilmington,
DE 19890 or calling ___________________.
    

     Any exchange will be based on the net asset values of the shares involved.
There is no sales commission or charge of any kind for an exchange. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. Contact
Rodney Square at _____________________ for a copy of the Prospectus for the
Portfolio(s). Exchanges can only be made with Portfolios that are registered for
sale in a shareholder's state of residence. Exchange requests may be made either
by mail or telephone. Telephone exchanges will be accepted only if the
certificates for the shares to be exchanged have not been issued to the
shareholder and if the registration of the two accounts will be identical.
Requests for exchanges with other Portfolios received prior to 4 p.m. (ET) will
be processed as of the close of business on the same day. Requests received
after that time will be processed on the next business day. The Board of
Trustees may limit frequency and amount of exchanges permitted. For additional
information regarding responsibility for the authenticity of telephoned
instructions, see "REDEMPTION OF SHARES-BY TELEPHONE" above. An exchange into
another Portfolio of the Fund is a sale of shares and may result in a capital
gain or loss for income tax purposes. The Fund may modify or terminate the
exchange privilege at any time.

TRANSFER OF REGISTRATION

     You may transfer the registration of any of your Fund shares to another
person by writing to the Fund at the above address. As in the case of
redemptions, the written request must be received in good order before any
transfer can be made. (See "REDEMPTION OF SHARES" for a definition of "good
order.")

                                RETIREMENT PLANS

     Shares of the Fund are available for use in certain tax-deferred plans
(such as Individual Retirement Accounts ("IRAs"), defined contribution, 401(k)
and 403(b)(7) plans).

Individual Retirement Accounts

     Application forms and brochures for IRAs can be obtained from Rodney Square
by calling ---------------.

     WTC makes available its services as an IRA custodian for each shareholder
account that is established as an IRA. For these services, WTC receives an
annual fee of $10.00 per account, which fee is paid directly to WTC by the IRA
shareholder. If the fee is not paid by the date due, shares of the Fund


                                      -15-

<PAGE>


   
owned by the IRA will be redeemed automatically for purposes of making the
payment. In addition, a $10 fee will be charged to shareholders transferring out
of a Fund IRA.
    

                               VALUATION OF SHARES

     The net asset value of the Portfolio is determined by dividing the sum of
the total market value of the Portfolio's investments and other assets, less any
liabilities, by the total number of shares outstanding. Net asset value per
share of the Portfolio is determined as of the close of the NYSE on each day
that the NYSE is open for business.

   
     Equity securities listed on a United States securities exchange for which
market quotations are readily available are valued at the last quoted sale price
on the day the valuation is made. Price information on listed securities is
taken from the exchange where the security is primarily traded. Unlisted equity
securities are valued at the last quoted sale price on the day the valuation is
made. Listed and unlisted securities not traded on the valuation date for which
market quotations are readily available are valued at the average between the
latest available bid and asked price at the close of the NYSE on each day that
the NYSE is open for business.
    

     Bonds and other fixed income securities are valued according to the
broadest and most representative market which will ordinarily be the
over-the-counter market. Net asset value includes interest on fixed income
securities, which is accrued daily. Bonds and other fixed income securities may
be valued on the basis of prices provided by a pricing service when such prices
are believed to reflect the fair market value of such securities. Securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost when the Board of Trustees determines that amortized cost reflects fair
value.

     The value of other assets and securities for which no quotations are
readily available (including restricted securities) is determined in good faith
at fair value using methods determined by the Trustees.

                            PERFORMANCE CALCULATIONS

     The Portfolio may advertise or quote total return data. Total return is
calculated on an average annual total return basis, and may also be calculated
on an aggregate total return basis, for various periods. Average annual total
return reflects the average annual percentage change in value of an investment
in a Portfolio over a period. Aggregate total return reflects the total
percentage change in value over a period. Both methods assume dividends and
capital gains distributions are reinvested in Portfolio shares.

   
     The Portfolio's performance may be compared to data prepared by independent
services which monitor the performance of investment companies, data reported in
financial and industry publications, and various indices, all as further
described in the Portfolio's SAI.
    

     The Portfolio will provide information about past performance together with
a comparison to an appropriate index in its Annual Report to Shareholders.
Following the end of the Portfolio's fiscal year, a free copy of the Portfolio's
Annual Report to Shareholders will be available upon request by writing or
calling the Fund at the address or phone number on the cover of this Prospectus.


                                      -16-

<PAGE>


                DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS

     The Portfolio will normally distribute substantially all of its net
investment income to shareholders in quarterly dividends. If any net capital
gains are realized, the Portfolio will normally distribute them with the last
dividend for the fiscal year. Dividends paid shortly after the purchase of
shares by an investor, although in effect a return of capital, are taxable to
shareholders. The Portfolio's dividends and capital gains distributions will be
automatically reinvested in additional shares of the Portfolio unless the Fund
is notified in writing that the shareholder elects to receive distributions in
cash.

FEDERAL TAXES

     The Portfolio intends to declare and pay dividend and capital gains
distributions so as to avoid imposition of the Federal Excise Tax. To do so, the
Portfolio expects to distribute an amount no less than:

          o    98% of its calendar year ordinary income;

          o    98% of its capital gains net income (the excess of short and
               long-term capital gains over short and long-term capital losses)
               for the one-year period ending October 31; and

          o    100% of any undistributed ordinary or capital gain net income
               from the prior year.

     Dividends paid by a Portfolio from net investment income, either in cash or
reinvested in shares, will be taxable to shareholders as ordinary income.
Dividends paid from the Portfolio will generally qualify in part for the 70%
dividends received deduction for corporations, but the portion of the dividends
so qualified depends on the ratio of the aggregate taxable qualifying dividend
income received by the Portfolio from domestic (U.S.) sources to the total
taxable income of the Portfolio, exclusive of long-term capital gains.

     Distributions paid by a Portfolio from long-term capital gains, either in
cash or additional shares of the Portfolio (and regardless of the length of time
the shares in the Portfolio have been owned by the shareholder), are taxable to
shareholders as such. These distributions are not eligible for the dividends
received deduction. Shareholders are notified annually by the Fund as to Federal
tax status of dividends and distributions paid by a Portfolio. Dividends and
distributions may also be subject to state and local taxes. Dividends declared
in October, November, or December to shareholders on record in such month will
be deemed to have been paid by the Fund and received by the shareholders on
December 31 of such calendar year, provided that the dividends are paid before
February 1 of the following year.

     Redemptions of shares in a Portfolio are taxable events for Federal income
tax purposes.

STATE AND LOCAL TAXES


                                      -17-

<PAGE>

     Shareholders may also be subject to state and local taxes on distributions
and redemptions. Shareholders should consult with their tax advisers regarding
the tax status of distributions in their state and locality.

                               INVESTMENT ADVISER

     John McStay Investment Counsel is a limited partnership formed in 1983 and
located at 5949 Sherry Lane, Suite 1560, Dallas, Texas 75225. The Adviser
provides investment management services to institutions and individuals. The
Adviser currently has approximately $2 billion in assets under management. John
D. McStay may be deemed to control the Adviser as a result of ownership of a
majority interest in John McStay & Associates ("JMA"), the general partner of
the Adviser. JMA owns a majority interest in the Adviser.

     An investment policy committee is responsible for the day-to-day management
of the Portfolio's investments.

     Under an Investment Advisory Agreement with the Fund, dated as of
______________, the Adviser manages the investment and reinvestment of the
assets of the Portfolios. The Adviser must adhere to the stated investment
objectives and policies of the Portfolios, and is subject to the control and
supervision of the Fund's Board of Trustees.

     As compensation for its services as an Adviser, the Portfolio pays the
Adviser an annual fee, in monthly installments, of .90% of the Portfolio's
average daily net assets for the month. The Adviser has voluntarily agreed to
keep operating expenses from exceeding 1.25% of average daily net assets. The
Fund will not reimburse the Adviser for any advisory fees that are waived or
Portfolio expenses that the Adviser may bear on behalf of a Portfolio.

     The Adviser may compensate its affiliated companies for referring investors
to the Portfolios. The Adviser, or any of its affiliates, may, at its own
expense, compensate a Service Agent or other person for marketing, shareholder
servicing, record-keeping and/or other services performed with respect to the
Fund or a Portfolio. Payments made for any of these purposes may be made from
the paying entity's revenues, its profits or any other source available to it.
When such service arrangements are in effect, they are made generally available
to all qualified service providers.

                        ADVISER'S HISTORICAL PERFORMANCE

     Set forth below are performance data provided by the Adviser pertaining to
the composite of separately managed accounts of the Adviser that are managed
with substantially similar (although not necessarily identical) objectives,
policies and strategies as those of the Portfolio. The investment returns of the
Portfolio may differ from those of the separately managed accounts because such
separately managed accounts may have fees and expenses that differ from those of
the Portfolio. Further, the separately managed accounts are not subject to
investment limitations, diversification requirements and other restrictions
imposed by the Investment Company Act of 1940 and Internal Revenue Code; such
conditions, if applicable, may have lowered the returns for the separately
managed accounts. The results presented are


                                      -18-

<PAGE>


not intended to predict or suggest the return of the Portfolio or the return an
investor might achieve by investing in the Portfolio.

   
         John McStay Investment Counsel Real Estate Securities Portfolio
               (Percentage Returns Net of Average Management Fees)
    

<TABLE>
<CAPTION>
                                         Institutional                   NAREIT                       Wilshire
  Calendar Year                         Equity Accounts               Equity Index                   REIT Index
<C>                                       <C>                            <C>                           <C> 
1994                                         14.6%                          3.2%                          2.7%

1995                                         20.5%                         15.3%                         12.2%

Year to Date (9/30/96)                       17.4%                         13.8%                         14.1%

Annualized                                   19.2%                         11.7%                         10.5%

Cumulative                                   62.1%                         35.4%                         31.5%

(Two)-Year Mean                              17.6%                          9.2%                          7.5%

Value of $1 invested
during 2 3/4 years
(1/1/94-9/30/96)                            $1.62                         $1.35                         $1.32

<FN>
Notes:

1.   The annualized return is calculated from monthly data, allowing for
     compounding. The formula used is in accordance with the methods set forth
     by the Association for Investment Management Research, The Bank
     Administration Institute, and the Investment Counsel Association of
     America. Market Value of the account was the sum of the account's total
     assets, including cash, cash equivalents, short term investments, and
     securities valued at current market prices.
2.   The cumulative return means that $1 invested in the composite account on
     January 1, 1994 had grown to $1.62 by 9/30/96.
3.   The two-year mean is the arithmetic average of the annual returns for the
     years listed.
4.   The NAREIT Equity Index and the Wilshire REIT Index are unmanaged indices
     which assume reinvestment of dividends and are generally considered
     representative of securities similar to those invested in by the Adviser
     for the purpose of the composite performance numbers set forth above.
5.   The Adviser's average annual management fee over the two-year period
     (1994-1995) was .90% or 90 basis points. During the period, fees on the
     Adviser's individual accounts ranged from .80% to 1% (80 basis points to
     100% basis points). Net returns to investors vary depending on the
     management fee.
</FN>
</TABLE>


                                      -19-

<PAGE>

                             ADMINISTRATIVE SERVICES

         Rodney Square Management Corporation, 1100 N. Market Street,
  Wilmington, DE 19890-001, serves as Administrator, Transfer Agent and Dividend
Paying Agent of the Fund and also provides accounting services to the Fund.

   
     As Administrator, Rodney Square supplies office facilities, non-investment
related statistical and research data, stationery and office supplies, executive
and administrative services, internal auditing and regulatory compliance
services. Rodney Square also assists in the preparation of reports to
shareholders, prepares proxy statements, updates prospectuses and makes filings
with the Securities and Exchange Commission and state securities authorities.
Rodney Square performs certain budgeting and financial reporting and compliance
monitoring activities. For the services provided as Administrator, Rodney Square
receives an annual fee from the Fund equal to the greater of: (1) a minimum
annual fee of $32,500 for each of the first two single-class Portfolios plus
$15,000 for any additional Portfolio, or second or additional class of a
Portfolio; or (2) an asset-based fee, equal to a percentage of the average daily
net assets of the Fund, on a Fund-wide basis, according to the following
schedule:
         0.15% of the first $50 million in assets; plus 
         0.15% of assets between $50 million and $200 million; 
         plus 0.07% of assets in excess of 200 million.
The Administrator's fee shall be payable monthly, as soon as practicable after
the last day of each month, based on the Fund's average daily net assets as
determined at the close of business on each business day day throughout the
month. Rodney Square also serves as Transfer Agent and Dividend Paying Agent of
the Fund.
    

     Rodney Square also serves as an Accounting Agent to the Fund. As Accounting
Agent, Rodney Square determines the Fund's net asset value per share and
provides accounting services to the Fund pursuant to an Accounting Services
Agreement with the Fund.

                                   DISTRIBUTOR

     Rodney Square Distributors, Inc., 1100 N. Market Street, Wilmington, DE
19890, has been engaged pursuant to a distribution agreement dated ___________,
1996, to assist in securing purchasers for shares of the Fund. RSD also
directly, or through its affiliates, provides investor support services. RSD
will receive no compensation for distribution of shares of the Fund, except for
reimbursement of out-of-pocket expenses.

     Banking laws limit deposit-taking institutions and certain of their
affiliates from underwriting or distributing securities. RSD is an affiliate of
Wilmington Trust Company ("WTC"), the Fund's custodian bank for its domestic
assets. RSD believes that it may perform the services contemplated by its
agreement with the Fund without violation of applicable banking laws or
regulations. If RSD were prohibited from performing these services, it is
expected that the Board of Trustees would consider entering into agreements with
other entities. It is not expected that shareholders would suffer any adverse
financial consequences as a result of such an occurrence.


                                      -20-

<PAGE>

                             PORTFOLIO TRANSACTIONS

     The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio. The Agreement directs the Adviser to use its best
efforts to obtain the best available price and most favorable execution for all
transactions of the Portfolio. The Adviser may buy and sell securities for the
account of the portfolio through the Adviser's affiliated broker-dealer. In such
instances, the affiliated broker-dealer will complete transactions pursuant to
procedures designed to ensure that charges for the transactions do not exceed
usual and customary levels obtainable from other, unaffiliated broker-dealers.
Such transactions and the procedures are supervised by the Fund's Board of
Trustees. It is understood that the affiliated broker-dealer will not be
utilized in situations where, in the Adviser's judgment, the brokerage services
of another security firm would be in the best interest of the Portfolio. If
consistent with the interests of the Portfolio, the Adviser may select brokers
on the basis of research, statistical and pricing services these brokers provide
to the Portfolio. Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be performed by the
Adviser under the Investment Advisory Agreement. Such brokers may be paid a
higher commission than that which another qualified broker would have charged
for effecting the same transaction, provided that such commissions are paid in
compliance with the Securities Exchange Act of 1934, as amended, and that the
Adviser determines in good faith that the commission is reasonable in terms
either of the transaction or the overall responsibility of the Adviser to the
Portfolios and the Adviser's other clients. Although not a typical practice, the
Adviser may place portfolio orders with qualified broker-dealers who refer
clients to the Adviser. If a purchase or sale of securities is consistent with
the investment policies of a Portfolio and one or more other clients served by
the Adviser is considered at or about the same time, transactions in such
securities will be allocated among the Portfolio and clients in a manner deemed
fair and reasonable by the Adviser. Although there is no specified formula for
allocating such transactions, the allocations are subject to periodic review by
the Fund's Trustees.

                               GENERAL INFORMATION

DESCRIPTION OF SHARES AND VOTING RIGHTS

   
     The Fund was organized as a Delaware Business Trust on October 24, 1996.
The Trustees have the power to designate one or more series of shares of
beneficial interest and to classify or reclassify any unissued shares without
further action by shareholders. At its discretion, the Board of Trustees may
create additional Portfolios and classes of shares.
    

     The shares of each Portfolio are fully paid and nonassessable, have no
preference as to conversion, exchange, dividends, retirement or other features
and have no pre-emptive rights. They have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
Trustees can elect 100% of the Trustees. A shareholder is entitled to one vote
for each full share held (and a fractional vote for each fractional share held),
then standing in his name on the books of the Fund.


                                      -21-

<PAGE>

     Annual meetings will not be held except as required by the 1940 Act and
other applicable laws. The Fund has undertaken that its Trustees will call a
meeting of shareholders if such a meeting is requested in writing by the holders
of not less than 10% of the outstanding shares of the Fund. The Fund will assist
shareholder communications in such matters.

CUSTODIAN

     Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, serves as Custodian of the Fund's assets.

INDEPENDENT ACCOUNTANTS

   
     Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, PA 19103,
is the independent accountants for the Fund.
    

REPORTS

   
     Shareholders receive unaudited semi-annual financial statements and annual
financial statements audited by Coopers & Lybrand L.L.P..
    

SHAREHOLDER INQUIRIES

     Shareholder inquiries may be made by contacting the Fund c/o Rodney Square
Management Corporation, P.O. Box 8987, Wilmington, DE 19890, or by calling the
telephone number listed on the cover of this Prospectus.

LITIGATION

     The Fund is not involved in any litigation.


                                      -22-

<PAGE>

                                   PROSPECTUS
                                      dated

                               Investment Adviser
                         JOHN MCSTAY INVESTMENT COUNSEL
                                5949 Sherry Lane
                                   Suite 1560
                                Dallas, TX 75225



                                   Distributor


                                TABLE OF CONTENTS

Fund Expenses...................................................................
Prospectus Summary..............................................................
Risk Factors....................................................................
Investment Objective............................................................
Investment Policies.............................................................
Other Investment Policies.......................................................
Investment Limitations..........................................................
Purchase of Shares..............................................................
Redemption of Shares............................................................
Shareholder Services............................................................
Valuation of Shares.............................................................
Performance Calculations........................................................
Dividends, Capital Gains Distributions and Taxes................................
Investment Adviser..............................................................
Advisers Historical Performance.................................................
Administrative Services.........................................................
Distributor.....................................................................
Portfolio Transactions..........................................................
General Information.............................................................

No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in the Fund's Statement of
Additional Information, in connection with the offering made by this Prospectus
and, if given or made, such information or its representations must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offering by the Fund in any jurisdiction in which such offering
may not lawfully be made.


                                      -23-

<PAGE>

                                     PART B


                   BRAZOS/JMIC SMALL/EMERGING GROWTH PORTFOLIO



                       STATEMENT OF ADDITIONAL INFORMATION

                            ___________________, 1996




This Statement is not a Prospectus but should be read in conjunction with the
Prospectus of the Brazos Mutual Funds (the "Fund") for the BRAZOS/JMIC
Small/Emerging Growth Portfolio Shares dated _________________, 1996. To obtain
the Prospectus, please call Rodney Square Management Corporation at
____________________:

                                                           [phone number]




                                Table of Contents

                                                                           Page

Investment Objective and Policies.........................................   2
Purchase of Shares........................................................   6
Redemption of Shares......................................................   6
Shareholder Services......................................................   7
Investment Limitations....................................................   8
Management of the Fund....................................................   9
Investment Adviser........................................................  12
Portfolio Transactions....................................................  13
Performance Calculations..................................................  14
General Information.......................................................  18
Financial Statements......................................................  20



                                       -1-

<PAGE>

                        INVESTMENT OBJECTIVE AND POLICIES

     The following policies supplement the investment objective and policies of
the BRAZOS/JMIC Small/Emerging Growth Portfolio as set forth in the Prospectus
for the Portfolio:

SECURITIES LENDING

     The Portfolio may lend its investment securities to qualified institutional
investors who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending its investment
securities, the Portfolio attempts to increase its income through the receipt of
interest on the loan. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Portfolio. The Portfolio may lend its investment securities to qualified
brokers, dealers, domestic and foreign banks or other financial institutions, so
long as the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "Commission") thereunder, which currently require that
(a) the borrower pledge and maintain with the Portfolio collateral consisting of
cash, an irrevocable letter of credit issued by a domestic U.S. bank or
securities issued or guaranteed by the United States Government having a value
at all times not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities loaned
rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Portfolio at any time, and (d) the
Portfolio receives reasonable interest on the loan (which may include the
Portfolio investing any cash collateral in interest bearing short-term
investments). All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review by
the Board of Trustees.

     At the present time, the Staff of the Commission does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities so long as such fees are set forth in a written contract and approved
by the investment company's Board of Trustees. The Portfolio will continue to
retain any voting rights with respect to the loaned securities. If a material
event occurs affecting an investment on a loan, the loan must be called and the
securities voted.

HEDGING STRATEGIES

     The Portfolio may engage in various portfolio strategies to hedge against
adverse movements in the equity markets. The Portfolio may buy or sell futures
contracts, write (i.e., sell) covered call options on its portfolio securities,
purchase put and call options on securities and engage in transactions in
related options on such futures. Each of these portfolio strategies is described
below. Although certain risks are involved in options and futures transactions,
the Adviser believes that, because the Portfolio will engage in options and
futures transactions only for hedging purposes, the options and futures
portfolio strategies of the Portfolio will not subject it to the risks
frequently associated with the speculative use of options and futures
transactions. While the Portfolio's use of hedging strategies is intended to
reduce the volatility of the net asset value of the Portfolio shares, the
Portfolio's net asset value will fluctuate. There can be no assurance that the
Portfolio's hedging transactions will be effective. Also, the Portfolio may not
necessarily be engaging in hedging activities when movements in any particular
equity market occur.


                                       -2-

<PAGE>

FUTURES CONTRACTS

     The Portfolio may enter into futures contracts for the purposes of hedging,
remaining fully invested and reducing transactions costs. Futures contracts
provide for the future sale by one party and purchase by another party of a
specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government agency.

     Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by trading an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.

     Futures traders are required to make a good faith margin deposit in cash or
acceptable securities with a broker or custodian to initiate and maintain open
positions in futures contracts. A margin deposit is intended to assure
completion of the contract (delivery or acceptance of the underlying security)
if it is not terminated prior to the specified delivery date. Minimal initial
margin requirements are established by the futures exchange and may be changed.
Brokers may establish deposit requirements which are higher than the exchange
minimums. Futures contracts are customarily purchased and sold on margin that
may range upward from less than 5% of the value of the contract being traded.
After a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy margin requirements, payment of additional
"variation" margin will be required. Conversely, change in the contract value
may reduce the required margin, resulting in a repayment of excess margin to the
contract holder. Variation margin payments are made to and from the futures
broker for as long as the contract remains open. The Portfolio expects to earn
interest income on its margin deposits.

     Traders in futures contracts may be broadly classified as either "hedgers"
or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging purposes.

     Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide straddles or that the Fund's commodity
futures and option positions be for other purposes, to the extent that the
aggregate initial margins and premiums required to establish such non-hedging
positions do not exceed five percent of the liquidation value of the Portfolio.
The Portfolio will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase. As evidence of this hedging
interest, the Portfolio expects that approximately 75% of its futures contracts
purchases will be "completed", that is, equivalent


                                       -3-

<PAGE>

amounts of related securities will have been purchased or will be purchased by
the Portfolio on the settlement date of the futures contracts.

     Although techniques other than the sale and purchase of futures contracts
could be used to control the Portfolios exposure to market fluctuations, the use
of futures contracts may be a more effective means of hedging this exposure.
While the Portfolio will incur commission expenses in both opening and closing
out futures positions, these costs are lower than transaction costs incurred in
the purchase and sale of the underlying securities.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
     The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.

RISK FACTORS IN FUTURES TRANSACTIONS
     The Portfolio will minimize the risk that it will be unable to close out a
futures position by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.
However, there can be no assurance that a liquid secondary market will exist for
a particular futures contract at any given time. Thus, it may not be possible to
close a futures position. In the event of adverse price movements, the Portfolio
would continue to be required to make daily cash payments to maintain its
required margin. In such situations, if the Portfolio has insufficient cash, it
may have to sell securities to meet daily margin requirements at a time when it
may be disadvantageous to do so. In addition, the Portfolio may be required to
make delivery of the instruments underlying futures contracts it holds. The
inability to close futures positions also could have an adverse impact on the
Portfolio's ability to effectively hedge.

     The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in excess of the amount
invested in the contract. However, because the futures strategies of the
Portfolio are engaged in only for hedging purposes, the Adviser does not believe
that the Portfolio is subject to the risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.

     Utilization of futures transactions by the Portfolio does involve the risk
of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that the Portfolio could lose money on futures contracts and
also


                                       -4-

<PAGE>

experience a decline in value of portfolio securities. There is also the risk of
loss by the Portfolio of margin deposits in the event of bankruptcy of a broker
with whom the Portfolio has an open position in a futures contract or related
option.

     Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and, therefore, does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.

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

OPTIONS
     The Portfolio may purchase and sell put and call options on securities and
futures contracts for hedging purposes. Investments in options involve some of
the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. In general, the market prices of
options can be expected to be more volatile than the market prices on the
underlying futures contract or securities.

WRITING COVERED CALL OPTIONS
     The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. The
Portfolio writes only covered options, which means that so long as the Portfolio
is obligated as the writer of the option it will, in a segregated account with
its custodian, maintain cash, U.S. government


                                       -5-

<PAGE>


securities, other high grade liquid debt securities or other liquid securities
denominated in U.S. dollars with a value equal to or greater than the exercise
price of the underlying securities.

PURCHASING OPTIONS
     The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out the Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, the Portfolio may
purchase call options on securities held in its investment portfolio on which it
has written call options or on securities which it intends to purchase.

                               PURCHASE OF SHARES

     Shares of the Portfolio may be purchased without sales commission at the
net asset value per share next determined after an order is received in proper
form by the Fund, and payment is received by the Fund's custodian. The minimum
initial investment required for the Portfolio is $10,000 with certain exceptions
as may be determined from time to time by the officers of the Fund. An order
received in proper form prior to the 4:00 p.m. close of the New York Stock
Exchange (the "NYSE") will be executed at the price computed on the date of
receipt; and an order received not in proper form or after the 4:00 p.m. close
of the NYSE will be executed at the price computed on the next day the NYSE is
open after proper receipt. The NYSE will be closed on the following days:
Thanksgiving Day, November 28, 1996; Christmas Day, December 25, 1996; New
Year's Day, January 1, 1997; President's Day, February 17, 1997; Good Friday,
March 28, 1997; Memorial Day, May 26, 1996; Independence Day, July 4, 1997; and
Labor Day, September 1, 1997.

     The Portfolio reserves the right in its sole discretion (1) to suspend the
offering of its shares, (2) to reject purchase orders when in the judgment of
management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.

                              REDEMPTION OF SHARES

     The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the Commission,
(2) during any period when an emergency exists as defined by the rules of the
Commission as a result of which it is not reasonably practicable for the
Portfolio to dispose of securities owned by it or to fairly determine the value
of its assets, and (3) for such other periods as the Commission may permit. The
Fund has made an election with the Commission to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net assets of the Fund at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the Commission. Redemptions in excess of the above limits may be
paid, in whole or in


                                       -6-

<PAGE>


part, in investment securities or in cash as the Board of Trustees may deem
advisable; however, payment will be made wholly in cash unless the Board of
Trustees believe that economic or market conditions exist which would make such
a practice detrimental to the best interests of the Fund. If redemptions are
paid in investment securities, such securities will be valued as set forth in
the Prospectus under "How Share Prices are Determined," and a redeeming
shareholder would normally incur brokerage expenses if those securities were
converted to cash.

     No charge is made by the Portfolio for redemptions. Any redemption may be
more or less than the shareholder's initial cost depending on the market value
of the securities held by the Portfolio.

SIGNATURE GUARANTEES
     To protect your account, the Fund and Rodney Square Management Corporation
(the "Administrator") from fraud, signature guarantees are required for certain
redemptions. Signature guarantees are required for (1) redemptions where the
proceeds are to be sent to someone other than the registered shareowner(s) or
the registered address or (2) share transfer requests. The purpose of signature
guarantees is to verify the identity of the party who has authorized a
redemption.

         Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. Eligible
guarantor institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. A complete definition of eligible guarantor institution is
available from the Administrator. Broker-dealers guaranteeing signatures must be
a member of a clearing corporation or maintain net capital of at least $100,000.
Credit unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program.

     The signature guarantee must appear either: (1) on the written request for
redemption; (2) on a separate instrument for assignment ("stock power") which
should specify the total number of shares to be redeemed; or (3) on all stock
certificates tendered for redemption and, if shares held by the Fund are also
being redeemed, on the letter or stock power.

                              SHAREHOLDER SERVICES

     The following supplements the shareholder services information set forth in
the BRAZOS/JMIC Small/Emerging Growth Portfolio's Prospectus:

   
EXCHANGE PRIVILEGE
     Shares of the BRAZOS/JMIC Small/Emerging Growth Portfolio may be exchanged
for shares of any Portfolio included within the Brazos Mutual Funds. Exchange
requests should be made by calling _______________ or by writing to Brazos
Mutual Funds, c/o Rodney Square Management Corporation, 1100 North Market
Street, 3rd Floor, Wilmington, DE 19890. The exchange privilege is only
available with respect to Portfolios that are registered for sale in the
shareholder's state of residence.
    

     Any such exchange will be based on the respective net asset values of the
shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder


                                       -7-

<PAGE>


should read its Prospectus and consider the investment objectives of the
Portfolio to be purchased. You may obtain a Prospectus for the Portfolio(s) you
are interested in by calling the Administrator at -------------.

     Exchange requests may be made either by mail or telephone. Telephone
exchanges will be accepted only if the certificates for the shares to be
exchanged are held by the Fund for the account of the shareholder and the
registration of the two accounts will be identical. Requests for exchanges
received prior to 4:00 p.m. (Eastern Time) will be processed as of the close of
business on the same day. Requests received after 4:00 p.m. will be processed on
the next business day. Neither the Fund nor the Administrator will be
responsible for the authenticity of the exchange instructions received by
telephone. Exchanges may also be subject to limitations as to amounts or
frequency, and to other restrictions established by the Board of Trustees to
assure that such exchanges do not disadvantage the Fund and its shareholders.

     For Federal income tax purposes an exchange between Portfolios is a taxable
event, and, accordingly, a capital gain or loss may be realized. In a revenue
ruling relating to circumstances similar to the Fund's, an exchange between
series of a Fund was also deemed to be a taxable event. It is likely, therefore,
that a capital gain or loss would be realized on an exchange between Portfolios;
you may want to consult your tax adviser for further information in this regard.
The exchange privilege may be modified or terminated at any time.

TRANSFER OF SHARES
     Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "Redemption
of Shares." As in the case of redemptions, the written request must be received
in good order before any transfer can be made.

                             INVESTMENT LIMITATIONS

     The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3) and (4) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:

     (1)  invest in physical commodities or contracts on physical commodities;


                                       -8-

<PAGE>


     (2)  purchase or sell real estate or real estate limited partnerships,
          although it may purchase and sell securities of companies which deal
          in real estate and may purchase and sell securities which are secured
          by interests in real estate;

     (3)  make loans except (i) by purchasing debt securities in accordance with
          its investment objectives and (ii) by lending its portfolio securities
          to banks, brokers, dealers and other financial institutions so long as
          such loans are not inconsistent with the 1940 Act or the rules and
          regulations or interpretations of the Commission thereunder;

     (4)  underwrite the securities of other issuers;

     (5)  invest in futures and/or options on futures unless (i) not more than
          5% of the Portfolio's assets are required as deposit to secure
          obligations under such futures and/or options on futures contracts
          provided, however, that in the case of an option that is in-the-money
          at the time of purchase, the in-the-money amount may be excluded in
          computing such 5% and (ii) not more than 20% of the Portfolio's assets
          are invested in futures and options;

     (6)  purchase on margin or sell short except as specified in (5) above;

     (7)  invest more than an aggregate of 15% of the net assets of the
          Portfolio, determined at the time of investment, in securities subject
          to legal or contractual restrictions on resale or securities for which
          there are no readily available markets;


                             MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS
     The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions and
principal occupations during the past five years:


   
*Daniel Hockenbrough               Trustee, President and Treasurer of the Fund;
5949 Sherry Lane, Suite 1560       Since August 1996, Business Manager of John
Dallas, Texas  75225               McStay Investment Counsel.  Formerly, Chief
Age 37                             Financial Officer of Waugh Enterprises, Inc. 
                                   from November 1995 until August 1996;
                                   Assistant Controller of Hicks, Muse, Tate &
                                   Furst Incorporated from December 1992 to
                                   November 1995; and Senior Associate at
                                   Coopers & Lybrand prior to December 1992.
    


                                       -9-

<PAGE>

   
John H. Massey                     Trustee of the Fund; Private Investor and a
4004 Windsor Avenue                Director of The Paragon Group, Inc., 
Dallas, Texas  75205               Chancellor Broadcasting, Inc., Bank of the 
Age 57                             Southwest, Columbine JDS Systems, Inc. and
                                   FSW Holdings, Inc. Until 1996, Chairman of
                                   the Board and Chief Executive Officer of Life
                                   Partners Group, Inc.

David M. Reichert                  Trustee of the Fund; Private Investor; 
7415 Stonecrest Drive              formerly Senior Vice President of Moffet 
Dallas, Texas  75240               Capital Management, an investment counseling 
Age 57                             firm, from January 1995 until June 1996 and
                                   Senior Vice President and Portfolio Manager
                                   of American Capital Asset Management, a
                                   mutual fund management company, from April
                                   1989 to July 1994.

*Tricia A. Hundley                 Vice President, Secretary and Compliance 
5949 Sherry Lane, Suite 1560       Officer of the Fund; Partner of John McStay 
Dallas, Texas  75225               Investment Counsel since 1987.
Age 46


*This person is deemed to be an "interested person" of the Fund as that term is
defined in the 1940 Act.
    

REMUNERATION OF TRUSTEES AND OFFICERS
     The Fund pays each Trustee, who is not also an officer or affiliated
person, a $500 quarterly retainer fee per active Portfolio which currently
amounts to $1,000 per quarter. In addition, each unaffiliated Trustee receives a
$500 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund, and reimbursement for travel
and other expenses incurred while attending Board meetings. Trustees who are
also officers or affiliated persons receive no remuneration for their service as
Trustees. The Fund's officers and employees are paid by either the Adviser or
the Administrator and receive no compensation from the Fund. The following table
shows aggregate compensation to be paid to each of the Fund's Trustees by the
Fund in the fiscal year ending September 30, 1997.


                                      -10-

<PAGE>




   
COMPENSATION TABLE
<TABLE>
<CAPTION>
        (1)                        (2)                         (3)                         (4)                         (5)
  Name of Person                Aggregate                  Pension or               Estimated Annual           Total Compensation
     Position                 Compensation             Retirement Benefits            Benefits Upon            from Registrant and
                             From Registrant           Accrued as Part of              Retirement               Fund Complex Paid
                                                          Fund Expenses                                            to Trustees
<S>                            <C>                         <C>                         <C>                         <C>
Daniel Hockenbrough                -0-                         -0-                         -0-                         -0-
Director

John H. Massey                   $1,000                        -0-                         -0-                       $6,000
Director

David M. Reichert                $1,000                        -0-                         -0-                       $6,000
Director
</TABLE>
    




PRINCIPAL HOLDERS OF SECURITIES
     As of ________________, 1997, the following persons or organizations held
of record 5% or more of the shares of the Portfolio:




                               INVESTMENT ADVISER

ADVISORY FEES
     As compensation for services rendered by John McStay Investment Counsel
(the "Adviser") under the Investment Advisory Agreement, the Portfolio pays the
Adviser an annual fee in monthly installments, calculated by applying the
following annual percentage rates to the Portfolio's average daily net assets
for the month:


BRAZOS/JMIC Small/Emerging Growth Portfolio..........................      0.90%


   
ADMINISTRATION FEES
     In addition to the fees received for its services as Administrator to the
Fund, as set forth in the Prospectus under "ADMINISTRATIVE SERVICES," Rodney
Square receives fees from the Fund for providing transfer agency, accounting and
dividend disbursing services. Such fees are included in the calculation of
"Other Expenses" which appears under the caption heading "FUND EXPENSES" in the
Prospectus.
    



                                      -11-

<PAGE>


                             PORTFOLIO TRANSACTIONS

     The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.

     It is not the Fund's practice to allocate brokerage or principal business
on the basis of sales of shares which may be made through broker-dealer firms.
However, the Adviser may place portfolio orders with qualified broker-dealers
who recommend the Portfolio or who act as agents in the purchase of shares of
the Portfolio for their clients.

     Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.

                            PERFORMANCE CALCULATIONS

PERFORMANCE
     The Portfolio may from time to time quote various performance figures to
illustrate past performance. Performance quotations by investment companies are
subject to rules adopted by the Commission, which require the use of
standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by the Fund be accompanied by
certain standardized performance information computed as required by the
Commission. Current yield and average annual compounded total return quotations
used by the Fund are based on the standardized methods of computing performance
mandated by the Commission. An explanation of those and other methods used to
compute or express performance follows.

YIELD
     Current yield reflects the income per share earned by the Portfolio's
investment. The current yield of the Portfolio is determined by dividing the net
investment income per share earned during a 30-day base period by the maximum
offering price per share on the last day of the period and annualizing the
result. Expenses accrued for the period include any fees charged to all
shareholders during the base period.


                                      -12-

<PAGE>


     This figure is obtained using the following formula:

                                    Yield=2[(a-b=1)6 + 1]
                                             ---
                                             cd

where:

          a=   dividends and interest earned during the period
          b=   expenses accrued for the period (net of reimbursements)
          c=   the average daily number of shares outstanding during the period
               that were entitled to receive income distributions
          d=   the maximum offering price per share on the last day of the
               period.

TOTAL RETURN
     The average annual total return of the Portfolio is determined by finding
the average annual compounded rates of return over 1, 5 and 10 year periods that
would equate an initial hypothetical $1,000 investment to its ending redeemable
value. The calculation assumes that all dividends and distributions are
reinvested when paid. The quotation assumes the amount was completely redeemed
at the end of each 1, 5 and 10 year period and the deduction of all applicable
Fund expenses on an annual basis.

     These figures will be calculated according to the following formula:

                     P(1+T)n=ERV

where:
         P=       a hypothetical initial payment of $ 1,000
         T=       average annual total return
         n=       number of years
        ERV=      ending redeemable value of a hypothetical $1,000 payment made
                  at the beginning of the 1, 5 or 10 year periods at the end of
                  the 1, 5 or 10 year periods (or fractional portion thereof).

COMPARISONS
     To help investors better evaluate how an investment in the Portfolio might
satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
to performance as reported by other investments, indices and averages. The
following publications, indices and averages may be used:

     (a)  Dow Jones Composite Average or its component averages - an unmanaged
          index composed of 30 blue-chip industrial corporation stocks (Dow
          Jones Industrial Average), 15 utilities company stocks and 20
          transportation stocks. Comparisons of performance assume reinvestment
          of dividends.


                                      -13-

<PAGE>

     (b)  Standard & Poor's 500 Stock Index or its component indices - an
          unmanaged index composed of 400 industrial stocks, 40 financial
          stocks, 40 utilities stocks and 20 transportation stocks. Comparisons
          of performance assume reinvestment of dividend.

     (c)  Standard & Poor's MidCap 400 Index - an unmanaged index measuring the
          performance of non-S&P 500 stocks in the mid-range sector of the U.S.
          stock market.

     (d)  The New York Stock Exchange composite or component indices - unmanaged
          indices of all industrial, utilities, transportation and finance
          stocks listed on the New York Stock Exchange.

     (e)  Wilshire 5000 Equity Index or its component indices - represents the
          return on the market value of all common equity securities for which
          daily pricing is available. Comparisons of performance assume
          reinvestment of dividends.

     (f)  Lipper - Mutual Fund Performance Analysis and Lipper - Fixed Income
          Fund Performance Analysis - measure total return and average current
          yield for the mutual fund industry. Rank individual mutual fund
          performance over specified time periods, assuming reinvestment of all
          distributions, exclusive of any applicable sales charges.

     (g)  Morgan Stanley Capital International EAFE Index and World Index -
          respectively, arithmetic, market value-weighted averages of the
          performance of over 900 securities listed on the stock exchanges of
          countries in Europe, Australia and the Far East, and over 1,400
          securities listed on the stock exchanges of these continents,
          including North America.

     (h)  Goldman Sachs 100 Convertible Bond Index - currently includes 67 bonds
          and 33 preferred. The original list of names was generated by
          screening for convertible issues of 100 million or greater in market
          capitalization. The index is priced monthly.

     (i)  Salomon Brothers GNMA Index - includes pools of mortgages originated
          by private lenders and guaranteed by the mortgage pools of the
          Government National Mortgage Association.

     (j)  Salomon Brothers High Grade Corporate Bond Index - consists of
          publicly issued, non-convertible corporate bonds rated AA or AAA. It
          is a value-weighted, total return index, including approximately 800
          issues with maturities of 12 years or greater.

     (k)  Salomon Brothers Broad Investment Grade Bond - is a market-weighted
          index that contains approximately 4,700 individually priced investment
          grade corporate bonds rated BBB or better, U.S. Treasury/agency issues
          and mortgage pass through securities.

     (l)  Lehman Brothers Long-Term Treasury Bond - is composed of all bonds
          covered by the Lehman Brothers Treasury Bond Index with maturities of
          10 years or greater.


                                      -14-

<PAGE>


     (m)  NASDAQ Industrial Index - is composed of more than 3,000 industrial
          issues. It is a value- weighted index calculated on price change only
          and does not include income.

     (n)  Value Line - composed of over 1,600 stocks in the Value Line
          Investment Survey.

     (o)  Russell 2000 - composed of the 2,000 smallest stocks in the Russell
          3000, a market value- weighted index of the 3,000 largest U.S.
          publicly-traded companies.

     (p)  Russell 2500 - composed of the 2,500 smallest stocks in the Russell
          3000, a market value- weighted index of the 3,000 largest U.S.
          publicly-traded companies.

     (q)  Composite Indices - 60% Standard & Poor's 500 Stock Index, 30% Lehman
          Brothers Long- Term Treasury Bond and 10% U.S. Treasury Bills; 70%
          Standard & Poor's 500 Stock Index and 30% NASDAQ Industrial Index; 35%
          Standard & Poor's 500 Stock Index and 65% Salomon Brothers High Grade
          Bond Index; all stocks on the NASDAQ system exclusive of those traded
          on an exchange, and 65% Standard & Poor's 500 Stock Index and 35%
          Salomon Brothers High Grade Bond Index.

     (r)  CDA Mutual Fund Report published by CDA Investment Technologies, Inc.
          - analyzes price, current yield, risk, total return and average rate
          of return (average compounded growth rate) over specified time periods
          for the mutual fund industry.

     (s)  Mutual Fund Source Book published by Morningstar, Inc. - analyzes
          price, yield, risk and total return for equity funds.

     (t)  Financial publications: Business Week, Changing Times, Financial
          World, Forbes, Fortune, Money, Barron's, Consumer's Digest, Financial
          Times, Global Investor, Wall Street Journal and Weisenberger
          Investment Companies Service - publications that rate fund performance
          over specified time periods.

     (u)  Consumer Price Index (or Cost of Living Index), published by the U.S.
          Bureau of Labor Statistics - a statistical measure of change over time
          in the price of goods and services in major expenditure groups.

     (v)  Stocks, Bonds, Bills and Inflation, published by Ibbotson Associates -
          historical measure of yield, price and total return for common and
          small company stock, long-term government bonds, U.S. Treasury bills
          and inflation.

     (w)  Savings and Loan Historical Interest Rates - as published by the U.S.
          Savings & Loan League Fact Book.

     (x)  Lehman Brothers Government/Corporate Index - is a combination of the
          Government and Corporate Bond Indices. The Government Index includes
          public obligations of the U.S. Treasury, issues of Government
          agencies, and corporate debt backed by the U.S.


                                      -15-

<PAGE>


          Government. The Corporate Bond Index includes fixed-rate
          nonconvertible corporate debt. Also included are Yankee Bonds and
          nonconvertible debt issued by or guaranteed by foreign or
          international governments and agencies. All issues are investment
          grade (BBB) or higher, with maturities of at least one year and an
          outstanding par value of at least $100 million for U.S. Government
          issues and $25 million for others. Any security downgraded during the
          month is held in the index until month-end and then removed. All
          returns are market value weighted inclusive of accrued income.

     (y)  Lehman Brothers Intermediate Government/Corporate Index is an
          unmanaged index composed of a combination of the Government and
          Corporate Bond Indices. All issues are investment grade (BBB) or
          higher, with maturities of one to ten years and an outstanding par
          value of at least $100 million for U.S. Government issues and $25
          million for others. The Government Index includes public obligations
          of the U.S. Treasury, issues of Government agencies, and corporate
          debt backed by the U.S. Government. The Corporate Bond Index includes
          fixed-rate nonconvertible corporate debt. Also included are Yankee
          Bonds and nonconvertible debt issued by or guaranteed by foreign or
          international governments and agencies. Any security downgraded during
          the month is held in the index until month-end and then removed. All
          returns are market value weighted inclusive of accrued income.

     (z)  Historical data supplied by the research departments of First Boston
          Corporation; the J.P. Morgan companies; Salomon Brothers; Merrill
          Lynch, Pierce, Fenner & Smith; Lehman Brothers, Inc.; and Bloomberg
          L.P.

     In assessing such comparisons of performance, an investor should keep in
mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.

                               GENERAL INFORMATION

   
DESCRIPTION OF SHARES AND VOTING RIGHTS
     The Fund was organized as a Delaware business trust on October 24, 1996.
The Fund's principal office is located at 5949 Sherry Lane, Dallas, Texas 75225;
however, all investor correspondence should be directed to the Fund c/o Rodney
Square Management Corporation, P.O. Box 8987, Wilmington, DE 19890. The Fund's
Agreement and Declaration of Trust permits the Fund to issue an unlimited number
of shares of beneficial interest, without par value. The Trustees have the power
to designate one or more series ("Portfolios") or classes of shares of
beneficial interest without further action by shareholders.
    

     On each matter submitted to a vote of the shareholders, each holder of a
share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his or her name on the books of the Fund.


                                      -16-

<PAGE>


     In the event of liquidation of the Fund, the holders of the shares of each
Portfolio or any class thereof that has been established and designated shall be
entitled to receive, when and as declared by the Trustees, the excess of the
assets belonging to that Portfolio, or in the case of a class, belonging to that
Portfolio and allocable to that class, over the liabilities belonging to that
Portfolio or class. The assets so distributable to the holders of shares of any
particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.

     Shareholders have no pre-emptive or other rights to subscribe to any
additional shares or other securities issued by the Fund or any Portfolio,
except as the Trustees in their sole discretion shall have determined by
resolution.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
     The Fund's policy is to distribute annually substantially all of the
Portfolio's net investment income, if any, together with any net realized
capital gains in the amount and at the times that will avoid both income
(including capital gains) taxes incurred and the imposition of the Federal
excise tax on undistributed income and capital gains. The amounts of any income
dividends or capital gains distributions cannot be predicted. See discussion
under "Dividends, Capital Gains Distributions and Taxes" in the Prospectus.

     Any dividend or distribution paid shortly after the purchase of shares of
the Portfolio by an investor may have the effect of reducing the per share net
asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.

     As set forth in the Prospectus, unless the shareholder elects otherwise in
writing, all dividend and capital gains distributions are automatically received
in additional shares of the respective Portfolio of the Fund at net asset value
(as of the business day following the record date). This will remain in effect
until the Fund is notified by the shareholder in writing at least three days
prior to the record date that either the Income Option (income dividends in cash
and capital gains distributions in additional shares at net asset value) or the
Cash Option (both income dividends and capital gains distributions in cash) has
been elected. An account statement is sent to shareholders whenever an income
dividend or capital gains distribution is paid.

     Each Portfolio of the Fund will be treated as a separate entity (and hence
as a separate "regulated investment company") for Federal tax purposes. Any net
capital gains recognized by the Portfolio will be distributed to its investors
without need to offset (for Federal income tax purposes) such gains against any
net capital losses of another Portfolio.

FEDERAL TAXES
     In order for the Portfolio to continue to qualify for Federal income tax
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"), at least 90% of the Portfolio's gross income for
a taxable year must be derived from certain qualifying income, i.e., dividends,
interest, income derived from loans of securities and gains from the sale or
other disposition of


                                      -17-

<PAGE>


stock, securities or foreign currencies, or other related income, including
gains from options, futures and forward contracts, derived with respect to its
business investing in stock, securities or currencies. Any net gain realized
from the closing out of futures contracts will, therefore, generally be
qualifying income for purposes of the 90% requirement. Qualification as a
regulated investment company also requires that less than 30% of the Portfolio's
gross income be derived from the sale or other disposition of stock, securities,
options, futures or forward contracts (including certain foreign currencies not
directly related to the Fund's business of investing in stock or securities)
held less than three months. In order to avoid realizing excessive gains on
securities held for less than three months, the Portfolio may be required to
defer the closing out of futures contracts beyond the time when it would
otherwise be advantageous to do so. It is anticipated that unrealized gains on
futures contracts which have been open for less than three months as of the end
of the Portfolio's taxable year, and which are recognized for tax purposes, will
not be considered gains on securities held for less than three months for the
purposes of the 30% test.

     Except for transactions the Portfolio has identified as hedging
transactions, the Portfolio is required for Federal income tax purposes to
recognize as income for the taxable year its net unrealized gains and losses on
forward currency and futures contracts as of the end of the taxable year as well
as those actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract. Recognized gain or loss
attributable to a foreign currency forward contract is treated as 100% ordinary
income. Furthermore, foreign currency futures contracts which are intended to
hedge against a change in the value of securities held by the Portfolio may
affect the holding period of such securities and, consequently, the nature of
the gain or loss on such securities upon disposition.

     The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year) on futures
transactions. Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised on the nature of the payment.

CODE OF ETHICS
     The Fund has adopted a Code of Ethics which restricts, to a certain extent,
personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.

                              FINANCIAL STATEMENTS

     The Financial Statements for the Portfolio and selected per share data and
ratios and notes to the Financial Statements relating to corresponding periods
will be contained in this Statement of Additional Information.


                                      -18-

<PAGE>


                                     PART B


                  BRAZOS/JMIC REAL ESTATE SECURITIES PORTFOLIO



                       STATEMENT OF ADDITIONAL INFORMATION

                        __________________________, 1996




This Statement is not a Prospectus but should be read in conjunction with the
Prospectus of the Brazos Mutual Funds (the "Fund") for the BRAZOS/JMIC Real
Estate Securities Portfolio Shares dated __________, 1996. To obtain the
Prospectus, please call Rodney Square Management Corporation at
[----------------]:

                                 [phone number]




                                Table of Contents

                                                                            Page

Investment Objective and Policies...........................................  2
Purchase of Shares..........................................................  6
Redemption of Shares........................................................  6
Shareholder Services........................................................  7
Investment Limitations......................................................  8
Management of the Fund......................................................  9
Investment Adviser.......................................................... 12
Portfolio Transactions...................................................... 13
Performance Calculations.................................................... 14
General Information......................................................... 18
Financial Statements........................................................ 20



                                       -1-

<PAGE>

                        INVESTMENT OBJECTIVE AND POLICIES

     The following policies supplement the investment objective and policies of
the BRAZOS/JMIC Real Estate Securities Portfolio as set forth in the Prospectus
for the Portfolio:

SECURITIES LENDING
         The Portfolio may lend its investment securities to qualified
institutional investors who need to borrow securities in order to complete
certain transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. By lending its investment
securities, the Portfolio attempts to increase its income through the receipt of
interest on the loan. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Portfolio. The Portfolio may lend its investment securities to qualified
brokers, dealers, domestic and foreign banks or other financial institutions, so
long as the terms, the structure and the aggregate amount of such loans are not
inconsistent with the Investment Company Act of 1940, as amended, (the "1940
Act") or the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "Commission") thereunder, which currently require that
(a) the borrower pledge and maintain with the Portfolio collateral consisting of
cash, an irrevocable letter of credit issued by a domestic U.S. bank or
securities issued or guaranteed by the United States Government having a value
at all times not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities loaned
rises (i.e., the borrower "marks to the market" on a daily basis), (c) the loan
be made subject to termination by the Portfolio at any time, and (d) the
Portfolio receives reasonable interest on the loan (which may include the
Portfolio investing any cash collateral in interest bearing short-term
investments). All relevant facts and circumstances, including the
creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review by
the Board of Trustees.

         At the present time, the Staff of the Commission does not object if an
investment company pays reasonable negotiated fees in connection with loaned
securities so long as such fees are set forth in a written contract and approved
by the investment company's Board of Trustees. The Portfolio will continue to
retain any voting rights with respect to the loaned securities. If a material
event occurs affecting an investment on a loan, the loan must be called and the
securities voted.

HEDGING STRATEGIES
         The Portfolio may engage in various portfolio strategies to hedge
against adverse movements in the equity markets. The Portfolio may buy or sell
futures contracts, write (i.e., sell) covered call options on its portfolio
securities, purchase put and call options on securities and engage in
transactions in related options on such futures. Each of these portfolio
strategies is described below. Although certain risks are involved in options
and futures transactions, the Adviser believes that, because the Portfolio will
engage in options and futures transactions only for hedging purposes, the
options and futures portfolio strategies of the Portfolio will not subject it to
the risks frequently associated with the speculative use of options and futures
transactions. While the Portfolio's use of hedging strategies is intended to
reduce the volatility of the net asset value of the Portfolio shares, the
Portfolio's net asset value will fluctuate. There can be no assurance that the
Portfolio's hedging transactions will be effective. Also, the Portfolio may not
necessarily be engaging in hedging activities when movements in any particular
equity market occur.


                                       -2-

<PAGE>




FUTURES CONTRACTS
         The Portfolio may enter into futures contracts for the purposes of
hedging, remaining fully invested and reducing transactions costs. Futures
contracts provide for the future sale by one party and purchase by another party
of a specified amount of a specific security at a specified future time and at a
specified price. Futures contracts which are standardized as to maturity date
and underlying financial instrument are traded on national futures exchanges.
Futures exchanges and trading are regulated under the Commodity Exchange Act by
the Commodity Futures Trading Commission ("CFTC"), a U.S. Government agency.

         Although futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date without the making or taking of delivery. Closing
out an open futures position is done by trading an opposite position ("buying" a
contract which has previously been "sold" or "selling" a contract previously
"purchased") in an identical contract to terminate the position. Brokerage
commissions are incurred when a futures contract is bought or sold.

         Futures traders are required to make a good faith margin deposit in
cash or acceptable securities with a broker or custodian to initiate and
maintain open positions in futures contracts. A margin deposit is intended to
assure completion of the contract (delivery or acceptance of the underlying
security) if it is not terminated prior to the specified delivery date. Minimal
initial margin requirements are established by the futures exchange and may be
changed. Brokers may establish deposit requirements which are higher than the
exchange minimums. Futures contracts are customarily purchased and sold on
margin that may range upward from less than 5% of the value of the contract
being traded. After a futures contract position is opened, the value of the
contract is marked to market daily. If the futures contract price changes to the
extent that the margin on deposit does not satisfy margin requirements, payment
of additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Portfolio
expects to earn interest income on its margin deposits.

         Traders in futures contracts may be broadly classified as either
"hedgers" or "speculators". Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities otherwise held for investment
purposes or expected to be acquired by them. Speculators are less inclined to
own the securities underlying the futures contracts which they trade and use
futures contracts with the expectation of realizing profits from a fluctuation
in interest rates. The Portfolio intends to use futures contracts only for
hedging purposes.

         Regulations of the CFTC applicable to the Fund require that all of its
futures transactions constitute bona fide straddles or that the Fund's commodity
futures and option positions be for other purposes, to the extent that the
aggregate initial margins and premiums required to establish such non-hedging
positions do not exceed five percent of the liquidation value of the Portfolio.
The Portfolio will only sell futures contracts to protect securities it owns
against price declines or purchase contracts to protect against an increase in
the price of securities it intends to purchase. As evidence of this hedging
interest, the Portfolio expects that approximately 75% of its futures contracts
purchases will be "completed", that is, equivalent


                                       -3-

<PAGE>


amounts of related securities will have been purchased or will be purchased by
the Portfolio on the settlement date of the futures contracts.

         Although techniques other than the sale and purchase of futures
contracts could be used to control the Portfolios exposure to market
fluctuations, the use of futures contracts may be a more effective means of
hedging this exposure. While the Portfolio will incur commission expenses in
both opening and closing out futures positions, these costs are lower than
transaction costs incurred in the purchase and sale of the underlying
securities.

RESTRICTIONS ON THE USE OF FUTURES CONTRACTS
         The Portfolio will not enter into futures contract transactions to the
extent that, immediately thereafter, the sum of its initial margin deposits on
open contracts exceeds 5% of the market value of its total assets. In addition,
the Portfolio will not enter into futures contracts to the extent that its
outstanding obligations to purchase securities under these contracts would
exceed 20% of its total assets.

RISK FACTORS IN FUTURES TRANSACTIONS
         The Portfolio will minimize the risk that it will be unable to close
out a futures position by only entering into futures which are traded on
national futures exchanges and for which there appears to be a liquid secondary
market. However, there can be no assurance that a liquid secondary market will
exist for a particular futures contract at any given time. Thus, it may not be
possible to close a futures position. In the event of adverse price movements,
the Portfolio would continue to be required to make daily cash payments to
maintain its required margin. In such situations, if the Portfolio has
insufficient cash, it may have to sell securities to meet daily margin
requirements at a time when it may be disadvantageous to do so. In addition, the
Portfolio may be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close futures positions also could have an
adverse impact on the Portfolio's ability to effectively hedge.

         The risk of loss in trading futures contracts in some strategies can be
substantial due both to the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor. For example, if at the time of purchase,
10% of the value of the futures contract is deposited as margin, a subsequent
10% decrease in the value of the futures contract would result in a total loss
of the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in excess of the amount
invested in the contract. However, because the futures strategies of the
Portfolio are engaged in only for hedging purposes, the Adviser does not believe
that the Portfolio is subject to the risks of loss frequently associated with
futures transactions. The Portfolio would presumably have sustained comparable
losses if, instead of the futures contract, it had invested in the underlying
financial instrument and sold it after the decline.

         Utilization of futures transactions by the Portfolio does involve the
risk of imperfect or no correlation where the securities underlying the futures
contracts have different maturities than the portfolio securities being hedged.
It is also possible that the Portfolio could lose money on futures contracts and
also


                                       -4-

<PAGE>


experience a decline in value of portfolio securities. There is also the risk of
loss by the Portfolio of margin deposits in the event of bankruptcy of a broker
with whom the Portfolio has an open position in a futures contract or related
option.

         Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of a trading session.
Once the daily limit has been reached in a particular type of contract, no
trades may be made on that day at a price beyond that limit. The daily limit
governs only price movement during a particular trading day and, therefore, does
not limit potential losses because the limit may prevent the liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.

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

OPTIONS
         The Portfolio may purchase and sell put and call options on securities
and futures contracts for hedging purposes. Investments in options involve some
of the same considerations that are involved in connection with investments in
futures contracts (e.g., the existence of a liquid secondary market). In
addition, the purchase of an option also entails the risk that changes in the
value of the underlying security or contract will not be fully reflected in the
value of the option purchased. Depending on the pricing of the option compared
to either the futures contract on which it is based or the price of the
securities being hedged, an option may or may not be less risky than ownership
of the futures contract or such securities. In general, the market prices of
options can be expected to be more volatile than the market prices on the
underlying futures contract or securities.

WRITING COVERED CALL OPTIONS
         The principal reason for writing call options is to attempt to realize,
through the receipt of premiums, a greater return than would be realized on
securities alone. By writing covered call options, the Portfolio gives up the
opportunity, while the option is in effect, to profit from any price increase in
the underlying security above the option exercise price. In addition, the
Portfolio's ability to sell the underlying security will be limited while the
option is in effect unless the Portfolio effects a closing purchase transaction.
A closing purchase transaction cancels out the Portfolio's position as the
writer of an option by means of an offsetting purchase of an identical option
prior to the expiration of the option it has written. Covered call options serve
as a partial hedge against the price of the underlying security declining. The
Portfolio writes only covered options, which means that so long as the Portfolio
is obligated as the writer of the option it will, in a segregated account with
its custodian, maintain cash, U.S. government


                                       -5-

<PAGE>


securities, other high grade liquid debt securities or other liquid securities
denominated in U.S. dollars with a value equal to or greater than the exercise
price of the underlying securities.

PURCHASING OPTIONS
         The amount of any appreciation in the value of the underlying security
subject to a put will be partially offset by the amount of the premium paid for
the put option and any related transaction costs. Prior to its expiration, a put
option may be sold in a closing sale transaction and profit or loss from a sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs. A closing sale
transaction cancels out the Portfolio's position as purchaser of an option by
means of an offsetting sale of an identical option prior to the expiration of
the option it has purchased. In certain circumstances, the Portfolio may
purchase call options on securities held in its investment portfolio on which it
has written call options or on securities which it intends to purchase.

                               PURCHASE OF SHARES

         Shares of the Portfolio may be purchased without sales commission at
the net asset value per share next determined after an order is received in
proper form by the Fund, and payment is received by the Fund's custodian. The
minimum initial investment required for the Portfolio is $10,000 with certain
exceptions as may be determined from time to time by the officers of the Fund.
An order received in proper form prior to the 4:00 p.m. close of the New York
Stock Exchange (the "NYSE") will be executed at the price computed on the date
of receipt; and an order received not in proper form or after the 4:00 p.m.
close of the NYSE will be executed at the price computed on the next day the
NYSE is open after proper receipt. The NYSE will be closed on the following
days: Thanksgiving Day, November 28, 1996; Christmas Day, December 25, 1996; New
Year's Day, January 1, 1997; President's Day, February 17, 1997; Good Friday,
March 28, 1997; Memorial Day, May 26, 1996; Independence Day, July 4, 1997; and
Labor Day, September 1, 1997.

         The Portfolio reserves the right in its sole discretion (1) to suspend
the offering of its shares, (2) to reject purchase orders when in the judgment
of management such rejection is in the best interests of the Fund, and (3) to
reduce or waive the minimum for initial and subsequent investment for certain
fiduciary accounts such as employee benefit plans or under circumstances where
certain economies can be achieved in sales of the Portfolio's shares.

                              REDEMPTION OF SHARES

         The Portfolio may suspend redemption privileges or postpone the date of
payment (1) during any period that both the Exchange and custodian bank are
closed or trading on the Exchange is restricted as determined by the Commission,
(2) during any period when an emergency exists as defined by the rules of the
Commission as a result of which it is not reasonably practicable for the
Portfolio to dispose of securities owned by it or to fairly determine the value
of its assets, and (3) for such other periods as the Commission may permit. The
Fund has made an election with the Commission to pay in cash all redemptions
requested by any shareholder of record limited in amount during any 90-day
period to the lesser of $250,000 or 1% of the net assets of the Fund at the
beginning of such period. Such commitment is irrevocable without the prior
approval of the Commission. Redemptions in excess of the above limits may be
paid, in whole or in


                                       -6-

<PAGE>



part, in investment securities or in cash as the Board of Trustees may deem
advisable; however, payment will be made wholly in cash unless the Board of
Trustees believe that economic or market conditions exist which would make such
a practice detrimental to the best interests of the Fund. If redemptions are
paid in investment securities, such securities will be valued as set forth in
the Prospectus under "How Share Prices are Determined," and a redeeming
shareholder would normally incur brokerage expenses if those securities were
converted to cash.

         No charge is made by the Portfolio for redemptions if shares are held
for at least 90 days. Shares held for less than 90 days will be subject to a 1%
redemption fee which is retained by the Fund for the benefit of the remaining
shareholders and is intended to encourage long-term investment in the Portfolio
to avoid transaction and other expenses caused by early redemption and to
facilitate portfolio management. Any redemption may be more or less than the
shareholder's initial cost depending on the market value of the securities held
by the Portfolio.

SIGNATURE GUARANTEES
         To protect your account, the Fund and Rodney Square Management
Corporation (the "Administrator") from fraud, signature guarantees are required
for certain redemptions. Signature guarantees are required for (1) redemptions
where the proceeds are to be sent to someone other than the registered
shareowner(s) or the registered address or (2) share transfer requests. The
purpose of signature guarantees is to verify the identity of the party who has
authorized a redemption.

         Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15 under the Securities Exchange Act of 1934. Eligible
guarantor institutions include banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations. A complete definition of eligible guarantor institution is
available from the Administrator. Broker-dealers guaranteeing signatures must be
a member of a clearing corporation or maintain net capital of at least $100,000.
Credit unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program.

         The signature guarantee must appear either: (1) on the written request
for redemption; (2) on a separate instrument for assignment ("stock power")
which should specify the total number of shares to be redeemed; or (3) on all
stock certificates tendered for redemption and, if shares held by the Fund are
also being redeemed, on the letter or stock power.

                              SHAREHOLDER SERVICES

         The following supplements the shareholder services information set
forth in the BRAZOS/JMIC Real Estate Securities Portfolio's Prospectus:

   
EXCHANGE PRIVILEGE
         Shares of the BRAZOS/JMIC Real Estate Securities Portfolio may be
exchanged for shares of any other Portfolio. Exchange requests should be made by
calling the Fund at _______________ or by writing to Brazos Mutual Funds, c/o
Rodney Square Management Corporation, 1100 North Market Street, 3rd
    


                                       -7-

<PAGE>


Floor, Wilmington, DE 19890. The exchange privilege is only available with
respect to Portfolios that are registered for sale in the shareholder's state of
residence.

         Any such exchange will be based on the respective net asset values of
the shares involved. There is no sales commission or charge of any kind. Before
making an exchange into a Portfolio, a shareholder should read its Prospectus
and consider the investment objectives of the Portfolio to be purchased. You may
obtain a Prospectus for the Portfolio(s) you are interested in by calling the
Administrator at ------------------.

         Exchange requests may be made either by mail or telephone. Telephone
exchanges will be accepted only if the certificates for the shares to be
exchanged are held by the Fund for the account of the shareholder and the
registration of the two accounts will be identical. Requests for exchanges
received prior to 4:00 p.m. (Eastern Time) will be processed as of the close of
business on the same day. Requests received after 4:00 p.m. will be processed on
the next business day. Neither the Fund nor the Administrator will be
responsible for the authenticity of the exchange instructions received by
telephone. Exchanges may also be subject to limitations as to amounts or
frequency, and to other restrictions established by the Board of Trustees to
assure that such exchanges do not disadvantage the Fund and its shareholders.

         For Federal income tax purposes an exchange between Portfolios is a
taxable event, and, accordingly, a capital gain or loss may be realized. In a
revenue ruling relating to circumstances similar to the Fund's, an exchange
between series of a Fund was also deemed to be a taxable event. It is likely,
therefore, that a capital gain or loss would be realized on an exchange between
Portfolios; you may want to consult your tax adviser for further information in
this regard. The exchange privilege may be modified or terminated at any time.

TRANSFER OF SHARES
         Shareholders may transfer shares of the Portfolio to another person by
making a written request to the Fund. The request should clearly identify the
account and number of shares to be transferred, and include the signature of all
registered owners and all stock certificates, if any, which are subject to the
transfer. The signature on the letter of request, the stock certificate or any
stock power must be guaranteed in the same manner as described under "Redemption
of Shares." As in the case of redemptions, the written request must be received
in good order before any transfer can be made.

                             INVESTMENT LIMITATIONS

         The following limitations supplement those set forth in the Prospectus.
Whenever an investment limitation sets forth a percentage limitation on
investment or utilization of assets, such limitation shall be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Accordingly, any later increase or decrease resulting
from a change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment limitations. Investment limitations (1), (2), (3) and (4) are
classified as fundamental. The Portfolio's fundamental investment limitations
cannot be changed without approval by a "majority of the outstanding shares" (as
defined in the 1940 Act) of the Portfolio. The Portfolio will not:


                                       -8-

<PAGE>




     (1)  invest in physical commodities or contracts on physical commodities;

     (2)  purchase or sell real estate or real estate limited partnerships,
          (although it may purchase and sell mortgage-related securities and
          securities of companies which deal in real estate or interests therein
          and may liquidate real estate acquired as a result of default on a
          mortgage and may purchase and sell securities which are secured by
          interests in real estate, invest in marketable securities issued by
          companies such as real estate investment trusts which deal in real
          estate or interests therein and participation interests in pools of
          real estate mortgage loans);

     (3)  make loans except (i) by purchasing debt securities in accordance with
          its investment objectives and (ii) by lending its portfolio securities
          to banks, brokers, dealers and other financial institutions so long as
          such loans are not inconsistent with the 1940 Act or the rules and
          regulations or interpretations of the Commission thereunder;

     (4)  underwrite the securities of other issuers;

     (5)  invest in futures and/or options on futures unless (i) not more than
          5% of the Portfolio's assets are required as deposit to secure
          obligations under such futures and/or options on futures contracts
          provided, however, that in the case of an option that is in-the-money
          at the time of purchase, the in-the-money amount may be excluded in
          computing such 5% and (ii) not more than 20% of the Portfolio's assets
          are invested in futures and options;

     (6)  purchase on margin or sell short except as specified in (5) above;

     (7)  invest more than an aggregate of 15% of the net assets of the
          Portfolio, determined at the time of investment, in securities subject
          to legal or contractual restrictions on resale or securities for which
          there are no readily available markets;


                             MANAGEMENT OF THE FUND

TRUSTEES AND OFFICERS
         The Officers of the Fund manage its day-to-day operations and are
responsible to the Fund's Board of Trustees. The Trustees set broad policies for
the Fund and elect its Officers. The following is a list of the Trustees and
Officers of the Fund and a brief statement of their present positions and
principal occupations during the past five years:

                                      -9-
<PAGE>
   
*Daniel Hockenbrough               Trustee, President and Treasurer of the Fund;
5949 Sherry Lane, Suite 1560       Since August 1996, Business Manager of John
Dallas, Texas  75225               McStay Investment Counsel.  Formerly, Chief
Age 37                             Financial Officer of Waugh Enterprises, Inc.
                                   from November 1995 until August 1996;
                                   Assistant Controller of Hicks, Muse, Tate &
                                   Furst Incorporated from December 1992 to
                                   November 1995; and Senior Associate at
                                   Coopers & Lybrand prior to December 1992.


John H. Massey                     Trustee of the Fund; Private Investor and a
4004 Windsor Avenue                Director of The Paragon Group, Inc., 
Dallas, Texas  75205               Chancellor Broadcasting, Inc., Bank of the 
Age 57                             Southwest, Columbine JDS Systems, Inc. 
                                   and FSW Holdings, Inc. Until 1996, Chairman
                                   of the Board and Chief Executive Officer of
                                   Life Partners Group, Inc.

David M. Reichert                  Trustee of the Fund; Private Investor; 
7415 Stonecrest Drive              formerly Senior Vice President of Moffet 
Dallas, Texas  75240               Capital Management, an investment counseling 
Age 57                             firm, from January 1995 until June 1996 and
                                   Senior Vice President and Portfolio Manager
                                   of American Capital Asset Management, a
                                   mutual fund management company, from April
                                   1989 to July 1994.

*Tricia A. Hundley                 Vice President, Secretary and Compliance 
5949 Sherry Lane, Suite 1560       Officer of the Fund; Partner of John McStay 
Dallas, Texas  75225               Investment Counsel since 1987.
Age 46
    


*This person is deemed to be an "interested person" of the Fund as that term is
defined in the 1940 Act.

REMUNERATION OF TRUSTEES AND OFFICERS
         The Fund pays each Trustee, who is not also an officer or affiliated
person, a $500 quarterly retainer fee per active Portfolio which currently
amounts to $1,000 per quarter. In addition, each unaffiliated Trustee receives a
$500 meeting fee which is aggregated for all the Trustees and allocated
proportionately among the Portfolios of the Fund and reimbursement for travel
and other expenses incurred while attending Board meetings. Trustees who are
also officers or affiliated persons receive no remuneration for their service as
Trustees. The Fund's officers and employees are paid by either the Adviser or
the Administrator and receive no compensation from the Fund. The following table
shows aggregate compensation to be paid to each of the Fund's Trustees by the
Fund in the fiscal year ending September 30, 1997.


                                       -10-

<PAGE>

<TABLE>
   
<CAPTION>
COMPENSATION TABLE

        (1)                         (2)                         (3)                         (4)                         (5)
  Name of Person                 Aggregate                  Pension or               Estimated Annual           Total Compensation
     Position                  Compensation             Retirement Benefits            Benefits Upon            from Registrant and
                              From Registrant           Accrued as Part of              Retirement               Fund Complex Paid
                                                           Fund Expenses                                            to Trustees
<S>                           <C>                         <C>                         <C>                         <C>
Daniel Hockenbrough                -0-                         -0-                         -0-                         -0-
Director

John H. Massey                   $1,000                        -0-                         -0-                       $6,000
Director

David M. Reichert                $1,000                        -0-                         -0-                       $6,000
Director
</TABLE>
    




PRINCIPAL HOLDERS OF SECURITIES
         As of ________________, 1997, the following persons or organizations
held of record 5% or more of the shares of the Portfolio:




                               INVESTMENT ADVISER

ADVISORY FEES
         As compensation for services rendered by John McStay Investment Counsel
(the "Adviser") under the Investment Advisory Agreement, the Portfolio pays the
Adviser an annual fee in monthly installments, calculated by applying the
following annual percentage rates to the Portfolio's average daily net assets
for the month:


BRAZOS/JMIC Real Estate Securities Portfolio..........................     0.90%

   
ADMINISTRATION FEES
         In addition to the fees received for its services as Administrator to
the Fund, as set forth in the Prospectus under "ADMINISTRATIVE SERVICES," Rodney
Square receives fees from the Fund for providing transfer agency, accounting and
dividend disbursing services. Such fees are included in the calculation of
"Other Expenses" which appears under the caption heading "FUND EXPENSES" in the
Prospectus.
    


                                      -11-

<PAGE>


                             PORTFOLIO TRANSACTIONS

         The Investment Advisory Agreement authorizes the Adviser to select the
brokers or dealers that will execute the purchases and sales of investment
securities for the Portfolio and directs the Adviser to use its best efforts to
obtain the best execution with respect to all transactions for the Portfolio.
The Adviser may, however, consistent with the interests of the Portfolio, select
brokers on the basis of the research, statistical and pricing services they
provide to the Portfolio. Information and research received from such brokers
will be in addition to, and not in lieu of, the services required to be
performed by the Adviser under the Investment Advisory Agreement. A commission
paid to such brokers may be higher than that which another qualified broker
would have charged for effecting the same transaction, provided that such
commissions are paid in compliance with the Securities Exchange Act of 1934, as
amended, and that the Adviser determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
the Adviser to the Portfolio and the Adviser's other clients.

         It is not the Fund's practice to allocate brokerage or principal
business on the basis of sales of shares which may be made through broker-dealer
firms. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend the Portfolio or who act as agents in the purchase
of shares of the Portfolio for their clients.

         Some securities considered for investment by the Portfolio may also be
appropriate for other clients served by the Adviser. If purchases or sales of
securities consistent with the investment policies of the Portfolio and one or
more of these other clients served by the Adviser is considered at or about the
same time, transactions in such securities will be allocated among the Portfolio
and clients in a manner deemed fair and reasonable by the Adviser. Although
there is no specified formula for allocating such transactions, the various
allocation methods used by the Adviser, and the results of such allocations, are
subject to periodic review by the Fund's Board of Trustees.

                            PERFORMANCE CALCULATIONS

PERFORMANCE
         The Portfolio may from time to time quote various performance figures
to illustrate past performance. Performance quotations by investment companies
are subject to rules adopted by the Commission, which require the use of
standardized performance quotations or, alternatively, that every
non-standardized performance quotation furnished by the Fund be accompanied by
certain standardized performance information computed as required by the
Commission. Current yield and average annual compounded total return quotations
used by the Fund are based on the standardized methods of computing performance
mandated by the Commission. An explanation of those and other methods used to
compute or express performance follows.



YIELD


                                      -12-

<PAGE>



         Current yield reflects the income per share earned by the Portfolio's
investment. The current yield of the Portfolio is determined by dividing the net
investment income per share earned during a 30-day base period by the maximum
offering price per share on the last day of the period and annualizing the
result. Expenses accrued for the period include any fees charged to all
shareholders during the base period.

         This figure is obtained using the following formula:

                              Yield=2[(a-b=1)6 + 1]
                                       ---
                                       cd

where:
          a=   dividends and interest earned during the period
          b=   expenses accrued for the period (net of reimbursements)
          c=   the average daily number of shares outstanding during the period
               that were entitled to receive income distributions
          d=   the maximum offering price per share on the last day of the
               period.

TOTAL RETURN
         The average annual total return of the Portfolio is determined by
finding the average annual compounded rates of return over 1, 5 and 10 year
periods that would equate an initial hypothetical $1,000 investment to its
ending redeemable value. The calculation assumes that all dividends and
distributions are reinvested when paid. The quotation assumes the amount was
completely redeemed at the end of each 1, 5 and 10 year period and the deduction
of all applicable Fund expenses on an annual basis.

         These figures will be calculated according to the following formula:

                               P(1+T)n=ERV

where:
         P=       a hypothetical initial payment of $ 1,000
         T=       average annual total return
         n=       number of years
        ERV=      ending redeemable value of a hypothetical $1,000 payment made
                  at the beginning of the 1, 5 or 10 year periods at the end of
                  the 1, 5 or 10 year periods (or fractional portion thereof).

COMPARISONS
         To help investors better evaluate how an investment in the Portfolio
might satisfy their investment objective, advertisements regarding the Fund may
discuss various measures of Fund performance as reported by various financial
publications. Advertisements may also compare performance (as calculated above)
to performance as reported by other investments, indices and averages. The
following publications, indices and averages may be used:

         (a)      Dow Jones Composite Average or its component averages - an
                  unmanaged index composed of 30 blue-chip industrial
                  corporation stocks (Dow Jones Industrial Average), 15
                  utilities


                                      -13-

<PAGE>

                  company stocks and 20 transportation stocks. Comparisons of
                  performance assume reinvestment of dividends.

         (b)      Standard & Poor's 500 Stock Index or its component indices -
                  an unmanaged index composed of 400 industrial stocks, 40
                  financial stocks, 40 utilities stocks and 20 transportation
                  stocks. Comparisons of performance assume reinvestment of
                  dividends.

         (c)      The New York Stock Exchange composite or component indices -
                  unmanaged indices of all industrial, utilities, transportation
                  and finance stocks listed on the New York Stock Exchange.

         (d)      Wilshire 5000 Equity Index or its component indices -
                  represents the return on the market value of all common equity
                  securities for which daily pricing is available. Comparisons
                  of performance assume reinvestment of dividends.

         (e)      Lipper - Mutual Fund Performance Analysis and Lipper - Fixed
                  Income Fund Performance Analysis - measure total return and
                  average current yield for the mutual fund industry. Rank
                  individual mutual fund performance over specified time
                  periods, assuming reinvestment of all distributions, exclusive
                  of any applicable sales charges.

         (f)      Morgan Stanley Capital International EAFE Index and World
                  Index - respectively, arithmetic, market value-weighted
                  averages of the performance of over 900 securities listed on
                  the stock exchanges of countries in Europe, Australia and the
                  Far East, and over 1,400 securities listed on the stock
                  exchanges of these continents, including North America.

         (g)      Goldman Sachs 100 Convertible Bond Index - currently includes
                  67 bonds and 33 preferred. The original list of names was
                  generated by screening for convertible issues of 100 million
                  or greater in market capitalization. The index is priced
                  monthly.

         (h)      Salomon Brothers GNMA Index - includes pools of mortgages
                  originated by private lenders and guaranteed by the mortgage
                  pools of the Government National Mortgage Association.

         (i)      Salomon Brothers High Grade Corporate Bond Index - consists of
                  publicly issued, non-convertible corporate bonds rated AA or
                  AAA. It is a value-weighted, total return index, including
                  approximately 800 issues with maturities of 12 years or
                  greater.

         (j)      Salomon Brothers Broad Investment Grade Bond - is a
                  market-weighted index that contains approximately 4,700
                  individually priced investment grade corporate bonds rated BBB
                  or better, U.S. Treasury/agency issues and mortgage pass
                  through securities.

         (k)      Lehman Brothers Long-Term Treasury Bond - is composed of all
                  bonds covered by the Lehman Brothers Treasury Bond Index with
                  maturities of 10 years or greater.


                                      -14-

<PAGE>



         (l)      NASDAQ Industrial Index - is composed of more than 3,000
                  industrial issues. It is a value- weighted index calculated on
                  price change only and does not include income.

         (m)      Value Line - composed of over 1,600 stocks in the Value Line
                  Investment Survey.

         (n)      Russell 2000 - composed of the 2,000 smallest stocks in the
                  Russell 3000, a market value- weighted index of the 3,000
                  largest U.S. publicly-traded companies.

         (o)      Composite Indices - 60% Standard & Poor's 500 Stock Index, 30%
                  Lehman Brothers Long- Term Treasury Bond and 10% U.S. Treasury
                  Bills; 70% Standard & Poor's 500 Stock Index and 30% NASDAQ
                  Industrial Index; 35% Standard & Poor's 500 Stock Index and
                  65% Salomon Brothers High Grade Bond Index; all stocks on the
                  NASDAQ system exclusive of those traded on an exchange, and
                  65% Standard & Poor's 500 Stock Index and 35% Salomon Brothers
                  High Grade Bond Index.

         (p)      CDA Mutual Fund Report published by CDA Investment
                  Technologies, Inc. - analyzes price, current yield, risk,
                  total return and average rate of return (average compounded
                  growth rate) over specified time periods for the mutual fund
                  industry.

         (q)      Mutual Fund Source Book published by Morningstar, Inc. -
                  analyzes price, yield, risk and total return for equity funds.

         (r)      Financial publications: Business Week, Changing Times,
                  Financial World, Forbes, Fortune, Money, Barron's, Consumer's
                  Digest, Financial Times, Global Investor, Wall Street Journal
                  and Weisenberger Investment Companies Service - publications
                  that rate fund performance over specified time periods.

         (s)      Consumer Price Index (or Cost of Living Index), published by
                  the U.S. Bureau of Labor Statistics - a statistical measure of
                  change over time in the price of goods and services in major
                  expenditure groups.

         (t)      Stocks, Bonds, Bills and Inflation, published by Ibbotson
                  Associates - historical measure of yield, price and total
                  return for common and small company stock, long-term
                  government bonds, U.S. Treasury bills and inflation.

         (u)      Savings and Loan Historical Interest Rates - as published by
                  the U.S. Savings & Loan League Fact Book.

         (v)      Lehman Brothers Government/Corporate Index - is a combination
                  of the Government and Corporate Bond Indices. The Government
                  Index includes public obligations of the U.S. Treasury, issues
                  of Government agencies, and corporate debt backed by the U.S.
                  Government. The Corporate Bond Index includes fixed-rate
                  nonconvertible corporate debt. Also included are Yankee Bonds
                  and nonconvertible debt issued by or guaranteed by foreign or
                  international governments and agencies. All issues are
                  investment grade (BBB) or higher,


                                      -15-

<PAGE>



                  with maturities of at least one year and an outstanding par
                  value of at least $100 million for U.S. Government issues and
                  $25 million for others. Any security downgraded during the
                  month is held in the index until month-end and then removed.
                  All returns are market value weighted inclusive of accrued
                  income.

         (w)      Lehman Brothers Intermediate Government/Corporate Index is an
                  unmanaged index composed of a combination of the Government
                  and Corporate Bond Indices. All issues are investment grade
                  (BBB) or higher, with maturities of one to ten years and an
                  outstanding par value of at least $100 million for U.S.
                  Government issues and $25 million for others. The Government
                  Index includes public obligations of the U.S. Treasury, issues
                  of Government agencies, and corporate debt backed by the U.S.
                  Government. The Corporate Bond Index includes fixed-rate
                  nonconvertible corporate debt. Also included are Yankee Bonds
                  and nonconvertible debt issued by or guaranteed by foreign or
                  international governments and agencies. Any security
                  downgraded during the month is held in the index until
                  month-end and then removed. All returns are market value
                  weighted inclusive of accrued income.

         (x)      Historical data supplied by the research departments of First
                  Boston Corporation; the J.P. Morgan companies; Salomon
                  Brothers; Merrill Lynch, Pierce, Fenner & Smith; Lehman
                  Brothers, Inc.; and Bloomberg L.P.

         (y)      NAREIT Equity Index - A compilation of market-weighted
                  securities data collected from all tax-qualified equity real
                  estate investment trusts listed on the New York and American
                  Stock Exchanges and the NASDAQ. The index tracks performance,
                  as well as REIT assets, by property type and geographic
                  region.

         (z)      Wilshire Real Estate Securities Index, published by Wilshire
                  Associates-a market capitalization-weighted index of publicly
                  traded real estate securities, such as Real Estate Investment
                  Trusts, Real Estate Operating Companies and partnerships.

         In assessing such comparisons of performance, an investor should keep
in mind that the composition of the investments in the reported indices and
averages is not identical to the composition of investments in the Portfolio,
that the averages are generally unmanaged, and that the items included in the
calculations of such averages may not be identical to the formula used by the
Portfolio to calculate its performance. In addition, there can be no assurance
that the Portfolio will continue this performance as compared to such other
averages.

                               GENERAL INFORMATION

   
DESCRIPTION OF SHARES AND VOTING RIGHTS
         The Fund was organized as a Delaware business trust on October 24,
1996. The Fund's principal office is located at 5949 Sherry Lane, Suite 1560,
Dallas, Texas 75225; however, all investor correspondence should be directed to
the Fund c/o Rodney Square Management Corporation, 1100 North Market Street, 3rd
Floor, Wilmington, DE 19890. The Fund's Agreement and Declaration of Trust
permits the Fund to issue an unlimited number of shares of beneficial interest,
without par value. The
    


                                      -16-

<PAGE>



Trustees have the power to designate one or more series ("Portfolios") or
classes of shares of beneficial interest without further action by shareholders.

         On each matter submitted to a vote of the shareholders, each holder of
a share shall be entitled to one vote for each whole share and a fractional vote
for each fractional share standing in his or her name on the books of the Fund.

         In the event of liquidation of the Fund, the holders of the shares of
each Portfolio or any class thereof that has been established and designated
shall be entitled to receive, when and as declared by the Trustees, the excess
of the assets belonging to that Portfolio, or in the case of a class, belonging
to that Portfolio and allocable to that class, over the liabilities belonging to
that Portfolio or class. The assets so distributable to the holders of shares of
any particular Portfolio or class thereof shall be distributed to the holders in
proportion to the number of shares of that Portfolio or class thereof held by
them and recorded on the books of the Fund. The liquidation of any Portfolio or
class thereof may be authorized at any time by vote of a majority of the
Trustees then in office.

         Shareholders have no pre-emptive or other rights to subscribe to any
additional shares or other securities issued by the Fund or any Portfolio,
except as the Trustees in their sole discretion shall have determined by
resolution.

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
         The Fund's policy is to distribute substantially all of the Portfolio's
net investment income, if any, together with any net realized capital gains
annually in the amount and at the times that will avoid both income (including
capital gains) taxes incurred and the imposition of the Federal excise tax on
undistributed income and capital gains. The amounts of any income dividends or
capital gains distributions cannot be predicted. See discussion under
"Dividends, Capital Gains Distributions and Taxes" in the Prospectus.

         Any dividend or distribution paid shortly after the purchase of shares
of the Portfolio by an investor may have the effect of reducing the per share
net asset value of the Portfolio by the per share amount of the dividend or
distribution. Furthermore, such dividends or distributions, although in effect a
return of capital, are subject to income taxes as set forth in the Prospectus.

         As set forth in the Prospectus, unless the shareholder elects otherwise
in writing, all dividend and capital gains distributions are automatically
received in additional shares of the respective Portfolio of the Fund at net
asset value (as of the business day following the record date). This will remain
in effect until the Fund is notified by the shareholder in writing at least
three days prior to the record date that either the Income Option (income
dividends in cash and capital gains distributions in additional shares at net
asset value) or the Cash Option (both income dividends and capital gains
distributions in cash) has been elected. An account statement is sent to
shareholders whenever an income dividend or capital gains distribution is paid.

         Each Portfolio of the Fund will be treated as a separate entity (and
hence as a separate "regulated investment company") for Federal tax purposes.
Any net capital gains recognized by the Portfolio will be


                                      -17-

<PAGE>



distributed to its investors without need to offset (for Federal income tax
purposes) such gains against any net capital losses of another Portfolio.


FEDERAL TAXES
         In order for the Portfolio to continue to qualify for Federal income
tax treatment as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"), at least 90% of the Portfolio's gross income
for a taxable year must be derived from certain qualifying income, i.e.,
dividends, interest, income derived from loans of securities and gains from the
sale or other disposition of stock, securities or foreign currencies, or other
related income, including gains from options, futures and forward contracts,
derived with respect to its business investing in stock, securities or
currencies. Any net gain realized from the closing out of futures contracts
will, therefore, generally be qualifying income for purposes of the 90%
requirement. Qualification as a regulated investment company also requires that
less than 30% of the Portfolio's gross income be derived from the sale or other
disposition of stock, securities, options, futures or forward contracts
(including certain foreign currencies not directly related to the Fund's
business of investing in stock or securities) held less than three months. In
order to avoid realizing excessive gains on securities held for less than three
months, the Portfolio may be required to defer the closing out of futures
contracts beyond the time when it would otherwise be advantageous to do so. It
is anticipated that unrealized gains on futures contracts which have been open
for less than three months as of the end of the Portfolio's taxable year, and
which are recognized for tax purposes, will not be considered gains on
securities held for less than three months for the purposes of the 30% test.

         Except for transactions the Portfolio has identified as hedging
transactions, the Portfolio is required for Federal income tax purposes to
recognize as income for the taxable year its net unrealized gains and losses on
forward currency and futures contracts as of the end of the taxable year as well
as those actually realized during the year. In most cases, any such gain or loss
recognized with respect to a regulated futures contract is considered to be 60%
long-term capital gain or loss and 40% short-term capital gain or loss without
regard to the holding period of the contract. Recognized gain or loss
attributable to a foreign currency forward contract is treated as 100% ordinary
income. Furthermore, foreign currency futures contracts which are intended to
hedge against a change in the value of securities held by the Portfolio may
affect the holding period of such securities and, consequently, the nature of
the gain or loss on such securities upon disposition.

         The Portfolio will distribute to shareholders annually any net capital
gains which have been recognized for Federal income tax purposes (including
unrealized gains at the end of the Portfolio's taxable year) on futures
transactions. Such distribution will be combined with distributions of capital
gains realized on the Portfolio's other investments, and shareholders will be
advised on the nature of the payment.

CODE OF ETHICS
         The Fund has adopted a Code of Ethics which restricts, to a certain
extent, personal transactions by access persons of the Fund and imposes certain
disclosure and reporting obligations.




                                      -18-

<PAGE>

                              FINANCIAL STATEMENTS

         The Financial Statements for the Portfolio and selected per share data
and ratios and notes to the Financial Statements relating to the corresponding
periods will be contained in this Statement of Additional Information.



                                      -19-

<PAGE>



                                     PART C

                                    FORM N-1A

                                OTHER INFORMATION


Item 24.      Financial Statements and Exhibits

              (a) Financial statements

              (b) Exhibits:
   
                     (1)    (a)    Certificate of Trust - Incorporated by
                                   reference to Registrant's registration
                                   statement filed on October 28, 1996.
    
                            (b)    Agreement and Declaration of Trust
                     (2)     Bylaws
                     (3)     Not Applicable
                     (4)     Specimen Share Certificate*
                     (5)     Investment Advisory Contract
                     (6)     Underwriting Contract and Selected Dealer Agreement
                     (7)     Not Applicable
                     (8)     Custodian Agreement
                     (9)     Administration Agreement, Transfer Agency Agreement
                             and Accounting Services Agreement
                     (10)    Opinion and Consent of Counsel*
                     (11)    Accountant's Consent*
                     (12)    Not Applicable
                     (13)    Subscription Agreement*
                     (14)    Not Applicable
                     (15)    Not Applicable
                     (16)    Not Applicable
                     (17)    Not Applicable
                     (18)    Not Applicable

              *To be filed by amendment to this N-1A.

Item 25.      Persons Controlled by or Under Common Control with Registrant

              Registrant is not controlled by or under common control with any
              person.

Item 26.      Number of Holders of Securities

              As of _____________, 1996:


                                       -1-

<PAGE>

                                                                  Number of
  Title of Class                                                Record Holders

  Shares of Beneficial Interests of:

  BRAZOS/JMIC Small/Emerging Growth Portfolio

  BRAZOS/JMIC Real Estate Securities Portfolio

Item 27.      Indemnification

              Reference is made to Article VII of Registrant's Agreement and
              Declaration of Trust, which is incorporated herein by reference.
              Registrant hereby also makes the undertaking consistent with Rule
              484 under the Securities Act of 1933, as amended.

              Insofar as indemnification for liability arising under the
              Securities Act of 1933 may be permitted to directors, officers and
              controlling persons of the registrant pursuant to the foregoing
              provisions, or otherwise, the Registrant has been advised that in
              the opinion of the Securities and Exchange Commission such
              indemnification is against public policy as expressed in the Act
              and is, therefore, unenforceable. In the event that a claim for
              indemnification against such liabilities (other than the payment
              by the registrant of expenses incurred or paid by a director,
              officer or controlling person of the registrant in the successful
              defense of any action, suit or proceeding) is asserted by such
              director, office or controlling person in connection with the
              securities being registered, the Registrant will, unless in the
              opinion of its counsel the matter has been settled by controlling
              precedent, submit to a court of appropriate jurisdiction the
              question whether such indemnification by it is against public
              policy as expressed in the Act and will be governed by the final
              adjudication of such issue.

Item 28.      Business and Other Connections of Investment Adviser

              Reference is made to the caption "Investment Adviser" in the
              Prospectuses constituting Part A of this Registration Statement
              and "Investment Adviser" in Part B of this Registration Statement.
              The information required by this Item 28 with respect to each
              director, officer, or partner of the investment adviser of the
              Registrant is incorporated by reference to the Form ADV filed by
              the investment adviser listed below with the Securities and
              Exchange Commission pursuant to the Investment Advisers Act of
              1940, as amended, on the date and under the File number indicated:

              John McStay Investment Counsel   3-31-96    SEC File No. 801-20244

   
Item 29.      Principal Underwriters

              (a) Investment Companies for which Rodney Square Distributors also
                  acts as principal underwriter:
    

                                       -2-

<PAGE>

   
                     The Rodney Square Fund
                     The Rodney Square Strategic Fixed-Income Fund 
                     The Rodney Square Multi-Manager Fund 
                     The Rodney Square Tax-Exempt Fund
                     Heitman Real Estate Fund 
                     The HomeState Group 
                     Kiewit Mutual Fund 
                     1838 Investment Advisors Funds 
                     The Olstein Funds

              (b) Reference is made to the caption "Distributor" in the
                  Prospectuses constituting Part A of this Registration
                  Statement. The information required by this Item 29 with
                  respect to each director of the underwriter is incorporated by
                  reference to the Form BD filed by the Underwriter with the
                  Commission pursuant to the Securities Exchange Act of 1934, as
                  amended under the File Number indicated:

                     Rodney Square Distributors            SEC File No. 8-37006
    

Item 30.      Location of Accounts and Records

              The books, accounts and other documents required by Section 31(a)
              under the Investment Company Act of 1940, as amended, and the
              rules promulgated thereunder will be maintained in the physical
              possession of the Registrant, the Registrant's Adviser, the
              Registrant's Transfer and Administrative Agent: Rodney Square
              Management Corporation, and the Registrant's Custodian Bank:
              Wilmington Trust Company.

Item 31.      Management Services

              Not Applicable.

Item 32.      Undertakings

              Registrant hereby undertakes to file a post-effective amendment,
              including reasonably current financial statements which need not
              be certified, for each of the BRAZOS/JMIC Small/Emerging Growth
              Portfolio and the BRAZOS/JMIC Real Estate Securities Portfolio,
              within four to six months from the commencement of operations of
              the Portfolios.

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

              Registrant hereby undertakes to call a meeting of shareholders for
              the purpose of voting upon the question of the removal of a
              Trustee or Trustees when requested in writing to do so by the
              holders of at least 10% of the Registrant's outstanding shares and
              in connection with such meeting to comply with the provisions of
              Section 16(c) of the Investment Company Act of 1940, as amended,
              relating to shareholder communications.



                                       -3-

<PAGE>


                                   SIGNATURES


   
         Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Dallas, and
State of Texas on the 25th day of November, 1996.
    


                                    Brazos Mutual Funds
                                             Registrant

                                    By/S/ Daniel Hockenbrough
                                             Daniel Hockenbrough
                                             President


   
         Pursuant to the requirements of the Securities Act of 1933, this
Pre-Effective Amendment No. 1 to the Registration Statement has been signed
below by the following persons in the capacities and on the date indicated.


/s/ Daniel Hockenbrough
Daniel Hockenbrough                  Trustee,                  November 25, 1996
                               Chief Executive and
                                Financial Officer

/s/ John H. Massey
John H. Massey                       Trustee                   November 25, 1996


/s/ David M. Reichert
David M. Reichert                    Trustee                   November 25, 1996
    



                                       -4-

<PAGE>




                                  Exhibit Index

Item 24(b)  Exhibits                                                   Page

            (1)(b)   Agreement and Declaration of Trust                  6
            (2)      Bylaws                                             18
            (5)      Investment Advisory Contract                       29
            (6)      Distribution Agreement and Selected 
                         Dealer Agreement                               34
            (8)      Custodian Agreement                                48
            (9)      Administration, Transfer Agency and 
                         Accounting Services Agreements                 60




                                                             Exhibit 24(b)(1)(b)

                                                                 Effective as of
                                                                October 28, 1996



                       AGREEMENT AND DECLARATION OF TRUST

                                       of

                               BRAZOS MUTUAL FUNDS

                            a Delaware Business Trust





                          Principal Place of Business:

                          5949 Sherry Lane, Suite 1560
                               Dallas, Texas 75225





                                       -6-

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page

ARTICLE I...................................................................1
         Name and Definitions...............................................1
                Section 1.  Name............................................1
                Section 2.  Definitions.....................................1
                 (a)  Trust.................................................1
                 (b)  Trust Property........................................1
                 (c)  Trustees..............................................1
                 (d)  Shares................................................2
                 (e)  Shareholder...........................................2
                 (f)  Person................................................2
                 (g)  1940 Act..............................................2
                 (h)  Commission and Principal Underwriter..................2
                 (i)  Declaration of Trust..................................2
                 (j)  By-Laws...............................................2
                 (k)  Interested Person.....................................2
                 (l)  Investment Manager....................................2
                 (m)  Series................................................2

ARTICLE II..................................................................2
         Purpose of Trust...................................................2

ARTICLE III.................................................................3
         Shares ............................................................3
                Section 1.  Division of Beneficial Interest.................3
                Section 2.  Ownership of Shares.............................3
                Section 3.  Investments in the Trust........................3
                Section 4.  Status of Shares and Limitation of Personal 
                            Liability.......................................4
                Section 5.  Power of Board of Trustees to Change 
                            Provisions Relating to Shares...................4
                Section 6.  Establishment and Designation of Shares.........4
                 (a)  Assets Held with Respect to a Particular Series.......5
                 (b)  Liabilities Held with Respect to a Particular Series..5
                 (c)  Dividends, Distributions, Redemptions, 
                      and Repurchases.......................................5
                 (d)  Voting................................................6
                 (e)  Equality..............................................6
                 (f)  Fractions.............................................6
                 (g)  Exchange Privilege....................................6
                 (h)  Combination of Series.................................6
                 (i)  Elimination of Series.................................6


                                       (i)

<PAGE>



ARTICLE IV..................................................................6
         The Board of Trustees..............................................6
                Section 1.  Number, Election and Tenure.....................6
                Section 2.  Effect of Death, Resignation, etc. 
                            of a Trustee....................................7
                Section 3.  Powers..........................................7
                Section 4.  Payment of Expenses by the Trust...............10
                Section 5.  Ownership of Assets of the Trust...............11
                Section 6.  Service Contracts..............................11

ARTICLE V..................................................................12
         Shareholders' Voting Powers and Meetings..........................12
                Section 1.  Voting Powers..................................12
                Section 2.  Voting Power and Meetings......................12
                Section 3.  Quorum and Required Vote.......................13
                Section 4.  Action by Written Consent......................13
                Section 5.  Record Dates...................................13

ARTICLE VI.................................................................13
         Net Asset Value, Distributions, and Redemptions...................13
                Section 1.  Determination of Net Asset Value, 
                            Net Income, and Distributions..................13
                Section 2.  Redemptions and Repurchases....................14
                Section 3.  Redemptions at the Option of the Trust.........14
                Section 4.  Transfer of Shares.............................14

ARTICLE VII................................................................15
         Compensation and Limitation of Liability..........................15
                Section 1.  Compensation of Trustees.......................15
                Section 2.  Indemnification and Limitation of Liability....15
                Section 3.  Trustee's Good Faith Action, Expert Advice, 
                            No Bond or Surety..............................15
                Section 4.  Insurance......................................15

ARTICLE VIII...............................................................16
         Miscellaneous.....................................................16
                Section 1.  Liability of Third Persons Dealing with 
                            Trustees.......................................16
                Section 2.  Termination of Trust or Series.................16
                Section 3.  Merger and Consolidation.......................16
                Section 4.  Amendments.....................................17
                Section 5.  Filing of Copies, References, Headings.........17
                Section 6.  Applicable Law.................................17
                Section 7.  Provisions in Conflict with Law or Regulations.17
                Section 8.  Business Trust Only............................18
                Section 9.  Use of the Name "JMIC".........................18


                                      (ii)



<PAGE>


                       AGREEMENT AND DECLARATION OF TRUST

                                       OF

                               BRAZOS MUTUAL FUNDS


                WHEREAS, this AGREEMENT AND DECLARATION OF TRUST is made and
entered into as of the date set forth below by the Trustees named hereunder for
the purpose of forming a Delaware business trust in accordance with the
provisions hereinafter set forth,

                NOW, THEREFORE, the Trustees hereby direct that a Certificate of
Trust be filed with the Office of the Secretary of State of the State of
Delaware and do hereby declare that the Trustees will hold IN TRUST all cash,
securities and other assets which the Trust now possesses or may hereafter
acquire from time to time in any manner and manage and dispose of the same upon
the following terms and conditions for the pro rata benefit of the holders of
Shares in this Trust.


                                   ARTICLE I.

                              Name and Definitions

                Section 1. Name. This trust shall be known as "BRAZOS MUTUAL
FUNDS" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.

                Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:

                (a) The "Trust" refers to the Delaware business trust
established by this Agreement and Declaration of Trust, as amended from time to
time;

                (b) The "Trust Property" means any and all property, real or
personal, tangible or intangible, which is owned or held by or for the account
of the Trust;

                (c) "Trustees" refers to the persons who have signed this
Agreement and Declaration of Trust, so long as they continue in office in
accordance with the terms hereof, and all other persons who may from time to
time be duly elected or appointed to serve on the Board of Trustees in
accordance with the provisions hereof, and reference herein to a Trustee or the
Trustees shall refer to such person or persons in their capacity as trustees
hereunder;

                (d) "Shares" means the shares of beneficial interest into which
the beneficial interest in the Trust shall be divided from time to time and
includes fractions of Shares as well as whole Shares;



<PAGE>




                (e)  "Shareholder" means a record owner of outstanding Shares;

                (f) "Person" means and includes individuals, corporations,
partnerships, trusts, foundations, plans, associations, joint ventures, estates
and other entities, whether or not legal entities, and governments and agencies
and political subdivisions thereof, whether domestic or foreign;

                (g) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from time to time.
References herein to specific sections of the 1940 Act shall be deemed to
include such Rules and Regulations as are applicable to such sections as
determined by the Trustees or their designees;

                (h) The terms "Commission" and "Principal Underwriter" shall
have the respective meanings given them in Section 2(a)(7) and Section
(2)(a)(29) of the 1940 Act;

                (i) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;

                (j) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time;

                (k) The term "Interested Person" has the meaning given it in
Section 2(a)(19) of the 1940 Act;

                (l) "Investment Manager" or "Manager" means a party furnishing
services to the Trust pursuant to any contract described in Article IV, Section
7(a) hereof;

                (m) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.

                                   ARTICLE II.

                                Purpose of Trust

                The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities.

                                  ARTICLE III.

                                     Shares

                Section 1. Division of Beneficial Interest. The beneficial
interest in the Trust shall at all times be divided into an unlimited number of
Shares, with a par value of $.001 per Share. The Trustees may authorize the
division of Shares into separate Series and the division of Series into separate
classes of Shares. The different Series shall be established and designated, and
the variations in the relative rights


                                       -2-

<PAGE>


and preferences as between the different Series shall be fixed and determined,
by the Trustees. If only one Series shall be established, the Shares shall have
the rights and preferences provided for herein and in Article III, Section 6
hereof to the extent relevant and not otherwise provided for herein.

                Subject to the provisions of Section 6 of this Article III, each
Share shall have voting rights as provided in Article V hereof, and holders of
the Shares of any Series shall be entitled to receive dividends, when, if and as
declared with respect thereto in the manner provided in Article VI, Section 1
hereof. No Share shall have any priority or preference over any other Share of
the same Series with respect to dividends or distributions of the Trust or
otherwise. All dividends and distributions shall be made ratably among all
Shareholders of a Series (or class) from the assets held with respect to such
Series according to the number of Shares of such Series (or class) held of
record by such Shareholders on the record date for any dividend or distribution
or on the date of termination of the Trust, as the case may be. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust or any Series. The Trustees may from time
to time divide or combine the Shares of a Series into a greater or lesser number
of Shares of such Series without thereby materially changing the proportionate
beneficial interest of such Shares in the assets held with respect to that
Series or materially affecting the rights of Shares of any other Series.

                Section 2. Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series. No
certificates evidencing the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the transfer of Shares of each
Series (or class) and similar matters. The record books of the Trust as kept by
the Trust or any transfer or similar agent, as the case may be, shall be
conclusive as to the identity of the Shareholders of each Series and as to the
number of Shares of each Series held from time to time by each Shareholder.

                Section 3. Investments in the Trust. Investments may be accepted
by the Trust from such Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize. Each investment
shall be credited to the Shareholder's account in the form of full and
fractional Shares of the Trust, in such Series (or class) as the purchaser shall
select, at the net asset value per Share next determined for such Series (or
class) after receipt of the investment; provided, however, that the Trustees
may, in their sole discretion, impose a sales charge or reimbursement fee upon
investments in the Trust.

                Section 4. Status of Shares and Limitation of Personal
Liability. Shares shall be deemed to be personal property giving only the rights
provided in this instrument and the By-Laws of the Trust. Every Shareholder by
virtue of having become a Shareholder shall be held to have expressly assented
and agreed to the terms hereof. The death of a Shareholder during the existence
of the Trust shall not operate to terminate the Trust, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but shall
entitle such representative only to the rights of said deceased Shareholder
under this Declaration of Trust. Ownership of Shares shall not entitle a
Shareholder to any title in or to the whole or any part of the Trust Property or
right to call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the


                                       -3-


<PAGE>



Shareholders as partners or joint venturers. Neither the Trust nor the Trustees,
nor any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time agree to pay.

                Section 5. Power of Board of Trustees to Change Provisions
Relating to Shares. Notwithstanding any other provision of this Declaration of
Trust to the contrary, and without limiting the power of the Board of Trustees
to amend the Declaration of Trust as provided elsewhere herein, the Board of
Trustees shall have the power to amend this Declaration of Trust, at any time
and from time to time, in such manner as the Board of Trustees may determine in
their sole discretion, without the need for Shareholder action, so as to add to,
delete, replace or otherwise modify any provisions relating to the Shares
contained in this Declaration of Trust, provided that before adopting any such
amendment without Shareholder approval the Board of Trustees shall determine
that it is consistent with the fair and equitable treatment of all Shareholders
and that Shareholder approval is not required by the 1940 Act or other
applicable law. If Shares have been issued, Shareholder approval shall be
required to adopt any amendments to this Declaration of Trust which would
adversely affect to a material degree the rights and preferences of the Shares
of any Series (or class) or to increase or decrease the par value of the Shares
of any Series (or class).

                Section 6. Establishment and Designation of Shares. The
establishment and designation of any Series (or class) of Shares shall be
effective upon the adoption by a majority of the Trustees, of a resolution which
sets forth such establishment and designation and the relative rights and
preferences of such Series (or class). Each such resolution shall be
incorporated herein by reference upon adoption.

                Shares of each Series (or class) established pursuant to this
Section 6, unless otherwise provided in the resolution establishing such Series,
shall have the following relative rights and preferences:

                (a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of a Series,
including dividends and distributions paid by, and reinvested in, such Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof from whatever source
derived, including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably be held with respect to that Series for all purposes, subject only
to the rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without limitation, any
proceeds derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds, in whatever
form the same may be, are herein referred to as "assets held with respect to"
that Series. In the event that there are any assets, income, earnings, profits
and proceeds thereof, funds or payments which are not readily identifiable as
assets held with respect to any particular Series (collectively "General
Assets"), the Trustees shall allocate such General Assets to, between or among
any one or more of the Series in such manner and on such basis as the Trustees,
in their sole discretion, deem fair and equitable, and any General Asset so
allocated to a particular Series shall be held with respect to that Series.


                                       -4-

<PAGE>



Each such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series for all purposes in absence of manifest error.

                (b) Liabilities Held with Respect to a Particular Series. The
assets of the Trust held with respect to each Series shall be charged with the
liabilities of the Trust with respect to such Series and all expenses, costs,
charges and reserves attributable to such Series, and any general liabilities of
the Trust which are not readily identifiable as being held in respect of a
Series shall be allocated and charged by the Trustees to and among any one or
more Series in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs, charges,
and reserves so charged to a Series are herein referred to as "liabilities held
with respect to" that Series. Each allocation of liabilities, expenses, costs,
charges and reserves by the Trustees shall be conclusive and binding upon the
holders of all Series for all purposes in absence of manifest error. All Persons
who have extended credit which has been allocated to a particular Series, or who
have a claim or contract which has been allocated to a Series, shall look
exclusively to the assets held with respect to such Series for payment of such
credit, claim, or contract. In the absence of an express agreement so limiting
the claims of such creditors, claimants and contracting parties, each creditor,
claimant and contracting party shall be deemed nevertheless to have agreed to
such limitation unless an express provision to the contrary has been
incorporated in the written contract or other document establishing the
contractual relationship.

                (c) Dividends, Distributions, Redemptions, and Repurchases. No
dividend or distribution including, without limitation, any distribution paid
upon termination of the Trust or of any Series (or class) with respect to, or
any redemption or repurchase of, the Shares of any Series (or class) shall be
effected by the Trust other than from the assets held with respect to such
Series, nor shall any Shareholder of any Series otherwise have any right or
claim against the assets held with respect to any other Series except to the
extent that such Shareholder has such a right or claim hereunder as a
Shareholder of such other Series. The Trustees shall have full discretion to
determine which items shall be treated as income and which items as capital; and
each such determination and allocation shall be conclusive and binding upon the
Shareholders in absence of manifest error.

                (d) Voting. All Shares of the Trust entitled to vote on a matter
shall vote without differentiation between the separate Series on a
one-vote-per-Share basis; provided however, if a matter to be voted on affects
only the interests of not all Series (or class of a Series), then only the
Shareholders of such affected Series (or class) shall be entitled to vote on the
matter.

                (e) Equality. All the Shares of each Series shall represent an
equal proportionate undivided interest in the assets held with respect to such
Series (subject to the liabilities of such Series and such rights and
preferences as may have been established and designated with respect to classes
of Shares within such Series), and each Share of a Series shall be equal to each
other Share of such Series.

                (f) Fractions. Any fractional Share of a Series shall have
proportionately all the rights and obligations of a whole share of such Series,
including rights with respect to voting, receipt of dividends and distributions
and redemption of Shares.


                                       -5-

<PAGE>



                (g) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series shall have the right to
exchange such Shares for Shares of one or more other Series in accordance with
such requirements and procedures as may be established by the Trustees.

                (h) Combination of Series. The Trustees shall have the
authority, without the approval of the Shareholders of any Series unless
otherwise required by applicable law, to combine the assets and liabilities held
with respect to any two or more Series into assets and liabilities held with
respect to a single Series.

                (i) Elimination of Series. At any time that there are no Shares
outstanding of a Series (or class), the Trustees may abolish such Series (or
class).

                                   ARTICLE IV.

                              The Board of Trustees

                Section 1. Number, Election and Tenure. The number of Trustees
constituting the Board of Trustees shall be fixed from time to time by a written
instrument signed, or by resolution approved at a duly constituted meeting, by a
majority of the Board of Trustees, provided, however, that the number of
Trustees shall in no event be less than one (1) nor more than fifteen (15).
Subject to the requirements of Section 16(a) of the 1940 Act, the Board of
Trustees, by action of a majority of the then Trustees at a duly constituted
meeting, may fill vacancies in the Board of Trustees and remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or incompetent by a
court of competent jurisdiction, or is removed. Any Trustee may resign at any
time by written instrument signed by him and delivered to any officer of the
Trust or to a meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. Except to the
extent expressly provided in a written agreement with the Trust, no Trustee
resigning and no Trustee removed shall have any right to any compensation for
any period following his or her resignation or removal, or any right to damages
or other payment on account of such removal. Any Trustee may be removed at any
meeting of Shareholders by a vote of two-thirds of the outstanding Shares of the
Trust. A meeting of Shareholders for the purpose of electing or removing one or
more Trustees may be called (i) by the Trustees upon their own vote, or (ii)
upon the demand of Shareholders owning 10% or more of the Shares of the Trust in
the aggregate.

                Section 2. Effect of Death, Resignation, etc. of a Trustee. The
death, declination, resignation, retirement, removal, or incapacity of one or
more Trustees, or all of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in Article IV, Section 1, the Trustees in office, regardless
of their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of Trust.

                Section 3. Powers. Subject to the provisions of this Declaration
of Trust, the business of the Trust shall be managed by the Board of Trustees,
and such Board shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in transactions of all kinds on
behalf of the Trust. Trustees, in all instances, shall act as principals and are
and shall be free from the


                                       -6-



<PAGE>



control of the Shareholders. The Trustees shall have full power and authority to
do any and all acts and to make and execute any and all contracts, documents and
instruments that they may consider desirable, necessary or appropriate in
connection with the administration of the Trust. Without limiting the foregoing,
the Trustees may: adopt, amend and repeal By-Laws not inconsistent with this
Declaration of Trust providing for the regulation and management of the affairs
of the Trust; elect and remove such officers and appoint and terminate such
agents as they consider appropriate; appoint from their own number and establish
and terminate one or more committees consisting of two or more Trustees who may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees determine; employ one or more custodians of the assets of the Trust
and may authorize such custodians to employ subcustodians and to deposit all or
any part of such assets in a system or systems for the central handling of
securities or with a Federal Reserve Bank, retain a transfer agent or a
shareholder servicing agent, or both; provide for the issuance and distribution
of Shares by the Trust directly or through one or more Principal Underwriters or
otherwise; redeem, repurchase and transfer Shares pursuant to applicable law;
set record dates for the determination of Shareholders with respect to various
matters; declare and pay dividends and distributions to Shareholders of each
Series from the assets of such Series; establish from time to time, in
accordance with the provisions of Article III, Section 6 hereof, any Series of
Shares, each such Series to operate as a separate and distinct investment medium
and with separately defined investment objectives and policies and distinct
investment purpose; and in general delegate such authority as they consider
desirable to any officer of the Trust, to any committee of the Trustees and to
any agent or employee of the Trust or to any such custodian, transfer or
shareholder servicing agent, Investment Manager or Principal Underwriter. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration of Trust, the presumption shall be in favor of a grant of power to
the Trustees and unless otherwise specified herein or required by the 1940 Act
or other applicable law, any action by the Board of Trustees shall be deemed
effective if approved or taken by a majority of the Trustees then in office or a
majority of any duly constituted committee of Trustees. Any action required or
permitted to be taken at any meeting of the Board of Trustees, or any committee
thereof, may be taken without a meeting if all members of the Board of Trustees
or committee (as the case may be) consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board of Trustees,
or committee, except as otherwise provided in the 1940 Act.

                Without limiting the foregoing, the Trust shall have power and
authority:

                (a) To invest and reinvest cash and cash items, to hold cash
uninvested, and to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, sell, assign, transfer, exchange, distribute, write
options on, lend or otherwise deal in or dispose of contracts for the future
acquisition or delivery of all types of securities, futures contracts and
options thereon, and forward currency contracts of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks, preferred
stocks, negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality or organization, or by any bank or savings institution, or by
any corporation or organization organized under


                                       -7-

<PAGE>



the laws of the United States or of any state, territory, or possession thereof,
or by any corporation or organization organized under any foreign law, or in
"when issued" contracts for any such securities, futures contracts and options
thereon, and forward currency contracts, to change the investments of the assets
of the Trust; and to exercise any and all rights, powers, and privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons,
to exercise any of said rights, powers, and privileges in respect of any of said
instruments;

                (b) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any property rights
relating to any or all of the assets of the Trust or any Series;

                (c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper;

                (d) To exercise powers and right of subscription or otherwise
which in any manner arise out of ownership of securities;

                (e) To hold any security or property in a form not indicating
that it is trust property, whether in bearer, unregistered or other negotiable
form, or in its own name or in the name of a custodian or subcustodian or a
nominee or nominees or otherwise or to authorize the custodian or a subcustodian
or a nominee or nominees to deposit the same in a securities depository, subject
in each case to the applicable provisions of the 1940 Act;

                (f) To consent to, or participate in, any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to pay
calls or subscriptions with respect to any security held in the Trust;

                (g) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;

                (h) To litigate, compromise, arbitrate, settle or otherwise
adjust claims in favor of or against the Trust or a Series, or any matter in
controversy, including but not limited to claims for taxes;

                (i) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;



                                       -8-

<PAGE>



                (j) To borrow funds or other property in the name of the Trust
or Series exclusively for Trust purposes;

                (k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof;

                (l) To purchase and pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary, desirable or appropriate for the
conduct of the business, including, without limitation, insurance policies
insuring the assets of the Trust or payment of distributions and principal on
its portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, Investment Manager, principal
underwriters, or independent contractors of the Trust, individually against all
claims and liabilities of every nature arising by reason of holding Shares,
holding, being or having held any such office or position, or by reason of any
action alleged to have been taken or omitted by any such Person as Trustee,
officer, employee, agent, Investment Manager, Principal Underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such Person against liability; and

                (m) To adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
and annuity contracts as a means of providing such retirement and other
benefits, for any or all of the Trustees, officers, employees and agents of the
Trust.

                The Trust shall not be limited to investing in obligations
maturing before the possible termination of the Trust or one or more of its
Series. The Trust shall not in any way be bound or limited by any present or
future law or custom in regard to investment by fiduciaries. The Trust shall not
be required to obtain any court order to deal with any assets of the Trust or
take any other action hereunder.

                Section 4. Payment of Expenses by the Trust. Subject to the
provisions of Article III, Section 6(b), the Trustees are authorized to pay or
cause to be paid out of the principal or income of the Trust or Series, or
partly out of the principal and partly out of income, and to charge or allocate
the same to, between or among such one or more of the Series that may be
established or designated pursuant to Article III, Section 6, all expenses,
fees, charges, taxes and liabilities incurred or arising in connection with the
Trust or Series, or in connection with the management thereof, including, but
not limited to, the Trustees' compensation and such expenses and charges for the
services of the Trust's officers, employees, Investment Manager, Principal
Underwriter, auditors, counsel, custodian, transfer agent, Shareholder servicing
agent, and such other agents or independent contractors and such other expenses
and charges as the Trustees may deem necessary or proper to incur.

                Section 5. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on such terms
as the Trustees may determine. Upon the resignation, incompetency, bankruptcy,
removal, or death of a Trustee he or she shall automatically cease to have any
such title in any of the Trust Property, and the title of such Trustee in the
Trust Property


                                       -9-

<PAGE>



shall vest automatically in the remaining Trustees. Such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered. The Trustees may determine that the Trust or the
Trustees, acting for and on behalf of the Trust, shall be deemed to hold
beneficial ownership of any income earned on the securities owned by the Trust,
whether domestic or foreign.

                Section 6.  Service Contracts.

                (a) The Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory, management and/or
administrative services for the Trust or for any Series with any Person; and any
such contract may contain such other terms as the Trustees may determine,
including without limitation, authority for the Investment Manager to determine
from time to time without prior consultation with the Trustees what investments
shall be purchased, held, sold or exchanged and what portion, if any, of the
assets of the Trust shall be held uninvested and to make changes in the Trust's
investments, and such other responsibilities as may specifically be delegated to
such Person.

                (b) The Trustees may also, at any time and from time to time,
contract with any Persons, appointing such Persons exclusive or nonexclusive
distributor or Principal Underwriter for the Shares of one or more of the Series
or other securities to be issued by the Trust. Every such contract may contain
such other terms as the Trustees may determine.

                (c) The Trustees are also empowered, at any time and from time
to time, to contract with any Persons, appointing such Person(s) to serve as
custodian(s), transfer agent and/or shareholder servicing agent for the Trust or
one or more of its Series. Every such contract shall comply with such terms as
may be required by the Trustees.

                (d) The Trustees are further empowered, at any time and from
time to time, to contract with any Persons to provide such other services to the
Trust or one or more of the Series, as the Trustees determine to be in the best
interests of the Trust and the applicable Series.

                (e)  The fact that:

                    (i) any of the Shareholders, Trustees, or officers of the
                Trust is a shareholder, director, officer, partner, trustee,
                employee, Manager, adviser, Principal Underwriter, distributor,
                or affiliate or agent of or for any Person with which an
                advisory, management or administration contract, or Principal
                Underwriter's or distributor's contract, or transfer,
                shareholder servicing or other type of service contract may be
                made, or that

                   (ii) any Person with which an advisory, management or
                administration contract or Principal Underwriter's or
                distributor's contract, or transfer, shareholder servicing or
                other type of service contract may be made also has an advisory,
                management or administration contract, or principal
                underwriter's or distributor's contract, or transfer,
                shareholder servicing or other service contract, or has other
                business or interests with any other Person,


                                      -10-

<PAGE>


shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
applicable requirements of the 1940 Act.

                                   ARTICLE V.

                    Shareholders' Voting Powers and Meetings

                Section 1. Voting Powers. Subject to the provisions of Article
III, Sections 5 and 6(d), the Shareholders shall have right to vote only (i) for
the election or removal of Trustees as provided in Article IV, Section 1, and
(ii) with respect to such additional matters relating to the Trust as may be
required by the applicable provisions of the 1940 Act, including Section 16(a)
thereof, and (iii) on such other matters as the Trustees may consider necessary
or desirable. Each whole Share shall be entitled to one vote as to any matter on
which it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise and the burden of proving
invalidity shall rest on the challenger.

                Section 2. Voting Power and Meetings. Meetings of the
Shareholders may be called by the Trustees for the purposes described in Section
1 of this Article V. A meeting of Shareholders may be held at any place
designated by the Trustees. Written notice of any meeting of Shareholders shall
be given or caused to be given by the Trustees by delivering personally or
mailing such notice not more than ninety (90), nor less than ten (10) days
before such meeting, postage prepaid, stating the time and place of the meeting,
to each Shareholder at the Shareholder's address as it appears on the records of
the Trust. Whenever notice of a meeting is required to be given to a Shareholder
under this Declaration of Trust, a written waiver thereof, executed before or
after the meeting by such Shareholder or his or her attorney thereunto
authorized and filed with the records of the meeting, or actual attendance at
the meeting of Shareholders in person or by proxy, shall be deemed equivalent to
such notice.

                Section 3. Quorum and Required Vote. Except when a larger quorum
is required by the applicable provisions of the 1940 Act, the presence in person
or by proxy of a majority of the Shares entitled to vote on a matter shall
constitute a quorum at a Shareholders' meeting. Any meeting of Shareholders may
be adjourned from time to time by a majority of the votes properly cast upon the
question of adjourning a meeting to another date and time, whether or not a
quorum is present, and the meeting may be held as adjourned within a reasonable
time after the date set for the original meeting without further notice. Subject
to the provisions of Article III, Section 6(d) and the applicable provisions of
the 1940 Act, when a quorum is present at any meeting, a majority of the Shares
voted shall decide any questions except only a plurality vote shall be necessary
to elect Trustees.

                Section 4. Action by Written Consent. Any action taken by
Shareholders may be taken without a meeting if all the holders of Shares
entitled to vote on the matter are provided with not less than 7 days written
notice thereof and written consent to the action is filed with the records of
the meetings of


                                      -11-

<PAGE>



Shareholders by the holders of the number of shares that would be required to
approve the matter as provided in Article V, Section 3. Such consent shall be
treated for all purposes as a vote taken at a meeting of Shareholders.

                Section 5. Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any adjournment
thereof, the Trustees may fix a time, which shall be not more than ninety (90)
nor less than ten (10) days before the date of any meeting of Shareholders, as
the record date for determining the Shareholders having the right to notice of
and to vote at such meeting and any adjournment thereof, and in such case only
Shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust after the
record date. For the purpose of determining the Shareholders who are entitled to
receive payment of any dividend or of any other distribution, the Trustees may
fix a date, which shall be before the date for the payment of such dividend or
distribution, as the record date for determining the Shareholders having the
right to receive such dividend or distribution. Nothing in this Section shall be
construed as precluding the Trustees from setting different record dates for
different Series.

                                   ARTICLE VI.

                 Net Asset Value, Distributions, and Redemptions

                Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to Article III, Section 6 hereof, the Trustees, in their
absolute discretion, may prescribe and shall set forth in the By-laws or in a
duly adopted resolution of the Trustees such bases and time for determining the
per Share net asset value of the Shares of any Series and the declaration and
payment of dividends and distributions on the Shares of any Series, as they may
deem necessary or desirable.

                Section 2. Redemptions and Repurchases. The Trust shall purchase
such Shares as are offered by any Shareholder for redemption, upon receipt by
the Trust or a Person designated by the Trust that the Trust redeem such Shares
or in accordance with such procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, in accordance with the By-Laws and the applicable provisions of the
1940 Act. Payment for said Shares shall be made by the Trust to the Shareholder
within seven days after the date on which the request for redemption is received
in proper form. The obligation set forth in this Section 2 is subject to the
provision that in the event that any time the New York Stock Exchange (the
"Exchange") is closed for other than weekends or holidays, or if permitted by
the Rules of the Commission during periods when trading on the Exchange is
restricted or during any emergency which makes it impracticable for the Trust to
dispose of the investments of the applicable Series or to determine fairly the
value of the net assets held with respect to such Series or during any other
period permitted by order of the Commission for the protection of investors,
such obligations may be suspended or postponed by the Trustees.

                The redemption price may in any case or cases be paid in cash or
wholly or partly in kind in accordance with Rule 18f-1 under the 1940 Act if the
Trustees determine that such payment is advisable in the interest of the
remaining Shareholders of the Series of which the Shares are being redeemed.
Subject to the foregoing, the selection and quantity of securities or other
property so paid or delivered as all or part of


                                      -12-

<PAGE>



the redemption price shall be determined by or under authority of the Trustees.
In no case shall the Trust be liable for any delay of any corporation or other
Person in transferring securities selected for delivery as all or part of any
payment in kind.

                Section 3. Redemptions at the Option of the Trust. The Trust
shall have the right, at its option, upon 60 days notice to the affected
Shareholder at any time to redeem Shares of any Shareholder at the net asset
value thereof as described in Section 1 of this Article VI: (i) if at such time
such Shareholder owns Shares of any Series having an aggregate net asset value
of less than a minimum value determined from time to time by the Trustees; or
(ii) to the extent that such Shareholder owns Shares of a Series equal to or in
excess of a maximum percentage of the outstanding Shares of such Series
determined from time to time by the Trustees; or (iii) to the extent that such
Shareholder owns Shares equal to or in excess of a maximum percentage,
determined from time to time by the Trustees, of the outstanding Shares of the
Trust.

                Section 4. Transfer of Shares. The Trust shall transfer shares
held of record by any Person to any other Person upon receipt by the Trust or a
Person designated by the Trust of a written request therefore in such form and
pursuant to such procedures as may be approved by the Trustees.

                                  ARTICLE VII.

                    Compensation and Limitation of Liability

                Section 1. Compensation of Trustees. The Trustees as such shall
be entitled to reasonable compensation from the Trust, and they may fix the
amount of such compensation from time to time. Nothing herein shall in any way
prevent the employment of any Trustee to provide advisory, management, legal,
accounting, investment banking or other services to the Trust and to be
specially compensated for such services by the Trust.

                Section 2. Indemnification and Limitation of Liability. The
Trustees shall not be responsible or liable in any event for any neglect or
wrong-doing of any officer, agent, employee, Manager or Principal Underwriter of
the Trust, nor shall any Trustee be responsible for the act or omission of any
other Trustee, and, subject to the provisions of the Bylaws, the Trust out of
its assets may indemnify and hold harmless each and every Trustee and officer of
the Trust from and against any and all claims, demands, costs, losses, expenses,
and damages whatsoever arising out of or related to such Trustee's performance
of his or her duties as a Trustee or officer of the Trust; provided that nothing
herein contained shall indemnify, hold harmless or protect any Trustee or
officer from or against any liability to the Trust or any Shareholder to which
he or she would otherwise be subject by reason of wilful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office.

                Every note, bond, contract, instrument, certificate or
undertaking and every other act or thing whatsoever issued, executed or done by
or on behalf of the Trust or the Trustees or any of them in connection with the
Trust shall be conclusively deemed to have been issued, executed or done only in
or with respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.


                                      -13-


<PAGE>


                Section 3. Trustee's Good Faith Action, Expert Advice, No Bond
or Surety. The exercise by the Trustees of their powers hereunder shall be
binding upon everyone interested in or dealing with the Trust. A Trustee shall
be liable to the Trust and to any Shareholder solely for his or her own wilful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of the office of Trustee, and shall not be liable for
errors of judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of this
Declaration of Trust, and shall be under no liability for any act or omission in
accordance with such advice nor for failing to follow such advice. The Trustees
shall not be required to give any bond as such, nor any surety if a bond is
required.

                Section 4. Insurance. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase with Trust assets
insurance for liability and for all expenses reasonably incurred or paid or
expected to be paid by a Trustee or officer in connection with any claim,
action, suit or proceeding in which he or she becomes involved by virtue of his
or her capacity or former capacity with the Trust, whether or not the Trust
would have the power to indemnify him or her against such liability under the
provisions of this Article.


                                  ARTICLE VIII.

                                  Miscellaneous

                Section 1. Liability of Third Persons Dealing with Trustees. No
Person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.

                Section 2. Termination of Trust or Series. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by the Trustees upon 60 days prior written notice
to the Shareholders. Any Series may be terminated at any time by the Trustees
upon 60 days prior written notice to the Shareholders of that Series.

                Upon termination of the Trust (or any Series, as the case may
be), after paying or otherwise providing for all charges, taxes, expenses and
liabilities held, severally, with respect to each Series (or the applicable
Series, as the case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such procedures
as the Trustees consider appropriate, reduce the remaining assets held,
severally, with respect to each Series (or the applicable Series, as the case
may be), to distributable form in cash or shares or other securities, and any
combination thereof, and distribute the proceeds held with respect to each
Series (or the applicable Series, as the case may be), to the Shareholders of
that Series, as a Series, ratably according to the number of Shares of that
Series held by the several Shareholders on the date of termination.

                Section 3. Merger and Consolidation. The Trustees may cause (i)
the Trust or one or more of its Series to the extent consistent with applicable
law to be merged into or consolidated with another


                                      -14-

<PAGE>



Trust, series or Person, (ii) the Shares of the Trust or any Series to be
converted into beneficial interests in another business trust (or series
thereof), (iii) the Shares to be exchanged for assets or property under or
pursuant to any state or federal statute to the extent permitted by law or (iv)
a sale of assets of the Trust or one or more of its Series. Such merger or
consolidation, Share conversion, Share exchange or sale of assets must be
authorized by vote as provided in Article V, Section 3 herein; provided that in
all respects not governed by statute or applicable law, the Trustees shall have
power to prescribe the procedure necessary or appropriate to accomplish a sale
of assets, Share exchange, merger or consolidation including the power to create
one or more separate business trusts to which all or any part of the assets,
liabilities, profits or losses of the Trust may be transferred and to provide
for the conversion of Shares of the Trust or any Series into beneficial
interests in such separate business trust or trusts (or series thereof).

                Section 4. Amendments. This Declaration of Trust may be restated
and/or amended at any time by an instrument in writing signed by a majority of
the Trustees then holding office. Any such restatement and/or amendment hereto
shall be effective immediately upon execution and approval. The Certificate of
Trust of the Trust may be restated and/or amended by a similar procedure, and
any such restatement and/or amendment shall be effective immediately upon filing
with the Office of the Secretary of State of the State of Delaware or upon such
future date as may be stated therein.

                Section 5. Filing of Copies, References, Headings. The original
or a copy of this instrument and of each restatement and/or amendment hereto
shall be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendment, references to this instrument, and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original.

                Section 6. Applicable Law. This Agreement and Declaration of
Trust is created under and is to be governed by and construed and administered
according to the laws of the State of Delaware and the Delaware Business Trust
Act, as amended from time to time (the "Act"). The Trust shall be a Delaware
business trust pursuant to such Act, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
business trust.

                Section 7.  Provisions in Conflict with Law or Regulations.

                (a) The provisions of the Declaration of Trust are severable,
and if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, the regulated investment
company provisions of the Internal Revenue Code or with other applicable laws
and


                                      -15-

<PAGE>



regulations, the conflicting provision shall be deemed never to have constituted
a part of the Declaration of Trust; provided, however, that such determination
shall not affect any of the remaining provisions of the Declaration of Trust or
render invalid or improper any action taken or omitted prior to such
determination.

                (b) If any provision of the Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of the Declaration of Trust in any jurisdiction.

                Section 8. Business Trust Only. It is the intention of the
Trustees to create a business trust pursuant to the Act, and thereby to create
only the relationship of trustee and beneficial owners within the meaning of
such Act between the Trustees and each Shareholder. It is not the intention of
the Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, joint venture, or any form of legal
relationship other than a business trust pursuant to such Act. Nothing in this
Declaration of Trust shall be construed to make the Shareholders, either by
themselves or with the Trustees, partners or members of a joint stock
association.

                Section 9. Use of the Name "JMIC". The name "JMIC" and all
rights to the use of the name "JMIC" belong to John McStay Investment Counsel
(the "Advisor"), the Manager of the Trust. The Advisor has consented to the use
by the Trust of the identifying words "JMIC" and has granted to the Trust a
non-exclusive license to use the name "JMIC" as part of the name of any Series
of Shares. In the event the Advisor or an affiliate of the Advisor is not
appointed as Manager or ceases to be the Manager of the Trust or of any Series
using such names, the non-exclusive license granted herein may be revoked by the
Advisor and the Trust promptly shall cease using the name "JMIC" as part of the
name of any Series of Shares, upon receipt of the written request therefore by
the Advisor or any successor to its interests in such name.


                                      -16-

<PAGE>



                IN WITNESS WHEREOF, the Trustees named below do hereby make and
enter into this Declaration of Trust as of the 28th day of October, 1996.



                                    /s/ Daniel Hockenbrough
                                    Daniel Hockenbrough
                                    5949 Sherry Lane
                                    Suite 1560
                                    Dallas, Texas 75225


                                    /s/ John H. Massey
                                    John H. Massey
                                    4004 Windsor Avenue
                                    Dallas, Texas 75205



                                     /s/ David M. Reichert
                                     David M. Reichert
                                     7415 Stonecrest Drive
                                     Dallas, Texas 75240










THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS

5949 Sherry Lane, Suite 1560, Dallas, Texas 75225


                                      -17-

                                                                Exhibit 24(b)(2)
                                     BY-LAWS

                                       OF

                               BRAZOS MUTUAL FUNDS



                                    ARTICLE I

                             Fiscal Year and Offices

                Section 1. Fiscal Year. Unless otherwise provided by resolution
of the Board of Trustees, the fiscal year of the Trust shall begin on the 1st
day of October and end on the 30th day of September.

                Section 2. Delaware Office. The Board of Trustees shall
establish a registered office in the State of Delaware and shall appoint as the
Trust's registered agent for service of process in the State of Delaware an
individual resident of the State of Delaware or a Delaware corporation or a
foreign corporation authorized to transact business in the State of Delaware; in
each case the business office of such registered agent for service of process
shall be identical with the registered Delaware office of the Trust.

                Section 3. Other Offices. The Board of Trustees may at any time
establish branch or subordinate offices at any place or places where the Trust
intends to do business.



                                   ARTICLE II

                            Meetings of Shareholders

                Section 1. Place of Meeting. Meetings of the shareholders for
the election of trustees shall be held in such place as shall be fixed by
resolution of the Board of Trustees and stated in the notice of the meeting.

                Section 2. Annual Meetings. An Annual Meeting of shareholders
will not be held unless the Investment Company Act of 1940 requires the election
of trustees to be acted upon.

                Section 3. Special Meetings. Special Meetings of the
shareholders may be called at any time by the President, or by a majority of the
Board of Trustees, and shall be called by the Secretary upon written request of
the holders of shares entitled to cast not less than ten percent of all the
votes entitled to be cast at such meeting provided that (a) such request shall
state the purposes of such meeting and the matters proposed to be acted on and
(b) the shareholders requesting such meeting shall have paid to the Trust the
reasonable estimated cost of preparing and mailing the notice thereof, which the
Secretary shall determine and specify to such shareholders. No special meeting
need be called upon the request of shareholders entitled to cast less than a
majority of all votes entitled to be cast at such meeting to consider any matter
which is substantially the same as a matter voted on at any meeting of the
shareholders held



<PAGE>



during the preceding twelve months. The foregoing provisions of this section 3
notwithstanding a special meeting of shareholders shall be called upon the
request of the holders of at least ten percent of the shares entitled to vote
for the purpose of consideration removal of a director from office as provided
in section 16(c) of the Investment Company Act of 1940.

                Section 4. Notice. Not less than ten, nor more than ninety days
before the date of every Annual or Special Shareholders Meeting, the Secretary
shall cause to be mailed to each shareholder entitled to vote at such meeting at
his (her) address (as it appears on the records of the Trust at the time of
mailing) written notice stating the time and place of the meeting and, in the
case of a Special Meeting of Shareholders, shall be limited to the purposes
stated in the notice. Notice of adjournment of a shareholders meeting to another
time or place need not be given, if such time and place are announced at the
meeting.

                Section 5. Record Date for Meetings. Subject to the provisions
of the Declaration of Trust, the Board of Trustees may fix in advance a date not
more than ninety, nor less than ten days, prior to the date of any annual or
special meeting of the shareholders as a record date for the determination of
the shareholders entitled to receive notice of, and to vote at any meeting and
any adjournment thereof; and in such case such shareholders and only such
shareholders as shall be shareholders of record on the date so fixed shall be
entitled to receive notice of and to vote at such meeting and any adjournment
thereof as the case may be, notwithstanding any transfer of any stock on the
books of the Trust after any such record date fixed as aforesaid.

                Section 6. Quorum. At any meeting of shareholders, the presence
in person or by proxy of the holders of record of a majority of the shares
issued and outstanding and entitled to vote thereon shall constitute a quorum
for the transaction of any business at the meeting, except as otherwise provided
by the Investment Company Act of 1940 or in the Trust's Declaration of Trust.
If, however, such quorum shall not be present or represented at any meeting of
the shareholders, the holders of a majority of the shares present or in person
or by proxy shall have the power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented to a date not more than 120 days after the original
record date. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.

                Section 7. Voting. Each shareholder shall have one vote for each
full share and a fractional vote for each fractional share of stock having
voting power held by such shareholder on the record date set pursuant to Section
5 on each matter submitted to a vote at a meeting of shareholders. Such vote may
be made in person or by proxy. At all meetings of the shareholders, a quorum
being present, all matters shall be decided by majority vote of the shares of
beneficial interest entitled to vote held by shareholders present in person or
by proxy, unless the question is one for which by express provision of the laws
of the State of Delaware, the Investment Company Act of 1940, as from time to
time amended, or the Declaration of Trust, a different vote is required, in
which case such express provision shall control the decision of such question.
At all meetings of shareholders, unless the voting is conducted by inspectors,
all questions relating to the qualification of voters and the validity of
proxies and the acceptance or rejection of votes shall be decided by the
Chairman of the meeting.

                Section 8. Inspectors. At any election of trustees, the Board of
Trustees prior thereto may, or, if they have not so acted, the Chairman of the
meeting may appoint one or more inspectors of election who shall first subscribe
an oath of affirmation to execute faithfully the duties of inspectors at such
election


                                      -19-
<PAGE>



with strict impartiality and according to the best of their ability, and shall
after the election make a certificate of the result of the vote taken.

                Section 9. Stock Ledger and List of Shareholders. It shall be
the duty of the Secretary or Assistant Secretary of the Trust to cause an
original or duplicate share ledger to be maintained at the office of the Trust's
transfer agent. Such share ledger may be in written form or any other form
capable of being converted into written form within a reasonable time for visual
inspection.

                Section 10. Action Without Meeting. Any action to be taken by
shareholders may be taken without a meeting if (a) all shareholders entitled to
vote on the matter consent to the action in writing, and (b) all shareholders
entitled to notice of the meeting but not entitled to vote at it sign a written
waiver of any right to dissent, and (c) the written consents are filed with the
records of the meetings of shareholders. Such consent shall be treated for all
purposes as a vote at a meeting.



                                   ARTICLE III

                                    Trustees

                Section 1. General Powers. The business of the Trust shall be
managed under the direction of its Board of Trustees, which may exercise all
powers of the Trust, except such as are by statute, or the Declaration of Trust,
or by these Bylaws conferred upon or reserved to the shareholders.

                Section 2. Number and Term of Office. The number of trustees
which shall constitute the whole Board shall be determined from time to time by
the Board of Trustees, but shall not be fewer than the minimum number permitted
by applicable laws, nor more than fifteen. Each trustee elected shall hold
office until his successor is elected and qualified. Trustees need not be
shareholders.

                Section 3. Elections. Provided a quorum is present, the trustees
shall be elected by the vote of a plurality of the shares present in person or
by proxy, except that any vacancy on the Board of Trustees may be filled by a
majority vote of the Board of Trustees, although less than a quorum, subject to
the requirements of Section 16(a) of the Investment Company Act of 1940.

                Section 4. Place of Meeting. Meetings of the Board of Trustees,
regular or special, may be held at any place as the Board may from time to time
determine.

                Section 5. Quorum. At all meetings of the Board of Trustees,
one-third of the entire Board of Trustees shall constitute a quorum for the
transaction of business provided that in no case may a quorum be less than two
persons. The action of a majority of the trustees present at any meeting at
which a quorum is present shall be the action of the Board of Trustees unless
the concurrence of a greater proportion is required for such action by the
Investment Company Act of 1940, these Bylaws or the Declaration of Trust. If a
quorum shall not be present at any meeting of trustees, the trustees present
thereat may by a majority vote adjourn the meeting from time to time without
notice other than announcement at the meeting, until a quorum shall be present.



                                      -20-

<PAGE>



                Section 6. Regular Meetings. Regular meetings of the Board of
Trustees may be held without additional notice at such time and place as shall
from time to time be determined by the Board of Trustees provided that notice of
any change in the time or place of such meetings shall be sent promptly to each
trustee not present at the meeting at which such change was made in the manner
provided for notice of special meetings.

                Section 7. Special Meetings. Special meetings of the Board of
Trustees may be called by the President on one day's notice to each trustee;
Special meetings shall be called by the President or Secretary in like manner
and on like notice on the written request of two trustees.

                Section 8. Telephone Meeting. Members of the Board of Trustees
or a committee of the Board of Trustees may participate in a meeting by means of
a conference telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same time.

                Section 9. Informal Actions. Any action required or permitted to
be taken at any meeting of the Board of Trustees or of any committee thereof may
be taken without a meeting, if a written consent to such action is signed by all
members of the Board or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.

                Section 10. Committees. The Board of Trustees may by resolution
passed by a majority of the entire Board appoint from among its members an
Executive Committee and other committees composed of two or more trustees, and
may delegate to such committees, in the intervals between meetings of the Board
of Trustees, any or all of the powers of the Board of Trustees in the management
of the business and affairs of the Trust.

                Section 11. Action of Committees. In the absence of an
appropriate resolution of the Board of Trustees, each committee may adopt such
rules and regulations governing its proceedings, quorum and manner of acting as
it shall deem proper and desirable, provided that the quorum shall not be less
than two trustees. The committees shall keep minutes of their proceedings and
shall report the same to the Board of Trustees at the meeting next succeeding,
and any action by the committee shall be subject to revision and alteration by
the Board of Trustees, provided that no rights of third persons shall be
affected by any such revision or alteration. In the absence of any member of
such committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Trustees to act in the
place of such absent member.

                Section 12. Compensation. Any trustee, whether or not he is a
salaried officer or employee of the Trust, may be compensated for his services
as trustee or as a member of a committee of trustees, or as Chairman of the
Board or chairman of a committee by fixed periodic payments or by fees for
attendance at meetings or by both, and in addition may be reimbursed for
transportation and other expenses, all in such manner and amounts as the Board
of Trustees may from time to time determine.




                                      -21-
<PAGE>



                                   ARTICLE IV

                                     Notices

                Section 1. Form. Notices to shareholders shall be in writing and
delivered personally or mailed to the shareholders at their addresses appearing
on the books of the Trust. Notices to trustees shall be oral or by telephone or
telegram or in writing delivered personally or mailed to the trustees at their
addresses appearing on the books of the Trust. Notice by mail shall be deemed to
be given at the time when the same shall be mailed. Subject to the provisions of
the Investment Company Act of 1940, notice to trustees need not state the
purpose of a regular or special meeting.

                Section 2. Waiver. Whenever any notice of the time, place or
purpose of any meeting of shareholders, trustees or a committee is required to
be given under the provisions of the Declaration of Trust or these Bylaws, a
waiver thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of shareholders in person
or by proxy, or at the meeting of Trustees or a committee in person, shall be
deemed equivalent to the giving of such notice to such persons.



                                    ARTICLE V

                                    Officers

                Section 1. Executive Officers. The officers of the Trust shall
be chosen by the Board of Trustees and shall include a President, a Secretary
and a Treasurer. The Board of Trustees may, from time to time, elect or appoint
a Controller, one or more Vice Presidents, Assistant Secretaries and Assistant
Treasurers. The Board of Trustees, at its discretion, may also appoint a trustee
as Chairman of the Board who shall perform and execute such executive and
administrative duties and powers as the Board of Trustees shall from time to
time prescribe. The same person may hold two or more offices, except that no
person shall be both President and Vice-President and no officer shall execute,
acknowledge or verify any instrument in more than one capacity, if such
instrument is required by law, the Declaration of Trust or these Bylaws to be
executed, acknowledged or verified by two or more officers.

                Section 2. Election. The Board of Trustees shall choose a
President, a Secretary and a Treasurer.

                Section 3. Other Officers. The Board of Trustees from time to
time may appoint such other officers and agents as it shall deem advisable, who
shall hold their offices for such terms and shall exercise powers and perform
such duties as shall be determined from time to time by the Board. The Board of
Trustees from time to time may delegate to one or more officers or agents the
power to appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.

                Section 4. Compensation. The salaries or other compensation of
all officers and agents of the Trust shall be fixed by the Board of Trustees,
except that the Board of Trustees may delegate to any


                                      -22-

<PAGE>



person or group of persons the power to fix the salary or other compensation of
any subordinate officers or agents appointed pursuant to Section 3 of this
Article V.

                Section 5. Tenure. The officers of the Trust shall serve at the
pleasure of the Board of Trustees. Any officer or agent may be removed by the
affirmative vote of a majority of the Board of Trustees whenever, in its
judgment, the best interests of the Trust will be served thereby. In addition,
any officer or agent appointed pursuant to Section 3 may be removed, either with
or without cause, by any officer upon whom such power of removal shall have been
conferred by the Board of Trustees. Any vacancy occurring in any office of the
Trust by death, resignation, removal or otherwise shall be filled by the Board
of Trustees, unless pursuant to Section 3 the power of appointment has been
conferred by the Board of Trustees on any other officer.

                Section 6. President. The President shall be the Chief Executive
Officer of the Trust and shall see that all orders and resolutions of the Board
are carried into effect. The President shall also be the Chief Administrative
Officer of the Trust and shall perform such other duties and have such other
powers as the Board of Trustees may from time to time prescribe.

                Section 7. Chairman of the Board. The Chairman of the Board, if
one shall be chosen, shall perform and execute such executive duties and
administrative powers as the Board of Trustees shall from time to time
prescribe.

                Section 8. Vice-President. The Vice-Presidents, in order of
their seniority, shall, in the absence or disability of the President, perform
the duties and exercise the powers of the President and shall perform such other
duties as the Board of Trustees or the President may from time to time
prescribe.

                Section 9. Secretary. The Secretary shall attend all meetings of
the Board of Trustees and all meetings of the shareholders and record all the
proceedings thereof and shall perform like duties for any committee when
required. He shall give, or cause to be given, notice of meetings of the
shareholders and of the Board of Trustees, shall have charge of the records of
the Trust, including the stock books, and shall perform such other duties as may
be prescribed by the Board of Trustees or Chief Executive Officer, under whose
supervision he shall be. He shall keep in safe custody the seal of the Trust
and, when authorized by the Board of Trustees, shall affix and attest the same
to any instrument requiring it. The Board of Trustees may give general authority
to any other officer to affix the seal of the Trust and to attest the affixing
by his signature.

                Section 10. Assistant Secretaries. The Assistant Secretaries in
order of their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties as the Board of Trustees shall prescribe.

                Section 11. Treasurer. The Treasurer, unless another officer has
been so designated, shall be the Chief Financial Officer of the Trust. He shall
have general charge of the finances and books of account of the Trust. Except as
otherwise provided by the Board of Trustees, he shall have general supervision
of the funds and property of the Trust and of the performance by the custodian
of its duties with respect thereto. He shall render to the Board of Trustees,
whenever directed by the Board, an account of the financial condition of the
Trust and of all his transactions as Treasurer. He shall cause to be prepared
annually a full and correct statement of the affairs of the Trust, including a
balance sheet and a


                                      -23-

<PAGE>



statement of operations for the preceding fiscal year. He shall perform all the
acts incidental to the office of Treasurer, subject to the control of the Board
of Trustees.

                Section 12. Assistant Treasurer. The Assistant Treasurer shall
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer and shall perform such other duties as the Board of
Trustees may from time to time prescribe.



                                   ARTICLE VI

                          Indemnification and Insurance

                Section 1. Agents, Proceedings and Expenses. For the purpose of
this Article, "agent" means any person who is or was a Trustee or officer of
this Trust and any person who, while a trustee or officer of this Trust, is or
was serving at the request of this Trust as a Trustee, director, officer,
partner, employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust or other enterprise; "Trust" includes any
domestic or foreign predecessor entity of this Trust in a merger, consolidation,
or other transaction in which the predecessor's existence ceased upon
consummation of the transaction; "proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
or investigative; and "expenses" includes without limitation attorney's fees and
any expenses of establishing a right to indemnification under this Article.

                Section 2. Actions Other Than by Trust. This Trust shall
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding (other than an action by or in the right of this Trust) by
reason of the fact that such person is or was an agent of this Trust, against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with such proceeding, if it is determined that
person acted in good faith and reasonably believed: (a) in the case of conduct
in his official capacity as an agent of the Trust, that his conduct was in the
Trust's best interests and (b) in all other cases, that his conduct was at least
not opposed to the Trust's best interests and (c) in the case of a criminal
proceeding, that he had no reasonable cause to believe the conduct of that
person was unlawful. The termination of any proceeding by judgment, order or
settlement shall not of itself create a presumption that the person did not meet
the requisite standard of conduct set forth in this Section. The termination of
any proceeding by conviction, or a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a rebuttable
presumption that the person did not meet the requisite standard of conduct set
forth in this Section.

                Section 3. Actions by the Trust. This Trust shall indemnify any
person who was or is a party or is threatened to be made a party to any
proceeding by or in the right of this Trust to procure a judgment in its favor
by reason of the fact that that person is or was an agent of this Trust, against
expenses actually and reasonably incurred by that person in connection with the
defense or settlement of that action if that person acted in good faith, in a
manner that person believed to be in the best interests of this Trust and with
such care, including reasonable inquiry, as an ordinarily prudent person in a
like position would use under similar circumstances.

                Section 4. Exclusion of Indemnification. Notwithstanding any
provision to the contrary contained herein, there shall be no right to
indemnification for any liability arising by reason of willful


                                      -24-

<PAGE>



misfeasance, bad faith, gross negligence, or the reckless disregard of the
duties involved in the conduct of the agent's office with this Trust.

                No indemnification shall be made under Sections 2 or 3 of this
Article:

                (a)    In respect of any proceeding as to which that person
                       shall have been adjudged to be liable on the basis that
                       personal benefit was improperly received by him, whether
                       or not the benefit resulted from an action taken in the
                       person's official capacity; or

                (b)    In respect of any proceeding as to which that person
                       shall have been adjudged to be liable in the performance
                       of that person's duty to this Trust, unless and only to
                       the extent that the court in which that action was
                       brought shall determine upon application that in view of
                       all the relevant circumstances of the case, that person
                       is fairly and reasonably entitled to indemnity for the
                       expenses which the court shall determine; however, in
                       such case, indemnification with respect to any proceeding
                       by or in the right of the Trust or in which liability
                       shall have been adjudged by reason of the disabling
                       conduct set forth in the preceding paragraph shall be
                       limited to expenses; or


                (c)    Of amounts paid in settling or otherwise disposing of a
                       proceeding, with or without court approval, or of
                       expenses incurred in defending a proceeding which is
                       settled or otherwise disposed of without court approval,
                       unless the required approval set forth in Section 6 of
                       this Article is obtained.

                Section 5. Successful Defense by Agent. To the extent that an
agent of this Trust has been successful, on the merits or otherwise, in the
defense of any proceeding referred to in Sections 2 or 3 of this Article before
the court or other body before whom the proceeding was brought, the agent shall
be indemnified against expenses actually and reasonably incurred by the agent in
connection therewith, provided that the Board of Trustees, including a majority
who are disinterested, non-party Trustees, also determines that based upon a
review of the facts, the agent was not liable by reason of the disabling conduct
referred to in Section 4 of this Article.

                Section 6. Required Approval. Except as provided in Section 5 of
this Article, any indemnification under this Article shall be made by this Trust
only if authorized in the specific case on a determination that indemnification
of the agent is proper in the circumstances because the agent has met the
applicable standard of conduct set forth in Sections 2 or 3 of this Article and
is not prohibited from indemnification because of the disabling conduct set
forth in Section 4 of this Article, by:

                (a)    A majority vote of a quorum consisting of Trustees who
                       are not parties to the proceeding and are not interested
                       persons of the Trust (as defined in the Investment
                       Company Act of 1940);

                (b)    A written opinion by an independent legal counsel; or

                (c)    The shareholders; however, shares held by agents who are
                       parties to the proceeding may not be voted on the subject
                       matter under this Sub-Section.


                                      -25-

<PAGE>



                Section 7. Advance of Expenses. Expenses incurred in defending
any proceeding may be advanced by this Trust before the final disposition of the
proceeding if (a) receipt of a written affirmation by the agent of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this Article and a written undertaking by or on behalf of
the agent, such undertaking being an unlimited general obligation to repay the
amount of the advance if it is ultimately determined that he has not met those
requirements, and (b) a determination that the facts then known to those making
the determination would not preclude indemnification under this Article.
Determinations and authorizations of payments under this Section must be made in
the manner specified in Section 6 of this Article for determining that the
indemnification is permissible.

                Section 8. Other Contractual Rights. Nothing contained in this
Article shall affect any right to indemnification to which persons other than
Trustees and officers of this Trust or any subsidiary hereof may be entitled by
contract or otherwise.

                Section 9. Limitations. No indemnification or advance shall be
made under this Article, except as provided in Sections 5 or 6 in any
circumstances where it appears:

                (a)    That it would be inconsistent with a provision of the
                       Agreement and Declaration of Trust of the Trust, a
                       resolution of the shareholders, or an agreement in effect
                       at the time of accrual of the alleged cause of action
                       asserted in the proceeding in which the expenses were
                       incurred or other amounts were paid which prohibits or
                       otherwise limits indemnification; or

                (b)    That it would be inconsistent with any condition
                       expressly imposed by a court in approving a settlement.

                Section 10. Insurance. Upon and in the event of a determination
by the Board of Trustees of this Trust to purchase such insurance, this Trust
shall purchase and maintain insurance on behalf of any agent or employee of this
Trust against any liability asserted against or incurred by the agent or
employee in such capacity or arising out of the agent's or employee's status as
such to the fullest extent permitted by law.

                Section 11. Fiduciaries of Employee Benefit Plan. This Article
does not apply to any proceeding against any Trustee, investment manager or
other fiduciary of an employee benefit plan in that person's capacity as such,
even though that person may also be an agent of this Trust as defined in Section
1 of this Article. Nothing contained in this Article shall limit any right to
indemnification to which such a Trustee, investment manager, or other fiduciary
may be entitled by contract or otherwise which shall be enforceable to the
extent permitted by applicable law other than this Article.



                                   ARTICLE VII

                          Shares of Beneficial Interest

                Section 1. Certificates. A certificate or certificates
representing and certifying the class and the full, but not fractional, number
of shares of beneficial interest owned by each shareholder in the Trust


                                      -26-

<PAGE>


shall not be issued except as the Board of Trustees may otherwise determine from
time to time. Any such certificate issued shall be signed by facsimile signature
or otherwise by the President or a Vice-President and counter-signed by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.

                Section 2. Signature. In case any officer who has signed any
certificate ceases to be an officer of the Trust before the certificate is
issued, the certificate may nevertheless be issued by the Trust with the same
effect as if the officer had not ceased to be such officer as of the date of its
issue.

                Section 3. Recording and Transfer Without Certificates. The
Trust shall have the full power to participate in any program approved by the
Board of Trustees providing for the recording and transfer of ownership of the
Trust's shares by electronic or other means without the issuance of
certificates.

                Section 4. Lost Certificates. The Board of Trustees may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Trust alleged to have been stolen, lost
or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to have been stolen, lost or destroyed, or
upon other satisfactory evidence of such theft, loss or destruction and may in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such stolen, lost or destroyed certificate or certificates, or his
legal representative, to give the Trust a bond with sufficient surety, to the
Trust to indemnify it against any loss or claim that may be made by reason of
the issuance of a new certificate.

                Section 5. Transfer of Shares. Transfers of shares of beneficial
interest of the Trust shall be made on the books of the Trust by the holder of
record thereof (in person or by his attorney thereunto duly authorized by a
power of attorney duly executed in writing and filed with the Secretary of the
Trust) (i) if a certificate or certificates have been issued, upon the surrender
of the certificate or certificates, properly endorsed or accompanied by proper
instruments of transfer, representing such shares, or (ii) as otherwise
prescribed by the Board of Trustees. Every certificate exchanged, surrendered
for redemption or otherwise returned to the Trust shall be marked "Canceled"
with the date of cancellation.

                Section 6. Registered Shareholders. The Trust shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by applicable law or the Declaration of Trust.

                Section 7. Transfer Agents and Registrars. The Board of Trustees
may, from time to time, appoint or remove transfer agents and or registrars of
the Trust, and they may appoint the same person as both transfer agent and
registrar. Upon any such appointment being made, all certificates representing
shares of beneficial interest thereafter issued shall be countersigned by such
transfer agent and shall not be valid unless so countersigned.

                Section 8. Stock Ledger. The Trust shall maintain an original
stock ledger containing the names and addresses of all shareholders and the
number and class of shares held by each shareholder. Such stock ledger may be in
written form or any other form capable of being converted into written form
within reasonable time for visual inspection.


                                      -27-

<PAGE>

                                  ARTICLE VIII

                               General Provisions

                Section 1. Custodianship. Except as otherwise provided by
resolution of the Board of Trustees, the Trust shall place and at all times
maintain in the custody of a custodian (including any sub-custodian for the
custodian) all funds, securities and similar investments owned by the Trust.
Subject to the approval of the Board of Trustees, the custodian may enter into
arrangements with securities depositories, provided such arrangements comply
with the provisions of the Investment Company Act of 1940 and the rules and
regulations promulgated thereunder.

                Section 2. Execution of Instruments. All deeds, documents,
transfers, contracts, agreements and other instruments requiring execution by
the Trust shall be signed by the President or a Vice President.

                Section 3. Net Asset Value. The net asset value per share shall
be determined separately as to each class of the Trust's shares, by dividing the
sum of the total market value of the class's investments and other assets, less
any liabilities, by the total outstanding shares of such class, subject to the
Investment Company Act of 1940 and any other applicable Federal securities law
or rule or regulation currently in effect.



                                   ARTICLE IX

                                   Amendments

                The Board of Trustees shall have the power to make, alter and
repeal the Bylaws of the Trust.


                                      -28-

                                                                Exhibit 24(b)(5)

                          INVESTMENT ADVISORY AGREEMENT


                               BRAZOS MUTUAL FUNDS



AGREEMENT made this 25th day of November, 1996 by and between Brazos Mutual
Funds, a Delaware business trust (the "Trust") and John McStay Investment
Counsel, a limited partnership (the "Adviser").

         (a) Duties of Adviser. The Trust hereby appoints the Adviser to act as
investment adviser to the Trust for the period and on such terms as set forth in
this Agreement. The Trust employs the Adviser to manage the investment and
reinvestment of the assets of its portfolios of securities, to continuously
review, supervise and administer the investment program of the portfolios, to
determine in its discretion the securities to be purchased or sold and the
portion of the Trust's assets to be held uninvested, to provide the Trust with
records concerning the Adviser's activities which the Trust is required to
maintain, and to render regular reports to the Trust's officers and Board of
Trustees concerning the Adviser's discharge of the foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the officers and the Board of Trustees of the Trust, and in
compliance with the objectives, policies and limitations set forth in the
Trust's prospectus and applicable laws and regulations. The Adviser accepts such
employment and agrees to render the services and to provide, at its own expense,
the office space, furnishings and equipment and the personnel required by it to
perform the services on the terms and for the compensation provided herein.

         (b) Portfolio Transactions. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of securities of
the Trust and is directed to use its best efforts to obtain the best available
price and most favorable execution, except as prescribed herein. Subject to
policies established by the Board of Trustees of the Trust, the Adviser may also
be authorized to effect individual


                                      -29-

<PAGE>



securities transactions at commission rates in excess of the minimum commission
rates available, if the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of the brokerage or research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Trust. The execution of such transactions shall not be deemed to represent
an unlawful act or breach of any duty created by this Agreement or otherwise.
The Adviser will promptly communicate to the officers and Trustees of the Trust
such information relating to portfolio transactions as they may reasonably
request.

         (c) Compensation of the Adviser. For the services to be rendered by the
Adviser as provided in Section 1 of this Agreement, the Trust shall pay to the
Adviser in monthly installments, an advisory fee calculated by applying the
following annual percentage rates to the Trust's average daily net assets for
the month:

         BRAZOS/JMIC Small/Emerging Growth Portfolio                   0.90%
         BRAZOS/JMIC Real Estate Securities Portfolio                  0.90%

         In the event of termination of this Agreement, the fee provided in this
Section shall be computed on the basis of the period ending on the last business
day on which this Agreement is in effect subject to a pro rata adjustment based
on the number of days elapsed in the current fiscal month as a percentage of the
total number of days in such month.

         (d) Other Services. At the request of the Trust, the Adviser in its
discretion may make available to the Trust office facilities, equipment,
personnel and other services. Such office facilities, equipment, personnel and
services shall be provided for or rendered by the Adviser and billed to the
Trust at the Adviser's cost.

         (e) Reports. The Trust and the Adviser agree to furnish to each other
current prospectuses, proxy statements, reports to shareholders, certified
copies of their financial statements, and such other information with regard to
their affairs as each may reasonably request.


                                      -30-

<PAGE>



         (f) Status of Adviser. The services of the Adviser to the Trust are not
to be deemed exclusive, and the Adviser shall be free to render similar services
to others so long as its services to the Trust are not impaired thereby.

         (g) Liability of Adviser. In the absence of (i) willful misfeasance,
bad faith or gross negligence on the part of the Adviser in performance of its
obligations and duties hereunder, (ii) reckless disregard by the Adviser of its
obligations and duties hereunder, or (iii) a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services (in
which case any award of damages shall be limited to the period and the amount
set forth in Section 36(b)(3) of the Investment Company Act of 1940 ("1940 Act")
, the Adviser shall not be subject to any liability whatsoever to the Trust, or
to any shareholder of the Trust, for any error or judgment, mistake of law or
any other act or omission in the course of, or connected with, rendering
services hereunder including, without limitation, for any losses that may be
sustained in connection with the purchase, holding, redemption or sale of any
security on behalf of the Trust.

         (h) Permissible Interests. Subject to and in accordance with the
Certificate of Trust and Agreement and Declaration of Trust of the Trust and the
Certificate of Limited Partnership and Partnership Agreement of the Adviser,
Trustees, officers, agents and shareholders of the Trust are or may be
interested in the Adviser (or any successor thereof) as Trustees, officers,
agents, shareholders or otherwise; Trustees, officers, agents and shareholders
of the Adviser are or may be interested in the Trust as Trustees, officers,
agents, shareholders or otherwise; and the Adviser (or any successor) is or may
be interested in the Trust as a shareholder or otherwise; and the effect of any
such interrelationships shall be governed by said organizational documents and
the provisions of the 1940 Act.

         (i) Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall continue until the earlier of November 25, 1998 or the
date of the first annual or special meeting of the shareholders of the Trust, if
any, and, if approved by a majority of the outstanding voting securities of


                                      -31-

<PAGE>



the Trust, thereafter shall continue for periods of one year so long as such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Board of Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (b)
by the Board of Trustees of the Trust or (c) by vote of a majority of the
outstanding voting securities of the Trust; provided however, that if the
shareholders of the Trust fail to approve the Agreement as provided herein, the
Adviser may continue to serve in such capacity in the manner and to the extent
permitted by the 1940 Act and rules thereunder. This Agreement may be terminated
by the Trust at any time, without the payment of any penalty, by vote of a
majority of the entire Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities of the Trust on 60 days' written notice to
the Adviser. This Agreement may be terminated by the Adviser at any time,
without the payment of any penalty, upon 90 days' written notice to the Trust.
This agreement will automatically and immediately terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing, addressed
and delivered or mailed postpaid, to the other party at the principal office of
such party.

         As used in this Section 9, the terms "assignment", "interested
persons", and "a vote of a majority of the outstanding voting securities" shall
have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and
Section 2(a)(42) of the 1940 Act.

         (j) Amendment of Agreement. This Agreement may be amended by mutual
consent, but the consent of the Trust must be approved (a) by vote of a majority
of those members of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment, and (b) by vote of a
majority of the outstanding voting securities of the Trust.

         (k) Severability. If any provisions of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.


                                      -32-

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of this 25th day of November, 1996.

JOHN McSTAY INVESTMENT COUNSEL                      BRAZOS MUTUAL FUNDS



By/s/ John McStay                                   By/s/ Daniel Hockenbrough
   John D. McStay, General Partner                    Chairman of the Board and 
   John D. McStay & Associates, General Partner       President
   John McStay Investment Counsel

                                      -33-


                                                                Exhibit 24(b)(6)

                             DISTRIBUTION AGREEMENT
                                     between
                               BRAZOS MUTUAL FUNDS
                                       and
                        RODNEY SQUARE DISTRIBUTORS, INC.

       THIS DISTRIBUTION AGREEMENT is made as of the ____ day of
_______________, 1996, between Brazos Mutual Funds, a Delaware business trust
(the "Trust"), having its principal place of business in Dallas, Texas, and
Rodney Square Distributors, Inc., a corporation organized under the laws of the
State of Delaware (the "Distributor"), having its principal place of business in
Wilmington, Delaware.

       WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company,
and offers for sale one or more series ("Series") of shares of beneficial
interest;

       WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each Series has
a separate investment objective and policies;

       WHEREAS, at the present time, the Trust has established two Series, each
of which consisting of one class of shares, and the Trust may establish
additional Series and/or classes in the future; and

       WHEREAS, the Trust desires to avail itself of the services of the
Distributor, with such assistance from its affiliates as the latter may provide;
and the Distributor is willing to furnish such services to the Trust with
respect to each of the Series listed on Schedule A to this Agreement (each a
"Fund" or collectively "Funds") on the terms and conditions hereinafter set
forth;

       NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein contained, the parties agree as follows:

1.     Sale of Shares. The Trust grants to the Distributor the right to sell
       shares of beneficial interest in all Series of the Trust, now or
       hereafter created (the "Shares"), on its behalf during the term of this
       Agreement and subject to the registration requirements of the Securities
       Act of 1933, as amended (the "1933 Act"), and of the laws governing the
       sale of securities in various states (the "Blue Sky Laws") under the
       following terms and conditions: the Distributor (i) shall have the right
       to sell, as agent on behalf of the Trust, Shares authorized for issue and
       registered under the 1933 Act; (ii) may sell Shares under offers of
       exchange, if available, between and among the funds distributed by
       Distributor and advised by Rodney Square Management Corporation or
       Wilmington Trust Company; and (iii) shall sell such Shares only in
       compliance with the terms set forth in the Trust's currently effective
       registration statement. Distributor may enter into selling agreements
       with selected dealers and others for the sale of Trust Shares, and will
       act only on its own behalf as principal in entering into such selling
       agreements.

2.     Sale of Shares by the Trust. The rights granted to the Distributor shall
       be non-exclusive in that the Trust reserves the right to sell its Shares
       to investors on applications received and accepted by the Trust. Further,
       the Trust reserves the right to issue Shares in connection with (a) the
       merger or consolidation, or acquisition by the Trust through purchase or
       otherwise, with any other investment company, trust or personal holding
       company; and (b) a pro rata distribution directly to the holders of
       Shares in the nature of a stock dividend or split-up.


<PAGE>




3.     Shares Covered by this Agreement. This Agreement shall apply to issued
       Shares of all Series of the Trust, Shares of all Series of the Trust held
       in its treasury in the event that in the discretion of the Trust treasury
       Shares shall be sold, and Shares of all Series of the Trust repurchased
       for resale.

4.     Suspension of Sales. If and whenever the determination of net asset value
       is suspended and until such suspension is terminated, no further orders
       for Shares shall be processed by the Distributor except such
       unconditional orders placed with the Distributor before it had knowledge
       of the suspension. In addition, the Trust reserves the right to suspend
       sales and the Distributor's authority to process orders for Shares on
       behalf of the Trust if, in the judgment of the Trust, it is in the best
       interests of the Trust to do so. Suspension will continue for such period
       as may be determined by the Trust. In addition, the Distributor reserves
       the right to reject any purchase order.

5.     Solicitation of Sales. In consideration of these rights granted to the
       Distributor, the Distributor agrees to use all reasonable efforts,
       consistent with its other business, to secure purchasers for Shares of
       the Trust. This shall not prevent the Distributor from entering into like
       arrangements (including arrangements involving the payment of
       underwriting commissions) with other issuers. Distributor agrees to use
       all reasonable efforts to ensure that taxpayer identification numbers
       provided for shareholders of the Trust are correct.

6.     Authorized Representations. The Distributor is not authorized by the
       Trust to give any information or to make any representations other than
       those contained in the appropriate registration statements, Prospectuses
       or Statements of Additional Information ("SAIs") filed with the
       Securities and Exchange Commission under the 1933 Act (as those
       registration statements, Prospectuses and SAIs may be amended from time
       to time), or contained in shareholder reports or other material that may
       be prepared by or on behalf of the Trust for the Distributor's use. This
       shall not be construed to prevent the Distributor from preparing and
       distributing, in compliance with applicable laws and regulations, sales
       literature or other material as it may deem appropriate. Distributor will
       furnish or cause to be furnished copies of such sales literature or other
       material to the President of the Trust or his designee, and will provide
       him with a reasonable opportunity to comment on the same. Distributor
       agrees to take appropriate action to cease using such sales literature or
       other material to which the Trust reasonably objects as promptly as
       practicable after receipt of the objection.

7.     Portfolio Securities. Portfolio securities of every Series of the Trust
       may be bought or sold by or through the Distributor, and the Distributor
       may participate directly or indirectly in brokerage commissions or
       "spreads" for transactions in portfolio securities of any Series of the
       Trust. However, all sums of money received by the Distributor as a result
       of such purchases and sales or as a result of such participation must,
       after reimbursement of actual expenses of the Distributor in connection
       with such activity, be paid over by the Distributor to or for the benefit
       of the applicable Series.

8.     Registration of Shares. The Trust agrees that it will take all action
       necessary to register Shares under the 1933 Act (subject to the necessary
       approval, if any, of its shareholders) so that there will be available
       for sale the number of Shares the Distributor may reasonably be expected
       to sell. The Trust shall furnish to the Distributor copies of all
       information, financial statements and other papers which the Distributor
       may reasonably request for use in connection with the distribution of
       Shares of each series of the Trust.

9.     Expenses, Compensation and Reimbursement


                                      -35-

<PAGE>



(a)    The Trust shall pay all fees and expenses:

       (i)    in connection with the preparation, setting in type and filing of
              any registration statement, Prospectus and SAI under the 1933 Act,
              and any amendments thereto, for the issue of its Shares;
       (ii)   in connection with the registration and qualification of Shares
              for sale in the various states in which the Board of Trustees (the
              "Trustees") of the Trust shall determine it advisable to qualify
              such Shares for sale (including registering the Trust or Series as
              a broker or dealer or any officer of the Trust as agent or
              salesperson in any state);
       (iii)  of preparing, setting in type, printing and mailing any report or
              other communication to shareholders of the Trust in their capacity
              as such; and
       (iv)   of preparing, setting in type, printing and mailing Prospectuses,
              SAIs, and any supplements thereto, sent to existing shareholders.

(b)    The Distributor shall pay expenses of:

       (i)    printing and distributing Prospectuses, SAIs and reports prepared
              for its use in connection with the offering of the Shares for sale
              to the public;
       (ii)   any other literature used in connection with such offering; and
              (iii) advertising in connection with such offering.

(c)    In addition to the services described above, Distributor will provide
       services including assistance in the production of marketing and
       advertising materials for the sale of Shares of the Trust and their
       review for compliance with applicable regulatory requirements; entering
       into dealer agreements with broker-dealers to sell Shares of the Trust
       and monitoring their financial strength and contractual compliance; and
       providing, directly or through its affiliates, certain investor support
       services, personal service, and the maintenance of shareholder accounts.

(d)    In connection with the services to be provided by the Distributor under
       this Agreement, the Distributor shall receive reimbursement from the
       Trust's investment adviser for fees and expenses previously agreed to by
       the Adviser (which may include, without limitation, reimbursement for the
       expenses incurred pursuant to Section 9(b) hereof).

10.    Indemnification.

(a)    The Trust agrees to indemnify and hold harmless the Distributor and each
       of its directors and officers and each person, if any, who controls the
       Distributor within the meaning of Section 15 of the 1933 Act and/or
       Section 20(a) of the Securities Exchange Act of 1934 (the "1934 Act")
       against any loss, liability, claim, damages or expense (including the
       reasonable cost of investigating or defending any alleged loss,
       liability, claim, damages, or expense, and reasonable counsel fees
       incurred in connection therewith) arising by reason of any person
       acquiring any Shares, based upon the 1933 Act or any other statute or
       common law, alleging any wrongful act of the Trust or any of its
       employees or representatives, or based upon the grounds that the
       registration statements, Prospectuses, SAIs, shareholder reports or other
       information filed or made public by the Trust (as from time to time
       amended) included an untrue statement of a material fact or omitted to
       state a material fact required to be stated or necessary in order to make
       the statements made therein not misleading. However, the Trust does not
       agree to indemnify the Distributor or hold it harmless to the extent that
       the statement or omission was made in reliance upon, and in conformity
       with, information furnished to the


                                      -36-


<PAGE>



       Trust in writing by or on behalf of the Distributor. In no case (i) is
       the indemnity of the Trust in favor of the Distributor or any person
       indemnified to be deemed to protect the Distributor or any person against
       any liability to the Trust or its security holders to which the
       Distributor or such person would otherwise be subject by reason of
       willful misfeasance, bad faith or gross negligence in the performance of
       its duties, or by reason of its reckless disregard of its obligations and
       duties under this Agreement, or (ii) is the Trust to be liable under its
       indemnity agreement contained in this Section 10(a) with respect to any
       claim made against the Distributor or any person indemnified unless the
       Distributor or person, as the case may be, shall have notified the Trust
       in writing of the claim within a reasonable time after the summons or
       other first written notification giving information of the nature of the
       claim shall have been served upon the Distributor or any such person or
       after the Distributor or such person shall have received notice of
       service on any designated agent. However, failure to notify the Trust of
       any claim shall not relieve the Trust from any liability which it may
       have to the Distributor or any person against whom such action is brought
       other than on account of its indemnity agreement contained in this
       Section 10(a). The Trust shall be entitled to participate at its own
       expense in the defense, or, if it so elects, to assume the defense of any
       suit brought to enforce any claims, but if the Trust elects to assume the
       defense, the defense shall be conducted by counsel chosen by it and
       satisfactory to the Distributor, or person or persons defendant or
       defendants in the suit. In the event the Trust elects to assume the
       defense of any suit and retain counsel, the Distributor, officers or
       directors or controlling person(s) or defendant(s) in the suit shall bear
       the fees and expenses of any additional counsel retained by them. If the
       Trust does not elect to assume the defense of any suit, it will reimburse
       the Distributor, officers or directors or controlling person(s) or
       defendant(s) in the suit for the reasonable fees and expenses of any
       counsel retained by them. The Trust agrees to notify the Distributor
       promptly of the commencement of any litigation or proceedings against it
       or any of its officers or Trustees in connection with the issuance or
       sale of any of the Shares.

(b)    The Distributor also covenants and agrees that it will indemnify and hold
       harmless the Trust and each of the members of its Trustees and officers
       and each person, if any, who controls the Trust within the meaning of
       Section 15 of the 1933 Act, against any loss, liability, damages, claim
       or expense (including the reasonable cost of investigating or defending
       any alleged loss, liability, damages, claim or expense, and reasonable
       counsel fees incurred in connection therewith) arising by reason of any
       person acquiring any Shares, based upon the 1933 Act or any other statute
       or common law, alleging any wrongful act of the Distributor or any of its
       employees or representatives, or alleging that the registration
       statements, Prospectuses, SAIs, shareholder reports or other information
       filed or made public by the Trust (as from time to time amended) included
       an untrue statement of a material fact or omitted to state a material
       fact required to be stated or necessary in order to make the statements
       made therein not misleading, insofar as the statement or omission was
       made in reliance upon, and in conformity with, information furnished in
       writing to the Trust by or on behalf of the Distributor. In no case (i)
       is the indemnity of the Distributor in favor of the Trust or any person
       indemnified to be deemed to protect the Trust or any person against any
       liability to which the Trust or such person would otherwise be subject by
       reason of willful misfeasance, bad faith or gross negligence in the
       performance of its duties, or by reason of its reckless disregard of its
       obligations and duties under this Agreement, or (ii) is the Distributor
       to be liable under its indemnity agreement contained in this Section
       10(b) with respect to any claim made against the Trust or any person
       indemnified unless the Trust or person, as the case may be, shall have
       notified the Distributor in writing of the claim within a reasonable time
       after the summons or other first written notification giving information
       of

                                      -37-

<PAGE>

       the nature of the claim shall have been served upon the Trust or any such
       person or after the Trust or such person shall have received notice of
       service on any designated agent. However, failure to notify the
       Distributor of any claim shall not relieve the Distributor from any
       liability which it may have to the Trust or any person against whom the
       action is brought other than on account of its indemnity agreement
       contained in this Section 10(b). In the case of any notice to the
       Distributor, it shall be entitled to participate, at its own expense, in
       the defense, or, if it so elects, to assume the defense of any suit
       brought to enforce any claims, but if the Distributor elects to assume
       the defense, the defense shall be conducted by counsel chosen by it and
       satisfactory to the Trust, to its officers and Trustees and to any
       controlling person(s) or any defendants(s) in the suit. In the event the
       Distributor elects to assume the defense of any suit and retain counsel,
       the Trust or controlling person(s) or defendant(s) in the suit, shall
       bear the fees and expenses of any additional counsel retained by them. If
       the Distributor does not elect to assume the defense of any suit, it will
       reimburse the Trust, its officers or Trustees, controlling person(s) or
       defendant(s) in the suit, for the reasonable fees and expenses of any
       counsel retained by them. The Distributor agrees to notify the Trust
       promptly of the commencement of any litigation or proceedings against it
       in connection with the issue and sale of any of the Shares.

11.    Effectiveness, Termination, etc. This Agreement shall become effective on
       the day and year first written above, and unless terminated as herein
       provided, shall continue in force for one (1) year from the date of its
       execution, and thereafter from year to year, provided continuance after
       the one (1) year period is approved at least annually by either (i) the
       vote of a majority of the Trustees of the Trust, or by the vote of a
       majority of the outstanding voting securities of the Trust, and (ii) the
       vote of a majority of those Trustees of the Trust who are not interested
       persons of the Trust, who have no direct or indirect financial interest
       in the operation of any Rule 12b-1 Plan of the Trust or any agreements
       related to any such Plan and who are not parties to this Agreement or
       interested persons of any party, cast in person at a meeting called for
       the purpose of voting on the approval. This Agreement shall automatically
       terminate in the event of its assignment. As used in this Section 12, the
       terms "vote of a majority of the outstanding voting securities,"
       "assignment" and "interested person" shall have the respective meanings
       specified in the 1940 Act and the rules enacted thereunder as now in
       effect or as hereafter amended. In addition to termination by failure to
       approve continuance or by assignment, this Agreement may at any time be
       terminated without the payment of any penalty by vote of a majority of
       the Trustees of the Trust who are not interested persons of the Trust and
       who have no direct or indirect financial interest in the operation of any
       Rule 12b-1 Plan of the Trust or any agreements related to any such Plan,
       or by vote of a majority of the outstanding voting securities of the
       Trust, on not more than sixty (60) days' written notice to the Trust.
       This Agreement may be terminated by the Distributor upon not less than
       sixty (60) days' prior written notice to the Trust.

12.    Notice. Any notice under this Agreement shall be given in writing
       addressed and hand delivered or sent by registered or certified mail,
       postage prepaid, to the other party to this Agreement at its principal
       place of business.

13.    Severability. If any provision of this Agreement shall be held or made
       invalid by a court decision, statute, rule or otherwise, the remainder of
       this Agreement shall not be affected thereby.

14.    Governing Law. To the extent that state law has not been preempted by the
       provisions of any law of the United States heretofore or hereafter
       enacted, as the same may be amended from time to time, this Agreement
       shall be administered, construed and enforced according to the laws
       (without regard, however, to laws as to conflicts of law) of the State of
       Delaware.


                                      -38-

<PAGE>


15.    Shareholder Liability. The Distributor is hereby expressly put on notice
       of the limitation of shareholder liability as set forth in the Trust
       Instrument of the Trust and agrees that obligations assumed by the Trust
       pursuant to this Agreement shall be limited in all cases to the Trust and
       its assets, and if the liability relates to one or more series, the
       obligations hereunder shall be limited to the respective assets of such
       series. The Distributor further agrees that it shall not seek
       satisfaction of any such obligation from the shareholders or any
       individual shareholder of a series of the Trust, nor from the Trustees or
       any individual Trustee of the Trust.

16.    Miscellaneous. Each party agrees to perform such further acts and execute
       such further documents as are necessary to effectuate the purposes
       hereof. The captions in this Agreement are included for convenience of
       reference only and in no way define or delimit any of the provisions
       hereof or otherwise affect their construction or effect. This Agreement
       may be executed in two counterparts, each of which taken together shall
       constitute one and the same instrument.

       IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.

                                        BRAZOS MUTUAL FUNDS


                                        By:   _____________________________
                                              Name, Title


                                        RODNEY SQUARE DISTRIBUTORS, INC.


                                        By:   _____________________________
                                              Jeffrey O. Stroble, President


Acknowledgment as to reimbursement with respect to
marketing expenses of Rodney Square Distributors, Inc. as
Distributor.

JOHN McSTAY INVESTMENT COUNSEL, as Investment Adviser


By: _____________________
     Name, Title

Date:

                                      -39-
<PAGE>



                        RODNEY SQUARE DISTRIBUTORS, INC.

               SELECTED DEALER AGREEMENT FOR NON-PROPRIETARY FUNDS

         THIS SELECTED DEALER AGREEMENT is made as of the _____ day of
_______________, 1996, between Rodney Square Distributors, Inc. ("RSD") and the
broker-dealer listed in Schedule B ("BD").

         WHEREAS, each company listed on Schedule A hereof (each a "Fund" and
collectively, the "Funds") is registered under the Investment Company Act of
1940 (the "1940 Act"), as amended as an open-end management investment company
and each Fund is authorized to issue one or more series of shares of common
stock or beneficial interest, as the case may be ("Shares");

         WHEREAS, RSD is the exclusive distributor of the Shares pursuant to
certain agreement(s) with the (respective) Fund(s); and

         WHEREAS, BD desires to serve as a selected dealer for the Shares;

         NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed among the parties as follows:

1.       Purchase of Shares. BD may, from time to times purchase Shares from RSD
         in accordance with the terms of this Agreement. In connection with each
         such purchase, BD shall act as principal for its own account; BD shall
         have no authority to act as agent for RSD or any of the Funds. BD
         agrees that it shall purchase Shares only from RSD, either directly or
         through a securities dealer, such as Fund/Serv ("Clearing Broker") with
         which BD and RSD have established clearing arrangements. BD agrees to
         purchase Shares of the Funds only in transactions contemplating the
         simultaneous resale of such Shares to investors and in no event shall
         BD place orders for Shares unless it has already received customers
         orders to purchase Shares at the applicable Public Offering Price.

2.       Acceptance of Purchase Orders. Orders received from BD for the purchase
         of Shares ("Purchase Orders") shall be accepted by RSD only at the
         price ("Public Offering Price") set forth in the then effective
         prospectus used in connection with the sale of such shares (the
         "Prospectus"). Purchase Orders shall be handled in accordance with such
         oral or written instructions that RSD may forward to BD from time to
         time and shall be subject to procedures relating to the purchase of
         Shares disclosed in the Prospectus. Purchase Orders for Shares of the
         "Money Market Funds" as listed in Schedule A must be received together
         with full payment in Federal Funds. Payment for Shares of the "Load
         Funds" as listed in Schedule A must be received by RSD within three
         business days after receipt of the Purchase Order. RSD reserves the
         right, from time to time and in our sole discretion, to limit the
         aggregate orders for Shares of the Load Funds placed by BD for which
         payment has not yet been received. In addition, all orders are subject
         to acceptance or rejection by RSD or the relevant Fund in the sole
         discretion of either. Purchase Orders shall be subject to receipt by
         the Funds' Transfer Agent of all required documents in proper form and
         to the minimum initial and subsequent purchase requirements set forth
         in the Prospectus.

3.       Dealer Reallowance. BD shall receive compensation in connection with
         the sale of Shares of Load Funds in the form of dealer reallowances at
         the percentage of the Public Offering Price applicable to Shares
         purchased by BD, specified in the Prospectus. It is understood that the

                                      -40-

<PAGE>

         Public Offering Price may reflect variations in sales charges, if any,
         applicable to the sales of such Shares in accordance with certain
         purchase plans set forth in such Prospectus. BD agrees that it will
         apply any such variations uniformly to all offerees in accordance with
         the provisions of the Prospectus and will not combine customer orders
         to reach "breakpoints" established in the Prospectus unless expressly
         permitted by the Prospectus or in writing by RSD or withhold any
         customer order so as to profit therefrom. BD agrees and understands
         that dealer reallowances will be paid based upon the schedule set forth
         in the Prospectus and that, in accordance with such schedule, dealer
         reallowances will be lower in the case of purchases to which reduced
         sales charges apply. However, where the reduced sales charge is in
         connection with a letter of intent, adjustment to a higher dealer
         reallowance will be made to reflect actual purchases by the investor if
         investor should fail to fulfill the letter of intent. No dealer
         reallowances shall be payable in respect of Load Fund Shares purchased
         through reinvestment of dividends or distributions or with respect to
         Load Fund Shares purchased in exchange for other Shares unless
         specifically set forth in the Prospectus. If any Load Fund Shares sold
         to BD under the terms of this Agreement are tendered for redemption or
         repurchase within seven business days after the date of confirmation to
         BD of its purchase order therefor, BD agrees to pay forthwith to RSD
         the full amount of the dealer reallowance on the original sale.

4.       Redemptions, Repurchases and Exchanges. Orders for the redemption or
         repurchase of Shares ("Redemption Orders") as well as exchange requests
         shall be handled in accordance with procedures set forth in the
         Prospectus and, to the extent consistent with the Prospectus, oral or
         written instruction forwarded to BD by RSD from time to time. RSD will,
         upon request assist BD in processing Redemption Orders and exchange
         requests. All such orders and requests are subject to the timely
         receipt by the Funds' Transfer Agent of all required documents in good
         order. If such documents are not received within a reasonable time
         after the order or request is placed, it will be subject to
         cancellation, in which case BD agrees to be responsible for any
         resulting loss incurred by RSD or the Funds.

5.       Compliance with Securities Laws. BD shall not offer or sell any Shares
         except under circumstances that will result in compliance with the
         applicable federal and state securities laws. In connection with sales
         and offers to sell Shares, BD will furnish or cause to be furnished to
         each person to whom any such sale or offer is made, at or prior to the
         time of offering or sale, a copy of the Prospectus and, if requested,
         the related statement of additional information ("SAI"). RSD shall,
         upon request, supply BD with reasonable quantities of Prospectuses and
         SAIs for its use in connection with the offer and sale of the Shares.
         BD shall will not furnish to any person any information in connection
         with the sale of Shares that is inconsistent in any respect with the
         information contained in such Prospectus or SAI.

         RSD shall, from time to time, inform BD as to the states and
         jurisdictions in which RSD believes the Shares have been qualified for
         sale under, or are exempt from the requirements of, the respective
         securities laws of such states and jurisdictions. BD agree that it will
         not offer or sell Shares in any state or jurisdiction in which such
         Shares are not registered, unless any such offer or sale is made in a
         transaction that qualifies for an exemption from such registration. BD
         agrees to indemnify RSD and the Fund(s) against any claim, liability,
         expense or loss in any way arising out of any sale or exchange of
         Shares by BD in any state or jurisdiction in which Shares are not so
         registered or qualified.

         BD hereby agrees to maintain all records required by law relating to
         transactions on the Shares, and upon the request of RSD, or of the
         Funds, promptly make such of these records available to RSD or the
         Funds' Administrator as are requested. In addition BD hereby agrees to
         establish


                                      -41-

<PAGE>



         appropriate procedures and reporting forms and/or mechanisms and
         schedules in conjunction with RSD and the Funds' Administrator, to
         enable the Funds to identify the location, type of, and sales to all
         accounts opened and maintained by BD's customers or by BD on behalf of
         BD's customers.

         BD hereby agrees to abide by the Rules of Fair Practice of the National
         Association of Securities Dealers, Inc. (the "NASD") and all applicable
         federal and state laws. Reference is specifically made to Section 26 of
         Article III of such Rules, which Section is incorporated herein by
         reference. RSD assumes no responsibility in connection with the
         registration of the BD under the laws of the various states or under
         federal law or BD's qualification under any such law to offer or sell
         Shares. BD agrees to indemnify RSD and the Fund(s) against any claim,
         liability, expense or loss in any way arising out of any sale or
         exchange of Shares by BD in any state or jurisdiction in which BD is
         not so registered or qualified.

         The signing of this Agreement and the purchase of Shares pursuant
         hereto is a representation to RSD that BD is a member in good standing
         of the NASD and a properly registered broker-dealer under the 1934 Act.
         This Agreement shall terminate automatically in the event of BD ceases
         to be a member in good standing of the NASD or upon the occurrence of
         any event adversely affecting BD's registration as a broker-dealer
         under the 1934 Act

         BD represents and warrants that it is a member of the Securities
         Investor Protection Corporation (SIPC) in good standing and agrees to
         notify RSD of any changes in BD's status with the SIPC. Notwithstanding
         the aforementioned, BD agrees to make a notation on all confirmations
         for transaction stating that it is not a member of the SIPC as required
         by Rule 10b-10 of the 1934 Act.

6.       Use of Sales Materials. BD shall not use any advertising or sales
         materials of any kind relating to the Funds or using the name of the
         Funds or RSD or any affiliate of either unless such material is
         provided to BD by RSD or unless BD has obtained the prior written
         consent of RSD. Neither BD nor any other person is authorized to make
         any representation in connection with the offer and sale of the Shares
         except those contained in the Prospectus and SAI or as expressly
         authorized in writing by RSD. If BD should make any such unauthorized
         representation, or use, or cause others to use, advertising or sales
         material not provided to BD by RSD or without RSD's prior approval, BD
         shall indemnify RSD and the (relevant) Fund from and against any and
         all claims, liability, expense or losses in any way arising out of or
         in any way connected with such representation.

7.       Confirmations. BD agrees to send confirmations of orders to its
         customers as required by Rule 10b-10 of the Securities Exchange Act of
         1934 (the "1934 Act") and agrees to pay any costs in connection
         therewith. BD agrees to use all reasonable efforts to ensure that
         taxpayer identification numbers provided by it on behalf of investors
         are correct.

8.       Suspension of Sales; Amendments. RSD shall have full authority to take
         such action as it may deem advisable in respect of all matters
         pertaining to the continuous offering of Shares; in particular and
         without limitation, the right in its discretion and without notice to
         BD to suspend sales or withdraw the offering of Shares. Upon notice to
         BD, RSD may amend this Agreement and BD agrees that any Purchase Order
         placed by it after notice of any amendment to this Agreement has been
         sent to BD shall constitute its agreement to such amendment.


                                      -42-


<PAGE>


9.       Distribution Fees Pursuant to Rule 12b-1 Plans. BD shall be entitled to
         receive distribution fees in connection with its sales and promotional
         efforts hereunder in accordance with any Plan of Distribution adopted
         by the Fund. Such fees shall be payable in the amounts and in the
         manner set forth in Schedule C to this agreement, which Schedule is
         expressly incorporated herein.

10.      No Agency Created. Nothing in this Agreement shall be deemed or
         construed to make BD an employee, agent, representative or partner of
         any of the Funds or of RSD, and BD is not authorized to act for RSD or
         for any Fund or to make any representations on RSD's or the Funds'
         behalf. BD acknowledges that this Agreement is not exclusive and that
         RSD may enter into similar arrangement with others. BD and RSD agree
         that each will be responsible for its own expenses in connection with
         its activities hereunder and each will be responsible for complying
         with the federal and state laws governing the operation of their
         respective business and the NASD Rules.

11.      Termination and Assignment. This Agreement shall also be terminable
         without penalty upon thirty (30) days' written notice to RSD by BD and
         upon ten (10) days' written notice to BD by RSD; provided, however,
         that any termination of this Agreement by operation of this Section 11
         shall not affect any unpaid obligations under Sections 2, 3 or 9 of
         this Agreement or the liability, indemnity and legal fee provisions of
         Sections 5, 6, 12 and 17 of this Agreement. This Agreement shall not be
         assignable by any of the parties hereto. Nothing in this Agreement is
         intended to confer upon any person other than the parties hereto and
         their successors, any rights or remedies under or by reason of this
         Agreement, other than those expressly set forth herein.

12.      Legal Fees. If any claims are asserted against RSD or the Funds
         regarding claims to which BD has indemnified these parties herein, the
         parties shall have the right to engage in their own defense, including
         the selection and engagement of counsel of their choosing and all costs
         of such defense shall be borne by BD.

13.      Notice. Any notice required or permitted to be given by either party to
         the other shall be deemed sufficient if sent by registered or certified
         mail, postage prepaid, addressed by the party giving notice to the
         other party at the last address furnished by the other party to the
         party giving notice: if to RSD, at 1100 N. Market Street, Wilmington,
         Delaware, 19890; if to BD at the address listed on Schedule B.

14.      Severability. If any provision of this Agreement shall be held or made
         invalid by a court decision, statute, rule or otherwise, the remainder
         of this Agreement shall not be affected thereby. This Agreement
         constitutes the entire agreement between the parties and supersedes all
         prior agreements.

15.      Governing Law. To the extent that state law has not been preempted by
         the provisions of any law of the United States heretofore or hereafter
         enacted, as the same may be amended from time to time, this Agreement
         shall be administered, construed and enforced according to the laws
         (without regard, however, to laws as to conflicts of law) of the State
         of Delaware.

16.      Miscellaneous. Each party agrees to perform such further acts and
         execute such further documents as are necessary to effectuate the
         purposes hereof. The captions in this Agreement are included for
         convenience of reference only and in no way define or delimit any of
         the provisions hereof or otherwise affect their construction or effect.


                                      -43-

<PAGE>



17.      Clearing Brokers. RSD acknowledges that BD may utilize the services of
         one or more Clearing Brokers with respect to purchases of Shares by
         BD's customers. BD acknowledges that this agreements authorizes only
         it, and not any Clearing Broker employed by BD, to offer or sell Shares
         under this Agreement. RSD agrees to accept Purchase Orders from any
         Clearing Broker that BD identifies to RSD in writing as authorized to
         place orders on BD's behalf, provided that BD agrees that RSD and the
         Funds shall be entitled to treat such orders as though they had been
         placed by BD directly. In addition, except where the context otherwise
         requires, references in this Agreement to BD shall be deemed to include
         references to any Clearing Broker employed by BD. BD agrees to cause
         any such Clearing Broker to abide by BD's obligations and agreements
         under this Agreement, and that BD's agreement with any such Clearing
         Broker will reflect the Clearing Broker's obligation to abide by such
         obligations and agreements. Neither RSD nor the Funds shall be liable
         hereunder to BD or to any Clearing Broker for any claim, liability,
         expense or loss in any way arising from BD's arrangements with such
         Clearing Broker, and BD agrees to hold RSD and the Funds harmless from
         and against any claim, liability, expense or loss in any way arising
         from the activities of the Clearing Broker in connection with Purchase
         Orders, Redemption Orders or exchange requests initiated by BD.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.

                              RODNEY SQUARE DISTRIBUTORS, INC.



                              By: _____________________________
                                  Jeffrey O. Stroble, President



                              PEMBROOK SECURITIES, INC.


                              By: _____________________________
                                  (Name,Title)




                                      -44-
<PAGE>



                        RODNEY SQUARE DISTRIBUTORS, INC.

               SELECTED DEALER AGREEMENT FOR NON-PROPRIETARY FUNDS

                                   SCHEDULE A

No Load Funds
BRAZOS/JMIC Small/Emerging Growth Portfolio
BRAZOS/JMIC Real Estate Securities Portfolio

Load Funds
None





                                      -45-

<PAGE>



                        RODNEY SQUARE DISTRIBUTORS, INC.

               SELECTED DEALER AGREEMENT FOR NON-PROPRIETARY FUNDS

                                   SCHEDULE B

Pembrook Securities, Inc.
Address:                            5949 Sherry Lane, Suite 1560
                                    Dallas, Texas  75225

Attn:__________________________
Phone:_________________________
Fax:___________________________




                                      -46-

<PAGE>



                        RODNEY SQUARE DISTRIBUTORS, INC.

               SELECTED DEALER AGREEMENT FOR NON-PROPRIETARY FUNDS

                                   SCHEDULE C


Set forth below is a table of total sales charges or underwriting commissions
and dealer concessions for the load funds. The Distributor may provide
additional compensation to dealers in connection with sales of shares of the
Fund(s).


                                      -47-





                                                                Exhibit 24(b)(8)

                                CUSTODY AGREEMENT


         This Agreement is made as of the _____ day of _____________, 19__,
between Brazos Mutual Funds, a business trust organized under the laws of
Delaware (the "Trust"), having its principal place of business in Wilmington,
Delaware, and Wilmington Trust Company, a Delaware corporation (the
"Custodian"), having its principal place of business in Wilmington, Delaware.

         WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and offers for public sale one or more distinct series of shares of beneficial
interest (each series, a "Fund" and collectively, the "Funds"), par value
$_________ per share, each Fund corresponding to a distinct portfolio;

         WHEREAS, each share of beneficial interest (collectively, "Shares") of
a Fund represents an undivided interest in the assets of that Fund, subject to
the liabilities of that Fund, as more fully described in the Declaration of
Trust pursuant to which the Trust is created and governed;

         WHEREAS, the Trust desires to employ the Custodian to provide custody
services; and

         WHEREAS, the Custodian is willing to furnish custody services to the
Trust on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound, the parties agree as
follows:


I.       Employment of Custodian; Property of the Trust to be Held by the 
         Custodian

         The Trust hereby employs the Custodian as the custodian of its assets.
The Trust agrees to deliver to the Custodian substantially all securities and
cash owned by it on behalf of the Fund(s) from time to time, and substantially
all income, principal, capital distributions or other payments received by it
with respect to such securities, and the cash consideration received for the
issuance and sale of Shares of the Trust from time to time. The Custodian will
not be responsible for any property of the Trust not delivered to the Custodian.

II.      Duties of the Custodian with Respect to Property of the Trust Held by 
         the Custodian

A.       Holding Securities

         The Custodian will hold, earmark and physically segregate for the
account of each Fund all non-cash property, including all securities owned by
the Trust on behalf of the Fund(s), other than securities maintained pursuant to
Article II, Section J hereof in a clearing agency which acts as a securities
depository or in an authorized book-entry system authorized by the U.S.
Department of the Treasury, collectively referred to herein as a "Securities
System."



                                      -48-

<PAGE>



B.       Delivery of Securities

         The Custodian will deliver securities held by the Custodian or in a
Securities System account only upon receipt of proper instructions, which may be
continuing instructions, and only in the following cases:

         1.       Upon sale of such securities for the account of each Fund and
                  receipt of payment therefor;

         2.       Upon receipt of payment in connection with any repurchase
                  agreement related to such securities entered into by the Trust
                  with respect to any Fund;

         3.       In the case of a sale effected through a Securities System, in
                  accordance with the provisions of Article II, Section J
                  hereof;

         4.       To the depository agent in connection with tenders or other
                  similar offers for securities of each Fund;

         5.       To the issuer thereof, or its agent, when such securities are
                  called, redeemed, retired or otherwise become payable;
                  provided that, in any such case, the cash or other
                  consideration is to be delivered to the Custodian;

         6.       To the issuer thereof, or its agent, for registration or
                  re-registration pursuant to the provisions of Article II,
                  Section C hereof; or for exchange for a different number of
                  certificates or other evidence representing the same aggregate
                  face amount or number of units; provided that, in any such
                  case, the new securities are to be delivered to the Custodian;

         7.       To the broker selling such securities for examination in
                  accordance with the "street delivery" custom; provided that
                  the Custodian will maintain procedures to ensure prompt return
                  to the Custodian by the broker in the event the broker elects
                  not to accept such securities;

         8.       For exchange or conversion pursuant to any plan of merger,
                  consolidation, recapitalization, reorganization or
                  readjustment of the securities of the issuer or pursuant to
                  provisions for conversion contained in such securities, or
                  pursuant to any deposit agreement; provided that, in any such
                  case, the new securities and cash, if any, are to be delivered
                  to the Custodian;

         9.       In the case of warrants, rights or similar securities, the
                  surrender thereof in the exercise of such warrants, rights or
                  similar securities or the surrender of interim receipts or
                  temporary securities for definitive securities; provided that,
                  in any such case, the new securities and cash, if any, are to
                  be delivered to the Custodian;

         10.      For delivery in connection with any loans of securities made
                  by the Trust on behalf of any Fund, but only against receipt
                  of adequate collateral, as agreed upon from time to time by
                  the Custodian and the Trust, which may be in the form of cash
                  or obligations issued by the United States government, its
                  agencies or instrumentalities;


                                      -49-

<PAGE>



         11.      For delivery as security in connection with any borrowing by
                  the Trust on behalf of any Fund requiring a pledge of assets
                  by the Trust on behalf of that Fund against receipt of amounts
                  borrowed;

         12.      Upon receipt of instructions from the transfer agent for the
                  Trust (the "Transfer Agent") for delivery to the Transfer
                  Agent or to holders of Shares in connection with distributions
                  in kind in satisfaction of requests by holders of Shares for
                  repurchase or redemption; and

         13.      For any other proper corporate purposes, but only upon receipt
                  of, in addition to proper instructions, a certified copy of a
                  resolution of the Board of Trustees signed by an officer of
                  the Trust and certified by the Secretary or an Assistant
                  Secretary, specifying the securities to be delivered, setting
                  forth the purpose for which such delivery is to be made,
                  declaring such purposes to be proper corporate purposes, and
                  naming the persons to whom delivery of such securities will be
                  made.

C.       Registration of Securities

         Securities held by the Custodian (other than bearer securities) will be
registered in the name of the Trust on behalf of the Fund(s), or in the name of
any nominee of the Trust, the Custodian or any Securities System, or in the name
or nominee name of any agent or sub-custodian appointed pursuant to Article II,
Section I hereof, provided that the Custodian will maintain a mechanism for
identifying all securities belonging to each Fund, wherever held or registered.
All securities accepted by the Custodian on behalf of the Trust for the Fund(s)
hereunder will be in "street name" or other good delivery form.

D.       Bank Accounts

         If requested by the Trust, the Custodian will open and maintain a
separate bank account or accounts in the name of the Trust, subject only to
draft or order by the Custodian acting pursuant to the terms of this Agreement,
and will hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund(s), other than cash
maintained by the Trust in a bank account established and used in accordance
with Rule 17f-3 under the 1940 Act.

E.       Payment for Shares

         The Custodian will receive from the distributor of the Shares of the
Fund(s) or from the Transfer Agent and deposit into each Fund's custody account
payments received for Shares of such Fund issued or sold from time to time by
the Trust. The Custodian will provide timely notification to the Trust and the
Transfer Agent of any receipt by it of cash payments for Shares of the Fund(s).

F.       Collection of Income and Other Payments

         The Custodian will collect on a timely basis all income and other
payments with respect to securities held hereunder to which the Trust and each
of the Fund(s) will be entitled by law or pursuant to custom in the securities
business, and will credit such income and other payments, as collected, to each
Fund's custody account.



                                      -50-

<PAGE>

G.       Payment of Trust Moneys

         Upon receipt of proper instructions, which may be continuing
instructions, the Custodian will pay out moneys of the Trust on behalf of the
Fund(s) in the following cases only:

         1.       Upon the purchase of securities for the account of each Fund,
                  but only (a) against the delivery of such securities to the
                  Custodian (or any bank, banking firm or trust company doing
                  business in the United States or abroad which is qualified
                  under the 1940 Act to act as a custodian and has been
                  designated by the Trust or by the Custodian as its agent for
                  this purpose); (b) in the case of a purchase effected through
                  a Securities System, in accordance with the conditions set
                  forth in Article II, Section J hereof or; (c) in the case of
                  repurchase agreements entered into between the Trust on behalf
                  of the Fund and the Custodian, or another bank, (i) against
                  delivery of securities either in certificate form or through
                  an entry crediting the Custodian's account at the Federal
                  Reserve Bank with such securities and with an indication on
                  the books of the Custodian that such securities are held for
                  the benefit of the Fund, and (ii) against delivery of the
                  receipt evidencing purchase by the Trust on behalf of the Fund
                  of securities owned by the Custodian or other bank along with
                  written evidence of the agreement by the Custodian or other
                  bank to repurchase such securities from the Trust on behalf of
                  the Fund;

         2.       In connection with conversion, exchange or surrender of
                  securities owned by the Trust on behalf of any Fund as set
                  forth in Article II, Section B hereof;

         3.       For the redemption or repurchase of Shares as set forth in
                  Article II, Section H hereof;

         4.       For the payment of any expense or liability incurred by the
                  Trust with respect to the Fund(s), including, but not limited
                  to, the following payments for the account of the Fund(s):
                  interest, dividend disbursements, taxes, trade association
                  dues, advisory, administration, accounting, transfer agent and
                  legal fees, and operating expenses allocated to the Trust or
                  the Fund(s) whether or not such expenses are to be in whole or
                  part capitalized or treated as deferred expenses;

         5.       For the payment of any dividend declared on behalf of the
                  Fund(s) pursuant to the governing documents of the Trust; and

         6.       For any other proper corporate purposes, but only upon receipt
                  of, in addition to proper instructions, a certified copy of a
                  resolution of the Board of Trustees of the Trust signed by an
                  officer of the Trust and certified by its Secretary or an
                  Assistant Secretary, specifying the amount of such payment,
                  setting forth the purpose for which such payment is to be
                  made, declaring such purpose to be a proper corporate purpose,
                  and naming the person or persons to whom such payment is to be
                  made.

H.       Payments for Repurchase or Redemptions of Shares of the Fund(s)

         From such funds as may be available, the Custodian will, upon receipt
of instructions from the Transfer Agent, make funds available for payment to
holders of Shares of the Fund(s) who have delivered to the Transfer Agent a
request for redemption or repurchase of their Shares. In connection


                                      -51-

<PAGE>



with the redemption or repurchase of Shares, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to a commercial
bank designated by the redeeming shareholders.

I.       Appointment of Agents

         The Custodian may at any time in its discretion appoint, but only in
accordance with an applicable vote by the Board of Trustees of the Trust, any
bank or trust company, which is qualified under the 1940 Act to act as a
custodian, as its agent or sub-custodian to carry out such of the provisions of
this Article II as the Custodian may from time to time direct; provided that the
appointment of any such agent or sub-custodian will not relieve the Custodian of
any of its responsibilities or liabilities hereunder. The Custodian is hereby
authorized to deposit, arrange for deposit and/or maintain foreign securities
owned by the Trust on behalf of the Fund(s) with the Custodian's agent Bankers
Trust Company or with the subcustodians or agents of the Custodian's agent.

J.       Deposit of Trust Assets in Securities Systems

         The Custodian may deposit and/or maintain securities owned by the Trust
on behalf of the Fund(s) in a clearing agency registered with the Securities and
Exchange Commission (the "SEC") under Section 17A of the Securities Exchange Act
of 1934, which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain federal agencies
(collectively referred to herein as a "Securities System") in accordance with
applicable Federal Reserve Board and SEC rules and regulations, if any, and
subject to the following provisions:

         1.       The Custodian may keep securities owned by the Trust on behalf
                  of the Fund(s) in a Securities System provided that such
                  securities are represented in an account ("Account") of the
                  Custodian in the Securities System which will not include any
                  assets of the Custodian other than assets held as a fiduciary,
                  custodian, or otherwise for customers;

         2.       The records of the Custodian with respect to securities owned
                  by the Trust on behalf of the Fund(s) which are maintained in
                  a Securities System will identify by book-entry those
                  securities belonging to the Fund(s);

         3.       The Custodian will pay for securities purchased for the
                  account of the Fund(s) upon (i) receipt of advice from the
                  Securities System that such securities have been transferred
                  to the Account, and (ii) the making of an entry on the records
                  of the Custodian to reflect such payment and transfer for the
                  account of the Fund(s). The Custodian will transfer securities
                  sold for the account of the Fund(s) upon (i) receipt of advice
                  from the Securities System that payment for such securities
                  has been transferred to the Account, and (ii) the making of an
                  entry on the records of the Custodian to reflect such transfer
                  and payment for the account of the Fund(s). The Custodian will
                  furnish the Trust a monthly account statement showing
                  confirmation of each transfer to or from the account of the
                  Fund(s) and each day's transactions in the Securities System
                  for the account of the Fund(s);

         4.       The book-entry system of the Federal Reserve System authorized
                  by the U.S. Department of the Treasury and the Depository
                  Trust Company, a clearing agency


                                      -52-

<PAGE>



                  registered with the SEC, each are hereby specifically approved
                  as a Securities System, provided that any changes in these
                  arrangements shall be subject to the approval of the Board of
                  Trustees of the Trust; and

         5.       The Custodian will be liable to the Trust on behalf of any
                  Fund for any direct loss or damage to the Trust on behalf of
                  any Fund resulting from use of the Securities System to the
                  extent caused by the gross negligence, misfeasance or
                  misconduct of the Custodian or any of its agents or of any of
                  its or their employees. In no event will the Custodian be
                  liable for any indirect, special, consequential or punitive
                  damages.

K.       Segregated Accounts for Futures Commission Merchants

         The Custodian may enter into separate custodial agreements with various
Futures Commission Merchants ("FCM's") which the Trust uses (each an "FCM
agreement"), pursuant to which the Trust's margin deposits made on behalf of the
Fund(s) in certain transactions involving futures contracts and options on
futures contracts will be held by the Custodian in accounts (each an "FCM
account") subject to the disposition by the FCM involved in such contracts in
accordance with the customer contract between FCM and the Trust ("FCM
contract"), SEC rules governing such segregated accounts, Commodities Futures
Trading Commission ("CFTC") rules and the rules of applicable securities or
commodities exchanges. Such custodial agreements will only be entered into upon
receipt of written instructions from the Trust which state that (a) an agreement
between the FCM and the Trust has been entered into, and (b) the Trust is in
compliance with all the rules and regulations of the CFTC. Transfers of initial
margin will be made into an FCM account only upon written instructions;
transfers of premium and variation margin may be made into an FCM account
pursuant to oral instructions. Transfers of funds from an FCM account to the FCM
for which the Custodian holds such an account may only occur upon certification
by the FCM to the Custodian that pursuant to the FCM agreement and the FCM
contract, all conditions precedent to its right to give the Custodian such
instructions have been satisfied.

L.       Ownership Certificates for Tax Purposes

         The Custodian will execute ownership and other certificates and
affidavits for all federal and state tax purposes in connection with receipt of
income or other payments with respect to securities of the Fund(s) held by it
and in connection with transfers of securities of the Fund(s).

M.       Proxies

         The Custodian will cause to be promptly executed by the registered
holder of such securities, if the securities are registered otherwise than in
the name of the Trust on behalf of the Fund(s) or a nominee of the Trust, all
proxies, without indication of the manner in which such proxies are to be voted,
and will promptly deliver to the Trust's investment advisor for the Fund(s) (the
"Advisor") such proxies, all proxy soliciting materials and all notices relating
to such securities.

N.       Communications Relating to Securities of the Fund(s)

         The Custodian will transmit promptly to the Advisor of that Fund all
written information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection therewith)
received by the Custodian from issuers of the securities being held for the
Fund(s). With respect to tender or exchange offers, the Custodian will transmit
promptly to the


                                      -53-

<PAGE>



Advisor all written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or its agents)
making the tender or exchange offer. If the Advisor desires to take action with
respect to any tender offer, exchange offer or any other similar transaction,
the Advisor will notify the Custodian at least five business days prior to the
date on which the Custodian is to take such action.

O.       Proper Instructions

         "Proper Instructions" as used herein mean a writing signed or initialed
by one or more person or persons in such manner as the Board of Trustees will
have authorized from time to time. Each writing will set forth the transaction
involved, including a specific statement of the purpose for which such action is
requested. Oral instructions will be considered proper instructions if the
Custodian reasonably believes them to have been given by a person authorized to
give such instructions with respect to the transaction involved. The Trust will
cause all oral instructions to be confirmed promptly in writing. Upon receipt of
a certificate of the Secretary or an Assistant Secretary as to the authorization
by the Board of Trustees of the Trust accompanied by a detailed description of
procedures approved by the Board of Trustees, proper instructions may include
communications effected directly between electro-mechanical or electronic
devices provided that the Board of Trustees and the Custodian are satisfied that
such procedures afford adequate safeguards for the assets of the Trust.

P.       Actions Permitted Without Express Authority

         The Custodian may, in its discretion, without express authority from
the Trust:

         1.       make payments to itself or others for minor expenses of
                  handling securities or other similar items relating to its
                  duties under this Agreement, provided that all such payments
                  will be accounted for to the Trust;

         2.       surrender securities in temporary form for securities in
                  definitive form;

         3.       endorse for collection, in the name of the Trust on behalf of
                  the Fund(s), checks, drafts and other negotiable instruments;
                  and

         4.       in general, attend to all non-discretionary details in
                  connection with the sale, exchange, substitution, purchase,
                  transfer and other dealings with the securities and property
                  of the Trust, except as otherwise directed by the Trust or the
                  Board of Trustees of the Trust.

Q.       Evidence of Authority

         The Custodian will be protected in acting upon any instruction, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Trust. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote, or (b) of any determination or
of any action by the Board of Trustees as described in such vote, and such vote
may be considered as in full force and effect until receipt by the Custodian of
written notice to the contrary.


                                      -54-


<PAGE>



III.     Duties of Custodian with Respect to Books of Account

         The Custodian will cooperate with and supply to the entity or entities
appointed to keep the books of account of the Trust such information in the
possession of the Custodian as is reasonably necessary to the maintenance of the
books of account of the Trust.

IV.      Records

         The Custodian will create and maintain all records relating to its
activities and obligations under this Agreement in such manner as will meet the
obligations of the Trust under the 1940 Act, including, without limitation,
Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records will
be property of the Trust and will at all times during the regular business hours
of the Custodian be open for inspection by duly authorized officers, employees
or agents of the Trust and employees and agents of the SEC. The Custodian will,
upon request, provide the Trust with a tabulation of securities held by the
Custodian on behalf of the Fund(s), and will, upon request, and for such
compensation as will be agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.

V.       Opinion of Trust's Independent Accountant

         The Custodian will take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions from the
Trust's independent accountants with respect to its activities hereunder in
connection with the preparation of the Trust's Form N-1A, Form N-SAR or other
annual or semiannual reports to the SEC and with respect to any other
requirements of the SEC.

VI.      Reports to Trust by Auditors

         The Custodian will provide the Trust, at such times as the Trust may
reasonably request, with reports by its internal or independent auditors on the
accounting system, internal accounting controls and procedures for safeguarding
securities, including reports available on securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Agreement. Such reports will be of sufficient scope and in
sufficient detail as may reasonably be required by the Trust to provide
reasonable assurance that any material inadequacies would be disclosed, will
state in detail material inadequacies disclosed by such examination, and if
there are no such inadequacies, will so state.

VII.     Compensation of Custodian

         For the normal services the Custodian provides under this Custody
Agreement, the Custodian will be entitled to reasonable compensation as agreed
to between the Trust and the Custodian from time to time. Until agreed
otherwise, the compensation will be as set forth on Schedule A attached hereto
and made part hereof, as such Schedule may be amended from time to time. The fee
set forth in Schedule A hereto is subject to an annual review and adjustment
process. In the event the Custodian provides any extraordinary services
hereunder, it will be entitled to additional reasonable compensation.



                                      -55-

<PAGE>


VIII.    Responsibility of Custodian/Indemnification

         So long as and to the extent that it has exercised reasonable care, the
Custodian will not be responsible for the title, validity or genuineness of any
property or evidence of title thereto received by it or delivered by it pursuant
to this Agreement and will be held harmless in acting upon any notice, request,
consent, certificate or other instrument reasonably believed by it to be genuine
and to be signed by the proper party or parties.

         The Custodian will be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and will be without
liability for any action reasonably taken or omitted pursuant to such advice.

         The Custodian will exercise reasonable care in carrying out the
provisions of this Agreement and shall be without liability for any action taken
or omitted by it in good faith and without negligence. The Trust will indemnify
the Custodian and hold it harmless from and against all claims, liabilities, and
expenses (including attorneys' fees) which the Custodian may suffer or incur on
account of being Custodian hereunder, except to the extent such claims,
liabilities and expenses are caused by the Custodian's own gross negligence or
bad faith. Notwithstanding the foregoing, nothing contained in this paragraph is
intended to nor will it be construed to modify the standards of care and
responsibility set forth in Article II, Section I hereof with respect to
sub-custodians and in Article II, Section J(5) hereof with respect to the
Securities System.

         If the Trust requires the Custodian to take any action, which involves
the payment of money or which may, in the reasonable opinion of the Custodian,
result in liability or expense to the Custodian or its nominee, the Trust, as a
prerequisite to requiring the Custodian to take such action, will provide
indemnity to the Custodian in an amount and form satisfactory to it.

IX.      Effective Period; Termination; Amendment

         This Agreement will become effective as of the date hereof and remain
effective until terminated as provided herein. This Agreement may be amended at
any time only by written instrument signed by both parties. This Agreement may
be terminated at any time on ninety (90) days' written notice by either party;
provided that the Trust will not amend or terminate the Agreement in
contravention of any applicable federal or state regulations, or any provision
of the governing documents of the Trust, and further provided, that the Trust
may at any time by action of its Board of Trustees immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the applicable federal regulator or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction. Upon termination of this Agreement, the Trust will pay to the
Custodian any fees incurred as a result of the termination transfer of assets,
and reimburse the Custodian for all costs, expenses and disbursements that are
due as of the date of such termination.

X.       Successor Custodian

         If a successor custodian is appointed by the Board of Trustees of the
Trust, the Custodian will, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities and other assets of the Trust then held by it hereunder. The
Custodian will also deliver to such successor custodian copies of such books and
records relating to the Trust as the Trust and Custodian may mutually agree.


                                      -56-

<PAGE>

         In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees has been delivered to the
Custodian on or before the date when such termination will become effective,
then the Custodian will have the right to petition a court of competent
jurisdiction for the appointment of a successor custodian, which shall be a bank
or trust company doing business in the state in which either the principal place
of business of the Trust or the Custodian is located and having an aggregate
capital, surplus, and undivided profits of not less than $25,000,000.

         In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Trust to procure the certified copy of vote referred to, or of
the Board of Trustees to appoint a successor custodian, the Custodian will be
entitled to fair compensation for its services during such period as the
Custodian and retain possession of such securities, funds and other properties
and the provisions of this Agreement relating to the duties and obligations of
the Custodian will remain in full force and effect.

XI.      Interpretive and Additional Provisions

         In connection with the operation of this Agreement, the Custodian and
the Trust may from time to time agree on such provisions interpretive of, or in
addition to, the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions will be in writing signed by both parties, provided that
no such interpretive or additional provisions will contravene any applicable
federal or state regulations or any provision of the governing documents of the
Trust. No interpretive or additional provisions made as provided in the
preceding sentence will be deemed to be an amendment of this Agreement.

XII.     Delaware Law to Apply

         This Agreement will be deemed to be a contract made in Delaware and
governed by the internal laws of the State of Delaware without giving effect to
the principles of conflicts of law thereof. If any provision of this Agreement
will be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement will not be affected thereby. This Agreement
will be binding and will inure to the benefit of the parties hereto and their
respective successors.



                                      -57-

<PAGE>


         IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and on behalf by its duly authorized representative and
its seal to be hereunder affixed as of the date first written above.

[SEAL]                             BRAZOS MUTUAL FUNDS


                                   By: ____________________________
                                       (___________), President


[SEAL]                             WILMINGTON TRUST COMPANY


                                   By: ____________________________
                                       (___________), Vice President








                                      -58-

<PAGE>




                                   SCHEDULE A


                               BRAZOS MUTUAL FUNDS

                                  FEE SCHEDULE


         For the services Custodian provides under this Custody Agreement, the
Trust, on behalf of the Fund(s) listed below, agrees to pay to the Custodian a
fee per Fund, payable monthly, expressed as follows:


Name of Fund(s)                             FEE SCHEDULE



Brazos/JMIC Small/Emerging      An annual fee based upon the average daily 
  Growth Portfolio              net asset value as follows:

Brazos/JMIC Real Estate
  Securities Portfolio            .020% on the first $50 million,

                                  .015% on the next $50 million, and

                                  .012% on the assets in excess of $100 million,

                                  subject to a minimum fee of $400 per month,

                                  plus, $15 per purchase, sale or maturity of a 
                                  portfolio security,

                                  plus, $7 for each incoming wire of funds and 
                                  $12 for each outgoing wire of funds,

                                plus any out-of-pocket expenses.




Note: For the first three months of this Agreement, Custodian has agreed to
waive 50% of the monthly fees otherwise payable to it under the above-referenced
Fee Schedule.



                                      -59-




                                                                Exhibit 24(b)(9)

                            ADMINISTRATION AGREEMENT
                                    between
                              BRAZOS MUTUAL FUNDS
                                      and
                      RODNEY SQUARE MANAGEMENT CORPORATION


         THIS ADMINISTRATION AGREEMENT is made as of the ___ day of
____________, 1996, between Brazos Mutual Funds, a Delaware business trust (the
"Trust"), having its principal place of business in Wilmington, Delaware, and
Rodney Square Management Corporation, a Delaware corporation ("Rodney Square"),
having its principal place of business in Wilmington, Delaware.

         WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
offers for public sale one or more series of shares of beneficial interest
("Series");

         WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series;

         WHEREAS, at the present time, the Trust has established two Series,
each consisting of one class of shares, and the Trust may establish additional
Series and/or classes in the future; and

         WHEREAS, the Trust desires to avail itself of the services of Rodney
Square and to have Rodney Square provide certain administrative services; and
Rodney Square is willing to furnish such services to the Trust with respect to
each Series listed on Schedule A to this Agreement (each a "Fund" and
collectively the "Funds") on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:

         1. Appointment. The Trust hereby appoints and employs Rodney Square as
agent to perform the services described in this Agreement for the Trust such
appointment to take effect at the close of business on the date first written
above. Rodney Square shall act under such appointment and perform the
obligations thereof upon the terms and conditions hereinafter set forth and in
accordance with the principles of principal and agent enunciated by applicable
common law.

         2. Documents. The Trust has furnished Rodney Square copies of the
Trust's Agreement and Declaration of Trust, By-Laws, Advisory Agreement,
Distribution Agreement, Accounting Services Agreement, Custody Agreement,
Transfer Agency Agreement, Shareholder Servicing Plan and Agreement, most recent
Registration Statement on Form N-1A, current Prospectus and Statement of
Additional Information (the "SAI") and all forms relating to the plan, program
or service offered by the Trust. The Trust shall furnish promptly to Rodney
Square a copy of any amendment or supplement to the above-mentioned documents.
The Trust shall furnish promptly to Rodney Square any additional documents
necessary for it to perform its functions hereunder or such other documents as
Rodney Square shall request.



                                      -60-

<PAGE>


         3. Administrative Services. Subject to the direction and control of the
Board of Trustees of the Trust (the "Trustees") and to the extent not otherwise
the responsibility of, or provided by, the Trust or other supply agents of the
Trust, Rodney Square shall provide the following administrative services to the
Trust:

                  a.       Supply:
                  (i) office facilities (which may be in Rodney Square's or its
                  affiliates' own offices);
                  (ii) non-investment related statistical and research data;
                  (iii) executive and administrative services;
                  (iv) stationery and office supplies at Trust expense; and
                  (v) corporate secretarial services, such as the preparation
                  and distribution of materials at Trust expense for meetings of
                  the Board of Trustee or shareholders;

                  b. Prepare, file, coordinate printing and mailing of, if
                  necessary, reports to shareholders of the Trust and reports
                  with the Securities and Exchange Commission (the "SEC") and
                  state securities authorities, including preliminary and
                  definitive proxy materials, post-effective amendments to the
                  Trust's registration statement, Rule 24f-2 Notices, Form N-SAR
                  filings and Prospectus supplements;

                  c. Monitor each Fund's compliance with the investment
                  restrictions and limitations imposed by the 1940 Act, state
                  securities laws and applicable regulations thereunder, the
                  fundamental and non-fundamental investment policies and
                  limitations set forth in the Prospectus and SAI, and the
                  investment restrictions and limitations necessary for each
                  Fund to qualify as a regulated investment company under
                  Subchapter M of the Internal Revenue Code of 1986, as amended
                  (the "Code"), or any successor statute;


                  d. Monitor sales of each Fund's shares and ensure that such
                  shares are properly registered, as required, with the SEC and
                  applicable state authorities;


                  e. Recommend dividend declarations to the Board, prepare and
                  distribute to appropriate parties notices announcing the
                  declaration of dividends and other distributions to
                  shareholders;


                  f. Prepare financial statements and footnotes and other
                  financial information with such frequency and in such format
                  as are required to be included in reports to shareholders, tax
                  authorities, the Trust's Board of Trustees, performance
                  reporting companies, Trust auditors and the SEC;

                  g. Review sales literature and file such with regulatory
                  authorities, as necessary;


                  h. Provide information regarding material developments in
                  state securities regulation;


                                      -61-

<PAGE>


                  i. Provide personnel to serve as officers of the Trust if so
                  elected by the Board of Trustees and attend Board meetings to
                  present materials for Board review.

                  j. Review the impact of current day's activity on a per share
                  basis, review the change in market value of securities, and
                  review yields for reasonableness.

                  k. Timely follow-up and resolution of all open issues with all
                  applicable internal units; and

                  l. Maintain awareness of all applicable regulatory and
                  operational service issues and recommended dispositions.

         4. Expenses of the Trust. The Trust agrees that it will pay all its
expenses, other than those expressly stated to be payable by Rodney Square
hereunder, which expenses payable by the Trust shall include, without
limitation:


                  a. Fees payable for investment advisory services provided by
                  the Trust's Investment Adviser;


                  b. Fees payable for services provided by the Trust's
                  independent public accountants;

                  c. Fees payable for accounting services;

                  d. Fees payable for transfer agency services;

                  e. Fees payable for custodial services;

                  f. The cost of obtaining quotations for calculating the value
                  of the assets of each Fund;

                  g. Taxes levied against the Trust or any Fund;


                  h. Brokerage fees, mark-ups and commissions in connection with
                  the purchase and sale of portfolio securities;

                  i. Costs, including the interest expense of borrowing money;


                  j. Costs and/or fees incident to holding meetings of the Board
                  of Trustees and shareholders, preparation (including
                  typesetting, printing and EDGAR filing charges) and mailing of
                  prospectuses, reports and proxy materials to the existing
                  shareholders of the Trust, filing of reports with regulatory
                  bodies, maintenance of the Trust's



                                      -62-

<PAGE>



                  corporate existence, and registration of Trust shares with
                  federal and state securities authorities;

                  k. Legal fees and expenses;

                  l. Costs of printing share certificates representing shares of
                  the Trust;


                  m. Fees payable to, and expenses of, members of the Board of
                  Trustees who are not "interested persons" of the Trust;


                  n. Out-of-pocket expenses incurred in connection with the
                  provision of administration, accounting, custodial and
                  transfer agency services;


                  o. Premiums payable on the fidelity bond required by Section
                  17(g) of the 1940 Act, and premiums payable on any other
                  insurance policies related to the Trust's business and the
                  investment activities of its Funds;

                  p. Rule 12b-1 fees, if any;

                  q. Shareholder service fees, if any;

                  r. Fees, voluntary assessments and other expenses incurred in
                  connection with the Trust's membership in investment company
                  organizations; and


                  s. Such non-recurring expenses as may arise, including
                  expenses in connection with legal actions, suits or
                  proceedings to which the Trust is a party, and the legal
                  obligation which the Trust may have to indemnify its Trustees
                  and officers with respect thereto.

         Except as otherwise agreed by Rodney Square, Rodney Square will not
reimburse the Trust for (or have deducted from its fees payable under this
Agreement) any expenses in excess of any expense limitations imposed by state
securities commissions having jurisdiction over the sale of Fund shares.

         5. Recordkeeping and Other Information. Rodney Square shall create and
maintain all necessary records in accordance with all applicable laws, rules and
regulations, including, but not limited to, records required by Section 31(a) of
the 1940 Act and the rules thereunder, as the same may be amended from time to
time, pertaining to the various functions (described above) performed by it and
not otherwise created and maintained by another party pursuant to contract with
the Trust. All records shall be the property of the Trust at all times and shall
be available for inspection and use by the Trust. Where applicable, such records
shall be maintained by Rodney Square for the periods and in the places required
by Rule 31a-2 under the 1940 Act.


                                      -63-


<PAGE>



         6. Audit, Inspection and Visitation. Rodney Square shall make available
during regular business hours all records and other data created and maintained
pursuant to the foregoing provisions of this Agreement for reasonable audit and
inspection by the Trust, any person retained by the Trust or any regulatory
agency having authority over the Trust.

         7. Appointment of Agents. Rodney Square may at any time or times, in
its discretion, appoint (and may at any time remove) other parties as its agent
to carry out such of the provisions of this Agreement as Rodney Square may from
time to time direct; provided, however, that the appointment of any such agent
shall not relieve Rodney Square of any of its responsibilities or liabilities
hereunder.

         8. Right to Receive Advice.


                  a. Advice of Trust. If Rodney Square shall be in doubt as to
                  any action to be taken or omitted by it, it may request, and
                  shall receive, from the Trust directions or advice, including
                  oral or written instructions where appropriate.

                  b. Advice of Counsel. If Rodney Square shall be in doubt as to
                  any question of law involved in any action to be taken or
                  omitted by Rodney Square, it may request advice at the Trust's
                  expense from counsel of its own choosing (who in the first
                  instance shall be the regularly retained counsel for the Trust
                  but, as to non-routine matters, may be the regularly retained
                  counsel of Rodney Square, at the option of Rodney Square).

                  c. Conflicting Advice. In case of conflict between oral and
                  written instructions received by Rodney Square, Rodney Square
                  shall be entitled to rely on and follow written instructions
                  alone. In case of conflict between advice received under (a)
                  and (b) above, Rodney Square shall be entitled to rely on and
                  follow advice obtained in accordance with (b) above.

                  d. Protection of Rodney Square. Rodney Square shall be
                  protected in any action or inaction which it takes in reliance
                  on any directions, advice or oral or written Instructions
                  received pursuant to subsections (a) or (b) of this Section
                  which Rodney Square, after receipt of any such directions,
                  advice or oral or written instructions, in good faith believes
                  to be consistent with such directions, advice or oral or
                  written instructions, as the case may be. However, nothing in
                  this Section shall be construed as imposing upon Rodney Square
                  any obligation (i) to seek such direction, advice or oral or
                  written instructions, or (ii) to act in accordance with such
                  directions, advice or oral or written instructions when
                  received, unless, under the terms of another provision of this
                  Agreement, the same is a condition to Rodney Square's properly
                  taking or omitting to take such action.

         9. Compliance with Governmental Rules and Regulations. Except as
otherwise provided herein, the Trust assumes full responsibility for ensuring
that the Trust complies with all applicable requirements of the Securities Act
of 1933, as amended (the "1933 Act"), the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the 1940 Act, the Commodity Exchange Act and any



                                      -64-

<PAGE>



laws, rules and regulations of governmental authorities having jurisdiction over
the Trust and its operations.

         10. Compensation. For the performance of its obligations under this
Agreement, each Fund shall pay Rodney Square an administration fee with respect
to each Fund in accordance with the fee arrangements described in Schedule A
attached hereto, as such schedule may be amended from time to time.

         11. Use of Rodney Square's Name. The Trust shall not use the name of
Rodney Square or any of its affiliates in any Prospectus, SAI, sales literature
or other material relating to the Trust in a manner not approved prior thereto
in writing by Rodney Square; provided, however, that Rodney Square shall approve
all uses of its and its affiliates' names that merely refer in accurate terms to
their appointments hereunder or that are required by the SEC or a state
securities commission; and further provided, that in no event shall such
approval be unreasonably withheld.

         12. Use of Trust's Name. Neither Rodney Square nor any of its
affiliates shall use the name of the Trust or material relating to the Trust on
any forms (including any checks, bank drafts or bank statements) for other than
internal use in a manner not approved prior thereto by the Trust; provided,
however, that the Trust shall approve all uses of its name that merely refer in
accurate terms to the appointment of Rodney Square hereunder or that are
required by the SEC or a state securities commission; and further provided, that
in no event shall such approval be unreasonably withheld.

         13. Liability of Rodney Square or Affiliates. Neither Rodney Square nor
any officer, director, or employee of Rodney Square, nor any person who controls
Rodney Square within the meaning of Section 15 of the 1933 Act or Section 20(a)
of the 1934 Act (collectively, "Rodney Square Affiliates") shall be liable for
any error of judgment or mistake of law or for any loss suffered by the Trust in
connection with the matters to which this Agreement relates, except to the
extent of a loss resulting from willful misfeasance, bad faith, negligence or
reckless disregard of such person's obligations and duties under this Agreement.
Any person, even though also an officer, director, employee or agent of Rodney
Square or any of its affiliates who may be or become an officer or director of
the Trust, shall be deemed, when rendering services to the Trust as such officer
or acting on any business of the Trust in such capacity (other than services or
business in connection with Rodney Square's duties under this Agreement), to be
rendering such services to or acting solely for the Trust and not as an officer,
director, employee or agent or one under the control or direction of Rodney
Square or any of its affiliates, even though paid by one of those entities.

         14. Indemnification.


                  a. The Trust agrees to indemnify and hold harmless Rodney
                  Square and any person who is a Rodney Square Affiliate from
                  all taxes, charges, expenses, assessments, claims and
                  liabilities including, without limitation, liabilities arising
                  under the 1933 Act, the 1934 Act or the 1940 Act and any
                  applicable state or foreign securities laws, and amendments
                  thereto (the "Securities Laws"), and expenses, including
                  without limitation reasonable attorneys' fees and
                  disbursements, arising directly or indirectly from any action
                  or omission to act which Rodney Square takes (i) at the
                  request of or on the direction of or in reliance on the advice
                  of the Trust or



                                      -65-

<PAGE>



                  (ii) upon oral or written instructions. Neither Rodney Square
                  nor any Rodney Square Affiliate shall be indemnified against
                  any liability (or any expenses incident to such liability)
                  arising out of Rodney Square's or any such affiliate's own
                  willful misfeasance, bad faith, negligence or reckless
                  disregard of its duties and obligations under this Agreement.


                  b. Rodney Square agrees to indemnify and hold harmless the
                  Trust from all taxes, charges, expenses, assessments, claims
                  and liabilities arising from Rodney Square's obligations
                  pursuant to this Agreement (including, without limitation,
                  liabilities arising under the Securities Laws) and expenses,
                  including (without limitation) reasonable attorneys' fees and
                  disbursements arising directly or indirectly out of Rodney
                  Square's or its directors', officers', employees', agents' and
                  representatives own willful misfeasance, bad faith, negligence
                  or reckless disregard of its duties and obligations under this
                  Agreement.


                  c. In order that the indemnification provisions contained in
                  this Section 14 shall apply, upon the assertion of a claim for
                  which either party may be required to indemnify the other, the
                  party seeking indemnification shall promptly notify the other
                  party of such assertion, and shall keep the other party
                  advised with respect to all developments concerning such
                  claim. The party who may be required to indemnify shall have
                  the option to participate with the party seeking
                  indemnification in the defense of such claim. The party
                  seeking indemnification shall in no case confess any claim or
                  make any compromise in any case in which the other party may
                  be required to indemnify it except with the other party's
                  prior written consent.


         15. Responsibility of Rodney Square. In the performance of its duties
hereunder, Rodney Square shall be obligated to exercise due care and diligence
and to act in good faith and to use its best efforts within reasonable limits in
performing services provided for under this Agreement. Rodney Square shall be
under no duty to take any action on behalf of the Trust except as specifically
set forth or as may be specifically agreed to by Rodney Square in writing.
Without limiting the generality of the foregoing or of any other provision of
this Agreement, Rodney Square in connection with its duties under this Agreement
shall not be under any duty or obligation to inquire into and shall not be
liable for or in respect of (i) the validity or invalidity or authority or lack
thereof of any oral or written instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which Rodney
Square reasonably believes to be genuine; or (ii) delays or errors or loss of
data occurring by reason of circumstances beyond Rodney Square's control,
including acts of civil or military authority, national emergencies, fire, flood
or catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply, in which circumstances Rodney
Square shall take reasonable actions to minimize loss of data therefore.

         16. Duration, Termination, etc. The provisions of this Agreement may
not be changed, waived, discharged or terminated orally, but only by written
instrument that shall make specific reference to this Agreement and that shall
be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.


                                      -66-

<PAGE>

         This Agreement shall become effective as of the day and year first
written above, and unless terminated as therein provided, shall continue in
force for twelve (12) months from the date of its execution and thereafter from
year to year, provided continuance after the initial twelve (12) month period is
approved at least annually by a vote of the Trustees of the Trust. This
Agreement may at any time be terminated on ninety (90) days' advance written
notice given to Rodney Square or by Rodney Square on six (6) months' advance
written notice given to the Trust; provided, however, that this Agreement may be
terminated immediately at any time for cause, either by the Trust or by Rodney
Square, in the event that such cause shall have remained unremedied for sixty
(60) days or more after receipt of written specification of such cause. Any such
termination shall not affect the rights and obligations of the parties under
Sections 13 and 14 hereof.

         Upon the termination of this Agreement, the Trust shall pay to Rodney
Square such compensation as may be payable for the period prior to the effective
date of such termination, including reimbursement for any out-of-pocket expenses
reasonably incurred by Rodney Square to such date. In the event that the Trust
designates a successor to any of Rodney Square's obligations hereunder, Rodney
Square shall, at the expense and direction of the Trust, transfer to such
successor all relevant books, records and other data established or maintained
by Rodney Square under the foregoing provisions.

         17. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.

         Rodney Square and the Trust shall regularly consult with each other
regarding Rodney Square's performance of its obligations and its compensation
under the foregoing provisions. In connection therewith, the Trust shall submit
to Rodney Square, at a reasonable time in advance of filing with the SEC, copies
of any amended or supplemented registration statement of the Trust (including
exhibits) under the 1933 Act and the 1940 Act, and, a reasonable time in advance
of their proposed use, copies of any amended or supplemented forms relating to
any plan, program or service offered by the Trust. Any change in such materials
that would require any change in Rodney Square's obligations under the foregoing
provisions shall be subject to the burdened party's approval, which shall not be
unreasonably withheld. In the event that a change in such documents or in the
procedures contained therein increases the cost to Rodney Square of performing
its obligations hereunder by more than an insubstantial amount, Rodney Square
shall be entitled to receive reasonable compensation therefore.

         18. Notice. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.

         19. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.

         20. Governing Law. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws (without regard,
however, to laws as to conflicts of law) of the State of Delaware.



                                      -67-

<PAGE>

         21. Shareholder Liability. Rodney Square is hereby expressly put on
notice of the limitation of shareholder liability as set forth in the Agreement
and Declaration of Trust of the Trust and agree that obligations assumed by the
Trust under this Agreement shall be limited in all cases to the Trust and its
assets, and if the liability relates to one or more Funds, the obligations
hereunder shall be limited to the respective assets of such Fund or Funds.
Rodney Square further agrees that it shall not seek satisfaction of any such
obligations from the shareholders or any individual shareholder of the Funds,
nor from the Trustees or any individual Trustee of the Trust.

         22. Arbitration. [TO BE ADDED]

         23. Miscellaneous. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof. The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. This Agreement may be executed in two
counterparts, each of which taken together shall constitute one and the same
instrument.


         IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first written above.

                              BRAZOS MUTUAL FUNDS

                              By: _________________________________
                                  Name, Title



                              RODNEY SQUARE MANAGEMENT
                              CORPORATION


                              By:   _________________________________
                                    Martin L. Klopping, President





                                      -68-

<PAGE>



                            ADMINISTRATION AGREEMENT
                                   SCHEDULE A
                               BRAZOS MUTUAL FUNDS

ANNUAL FEE

For services provided to Brazos Mutual Funds (the "Trust") pursuant to this
Administration Agreement, Rodney Square Management Corporation ("Rodney Square")
shall receive an annual fee equal to the greater of:

A.   A minimum annual fee of $32,500 for each of the first two single-class
     portfolios of the Trust, plus $15,000 for any such additional portfolio, or
     second or additional class of a portfolio; or

B.   an asset-based fee, calculated with reference to the average daily net
     assets of the Trust, on a Trust-wide basis, according to the following
     schedule:

          0.15% of the first $50 million in assets; plus 
          0.10% of assets between $50 million and $200 million; plus 
          0.7% of assets in excess of $200 million.

The foregoing fee shall be payable monthly, as soon as practicable after the
last day of each month, based on the Trust's combined average daily net assets
as determined at the close of business on each business day throughout the
month.

OUT-OF-POCKET EXPENSES

In addition to the foregoing fee, Rodney Square's reasonable out-of-pocket
expenses incurred in the performance of its responsibilities pursuant to this
Administration Agreement shall either be paid and advanced directly by the
Trust, or promptly reimbursed, upon billing, by the Trust.

SEVERANCE AND CONVERSION FEE
Upon the termination, or notice of termination, of the attached Administration
Agreement within the initial twelve (12) month term by the Trust or the Trust's
Board of Trustees, the parties hereby acknowledge and agree that the Trust shall
pay to Rodney Square, as a fee in consideration of severance and cooperation
toward conversion to a new service provider, and not as a penalty, a sum with
respect to each of the Trust's portfolios equal to the above-stipulated annual
fee as per the schedule, plus out-of-pocket expenses incurred in connection with
cooperating with conversion to a new service provider.



                                      -69-


<PAGE>

                            TRANSFER AGENCY AGREEMENT
                                     between
                               BRAZOS MUTUAL FUNDS
                                       and
                      RODNEY SQUARE MANAGEMENT CORPORATION


       THIS TRANSFER AGENCY AGREEMENT is made as of the ___ day of
_______________, 1996, between Brazos Mutual Funds, a Delaware business trust
(the "Trust"), having its principal place of business in Dallas, Texas, and
Rodney Square Management Corporation, a Delaware corporation ("Rodney Square"),
having its principal place of business in Wilmington, Delaware.

       WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company and
offers for public sale distinct series of shares of beneficial interest
("Series");

       WHEREAS, each share of a Series represents an undivided interest in the
assets, subject to the liabilities, allocated to that Series and each Series has
a separate investment objective and policies;

       WHEREAS, at the present time, the Trust has established two Series, each
consisting of one class of shares, and the Trust may establish additional Series
and/or classes in the future; and

       WHEREAS, the Trust desires to avail itself of the services of Rodney
Square to serve as the Trust's transfer agent and Rodney Square is willing to
furnish such services to the Trust with respect to each of the Series listed on
Schedule A to this Agreement (each a "Portfolio" or collectively the
"Portfolios") on the terms and conditions hereinafter set forth;

       NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties agree as follows:


1.     Appointments. The Trust hereby appoints Rodney Square as transfer agent,
       registrar and dividend disbursing agent for the shares of beneficial
       interest (the "Shares") in the Trust and as servicing agent in connection
       with the disbursements of dividends and distributions and as
       shareholders' servicing agent for the Trust, each such appointment to
       take effect at the close of business on the day and year first written
       above, and Rodney Square shall act as such and perform its obligations
       thereof upon the terms and conditions hereafter set forth and in
       accordance with the principles of principal and agent enunciated by
       applicable common law.

2.     Documents. The Trust has furnished Rodney Square with copies of the
       Trust's Agreement and Declaration of Trust, By-Laws, Management
       Agreement, Custodian Agreement, Distribution Agreement, Accounting
       Services Agreement, Shareholder Servicing Agreements, most recent
       Registration Statement on Form N-1A, current Prospectus and Statement of
       Additional Information (the "SAI"), all forms relating to any plan,
       program or service offered by the Trust and a certified copy of the
       resolution of its Board of Trustees (the "Trustees") approving Rodney
       Square's appointment hereunder and identifying and containing the
       signatures of the Trust's officers authorized to issue Oral Instructions
       and to sign Written Instructions, as hereinafter defined, on


                                      -70-

<PAGE>


       behalf of the Portfolio and to execute stock certificates representing
       Shares. Subject to the provisions of Section 21 hereof, the Trust shall
       furnish promptly to Rodney Square a copy of any amendment or supplement
       to the above-listed documents. The Trust shall furnish to Rodney Square
       any additional documents necessary for it to perform its functions
       hereunder.

3.     Definitions.

       (a) Authorized Person. As used in this Agreement, the term "Authorized
       Person" means any officer of the Trust and any other person, whether or
       not any such person is an officer or employee of the Trust, duly
       authorized by the Trustees of the Trust to give Oral and Written
       Instructions on behalf of the Portfolio and certified by the Secretary or
       Assistant Secretary of the Trust or any amendment thereto as may be
       received by Rodney Square from time to time.

       (b) Oral Instructions. As used in this Agreement, the term "Oral
       Instructions" means oral instructions actually received by Rodney Square
       from an Authorized Person or from a person reasonably believed by Rodney
       Square to be an Authorized Person. The Trust agrees to deliver to Rodney
       Square, at the time and in the manner specified in Section 4(b) of this
       Agreement, Written Instructions confirming Oral Instructions.

       (c) Written Instructions. As used in this Agreement, the term "Written
       Instructions" means written instructions delivered by hand, mail, tested
       telegram, cable, telex or facsimile sending device, and received by
       Rodney Square and signed by an Authorized Person.

4.     Instructions Consistent with Agreement and Declaration of Trust, etc.

       (a) Unless otherwise provided in this Agreement, Rodney Square shall act
       only upon Oral or Written Instructions. Although Rodney Square may know
       of the provisions of the Agreement and Declaration of Trust and By-Laws
       of the Trust, Rodney Square may assume that any Oral or Written
       Instructions received hereunder are not in any way inconsistent with any
       provisions of such Agreement and Declaration of Trust or By-Laws or any
       vote, resolution or proceeding of the shareholders, or of the Trustees,
       or of any committee thereof.

       (b) Rodney Square shall be entitled to rely upon any Oral Instructions
       and any Written Instructions actually received by Rodney Square pursuant
       to this Agreement. The Trust agrees to forward to Rodney Square Written
       Instructions confirming Oral Instructions in such manner that the Written
       Instructions are received by Rodney Square by the close of business of
       the same day that such Oral Instructions are given to Rodney Square. The
       Trust agrees that the fact that such confirming Written Instructions are
       not received by Rodney Square shall in no way affect the validity of the
       transactions or enforceability of the transactions authorized by such
       Oral Instructions. The Trust agrees that Rodney Square shall incur no
       liability to the Trust in acting upon Oral Instructions given to Rodney
       Square hereunder concerning such transactions, provided such instructions
       reasonably appear to have been received from an Authorized Person.

5.     Transactions Not Requiring Instructions. In the absence of contrary
       Written Instructions, Rodney Square is authorized to take the following
       actions:

       (a) Issuance of Shares. Upon receipt of a purchase order from the
       Distributor, as defined in the Distribution Agreement between the Trust
       and Rodney Square Distributors, Inc. or a



                                      -71-

<PAGE>



       prospective shareholder for the purchase of Shares and sufficient
       information to enable Rodney Square to establish a shareholder account or
       to issue Shares to an existing shareholder account, and after
       confirmation of receipt or crediting of Federal funds for such order from
       Rodney Square's designated bank, Rodney Square shall issue and credit the
       account of the investor or other record holder with Shares in the manner
       described in the Prospectus. Rodney Square shall deposit all checks
       received from prospective shareholders into an account on behalf of the
       Trust, and shall promptly transfer all Federal funds received from such
       checks to the Custodian, as defined in the Custodian Agreement between
       the Trust and Wilmington Trust Company. (References herein to "Custodian"
       shall also be construed to refer to a "Sub-Custodian" if such appointment
       has been made.) If so directed by the Distributor, the confirmation
       supplied to the shareholder to mark such issuance will be accompanied by
       a Prospectus.

       (b) Transfer of Shares; Uncertificated Securities. Where a shareholder
       does not hold a certificate representing the number of Shares in its
       account and does provide Rodney Square with instructions for the transfer
       of such Shares which include a signature guaranteed by a commercial bank,
       trust company or member firm of a national securities exchange and such
       other appropriate documentation to permit a transfer, then Rodney Square
       shall register such Shares and shall deliver them pursuant to
       instructions received from the transferor, pursuant to the rules and
       regulations of the Securities and Exchange Commission (the "SEC"), and
       the laws of the State of Delaware relating to the transfer of shares of
       beneficial interest.

       (c) Stock Certificates. If at any time the Portfolio issues stock
       certificates, the following provisions will apply:

              (i) The Trust will supply Rodney Square with a sufficient supply
       of stock certificates representing Shares, in the form approved from time
       to time by the Trustees of the Trust, and, from time to time, shall
       replenish such supply upon request of Rodney Square. Such stock
       certificates shall be properly signed, manually or by facsimile
       signature, by the duly authorized officers of the Trust, and shall bear
       the corporate seal or facsimile thereof of the Trust, and notwithstanding
       the death, resignation or removal of any officer of the Trust, such
       executed certificates bearing the manual or facsimile signature of such
       officer shall remain valid and may be issued to shareholders until Rodney
       Square is otherwise directed by Written Instructions.

              (ii) In the case of the loss or destruction of any certificate
       representing Shares, no new certificate shall be issued in lieu thereof,
       unless there shall first have been furnished an appropriate bond of
       indemnity issued by the surety company approved by Rodney Square.

              (iii) Upon receipt of signed stock certificates, which shall be in
       proper form for transfer, and upon cancellation or destruction thereof,
       Rodney Square shall countersign, register and issue new certificates for
       the same number of Shares and shall deliver them pursuant to instructions
       received from the transferor, the rules and regulations of the SEC, and
       the laws of the State of Delaware relating to the transfer of shares of
       beneficial interest.

              (iv) Upon receipt of the stock certificates, which shall be in
       proper form for transfer, together with the shareholder's instructions to
       hold such stock certificates for safekeeping, Rodney Square shall reduce
       such Shares to uncertificated status, while


                                      -72-

<PAGE>



       retaining the appropriate registration in the name of the shareholder
       upon the transfer books.

              (v) Upon receipt of written instructions from a shareholder of
       uncertificated securities for a certificate in the number of shares in
       its account, Rodney Square will issue such stock certificates and deliver
       them to the shareholder.

       (d) Redemption of Shares. Upon receipt of a redemption order from the
       Distributor or a shareholder, Rodney Square shall redeem the number of
       Shares indicated thereon from the redeeming shareholder's account and
       receive from the Trust's Custodian and disburse pursuant to the redeeming
       shareholder's instructions the redemption proceeds therefor, or arrange
       for direct payment of redemption proceeds by the Custodian to the
       redeeming shareholder or as instructed by the shareholder, in accordance
       with such procedures and controls as are mutually agreed upon from time
       to time by and among the Trust, Rodney Square and the Trust's Custodian.

6.     Authorized Issued and Outstanding Shares. The Trust agrees to notify
       Rodney Square promptly of any change in the number of authorized Shares
       and of any change in the number of Shares registered under the Securities
       Act of 1933, as amended (the "1933 Act") or termination of the Trust's
       declaration under Rule 24f-2 of the 1940 Act. The Trust has advised
       Rodney Square, as of the date hereof, of the number of Shares (a) held in
       any redemption or repurchase account, and (b) registered under the 1933
       Act, as amended, which are unsold. In the event that the Trust shall
       declare a stock dividend or a stock split, the Trust shall deliver to
       Rodney Square a certificate, upon which Rodney Square shall be entitled
       to rely for all purposes, certifying (a) the number of Shares involved,
       (b) that all appropriate corporate action has been taken, and (c) that
       any amendment to the Agreement and Declaration of Trust of the Trust
       which may be required has been filed and is effective. Such certificate
       shall be accompanied by an opinion of counsel to the Trust relating to
       the legal adequacy and effect of the transaction.

7.     Dividends and Distributions. The Trust shall furnish Rodney Square with
       appropriate evidence of action by the Trust's Trustees authorizing the
       declaration and payment of dividends and distributions as described in
       the Prospectus. After deducting any amount required to be withheld by any
       applicable tax laws, rules and regulations or other applicable laws,
       rules and regulations, Rodney Square shall in accordance with the
       instructions in proper form from a shareholder and the provisions of the
       Agreement and Declaration of Trust and Prospectus, issue and credit the
       account of the shareholder with Shares, or, if the shareholder so elects,
       pay such dividends or distributions in cash to the shareholders in the
       manner described in the Prospectus. In lieu of receiving from the Trust's
       Custodian and paying to shareholders cash dividends or distributions,
       Rodney Square may arrange for the direct payment of cash dividends and
       distributions to shareholders by the Custodian, in accordance with such
       procedures and controls as are mutually agreed upon from time to time by
       and among the Trust, Rodney Square and the Trust's Custodian.

       Rodney Square shall prepare, file with the Internal Revenue Service and
       other appropriate taxing authorities, and address and mail to
       shareholders such returns and information relating to dividends and
       distributions paid by the Trust as are required to be so prepared, filed
       and mailed by applicable laws, rules and regulations, or such substitute
       form of notice as may from time to time be permitted or required by the
       Internal Revenue Service. On behalf of the Portfolio, Rodney Square shall
       mail certain requests for shareholders' certifications under penalties of
       perjury and pay on a timely basis


                                      -73-

<PAGE>



       to the appropriate Federal authorities any taxes to be withheld on
       dividends and distributions paid by the Portfolio, all as required by
       applicable Federal tax laws and regulation.

       In accordance with the Prospectus, resolutions of the Trust's Trustees
       that are not inconsistent with this Agreement and are provided to Rodney
       Square from time to time, and such procedures and controls as are
       mutually agreed upon from time to time by and among the Trust, Rodney
       Square and the Trust's Custodian, Rodney Square shall (a) arrange for
       issuance of Shares obtained through transfers of funds from shareholders'
       accounts at financial institutions; (b) arrange for the exchange of
       Shares for shares of other eligible investment companies, when permitted
       by the Prospectus.

8.     Communications with Shareholders.

       (a) Communications to Shareholders. Rodney Square will address and mail
       all communications by the Portfolio to its shareholders, including
       reports to shareholders, confirmations of purchases and sales of Shares,
       monthly statements, dividend and distribution notices and proxy material
       for its meetings of shareholders. Rodney Square will receive and tabulate
       the proxy cards for the meetings of the shareholders of the Portfolio.

       (b) Correspondence. Rodney Square will answer such correspondence from
       shareholders, securities brokers and others relating to its duties
       hereunder and such other correspondence as may from time to time be
       mutually agreed upon between Rodney Square and the Trust.

9.     Services to be Performed. Rodney Square shall be responsible for
       administering and/or performing transfer agent functions, for acting as
       service agent in connection with dividend and distribution functions and
       for performing shareholder account administrative agent functions in
       connection with the issuance, transfer and redemption or repurchase
       (including coordination with the Trust's custodian bank in connection
       with shareholder redemption by check) of the Trust's Shares as set forth
       in Schedule B. The details of the operating standards and procedures to
       be followed shall be determined from time to time by agreement between
       Rodney Square and the Trust and may be expressed in written schedules
       which shall constitute attachments to this Agreement.

10.    Record Keeping and Other Information.

       (a) Rodney Square shall maintain records of the accounts for each
       Shareholder showing the items listed in Schedule C.

       (b) Rodney Square shall create and maintain all necessary records in
       accordance with all applicable laws, rules and regulations, including but
       not limited to records required by Section 31(a) of the 1940 Act and the
       rules thereunder, as the same may be amended from time to time, and those
       records pertaining to the various functions performed by it hereunder.
       All records shall be the property of the Trust at all times and shall be
       available for inspection and use by the Trust. Where applicable, such
       records shall be maintained by Rodney Square for the periods and in the
       places required by Rule 31a-2 under the 1940 Act.

11.    Audit, Inspection and Visitation. Rodney Square shall make available
       during regular business hours all records and other data created and
       maintained pursuant to this Agreement for reasonable audit and inspection
       by the Trust or any person retained by the Trust. Upon reasonable notice
       by the Trust, Rodney Square shall make available during regular business
       hours its facilities and premises


                                      -74-

<PAGE>



       employed in connection with its performance of this Agreement for
       reasonable visitation by the Trust, or any person retained by the Trust.

12.    Compensation. Compensation for the transfer agent services and duties
       performed pursuant to this Agreement will be paid by the Trust. Certain
       other fees due and expenses incurred pursuant to this Agreement are
       payable by the Trust or the shareholder on whose behalf the service is
       performed and are provided in Schedule D hereto.

       The Trust shall reimburse Rodney Square for all reasonable out-of-pocket
       expenses incurred by Rodney Square or its agents in the performance of
       its obligations hereunder. Such reimbursement for expenses incurred in
       any calendar month shall be made on or before the tenth day of the next
       succeeding month.

       The term "out-of-pocket expenses" shall include, but not be limited to,
       the following expenses incurred by Rodney Square in the performance of
       its obligations hereunder: the cost of stationery and forms (including
       but not limited to checks, proxy cards, and envelopes), the cost of
       postage, the cost of insertion of non-standard size materials in mailing
       envelopes and other special mailing preparation by outside firms, the
       cost of first-class mailing insurance, the cost of external electronic
       communications as approved by the Trustees (to include telephone and
       telegraph equipment and an allocable portion of the cost of personnel
       responsible for the maintenance of such equipment), toll charges, data
       communications equipment and line charges and the cost of microfilming of
       shareholder records (including both the cost of storage as well as
       charges for access to such records). If Rodney Square shall undertake the
       responsibility for microfilming shareholder records, it may be separately
       compensated therefor in an amount agreed upon by the principal financial
       officer of the Trust and Rodney Square, such amount not to exceed the
       amount which would be paid to an outside firm for providing such
       microfilming services.

13.    Use of Rodney Square's Name. The Trust shall not use the name of Rodney
       Square in any Prospectus, SAI, sales literature or other material
       relating to the Trust in a manner not approved prior thereto, provided,
       however, that Rodney Square shall approve all uses of its name which
       merely refer in accurate terms to its appointments hereunder or which are
       required by the SEC or a state securities commission and, provided
       further, that in no event shall such approval be unreasonably withheld.

14.    Use of Trust's Name. Rodney Square shall not use the name of the Trust or
       the Portfolio of the Trust or material relating to the Trust or the
       Portfolio on any checks, bank drafts, bank statements or forms for other
       than internal use in a manner not approved prior thereto, provided,
       however, that the Trust shall approve all uses of its name which merely
       refer in accurate terms to the appointment of Rodney Square hereunder or
       which are required by the SEC or a state securities commission, and,
       provided, further, that in no event shall such approval be unreasonably
       withheld.

15.    Security. Rodney Square represents and warrants that, to the best of its
       knowledge, the various procedures and systems which Rodney Square has
       implemented with regard to safeguarding from loss or damage attributable
       to fire, theft or any other cause (including provision for twenty-four
       hours a day restricted access) the Trust's blank checks, records and
       other data and Rodney Square's records, data, equipment, facilities and
       other property used in the performance of its obligations hereunder are
       adequate and that it will make such changes therein from time to time as
       in its


                                      -75-


<PAGE>


       judgment are required for the secure performance of its obligations
       hereunder. The parties shall review such systems and procedures on a
       periodic basis.

16.    Insurance. Rodney Square shall notify the Trust should any of its
       insurance coverage be materially changed. Such notification shall include
       the date of change and the reason or reasons therefor. Rodney Square
       shall notify the Trust of any material claims against it, whether or not
       they may be covered by insurance and shall notify the Trust from time to
       time as may be appropriate of the total outstanding claims made by Rodney
       Square under its insurance coverage.

17.    Assignment of Duties to Others. Neither this Agreement nor any rights or
       obligations hereunder may be assigned by Rodney Square without the
       written consent of the Trust. Rodney Square may, however, at any time or
       times in its discretion appoint (and may at any time remove) any other
       bank or trust company, which is itself qualified under the Securities
       Exchange Act of 1934, as amended (the "1934 Act") to act as a transfer
       agent, as its agent to carry out such of the services to be performed
       under this agreement as Rodney Square may from time to time direct;
       provided, however, that the appointment of any agent shall not relieve
       Rodney Square of any of its responsibilities or liabilities hereunder.

18.    Indemnification.

       (a) The Trust agrees to indemnify and hold harmless Rodney Square and any
       officer, director, or employee of Rodney, nor any person who controls
       Rodney Square within the meaning of Section 15 of the 1933 Act or Section
       20(a) of the 1934 Act (collectively, "Rodney Square Affiliates") from all
       taxes, charges, expenses, assessments, claims and liabilities including,
       without limitation, liabilities arising under the 1933 Act, the 1934 Act
       and any state and foreign securities laws, and amendments thereto (the
       "Securities Laws"), and expenses, including without limitation reasonable
       attorneys' fees and disbursements arising directly or indirectly from any
       action or omission to act which Rodney Square takes (i) at the request of
       or on the direction of or in reliance on the advice of the Trust or (ii)
       upon Oral or Written Instructions. No Rodney Square Affiliate shall be
       indemnified against any liability (or any expenses incident to such
       liability) arising out of any such person's own willful misfeasance, bad
       faith, negligence or reckless disregard of its duties and obligations
       under this Agreement.

       (b) Rodney Square agrees to indemnify and hold harmless the Trust from
       all taxes, charges, expenses, assessments, claims and liabilities arising
       from Rodney Square's obligations pursuant to this Agreement (including,
       without limitation, liabilities arising under the Securities Laws, and
       amendments thereto) and expenses, including (without limitation)
       reasonable attorneys' fees and disbursements arising directly or
       indirectly out of Rodney Square's or its nominees' own willful
       misfeasance, bad faith, negligence or reckless disregard of its duties
       and obligations under this Agreement.

       (c) In order that the indemnification provisions contained in this
       Section 18 shall apply, upon the assertion of a claim for which either
       party may be required to indemnify the other, the party seeking
       indemnification shall promptly notify the other party of such assertion,
       and shall keep the other party advised with respect to all developments
       concerning such claim. The party who may be required to indemnify shall
       have the option to participate with the party seeking indemnification in
       the defense of such claim. The party seeking indemnification shall in no
       case confess any claim


                                      -76-

<PAGE>



       or make any compromise in any case in which the other party may be
       required to indemnify it except with the other party's prior written
       consent.

19.    Responsibility of Rodney Square. In the performance of its duties under
       this Agreement, Rodney Square shall be obligated to exercise due care and
       diligence in the performance of its duties hereunder, to act in good
       faith and to use its best efforts in performing services provided for
       under this Agreement. Rodney Square shall not be under any duty to take
       any action on behalf of the Trust except as specifically set forth herein
       or as may be specifically agreed to by Rodney Square in writing. Neither
       Rodney Square nor any officer, employees or director of Rodney Square
       shall be liable for any error of judgment or mistake of law, or for any
       loss suffered by the Trust in connection with the matters to which this
       Agreement relates except to the extent such damages arise out of Rodney
       Square's own negligence, bad faith, willful misfeasance, or reckless
       disregard of obligations and duties under this Agreement.

       Any person, even though also an officer, director, employee or agent of
       Rodney Square or any of its affiliates who may be or become an officer or
       director of the Trust, shall be deemed, when rendering services to the
       Trust as such officer or acting on any business of the Trust in such
       capacity (other than services or business in connection with Rodney
       Square's duties under this Agreement), to be rendering such services to
       or acting solely for the Trust and not as an officer, director, employee
       or agent or one under the control or direction of Rodney Square or any of
       its affiliates, even though paid by one of those entities. Rodney Square
       shall not be liable or responsible for any acts or omissions of any
       predecessor administrator or any other persons having responsibility for
       matters to which this Agreement relates nor shall Rodney Square be
       responsible for reviewing any such act or omissions.

       Without limiting the generality of the foregoing or of any other
       provision of this Agreement, Rodney Square, in connection with its duties
       under this Agreement, shall not be under any duty or obligation to
       inquire into and shall not be liable for (a) the validity or invalidity
       or authority or lack thereof of any Oral or Written Instruction, notice
       or other instrument which conforms to the applicable requirements of this
       Agreement, and which Rodney Square reasonably believes to be genuine; or
       (b) subject to the provisions of Section 20, delays or errors or loss of
       data occurring by reason of circumstances beyond Rodney Square's control,
       including acts of civil or military authority, national emergencies,
       labor difficulties, fire, flood or catastrophe, acts of God,
       insurrection, war, riots or failure of the mails, transportation,
       communication or power supply.

20.    Acts of God, etc. Rodney Square shall not be liable for delays or errors
       occurring by reason of circumstances beyond its control, including but
       not limited to acts of civil or military authority, national emergencies,
       fire, flood or catastrophe, acts of God, insurrection, war, riots, or
       failure of the mails, transportation, communication or power supply. In
       the event of equipment breakdowns beyond its control, Rodney Square
       shall, at no additional expense to the Trust, take reasonable steps to
       minimize service interruptions. Rodney Square shall enter into and shall
       maintain in effect with appropriate parties one or more agreements making
       reasonable provision for emergency use of electronic data processing
       equipment to the extent appropriate equipment is available.

21.    Registration Statement Amendments. Rodney Square and the Trust shall
       regularly consult with each other regarding Rodney Square's performance
       of its obligations and its compensation hereunder. In connection
       therewith, the Trust shall submit to Rodney Square at a reasonable time
       in advance of filing with the SEC copies of any amended or supplemented
       registration statements


                                      -77-

<PAGE>



       (including exhibits) under the 1933 Act, as amended, and the 1940 Act,
       and a reasonable time in advance of their proposed use, copies of any
       amended or supplemented forms relating to any plan, program or service
       offered by the Trust. Any change in such material which would require any
       change in Rodney Square's obligations hereunder shall be subject to
       Rodney Square's approval, which shall not be unreasonably withheld. In
       the event that such change materially increases the cost to Rodney Square
       of performing its obligations hereunder, Rodney Square shall be entitled
       to receive reasonable compensation therefor.

22.    Duration, Termination, etc. Neither this Agreement nor any provisions
       hereof may be changed, waived, discharged or terminated orally, but only
       by written instrument which shall make specific reference to this
       Agreement and which shall be signed by the party against which
       enforcement of such change, waiver, discharge or termination is sought.

       This Agreement shall become effective on the day and year first written
       above, and shall continue in effect for twelve (12) months from the
       effective date, and thereafter as the parties may mutually agree;
       provided, however, that this Agreement may be terminated at any time by
       six (6) months' written notice given by Rodney Square to the Trust or
       ninety (90) days' written notice given by the Trust to Rodney Square; and
       provided further that this Agreement may be terminated immediately at any
       time for cause either by the Trust or by Rodney Square in the event that
       such cause remains unremedied for a period of time not to exceed ninety
       days after receipt of written specification of such cause. Any such
       termination shall not affect the rights and obligations of the parties
       under Sections 18 and 19 hereof.

       Upon the termination hereof, the Trust shall reimburse Rodney Square for
       any out-of-pocket expenses reasonably incurred by Rodney Square during
       the period prior to the date of such termination. In the event that the
       Trust designates a successor to any of Rodney Square's obligations
       hereunder, Rodney Square shall, at the expense and direction of the
       Trust, transfer to such successor a certified list of the shareholders of
       the Trust (with name, address, and, if provided, tax identification or
       Social Security number), a complete record of the account of each
       shareholder, and all other relevant books, records and other data
       established or maintained by Rodney Square hereunder. Rodney Square shall
       be liable for any losses sustained by the Trust as a result of Rodney
       Square's failure to accurately and promptly provide these materials.

23.    Registration as a Transfer Agent. Rodney Square represents that it is
       currently registered with the appropriate Federal agency for the
       registration of transfer agents, and that it will remain so registered
       for the duration of this Agreement. Rodney Square agrees that it will
       promptly notify the Trust in the event of any material change in its
       status as a registered transfer agent. Should Rodney Square fail to be
       registered with the Federal Deposit Insurance Corporation or any
       successor regulatory authority as a transfer agent at any time during
       this Agreement, the Trust may, on written notice to Rodney Square,
       immediately terminate this Agreement.

24.    Notice. Any notice under this Agreement shall be given in writing
       addressed and delivered or mailed, postage prepaid, to the other party to
       this Agreement at its principal place of business.

25.    Severability. If any provision of this Agreement shall be held or made
       invalid by a court decision, statute, rule or otherwise, the remainder of
       this Agreement shall not be affected thereby.


                                      -78-

<PAGE>



26.    Governing Law. To the extent that state law has not been preempted by the
       provisions of any law of the United States heretofore or hereafter
       enacted, as the same may be amended from time to time, this Agreement
       shall be administered, construed and enforced according to the laws of
       the State of Delaware.

27.    Shareholder Liability. Rodney Square is hereby expressly put on notice of
       the limitation of shareholder liability as set forth in the Agreement and
       Declaration of Trust of the Trust and agrees that obligations assumed by
       the Trust pursuant to this Agreement shall be limited in all cases to the
       Trust and its assets. Rodney Square agrees that it shall not seek
       satisfaction of any such obligation from the shareholders or any
       individual shareholder of the Trust, nor from the Trustees or any
       individual Trustee of the Trust.

28.    Arbitration.  [TO BE ADDED]

29.    Miscellaneous. Both parties agree to perform such further acts and
       execute such further documents as are necessary to effectuate the
       purposes hereof. The captions in this Agreement are included for
       convenience of reference only and in no way define or delimit any of the
       provisions hereof or otherwise affect their construction or effect. This
       Agreement may be executed simultaneously in two counterparts, each of
       which taken together shall constitute one and the same instrument.

      IN WITNESS WHEREOF, the parties have duly executed this agreement as of
the day and year first written above.

                                   BRAZOS MUTUAL FUNDS


                                   By:   _____________________________
                                   Name, Title



                                   RODNEY SQUARE MANAGEMENT
                                   CORPORATION


                                   By:   _____________________________
                                         Martin L. Klopping, President




                                      -79-

<PAGE>



                                   SCHEDULE A
                               BRAZOS MUTUAL FUNDS

                                  FUND LISTING



                   BRAZOS/JMIC Small/Emerging Growth Portfolio
                  BRAZOS/JMIC Real Estate Securities Portfolio









                                      -80-

<PAGE>



                                   SCHEDULE B
                               BRAZOS MUTUAL FUNDS

                            Services to be Performed


Rodney Square Management Corporation ("Rodney Square") will perform the
following functions as transfer agent on an ongoing basis with respect to the
Portfolio:

(a)    furnish state-by-state registration reports;

(b)    calculate sales load or compensation payment and provide such
       information;

(c)    calculate dealer commissions;

(d)    provide toll-free lines for direct shareholder use, plus customer liaison
       staff with on-line inquiry capacity;

(e)    mail duplicate confirmations to dealers of their clients' activity,
       whether executed through the dealer or directly with Rodney Square;

(f)    provide detail for underwriter or broker confirmations and other
       participating dealer shareholder accounting, in accordance with such
       procedures as may be agreed upon between the Trust and Rodney Square;

(g)    provide shareholder lists and statistical information concerning accounts
       of the Portfolio to the Trust;

(h)    provide timely notification of Portfolio activity and such other
       information as may be agreed upon from time to time between Rodney Square
       and the Portfolio or the Custodian, to the Trust or the Custodian; and

(i)    solicit and tabulate proxies






                                      -81-

<PAGE>



                                   SCHEDULE C
                               BRAZOS MUTUAL FUNDS

                               Shareholder Records


Rodney Square Management Corporation ("Rodney Square") shall maintain records of
the accounts for each shareholder showing the following information:

(a) name, address and United States Tax Identification or Social Security
number;

(b) number of Shares held and number of Shares for which certificates, if any,
have been issued, including certificate numbers and denominations;

(c) historical information regarding the account of each shareholder, including
dividends and distributions paid and the date and price for all transactions on
a shareholder's account;

(d)    any stop or restraining order placed against a shareholder's account;

(e)    any correspondence relating to the current maintenance of a shareholder's
       account;

(f)    information with respect to withholdings; and,

(g)    any information required in order for Rodney Square to perform any
       calculations contemplated or required by this Agreement.






                                      -82-

<PAGE>



                                   SCHEDULE D
                               BRAZOS MUTUAL FUNDS

                                  Fee Schedule

For the services Rodney Square provides under the Transfer Agency Agreement
attached hereto, Brazos Mutual Funds (the "Trust") agrees to pay Rodney Square a
fee for each class of shares for each portfolio for transfer agency services
equal to the following:

                                                                Fee per Annum
Type of Trust/Account                                            per Account

Annual, Semi-Annual or Quarterly Dividend                       $15.00/year
Monthly Dividend                                                $16.50/year
Daily Accrual Fund                                              $18.00/year

subject to a $30,000 per annum minimum (2,500 per month).


Checkwriting:                    $2.00 per account with checkwriting, per year
                                 $0.15 per check (non-return)
                                 $15.00 each - stop payment
                                 $25.00 each - non-sufficient funds
                                 $2.50 each check copy

This transfer agency fee shall be pro-rated and payable monthly as soon as
practicable after the last day of each month based on the average of the daily
net assets of each Portfolio, as determined at the close of business on each day
throughout the month.

Out of pocket expenses shall be reimbursed by the Trust to Rodney Square or paid
directly by the Trust. Such expenses include, but are not limited to, the
following:

Transaction Charges:
       12b-1 Calculation - $.25 per account, per run
       Exchange Fees - $5.00 per transaction
       Wire fee for receipt or disbursement - $7.00 receipt per wire, $12.00
       disbursement ACH transaction charges - $0.25 per transaction Lockbox
       processing - $0.06 per transaction New Account Opening - $0.40 electronic
       interface; paper application $3.50 per account Master/Omnibus Account -
       $7.50 per broker call placed transaction

Additional Expenses:
a.     Toll-free lines (if required)
b.     Forms, envelopes, checks, checkbooks
c.     Postage (bulk, pre-sort, first-class at current prevailing rates)
d.     Hardware/phone lines for remote terminal(s) (if required)
e.     Microfiche/Microfilm
f.     Mailing fee - approximately $45.00 per 1,000 items
g.     Cost of proxy solicitation, mailing and tabulation (if required)



                                      -83-

<PAGE>



h.     Certificate issuance - $5.00 per certificate
i.     Record retention storage - $3.50 per cubic foot per month
j.     Development/programming costs/special projects (i.e. ad hoc reports)
       * Ad-hoc report set up $125 plus $0.012 per record passed
k.     "B" notice mailing - $5.00 per item
l.     Locating lost shareholders in anticipation of escheating - $7.50 per name
m.     Labels - $0.12 per label ($75 minimum)
n.     Commission Calculation - $0.25 per account
o.     Reruns for incorrect NAV's, dividends or mil rates, late NAV's
p.     Consolidated Statements - to be determined, time and materials
q.     Fulfillment - $2.00 per call plus vendor handling and postage
r.     Retroactive Record Dates for Dividends, Proxies, etc.
s.     Conversion Expenses - to be determined, time and materials

Additional Expenses (paid by shareholder):
       Direct IRA/Keogh processing               $10.00 per account per annum
                                                 $10.00 per transfer out


Fund/SERV/Networking Charges
1. - FUND/SERV
         Participation Fee                       $50.00 per month
         CPU Access Fee                          $40.00 per month
         Transaction Fee                         $  .50 per transaction

       NSCC will deduct it's monthly fee on the 15th of each month from Rodney
       Square's cash settlement that day. These charges will be included on the
       next month's T/A bill as out-of-pocket expenses.
2. - Networking
         Participation Fee                       $250.00 per month
         CPU Access Fee                          $  40.00 per month
         Account Fee                             $      .045 per month on
                                                        monthly dividend funds
                                                 $      .030 per month on all
                                                        other dividend payables

Rodney Square System Access Charges for NSCC
1. - FUND/SERV
         Base Facility Use Fee                   $500.00 per month
         Transaction Fee                         $   .25 per transaction
Plus: out-of-pocket expenses for settlements, wire charges, NSCC pick-up 
charges, etc.
2. - Networking
         Base Facility Use Fee                   $500.00 per month
         Matrix Level Charges:
         Level 1, 2 or 4                         $     .30 per account/month
         Level 3                                 $     .10 per account/month

Payment
       The above will be billed within the first five (5) business days of each
       month and will be paid by wire within five (5) business days of receipt.



                                      -84-

<PAGE>




SEVERANCE AND CONVERSION FEE
Upon the termination, or notice of termination, of the attached Transfer Agency
Agreement within the initial twelve (12) month term by the Trust or the Trust's
Board of Trustees, the parties hereby acknowledge and agree that the Trust shall
pay to Rodney Square, as a fee in consideration of severance and cooperation
toward conversion to a new service provider, and not as a penalty, a sum with
respect to each class of shares for each Trust portfolio equal to the
above-stipulated per annum fee as per the schedule, plus out-of-pocket expenses
incurred in connection with cooperating with conversion to a new service
provider.



                                      -85-

<PAGE>

                          ACCOUNTING SERVICES AGREEMENT
                                     between
                               BRAZOS MUTUAL FUNDS
                                       and
                      RODNEY SQUARE MANAGEMENT CORPORATION


         THIS ACCOUNTING SERVICES AGREEMENT is made as of the ____ day of
______________, 1996 between Brazos Mutual Funds, a Delaware business trust (the
"Trust") having its principal place of business in Dallas, Texas and Rodney
Square Management Corporation, a Delaware corporation ("Rodney Square") having
its principal place of business in Wilmington, Delaware.

         WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act") as an open-end, management investment company
and offers for public sale one or more series of shares of beneficial interest,
each of which may offer one or more classes of shares;

         WHEREAS, each share of a series represents an undivided interest in the
assets, subject to the liabilities, allocated to that series;

         WHEREAS, at the present time, the Trust has established two Series,
each consisting of one class of shares, and the Trust may establish additional
Series and/or classes in the future; and

         WHEREAS, the Trust desires to avail itself of the services of Rodney
Square to provide certain accounting services; and Rodney Square is willing to
furnish such services to the Trust with respect to each of the series listed on
Appendix A to this Agreement (each a "Portfolio" or collectively the
"Portfolios") on the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties agree as follows:

         1. Appointment. The Trust hereby appoints Rodney Square to provide
certain accounting services to the Trust for the period and on the terms set
forth in this Agreement. Rodney Square accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in Paragraph 12 of this Agreement. Rodney Square agrees to comply with all
relevant provisions of the 1940 Act and applicable rules and regulations
thereunder, and to remain open for business on any day on which the New York
Stock Exchange, the Federal Reserve Bank of Philadelphia and Wilmington Trust
Company are open for business. The Trust may from time to time issue separate
series or classes or classify and reclassify shares of such series or class.
Rodney Square shall identify to each such series or class property belonging to
such series or class and in such reports, confirmations and notices to the Trust
called for under this Agreement shall identify the series or class to which such
report, confirmation or notice pertains.

         2. Documents. The Trust has furnished Rodney Square copies of the
Trust's Agreement and Declaration of Trust, By-Laws, Advisory Contract,
Distribution Agreement, Administration Agreement, Custody Agreement, Transfer
Agency Agreement, most recent Registration Statement on Form N-1A, current
Prospectus and Statement of Additional Information (the "SAI") and all forms
relating to any plan, program or service offered by the Trust. The Trust shall
furnish promptly to Rodney Square a copy of any amendment or supplement to the
above-mentioned documents. The Trust shall furnish promptly to



                                      -86-

<PAGE>

Rodney Square any additional documents necessary for it to perform its functions
hereunder or such other documents as Rodney Square shall request.

         3. Definitions.

         (a) Authorized Person. As used in this Agreement, the term "Authorized
         Person" means the President, Treasurer, Secretary and any Vice
         President of the Trust and any other person, whether or not any such
         person is an officer or employee of the Trust, duly authorized by the
         Board of Trustees of the Trust to give Oral and Written Instructions on
         behalf of the Trust and listed on Appendix B listing persons duly
         authorized to give Oral and Written Instructions on behalf of the Trust
         as may be received by Rodney Square from time to time.

         (b) Oral Instructions. As used in this Agreement, the term "Oral
         Instructions" means oral instructions actually received by Rodney
         Square from an Authorized Person or from a person reasonably believed
         by Rodney Square to be an Authorized Person. The Trust agrees to
         deliver to Rodney Square, at the time and in the manner specified in
         Paragraph 4(b) of this Agreement, Written Instructions confirming oral
         Instructions.

         (c) Written Instructions. As used in this Agreement, the term "Written
         Instructions" means written instructions signed by two Authorized
         Persons, and delivered by hand, mail, tested telegram, cable, telex or
         facsimile sending device, and received by Rodney Square.

         4. Instructions Consistent with Trust Instrument, etc.

         (a) Unless otherwise provided in this Agreement, Rodney Square shall
         act only upon Oral and Written Instructions. Although Rodney Square may
         know of the provisions of the Trust Instrument and By-Laws of the
         Trust, Rodney Square may assume that any Oral or Written Instructions
         received hereunder are not in any way inconsistent with any provisions
         of such Trust Instrument or By-Laws or any vote, resolution or
         proceeding of the Shareholders, or of the Board of Trustees, or of any
         committee thereof.

         (b) Rodney Square shall be entitled to rely upon any Oral Instructions
         and any Written Instructions actually received by Rodney Square
         pursuant to this Agreement. The Trust agrees to forward to Rodney
         Square Written Instructions confirming Oral Instructions in such manner
         that the Written Instructions are received by Rodney Square, whether by
         hand delivery, telex, facsimile sending device or otherwise, by the
         close of business of the same day that such Oral Instructions are given
         to Rodney Square. The Trust agrees that the fact that such confirming
         Written Instructions are not received by Rodney Square shall in no way
         affect the validity of the transactions or enforceability of the
         transactions authorized by the Trust by giving Oral Instructions.

         The Trust agrees that Rodney Square shall incur no liability to the
Trust in acting upon Oral Instructions given to Rodney Square hereunder
concerning such transactions, provided such instructions reasonably appear to
have been issued by an Authorized Person.

         5.       Services on a Continuing Basis.

         (a)      Rodney Square will perform the following accounting functions
                  on a daily basis:



                                      -87-

<PAGE>


         (i)      Journalize each Portfolio's investment, capital share and
                  income and expense activities;
         (ii)     Verify investment buy/sell trade tickets when received from
                  the Trust's Investment Advisor ("Advisor") and transmit trades
                  to the Trust's custodian for proper settlement;
         (iii)    Maintain individual ledgers for investment securities;
         (iv)     Maintain historical tax lots for each security;
         (v)      Reconcile cash and investment balances of each Portfolio with
                  the Custodian, and provide the Advisor with the beginning cash
                  balance available for investment purposes;
         (vi)     Update the cash availability throughout the day as required by
                  the Advisor;
         (vii)    Post to and prepare each Portfolio's Statement of Assets and
                  Liabilities and the Statement of Operations;
         (viii)   Calculate expenses payable pursuant to the Portfolio's various
                  contractual obligations;
         (ix)     Control all disbursements from the Trust on behalf of each
                  Portfolio and authorize such disbursements upon Written
                  Instructions;
         (x)      Calculate capital gains and losses;
         (xi)     Determine each Portfolio's net income;
         (xii)    Obtain security market quotes from services approved by the
                  Advisor, or if such quotes are unavailable, then obtain such
                  prices from services approved by the Advisor, and in either
                  case calculate the market or fair value of each Portfolio's
                  investments;
         (xiii)   Transmit or mail a copy of the portfolio valuation to the
                  Advisor;
         (xiv)    Compute the net asset value per share of each class of each
                  Portfolio; 
         (xv)     Compute the yield, total return and expense ratio of each
                  class of each Portfolio, and each Portfolio's portfolio
                  turnover rate; and 
         (xvi)    Monitor the expense accruals and notify Trust management of
                  any proposed adjustments.
(b)      In addition, Rodney Square will:
         (i)      Prepare monthly financial statements, which will include
                  without limitation the following items:
                       Schedule of Investments
                       Statement of Assets and Liabilities
                       Statement of Operations
                       Statement of Changes in Net Assets
                       Cash Statement
                       Schedule of Capital Gains and Losses;
         (ii)     Prepare monthly security transactions listings;
         (iii)    Prepare quarterly broker security transactions summaries;
         (iv)     Supply various Trust, Portfolio and class statistical data as
                  requested on an ongoing basis;
         (v)      Assist in the preparation of support schedules necessary for
                  completion of Federal and state tax returns; prepare
                  1099-Misc's for Trustees, as well as other non-corporate
                  entities providing services to the Portfolios.
         (vi)     Assist in the preparation and filing of the Trust's
                  Semi-Annual Reports with the SEC on Form N-SAR;


                                      -88-

<PAGE>



         (vii)    Assist in the preparation and filing of the Trust's annual and
                  semi- annual shareholder reports and proxy statements;
         (viii)   Assist with the preparation of and Amendments to the Trust's
                  registration statements on Form N-1A and other filings
                  relating to the registration of shares; and
         (ix)     Monitor each Portfolio's status as a regulated investment
                  company under Subchapter M of the Internal Revenue Code of
                  1986, as amended.
         (x)      Communicate statistical data to the financial media (Donaghue,
                  Lipper, Morningstar, et al).

         6. Records. Rodney Square shall keep all books and records with respect
to the Trust's books of account and records of the Trust's securities
transactions. The books and records pertaining to the Trust which are in the
possession of Rodney Square shall be the property of the Trust. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Trust, or the Trust's
authorized representatives, shall have access to such books and records at all
times during Rodney Square's normal business hours. Upon the reasonable request
of the Trust, copies of any such books and records shall be provided by Rodney
Square to the Trust or the Trust's authorized representative at the Trust's
expense.

         7. Liaison With Accountants. Rodney Square shall act as liaison with
the Trust's independent public accountants and shall provide account analyses,
fiscal year summaries, and other audit related schedules. Rodney Square shall
take all reasonable action in the performance of its obligations under this
Agreement to assure that the necessary information is made available to such
accountants for the expression of their opinion, as such may be required by the
Trust from time to time.

         8. Confidentiality. Rodney Square agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the Trust
all records and other information relative to the Trust and its prior, present
or potential Shareholders, and not to use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except, after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where Rodney
Square may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Trust.

         9. Equipment Failures. In the event of equipment failures beyond Rodney
Square's control, Rodney Square shall, at no additional expense to the Trust,
take reasonable steps to minimize service interruptions but shall have no
liability with respect thereto. Rodney Square shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision of emergency use of electronic data processing equipment to
the extent appropriate equipment is available.

         10.      Right to Receive Advice.

         (a) Advice of Trust. If Rodney Square shall be in doubt as to any
         action to be taken or omitted by it, it may request, and shall receive,
         from the Trust directions or advice, including Oral or Written
         Instructions where appropriate.

         (b) Advice of Counsel. If Rodney Square shall be in doubt as to any
         question of law involved in any action to be taken or omitted by Rodney
         Square, it may request advice at the Trust's

                                      -89-

<PAGE>


         expense from counsel of its own choosing (who in the first instance
         shall be the regularly retained counsel for the Trust but, as to
         non-routine matters may be the regularly retained counsel of Rodney
         Square, at the option of Rodney Square).

         (c) Conflicting Advice. In case of conflict between Oral and Written
         Instructions received by Rodney Square, Rodney Square shall be entitled
         to rely on and follow Written Instructions alone. In case of conflict
         between advice received from the Trust under (a) and (b) above, Rodney
         Square shall be entitled to rely on and follow advice obtained in
         accordance with (b) above.

         (d) Protection of Rodney Square. Rodney Square shall be protected in
         any action or inaction which it takes in reliance on any directions,
         advice or Oral or Written Instructions received pursuant to subsections
         (a) or (b) of this paragraph which Rodney Square, after receipt of any
         such directions, advice or Oral or Written Instructions, in good faith
         believes to be consistent with such directions, advice or Oral or
         Written Instructions, as the case may be. However, nothing in this
         paragraph shall be construed as imposing upon Rodney Square any
         obligation (i) to seek such directions, advice or Oral or Written
         Instructions, or (ii) to act in accordance with such directions, advice
         or Oral or Written Instructions when received, unless, under the terms
         of another provision of this Agreement, the same is a condition to
         Rodney Square's properly taking or omitting to take such action.

         11. Compliance with Governmental Rules and Regulations. The Trust
assumes full responsibility for ensuring that the Trust complies with all
applicable requirements of the Securities Act of 1933 ("1933 Act"), the
Securities Exchange Act of 1934, as amended ("1934 Act"), the 1940 Act, and any
laws, rules and regulations of governmental authorities having jurisdiction,
subject to disclosure of pertinent facts to the Trust by Rodney Square.

         12. Compensation. For the performance of its obligations under this
Agreement, the Trust on behalf of each Portfolio, shall pay Rodney Square in
accordance with the fee arrangements described in Schedule A attached hereto, as
such schedule may be amended from time to time.

         13. Indemnification. The Trust agrees to indemnify and hold harmless
Rodney Square and any officer, director, or employee of Rodney Square and any
person who controls Rodney Square within the meaning of Section 15 of the 1933
Act or Section 20(a) of the 1934 Act (collectively, "Rodney Square Affiliates")
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act, the 1940 Act, and any other laws, rules and regulations of any governmental
authorities, all as or to be amended from time to time) and expenses, including
(without limitation) attorneys' fees and disbursements, arising directly or
indirectly from any action or thing which Rodney Square takes or does or omits
to take or do (i) at the request or on the direction of or in reliance on the
written advice of the Trust or (ii) upon Oral or Written Instructions, provided
that neither Rodney Square nor any of its nominees shall be indemnified against
any liability to the Trust or to its Shareholders (or any expenses incident to
such liability) arising out of Rodney Square's own willful misfeasance, bad
faith, negligence or reckless disregard of its duties and obligations
specifically described in this Agreement.

         14. Responsibility of Rodney Square. In the performance of its duties
hereunder, Rodney Square shall be obligated to exercise due care and diligence
and to act in good faith and to use its best efforts within reasonable limits in
performing services provided for under this Agreement. Rodney Square shall be
under no duty to take any action on behalf of the Trust except as specifically
set herein or as may be specifically agreed to by Rodney Square in writing.
Neither Rodney Square nor any Rodney Square


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<PAGE>


Affiliate shall be liable for any error of judgment or mistake of law, or for
any loss suffered by the Trust in connection with the matters to which this
Agreement relates except to the extent that such loss. arise out of Rodney
Square's own negligence, bad faith, willful misfeasance, or reckless disregard
of obligations and duties under this Agreement. Any person, even though also an
officer, director, employee or agent of Rodney Square or any of its affiliates
who may be or become an officer or director of the Trust, shall be deemed, when
rendering services to the Trust as such officer or acting on any business of the
Trust in such capacity (other than services or business in connection with
Rodney Square's duties under this Agreement), to be rendering such services to
or acting solely for the Trust and not as an officer, director, employee or
agent or one under the control or direction of Rodney Square or any of its
affiliates, even though paid by one of those entities. Rodney Square shall not
be liable or responsible for any acts or omissions of any predecessor
administrator or any other persons having responsibility for matters to which
this Agreement relates nor shall Rodney Square be responsible for reviewing any
such act or omissions.

         Without limiting the generality of the foregoing or of any other
provision of this Agreement, Rodney Square in connection with its duties under
this Agreement shall not be under any duty or obligation to inquire into and
shall not be liable for or in respect of (i) the validity or invalidity or
authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this Agreement, and
which Rodney Square reasonably believes to be genuine; or (ii) delays or errors
or loss of data occurring by reason of circumstances beyond Rodney Square's
control, including acts of civil or military authority, national emergencies,
labor difficulties, fire, mechanical breakdown (except as provided in paragraph
9), flood or catastrophe, acts of God, insurrection, war, riots or failure of
the mails, transportation, communication or power supply.

         15. Waiver, Discharge, Duration and Termination. The provisions of this
Agreement may not be waived, discharged or terminated orally, but only by
written instrument that shall make specific reference to this Agreement and that
shall be signed by the party against which enforcement of such change, waiver,
discharge or termination is sought.

         This Agreement shall become effective as of the day and year first
written above, and unless terminated as herein provided, shall continue in force
for twelve (12) months from the date of its execution and thereafter, from year
to year, provided continuance after the twelve (12) month period is approved at
least annually by a vote of the Trustees of the Trust. This Agreement may at any
time be terminated on ninety (90) days' written notice given to Rodney Square or
by Rodney Square by six (6) months' written notice given to the Trust; provided,
however, that the foregoing provisions of this Agreement may be terminated
immediately at any time for cause either by the Trust or by Rodney Square in the
event that such cause shall have remained unremedied for sixty (60) days or more
after receipt of written specification of such cause. Any such termination shall
not affect the rights and obligations of the parties under Sections 13 and 14
hereof.

         Upon the termination of this Agreement, the Trust shall pay to Rodney
Square such compensation as may be payable for the period prior to the effective
date of such termination, including reimbursement for any out-of-pocket expenses
reasonably incurred by Rodney Square to such date. In the event that the Trust
designates a successor to any of Rodney Square's obligations hereunder, Rodney
Square shall, at the expense and direction of the Trust, transfer to such
successor all relevant books, records and other data established or maintained
by Rodney Square under the foregoing provisions.


         16. Notices. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed, postage prepaid, to the other party to this
Agreement at its principal place of business.


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<PAGE>


         17. Further Actions. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.

         18. Amendments. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.

         19. Delegation. On thirty (30) days' prior written notice to the Trust,
Rodney Square may assign all its rights and delegate its duties hereunder to any
wholly-owned direct or indirect subsidiary of Wilmington Trust Company, provided
that (i) the delegate agrees with Rodney Square to comply with all relevant
provisions of the 1940 Act and applicable rules and regulations; (ii) Rodney
Square shall remain responsible for the performance of all of its duties under
this Agreement; (iii) Rodney Square and such delegate shall promptly provide
such information as the Trust may request; and (iv) Rodney Square shall respond
to such questions as the Trust may ask, relative to the delegation, including
(without limitation) the capabilities of the delegate.

         20. Arbitration. [TO BE ADDED]

         21. Miscellaneous.

         (a) Each party agrees to perform such further acts and execute such
         further documents as are necessary to effectuate the purposes hereof.
         The captions in this Agreement are included for convenience of
         reference only and in no way define or delimit any of the provisions
         hereof or otherwise affect their construction or effect. This Agreement
         may be executed in two counterparts, each of which, taken together,
         shall constitute one and the same instrument.

         (b) This Agreement embodies the entire agreement and understanding
         between the parties thereto, and supersedes all prior agreements and
         understandings relating to the subject matter hereof, provided that the
         parties hereto may embody in one or more separate documents their
         agreement, if any, with respect to Oral and/or Written Instructions.
         This Agreement shall be deemed to be a contract made in Delaware and
         shall be administered, construed and enforced according to the laws
         (without regard, however, to laws as to conflicts of law) of the State
         of Delaware. If any provision of this Agreement shall be held or made
         invalid by a court decision, statute, rule or otherwise, the remainder
         of this Agreement shall not be affected thereby. This Agreement shall
         be binding and shall inure to the benefits of the parties hereto and
         their respective successors.

         (c) Rodney Square is hereby expressly put on notice of the limitation
         of shareholder liability as set forth in the Trust Instrument of the
         Trust and agree that obligations assumed by the Trust under this
         Agreement shall be limited in all cases to the Trust and its assets,
         and if the liability relates to one or more Portfolios, the obligations
         hereunder shall be limited to the respective assets of such Portfolio
         or Portfolios. Rodney Square further agrees that it shall not seek
         satisfaction of any such obligations from the shareholders or any
         individual shareholder of the Portfolios, nor from the Trustees or any
         individual Trustee of the Trust.




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<PAGE>



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on the day and year first written
above.

                                   BRAZOS MUTUAL FUNDS


                                   By: ______________________________


                                   RODNEY SQUARE MANAGEMENT
                                   CORPORATION
     

                                   By: ______________________________





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<PAGE>



                                                                      APPENDIX A


                          ACCOUNTING SERVICES AGREEMENT

                               BRAZOS MUTUAL FUNDS

                       PORTFOLIO LISTINGS AND FEE SCHEDULE

ANNUAL FEE

For services provided to Brazos Mutual Funds (the "Trust") pursuant to this
Accounting Services Agreement, Rodney Square Management Corporation ("Rodney
Square") shall receive an annual fee equal to the following:

A.       For each domestic, single-class portfolio of the Trust, a $45,000
         minimum annual fee for up to the first $50 million in assets, plus an
         asset-based fee calculated, with reference to the average daily net
         assets of each such portfolio, according to the following schedule:

                  0.03% of assets between $50 million and $100 million; plus
                  0.02% of assets in excess of $100 million.

B.       For the second and each additional class of any domestic portfolio, a
         $15,000 minimum annual fee for up to the first $50 million in assets
         generated by the class, plus an asset-based fee calculated, with
         reference to the average daily net assets generated by each such class,
         according to the same schedule as in A. above.

The foregoing fee shall be payable monthly, as soon as practicable after the
last day of the month, based on the average daily net assets of each of the
Trust's portfolios as determined at the close of business on each business day
throughout the month.

OUT-OF-POCKET EXPENSES

In addition to the foregoing fee, Rodney Square's reasonable out-of-pocket
expenses incurred in the performance of its responsibilities pursuant to this
Accounting Services Agreement shall either be paid and advanced directly by the
Trust, or promptly reimbursed, upon billing, by the Trust.

SEVERANCE AND CONVERSION FEE
Upon the termination, or notice of termination, of the attached Accounting
Services Agreement within the initial twelve (12) month term by the Trust or the
Trust's Board of Trustees, the parties hereby acknowledge and agree that the
Trust shall pay to Rodney Square, as a fee in consideration of severance and
cooperation toward conversion to a new service provider, and not as a penalty, a
sum with respect to each of the Trust's portfolios equal to the above-stipulated
annual fees as per the schedule, plus out-of-pocket expenses incurred in
connection with cooperating with conversion to a new service provider.





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<PAGE>



                                                                      APPENDIX B



                          ACCOUNTING SERVICES AGREEMENT

                               BRAZOS MUTUAL FUNDS

                               AUTHORIZED PERSONS




The following persons have been duly authorized by the Board of Trustees to give
Oral and Written Instructions on behalf of the Portfolios:



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