GRANUM SERIES TRUST, N-1A EL, 1997-01-27

GRANUM SERIES TRUST
N-1A EL, 1997-01-27

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<PAGE> 1
As filed with the Securities and Exchange 1933 Act Registration No. 333-____
Commission on January 27, 1997 1940 Act Registration No. 811-____

________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_______________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. ____ [ ]
Post-Effective Amendment No. ____ [ ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
Amendment No. [ ]

(Check appropriate box or boxes)
_____________________________

GRANUM SERIES TRUST
(Exact Name of Registrant as Specified in Charter)

126 East 56th Street, New York, NY 10022
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (212) 407-3400

Jonas B. Siegel
126 East 56th Street
New York, NY 10022
(Name and Address of Agent for Service)

Copy to:
Kenneth S. Gerstein, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, NY 10022

Approximate Date of Proposed Public Offering: As soon as practicable
after the effective date of this Registration Statement.
_____________________________

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
hereby elects to register an indefinite number of shares of beneficial
interest.
_____________________________

Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until 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 this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

<PAGE> 2

FORM N-1A

GRANUM SERIES TRUST

CROSS REFERENCE SHEET

(as required by Rule 495)

<TABLE>
<CAPTION>
PART A
ITEM NUMBER LOCATION IN PROSPECTUS
- ----------- ----------------------
<S> <C> <C>
1. Cover Page................................. Cover Page

2. Synopsis................................... Prospectus Summary;
Summary of Expenses

3. Condensed Financial Information............ Summary of Expenses;
Comparative
Performance
Information; Fund
Expenses

4. General Description of Registrant.......... Front Cover Page;
Investment Objective
and Policies;
Investment
Instruments and
Practices; General
Information

5. Management of Fund......................... Front Cover Page;
Prospectus Summary;
Management of the
Fund; Back Cover Page

5A. Management's Discussion of Fund Performance Not Applicable

6. Capital Stock and Other Securities......... Front Cover Page;
Dividends,
Distributions and
Taxes; General
Information

7. Purchase of Securities Being Offered....... How to Buy Shares

8. Redemption or Repurchase................... How to Redeem Shares

9. Pending Legal Proceedings.................. Not Applicable

LOCATION IN STATEMENT
PART B OF ADDITIONAL
ITEM NUMBER INFORMATION
- ----------- ----------------------

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

11. Table of Contents.......................... Table of Contents

12. General Information and History............ Not Applicable
(Registrant is a
newly-formed entity.)

13. Investment Objectives and Policies......... Investment Policies
and Practices;
Derivative
Investments;
Investment
Restrictions
</TABLE>

<PAGE> 3

<TABLE>
<CAPTION>
PART B LOCATION IN STATEMENT OF
ITEM NUMBER ADDITIONAL INFORMATION
- ----------- ------------------------------
<S> <C> <C>
14. Management of the Fund................. Trustees and Officers;
Investment Advisory
Agreement; Back Cover Page

15. Control Persons and Principal Holders
of Securities.......................... General Information

16. Investment Advisory and Other Services. Investment Advisory
Agreement; Distributor;
Distribution Plan

17. Brokerage Allocation and Other Services Portfolio Transactions and
Brokerage

18. Capital Stock and Other Securities..... Dividends, Distributions and
Taxes; General Information

19. Purchase, Redemption and Pricing of How to Redeem Shares;
Securities Being Offered............... Determination of Net Asset
Value

20. Tax Status............................. Dividends, Distributions and
Taxes

21. Underwriters........................... Distributor; Distribution Plan

22. Calculation of Performance Data........ Performance Information

23. Financial Statements................... Financial Statements
</TABLE>

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

<PAGE> 4

GRANUM VALUE FUND
126 EAST 56TH STREET
TWENTY-FIFTH FLOOR
NEW YORK, NEW YORK 10022
PROSPECTUS
DATED ___________, 1997

Granum Value Fund (the "Fund") is a series of Granum Series Trust (the
"Trust"), a non-diversified, open-end management investment company (commonly
known as a mutual fund). The investment objective of the Fund is to seek
capital appreciation. The Fund pursues this objective by investing its assets
principally in equity securities, including common and preferred stocks, and
other securities, such as warrants and stock options, having equity
characteristics. In managing the Fund's portfolio, the investment adviser of
the Fund attempts to identify securities that are undervalued relative to their
potential for growth. The Fund may also pursue its objective by investing in
fixed income securities when such securities, in the judgment of the investment
adviser, provide greater potential for capital appreciation on a risk adjusted
basis than alternative equity investments. See "INVESTMENT OBJECTIVE AND
POLICIES." As part of its investment program, the Fund may use certain
derivative investments which involve certain risks. See "DERIVATIVE
INVESTMENTS." The Fund's investment policies and practices involve certain
risks and there can be no assurance that the Fund will achieve its investment
objective. See "RISK CONSIDERATIONS."

Granum Capital Management, L.L.C. serves as the Fund's investment adviser
(the "Investment Adviser"). Firstar Trust Company (the "Administrator")
provides administrative services to the Fund.

This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. It should be read
carefully and retained for future reference. Additional information about the
Fund is contained in a Statement of Additional Information, dated ____________,
1997, which, as amended or supplemented from time to time, is incorporated into
this Prospectus by this reference. The Statement of Additional Information has
been filed with the Securities and Exchange Commission (the "SEC") and is
available without charge by writing to the Transfer Agent or by calling
1-888-5-GRANUM (547-2686).
_________________________________

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

<PAGE> 5
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus.

THE FUND Granum Value Fund (the "Fund") is a series of Granum
Series Trust (the "Trust"), a non-diversified, open-end
management investment company (commonly known as a mutual
fund).

INVESTMENT The investment objective of the Fund is to seek
OBJECTIVE AND capital appreciation. The Fund pursues this objective by
POLICIES investing its assets principally in equity securities,
including common and preferred stocks, and other securities,
such as warrants and stock options, having equity
characteristics. In managing the Fund's portfolio, the
investment adviser of the Fund attempts to identify
securities that are undervalued relative to their potential
for growth. The Fund may also pursue its objective by
investing in fixed income securities when such securities,
in the judgment of the investment adviser, provide greater
potential for capital appreciation on a risk adjusted basis
than alternative equity investments. See "INVESTMENT
OBJECTIVE AND POLICIES." As part of its investment program,
the Fund may use certain derivative investments which
involve certain risks. See "DERIVATIVE INVESTMENTS."

MANAGEMENT Subject to the overall supervision of the Board of
Trustees of the Trust, Granum Capital Management, L.L.C.
(the "Investment Adviser") is responsible for managing the
investment operations of the Fund in accordance with the
Fund's investment objective and policies. The Investment
Adviser formulates a continuing investment strategy for the
Fund and makes all decisions regarding investments to be
purchased or sold for the Fund. In consideration of the
services provided by the Investment Adviser, the Fund pays
the Investment Adviser a monthly fee computed at the annual
rate of 1.25% of the Fund's average daily net assets (the
"Basic Fee"), which is adjusted monthly (the "Monthly
Performance Adjustment") depending on the extent to which
the investment performance of the Fund, after expenses,
exceeds or was exceeded by the percentage change in the
investment performance of the Standard & Poor's Composite
Index of 500 Stocks. The Monthly Performance Adjustment may
increase or decrease the total advisory fee payable to the
Investment Adviser (the "Total Advisory Fee") by up to 0.75%
of the value of the Fund's average daily net assets. See
"MANAGEMENT OF THE FUND - Investment Adviser."

- 2 -

<PAGE> 6
The Trust has retained Firstar Trust Company (the
"Administrator") to provide various administrative and
accounting services necessary for the operations of the
Trust and the Fund. The Fund pays the Administrator a
monthly fee for administrative services which is calculated
at the annual rate of 0.06% of the Fund's average net assets
(subject to a minimum annual fee of $30,000) and reimburses
the Administrator for certain out-of-pocket expenses. In
addition, the Fund pays the Administrator a fee for
accounting services which is calculated at the annual rate
of 0.02% of the Fund's net assets (subject to a minimum
annual fee of $25,000), plus certain expenses. See
"MANAGEMENT OF THE FUND - Administrator."

FEES AND EXPENSES In addition to the fees paid to the Investment Adviser and
the Administrator, the Fund pays all of its expenses other
than those expressly assumed by the Investment Adviser or
the Distributor. The Fund also makes payments to the
Distributor for distribution and shareholder services
provided by the Distributor and selected securities dealers.

The Investment Adviser has voluntarily agreed to absorb all
ordinary operating expenses of the Fund, other than the fee
payable to the Investment Adviser and amounts payable by the
Fund pursuant to the Distribution Plan (see "Distribution
Plan," below) during the first year of the Fund's operations
or, if sooner, until such time as the daily total net assets
of the Fund average $20 million or more for a period of 30
days. See "FUND EXPENSES."

DIVIDENDS, The Fund intends to pay dividends annually consisting
DISTRIBUTIONS of substantially all of its net investment income. Unless
AND TAXES requested otherwise by a shareholder, dividends are
automatically reinvested in additional shares of the Fund at
the net asset value per share of the Fund in effect on the
day after the dividend payment record date. Long-term
capital gains, if any, will be distributed to shareholders
at least once annually. Dividend and capital gains
distributions are automatically reinvested in additional
shares of the Fund at the net asset value per share in
effect on the day after the record date, unless otherwise
requested by the shareholder.

The Fund intends to qualify each year as a "regulated
investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. If so qualified, the Fund
will not be subject to federal income taxes to the extent
that it distributes its net income

- 3 -

<PAGE> 7
to shareholders.

Shareholders that are subject to federal income taxation
will have to pay any applicable federal income taxes on the
dividends and distributions they receive from the Fund,
whether paid in cash or reinvested in additional shares of
the Fund. Dividends and distributions will also be subject
to applicable state and local taxes.

HOW TO BUY SHARES Shares of the Fund are distributed on a continuous basis
at their current net asset value per share, without
imposition of any front-end or contingent deferred sales
charge, by Mercer Allied Company (the "Distributor") and by
selected securities dealers. The minimum initial investment
in the Fund is $5,000. Subsequent investments may be made
in any amount of $1,000 or more. See "HOW TO BUY SHARES."

HOW TO REDEEM Shares of the Fund may be redeemed at any time at their
SHARES current net asset value per share next computed after
receipt of a redemption request in proper form. No charges
are imposed in connection with redemptions of shares. The
value of the shares redeemed may be more or less than their
original cost, depending upon the Fund's then-current net
asset value. See "HOW TO REDEEM SHARES."

DISTRIBUTION PLAN Under a distribution plan adopted by the Trust in
accordance with Rule 12b-1 under the Investment Company Act
of 1940 (the "Distribution Plan"), the Fund makes payments
to the Distributor in consideration of the services it
provides in connection with the sale of the Fund's shares to
investors ("Distribution Services") and for the furnishing
of account related services by the Distributor and
securities dealers to shareholders of the Fund ("Shareholder
Services"). As compensation for Distribution Services, the
Fund makes monthly payments to the Distributor which are
computed at the annual rate of 0.50% of the Fund's average
net assets. From such compensation, the Distributor makes
payments to securities dealers that have sold shares of the
Fund to their customers. As compensation for Shareholder
Services, the Fund makes monthly payments to the Distributor
which are computed at the annual rate of 0.25% of the Fund's
average net assets. All payments to securities dealers by
the Distributor are made in arrears commencing six months
after the commencement of the Fund's operations and
thereafter on a quarterly basis. See "DISTRIBUTION PLAN."

RISK The Fund's investment policies involve certain risks, and
CONSIDERATIONS there can be no assurance that the Fund's investment
objective will be

- 4 -

<PAGE> 8
achieved. See "RISK CONSIDERATIONS." Changes in the value
of the Fund's investments will result in changes in the
value of the Fund's shares, and thus the Fund's total return
to shareholders. A significant portion of the Fund's assets
may, from time to time, be invested in the securities of
companies having smaller market capitalization, which
involve greater investment risks than securities of larger,
well established companies. The Fund's use of derivative
investments and limited diversification may be considered
speculative practices and may also result in losses to the
Fund. Investments in illiquid securities by the Fund will
also involve certain risks. Investments in foreign
securities are affected by risk factors generally not
thought to be present in the U.S., including, among other
things, increased political, regulatory, contractual and
economic risk and exposure to currency fluctuations. Certain
other types of securities, such as derivatives, also are
affected by particular risks as described herein. See
"INVESTMENT INSTRUMENTS AND PRACTICES - Foreign Securities"
and "DERIVATIVE INVESTMENTS." The compensation that may be
payable by the Fund to the Investment Adviser is higher than
the compensation paid by most other mutual funds with
investment objectives similar to the investment objective of
the Fund. See "MANAGEMENT OF THE FUND - Investment Adviser."

- 5 -

<PAGE> 9
<TABLE>
<CAPTION>
SUMMARY OF EXPENSES

<S> <C>

SHAREHOLDER TRANSACTION EXPENSES:

Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) NONE
Maximum Sales Load Imposed on Reinvestment of Dividends NONE
Maximum Deferred Sales Load NONE
Redemption Fees NONE

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

Management Fee 1.25%*
Rule 12b-1 Expenses**
Distribution Fee 0.50%
Shareholder Services Fee 0.25% 0.75%
Other Expenses (estimated) 1.0%
----
Total Fund Operating Expenses (estimated) 3.0%

</TABLE>
- --------------
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that they will bear directly or indirectly as
shareholders of the Fund. The amounts set forth under "Other Expenses," as
well as the amounts in the Example below, are based upon estimates of expenses
for the current fiscal year, but do not reflect reimbursement of Fund expenses
by the Investment Adviser. In this regard, the Investment Adviser has
voluntarily agreed to absorb all ordinary operating expenses of the Fund, other
than the Management Fee and Rule 12b-1 Expenses, for the first year of the
Fund's operations or until such time as the daily total net assets of the Fund
average $20 million or more for a period of 30 days, if sooner. See "FUND
EXPENSES." Giving effect to this undertaking by the Investment Adviser, and
assuming that net assets of the Fund do not reach $20 million for 30 days
during the current fiscal year, Other Expenses would be 0% of the Fund's
average net assets. Thus, it is estimated that, giving effect to the
absorption of expenses by the Investment Adviser, Total Operating Expenses
would range from 2.75% to 1.25% of the Fund's average net assets, depending on
the investment performance of the Fund.

* The fee paid by the Fund to the Investment Adviser is computed at the
annual rate of 1.25% of the average net assets of the Fund and is subject
to increase or decrease by as much as 0.75% based upon the investment
performance of the Fund in relation to the percentage change in the
Standard & Poor's Composite Index of 500 Stocks. See "MANAGEMENT OF THE
FUND - Investment Adviser."

** As a result of Rule 12b-1 expenses paid by the Fund pursuant to its
distribution plan, long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. See "DISTRIBUTION PLAN."

- 6 -

<PAGE> 10

EXAMPLE: 1 3
YEAR YEARS
---- -----
<S> <C> <C>
You would pay the following expenses on a $1,000
investment, assuming (1) a 5% annual return and
(2) redemption at the end of each time period: $31.53 $87.83

</TABLE>

The above Example is based upon estimated Total Operating Expenses as set
forth in the Table above, which do not reflect the Investment Adviser's
agreement to absorb certain expenses of the Fund. The Example also assumes
that the Fund's hypothetical investment performance of 5% annually for the
relevant periods was the same as the percentage changes in the Standard &
Poor's Composite Index of 500 Stocks (the "S&P 500 Index") throughout such
periods. If the percentage change in the S&P 500 Index was a 2.5% annual
return for those periods as compared to 5% for the Fund, the expenses on a
$1,000 investment for the one and three year periods would be $31.75 and
$88.54, respectively. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. ANNUAL RETURN MAY BE GREATER OR LESS THAN THE ANNUAL RETURN ASSUMED IN
THE EXAMPLE.

For a more complete description of fees and expenses, see "DISTRIBUTION
PLAN," "FUND EXPENSES" and "MANAGEMENT OF THE FUND - Investment Adviser."

INVESTMENT OBJECTIVE AND POLICIES

The investment objective of the Fund is to seek capital appreciation. The
Fund pursues this objective by investing its assets principally in equity
securities, including common and preferred stocks, and other securities, such
as warrants and stock options, having equity characteristics. In managing the
Fund's portfolio, the Investment Adviser attempts to identify securities that
are undervalued relative to their potential for growth. The Fund may also
pursue its objective by investing in fixed income securities, when such
securities, in the judgment of the Investment Adviser, provide greater
potential for capital appreciation on a risk adjusted basis than alternative
equity investments. As part of its investment program, the Fund may use
certain derivative instruments which involve certain risks. See "DERIVATIVE
INVESTMENTS."

The Investment Adviser emphasizes the use of fundamental research,
particularly balance sheet and return-on-equity analysis, in identifying
companies that it believes to be undervalued, and focuses on those companies
that have, or have the potential to develop, above-average earnings, sales or
asset growth. In evaluating investments, the Investment Adviser also seeks to
identify companies that may be involved in special corporate situations, the
occurrence of which would favorably affect the values of the companies' equity
securities. Such situations could include, among other developments, the
following: a change in management or management policies; the acquisition of a
significant equity position in the company by an investor or investor group; a
merger, reorganization or the sale of a division; the spin-off of a subsidiary,
division, or other substantial assets; or a third-party or issuer tender offer.
The Investment Adviser believes

- 7 -

<PAGE> 11

that these situations can serve as catalysts for capital appreciation in the
equity securities of undervalued companies. The Fund's investments are made
without regard to market capitalization. Thus, a significant portion of the
Fund's assets may, from time to time, be invested in the securities of
companies having smaller market capitalizations. See "INVESTMENT INSTRUMENTS
AND PRACTICES - Smaller Companies." Current income is not a primary factor in
the consideration of equity investments for the Fund.

An essential element of the Investment Adviser's investment philosophy is
the pursuit of superior returns in rising markets and of preservation of
capital in declining markets. In implementing this philosophy, the Fund may
use certain derivative investments (including options and warrants) to pursue
profit opportunities or to hedge a portion of its portfolio against certain
risks. See "DERIVATIVE INVESTMENTS." There is no requirement, however, that
the Fund hedge its investment positions.

Although the Fund invests principally in equity securities of U.S.
companies, the Fund may also invest in the equity securities of foreign issuers
and in U.S. and foreign fixed income securities. The Fund may invest up to 20%
of the value of its total assets in the securities of foreign issuers. See
"TYPES OF INVESTMENTS AND RELATED RISK FACTORS - Fixed Income Securities" and
"- Foreign Securities." Under normal market conditions, the Fund will invest
at least 65% of its assets in equity securities, including for this purpose
common stocks, preferred stocks and securities with equity characteristics such
as convertible securities, warrants and options on stocks and stock indices.
However, when the Investment Adviser believes that a defensive investment
posture is warranted or for liquidity purposes, the Fund may temporarily invest
all or a substantial portion of its assets in high quality fixed income
securities, money market instruments and money market mutual funds, or may hold
cash. See "TYPES OF INVESTMENTS AND RELATED RISK FACTORS - Temporary
Investments."

Because the Fund is a "non-diversified" investment company, with respect
to 50% of the value of its total assets, there are no percentage limitations on
the portion of the Fund's assets that may be invested in the securities of any
one issuer. However, as a matter of policy, the Fund does not invest more than
10% of the value of its total assets in the securities of any one issuer. If
this percentage limitation is adhered to at the time of investment, the Fund
will not be required to reduce a position if, as a result of a change in
percentage resulting from a change in the values of the securities or in the
total assets of the Fund, the position exceeds this percentage limitation.
Under these policies, the Fund's portfolio may be subject to greater risk and
volatility than the portfolio of a "diversified" investment company. See
"TYPES OF INVESTMENTS AND RELATED RISK FACTORS - Limited Diversification."

THE FUND'S INVESTMENT POLICIES INVOLVE CERTAIN RISKS, AND THERE CAN BE NO
ASSURANCE THAT THE FUND'S INVESTMENT OBJECTIVE WILL BE ACHIEVED. IN
PARTICULAR, THE FUND'S USE OF DERIVATIVE INVESTMENTS AND LIMITED
DIVERSIFICATION MAY BE CONSIDERED SPECULATIVE PRACTICES AND MAY RESULT IN
LOSSES TO THE FUND.

- 8 -

<PAGE> 12

INVESTMENT INSTRUMENTS AND PRACTICES

The Fund may utilize a variety of investment instruments and practices in
pursuing its investment program. Descriptions of these instruments and
practices, and the risks associated with them, are set forth below.

Investors should consider the Fund as a supplement to an overall
investment program and should invest only if they are willing to undertake the
risks involved. Changes in the value of the Fund's investments will result in
changes in the value of the Fund's shares, and thus the Fund's total return to
shareholders. The Fund's use of derivative investments should also be
considered. See "DERIVATIVE INVESTMENTS."

EQUITY SECURITIES

The Fund's investments in equity securities may include investments in
common stocks, preferred stocks and convertible securities of U.S. and foreign
issuers. The value of equity securities varies in response to many factors,
including, but not limited to, the activities and financial condition of
individual companies, the business market in which individual companies compete
and general market and economic conditions. Equity securities fluctuate in
value, often based on factors unrelated to the value of the issuer of the
securities, and such fluctuations can be significant.

SMALLER COMPANIES

The Fund may invest in the securities of issuers having smaller market
capitalizations than the issuers in which many other investment companies
invest. The investment risks associated with securities of smaller companies
are generally greater than those associated with the securities of larger,
well-established companies. Smaller companies often are of more recent
formation than other companies and may have limited product lines, distribution
channels and financial and managerial resources. Further, there is often less
publicly available information concerning smaller companies than there is for
larger, more established issuers. The equity securities of smaller companies
are often traded over-the-counter or on regional exchanges and those securities
may not be traded in the volume typical for securities that are traded on a
national securities exchange. Consequently, the Fund may be required to
dispose of such securities over a longer period of time (and potentially at
less favorable prices) than would be the case for securities of larger
companies. In addition, the prices of the securities of smaller companies may
be more volatile than those of larger companies.

- 9 -

<PAGE> 13

FIXED INCOME SECURITIES

To a limited extent, the Fund may invest in bonds and other types of debt
obligations of U.S. and foreign issuers. The Fund may invest in these fixed
income securities to pursue the Fund's investment objective when they offer, in
the judgment of the Investment Adviser, greater potential for capital
appreciation on a risk adjusted basis than alternative equity investments. The
Fund may also invest in these securities for temporary defensive purposes and
to maintain liquidity. See "INVESTMENT INSTRUMENTS AND PRACTICES AND RELATED
RISK FACTORS - Temporary Investments." Fixed income securities purchased by
the Fund may include, among others: bonds, notes and debentures issued by
corporations; debt securities issued or guaranteed by the U.S. Government or
one of its agencies or instrumentalities ("U.S. Government Securities");
municipal securities; mortgage-backed and asset-backed securities; and debt
securities issued or guaranteed by foreign governments, their agencies,
instrumentalities or political subdivisions, or by government owned, controlled
or sponsored entities, including central banks. These securities may pay
fixed, variable or floating rates of interest, and may include zero coupon
obligations. Fixed income securities are subject to the risk of the issuer's
inability to meet principal and interest payments on its obligations (i.e.,
credit risk) and are subject to price volatility due to such factors as
interest rate sensitivity, market perception of the creditworthiness of the
issuer and general market liquidity (i.e., market risk). There are no
restrictions as to the maximum maturities of the fixed income securities in
which the Fund may invest. Securities having longer maturities involve greater
risk of fluctuations in value resulting from changes in interest rates.

The Fund may invest in both investment grade and non-investment grade debt
securities. Investment grade debt securities are securities that have received
a rating from at least one nationally recognized statistical rating
organization ("NRSRO") in one of the four highest rating categories or, if not
rated by any NRSRO, have been determined by the Investment Adviser to be of
comparable quality. Non-investment grade debt securities (typically called
"junk bonds") are securities that have received a rating from a NRSRO of below
investment grade or have been given no rating, and are considered by the NRSRO
to be predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal. Non-investment grade debt securities in the
lowest rating categories may involve a substantial risk of default or may be in
default. Changes in economic conditions or developments regarding the
individual issuer are more likely to cause price volatility and weaken the
capacity of the issuers of non-investment grade debt securities to make
principal and interest payments than is the case for higher grade debt
securities. An economic downturn affecting an issuer of non-investment grade
debt securities may result in an increased incidence of default. In addition,
the market for lower grade debt securities may be thinner and less active than
for higher grade debt securities. For these reasons, the Fund will not invest
more than 20% of the value of its total assets in non-convertible fixed income
securities which have not been rated as being investment grade by one or more
NRSROs.

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<PAGE> 14

FOREIGN SECURITIES

Although the Fund invests principally in equity securities of U.S.
companies, the Fund is permitted to invest up to 20% of the value of its total
assets in equity and fixed income securities of foreign issuers, including
depository receipts (such as American Depository Receipts) that represent an
indirect interest in securities of foreign issuers. Investments in foreign
securities are affected by risk factors generally not thought to be present in
the U.S. With respect to such securities, there may be more limited
information publicly available concerning the issuer than would be the case
with respect to domestic securities, different accounting standards may be used
by foreign issuers and foreign trading markets may not be as liquid as U.S.
markets. Foreign securities also involve such risks as currency risks,
possible imposition of withholding or confiscatory taxes, possible currency
transfer restrictions, expropriation or other adverse political or economic
developments and the difficulty of enforcing obligations in other countries.
These risks may be greater in emerging markets and in less developed countries.

The purchase of securities denominated in foreign currencies will subject
the value of the Fund's investments in those securities to fluctuations due to
changes in foreign exchange rates. To hedge against the effects of changes in
foreign exchange rates, the Fund may enter into forward foreign currency
exchange contracts ("forward contracts"). These contracts represent agreements
to exchange an amount of currency at an agreed upon future date and rate. The
Fund will generally use forward contracts only to "lock in" the price in U.S.
dollars of a foreign security that the Fund plans to purchase or to sell, but
in certain limited cases may use such contracts to hedge against an anticipated
substantial decline in the price of a foreign currency against the U.S. dollar.
Forward contracts will not be used in all cases and, in any event, cannot
completely protect the Fund against all changes in the values of foreign
securities resulting from fluctuations in foreign exchange rates. For hedging
purposes, the Fund may also use options on foreign currencies, which expose the
Fund to certain risks. See "DERIVATIVE INVESTMENTS - Options on Foreign
Currency."

TEMPORARY INVESTMENTS

For defensive purposes or to maintain liquidity, the Fund may temporarily
invest all or a substantial portion of its assets in high quality fixed income
securities and money market instruments, or may temporarily hold cash in such
amounts as the Investment Adviser deems appropriate. Fixed income securities
will be deemed to be of high quality if they are rated "A" or better by an
NRSRO or, if unrated, are determined to be of comparable quality by the
Investment Adviser. Money market instruments are high quality, short-term
fixed income obligations (which generally have remaining maturities of one year
or less), and may include: U.S. Government Securities; commercial paper;
certificates of deposit and banker's acceptances issued by domestic branches of
United States banks that are members of the Federal Deposit Insurance
Corporation; and repurchase agreements for U.S. Government Securities. In lieu
of purchasing money market instruments, the Fund may purchase shares of money
market mutual funds that invest primarily in U.S. Government Securities and
repurchase agreements involving those securities, subject to certain
limitations imposed by the Investment Company Act of 1940 (the

- 11 -

<PAGE> 15

"1940 Act"). The Fund, as an investor in a money market fund, will indirectly
bear the fees and expenses of that fund, which will be in addition to the fees
and expenses of the Fund.

Repurchase agreements are agreements under which the Fund purchases
securities from a bank or a securities dealer that agrees to repurchase the
securities from the Fund at a higher price on a designated future date. If the
seller under a repurchase agreement becomes insolvent, the Fund's right to
dispose of the securities may be restricted, or the value of the securities may
decline before the Fund is able to dispose of them. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the securities before the repurchase of the securities under a repurchase
agreement is accomplished, the Fund may encounter delay and incur costs,
including a decline in the value of the securities, before being able to sell
the securities. If the seller defaults, the value of such securities may
decline before the Fund is able to dispose of them. If the Fund enters into a
repurchase agreement that is subject to foreign law and the other party
defaults, the Fund may not enjoy protections comparable to those provided to
certain repurchase agreements under U.S. bankruptcy law, and may suffer delays
and losses in disposing of the collateral as a result. The Fund has adopted
procedures designed to minimize certain of the risks of loss from repurchase
agreement transactions.

LIMITED DIVERSIFICATION

As a "non-diversified" investment company, the Fund is not subject to the
provisions of the 1940 Act that otherwise would limit the percentage of its
assets that may be invested in the securities of a single issuer. However, the
Fund will not invest more than 10% of the value of its total assets in the
securities of any one issuer. If this percentage limitation is adhered to at
the time of investment, the Fund will not be required to reduce a position if,
as a result of a change in percentage resulting from a change in the values of
the securities or in the total assets of the Fund, the position exceeds this
percentage limitation.

In addition, the Fund intends to comply with the diversification
requirements imposed by the Internal Revenue Code of 1986, as amended (the
"Code"). Under these requirements, at the end of each quarter of the Fund's
taxable year, at least 50% of the market value of the Fund's total assets must
be invested in cash, U.S. Government Securities, the securities of other
regulated investment companies and other securities, with such other securities
of any one issuer limited (for purposes of this calculation) to an amount not
greater than 5% of the value of the Fund's total assets and not greater than
10% of the outstanding voting securities of such issuer.

Under the Fund's policies, a relatively high percentage of the Fund's
assets may be invested in the securities of a limited number of issuers, some
of which may be within the same industry or economic sector. The Fund's
portfolio may therefore be more susceptible to any single economic, political
or regulatory occurrence and may be more volatile than the portfolio securities
of a "diversified" investment company. Therefore, an investment in the Fund
involves greater risks than an investment in a "diversified" investment
company.

- 12 -

<PAGE> 16

PORTFOLIO TURNOVER

Although many of the Fund's investments may be held for the purpose of
seeking capital appreciation over the long term, the Fund may also engage in
short-term trading in seeking capital appreciation. Moreover, securities may
be sold without regard to the time they have been held when investment
considerations warrant such action. It is expected that these policies will
cause the Fund's portfolio turnover rate to be higher than certain other
investment companies, although the portfolio turnover rate is not anticipated
to exceed 100%. A high portfolio turnover rate will result in higher brokerage
costs to the Fund and may also result in the realization of greater capital
gains which will be subject to tax, including short-term gains which will be
taxable to shareholders at ordinary income tax rates. See "DIVIDENDS,
DISTRIBUTIONS AND TAXES."

SHORT SALES

Although the Fund may not generally sell securities short, it may effect
short sales "against-the-box." In these transactions, the Fund sells short
securities it owns or has the right to obtain without payment of additional
consideration. The Fund may make a short sale against-the-box in order to
hedge against market risks when it believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund, or
when the Fund does not want to sell the security it owns, because, among other
reasons, it wishes to defer recognition of gain or loss for U.S. federal income
tax purposes. If the Fund makes a short sale against-the-box, it will be
required to set aside securities equivalent in kind and amount to the
securities sold short (or securities convertible or exchangeable into such
securities) and will hold such securities while the short sale is outstanding.
The Fund will incur transaction costs, including interest expense, in
connection with opening, maintaining and closing short sales against-the-box.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES

The Fund may purchase or sell securities on a when-issued or
delayed-delivery basis. In these transactions, securities are purchased or
sold by the Fund with payment and delivery taking place as much as a month or
more in the future. The Fund engages in these transactions to secure an
advantageous price or yield at the time of entering into the transactions.
However, the value of securities purchased on a when-issued or delayed-delivery
basis is subject to market fluctuation and no dividends or interest accrues to
the purchaser during the period before the settlement date. The Fund will not
enter into a when-issued and delayed-delivery transaction, if as a result,
when-issued and delayed-delivery positions which are not "covered" would exceed
one-third of the value of the Fund's total assets. For this purpose, a
position will be "covered" if the Fund's custodian maintains, in a segregated
account for the Fund, cash and other liquid securities held by the Fund and
having a value (determined daily) equal to or greater than the position.

ILLIQUID SECURITIES

The Fund may invest up to 15% of the value of its total assets in illiquid
securities. Illiquid securities are those securities which the Fund cannot
sell or dispose of in the ordinary

- 13 -

<PAGE> 17

course of business within seven days at approximately the value at which the
Fund carries the securities. These securities include restricted securities
and repurchase agreements maturing in more than seven days. Restricted
securities are securities that may not be sold to the public without an
effective registration statement under the Securities Act of 1933, as amended
(the "1933 Act"), and thus, may be sold only in privately negotiated
transactions or pursuant to an exemption from registration. Subject to the
adoption of guidelines by the Board of Trustees of the Trust, certain
restricted securities that may be sold to institutional investors pursuant to
Rule 144A under the 1933 Act and non-exempt commercial paper may be determined
to be liquid by the Investment Adviser. Illiquid securities involve the risk
that the securities will not be able to be sold at the time desired by the
Investment Adviser or at prices approximating the value at which the Fund is
carrying the securities.

LENDING PORTFOLIO SECURITIES

The Fund may lend its portfolio securities to brokers, dealers and
financial institutions in an amount not exceeding 33 1/3% of the value of the
Fund's total assets. These loans will be secured by collateral (consisting of
cash, U.S. Government Securities or irrevocable letters of credit) maintained
in an amount equal to at least 100% of the market value, determined daily, of
the loaned securities. The Fund may, subject to certain notice requirements,
at any time call the loan and obtain the return of the securities loaned. The
Fund will be entitled to payments equal to the interest and dividends on the
loaned securities and may receive a premium for lending the securities. By
lending portfolio securities, the Fund will seek to earn a return on the
investment of collateral. However, there may be delays in the recovery of the
loaned securities or a loss of rights in the collateral supplied should the
borrower fail financially. In addition, securities lending involves a form of
leverage, and the Fund may incur a loss if securities purchased with the
collateral from securities loans decline in value or if the income earned does
not cover the Fund's transaction costs.

INVESTMENT RESTRICTIONS

The Fund has adopted various restrictions on its investment practices.
Except as may otherwise be noted, these restrictions may be changed by the
Board of Trustees of the Trust. However, the Fund's investment objective and
certain of its investment restrictions are deemed fundamental policies and
cannot be changed without the approval of the holders of a majority (as defined
in the 1940 Act) of the Fund's outstanding voting securities. Certain of the
Fund's investment restrictions are set forth in this Prospectus. Additional
investment restrictions are described in the Statement of Additional
Information under "INVESTMENT RESTRICTIONS." Under one such restriction, the
Fund may borrow money from banks for temporary extraordinary or emergency
purposes (but not for investment) in an amount up to 10% of the value of the
Fund's total assets.

- 14 -

<PAGE> 18

DERIVATIVE INVESTMENTS

The Fund may use certain derivative instruments in connection with its
investment activities. These include options on individual securities, options
on securities indices, options on foreign currency and warrants (collectively,
"Derivatives"). These instruments derive their performance, at least in part,
from the performance of an underlying asset or index. While Derivatives will
be used to pursue profit opportunities, and also for hedging purposes, the use
of Derivatives can increase the volatility of the Fund's net asset value, can
decrease the liquidity of the Fund's portfolio and make more difficult the
pricing of the Fund's portfolio. Derivatives may entail investment exposures
that are greater than their costs would suggest, meaning that a small
investment in Derivatives could have a large potential positive or negative
impact on the Fund's performance. If the Fund invests in Derivatives at
inappropriate times or judges market conditions incorrectly, such investments
may lower the Fund's return or result in losses. Changes in the liquidity of
the secondary markets on which the Fund's Derivatives may trade could result in
significant, rapid and unpredictable changes in the prices of such Derivatives,
which could also cause losses to the Fund.

OPTIONS ON SECURITIES

The Fund may purchase call and put options on securities to seek capital
appreciation or for hedging purposes. The Fund may also write and sell covered
call and put options for hedging purposes. A put option gives the purchaser of
the option the right to sell, and obligates the writer to buy, the underlying
security at a stated exercise price at any time prior to the expiration of the
option. Similarly, a call option gives the purchaser of the option the right
to buy, and obligates the writer to sell, the underlying security at a stated
exercise price at any time prior to the expiration of the option.

A call option written by the Fund is "covered" if the Fund owns the
underlying security or holds related securities (i.e., securities whose price
movements correlate to the price movements of the securities underlying the
option) during the term of the option. By writing a covered call option, the
Fund foregoes the opportunity to realize any appreciation in the market price
of the underlying security above the exercise price and incurs the risk of
having to continue to hold a security that it might otherwise have subsequently
determined to sell based on investment considerations. A put option written by
the Fund is "covered" if the Fund maintains at all times cash, U.S. Government
Securities or other liquid securities having a value equal to the option
exercise price in a segregated account with the Fund's custodian, or if the
Fund has bought and holds a put on the same security (and on the same amount of
securities) where the exercise price of the put held by the Fund is equal to or
greater than the exercise price of the put written by the Fund. By writing a
put option, the Fund is exposed to the risk, during the term of the option, of
a decline in the price of the underlying security which the Fund would be
required to purchase at a higher price.

After the Fund has written an option, it may close out its position by
purchasing an option on the same security with the same exercise price and
expiration date as the option that it has previously written on the security.
The Fund will realize a profit or loss if the amount paid to

- 15 -

<PAGE> 19

purchase an option is less or more, as the case may be, than the amount
received from the sale thereof. To close out a position as a purchaser of an
option, the Fund would ordinarily make a similar "closing sale transaction,"
which involves liquidating the Fund's position by selling the option previously
purchased, although the Fund would be entitled to exercise the option should it
deem it advantageous to do so. The Fund may also invest in so-called
"synthetic" options or other derivative instruments written by broker-dealers,
including options on baskets of specified securities.

Options transactions may be effected on securities exchanges or in the
over-the-counter market. When options are purchased over-the-counter, the Fund
bears the risk that the counterparty that wrote the option will be unable or
unwilling to perform its obligations under the option contract. Such options
may also be illiquid and, in such cases, the Fund may have difficulty closing
out its position, which could result in losses to the Fund.

OPTIONS ON SECURITIES INDICES

The Fund may purchase and may write and sell call and put options on stock
indices (such as the S&P 500 Index) listed on national securities exchanges or
traded in the over-the-counter market for hedging purposes. A stock index
fluctuates with changes in the market values of the stocks included in the
index. The effectiveness of purchasing or writing stock index options to hedge
the Fund's investment positions will depend upon the extent to which price
movements of securities held by the Fund correlate with price movements of the
stock index selected. Because the value of an index option depends upon
movements in the level of the index rather than the price of a particular
stock, whether the Fund will realize a gain or loss from the purchase or
writing of options on an index depends upon movements in the level of stock
prices in the stock market generally or, in the case of certain indexes, in an
industry or market segment, rather than movements in the price of a particular
stock. Accordingly, successful use by the Fund of options on stock indexes
will be subject to the Investment Adviser's ability to predict correctly
movements in the direction of the stock market generally or of a particular
industry or market segment. This requires different skills and techniques than
predicting changes in the price of individual stocks.

A put option on an index may be purchased to hedge against a general
decline in the stock market or in a particular market segment or industry. A
call option on an index may be purchased in an attempt to reduce the risk of
missing a general market advance or an increase in the prices of securities
within a particular market segment or industry.

Put and call options of stock indices written by the Fund must be
"covered." A call option on an index written by the Fund will be covered if
the Fund segregates in a separate account with its custodian cash, U.S.
Government Securities or other liquid securities with a value equal to its
obligations under the option. A put option written on an index will be
"covered" if the Fund maintains cash, U.S. Government Securities or other
liquid securities with a value equal to the exercise price of the option in a
segregated account with its custodian or if the Fund has bought and holds a put
on the same index (and in the same amount) where the exercise price of the put
held is equal to or greater than the exercise price of the put written.

- 16 -

<PAGE> 20

OPTIONS ON FOREIGN CURRENCIES

The Fund may write and purchase covered put and call options on foreign
currencies, in amounts not exceeding 5% of the value of its total assets. The
Fund may engage in these transactions for the purpose of protecting against
declines in the U.S. dollar value of portfolio securities or in the U.S. dollar
of dividends or interest expected to be received on those securities. These
transactions may also be used to protect against increases in the U.S. dollar
cost of securities to be acquired by the Fund. As with other types of options,
however, writing an option on foreign currency constitutes only a partial
hedge, up to the amount of the premium received, and the Fund could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. Certain options on foreign currencies are traded on
the over-the-counter market and involve liquidity and credit risks that may not
be present in the case of exchange traded currency options.

WARRANTS AND RIGHTS

The Fund may purchase warrants and rights to purchase securities.
Warrants are derivative instruments that permit, but do not obligate, the
holder to subscribe for other securities. Rights are similar to warrants, but
normally have a short duration and are distributed directly by the issuer to
its shareholders. Warrants and rights do not carry with them the right to
dividends or voting rights with respect to the securities that they entitle the
holder to purchase, and they do not represent any rights in the assets of the
issuer. As a result, warrants and rights may be considered more speculative
than certain other types of investments. In addition, the value of warrants
and rights do not necessarily change with the value of the underlying
securities and such securities cease to have value if they are not exercised
prior to their expiration dates.

RISK CONSIDERATIONS

The Fund's total return and net asset value will fluctuate, and such
fluctuations could be substantial. The Fund is subject to the risk that the
Investment Adviser's investment selections will cause the Fund to fail to
achieve its investment objective or to lag the stock market as a whole. The
Fund is also subject to objective risk, which is the possibility that returns
from the value stocks in which the Fund invests will trail returns from the
overall stock market. As a group, value stocks tend to go through cycles of
relative under-performance and out-performance in comparison to common stocks
in general. These periods have, in the past, lasted for as long as several
years. Because the Fund may invest a significant portion of its assets in the
securities of companies having smaller market capitalization, the Fund's
portfolio may experience more volatility and be exposed to greater risk than
the portfolios of many other mutual funds. In addition, the Fund's use of
derivative investments and limited diversification may be considered
speculative practices and may result in losses to the Fund. Investments in
non-investment grade debt securities, foreign securities and illiquid
securities by the Fund will also involve certain risks as described above.

The Fund and the Investment Adviser are newly formed entities and have no
operating histories upon which investors can evaluate the performance of the
Fund. The principal members of the Investment Adviser, however, together have
substantial experience in managing private

- 17 -

<PAGE> 21

investment partnerships that have investment objectives that are similar to the
Fund's investment objective. See "MANAGEMENT" and "COMPARATIVE PERFORMANCE
INFORMATION."

The compensation that may be payable by the Fund to the Investment Adviser
is higher than the compensation paid by most other mutual funds with investment
objectives similar to the investment objective of the Fund. See "MANAGEMENT OF
THE FUND - Investment Adviser."

COMPARATIVE PERFORMANCE INFORMATION

In managing the Fund's portfolio, the Investment Adviser will use many of
the same investment strategies and certain of the investment techniques that
are used by an affiliate of the Investment Adviser in managing the assets of
two investment funds (collectively, "Other Funds") that are not registered
under the 1940 Act. The personnel of the Investment Adviser who will be
responsible for managing the Fund's portfolio are the same persons who have
been primarily responsible for managing the Other Funds' portfolios. See
"MANAGEMENT OF THE FUND - Investment Adviser." In a number of respects,
however, there are significant differences between the investment policies of
the Fund and those of the Other Funds. Unlike the Other Funds, the Fund, among
other things, does not borrow money from banks or brokers to purchase
investments, is not permitted to purchase illiquid securities to the same
extent as the Other Funds, and does not make short sales of securities (other
than short sales "against-the-box").

The composite investment performance of the Other Funds (which is not the
investment performance of the Fund) is set forth below. This information is
provided solely to illustrate the historical performance achieved by personnel
of the Investment Adviser in managing investment funds with investment
objectives similar to the investment objective of the Fund as compared to
investment return of a broad based market index. It is important to recognize
that the policies of the Fund and the Other Funds differ, as noted above, and
that fees and expenses also differ. The investment performance of the Fund
will therefore differ from the performance of the Other Funds. In addition,
the past performance of the Other Funds should not be viewed as indicative of
the Fund's future investment performance. Prospective investors should note
that, unlike the Fund, the Other Funds are not subject to certain investment
limitations, diversification requirements and other restrictions imposed by the
1940 Act and the Code, which, if applicable, might have adversely affected the
past performance of the Other Funds. Thus, it is expected that the future
performance of Fund and of the Other Funds will differ. The following data
should be read in conjunction with the accompanying notes. PAST PERFORMANCE
DOES NOT GUARANTEE FUTURE RESULTS.

- 18 -

COMPOSITE OF OTHER COMPOSITE OF OTHER S&P
FUNDS BASED ON FUNDS BASED ON THE 500 AGGREGATE
YEAR ACTUAL FEES(1) FUND'S FEES(2) INDEX(3) NET ASSETS(4)
- ------------------ -------------------- -------------------- -------------- -----------
<S> <C> <C> <C> <C>
1990(5) 2.4% 2.2% 2.5% 26
1991 49.4% 60.0% 30.4% 47
1992 16.6% 19.1% 7.6% 82
1993 8.5% 9.8% 10.1% 146
1994 -15.1% -15.4% 0.7% 128
1995 49.7% 56.0% 37.6% 215
1996 36.5% 43.9% 23.0% 340
Cumulative Return(6) 236% 305% 170%
1990 - 1996(7)
</TABLE>

NOTES

1. The above returns of the Other Funds are net of all fees
(including a 1% management fee) and expenses and 20% incentive
allocations to the advisers of the Other Funds. The returns are
based upon the results an investor would have achieved on an
investment made at the commencement of each fund's operations. This
information is based upon audited financial statements for each
period, except 1996 for which audited financial statements are not
yet available. The Other Funds commenced operations on March 5,
1990 and August 16, 1993, respectively.

2. The rates of return of the Other Funds have been modified to
reflect the investment performance of the Other Funds assuming the
fees and estimated expenses of the Fund. See "SUMMARY OF EXPENSES."

3. The S&P 500 Index is the Standard & Poor's Composite Index of
500 Stocks and is provided for comparison purposes. The S&P 500
figures assume reinvestment of all dividends paid by stocks included
in the index. They do not, however, include any allowance for the
brokerage commissions or other fees required to invest in those
stocks. The Other Funds do not restrict their investments solely to
securities included in the S&P 500 Index.

4. As of the end of the period, in millions.

5. Returns for 1990 are for the period March 5, 1990 (date of
inception) through December 31, 1990.

6. Cumulative return is calculated by using a compounded,
time-weighted return.

7. The principals of the Fund's Investment Adviser are the same
individuals who are solely responsible for the investments of the
Other Funds in this composite.

- 19 -

<PAGE> 23

MANAGEMENT OF THE FUND

The Board of Trustees of the Trust is responsible for supervising the
operations and affairs of the Fund. The Trust's officers, who are all members,
partners, officers or employees of the Investment Adviser, the Administrator or
their affiliates, are responsible for the daily management and administration
of the Fund's operations.

INVESTMENT ADVISER

The Investment Adviser, Granum Capital Management, L.L.C., 126 East 56th
Street, 25th Floor, New York, New York 10022, an investment adviser registered
under the Investment Advisers Act of 1940, is controlled by Lewis M. Eisenberg
and Walter F. Harrison III, who serve as its managing members. Subject to the
overall supervision of the Board of Trustees, the Investment Adviser is
responsible for managing the investment operations of the Fund in accordance
with the Fund's investment objective and policies. The Investment Adviser
formulates a continuing investment strategy for the Fund and makes all
decisions regarding investments to be purchased or sold for the Fund. An
investment committee (the "Investment Committee") comprised of Messrs.
Eisenberg and Harrison and Paul Matten is primarily responsible for managing
the investment operations of the Fund in accordance with the Fund's investment
objective and policies.

LEWIS M. EISENBERG graduated from Dartmouth College in 1964 and received
an M.B.A. from Cornell University in 1966. Currently, Mr. Eisenberg serves in
a management and investment advisory capacity in connection with the Other
Funds. From 1966 to 1989, Mr. Eisenberg was associated with Goldman, Sachs &
Co. ("Goldman, Sachs"). While at Goldman Sachs, Mr. Eisenberg became a general
partner of the firm, was co-head of the Equities Division and served on the
Sales, Trading and Research Policy Committee, the Budget Committee and the
International Equity Policy Committee, among others.

WALTER F. HARRISON, III graduated from Dartmouth College in 1966 and
received an M.B.A. in 1969 from the Amos Tuck School of Business
Administration. Currently, Mr. Harrison serves in a management and investment
advisory capacity with the Other Funds. From 1971 to 1980, Mr. Harrison was
associated with A.W. Jones & Associates and A.W. Jones Co., two investment
limited partnerships (collectively, "A.W. Jones"). During his tenure with A.W.
Jones, Mr. Harrison became a managing general partner and was a member of the
Policy Committee, set guidelines for equity exposure, and performed extensive
work on equities valuation techniques. From 1980 to 1983, Mr. Harrison was
senior vice president and a principal of Brokaw Capital Management Co., Inc.,
and from 1983 to 1989, Mr. Harrison was associated with Siebel Capital
Management.

PAUL MATTEN graduated from Princeton University in 1984 and received an
M.B.A. and a J.D. in 1991 and an M.A. in 1995 from Harvard University.
Currently, Mr. Matten serves as an analyst to the Other Funds. From 1984 to
1987, Mr. Matten was associated with Merrill Lynch Capital Markets, an
investment banking firm, as an analyst. From 1987 to 1991, Mr. Matten earned
two graduate-level degrees at Harvard University.

- 20 -

<PAGE> 24

Although the Investment Adviser is a newly formed company which has not
previously served as the investment adviser of a registered investment company,
the personnel of the Investment Adviser are all persons who are limited
partners or employees of an investment adviser which commenced operations in
1990 and is under common control with the Investment Adviser. In their
capacities with such adviser, these persons have provided investment advisory
services to clients, including the Other Funds, and currently manage investment
portfolios with assets in excess of $340 million.

In consideration of the services provided by the Investment Adviser, the
Fund pays the Investment Adviser a monthly fee computed at the annual rate of
1.25% of the Fund's average daily net assets (the "Basic Fee"), which is
adjusted monthly (the "Monthly Performance Adjustment") depending on the extent
to which the investment performance of the Fund, after expenses, exceeds or was
exceeded by the percentage change in the investment performance of the S&P 500
Index. The Monthly Performance Adjustment may increase or decrease the total
advisory fee payable to the Investment Adviser (the "Total Advisory Fee") by up
to 0.75% per year of the value of the Fund's average daily net assets.

The monthly Total Advisory Fee is computed as follows: (a) 1/12th of the
1.25% Basic Fee rate is applied to the Fund's average daily net assets for the
most recent month to determine the dollar amount of the Basic Fee for the
month; (b) commencing after the first complete calendar month of the Fund's
operations, 1/12th of the applicable performance adjustment rate from the table
below is applied to the Fund's average daily net assets for the applicable
month to determine the dollar amount of the Monthly Performance Adjustment; and
(c) the Monthly Performance Adjustment is then added to or subtracted from the
Basic Fee to determine the Total Advisory Fee for that month.

<TABLE>
<CAPTION>
PERCENTAGE POINT
DIFFERENCE BETWEEN
FUND PERFORMANCE
(NET OF ADVISORY
FEES) AND TOTAL
PERCENTAGE CHANGE BASIC PERFORMANCE ADVISORY
IN S&P 500 INDEX FEE (%) ADJUSTMENT RATE (%) FEE (%)
- -------------------- ------------- -------------------- ------------
<S> <C> <C> <C>
+5 1.25 +0.75 2.00
+4 1.25 +0.60 1.85
+3 1.25 +0.45 1.70
+2 1.25 +0.30 1.55
+1 1.25 +0.15 1.40
0 1.25 0.0 1.25
-1 1.25 -0.15 1.10
-2 1.25 -0.30 0.95
-3 1.25 -0.45 0.80
-4 1.25 -0.60 0.65
-5 1.25 -0.75 0.50
</TABLE>

- 21 -

<PAGE> 25

For purpose of determining the Performance Adjustment Rate applicable in
each month, performance will be measured over a rolling 12-month period.
During the first 12 months of the Fund's operations, however, the performance
of the Fund will be measured each month from commencement of operations through
the end of the month as of which the Performance Adjustment Rate is being
calculated. This will result in short-term investment results having a greater
impact on the level of the Total Advisory Fee during the first 11 months of the
Fund's operations than would be the case if performance were measured over a
12-month period. The performance of the S&P 500 Index is computed as the sum
of the change in the level of the S&P 500 Index during the period, plus the
value of any dividends or distributions on common stock made by companies whose
stock was included in the index for the relevant period.

The Basic Fee, and the Total Advisory Fee that may be payable by the Fund
as a result of the Monthly Performance Adjustment, are each higher than the
fees paid by most other mutual funds with investment objectives similar to the
investment objective of the Fund.

ADMINISTRATOR

The Trust has retained Firstar Trust Company (the "Administrator"), 615
East Michigan Street, 3rd Floor, Milwaukee, WI 53202, to provide various
administrative and accounting services necessary for the operations of the
Trust and the Fund. Services provided by the Administrator include:
facilitating general Fund management; monitoring Fund compliance with federal
and state regulations; supervising the maintenance of the Fund's general
ledger, the preparation of the Fund's financial statements, the determination
of the net asset value of the Fund's assets and the declaration and payment of
dividends and other distributions to shareholders; and preparing specified
financial, tax and other reports. See "MANAGEMENT OF THE FUND -
Administrator." The Fund pays the Administrator a monthly fee for
administrative services which is calculated at the annual rate of 0.06% of the
Fund's average net assets (subject to a minimum annual fee of $30,000) and
reimburses the Administrator for certain out-of-pocket expenses. In addition,
the Fund pays the Administrator a fee for accounting services which is
calculated at the annual rate of 0.02% of the Fund's net assets (subject to a
minimum annual fee of $25,000), plus certain expenses.

FUND EXPENSES

The Fund pays all of its expenses other than those expressly assumed by
the Investment Adviser or the Distributor. Expenses of the Fund are deducted
from the Fund's total income before dividends are paid. The Fund's expenses
include, but are not limited to, the following: fees paid to the Investment
Adviser and the Administrator; payments pursuant to the Distribution Plan of
the Fund; fees of the Fund's independent accountants, custodian and transfer
agent and certain related expenses; taxes; organization costs; brokerage fees
and commissions; interest; costs incident to meetings of the Board of Trustees
of the Trust and meetings of the Fund's shareholders; costs of printing and
mailing prospectuses and reports to shareholders and the filing of reports with
regulatory bodies; legal fees and disbursements; fees payable to federal and
state regulatory authorities; fees and expenses of Trustees who are not
affiliated with the Investment Adviser, the Distributor or the Administrator;
and any extraordinary expenses.

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<PAGE> 26

The Investment Adviser has voluntarily agreed to absorb all ordinary
operating expenses of the Fund, other than the fee payable to the Investment
Adviser and amounts payable by the Fund pursuant to the Distribution Plan (see
"DISTRIBUTION PLAN," below) during the first year of the Fund's operations or,
if sooner, until such time as the daily total net assets of the Fund average
$20 million or more for a period of 30 days. The parent of the Distributor,
The Ayco Company, L.P., has agreed to reimburse the Investment Adviser for one
half of the expenses of the Fund that the Investment Adviser absorbs pursuant
to this undertaking.

The Investment Adviser has borne certain organizational costs which are
subject to reimbursement by the Fund. These expenses have been deferred by the
Fund and will be amortized over a sixty month period beginning of the
commencement of Fund operations.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS

The Fund intends to pay dividends annually consisting of substantially all
of its net investment income (i.e., the income it earns from dividends and
interest on its investments, and any short-term capital gains, net of Fund
expenses). Unless requested otherwise by a shareholder, dividends are
automatically reinvested in additional shares of the Fund at the net asset
value per share of the Fund in effect on the day after the dividend payment
record date.

CAPITAL GAINS DISTRIBUTIONS

The Fund will realize capital gains or losses when it sells investments at
prices that are higher or lower than the prices paid by the Fund to purchase
the investments. Long-term capital gains, if any, will be distributed to
shareholders at least once annually. An additional distribution will be paid
if required for the Fund to avoid imposition of a federal income or excise tax
on undistributed capital gains. Capital gains distributions are automatically
reinvested in additional shares of the Fund at the net asset value per share in
effect on the day after the record date, unless otherwise requested by the
shareholder.

TAXES

The Fund intends to qualify each year as a "regulated investment company"
under Subchapter M of the Code. If so qualified, the Fund will not be subject
to federal income taxes to the extent that it distributes its net income to
shareholders. Certain federal income and excise taxes would be imposed on the
Fund if it fails to make certain required distributions of its income to
shareholders. The Fund intends, however, to make distributions in a manner
which will avoid the imposition of any such taxes. If the Fund fails to
qualify as a "regulated investment company," it would be subject to regular
federal income tax on its taxable income, and its distributions generally would
be taxable.

Shareholders that are subject to federal income taxation will have to pay
any applicable federal income taxes on the dividends and distributions they
receive from the Fund, whether paid in cash or reinvested in additional shares
of the Fund. Dividends and distributions will also be

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<PAGE> 27

subject to applicable state and local taxes. Dividends derived from net
investment income or net realized short-term capital gains and all or a portion
of any gains realized from the sale or other disposition of certain market
discount bonds will be taxable to shareholders as ordinary income for federal
income tax purposes. Distributions from net realized long-term capital gains
will be taxable to shareholders as long-term capital gains for federal income
tax purposes, regardless of how long shareholders have held their shares of the
Fund. Each year, shareholders of the Fund will be sent full information on
dividends and capital gains distributions for tax purposes, including
information as to the portion taxable as ordinary income, the portion taxable
as long-term capital gains and the amount of dividends eligible for the
dividends received deduction available for corporations.

Redemptions of shares of the Fund will result in the recognition of any
gain or loss for federal income tax purposes.

Prior to investing in shares of the Fund, prospective shareholders may
wish to consult their tax advisers concerning the federal, state, local and
foreign tax consequences of such an investment.

HOW TO BUY SHARES

Shares of the Fund are available for purchase by investors through the
Distributor and from selected securities dealers which have entered in dealer
agreements with the Distributor. All purchases of shares are effected at the
net asset value per share of the Fund next computed after the receipt of a
purchase order and payment for the shares being purchased. See "Share Price,"
below. No sales charge is imposed in connection with the purchase of shares.
However, the Distributor and securities dealers that sell shares of the Fund
receive compensation for their services which is paid by the Fund. See
"DISTRIBUTION PLAN." Stock certificates will not be issued. Instead, the
Transfer Agent maintains an account for each shareholder reflecting full and
fraction shares of the Fund owned, and sends shareholders confirmations of each
transaction and quarterly statements showing account balances. The Fund
reserves the right to reject any order to purchase shares.

The minimum initial investment in the Fund by an investor is $5,000.
Subsequent investments may be made in any amount of $1,000 or more. The Fund
may waive these minimum investment requirements in special circumstances and
may modify these requirements at any time.

Shares of the Fund may be purchased by check or federal funds wire using
the procedures described below.

PURCHASE BY MAIL

Checks to purchase shares of the Fund must be drawn on a U.S. bank and
made payable to "Granum Value Fund." Checks should be sent, together with a
completed Account Application in the case of an initial investment, to the
Distributor or to Granum Value Fund, c/o

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<PAGE> 28

Firstar Trust Company, 615 East Michigan Street, 3rd Floor, Milwaukee, WI
53202. Subsequent investments should be accompanied with an investment slip
(which will be enclosed with confirmations and statements sent to investors and
which will also be available upon request from the Distributor or the
Administrator), and your Fund account number should be written on the check.
Third party checks will not be accepted.

All checks are accepted subject to collection. In the event that an
investor's check does not clear, the Fund will hold the investor liable for the
full amount of any decrease in the value of the shares that have been issued
and for any collection costs incurred by the Fund. Payments for redemptions of
shares recently purchased by check may be delayed to assure that the purchase
check clears, which may take up to 15 days from the Transfer Agent's receipt of
the check. This delay can be avoided if shares are purchased by wire and will
also not apply if there are sufficient other shares in the account from which
to satisfy the requested redemption.

PURCHASE BY WIRE

Shares can be purchased by federal funds wire by existing investors and
prospective investors whose applications have been accepted by the Fund. To
send a wire payment, you should have your bank transmit federal funds to:
Firstar Bank Milwaukee, N.A. Trust Company, Milwaukee, WI, Transmit Number
075000022, Attn.: Granum Value Fund, Account Name (Name of Investor). In the
case of an initial investment, you should obtain an account number by calling
1-888-5-GRANUM (547-2686) before wiring funds. A completed Account
Application, including your account number, should be submitted promptly after
wiring federal funds for an initial investment.

For further information regarding the procedures to be used in purchasing
shares, you may contact the Distributor or your securities dealer, or call
1-888-5-GRANUM (547-2686).

PLEASE BE SURE TO SUBMIT A COMPLETED ACCOUNT APPLICATION WITH ALL INITIAL
PURCHASES. AN ACCOUNT APPLICATION MUST BE ON FILE WITH THE TRANSFER AGENT IN
ORDER TO REDEEM SHARES.

SHARE PRICE

The Fund's net asset value per share is determined once daily as of the
close of trading on the floor of the New York Stock Exchange (currently 4:00
p.m., New York time), on each day the New York Stock Exchange is open for
business. Net asset value per share is computed by dividing the value of the
Fund's net assets (i.e., the value of its assets less its liabilities) by the
total number of Fund shares outstanding. The Fund's investments are valued at
their market value or, if market quotations are not readily available, at their
fair value as determined by the Investment Adviser in accordance with
procedures adopted by the Fund's Board of Trustees.

HOW TO REDEEM SHARES

Shares of the Fund may be redeemed at any time at their current net asset
value per share next computed after receipt of a redemption request in proper
form. See "HOW TO BUY SHARES - Share Price." No charges are imposed in
connection with redemptions of shares.

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<PAGE> 29

The value of the shares redeemed may be more or less than their original cost,
depending upon the Fund's then-current net asset value.

The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper
form, but may be delayed for more than seven days as provided by SEC rules.
However, if you purchase shares by check and submit shortly thereafter a
redemption request, the redemption proceeds will not be transmitted to you
until your purchase check has cleared, which may take up to 15 days. Prior to
the time any redemption is effective, dividends on such shares will accrue and
be payable, and you will be entitled to exercise all other rights of beneficial
ownership. Shares may not be redeemed unless you have submitted a completed
Account Application which is on file with the Transfer Agent.

The Fund reserves the right to redeem at its option, upon not less than 45
days' written notice, the account of any shareholder that, as a result of a
redemption of shares, has a value of less than $5,000 as the result of one or
more redemptions if the shareholder does not purchase additional shares to
increase the account value to at least $5,000 during the notice period.

Shares of the Fund may be redeemed by using one of the procedures
described below. For further information regarding redemption procedures, you
may contact the Distributor or your securities dealer, or call 1-888-5-GRANUM
(547-2686).

WRITTEN REDEMPTION REQUESTS

You may redeem shares by written request mailed to: Granum Value Fund, c/o
Firstar Trust Company, 615 East Michigan Street, 3rd Floor, Milwaukee, WI
53202. A written request must be signed by each shareholder, including each
owner of a joint account, and each signature must be guaranteed for redemptions
over $______. The Transfer Agent has adopted standards and procedures pursuant
to which signature guarantees in proper form generally will be accepted from
domestic banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. If you have any questions with respect to
signature-guarantees, please call 1-888-5-GRANUM (547-2686).

The proceeds of the redemption of shares redeemed by written request will
normally be paid by check made payable to the shareholders of record. However,
you may request that redemption proceeds of $1,000 or more be wired to any
member bank of the Federal Reserve System if you have previously on your
Account Application, or on a Shareholder Services Form filed with the Transfer
Agent, designated an account at such bank to which redemption proceeds may be
wired.

TELEPHONE REDEMPTION REQUESTS

You may redeem shares by telephone request if you have checked the
appropriate box on the Account Application or have filed a Shareholder Services
Form with the Transfer Agent. If you have selected this option, you may place
a redemption request by calling 1-888-5-GRANUM

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<PAGE> 30

(547-2686). The proceeds of telephone redemptions in the amount of $1,000 or
more will be wired to your account at any member bank of the Federal Reserve
System if you have previously designated an account at such a bank to which
redemption proceeds may be wired. Otherwise redemption proceeds will be paid by
check made payable to the shareholders of record.

During times of extreme economic or market conditions, you may experience
difficulty in contacting the Transfer Agent by telephone to request a
redemption of Fund shares. In such cases, you should consider using a written
redemption request sent by overnight service to: Granum Value Fund, c/o Firstar
Trust Company, 615 East Michigan Street, 3rd Floor, Milwaukee, WI 53202. Using
this procedure may result in your redemption request being processed at a later
time that it would have been if the telephone redemption procedure had been
used. During the delay, the Fund's net asset value may fluctuate.

By selecting the telephone redemption option, you authorize the Transfer
Agent to act on telephone instructions reasonably believed by the Transfer
Agent to be genuine. The Transfer Agent employs reasonable procedures, such as
requiring a form of personal identification, to confirm that telephone
redemption instructions are genuine, and neither the Fund nor the Transfer
Agent will be liable for any losses due to unauthorized or fraudulent
instructions if such procedures are followed. The Fund reserves the right to
refuse any request made by telephone, including requests made shortly after a
change of address, and may limit the number of such requests within a specified
period.

DISTRIBUTION PLAN

Under a distribution plan adopted by the Trust in accordance with Rule
12b-1 under the 1940 Act (the "Distribution Plan"), the Fund makes payments to
the Distributor in consideration of the services it provides in connection with
the sale of the Fund's shares to investors ("Distribution Services") and for
the furnishing of account related services by the Distributor and securities
dealers to shareholders of the Fund ("Shareholder Services"). Shareholder
Services provided by the Distributor and securities dealers include responding
to shareholder inquiries regarding the Fund and their accounts with the Fund,
and providing shareholders with reports, information and services related to
their Fund accounts.

As compensation for Distribution Services, the Fund makes monthly payments
to the Distributor which are computed at the annual rate of 0.50% of the Fund's
average net assets. From such compensation, the Distributor makes payments to
securities dealers that have sold shares of the Fund to their customers in such
amounts as may be agreed to by the Distributor and dealer. As compensation for
Shareholder Services, the Fund makes monthly payments to the Distributor which
are computed at the annual rate of 0.25% of the Fund's average net assets. All
payments to securities dealers by the Distributor are made in arrears
commencing six months after the commencement of the Fund's operations and
thereafter on a quarterly basis.

- 27 -

<PAGE> 31

FUND PERFORMANCE INFORMATION

Advertisements and sales literature relating to the Fund and reports to
shareholders may include quotations of the Fund's investment performance. In
such materials, the Fund's performance may be calculated on the basis of
average annual total return or total return.

Average annual total return is calculated pursuant to a standardized
formula which assumes that an investment was purchased with an initial payment
of $1,000 and that the investment was redeemed at the end of a stated period of
time, after giving effect to the reinvestment of dividends and distributions
during the period. The return is expressed as a percentage rate which, if
applied on a compounded annual basis, would result in the redeemable value of
the investment at the end of the period. Advertisements of the Fund's
performance will include the Fund's average annual total return for one, five
and ten year periods, depending upon the length of time during which the Fund
has operated.

Total return is computed on a per share basis and assumes the reinvestment
of dividends and distributions. Total return generally is expressed as a
percentage rate which is calculated by combining the income and principal
changes for a specified period and dividing by the net asset value per share at
the beginning of the period. Advertisements may include the percentage rate of
total return or may include the value of a hypothetical investment at the end
of the period which assumes the application of the percentage rate of total
return.

Performance will vary from time to time, and past results are not
necessarily representative of future results.

Comparative performance information may be used from time to time in
advertising or marketing the Fund's shares, including data from Lipper
Analytical Services, Inc., the S&P 500 Index, the Wilshire 5000 Index, the Dow
Jones Industrial Average, Money Magazine, Morningstar, Inc. and other industry
publications.

GENERAL INFORMATION

DESCRIPTION OF SHARES

The Trust is a Delaware business trust, organized pursuant to a
Certificate of Trust dated December 19, 1996, and is authorized to issue an
unlimited number of shares of beneficial interest, $0.001 par value. As of the
date of this Prospectus, the Trust has established one series of its shares,
representing interests in the Fund. The Board of Trustees has the power to
establish additional series of shares representing interests in separate
investment portfolios and, subject to applicable laws and regulations, to issue
two or more classes of shares of each series. Shares are fully paid and
non-assessable, and have no preemptive or conversion rights.

Shareholders of the Fund are entitled to vote on the election of Trustees
and the ratification of the Trust's independent accountants when those matters
are voted upon at a meeting of shareholders and on certain other matters. Each
share (and fractional share) is entitled to that number of votes which equals
the net asset value of such share (or fraction

- 28 -

<PAGE> 32

thereof). Shares of the Fund have non-cumulative voting rights, which means
that shareholders entitled to cast more than 50% of the votes for the election
of Trustees can elect all of the Trustees standing for election if they choose
to do so.

Under Delaware law, a shareholder of the Fund could, under certain
circumstances, be held personally liable for the obligations of the Trust and
the Fund, but only to the extent of the shareholder's investment. The
Declaration of Trust disclaims liability of the shareholders, Trustees or
officers of the Trust for acts or obligations of the Trust or the Fund, which
are binding only on the assets and property of the Fund. The Declaration of
Trust requires that notice of this disclaimer be given in each contract or
obligation entered into or executed by the Trust or the Trustees. In view of
the foregoing, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which the Fund itself
would be unable to meet its obligations and should therefore be considered
remote.

Annual meetings of shareholders will not be held except as required by the
1940 Act or other applicable law. A meeting will be held on the removal of a
trustee or trustees of the Fund if requested in writing by holders of not less
than 10% of the outstanding shares of the Fund.

CONTROL PERSONS

As of the date of this Prospectus, the Investment Adviser was the sole
shareholder of the Fund. So long as such ownership of shares continues to
exceed 25% of the outstanding shares of the Fund, the Investment Adviser and
Messrs. Eisenberg and Harrison, as the controlling persons of the Investment
Adviser, will be deemed to control the Fund by virtue of such ownership.

TRANSFER AGENT

The Transfer Agent, Firstar Trust Company, 615 East Michigan Street, 3rd
Floor, Milwaukee, WI 53202, serves as the Fund's transfer agent and dividend
disbursing agent. Shareholders of the Fund may contact the Transfer Agent with
their questions regarding transactions in shares of the Fund and their account
balances.

CUSTODIAN

Firstar Trust Company also serves as custodian for the Fund, and in that
capacity maintains custody of all securities and cash assets of the Fund. The
custodian is authorized to hold the Fund's investments in securities
depositories and to subcustodians approved by the Fund.

ADDITIONAL INFORMATION

This Prospectus, including the Statement of Additional Information which
has been incorporated by reference herein, does not contain all the information
set forth in the Registration Statement filed by the Fund with the SEC under
the Securities Act of 1933, as amended and the 1940 Act. Copies of the
Registration Statement may be obtained at a reasonable charge from the SEC or
may be examined, without charge, at the office of the SEC in Washington, D.C.

- 29 -

<PAGE> 33

SHAREHOLDER REPORTS

The Fund sends shareholders annual and semi-annual reports without charge.
These reports include further information regarding the Fund's investment
performance. The financial statements of the Fund appearing in the Fund's
annual reports are audited by Coopers & Lybrand, the Fund's independent public
accountants.

SHAREHOLDER INQUIRIES

For questions concerning shareholder accounts, dividends and share
purchase and redemption procedures, a shareholder may contact their securities
dealer or may call the Transfer Agent toll free at 1-888-5-GRANUM (547-2686).

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<PAGE> 34

INVESTMENT ADVISER
Granum Capital Management, L.L.C.
126 East 56th Street
Twenty-fifth Floor
New York, New York 10022

DISTRIBUTOR
Mercer Allied Company
One Wall Street
Albany, New York 12205

ADMINISTRATOR, TRANSFER AGENT AND CUSTODIAN
Firstar Trust Company
615 East Michigan Street
3rd Floor
Milwaukee, Wisconsin 53202

INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand
The 411 East Wisconsin Building
Milwaukee, Wisconsin 53202

LEGAL COUNSEL
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022

______________________________________________________________________________

NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS OR IN APPROVED SALES LITERATURE IN CONNECTION WITH THE OFFER
CONTAINED HEREIN, AND IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY THE TRUST
OR BY THE DISTRIBUTOR TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER.

<PAGE> 35

TABLE OF CONTENTS

PAGE

PROSPECTUS SUMMARY 2
SUMMARY OF EXPENSES 6
INVESTMENT OBJECTIVE AND POLICIES 7
INVESTMENT INSTRUMENTS AND PRACTICES 9
DERIVATIVE INVESTMENTS 15
RISK CONSIDERATIONS 17
COMPARATIVE PERFORMANCE INFORMATION 18
MANAGEMENT OF THE FUND 20
FUND EXPENSES 22
DIVIDENDS, DISTRIBUTIONS AND TAXES 23
HOW TO BUY SHARES 24
HOW TO REDEEM SHARES 25
DISTRIBUTION PLAN 27
FUND PERFORMANCE INFORMATION 28
GENERAL INFORMATION 28

<PAGE> 36
GRANUM VALUE FUND
126 EAST 56TH STREET
TWENTY-FIFTH FLOOR
NEW YORK, NEW YORK 10022
STATEMENT OF
ADDITIONAL INFORMATION
DATED _____________, 1997

Granum Value Fund (the "Fund") is a series of Granum Series Trust (the
"Trust"), a non-diversified, open-end management investment company (or mutual
fund). The investment objective of the Fund is to seek capital appreciation.
The Fund pursues this objective by investing its assets principally in equity
securities, including common and preferred stocks and other securities, such as
warrants and stock options, having equity characteristics. In managing the
Fund's portfolio, the investment adviser of the Fund attempts to identify
securities that are undervalued relative to their potential for growth. The
Fund may also pursue its objective by investing in fixed income securities when
such securities, in the judgment of the investment adviser, provide greater
potential for capital appreciation on a risk adjusted basis than alternative
equity investments. As part of its investment program, the Fund may use
certain derivative investments which involve certain risks. The Fund's
investment policies and practices involve certain risks and there can be no
assurance that the Fund will achieve its investment objective.

Granum Capital Management, L.L.C. serves as the Fund's investment adviser
(the "Investment Adviser"). Firstar Trust Company (the "Administrator")
provides administrative services to the Fund.

Information about the Fund is set forth in a separate Prospectus for the
Fund, dated ______________, 1997, which provides the basic information you
should know before investing. To obtain a copy of the Fund's Prospectus,
please write to Granum Value Fund, c/o Firstar Trust Company, 615 East Michigan
Street, 3rd Floor, Milwaukee, WI 53202, or call 1-888-5-GRANUM (547-2686).
This Statement of Additional Information is not a prospectus, but contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you with additional information
regarding the activities and operations of the Fund and the Trust, and should
be read in conjunction with the Fund's Prospectus.
<PAGE> 37

TABLE OF CONTENTS

PAGE

INVESTMENT POLICIES AND PRACTICES 3
DERIVATIVE INVESTMENTS 8
INVESTMENT RESTRICTIONS 10
TRUSTEES AND OFFICERS 12
INVESTMENT ADVISORY AGREEMENT 13
DISTRIBUTOR 14
DISTRIBUTION PLAN 15
HOW TO REDEEM SHARES 17
DETERMINATION OF NET ASSET VALUE 17
DIVIDENDS, DISTRIBUTIONS AND TAXES 19
PORTFOLIO TRANSACTIONS AND BROKERAGE 20
PERFORMANCE INFORMATION 22
GENERAL INFORMATION 23

B-2

<PAGE> 38

INVESTMENT POLICIES AND PRACTICES

The sections below describe, in greater detail than in the Fund's
Prospectus, some of the different types of investments which may be made by the
Fund and the different investment practices in which the Fund may engage. The
use of options by the Fund are discussed under "DERIVATIVE INVESTMENTS." The
general investment policies of the Fund are described in the Prospectus.

TYPES OF EQUITY SECURITIES

The equity securities which may be purchased by the Fund include common,
preferred and convertible preferred stocks, and securities having equity
characteristics such as rights, warrants and convertible debt securities. See
"-Convertible Securities." Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which
means that they may be entitled to dividends in excess of the stated dividend
in certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities.

CONVERTIBLE SECURITIES

Convertible securities may be purchased by the Fund. These securities
include convertible debt obligations and convertible preferred stock. A
convertible security entitles the holder to exchange it for a fixed number of
shares of common stock (or other equity security), usually at a fixed price
within a specified period of time. Until conversion, the holder receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.

Convertible securities have an "investment value" which is the theoretical
value determined by the yield it provides in comparison with similar securities
without the conversion feature. The investment value changes based upon
prevailing interest rates and other factors. They also have a "conversion
value" which is the worth in market value if the security were exchanged for
the underlying equity security. Conversion value fluctuates directly with the
price of the underlying security. If conversion value is substantially below
investment value, the price of the convertible security is governed principally
by its investment value. If the conversion value is near or above investment
value, the price of the convertible security generally will rise above
investment value and may represent a premium over conversion value due to the
combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, will generally yield less than a senior non-convertible
security of comparable investment value.

B-3

<PAGE> 39

Convertible securities may be purchased at varying price levels above their
investment values or conversion values. However, there is no assurance that
any premium above investment value or conversion value will be recovered
because prices change and, as a result, the ability to achieve capital
appreciation through conversion may never be realized.

SPECIAL CORPORATE SITUATION INVESTMENTS

The Fund may invest a significant portion of its total assets in
securities of companies that may be involved in special corporate situations,
the occurrence of which would favorably affect the values of the companies'
equity securities. Such situations could include, among other developments,
the following: a change in management or management policies; the acquisition
of a significant equity position in the company by an investor or investor
group; a merger, reorganization or the sale of a division; the spin-off of a
subsidiary, division, or other substantial assets; or a third-party or issuer
tender offer. The primary risk of this type of investing is that if the
contemplated transaction is abandoned, revised, delayed or becomes subject to
unanticipated uncertainties, the market price of the securities may decline
below the purchase price paid by the Fund.

In general, securities that are the subject of a special corporate
situation sell at a premium to their market prices immediately prior to the
announcement of the situation. However, the increased market price of these
securities sometimes reflect a discount from what the stated or appraised value
of the security would be if the contemplated transaction were approved or
consummated. These investments may be advantageous when the following occur:
(1) the discount significantly overstates the risk of the contingencies
involved; (2) the discount significantly undervalues the securities, assets or
cash to be received by shareholders of the prospective portfolio company as a
result of the contemplated transactions; or (3) the discount fails adequately
to recognize the possibility that the offer or proposal may be replaced or
superseded by an offer or proposal of greater value. The evaluation of these
contingencies requires unusually broad knowledge and experience on the part of
the Investment Adviser, which must appraise not only the value of the issuer
and its component businesses as well as the assets or securities to be received
as a result of the contemplated transaction, but also the financial resources
and business motivation of the offeror as well as the dynamics of the business
climate when the offer or proposal is in progress.

The Fund's special corporate situation investments may tend to increase
its turnover ratio, thereby increasing its brokerage and other transaction
expenses as well as making it more difficult for the Fund to meet the tests for
favorable tax treatment as a "regulated investment company" specified by the
Internal Revenue Code of 1986, as amended (the "Code"). See "DIVIDENDS,
DISTRIBUTIONS AND TAXES." The Investment Adviser attempts to select
investments of the type described that, in its view, have a reasonable prospect
of capital appreciation that is significant in relation to both the risk
involved and the potential of available alternate investments. The Investment
Adviser will closely monitor the effect of such investments on the tax
qualification tests of the Code.

B-4

<PAGE> 40

TYPES OF FIXED INCOME SECURITIES

Generally. The types of fixed income securities in which the Fund may
invest, and certain of their attendant risks, are described in the Prospectus.
Under certain circumstances, these investments are subject to certain quality
limitations and other restrictions and include money market instruments and
other types of obligations. Investors should recognize that, although
securities ratings issued by a nationally recognized statistical rating
organization ("NRSRO") provide a generally useful guide as to credit risks,
they do not offer any criteria to evaluate interest rate risk. Changes in
interest rate levels generally cause fluctuations in the prices of fixed income
securities and will, therefore, cause fluctuations in the net asset value per
share of the Fund. Subsequent to the purchase of a fixed income security by
the Fund, the ratings or credit quality of such security may deteriorate. Any
such subsequent adverse changes in the rating or quality of a security held by
the Fund would not require the Fund to sell the security.

Zero Coupon Securities. Fixed income securities purchased by the Fund may
include zero coupon securities. These securities do not pay any interest until
maturity and, for this reason, zero coupon securities of longer maturities may
trade at a deep discount from their face or par values and may be subject to
greater fluctuations in market value than ordinary debt obligations of
comparable maturity. Current federal tax law requires the holder of a zero
coupon security to accrue a portion of the discount at which the security was
purchased as income each year even though the holder receives no interest
payment that year.

Variable and Floating Rate Securities. Fixed income securities purchased
by the Fund may also include variable and floating rate securities. The
interest rates payable on these securities are adjusted either at
pre-designated periodic intervals or whenever there is a change in an
established market rate of interest. Other features may include a right
whereby the Fund may demand prepayment of the principal amount prior to the
stated maturity (a "demand feature") and the right of an issuer to prepay the
principal amount prior to maturity. One benefit of variable and floating rate
securities is that, because of interest rate adjustments on the obligation,
changes in market value that would normally result from fluctuations in
prevailing interest rates are reduced. One benefit of a demand feature is
enhanced liquidity.

Non-Investment Grade Debt Securities. The Fund may invest in both
investment grade and non-investment grade debt securities. Investment grade
debt securities are securities that have received a rating from at least one
NRSRO in one of the four highest rating categories or, if not rated by any
NRSRO, have been determined by the Investment Adviser to be of comparable
quality. Non-investment grade debt securities (typically called "junk bonds")
are securities that have received an investment grade rating from any NRSRO or
have been given no rating, and are considered by the NRSRO to be predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal.

Companies that issue certain of these securities often are highly
leveraged and may not have available to them more traditional methods of
financing. Therefore, the risk associated with acquiring the securities of
such issuers generally is greater than is the case with higher grade
securities. For example, during an economic downturn or a sustained period of
rising

B-5

<PAGE> 41

interest rates, highly leveraged issuers of these securities may not have
sufficient revenues to meet their interest payment obligations. The issuer's
ability to service its debt obligations also may be affected adversely by
specific corporate developments, forecasts, or the unavailability of additional
financing. The risk of loss because of default by the issuer is significantly
greater for the holders of these securities because such securities generally
are unsecured and often are subordinated to other creditors of the issuer.

Because there is no established retail secondary market for many of these
securities, the Fund anticipates that such securities could be sold only to a
limited number of dealers or institutional investors. To the extent a
secondary trading market for these securities does exist, it generally is not
as liquid as the secondary market for higher grade securities. The lack of a
liquid secondary market may have an adverse impact on market price and yield
and the Fund's ability to dispose of particular issues when necessary to meet
the Fund's liquidity needs or in response to a specific economic event such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for the
Fund to obtain accurate market quotations for purposes of valuing the Fund's
portfolio and calculating its net asset value. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of these securities. In such cases, judgment may play a
greater role in valuation because less reliable, objective data may be
available.

These securities may be particularly susceptible to economic downturns.
It is likely that an economic recession could disrupt severely the market for
such securities and may have an adverse impact on the value of such securities.
In addition, it is likely that any such economic downturn could adversely
affect the ability of the issuers of such securities to repay principal and pay
interest thereon and increase the incidence of default for such securities.

The Fund may acquire these securities during an initial offering. Such
securities may involve special risks because they are new issues. The Fund has
no arrangement with any person concerning the acquisition of such securities,
and the Investment Adviser will review the credit and other characteristics
pertinent to such new issues.

FORWARD CONTRACTS

As discussed in the Prospectus, the Fund is authorized to enter into
forward foreign currency exchange contracts ("forward contracts"). These
contracts represent agreements to exchange an amount of currency at an agreed
upon future date and rate. The rate can be higher or lower than the spot rate
between the currencies that are the subject of the contract. A forward
contract generally has no deposit requirement, and such transactions do not
involve commissions. By entering into a forward contract for the purchase or
sale of the amount of foreign currency invested in an equity or fixed income
security of a foreign issuer (a "foreign security"), the Fund can hedge against
possible variations in the value of the dollar versus the subject currency
either between the date the foreign security is purchased or sold and the date
on which payment is made or received ("transaction hedging"), or during the
time the Fund holds the foreign security ("position hedging"). Hedging against
a decline in the value of a currency through the use of forward contracts does
not eliminate fluctuations in the prices of

B-6

<PAGE> 42

securities or prevent losses if the prices of securities decline. Hedging
transactions preclude the opportunity for gain if the value of the hedged
currency should rise. The Fund will not speculate in forward currency
contracts. If the Fund enters into a "position hedging transaction," which is
the sale of forward non-U.S. currency with respect to a security held by it and
denominated in such foreign currency, the Trust's custodian will place cash or
liquid securities in a separate account in an amount equal to the value of the
Fund's total assets committed to the consummation of such forward contract. If
the value of the securities placed in the account declines, additional cash or
securities will be placed in the account so that the value of cash or
securities in the account will equal the amount of the Fund's commitments with
respect to such contracts. Forward contracts will not be used in all cases
and, in any event, cannot completely protect the Fund against all changes in
the values of foreign securities resulting from fluctuations in foreign
exchange rates.

REPURCHASE AGREEMENTS

As discussed in the Prospectus, the Fund may enter into repurchase
agreements involving the types of securities which are eligible for purchase by
the Fund. However, there is no limitation upon the maturity of the securities
underlying the repurchase agreements.

Repurchase agreements, which may be viewed as a type of secured lending by
the Fund, typically involve the acquisition by the Fund of debt securities
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities (collectively, "U.S. Government Securities") or other
securities from a selling financial institution such as a bank, savings and
loan association or broker-dealer. The agreement provides that the Fund will
sell back to the institution, and that the institution will repurchase, the
underlying security ("collateral") at a specified price and at a fixed time in
the future, usually not more than seven days from the date of purchase. The
Fund will receive interest from the institution until the time when the
repurchase is to occur. Although such date is deemed to be the maturity date
of a repurchase agreement, the maturities of securities subject to repurchase
agreements are not subject to any limits and may exceed one year.

While repurchase agreements involve certain risks not associated with
direct investments in debt securities, the Trust follows procedures designed to
minimize such risks. These procedures include a requirement that the
Investment Adviser effect repurchase transactions only with large, well
capitalized United States financial institutions approved by it as creditworthy
based upon periodic review under guidelines established and monitored by the
Board of Trustees. In addition, the value of the collateral underlying the
repurchase agreement, which will be held by the Trust's custodian on behalf of
the Fund, will always be at least equal to the repurchase price, including any
accrued interest earned on the repurchase agreement. In the event of a default
or bankruptcy by a selling financial institution, the Fund will seek to
liquidate such collateral. However, the exercise of the Fund's right to
liquidate such collateral could involve certain costs or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase were less than the repurchase price, the Fund could suffer a loss.

B-7

<PAGE> 43

LENDING PORTFOLIO SECURITIES

As discussed in the Prospectus, the Fund may lend its portfolio securities
to brokers, dealers and financial institutions. The advantage of such loans is
that the Fund continues to receive the income on the loaned securities while at
the same time earning interest on the cash amounts deposited as collateral,
which will be invested in short-term investments.

A loan may be terminated by the borrower on one business day's notice, or
by the Trust on four business days' notice. If the borrower fails to deliver
the loaned securities within four days after receipt of notice, the Trust could
use the collateral to replace the securities while holding the borrower liable
for any excess of replacement cost exceeding the collateral. As with any
extensions of credit, there are risks of delay in recovery and in some cases
even loss of rights in the collateral should the borrower of the securities
fail financially. However, loans of securities will only be made to firms
deemed by the Board of Trustees to be creditworthy (such creditworthiness will
be monitored on an ongoing basis) and when the income which can be earned from
such loans justifies the attendant risks. Upon termination of the loan, the
borrower is required to return the securities. Any gain or loss in the market
price during the loan period would inure to the Fund.

When voting or consent rights which accompany loaned securities pass to
the borrower, the Trust will follow the policy of calling the loaned
securities, to be delivered within one day after notice, to permit the exercise
of such rights if the matters involved would have a material effect on the
investment in such loaned securities. The Fund will pay reasonable finder's,
administrative and custodial fees in connection with loans of securities. The
Fund may lend foreign securities consistent with the foregoing requirements.

DERIVATIVE INVESTMENTS

As discussed in the Prospectus, the Fund may use certain derivative
instruments in connection with its investment activities. These include
options on individual securities, options on securities indices, options on
foreign currency and warrants (collectively, "Derivatives"). The specific
Derivatives transactions in which the Fund may engage are noted and described
in the Prospectus. The discussion below provides additional information
regarding the risk of Derivatives generally and use of options on securities
indices.

DERIVATIVES - GENERALLY

The Fund may invest in Derivatives for a variety of reasons, including to
hedge certain market risks, to provide a substitute for purchasing or selling
particular securities or to increase potential income gain. Derivatives may
provide a less costly, quicker or more specifically focused way for the Fund to
invest than "traditional" securities and currencies would.

Derivatives can be volatile and involve various types and degrees of risk,
depending upon the characteristics of the particular Derivative and the Fund's
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character

B-8

<PAGE> 44

of the risk, to which its portfolio is exposed in much the same way as the Fund
can increase or decrease the level of risk, or change the character of the
risk, of its portfolio by making investments in specific securities or
currencies.

Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Fund's performance.

Derivatives may be purchased on established exchanges or over-the-counter
through privately negotiated transactions. Exchange traded Derivatives
generally are guaranteed by the clearing agency which is the issuer or
counterparty to such Derivatives. This guarantee usually is supported by a
daily payment system (i.e., variation margin requirements) operated by the
clearing agency in order to reduce settlement risks. As a result, unless the
clearing agency defaults, there is relatively little counterparty credit risk
associated with Derivatives purchased on an exchange. By contrast, no clearing
agency guarantees over-the-counter Derivatives. Therefore, each party to an
over-the-counter Derivative bears the risk that the counterparty will default.
Accordingly, the Investment Adviser will consider the creditworthiness of
counterparties to over-the-counter Derivatives in the same manner as it would
review the credit quality of a security to be purchased by the Fund.
Over-the-counter Derivatives are less liquid than exchange-traded Derivatives
since the other party to the transaction may be the only investor with
sufficient understanding of the Derivative to be interested in bidding for it.

RISKS OF OPTIONS ON SECURITIES INDICES

As discussed in the Prospectus, the purchase and sale of options on
securities indices will be subject to risks applicable to options transactions
generally. In addition, the distinctive characteristics of options on indices
create certain risks that are not present with securities options. Index
prices may be distorted if trading of certain securities included in the index
is interrupted. Trading in index options also may be interrupted in certain
circumstances such as if trading were halted in a substantial number of
securities included in the index or if dissemination of the current level of an
underlying index is interrupted. If this occurred, the Fund would not be able
to close out options which it had purchased and, if restrictions on exercise
were imposed, may be unable to exercise an option it holds, which could result
in losses if the underlying index moves adversely before trading resumes.
However, it is the Fund's policy to purchase options only on indices which
include a sufficient number of securities so that the likelihood of a trading
halt in the index is minimized.

The purchaser of an index option may also be subject to a timing risk. If
an option is exercised by the Fund before final determination of the closing
index value for that day, the risk exists that the level of the underlying
index may subsequently change. If such a change caused the exercised option to
fall out-of-the-money (that is, the exercising of the option would result in a
loss, not a gain), the Fund would be required to pay the difference between the
closing index value and the exercise price of the option (times the applicable
multiplier) to the assigned writer. Although the Fund may be able to minimize
this risk by withholding exercise instructions until just before the daily
cutoff time, it may not be possible to eliminate this risk

B-9

<PAGE> 45

entirely because the exercise cutoff times for index options may be earlier
than those fixed for other types of options and may occur before definitive
closing index values are announced. Alternatively, when the index level is
close to the exercise price, the Fund may sell rather than exercise the option.
Although the markets for certain index option contracts have developed
rapidly, the markets for other index options are not as liquid. The ability to
establish and close out positions on such options will be subject to the
development and maintenance of a liquid secondary market. It is not certain
that this market will develop in all index option contracts. The Fund will not
purchase or sell any index option contract unless and until in the opinion of
the Investment Adviser the market for such options has developed sufficiently
that such risk in connection with such transactions is no greater than such
risk in connection with options on securities.

INVESTMENT RESTRICTIONS

The Fund has adopted various investment restrictions on its investment
activities. Certain of these are fundamental policies which cannot be changed
without approval by the holders of a majority, as defined in the Investment
Company Act of 1940 (the "1940 Act"), of the Fund's outstanding voting shares.
For the Fund to alter a fundamental policy requires the affirmative vote of the
holders of (a) 67% or more of the shares of the Fund present at a meeting of
shareholders, if the holders of at least 50% of the outstanding shares of the
Fund are present or represented by proxy or (b) more than 50% of the
outstanding shares of the Fund, whichever is less.

Under its fundamental policies, the Fund may not:

1. Invest more than 25% of the value of its total assets in the
securities of issuers in any single industry, provided that there
shall be no limitation on the purchase of U.S. Government
securities.

2. Purchase or sell commodities, except that the Fund may
purchase and sell foreign currency and options on foreign currency
and may enter into forward foreign currency exchange contracts in
connection with its investments in foreign securities.

3. Purchase or sell real estate or interests therein, or
purchase oil, gas or other mineral leases, rights or royalty
contracts or development programs, except that the Fund may invest
in the securities of issuers engaged in the foregoing activities and
may invest in securities secured by real estate or interests
therein.

4. Issue senior securities as defined by the 1940 Act or borrow
money, except that the Fund may borrow from banks for temporary
extraordinary or emergency purposes (but not for investment) in an
amount up to 10% of the value of the Fund's total assets (calculated
at the time of the borrowing). The Fund may not make additional
investments while it has any borrowings outstanding. This
restriction shall not be deemed to prohibit the Fund from purchasing
or selling securities on a when-issued or delayed-delivery basis,
or entering into

B-10

<PAGE> 46

repurchase agreements, lending portfolio securities, selling
securities short against-the-box, or writing covered put and call
options on securities, stock indices and foreign currencies, in
each case in accordance with such investment policies as may be
adopted by the Board of Trustees.

5. Underwrite the securities of other issuers, except to the
extent that the Fund may be deemed to be an underwriter in
connection with the disposition of portfolio securities.

6. Make loans of money or securities, except that the Fund may
lend money through the purchase of permitted investments, including
repurchase agreements, and may lend its portfolio securities in an
amount not exceeding 33-1/3% of the value of the Fund's total
assets.

The Fund has adopted the following additional investment restrictions
which are not fundamental and may be changed by the Board of Trustees. Under
these restrictions, the Fund may not:

1. Make short sales of securities (other than short sales
against-the-box) or purchase securities on margin, but the Fund may
make margin deposits in connection with its permitted investment
activities.

2. Invest in the securities of a company for the purpose of
exercising management or control; however, this shall not be deemed
to prohibit the Fund from exercising voting rights with respect to
its portfolio securities.

3. Pledge, mortgage, hypothecate or otherwise encumber its
assets, except to secure permitted borrowings and to implement
collateral and similar arrangements incident to permitted investment
practices.

4. Purchase securities which are illiquid, including repurchase
agreements maturing in more than seven days, if as a result more
than 15% of the value of the Fund's total assets would be so
invested.

5. Purchase securities of other investment companies, except to
the extent permitted under the 1940 Act.

Except as otherwise may be stated, all percentage limitations on the
Fund's investment practices apply at the time of an investment or a
transaction. A later change in any percentage resulting from a change in value
of the investment or the total value of the Fund's assets will not constitute a
violation of such restriction.

B-11

<PAGE> 47

TRUSTEES AND OFFICERS

The Board of Trustees of the Trust has the overall responsibility for
monitoring the operations of the Trust and the Fund and for supervising the
services provided by the Investment Adviser and other organizations. The
officers of the Trust are responsible for managing the day-to-day operations of
the Trust and the Fund.

Set forth below is information with respect to each of the Trustees and
officers of the Trust, including their principal occupations during the past
five years.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATIONS
NAME, AGE AND ADDRESS POSITION(S) WITH TRUST DURING LAST FIVE YEARS
- --------------------- ---------------------- ----------------------
<S> <C> <C>
Lewis M. Eisenberg Co-Chairman of the Investment adviser to
[Age & Address] Board of Trustees private investment
companies.

Walter F. Harrison, III Co-Chairman of the Investment adviser to
[Age & Address] Board of Trustees private investment
companies.

</TABLE>

Messrs. Eisenberg and Harrison are Trustees who are "interested persons"
of the Trust (as defined by the 1940 Act) by virtue of their affiliations with
the Investment Adviser or the Distributor. Trustees who are not officers or
employees of the Investment Adviser, the Distributor or their affiliated
companies, are each paid an annual retainer of $6,000 and receive an attendance
fee of $1,000 for each meeting of the Board of Trustees they attend. Officers
of the Trust, all of whom are members, officers or employees of the Investment
Adviser, the Distributor, the Administrator or their affiliates, receive no
compensation from the Trust.

B-12

<PAGE> 48
Trustee compensation from the Trust is estimated as follows:

COMPENSATION TABLE
------------------
<TABLE>
<CAPTION>

PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED TOTAL COMPENSATION
NAME OF PERSON, COMPENSATION ACCRUED AS PART OF BENEFITS FROM TRUST PAID
POSITION FROM FUND FUND EXPENSES UPON RETIREMENT TO TRUSTEES
- ------------------- ------------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Lewis M. Eisenberg,
Co-Chairman of the
Board of Trustees $0 $0 $0 $0

Walter Harrison,
Co-Chairman of the
Board of Trustees $0 $0 $0 $0
</TABLE>

INVESTMENT ADVISORY AGREEMENT

The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "MANAGEMENT OF THE FUND -
Investment Adviser."

The Investment Adviser is a Delaware limited liability company with
offices at 126 East 56th Street, Twenty-fifth floor, New York, New York 10022.
It is controlled by its managing members, Messrs. Eisenberg and Harrison.

The Investment Adviser provides investment advisory services to the Fund
pursuant to an Investment Advisory Agreement (the "Advisory Agreement"), dated
February __, 1997 with the Trust. The Advisory Agreement was approved by the
Trust's Board of Trustees, including a majority of the Trustees who are not
"interested persons" (as defined by the 1940 Act) of the Trust at a meeting
held on February __, 1997, and was also approved on such date by the vote of
the sole shareholder of the Trust on such date. The Advisory Agreement is
terminable without penalty, on 60 days' notice, by the Trust's Board or by vote
of the holders of a majority of the Fund's shares, or, on not less than 90
days' notice, by the Investment Adviser. The Advisory Agreement has an initial
term expiring on ____________, 1999, and may be continued in effect from year
to year thereafter subject to the approval thereof by (i) the Trust's Board or
(ii) vote of a majority (as defined by the 1940 Act) of the outstanding voting
securities of the Fund, provided that in either event the continuance must also
be

B-13

<PAGE> 49

approved by a majority of the Trustees who are not "interested persons" (as
defined by the 1940 Act) of the Trust or the Investment Adviser, by vote cast
in person at a meeting called for the purpose of voting on such approval. The
Advisory Agreement provides that it will terminate automatically in the event
of its "assignment" (as defined by the 1940 Act and the rules thereunder).

The Investment Adviser manages the Fund's investments in accordance with
the stated policies of the Fund, subject to the supervision of the Trust's
Board. The Investment Adviser is responsible for all investment decisions for
the Fund and for placing orders for the purchase and sale of investments for
the Fund's portfolio. The Investment Adviser also provides such additional
administrative services as the Trust or the Fund may require beyond those
furnished by the Administrator and furnishes, at its own expense, such office
space, facilities, equipment, clerical help, and other personnel and services
as may reasonably be necessary in connection with the operations of the Trust
and the Fund. In addition, the Investment Adviser pays the salaries of
officers of the Trust and any fees and expenses of Trustees of the Trust who
are also officers, directors or employees of the Investment Adviser or who are
officers or employees of any company affiliated with the Investment Adviser and
bears the cost of telephone service, heat, light, power and other utilities
associated with the services it provides.

In consideration of the services provided by the Investment Adviser, the
Fund pays the Investment Adviser a monthly fee computed at the annual rate of
1.25% of the Fund's average daily net assets (the "Basic Fee"), which is
adjusted monthly (the "Monthly Performance Adjustment") depending on the extent
to which the investment performance of the Fund, after expenses, exceeds or was
exceeded by the percentage change in the investment performance of the Standard
& Poor's Composite Index of 500 Stocks (the "S&P 500"). The Monthly
Performance Adjustment may increase or decrease the total advisory fee payable
to the Investment Adviser (the "Total Advisory Fee") by up to 0.75% per annum
of the value of the Fund's average daily net assets. The method by which the
fee is computed is set forth in the Prospectus.

DISTRIBUTOR

Shares of the Fund are distributed on a continuous basis at their current
net asset value per share, without imposition of any front-end or contingent
deferred sales charge, by Mercer Allied Company, the Distributor, and by
selected securities dealers. The Distributor provides these services to the
Fund pursuant to a Distribution Agreement (the "Distribution Agreement"), dated
February __, 1997, with the Trust. The Distribution Agreement was approved by
the Board of Trustees, including a majority of the Trustees who are not parties
to the Distribution Agreement or "interested persons" (as defined by the 1940
Act) of the Investment Adviser or the Distributor, at a meeting held on
February __, 1997, and was also approved on such date by the vote of the sole
shareholder of the Trust on such date. The Distribution Agreement is
terminable

B-14

<PAGE> 50

without penalty, on 60 days' notice, by the Trust's Board or by vote of the
holders of a majority of the Fund's shares, or, on not less than 90 days'
notice, by the Distributor. The Distribution Agreement has an initial term
expiring on ______ __, 1999, and may be continued in effect from year-to-year
thereafter, subject to the approval by (i) the Trust's Board or (ii) vote of
the holders of a majority of the Fund's outstanding shares, provided that in
either event the continuance must also be approved by a majority of the
Trustees who are not "interested persons" (as defined by the 1940 Act) of the
Investment Adviser or the Distributor, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Distribution Agreement
provides that it will terminate automatically in the event of its "assignment"
(as defined by the 1940 Act and the rules thereunder).

Under the terms of the Distribution Agreement, the Distributor bears all
of the costs associated with distribution of the shares of the Fund, including
the incremental cost of printing prospectuses, statements of additional
information, annual reports and other periodic reports for distribution to
prospective investors and the costs of preparing, distributing and publishing
sales literature and advertising materials. However, pursuant to a plan of
distribution adopted by the Trust, the Fund makes certain payments to the
Distributor for services provided by the Distributor. See "DISTRIBUTION PLAN."
In the Distribution Agreement, the Trust has agreed to indemnify the
Distributor to the extent permitted by applicable law against certain
liabilities under the Securities Act of 1933, as amended.

The Distributor is a Delaware limited partnership that is wholly owned by
The Ayco Company, L.P. and the principals of that firm. The Distributor's
address is One Wall Street, Albany, New York 12205.

DISTRIBUTION PLAN

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "DISTRIBUTION PLAN."

The Trust has adopted a plan of distribution on behalf of the Fund
pursuant to Rule 12b-1 under the 1940 Act (the "Distribution Plan"). The
Distribution Plan was approved by the Board of Trustees, including a majority
of the Trustees who are not "interested persons" (as defined by the 1940 Act)
of the Trust and who have no direct or indirect financial interest in the
operation of the Distribution Plan or in any agreement related to such Plan
("Qualified Trustees"), on January __, 1997. The Distribution Plan provides
that it will continue in effect for a period of one year from the date of its
execution, and may be continued in effect from year to year thereafter,
provided that each such continuance is approved annually by a vote of both a
majority of the Trustees and a majority of the Qualified Trustees. The
Distribution Plan requires that the Trust shall provide to the Board of
Trustees, and the Board of Trustees shall review, at least quarterly, a written
report of the amounts expended (and the purposes therefor) under the
Distribution Plan. The Distribution Plan further provides that the selection
and nomination of Qualified Trustees shall be committed to the discretion of
those Trustees, who are not "interested persons" (as defined by the 1940 Act)
of the Distributor, then in office. The Distribution Plan may be terminated at
any time by a vote of a majority of the

B-15

<PAGE> 51

Qualified Trustees or by vote of a majority of the outstanding voting shares of
the Fund (as defined by the 1940 Act). The Distribution Plan may not be
amended to increase materially the amount of permitted expenses thereunder
without the approval of shareholders and may not be materially amended in any
case without a vote of the majority of both the Trustees and the Qualified
Trustees. The Fund will preserve copies of any plan, agreement or report made
pursuant to the Distribution Plan for a period of not less than six years from
the date of the Distribution Plan, and for the first two years such copies will
be preserved in an easily accessible place.

Under the Distribution Plan, the Fund compensates the Distributor for the
services it provides in connection with the sale of the Fund's shares to
investors ("Distribution Services") and for furnishing or arranging for
securities dealers to provide account related services to shareholders
("Shareholder Services"). Shareholder Services provided by the Distributor
and securities dealers include responding to shareholder inquiries regarding
the Fund and their accounts with the Fund, and providing shareholders with
reports, information and services related to their Fund accounts.

As compensation for Distribution Services, the Fund makes payments to the
Distributor which are computed at the annual rate of 0.50% of the Fund's
average net assets (the "Distribution Fee"). As compensation for Shareholder
Services, the Fund makes monthly payments to the Distributor which are computed
at the annual rate of 0.25% of the Fund's average net assets (the "Shareholder
Services Fee"). All payments to securities dealers by the Distributor are made
in arrears commencing six months after the commencement of the Fund's
operations and thereafter on a quarterly basis.

All or a portion of payments received by the Distributor for Distribution
and Shareholder Services with respect to shares sold by unaffiliated securities
dealers that is in excess of the amount of payments made by the Distributor to
such securities dealers may be shared by the Distributor and a securities
dealer affiliated with the Investment Adviser.

Since payments made pursuant to the Distribution Plan are not directly
tied to actual expenses, the amount of payments by the Fund during any year may
be more or less than actual expenses incurred by the Distributor pursuant to
the Distribution Plan. For this reason, this type of distribution fee
arrangement is characterized by the staff of the Securities and Exchange
Commission as being of the "compensation variety" (in contrast to
"reimbursement" arrangements under which payments by a fund are directly linked
to reimburse specific expenses). However, the Fund is not liable for any
distribution related expenses incurred by the Distributor in excess of the
amounts paid pursuant the Distribution Plan.

The Fund estimates that for its first full calendar year of operations,
$125,000 in Distribution Fees and $62,500 in Shareholder Services Fees will be
paid or accrued to the Distributor, assuming net assets of the Fund of $25
million (which cannot be assured).

B-16

<PAGE> 52

HOW TO REDEEM SHARES

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "HOW TO REDEEM SHARES."

WIRE REDEMPTION PRIVILEGE

By using this Privilege, the investor authorizes the Transfer Agent to act
on wire or telephone redemption instructions from any person representing
himself or herself to be the investor and reasonably believed by the Transfer
Agent to be genuine. Ordinarily, the Trust will initiate payment for shares
redeemed pursuant to this Privilege on the next business day after receipt by
the Transfer Agent of the redemption request in proper form. Redemption
proceeds ($1,000 minimum) will be transferred by Federal Reserve wire only to
the commercial bank account specified by the investor on the Account
Application or Distribution Services Form, or to a correspondent bank if the
investor's bank is not a member of the Federal Reserve System. Fees ordinarily
are imposed by such bank and usually are borne by the investor. Immediate
notification by the correspondent bank to the investor's bank may be necessary
to avoid a delay in crediting the Fund to the investor's bank account.

To change the commercial bank, or account designated to receive redemption
proceeds, a written request must be sent to the Transfer Agent. This request
must be signed by each shareholder, with each signature guaranteed as described
in the Prospectus under "HOW TO REDEEM SHARES - Written Redemption Requests."

SUSPENSION OF REDEMPTIONS

The right of redemption may be suspended or the date of payment postponed
(a) during any period when the New York Stock Exchange, Inc. (the "NYSE") is
closed (other than customary weekend and holiday closings), (b) when trading in
the markets the Fund ordinarily utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission such that
disposal of the Fund's investments or determination of its net asset value is
not reasonably practicable, or (c) for such other periods as the Securities and
Exchange Commission by order may permit to protect the Fund's shareholders.

DETERMINATION OF NET ASSET VALUE

The following information supplements and should be read in conjunction
with the sections in the Fund's Prospectus entitled "HOW TO BUY SHARES" and
"HOW TO REDEEM SHARES."

Net asset value is computed once daily (generally 4:00 p.m. Eastern time)
each day the NYSE is open and on each other day on which there is a sufficient
degree of trading in the Fund's investments to affect net asset value, except
that no computation need be made on a day on which no orders to purchase or
redeem shares have been received. The NYSE currently observes the following
holidays: New Year's Day; Presidents' Day (third Monday

B-17
<PAGE> 53

in February); Good Friday (Friday before Easter); Memorial Day (last Monday in
May); Independence Day; Labor Day (first Monday in September); Thanksgiving Day
(last Thursday in November); and Christmas Day.

Net asset value per share is computed by dividing the value of the Fund's
net assets (i.e., the value of its assets less its liabilities) by the total
number of Fund shares outstanding. In computing net asset value, securities
are valued at market value as of the close of trading on each business day when
the NYSE is open. Securities, other than stock options, listed on the NYSE or
other exchanges are valued on the basis of the last sale price on the exchange
on which they are primarily traded. However, if the last sale price on the
NYSE is different than the last sale price on any other exchange, the NYSE
price will be used. If there are no sales on that day, then the securities are
valued at the bid price on the NYSE or other primary exchange for that day.
Securities traded in the over-the-counter market are valued on the basis of the
last sales price as reported by NASDAQ. If there are no sales on that day,
then the securities are valued at the mean between the closing bid and asked
prices as reported by NASDAQ. Stock options traded on national securities
exchanges are valued at the last sales price prior to the time of computation
of net asset value per share. Securities for which market quotations are not
readily available and other assets are valued at fair value as determined
pursuant to procedures adopted in good faith by the Board of Trustees.
Short-term debt securities will be valued at their current market value when
available or fair value, which for securities with remaining maturities of 60
days or less has been determined in good faith by the Board of Trustees to be
represented by amortized cost value, absent unusual circumstances. A pricing
service may be utilized to determine the fair value of securities held by the
Fund. Any such service might value the investments based on methods which
include consideration of: yields or prices of securities of comparable
quality, coupon, maturity and type; indications as to values from dealers; and
general market conditions. The service may also employ electronic data
processing techniques, a matrix system or both to determine valuation. The
Board of Trustees will review and monitor the methods used by such services to
assure itself that securities are valued at their fair values.

The values of securities held by the Fund and other assets used in
computing net asset value are determined as of the time trading in such
securities is completed each day, which, in the case of foreign securities,
generally occurs at various times prior to the close of the NYSE. Foreign
currency exchange rates are also generally determined prior to the close of the
NYSE. On occasion, the values of such securities and exchange rates may be
affected by events occurring between the time as of which determinations of
such values or exchange rates are made and the close of the NYSE. When such
events materially affect the value of securities held by the Fund or their
liabilities, such securities and liabilities will be valued at fair value in
accordance with procedures adopted in good faith by the Board of Trustees. The
values of any assets and liabilities initially expressed in foreign currencies
will be converted to U.S. dollars at the mean between the bid and offer prices
of the currencies against U.S. dollars last quoted by any major bank.

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<PAGE> 54

DIVIDENDS, DISTRIBUTIONS AND TAXES

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "DIVIDENDS, DISTRIBUTIONS
AND TAXES."

It is the policy of the Trust each fiscal year to distribute substantially
all of the Fund's net investment income and net realized capital gains, if any,
to its shareholders. The Trust intends that the Fund will qualify as a
regulated investment company under the provisions of the Code. If so
qualified, the Fund will not be subject to federal income tax on that part of
its net investment income and net realized capital gains which it distributed
to its shareholders. To qualify for such tax treatment, the Fund must
generally, among other things, (a) derive at least 90% of its gross income from
dividends, interest (including payments received with respect to loans of stock
and securities) and gains from the sale or other disposition of stock or
securities and certain related income; (b) derive less than 30% of its gross
income from the sale or other disposition of stock or securities or options or
futures thereon and certain other investments held less than three months; and
(c) diversify its holdings so that at the end of each fiscal quarter (i) 50% of
the market value of the Fund's assets is represented by cash, U.S. Government
securities and other securities limited, in respect of any one issuer, to an
amount not greater than 5% of the Fund's assets or 10% of the voting securities
of the issuer, and (ii) not more than 25% of the value of its assets is
invested in the securities of any one issuer (other than U.S. Government
securities). These requirements may limit the ability of the Fund to engage in
certain transactions involving options.

Shareholders will be notified annually by the Trust as to the federal tax
status of dividends and distributions paid to or reinvested by the shareholder
for the preceding taxable year. In addition, dividend and long-term capital
gains distributions may also be subject to state and local taxes. Each
shareholder is advised to consult its own tax adviser concerning the tax
effects of share ownership.

Depending upon the composition of the Fund's income, the entire amount or
a portion of the dividends paid by the Fund from net investment income may
qualify for the dividends received deduction allowable to qualifying U.S.
corporate shareholders (the "dividends received deduction"). In general,
dividend income of the Fund distributed to qualifying corporate shareholders
will be eligible for the dividends received deduction only to the extent that
the Fund's income consists of dividends paid by U.S. corporations. However,
Section 246(c) of the Code provides that if a qualifying corporate shareholder
has disposed of Fund shares not held for 46 days or more and has received a
dividend from net investment income with respect to such shares, the portion
designated by the Fund as qualifying for the dividends received deduction will
not be eligible for such shareholder's dividends received deduction. In
addition, the Code provides other limitations with respect to the ability of a
qualifying corporate shareholder to claim the dividends received deduction in
connection with holding Fund shares.

It should be noted that both dividends and capital gains distributions
received by an investor have the effect of reducing the net asset value of the
shares by the exact amount of the

B-19

<PAGE> 55

dividend or capital gains distribution. If the net asset value of the shares
should be reduced below a shareholder's cost as a result of the distribution of
realized long-term capital gains, such distribution would be at least a partial
return of capital but nonetheless taxable at capital gains rates. Therefore,
an investor should consider the tax consequences of purchasing shares
immediately prior to a distribution record date.

Dividends and interest received by the Fund on foreign investments may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes.

Distributions by the Fund of net investment income and the excess of net
short-term capital gains over net long-term capital loss are taxable to
shareholders of the Fund as ordinary income regardless of whether such
distributions are reinvested in additional shares or paid in cash.
Distributions of net long-term gains, if any, are taxable as long-term capital
gains regardless of how long the investor has held the shares and regardless of
whether the distribution is received in additional shares or in cash.

Under present Delaware law, the Trust is not subject to any state income
taxation during any fiscal year in which the Fund qualifies as a regulated
investment company. However, the Trust might be subject to Delaware income
taxes for any taxable year in which the Fund did not so qualify. Further, the
Trust may be subject to tax in certain states where it does business. In those
states which have income tax laws, the tax treatment of the Trust and its
shareholders in respect to distributions may differ from federal tax treatment.

PORTFOLIO TRANSACTIONS AND BROKERAGE

Subject to the general supervision of the Board of Trustees, the
Investment Adviser is responsible for decisions to buy and sell securities for
the Fund, the selection of brokers and dealers to effect the transactions, and
the negotiation of brokerage commissions, if any. Purchases and sales of
securities on a stock exchange are effected through brokers who charge a
commission for their services. In the over-the-counter market, securities are
generally traded on a "net" basis with dealers acting as principal for their
own accounts without a stated commission, although the price of the security
usually includes a profit to the dealer. In underwritten offerings, securities
are purchased at a fixed price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
Certain money market instruments may be purchased directly from an issuer, in
which case no commission or discounts are paid. The Fund anticipates that its
transactions involving foreign securities will be effected primarily on
principal stock exchanges for such securities. Fixed commissions on such
transactions are generally higher than negotiated commissions on domestic
transactions. There is also generally less government supervision and
regulation of foreign stock exchanges and brokers than in the United States.

Affiliates of the Investment Adviser currently serve as investment adviser
to a number of clients, including private investment companies, and the
Investment Adviser may in the future act as investment adviser to other
registered investment companies. It is the practice of

B-20

<PAGE> 56

the Investment Adviser to cause purchase and sale transactions to be allocated
among the Fund and others whose assets are managed by the Investment Adviser or
its affiliates in such manner as it deems equitable. In making such
allocations, the main factors considered are the respective investment
objectives, the relative size of portfolio holdings of the same or comparable
securities, the availability of cash for investment, the size of investment
commitments generally held and the opinions of the persons responsible for
managing the Fund and the other client accounts. This procedure may, under
certain circumstances, have an adverse effect on the Fund.

The policy of the Trust regarding purchases and sales of securities for
the Fund is that primary consideration will be given to obtaining the most
favorable prices and efficient executions of transactions. Consistent with
this policy, when securities transactions are effected on a stock exchange, the
Trust's policy is to pay commissions which are considered fair and reasonable
without necessarily determining that the lowest possible commissions are paid
in all circumstances. The Board of Trustees believes that a requirement always
to seek the lowest commission cost could impede effective management and
preclude the Investment Adviser from obtaining high quality brokerage and
research services. In seeking to determine the reasonableness of brokerage
commissions paid in any transaction, the Investment Adviser relies on its
experience and knowledge regarding commissions generally charged by various
brokers and on its judgment in evaluating the brokerage and research services
received from the broker effecting the transaction. Such determinations are
necessarily subjective and imprecise, as in most cases an exact dollar value
for those services is not ascertainable.

In seeking to implement the Trust's policies, the Investment Adviser
effects transactions with those brokers and dealers who it believes provide the
most favorable prices and which are capable of providing efficient executions.
If the Investment Adviser believes such price and execution are obtainable from
more than one broker or dealer, it may give consideration to placing portfolio
transactions with those brokers and dealers who also furnish research and other
services to the Trust or the Investment Adviser. Such services may include,
but are not limited to, any one or more of the following: information as to the
availability of securities for purchase or sale; statistical or factual
information or opinions pertaining to investments; wire services; and
appraisals or evaluations of portfolio securities. The information and
services received by the Investment Adviser from brokers and dealers may be of
benefit in the management of accounts of other clients and may not in all cases
benefit the Trust directly. While such services are useful and important in
supplementing its own research and facilities, the Investment Adviser believes
the value of such services is not determinable and does not significantly
reduce its expenses.

Portfolio transactions may be effected through qualified broker-dealers
who recommend the Fund to their clients, or who act as agent in the purchase of
the Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Fund's adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker-dealers.

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<PAGE> 57
PERFORMANCE INFORMATION

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "FUND PERFORMANCE
INFORMATION."

GENERALLY

As discussed in the Prospectus, from time to time the Trust may
disseminate quotations of total return and other performance related and
comparative information.

From time to time, the performance of the Fund or of individual accounts
or mutual funds managed by the Investment Adviser may be compared to the
performance of other mutual funds following similar objectives, to a database
including the performance of individually managed portfolios maintained by the
Investment Adviser or to recognized market indices. Comparative performance
information may be used from time to time in advertising or marketing the
Fund's shares, including data from Lipper Analytical Services, Inc., the S&P
500 Index, the Wilshire 5000 Index, the Dow Jones Industrial Average, Money
Magazine, Morningstar, Inc. and other industry publications. The Fund's return
may also be compared to the cost of living (measured by the Consumer Price
Index) or the return of various categories of investments (as measured by
Ibbotson Associates or others) over the same period. In addition to
performance rankings, the Fund may compare its total expense ratio to the
average total expense ratio of similar funds tracked by Lipper Analytical
Services, Inc.

In advertising materials, the Trust may quote or reprint financial or
business publications and periodicals, including model portfolios or
allocations, as they relate to current economic and political conditions, fund
management, portfolio composition, investment philosophy, investment
techniques, the desirability of owning a particular mutual fund, and the
Investment Adviser's services and products. The Investment Adviser may provide
information designed to clarify investment goals and explore various financial
strategies. Such information may include information about current economic,
market, and political conditions; materials that describe general principles of
investing, such as asset allocation, diversification, risk tolerance, and goal
setting. Materials may also include discussions of other products and services
offered by the Investment Adviser.

The Trust may quote various measures of the volatility and benchmark
correlation of the Fund in advertising. In addition, the Trust may compare
these measures to those of other funds. Measures of volatility seek to compare
the Fund's historical share price fluctuations or total returns to those of a
benchmark. Measures of benchmark correlation indicate how valid a comparative
benchmark may be. All measures of volatility and correlation are calculated
using averages of historical data.

B-22
<PAGE> 58

comparative benchmark may be. All measures of volatility and correlation are
calculated using averages of historical data.

TOTAL RETURN

The Fund's quotations of total return will reflect the average annual
compounded rate of return on an assumed investment of $1,000 that equates the
initial amount invested to the ending redeemable value according to the
following formula:

P (1 + T)(n) = ERV

"P" represents a hypothetical initial investment of $1,000; "T" represents
average annual total return; "n" represents the number of years; and "ERV"
represents the ending redeemable value of the initial investment. Dividends
and other distributions are assumed to be reinvested in shares at the prices in
effect on the reinvestment dates. ERV will be adjusted to reflect the effect
of the Investment Adviser's agreement to absorb certain expenses as discussed
in the Prospectus. Quotations of total return will be for a one year, five
year and ten year periods ended on the date of the most recent balance sheet
included in the Trust's registration statement at such times as the
registration statement has been in effect for such periods. Until such time as
the registration has been effective for the one year, five year and ten year
periods, the Fund's quotations of total return will also include a quotation of
total return for the time period during which the registration statement has
been in effect or commencement of operations, whichever is later. The Fund may
also provide quotations of total return for other periods and quotations of
cumulative total returns, which reflect the actual performance of the Fund over
the entire period for which the quotation is given.

NET ASSET VALUE

Charts and graphs using the Fund's net asset values, adjusted net asset
values, and benchmark indices may be used to exhibit performance. An adjusted
net asset value includes any distributions paid by the Fund and reflects all
elements of its return.

GENERAL INFORMATION

The following information supplements and should be read in conjunction
with the section in the Fund's Prospectus entitled "GENERAL INFORMATION."

DESCRIPTION OF SHARES

Interests in the Fund are represented by shares of beneficial interest,
$.001 par value. The Trust is authorized to issue an unlimited number of
shares.

Each share of the Fund represents an equal proportionate interest in the
Fund with each other share of the Fund, without any priority or preference over
other shares. All consideration received for the sales of shares of the Fund,
all assets in which such consideration is invested, and all income, earnings
and profits derived therefrom are allocated

B-23

<PAGE> 59

to and belong to the Fund. As such, the interest of shareholders in the Fund
will be separate and distinct from the interest of shareholders of any other
series of the Trust that may be created in the future, and shares of the Fund
will be entitled to dividends and distributions only out of the net income and
gains, if any, of the Fund as declared by the Board of Trustees. The assets of
the Fund will be segregated on the Trust's books from the assets of any other
series and will be charged with the expenses and liabilities of the Fund and
with a share of the general expenses and liabilities of the Trust not
attributable to the Fund or any other series. The Board of Trustees will
determine those expenses and liabilities deemed to be general, and these items
would be allocated among the Fund and any other series as deemed fair and
equitable by the Board of Trustees in its sole discretion.

CONTROL PERSONS AND HOLDERS OF SECURITIES

As of ____________, 1997, Messrs. Eisenberg and Harrison may be deemed to
control the Trust and the Fund through the Investment Adviser's record and
beneficial ownership of all outstanding shares of the Fund. These control
relationships will continue to exist until such time as the above-described
share ownership represents 25% or less of the outstanding shares of the Fund.
Through the exercise of voting rights with respect to shares of the Fund, the
controlling persons set forth above may be able to determine the outcome of
shareholder voting on matters as to which approval of shareholders is required.

TRUSTEE AND OFFICER LIABILITY

Under the Trust's Declaration of Trust and its By-Laws, and under Delaware
law, the Trustees, officers, employees and certain agents of the Trust are
entitled to indemnification under certain circumstance against liabilities,
claims and expenses arising from any threatened, pending or completed action,
suit or proceeding to which they are made parties by reason of the fact that
they are or were such Trustees, officers, employees or agents of the Trust,
subject to the limitations of the 1940 Act which prohibit indemnification which
would protect such persons against liabilities to the Trust or its shareholders
to which they would otherwise be subject by reason of their own bad faith,
willful misfeasance, gross negligence or reckless disregard of duties.

INDEPENDENT PUBLIC ACCOUNTANTS

Coopers & Lybrand, The 411 East Wisconsin Building, Milwaukee, Wisconsin
53202, are the independent public accountants of the Trust. The independent
public accountants are responsible for auditing the financial statements and
prepare the tax returns of the Fund. The selection of the independent public
accountants is approved annually by the Board of Trustees.

CUSTODIAN

Firstar Trust Company, 615 East Michigan Street, 3rd Floor, Milwaukee, WI
53202, serves as custodian of the Trust's assets and maintains custody of the
Fund's cash and investments. Cash held by the custodian, which may at times be
substantial, is insured by the

B-24

<PAGE> 60

Federal Deposit Insurance Corporation up to the amount of available insurance
coverage limits (presently, $100,000).

ADMINISTRATOR

The Trust has retained Firstar Trust Company, 615 East Michigan Street,
3rd Floor, Milwaukee, WI 53202, to provide various administrative and
accounting services necessary for the operations of the Trust and the Fund.
Services provided by the Administrator include: facilitating general Fund
management; monitoring Fund compliance with federal and state regulations;
supervising the maintenance of the Fund's general ledger, the preparation of
the Fund's financial statements, the determination of the net asset value of
the Fund's assets and the declaration and payment of dividends and other
distributions to shareholders; and preparing specified financial, tax and other
reports. The Fund pays the Administrator a monthly fee for administrative
services which is calculated at the annual rate of 0.06% of the Fund's average
net assets (subject to a minimum annual fee of $30,000) and reimburses the
Administrator for certain out-of-pocket expenses. In addition, the Fund pays
the Administrator a fee for accounting services which is calculated at the
annual rate of 0.02% of the Fund's net assets (subject to a minimum annual fee
of $25,000), plus certain expenses.

LEGAL COUNSEL

Schulte Roth & Zabel LLP, New York, New York, serves as counsel to the
Trust.

REGISTRATION STATEMENT

This Statement of Additional Information and the Prospectus do not contain
all of the information set forth in the Registration Statement the Trust has
filed with the Securities and Exchange Commission. The complete Registration
Statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Securities
and Exchange Commission.

FINANCIAL STATEMENTS

The financial statements of the Fund as of February ___, 1997 included in
this Statement of Additional Information have been audited by Coopers &
Lybrand, independent public accountants, as indicated in their report with
respect thereto. The financial statements are included herein in reliance upon
the authority of said firm as experts in accounting and auditing and giving
said report.

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<PAGE> 61

[INSERT FINANCIAL STATEMENTS AND REPORT THEREON]

B-26

<PAGE> 62

FORM N-1A

GRANUM SERIES TRUST

PART C - OTHER INFORMATION

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial Statements

Statement of Assets and Liabilities.*

(b) Exhibits

(1) (a) Certificate of Trust dated December 19, 1996. Filed herewith.

(b) Declaration of Trust dated December 19, 1996. Filed herewith.

(2) By-Laws. Filed herewith.

(3) Not applicable.

(4) Instruments Defining the Rights of Holders of Securities.*

(5) Investment Advisory Agreement.*

(6) Underwriting or Distribution Contract.*

(7) Not applicable.

(8) Custodian Agreement.*

(9) Contracts Not Made in the Ordinary Course of Business.*

(10) Opinion and Consent of Counsel.*

(11) Consent of Independent Public Accountants*

(12) Not applicable.

(13) Letter of Investment Intent.*

(14) Not applicable.

(15) Plan Pursuant to Rule 12b-1.*

_____________________________

* To be filed by pre-effective amendment.

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<PAGE> 63
(16) Schedule for Computation of Performance Quotations.**

(17) Financial Data Schedule.*

(18) Not applicable.

ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

Granite Capital International Group L.P., an investment adviser which is
exempt from registration under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), Granum Securities, L.L.C., a newly formed entity which is
in the process of registering as a broker-dealer, and Granum Capital
Management, L.L.C., a newly formed entity which is in the process of
registering as an investment adviser and expects to serve as the investment
adviser of Registrant, are each companies which are controlled by Lewis M.
Eisenberg and Walter F. Harrison, III who jointly own all of the voting
interests in these entities. Registrant may be deemed to be under common
control with the foregoing companies because Messrs. Eisenberg and Harrison
serve as the initial trustees of Registrant, which currently has no shares
outstanding.

ITEM 26. NUMBER OF HOLDERS OF SECURITIES

Title of Class Number of Record Holders
- -------------------- ------------------------
Shares of None.
Beneficial Interest
in Granum Value
Fund

ITEM. 27. INDEMNIFICATION

A Delaware business trust may provide in its governing instrument for
indemnification of its officers and trustees from and against any and all
claims and demands whatsoever. Article III, Section 7 of Registrant's
Declaration of Trust provides that if any Shareholder or former Shareholder
shall be exposed to liability by reason of a claim or demand relating to his or
her being or having been a Shareholder, and not because of his or her acts or
omissions, the Shareholder or former Shareholder (or his or her heirs,
executors, administrators, or other legal representatives or in the case of a
corporation or other entity, its corporate or other

- ---------------
* To be filed by pre-effective amendment.
** To be filed by post-effective amendment.

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<PAGE> 64

general successor) shall be entitled to be held harmless from and indemnified
out of the assets of the Trust against all loss and expense arising from such
claim or demand.

Pursuant to Article VII, Section 2 of the Declaration of Trust, the
Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, Investment Manager or Principal
Underwriter of the Trust, nor shall any Trustee be responsible for the act or
omission of any other Trustee, and the Trust out of its assets shall indemnify
and hold harmless each and every Trustee from and against any and all claims
and demands whatsoever arising out of or related to each Trustee's performance
of his duties as a Trustee of the Trust to the fullest extent permitted by law;
provided that nothing herein contained shall indemnify, hold harmless or
protect any Trustee from or against any liability to the Trust or any
Shareholder to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Registrant of expenses
incurred or paid by a trustee, officers or controlling person of Registrant in
the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, 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 such Act and will be governed by the final adjudication
of such issue.

ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

A description of any other business, profession, vocation, or employment
of a substantial nature in which each investment adviser of Registrant, and
each director, executive officer, or partner of any such investment adviser, is
or has been, at any time during the past two fiscal years, engaged in for his
or her own account or in the capacity of director, officer, employee, partner
or trustee, is set forth in the Form ADV of Granum Capital Management, L.L.C.
as filed with the Securities and Exchange Commission on January 10, 1997, and
is incorporated herein by this reference.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) Mercer Allied Company, L.P., a limited partnership whose sole general
partner is Breham, Inc., acts as the principal underwriter of shares of
Registrant. The Distributor does not serve as principal underwriter,
depositor, or investment adviser of any other registered investment company.

C-3
<PAGE> 65

(b) Set forth below is information concerning each partner and officer of
the Distributor. Unless otherwise specified, the business address of each such
person is One Wall Street, Albany, NY 12205-3804.

<TABLE>
<CAPTION>
NAME TITLE
- ---------------- ----------------------------

<S> <C>

[To be included in a pre-effective amendment.]

</TABLE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

All financial and accounting related books and records required to be
maintained under Section 31(a) of the Investment Company Act of 1940, as
amended, and the rules thereunder are maintained at the offices of Firstar
Trust Company, 615 East Michigan Street, Milwaukee, WI 53202. All other books
and records required to be maintained by Section 31(a) and the rules thereunder
are maintained at 126 East 56th Street, New York, NY 10022.

ITEM 31. MANAGEMENT SERVICES

Other than as set forth in Parts A and B of this Registration Statement,
Registrant is not a party to any management-related service contract.

ITEM 32. UNDERTAKINGS

Registrant undertakes to file a post-effective amendment, containing
financial statements which need not be certified, within four to six months
from the effective date of this Registration Statement under the 1933 Act.

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

C-4

<PAGE> 66

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and State of New York on the
23nd day of January, 1997.

Granum Series Trust
Registrant

By:....../s/ Lewis M. Eisenberg.............
Lewis M. Eisenberg
Co-Chairman

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

......./s/ Lewis M. Eisenberg....... Co-Chairman and Trustee January 23, 1997
Lewis M. Eisenberg

......./s/ Walter F. Harrison, III.. Co-Chairman and Trustee January 23, 1997
Walter F. Harrison, III

......./s/ Jonas B. Siegel.......... Vice President, Treasurer January 23, 1997
Jonas B. Siegel and Chief Financial Officer

<PAGE> 67

FORM N-1A

GRANUM SERIES TRUST

EXHIBIT INDEX

EXHIBIT
NUMBER DOCUMENT

(1) (a) Certificate of Trust dated December 19, 1996.

(b) Declaration of Trust dated December 19, 1996.

(2) By-Laws.

<PAGE> 1
Exhibit 99.(1)(a)

CERTIFICATE OF TRUST
OF
GRANUM SERIES TRUST

This Certificate of Trust of GRANUM SERIES TRUST, a business trust which
proposes to register under the Investment Company Act of 1940, as amended (the
"Business Trust"), filed in accordance with the provisions of the Delaware
Business Trust Act (12 Del. Code Sections 3801 et seq.), sets forth the
following:

FIRST: The name of the Business Trust is GRANUM SERIES TRUST.

SECOND: As required by 12 Del. Code Sections 3807(b) and
3810(a)(1)(b), the name and business address of the Business Trust's Registered
Agent for Service of Process and the address of the Business Trust's Registered
Office are:

Address of Business
Trust's Registered
Office and Business
Address of Registered
Resident Agent Agent
-------------- ------------------------

National Corporate Research, Ltd. 9 East Loockerman Street
Dover, DE 19901

The names and business addresses of the initial trustees of the Business
Trust are as follows:

Name Business Address
---- ----------------

Lewis M. Eisenberg 126 East 56th Street
New York, NY 10022

Walter F. Harrison, III 126 East 56th Street
New York, NY 10022

THIRD: The nature of the business or purpose or purposes of the Business
Trust as set forth in its governing instrument is to conduct, operate and carry
on the business of a management investment company registered under the
Investment Company Act of 1940, as amended, through one or more series of
shares of beneficial interest, investing primarily in securities.

<PAGE> 2

FOURTH: The trustees of the business trust, as set forth in its governing
instrument, reserve the right to amend, alter, change or repeal any provision
contained in this Certificate of Trust, in any manner now or hereafter
prescribed by statute.

FIFTH: This Certificate of Trust shall become effective immediately upon
its filing with the Office of the Secretary of State of the State of Delaware.

IN WITNESS WHEREOF, the undersigned, being the initial trustees of GRANUM
SERIES TRUST, have duly executed this Certificate of Trust as of this 19th day
of December, 1996.
/s/ Lewis M. Eisenberg
------------------------------------
Lewis M. Eisenberg, as Trustee and
not individually

/s/ Walter F. Harrison, III
------------------------------------
Walter F. Harrison, III as Trustee
and not individually

<PAGE> 1
Exhibit 99.(1)(b)

Effective as of
December 19, 1996

DECLARATION OF TRUST

GRANUM SERIES TRUST

A DELAWARE BUSINESS TRUST

PRINCIPAL PLACE OF BUSINESS:
126 East 56th Street, 25th Floor
New York, NY 10022

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE I NAME AND DEFINITIONS 1
Section 1. Name 1
Section 2. Definitions 1
ARTICLE II PURPOSE OF TRUST 3
ARTICLE III SHARES OF BENEFICIAL INTEREST 3
Section 1. Description of Shares 3
Section 2. Ownership of Shares 4
Section 3. Investments in the Trust; Consideration 4
Section 4. Status of Shares and Limitation of Personal Liability 4
Section 5. Power of Board of Trustees to Change Provisions Relating to Shares 5
Section 6. Establishment and Designation of Series and Classes 5
Section 7. Indemnification of Shareholders 7
ARTICLE IV THE BOARD OF TRUSTEES 7
Section 1. Number, Election and Tenure 7
Section 2. Effect of Death, Resignation, etc. of a Trustee 8
Section 3. Powers 8
Section 4. Payment of Expenses by the Trust 12
Section 5. Payment of Expenses by Shareholders 12
Section 6. Ownership of Assets of the Trust 12
Section 7. Service Contracts 12
ARTICLE V SHAREHOLDERS' VOTING POWERS 13
ARTICLE VI NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS 14
Section 1. Determination of Net Asset Value, Net Income, Dividends and Distributions 14
Section 2. Redemptions and Repurchases 14
Section 3. Redemptions at the Option of the Trust 15
ARTICLE VII COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES 15
Section 1. Compensation 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 16
ARTICLE VIII 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 18
Section 7. Provisions in Conflict with Law or Regulations 18
Section 8. Business Trust Only 18
Section 9. Use of the Names "Granite" and "Granum" 18
</TABLE>

-i-

<PAGE> 3

DECLARATION OF TRUST

GRANUM SERIES TRUST

WHEREAS, THIS DECLARATION OF TRUST (the "Declaration") is made and entered
into as of the date set forth below by the Trustees hereunder (the "Initial
Trustees") for the purpose of forming a Delaware business trust in accordance
with the provisions hereinafter set forth,

NOW, THEREFORE, the Initial Trustees are filing a Certificate of Trust
with the Office of the Secretary of State of the State of Delaware and hereby
declares that all money and property contributed to the trust established
hereby shall be held and managed in trust for the benefit of the persons who
may from time to time hold beneficial interests issued hereunder and subject to
the provisions hereof, to wit:

ARTICLE I
NAME AND DEFINITIONS

Section 1. Name.

The name of the trust established hereby (the "Trust") is GRANUM SERIES
TRUST and, insofar as may be practicable, the Trustees shall conduct the
Trust's activities, execute all documents and sue or be sued under that name,
which name (and the word "Trust" wherever herein used) shall refer to the
Trustees as trustees, and not as individuals, or personally, and shall not
refer to the officers, agents, employees or Shareholders of the Trust. If the
Trustees determine that the Trust's use of such name is not advisable or if the
Trust is required to discontinue the use of such name pursuant to Article VIII,
Section 9 hereof, then, subject to that section, the Trustees may adopt such
other name for the Trust as they deem proper and the Trust may hold its
property and conduct its activities under such other name.

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 hereby,
by whatever name it be known, inclusive of each and every Series established
hereunder;

(b) The "Trust Property" means any and all assets and property, real or
personal, tangible or intangible, which are owned or held by or for the account
of the Trust or the Trustees, including without limitation the rights
referenced in Article VIII, Section 9 hereof;

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<PAGE> 4

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

(d) "Shares" means the units 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;

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

(f) "Person" means and includes individuals, corporations, partnerships,
trusts, 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 and any
orders thereunder which may from time to time be applicable to the Trust;

(h) The terms "Commission" and "Principal Underwriter" shall have the
meanings given them in the 1940 Act;

(i) "Declaration" shall mean this Declaration of Trust, as amended and in
effect from time to time. Reference in this Declaration of Trust to
"Declaration," "hereof," "herein," "hereby," and "hereunder" shall be deemed to
refer to this Declaration rather than the article or section in which such
words appear;

(j) "By-Laws" shall mean the By-Laws of the Trust referred to in Article
IV, Section 3 hereof, as amended from time to time and incorporated herein by
reference;

(k) The term "Interested Person" has the meaning given it in the 1940 Act;

(l) "Investment 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 the Trust established and designated
under or in accordance with the provisions of Article III hereof;

(n) "Class" means a separately designated class of shares of a Series
established in accordance with the provisions of Article III of this
Declaration with such varying rights from each other Class of such Series as
may be established in accordance with the provisions of Article III of this
Declaration; and

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<PAGE> 5

(o) "Board of Trustees" means such individuals who at any given time
constitute the Trustees.

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 OF BENEFICIAL INTEREST

Section 1. Description of Shares.

The beneficial interest in the Trust shall at all times be divided into
transferable units to be called Shares of Beneficial Interest, each with a par
value of one tenth of one cent ($.001). The Trustees may, from time to time,
authorize the division of Shares into separate Series and the division of any
Series into two or more separate Classes of Shares, as they deem necessary and
desirable. The different Series shall be established and designated, and the
variations in the relative rights and preferences as between the different
Series shall be fixed and determined, by the Trustees, without the requirement
of Shareholder approval. The sole initial Series of 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, and all
references to Series (and Classes) shall be construed (as the context may
require) to refer to the Trust.

Subject to the provisions of Section 6 of this Article III, each Share
shall have voting rights as provided in Article V hereof and in the By-Laws,
and holders of the Shares of any Series shall be entitled to receive dividends,
if and when declared, with respect thereto in the manner provided in Article
VI, Section 1 hereof. No Shares shall have any priority or preference over any
other Share of the same Series or Class with respect to dividends or
distributions upon termination of the Trust or of such Series or Class made
pursuant to Article VIII, Section 2 hereof. All dividends and distributions
shall be made ratably among all Shareholders of a particular Series or Class
thereof from the assets held with respect to such Series according to the
number of Shares of such Series or Class thereof 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 Shareholder on the record date for any dividend or
distribution or on the date of termination, 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 or Class. The Trustees
may from time to time divide or combine the Shares of any particular Series or
Class without thereby materially changing the proportionate beneficial interest
of the Shares of that Series or Class in the assets held with respect to that
Series or materially affecting the rights of Shares of any other Series or
Class.

The number of authorized Shares and the number of Shares of each Series
and Class that may be issued is unlimited. The Trustees may classify or
reclassify any unissued

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<PAGE> 6

Shares or any Shares previously issued and reacquired of any Series or Class
into one or more Series or Classes that are now or hereafter established and
designated from time to time. The Trustees may hold as treasury Shares,
reissue for such consideration and on such terms as they may determine, or
cancel, at their discretion from time to time, any Shares of any Series or
Class reacquired by the Trust.

Section 2. Ownership of Shares.

The ownership of Shares shall be recorded on the books of the Trust or of
a transfer or similar agent for the Trust, which books shall be maintained
separately for the Shares of each Series or Class. No certificates certifying
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 who
are the Shareholders of each Series or Class and as to the number of Shares of
each Series or Class held by each Shareholder.

Section 3. Investments in the Trust; Consideration.

Shares of the Trust shall be offered for sale and sold in such manner and
at such times, and subject to such requirements and for such consideration, as
may be determined from time to time by the Trustees, subject to applicable
requirements of law, including the 1940 Act. To the extent permitted by
applicable law, Shares may be sold subject to imposition of such sales charges,
deferred sales charges, asset-based sales charges and redemption fees as may be
determined by the Trustees. All Shares when issued on the terms determined by
the Trustees shall be fully paid and nonassessable.

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. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder shall not
operate to terminate the Trust, and shall not 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 entitles such representative
only to the rights of said deceased Shareholder under this Trust. Ownership of
Shares shall not entitle the Shareholder to any title in or to the whole or any
part of the Trust Property or to any right to call for a partition or division
of the same or for an accounting, nor shall the ownership of Shares constitute
the Shareholders as partners. Neither the Trust nor the Trustees, nor any
officer, employee or agent of the Trust shall have any power to bind personally
any Shareholders, nor, except as specifically provided herein, 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 personally agree to pay.

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<PAGE> 7

Section 5. Power of Board of Trustees to Change Provisions Relating to Shares.

Notwithstanding any other provisions of this Declaration and without
limiting the power of the Board of Trustees to amend the Declaration as
provided elsewhere herein, the Board of Trustees shall have the power to amend
this Declaration, at any time and from time to time, in such manner as the
Board of Trustees may determine in its 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, 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 or that Shareholder approval is not otherwise
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 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.

Subject to this Section 5, the Board of Trustees may amend the Declaration
of Trust to amend any of the provisions set forth in paragraphs (a) through (g)
of Section 6 of this Article III.

Section 6. Establishment and Designation of Series and Classes.

The sole initial Series of Shares of the Trust (the "Initial Series"),
which Series is hereby established and designated, is the GRANUM VALUE FUND.
Until such time as may otherwise be determined by the Trustees in accordance
with this Declaration, all Shares of such initial Series shall be of one Class.

The establishment and designation of any additional Series or Class shall
be effective upon the execution by a majority of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series or Class, or as otherwise provided in
such instrument. Each instrument referred to in this paragraph shall have the
status of an amendment to this Declaration.

Shares of the Initial Series, and Shares of each additional Series
hereafter established pursuant to this Section 6, unless otherwise provided in
the instrument establishing such Series, shall have the following relative
rights and preferences:

(a) Assets Held With Respect to a Particular Series or Class. All
consideration received by the Trust for the issuance or sale of Shares of a
particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings and profits
thereon, and the 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 or Class for all purposes, subject only to the rights of
creditors of such Series, and shall be so recorded upon the books of account of
the Trust. All such consideration, assets, income, earnings, profits and
proceeds thereof of a Series or Class, are herein referred to as "assets held
with respect to" that Series or

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<PAGE> 8

Class. 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 or Class (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series or Classes in such manner and on such
basis as the Trustees, in their sole discretion, deem fair and equitable, and
any General Assets so allocated to a particular Series or Class shall be assets
held with respect to that Series or Class. Each such allocation by the
Trustees shall be conclusive and binding upon the Shareholders of all Series
and Classes for all purposes.

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

(c) Dividends, Distributions, Redemptions and Repurchases.
Notwithstanding any other provisions of this Declaration, including, without
limitation, Article VI: (i) no dividend or distribution including, without
limitation, any distribution paid upon termination of the Trust or of any
Series or Class with respect to, nor 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 or Class, and (ii) except as
specifically provided in Section 7 of this Article III, no Shareholder of any
particular Series or Class shall otherwise have any right or claim against the
assets held with respect to any other Series or Class except to the extent that
such Shareholder has such a right or claim hereunder as a Shareholder of such
other Series or Class. The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items shall be treated
as income or capital gains and which items shall be treated as capital; and
each such determination and allocation shall be conclusive and binding upon the
Shareholders.

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<PAGE> 9

(d) Voting. All Shares of the Trust entitled to vote on a matter shall
vote separately by Series and by Class: that is, the Shareholders of each
Series and Class shall have the right to approve or disapprove matters
affecting the Trust and that Series and Class as if the Series or Class were
separate companies. There are, however, two exceptions to voting by separate
Series and Classes. First, if as to any matter the 1940 Act requires or
permits all Shares entitled to vote with respect to such matter to be voted in
the aggregate without differentiation between the separate Series or Classes,
then all Shares entitled to vote on such matter shall vote as a single class.
Second, if any matter affects only the interests of some but not all Series or
Classes, then only the Shareholders of such affected Series or Classes shall be
entitled to vote on the matter.

(e) Equality. All the Shares of each particular Series or Class shall
represent an equal proportionate interest in the assets held with respect to
that Series or Class (subject to the liabilities attributable to that Series or
Class and such rights and preferences as may have been established and
designated with respect to such Series or Class), and each Share of any
particular Series or Class shall be equal to each other Share of that Series or
Class.

(f) Fractional Shares. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole share of that
Series or Class, including rights with respect to voting, receipt of dividends
and distributions, redemption of Shares and termination of the Trust.

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

Section 7. Indemnification of Shareholders.

If any Shareholder or former Shareholder shall be exposed to liability by
reason of a claim or demand relating to his or her being or having been a
Shareholder, and not because of his or her acts or omissions, the Shareholder
or former Shareholder (or his or her heirs, executors, administrators, or other
legal representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled to be held harmless
from and indemnified out of the assets of the Trust against all loss and
expense arising from such claim or demand.

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). Except as required by the 1940 Act, Trustees need not
be elected by Shareholders. The Board of Trustees, by action of a

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<PAGE> 10

majority of the then Trustees at a duly constituted meeting, may fill vacancies
in the Board of Trustees or remove Trustees with or without cause; except that
a vacancy shall be filled only by a person elected by Shareholders if required
by the 1940 Act.

Each Trustee shall serve during the continued lifetime of the Trust until
he dies, resigns, is declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next meeting of
Shareholders called for the purpose of electing Trustees and until the election
and qualification of his successor. 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 resignation or removal, or any right to damages on account of
such removal. The Shareholders may elect Trustees at any meeting of
Shareholders called by the Trustees for that purpose. 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 shall be called (i) by the Trustees
upon their own vote, or (ii) upon the demand of a Shareholder or Shareholders
owning Shares representing 10% or more of all votes entitled to be cast by
outstanding Shares.

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. 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. As conclusive evidence of such vacancy, a written instrument
certifying the existence of such vacancy may be executed by an officer of the
Trust or by a majority of the Board of Trustees. In the event of the death,
declination, resignation, retirement, removal or incapacity of all the then
Trustees within a short period of time and without the opportunity for at least
one Trustee being able to appoint additional Trustees to fill vacancies, the
Trust's Investment Manager is hereby empowered to appoint new Trustees, subject
to the provisions of Section 16(a) of the 1940 Act.

Section 3. Powers.

Subject to the provisions of this Declaration, 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.

Without limiting the foregoing, the Trustees may: (i) adopt By-Laws not
inconsistent with this Declaration providing for the regulation and management
of the affairs of the Trust and may amend and repeal the By-Laws to the extent
that such By-Laws do not reserve that right to the Shareholders; (ii) elect
persons to serve as Trustees and fill vacancies in the Board of Trustees, and
remove Trustees from such Board in accordance with the provisions of

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<PAGE> 11

this Declaration, and may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; (iii) appoint from their
own number and establish and terminate one or more committees consisting of one
or more Trustees which may exercise the powers and authority of the Board of
Trustees to the extent that the Trustees determine; (iv) employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ sub-custodians 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, and
employ such other Persons as the Trustees may deem desirable for the
transaction of business of the Trust or any Series; (v) provide for the
issuance, sale and distribution of Shares by the Trust directly or through one
or more Principal Underwriters or otherwise; (vi) redeem, repurchase, retire,
cancel, acquire, hold, resell, reissue, classify, reclassify, and transfer and
otherwise deal in Shares pursuant to applicable law; (vii) set record dates for
the determination of Shareholders with respect to various matters; (viii)
declare and pay dividends and distributions to Shareholders of each Series or
Class from the assets of such Series or Class; (ix) collect all property due to
the Trust, pay all claims, including taxes, against the Trust Property,
prosecute, defend, compromise or abandon any claims relating to the Trust
Property, foreclose any security interest securing any obligations by virtue of
which any property is owed to the Trust, and enter into releases, agreements
and other instruments; (x) incur and pay any expenses which, in the opinion of
the Trustees, are necessary or incidental to carry out the purposes of the
Trust, and pay reasonable compensation from the funds of the Trust to
themselves as Trustees; (xi) engage in and prosecute, defend, compromise,
abandon, or adjust, by arbitration or otherwise, any actions, suits,
proceedings, disputes, claims and demands relating to the Trust expenses
incurred in connection therewith, including those of litigation; (xii)
indemnify any Person with whom the Trust has dealings, including the
Shareholders, Trustees, officers, employees, agents, Investment Managers, or
Principal Underwriters of the Trust, to the extent permitted by law and not
inconsistent with any applicable provisions of the By-Laws as the Trustees
shall determine; (xiii) determine and change the fiscal year of the Trust or
any Series and the method by which its accounts shall be kept; (xiv) adopt a
seal for the Trust or any Series; and (xv) 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 made by the Trustees in good faith as to what
is in the interests of the Trust shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a grant of
power to the Trustees. Unless otherwise specified or required by 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.

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

(a) To invest and reinvest cash, 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 securities of every nature and kind, including, without limitation,
all types of stocks, bonds, bills, notes, debentures, options, negotiable or
non-negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or

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<PAGE> 12

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 political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality, or by any bank or saving institution, or by any corporation or
organization organized under 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" or "delayed delivery"
contracts for any such securities, 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 rights to 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 any trust,
whether in bearer, unregistered or other negotiable form, or in its own name or
in the name of a custodian or sub-custodian or a nominee or nominees or
otherwise;

(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 compromise, arbitrate or otherwise adjust claims in favor of or
against the Trust or any matter in controversy, including but not limited to a
claim for taxes;

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<PAGE> 13

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

(j) To borrow funds or other property in the name of the Trust 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 out of Trust Property such insurance as the
Trustees may deem necessary 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 Managers, Principal Underwriters, or independent
contractors of the Trust, individually against all claims and liabilities of
every nature arising by reason of holding Shares, holding 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,
subject to such limitations as may be imposed by law;

(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;

(n) To enter into futures contracts (including, but not limited to,
interest rate and stock index futures contracts) and options thereon; and

(o) To conduct, operate and carry on any other lawful business and engage
in any other lawful business activity which the Trustees, in their sole and
absolute discretion, consider to be (i) incidental to the business of the Trust
as an investment company, (ii) conducive to or expedient for the benefit or
protection of the Trust or any Series or the Shareholders, or (iii) calculated
in any other manner to promote the interests of the Trust or any Series or the
Shareholders.

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.

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<PAGE> 14

Section 4. Payment of Expenses by the Trust.

The Trustees are authorized to pay or cause to be paid out of the
principal or income of the Trust, or partly out of the principal and partly out
of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, 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 Managers, Principal Underwriters, 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. Payment of Expenses by Shareholders.

The Trustees shall have the power, as frequently as they may determine, to
cause each Shareholder, or each Shareholder of any particular Series, to pay
directly, in advance or arrears, for charges of the Trust's custodian or
transfer, Shareholder servicing or similar agent, an amount fixed from time to
time by the Trustees, by setting off such charges due from such Shareholder
from declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such
charges due from such Shareholder.

Section 6. 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. The right,
title and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee he shall automatically cease to have
any right, title or interest in any of the Trust Property, and the right, title
and interest of such Trustee in the Trust Property 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.

Section 7. Service Contracts.

(a) Subject to such requirements and restrictions as may be set forth in
the By-Laws, the Trustees may, at any time and from time to time, contract for
exclusive or nonexclusive investment advisory, management and administrative
services for the Trust or for any Series with any corporation, trust,
association or other organization; and any such contract may contain such other
terms as the Trustees may determine, including without limitation, authority
for one or more Investment Managers 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, or such other
activities as may specifically be delegated to such party.

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<PAGE> 15

(b) The Trustees may also, at any time and from time to time, contract
with any corporation, trust, association or other organization, appointing it
exclusive or nonexclusive distributor or Principal Underwriter for the Shares
of one or more of the Series or Classes or other securities to be issued by the
Trust.

(c) The Trustees are also empowered, at any time and from time to time, to
contract with any corporation, trust, association or other organization,
appointing it the administrator, custodian, transfer agent or shareholder
servicing agent for the Trust or one or more of its Series.

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

(e) The fact that:

(i) any of the Shareholders, Trustees, or officers of the
Trust is a shareholder, director, officer, partner, trustee,
employee, Investment Manager, Principal Underwriter, distributor,
or affiliate or agent of or for any corporation, trust,
association, or other organization, or for any parent or affiliate
of any organization 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 have been or may hereafter be made, or
that any such organization, or any parent or affiliate thereof, is
a Shareholder or has an interest in the Trust, or that

(ii) any corporation, trust, association or other organization
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 have
been or may hereafter 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 with other organizations, or has other business or
interests,

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
requirements of the 1940 Act.

ARTICLE V
SHAREHOLDERS' VOTING POWERS

Subject to the provisions of Article III, Section 6(d), the Shareholders
shall have power 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 this Declaration, the
By-Laws, the 1940 Act or any registration of the Trust with the Commission (or

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<PAGE> 16

any successor agency) or any state, or 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, except that (i) Shares held in the Treasury as
of the record date, as determined in accordance with the By-Laws, shall not be
voted, and (ii) when Shares of more than one Series or Class vote together on a
matter as a single class, each Share (or fraction thereof) shall be entitled to
that number of votes which is equal to the net asset value of such Share (or
fractional Share) determined as of the applicable record date. There shall be
no cumulative voting in the election of Trustees.

Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action that the law, this Declaration or the
By-Laws require to be taken by Shareholders.

ARTICLE VI
NET ASSET VALUE, DISTRIBUTIONS AND REDEMPTIONS

Section 1. Determination of Net Asset Value, Net Income, Dividends and
Distributions.

Subject to Article III, Section 6 hereof, the Trustees, in their absolute
discretion, may prescribe such bases and times for valuing the net assets of
the Trust and determining the net asset value of Shares, which net asset value
shall be separately determined for each Series and Class, for determining the
net income attributable to the Shares of any Series or Class, or for declaring
and paying dividends and other distributions on Shares of any Series or Class,
as they may deem necessary or desirable.

The Trustees shall, in their sole discretion, consistent with applicable
law, determine whether any cash or property of the Trust or any stock dividends
received by the Shareholders shall be treated as income or as principal and
whether any item of expense shall be charged to the income or the principal
amount, and any such determination made in good faith shall be conclusive and
binding upon the Shareholders.

Section 2. Redemptions and Repurchases.

The Trust shall purchase such Shares as are offered by any Shareholder for
redemption upon the presentation of a proper instrument of transfer together
with a request directed to the Trust or a Person designated by the Trust that
the Trust purchase such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and the Trust will
pay therefor the net asset value thereof by wire or check, in accordance with
applicable law, less the amount of any deferred sales charge or redemption fee
that is applicable. Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request is made in
proper form, except as may otherwise be permitted by the 1940 Act.

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<PAGE> 17
Section 3. Redemptions at the Option of the Trust.

The Trust shall have the right at its option and at any time to redeem
Shares from any Shareholder at the net asset value thereof as described in
Section 1 of this Article VI if at such time, and as a result of one or more
redemptions of one or more Shares by such Shareholder, the aggregate net asset
value of the Shares in such Shareholder's account with the Trust or any Series
of Class is, as a result (in whole or part) of a redemption of Shares, less
than the minimum initial investment amount then applicable for investments in
the Trust or the applicable Series or Class, or such lesser amount, as the
Trustees may from time to time determine.

ARTICLE VII
COMPENSATION AND LIMITATION OF LIABILITY OF TRUSTEES

Section 1. Compensation.

The Trustees as such shall be entitled to reasonable compensation from the
Trust, and they may fix the amount of such compensation. Nothing herein shall
in any way prevent the employment of any Trustee for advisory, management,
legal, accounting, investment banking or other services and payment for the
same 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 wrongdoing of any officer, agent, employee, Investment Manager or
Principal Underwriter of the Trust, nor shall any Trustee be responsible for
the act or omission of any other Trustee, and the Trust out of its assets shall
indemnify and hold harmless each and every Trustee from and against any and all
claims and demands whatsoever arising out of or related to each Trustee's
performance of his duties as a Trustee of the Trust to the fullest extent
permitted by law; provided that nothing herein contained shall indemnify, hold
harmless or protect any Trustee from or against any liability to the Trust or
any Shareholder to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his 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 capacity as Trustees or Trustee, and such Trustees or
Trustee shall not be personally liable thereon.

Section 3. Trustee's Good Faith Action; Expert Advice; No Bond or Surety.

The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable to the
Trust and to any Shareholder solely for his own willful 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, and
shall be under no liability for

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<PAGE> 18

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
becomes involved by virtue of his capacity or former capacity with the Trust.

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 or Class.

Unless terminated as provided herein, the Trust shall continue without
limitation of time. The Trust may be terminated at any time by vote of the
holders of a majority of the outstanding Shares of each Series entitled to
vote, voting separately by Series, or by the Trustees by written notice to the
Shareholders. Any Series or Class may be terminated at any time by vote of the
holders of a majority of the outstanding Shares of that Series or Class
respectively or by the Trustees by written notice to the Shareholders of that
Series or Class.

Upon termination of the Trust (or any Series or Class, 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 or Class), 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 or Class) to
distributable form in cash or shares or other securities, or any combination
thereof, and distribute the proceeds held with respect to each Series (or the
applicable Series or Class) to the Shareholders of that Series or Class, as a
Series or Class, ratably according to the number of Shares of that Series or
Class 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 trust or company, (ii) Shares of the Trust or any Series to be
converted into beneficial interests in another business trust (or series
thereof) created pursuant to this Section 3 of Article VIII, (iii) the sale of

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substantially all of the assets of the Trust or one or more of its Series to
another trust or company in exchange for the assumption of the liabilities of
the Trust or the Series and the issuance of beneficial interests in such trust
or company, or (iv) Shares to be exchanged under or pursuant to any state or
federal statute to the extent permitted by law. Such merger or consolidation,
Share conversion, sale of assets or Share exchange must be authorized by vote
of the holders of a majority of the outstanding Shares of the affected Series;
provided that in all respects not governed by applicable law, the Trustees
shall have the power to prescribe the procedures necessary or appropriate to
accomplish the transaction 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). The Trustees may also cause
substantially all of the assets of any Series (the "Acquired Series") to be
sold to another Series if authorized by vote of the holders of a majority of
the outstanding Shares of the Acquired Series, and to the extent not governed
by applicable law, the Trustees shall have the power to prescribe the
procedures necessary or appropriate to accomplish the transaction. Upon
consummation of any transaction contemplated by this Section 3, the Trust or
applicable Series, as the case may be, shall distribute its remaining assets to
Shareholders and terminate as provided by Section 2 of this Article VIII.

Section 4. Amendments.

(a) This Declaration may be restated or amended at any time by an
instrument in writing signed by a majority of the Trustees and, if required by
applicable law or this Declaration or the By-Laws, by approval of such
amendment by Shareholders in accordance with Article V hereof and the By-Laws.
Any such restatement or amendment hereto shall be effective immediately upon
execution and approval. The Certificate of Trust of the Trust may be restated
or amended by a similar procedure, and any such restatement 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.

(b) Nothing contained in this Declaration shall permit the amendment of
this Declaration to impair the exemption from personal liability of the
Shareholders, Trustees, officers, employees and agents of the Trust or to
permit assessments on Shareholders.

Section 5. Filing of Copies; References; Headings.

The original or a copy of this Declaration and of each restatement and
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 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
Declaration or of any such restatement or amendment. 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
Declaration. Whenever the singular number is used herein, the same shall
include the plural; and the neuter,

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masculine and feminine genders shall include each other, as applicable. This
Declaration may be simultaneously executed in any number of counterparts each
of which shall be deemed an original, and such counterparts together shall
constitute one and the same instrument, which shall be sufficiently evidenced
by any such original counterpart.

Section 6. Applicable Law.

This Declaration 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 "Delaware Act").
The Trust shall be a Delaware business trust pursuant to the Delaware 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 this Declaration 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 of 1986, as amended, or with other applicable laws and
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 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 in any jurisdiction.

Section 8. Business Trust Only.

It is the intention of the Trustees to create a business trust pursuant to
the Delaware Act and thereby to create only the relationship of trustee and
beneficial owners within the meaning of the Delaware 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, or any form of legal relationship other than a business trust
pursuant to the Delaware Act. Nothing in this Declaration 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 Names "Granite" and "Granum".

The names "Granite" and "Granum" and all rights to the use of the names
"Granite" and "Granum" belong to Granite Capital International Group L.P.
("Granite Capital International"), the sponsor of the Trust. Granite Capital
International has consented to the use by the Trust of the identifying words
"Granite" and "Granum" and has granted to the Trust a non-exclusive license to
use such words as part of the name of the Trust and the name of any Series

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<PAGE> 21

of Shares. In the event an affiliate of Granite Capital International is not
appointed as Investment Manager or ceases to be the Investment Manager of the
Trust or of any Series, the non-exclusive license granted herein may be revoked
in whole or in part by Granite Capital International and the Trust shall cease
using the names Granite and Granum as part of its name or the name of any
Series of Shares, unless otherwise consented to by Granite Capital
International or any successor to its interest in such name.

IN WITNESS WHEREOF, the Trustees named below do hereby make and enter into
this Declaration of Trust as of the 19th day of December, 1996.

/s/ Lewis M. Eisenberg
-----------------------------
Lewis M. Eisenberg

/s/ Walter F. Harrison, III
-----------------------------
Walter F. Harrison, III

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<PAGE> 1
Exhibit 99.(2)

BY-LAWS

GRANUM SERIES TRUST

A DELAWARE BUSINESS TRUST

AS ADOPTED JANUARY 23, 1997

TABLE OF CONTENTS

<S> <C>
ARTICLE I OFFICES 1
SECTION 1. PRINCIPAL OFFICE. 1
SECTION 2. DELAWARE OFFICE. 1
SECTION 3. OTHER OFFICES. 1

ARTICLE II MEETINGS OF SHAREHOLDERS 2
SECTION 1. TIME AND PLACE OF MEETINGS. 2
SECTION 2. MEETINGS. 2
SECTION 3. NOTICE OF MEETINGS. 2
SECTION 4. QUORUM; ADJOURNMENTS. 2
SECTION 5. VOTE REQUIRED. 3
SECTION 6. VOTING. 3
SECTION 7. PROXIES. 3
SECTION 8. PROCEDURES AT MEETINGS. 4
SECTION 9. INFORMAL ACTION BY SHAREHOLDERS. 4

ARTICLE III TRUSTEES 4
SECTION 1. POWERS. 4
SECTION 2. NUMBER OF TRUSTEES. 4
SECTION 3. VACANCIES. 4
SECTION 4. ANNUAL MEETINGS OF THE TRUSTEES. 4
SECTION 5. REGULAR AND SPECIAL MEETINGS OF THE TRUSTEES. 5
SECTION 6. NOTICE OF SPECIAL MEETING. 5
SECTION 7. QUORUM; ADJOURNMENT. 5
SECTION 8. VOTING. 5
SECTION 9. EXECUTIVE AND OTHER COMMITTEES. 5
SECTION 10. PARTICIPATION IN MEETINGS BY TELEPHONE. 6
SECTION 11. INFORMAL ACTION BY TRUSTEES. 6
SECTION 12. COMPENSATION. 6

</TABLE>

i
<PAGE> 3

<TABLE>

<S> <C>

ARTICLE IV WAIVER OF NOTICE 7

ARTICLE V OFFICERS 7
SECTION 1. EXECUTIVE OFFICERS. 7
SECTION 2. OTHER OFFICERS AND AGENTS. 7
SECTION 3. TENURE, RESIGNATION AND REMOVAL. 7
SECTION 4. VACANCIES. 8
SECTION 5. COMPENSATION. 8
SECTION 6. AUTHORITY AND DUTIES. 8
SECTION 7. CHAIRMEN. 8
SECTION 8. VICE-PRESIDENTS. 9
SECTION 9. SECRETARY. 9
SECTION 10. TREASURER. 9

ARTICLE VI INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES
AND OTHER AGENTS 10
SECTION 1. AGENTS, PROCEEDINGS AND EXPENSES. 10
SECTION 2. ACTIONS OTHER THAN BY TRUST. 10
SECTION 3. ACTIONS BY THE TRUST. 10
SECTION 4. EXCLUSION OF INDEMNIFICATION. 10
SECTION 5. SUCCESSFUL DEFENSE BY AGENT. 11
SECTION 6. REQUIRED APPROVAL. 11
SECTION 7. ADVANCE OF EXPENSES. 12
SECTION 8. OTHER CONTRACTUAL RIGHTS. 12
SECTION 9. LIMITATIONS. 12
SECTION 10. INSURANCE. 12
SECTION 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN. 13

ARTICLE VII RECORDS AND REPORTS 13
SECTION 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER. 13
SECTION 2. MAINTENANCE AND INSPECTION OF BY-LAWS. 13
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. 13
SECTION 4. INSPECTION BY TRUSTEES. 14

</TABLE>

<PAGE> 4

<TABLE>
<S> <C>
SECTION 5. FINANCIAL STATEMENTS. 14

ARTICLE VIII CONTRACTS, CHECKS AND DRAFTS 14
SECTION 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS. 14
SECTION 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED. 14

ARTICLE IX SHARES OF BENEFICIAL INTEREST 14
SECTION 1. CERTIFICATES OF SHARES. 14
SECTION 2. TRANSFERS OF SHARES. 15
SECTION 3. LOST CERTIFICATE. 15
SECTION 4. FIXING OF RECORD DATE. 15

ARTICLE X FISCAL YEAR 16

ARTICLE XI SEAL 16

ARTICLE XII FEDERAL SUPREMACY 16

ARTICLE XIII DECLARATION OF TRUST 16

ARTICLE XIV AMENDMENTS 17
</TABLE>

iii

<PAGE> 5

BY-LAWS

GRANUM SERIES TRUST
A DELAWARE BUSINESS TRUST

These By-Laws are made and adopted pursuant to Article IV, Section 3, of
the Declaration of Trust establishing Granum Series Trust (the "Trust"), dated
December 19, 1996, as from time to time amended (the "Declaration"). All words
capitalized in these By-Laws that are not otherwise defined herein shall have
the meaning or meanings set forth for such words or terms in the Declaration.

ARTICLE I

OFFICES

SECTION 1. PRINCIPAL OFFICE.

The Board of Trustees shall fix and, from time to time, may change the
location of the principal executive office of the Trust at any place within or
without the State of Delaware.

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 in the State of
Delaware or a Delaware corporation or a foreign corporation authorized to
transact business in the State of Delaware; provided that, 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 an office or offices in
the City of New York and at such other places within or without the State of
Delaware as the Trustees may from time to time designate or the business of the
Trust may require.

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<PAGE> 6

ARTICLE II

MEETINGS OF SHAREHOLDERS

SECTION 1. TIME AND PLACE OF MEETINGS.

All meetings of Shareholders shall be held at such time and place, whether
within or without the State of Delaware, as shall be stated in the notice of
the meeting or in a duly executed waiver of notice thereof.

SECTION 2. MEETINGS.

Meetings of Shareholders of the Trust or any Series (or Class) shall be
held whenever a vote of such Shareholders is required by the Declaration and at
such other times as the Trustees may determine to be necessary, appropriate or
advisable. Meetings of Shareholders to consider any matter as to which a vote
of Shareholders is required by the 1940 Act or is permitted to be requested by
Shareholders pursuant to the 1940 Act and as to which the Trustees have not
called a meeting of Shareholders shall be called by the secretary upon the
written request of the holders of Shares entitled to cast not less than ten
percent (10%) of all the votes then entitled to be cast on such matter at a
meeting of Shareholders. Such request shall state the purpose or purposes of
such meeting and the matters proposed to be acted on thereat. The secretary
shall inform such Shareholders of the estimated reasonable cost of preparing
and mailing such notice of the meeting. Upon payment to the Trust of such
costs, the secretary shall give notice stating the purpose or purposes of the
meeting to each Shareholder entitled to vote at such meeting. Unless requested
by Shareholders entitled to cast a majority of all votes entitled to be cast on
such matter, a meeting need not be called to consider any matter which is
substantially the same as a matter voted on at any meeting of Shareholders held
during the preceding twelve (12) months.

SECTION 3. NOTICE OF MEETINGS.

Written notice of each meeting of Shareholders stating the place, date and
hour thereof, and in the case of a special meeting, specifying the purpose or
purposes thereof, shall be given, to each Shareholder entitled to vote thereat,
not less than ten (10) nor more than ninety (90) days prior to the meeting
either by mail or by presenting it to such Shareholder personally or by leaving
it at his residence or usual place of business. If mailed, such notice shall
be deemed to be given when deposited in the United States mail, postage
prepaid, addressed to the Shareholder at his post office address as it appears
on the records of the Trust.

If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a Trustee has a direct or indirect financial
interest, (ii) an amendment of the Declaration, (iii) a reorganization of the
Trust, or (iv) a voluntary dissolution of the Trust, the notice shall state the
general nature of that proposal.

SECTION 4. QUORUM; ADJOURNMENTS.

Except as otherwise provided by law, by the Declaration or by these
By-Laws, at all meetings of Shareholders the holders of Shares representing
forty percent (40%) of the Shares

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<PAGE> 7

entitled to vote on a matter, present in person or represented by proxy, shall
be requisite and shall constitute a quorum for the transaction of business as
to such matter. This section shall not affect any applicable requirement of
law or the Declaration for the vote necessary for the adoption of any measure.
In the absence of a quorum, the Shareholders present in person or represented
by proxy and entitled to vote on a matter shall have power to adjourn the
meeting with respect to such matter from time to time without notice other than
announcement at the meeting until such quorum shall be present. The holders of
Shares entitled to cast not less than a majority of all the votes entitled to
be cast at such meeting on a matter shall also have the power to adjourn the
meeting. Written notice shall be given as required by this Article II, Section
3, if a meeting is adjourned to a date more than one hundred twenty (120) days
after the record date originally scheduled with respect to the meeting. At any
such adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted had a quorum been present at the
time originally fixed for the meeting.

SECTION 5. VOTE REQUIRED.

Except as otherwise provided by applicable law, by the Declaration or by
these By-Laws and subject to the provisions of Article III, Section 6(d) of the
Declaration, when a quorum is present at any meeting, a majority of the Shares
voted shall decide all questions and a plurality shall elect a Trustee.

SECTION 6. VOTING.

At any meeting of Shareholders, each Shareholder having the right to vote
shall be entitled to vote in person or by proxy, and each Shareholder of record
shall be entitled to cast such number of votes as specified by Article V of the
Declaration for each Share (and fractional share) entitled to vote so
registered in his name on the records of the Trust on the date fixed as the
record date for the determination of Shareholders entitled to vote at such
meeting. Shares held by two or more persons (whether as joint tenants,
co-fiduciaries or otherwise) will be voted as follows, unless written
instrument or court order providing to the contrary has been filed with the
secretary of the Trust: (1) if only one votes, his vote will bind all; (2) if
more than one votes, the vote of the majority will bind all; and (3) if more
than one votes and the vote is evenly divided, the Shares will be voted in
accordance with the determination of a majority of such persons and any person
appointed to act by a court of competent jurisdiction, or, in the absence of
such appointment, the vote will be cast proportionately.

SECTION 7. PROXIES.

Each proxy shall be in writing executed by the Shareholder giving the
proxy or by his duly authorized attorney. Notwithstanding the foregoing, a
Shareholder may authorize another person or persons to act for him as proxy by
transmitting or authorizing the transmission of a telegram, cablegram or other
means of electronic transmission to the person who will be the holder of the
proxy or to a proxy solicitation firm, proxy support service organization or
like agent duly authorized by the person who will be the holder of the proxy to
receive such trnasmission, provided that any such telegram, cablegram or other
means of electronic transmission must either set forth or be submitted with
information from which it can be

3
<PAGE> 8

determined that the telegram, cablegram or other electronic transmission was
authorized by the Shareholder. No proxy shall be valid after the expiration of
eleven (11) months from its date, unless a longer period is provided for in the
proxy.

SECTION 8. PROCEDURES AT MEETINGS.

At all meetings of Shareholders, all questions relating to the
qualification of voters, the validity of proxies, the acceptance or rejection
of votes, the order and manner in which matters are submitted to a vote, and
all other matters relating to questions of procedure shall be decided by the
chairman, or co-chairmen, of the meeting, in a manner consistent with these
By-Laws.

SECTION 9. INFORMAL ACTION BY SHAREHOLDERS.

Any action required or permitted to be taken at a meeting of Shareholders
may be taken without a meeting if (i) a consent in writing, setting forth such
action, is signed by the holders of outstanding Shares having not less than the
minimum number of votes that would be necessary to authorize such action at a
meeting of Shareholders at which all Shares issued and outstanding and entitled
to vote thereat were present in person or by proxy, and (ii) such consents are
filed with the records of the Trust.

ARTICLE III

TRUSTEES

SECTION 1. POWERS.

Subject to the applicable provisions of the Declaration and these By-Laws
relating to action required to be approved by the Shareholders or by the
outstanding Shares, the business and affairs of the Trust shall be managed and
all powers shall be exercised by or under the direction of the Board of
Trustees.

SECTION 2. NUMBER OF TRUSTEES.

The exact number of Trustees within the limits specified in the
Declaration 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.

SECTION 3. VACANCIES.

Vacancies in the Board of Trustees may be filled by a majority of the then
remaining Trustees at a duly constituted meeting; except that a vacancy shall
be filled only by a person elected by Shareholders if required by the 1940 Act.

SECTION 4. ANNUAL MEETINGS OF THE TRUSTEES.

The Trustees shall hold an annual meeting for the election of officers and
the transaction of other business which may come before the meeting.

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<PAGE> 9

SECTION 5. REGULAR AND SPECIAL MEETINGS OF THE TRUSTEES.

The Trustees may in their discretion provide for regular or special
meetings of the Trustees. Regular meetings of the Trustees may be held without
further notice, except as otherwise required by the 1940 Act in which case
notice shall be given as prescribed in Section 6 of this Article III, and may
be held at such time and place as shall be fixed in advance by the Trustees.
Special meetings of the Trustees may be called at any time by the chairman, or
co-chairmen, and shall be called by the chairman, or co-chairmen,
vice-president or the secretary upon the request of any two (2) Trustees or, if
there shall be only one (1) Trustee, upon the request of such sole Trustee.

SECTION 6. NOTICE OF SPECIAL MEETING.

Notice of any special meeting of the Trustees shall be given by oral or
written notice delivered personally, telephoned, telegraphed, mailed or
electronically transmitted to each Trustee at his business or residence
address. Personally delivered, telegram or electronically transmitted notice
shall be given at least twenty-four (24) hours prior to the meeting. Notice by
mail shall be given at least five (5) days prior to the meeting. If mailed,
such notice will be deemed to be given when deposited in the United States mail
properly addressed, with postage thereon prepaid. If notice be given by
telegram, such notice shall be deemed given when the telegram is delivered to
the telegraph company. Neither the business to be transacted at, nor the
purpose of, any special meeting of the Trustees need be stated in the notice,
unless specifically required by the 1940 Act.

SECTION 7. QUORUM; ADJOURNMENT.

A majority of the authorized number of Trustees shall constitute a quorum
for the transaction of business; provided, that if less than a majority of such
number of Trustees is present at any such meeting, a majority of the Trustees
present or the sole Trustee present may adjourn the meeting from time to time
without further notice until a quorum is present.

SECTION 8. VOTING.

The action of a majority of the Trustees present at a meeting at which a
quorum is present shall be the action of the Trustees, unless the concurrence
of a greater proportion or of any specified group of Trustees is required for
such action by law, the Declaration or these By-Laws.

SECTION 9. EXECUTIVE AND OTHER COMMITTEES.

The Trustees may designate one or more committees, each committee to
consist of one (1) or more Trustees and to have such title as the Trustees may
consider to be properly descriptive of its function, except that not more than
one committee shall be designated as the Executive Committee and that the
Executive Committee shall consist of two (2) or more Trustees. Each such
committee shall serve at the pleasure of the Trustees.

<PAGE> 10

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
Trustee to act in the place of such absent member.

The Trustees may delegate to any of the committees appointed under this
Article III, Section 9, any of the powers of the Trustees, except the power to:
(1) amend the Declaration; (2) authorize the merger or consolidation of the
Trust or the sale, lease or exchange of all or substantially all of the Trust
Property belonging to the Trust or any Series (or Class); (3) approve the
incorporation of the Trust; (4) approve the termination of the Trust; (5)
declare dividends or distributions on Shares; (6) issue Shares except pursuant
to a general formula or method specified by the Trustees by resolution; (7)
amend these By-Laws; or (8) elect, appoint or remove Trustees.

Each committee, as and when requested by the Trustees, shall keep minutes
or other appropriate written evidence of its meetings or proceedings and shall
report the same to the Trustees and shall observe such other procedures with
respect to its meetings as may be prescribed by the Trustees in the resolution
appointing such committee, or, if and to the extent not so prescribed, as are
prescribed in these By-Laws with respect to meetings of the Trustees.

SECTION 10. PARTICIPATION IN MEETINGS BY TELEPHONE.

Any Trustee may participate in a meeting of the Trustees or of any
committee of the Trustees by means of conference telephone or similar
communications equipment if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting except where the 1940 Act requires
Trustee action at a meeting held in person.

SECTION 11. INFORMAL ACTION BY TRUSTEES.

Unless an in person meeting is required by the 1940 Act, any action
required or permitted to be taken at any meeting of the Trustees or of any
committee of the Trustees may be taken without a meeting, if a consent in
writing to such action is signed by each Trustee in the case of a meeting of
Trustees, or each Trustee who is a member of the committee, in the case of a
meeting of a committee, and such written consent is filed with the minutes of
proceedings of the Trustees or of the committee. Any such consent may be
executed in counterparts.

SECTION 12. COMPENSATION.

The Trustees shall determine and from time to time fix by resolution the
compensation payable to Trustees for their services to the Trust in that
capacity. Such compensation may, but need not, consist of an annual fee or a
fee for attendance at meetings of the Trustees or of any committee of the
Trustees of which the Trustees receiving such fees are members, or a
combination of an annual fee and a fee for attendance. The chairman, or
co-chairmen, of the Board of Trustees and the chairman, if any, of each
committee of Trustees, may be paid additional amounts for services rendered in
such capacities. In addition, the Trustees may authorize the reimbursement of
Trustees for their expenses for attendance at meetings of the

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<PAGE> 11

Trustees and at meetings of any committee of the Trustees of which they are
members. Nothing herein contained shall be construed to preclude any Trustee
from serving the Trust in any other capacity and receiving compensation
therefor.

ARTICLE IV

WAIVER OF NOTICE

Whenever any notice is required to be given pursuant to law, the
Declaration or these By-Laws, a waiver thereof in writing, signed by the person
or persons entitled to such notice, or, in the case of any waiver of notice of
any meeting of Shareholders, signed by the proxy for a person entitled to
notice thereof, whether before or after the time stated therein, shall be
deemed equivalent to the giving of such notice. Neither the business to be
transacted at nor the purpose of any meeting need be set forth in the waiver of
notice, unless specifically required by law, the Declaration or these By-Laws.
The attendance by any person at any meeting in person, or in the case of a
meeting of Shareholders, by proxy, shall constitute a waiver of notice of such
meeting, except where such person attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting is
not lawfully called or convened.

ARTICLE V

OFFICERS

SECTION 1. EXECUTIVE OFFICERS.

The executive officers of the Trust shall be a chairman, or co-chairmen, a
secretary and a treasurer. If the Trustees shall elect one or more
vice-presidents, each such vice-president shall be an executive officer. The
chairman, or co-chairmen, shall be elected from among the Trustees, but no
other executive officer need be a Trustee. Any two or more executive offices,
except those of chairman and vice-president, may be held by the same person. A
person holding more than one office may not act in more than one capacity to
execute, acknowledge or verify on behalf of the Trust an instrument required by
law to be executed, acknowledged and verified by more than one officer. The
executive officers of the Trust shall be elected annually at a meeting of
Trustees.

SECTION 2. OTHER OFFICERS AND AGENTS.

The Trustees may also elect or may delegate to the chairman, or
co-chairmen, authority to appoint, remove, or fix the duties, compensation or
terms of office of one or more assistant vice-presidents, assistant secretaries
and assistant treasurers, and such other officers and agents as the Trustees
shall at any time and from time to time deem to be advisable.

SECTION 3. TENURE, RESIGNATION AND REMOVAL.

Each officer of the Trust shall hold office until his successor is elected
or appointed or until his earlier displacement from office by resignation,
removal or otherwise; provided, that if

<PAGE> 12

the term of office of any officer elected or appointed pursuant to Section 2 of
this Article V shall have been fixed by the Trustees or by the chairman, or
co-chairmen, acting under authority delegated by the Trustees, such officer
shall cease to hold such office no later than the date of expiration of such
term, regardless of whether any other person shall have been elected or
appointed to succeed him. Any officer of the Trust may resign at any time by
written notice to the Trust. Any officer or agent of the Trust may be removed
at any time by the Trustees or by the chairman, or co-chairmen, acting under
authority delegated by the Trustees pursuant to Section 2 of this Article V if
in their or his judgment the best interest of the Trust would be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an officer or agent
shall not of itself create contract rights between the Trust and such officer
or agent.

SECTION 4. VACANCIES.

If the office of any officer becomes vacant for any reason, the vacancy
may be filled by the Trustees or by the chairman, or co-chairmen, acting under
authority delegated by the Trustees pursuant to Section 2 of this Article V.
Each officer elected or appointed to fill a vacancy shall hold office for the
balance of the term for which his predecessor was elected or appointed.

SECTION 5. COMPENSATION.

The compensation, if any, of all officers of the Trust shall be fixed by
the Trustees or by the chairman, or co-chairmen, acting under authority
delegated by the Trustees pursuant to Section 2 of this Article V.

SECTION 6. AUTHORITY AND DUTIES.

All officers as between themselves and the Trust shall have such powers,
perform such duties and be subject to such restrictions, if any, in the
management of the Trust as may be provided in these By-Laws, or, to the extent
not so provided, as may be prescribed by the Trustees or by the chairman, or
co-chairmen, acting under authority delegated by the Trustees pursuant to
Section 2 of this Article V.

SECTION 7. CHAIRMEN.

The Trustees shall elect a chairman or two co-chairmen from among the
Trustees. The chairman, or co-chairmen, shall preside at meetings of the
Shareholders and of the Trustees; and shall have such other powers and duties
as may be prescribed by the Trustees.

The chairman, or co-chairmen, shall act as the chief executive officer or
officers of the Trust, and shall have responsibility for the general management
of the business of the Trust, shall see to it that all orders, policies and
resolutions of the Trustees are carried into effect, and, in connection
therewith, shall be authorized to delegate to any vice-president of the Trust
such of his or their powers and duties as chairman, or co-chairmen, and at such
times and in such manner as he or they shall deem advisable. In the absence or
disability of the chairman, or both co-chairmen, the most senior vice-president
shall preside at all meetings of the Shareholders and of

<PAGE> 13

the Trustees; and each shall have such other powers and perform such other
duties as are incident to the office of a corporate chief executive officer and
as the Trustees may from time to time prescribe.

SECTION 8. VICE-PRESIDENTS.

The vice-president, if any, or, if there be more than one, the
vice-presidents, shall assist the chairman, or co-chairmen, in the management
of the business of the Trust and the implementation of orders, policies and
resolutions of the Trustees at such times and in such manner as the chairman,
or co-chairmen, may deem to be advisable. If there be more than one
vice-president, the Trustees may designate one as the executive vice-president,
in which case he shall be first in order of seniority, and the Trustees may
also grant to other vice-presidents such titles as shall be descriptive of
their respective functions or indicative of their relative seniority. In the
absence or disability of the chairman, or co-chairmen, the vice-president, or,
if there be more than one, the vice-presidents in the order of their relative
seniority, shall exercise the powers and perform the duties of those officers;
and the vice-president or vice-presidents shall have such other powers and
perform such other duties as from time to time may be prescribed by the
chairman, or co-chairmen, or by the Trustees.

SECTION 9. SECRETARY.

The secretary shall (a) keep the minutes of the meetings and proceedings
and any written consents evidencing actions of the Shareholders, the Trustees
and any committees of the Trustees in one or more books provided for that
purpose; (b) see that all notices are duly given in accordance with the
provisions of these By-Laws or as required by law; (c) be custodian of the
corporate records and of the seal of the Trust, and, when authorized by the
Trustees, cause the seal of the Trust to be affixed to any document requiring
it, and when so affixed, attested by his signature as secretary or by the
signature of an assistant secretary; and (d) in general, perform such other
duties as from time to time may be assigned to him by the chairman, or
co-chairmen, or by the Trustees.

SECTION 10. TREASURER.

The treasurer shall be the chief financial officer of the Trust. The
treasurer shall keep full and accurate accounts of receipts and disbursements
in books belonging to the Trust, shall deposit all moneys and other valuable
effects in the name and to the credit of the Trust in such depositories as may
be designated by the Trustees, and shall render to the Trustees and the
chairman, or co-chairmen, at regular meetings of the Trustees or whenever they
or the chairman, or co-chairmen, may require it, an account of all his
transactions as treasurer and of the financial condition of the Trust.

If required by the Trustees, the treasurer shall give the Trust a bond in
such sum and with such surety or sureties as shall be satisfactory to the
Trustees for the faithful performance of the duties of his office and for the
restoration to the Trust, in case of his death, resignation, retirement or
removal from office, all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the Trust.

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<PAGE> 14

ARTICLE VI

INDEMNIFICATION OF TRUSTEES, OFFICERS,

EMPLOYEES AND OTHER AGENTS

SECTION 1. AGENTS, PROCEEDINGS AND EXPENSES.

For purposes of this Article VI, "agent" means any individual who is or
was a Trustee, officer or employee of the Trust or is or was serving at the
request of the Trust as a trustee, director, partner, officer or employee of
another trust, partnership, corporation or association whose securities are or
were owned by the Trust or of which the Trust is or was a creditor, and the
heirs, executors, administrators, successors and assigns of any of the
foregoing individuals; "proceeding" means any threatened, pending or completed
action 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 VI.

SECTION 2. ACTIONS OTHER THAN BY TRUST.

The 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 the Trust) by reason of the fact that such person is or was an
agent of the Trust, against expenses, judgments, fines, settlements and other
amounts actually and reasonably incurred in connection with such proceedings,
if it is determined that such person acted in good faith and reasonably
believed: (a) in the case of conduct in his official capacity as a Trustee 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 was unlawful. The termination of any
proceeding by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent shall not of itself create a presumption that the
person did not act in good faith and in a manner which the person reasonably
believed to be in the best interests of the Trust or that the person had
reasonable cause to believe that the person's conduct was unlawful.

SECTION 3. ACTIONS BY THE TRUST.

The Trust shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action by
or in the right of the Trust to procure a judgment in its favor by reason of
the fact that such person is or was an agent of the 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 such person believed to be in the best interests of the 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 misfeasance, bad faith, gross

10
<PAGE> 15

negligence, or the reckless disregard of the duties involved in the conduct of
the agent's office with the Trust.

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

(a) In respect of any claim, issue, or matter 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 claim, issue or matter as to which
that person shall have been adjudged to be liable in the
performance of that person's duty to the 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 circumstances of the case, that person was not liable by
reason of the disabling conduct set forth in the preceding
paragraph and is fairly and reasonably entitled to indemnity
for the expenses which the court shall determine; or

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

SECTION 5. SUCCESSFUL DEFENSE BY AGENT.

To the extent that an agent of the Trust has been successful on the merits
in defense of any proceeding referred to in Sections 2 or 3 of this Article VI
or in defense of any claim, issue or matter therein, 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 VI.

SECTION 6. REQUIRED APPROVAL.

Except as provided in Section 5 of this Article VI, any indemnification
under this Article VI shall be made by the 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 VI and is not prohibited from
indemnification because of the disabling conduct set forth in Section 4 of this
Article VI, by:

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<PAGE> 16

(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 1940 Act); or

(b) A written opinion by an independent legal counsel.

SECTION 7. ADVANCE OF EXPENSES.

Expenses incurred in defending any proceeding may be advanced by the Trust
before the final disposition of the proceeding upon a written undertaking by or
on behalf of the agent, to repay the amount of the advance if it is ultimately
determined that he or she is not entitled to indemnification, together with at
least one of the following as a condition to the advance: (i) security for the
undertaking; or (ii) the existence of insurance protecting the Trust against
losses arising by reason of any lawful advances; or (iii) a determination by a
majority of a quorum of Trustees who are not parties to the proceeding and are
not interested persons of the Trust (as defined in the 1940 Act), or by an
independent legal counsel in a written opinion, based on a review of readily
available facts that there is reason to believe that the agent ultimately will
be found entitled to indemnification. Determinations and authorizations of
payments under this Section must be made in the manner specified in Section 6
of this Article VI for determining that the indemnification is permissible.

SECTION 8. OTHER CONTRACTUAL RIGHTS.

Nothing contained in this Article VI shall affect any right to
indemnification to which persons other than Trustees and officers of the 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 VI, 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
Declaration, a resolution of the Shareholders, or an
agreement in effect at the time of accrual or 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 the approval of the Board of Trustees, the Trust may purchase and
maintain insurance protecting any agent of the Trust against any liability
asserted against or incurred by the agent in such capacity or arising out of
the agent's status as such, but the portion of the cost

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of such insurance protecting the agent against liabilities as to which the
Trust would not have the power to indemnify the agent under the provisions of
this Article VI and the Declaration shall not be borne by the Trust.

SECTION 11. FIDUCIARIES OF EMPLOYEE BENEFIT PLAN.

This Article VI 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 the
Trust as defined in Section 1 of this Article VI. Nothing contained in this
Article VI 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 VI.

ARTICLE VII

RECORDS AND REPORTS

SECTION 1. MAINTENANCE AND INSPECTION OF SHARE REGISTER.

The Trust shall keep at its principal executive office or at the office of
its transfer agent, a record of its Shareholders, giving the names and
addresses of all Shareholders and the number and Series (and Class) of Shares
held by each Shareholder.

SECTION 2. MAINTENANCE AND INSPECTION OF BY-LAWS.

The Trust shall keep at its principal executive office the original or a
copy of these By-Laws as amended to date, which shall be open to inspection by
the Shareholders at all reasonable times during office hours.

SECTION 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS.

The accounting books and records of the Trust and minutes of proceedings
of the Shareholders and the Board of Trustees and any committee or committees
of the Board of Trustees shall be kept at such place or places designated by
the Board of Trustees or in the absence of such designation, at the principal
executive office of the Trust. The minutes shall be kept in written form and
the accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written
demand of any Shareholder at any reasonable time during usual business hours
for a purpose reasonably related to the holder's interests as a Shareholder.
The inspection may be made in person or by an agent or attorney and shall
include the right to copy and make extracts. Inspection by any Shareholder of
the Shareholder list and books and records of the Trust shall be at the
discretion of the Trustees.

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SECTION 4. INSPECTION BY TRUSTEES.

Every Trustee shall have the absolute right at any reasonable time to
inspect all books, records and documents of every kind and the physical
properties of the Trust. This inspection by a Trustee may be made in person or
by an agent or attorney and the right of inspection includes the right to copy
and make extracts of documents.

SECTION 5. FINANCIAL STATEMENTS.

The Trustees shall submit to the Shareholders such written financial
reports as are required by the 1940 Act.

ARTICLE VIII

CONTRACTS, CHECKS AND DRAFTS

SECTION 1. CHECKS, DRAFTS, EVIDENCE OF INDEBTEDNESS.

All checks, drafts, or other orders for payment of money, notes or other
evidences of indebtedness issued in the name of or payable to the Trust shall
be signed or endorsed in such manner and by such person or persons as shall be
designated from time to time in accordance with the resolution of the Board of
Trustees.

SECTION 2. CONTRACTS AND INSTRUMENTS; HOW EXECUTED.

The Board of Trustees, except as otherwise provided in these By-Laws, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the Trust and this
authority may be general or confined to specific instances; and unless so
authorized or ratified by the Board of Trustees or within the agency power of
an officer, no officer, agent, or employee shall have any power or authority to
bind the Trust by any contract or engagement or to pledge its credit or to
render it liable for any purpose or for any amount.

ARTICLE IX

SHARES OF BENEFICIAL INTEREST

SECTION 1. CERTIFICATES OF SHARES.

The Trust shall not be obligated to issue certificates representing Shares
of the Trust or any Series (or Class), except that the Trustees may determine
to authorize the issuance of certificates for Shares of any Series (or Class),
and in such case, certificates shall be issued in accordance with such
procedures as the Trustees may establish. If certificates for Shares are
issued, each such certificate shall be signed by the chairman, or co-chairmen,
or, in the absence of a chairman or co-chairmen, by a vice-president and
countersigned by the secretary or the treasurer. Certificates may be sealed
with the seal of the Trust. The signatures and seal, if any,

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on a certificate may be either manual or facsimile. A certificate is valid and
may be issued whether or not an officer who signed it is still an officer when
it is issued. A full record of the issuance of each certificate and the
identifying number assigned thereto shall be made on the books and records of
the Trust usually kept for the purpose or required by statute.

SECTION 2. TRANSFERS OF SHARES.

Upon surrender to the Trust or its transfer agent of a certificate duly
endorsed or accompanied by proper evidence of succession, assignment or
authority to transfer, the Trust shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books. Shares of the Trust or any Series (or Class) not represented by
certificates shall be transferred by recording the transaction on the books of
the Trust upon presentation of proper evidence of succession, assignment or
authority to transfer.

The Trust shall be entitled to treat the holder of record of any Share or
Shares as the holder in fact thereof and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such 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.

SECTION 3. LOST CERTIFICATE.

The Trustees may by resolution establish procedures pursuant to which a
new certificate or certificates may be issued in place of any certificate or
certificates theretofore issued by the Trust which have been mutilated or which
are alleged to have been lost, stolen or destroyed, upon presentation of each
such mutilated certificate, or the making of an affidavit by the person
claiming any such certificate to have been lost, stolen or destroyed as to the
fact and circumstances of the loss, theft or destruction thereof. The
Trustees, in their discretion and as a condition precedent to the issuance of
any new certificate, may include among such procedures a requirement that the
owner of any certificate alleged to have been lost, stolen or destroyed, or the
owner's legal representative, furnish the Trust with a bond, in such sum and
with such surety or sureties as the Trustees may direct, as indemnity against
any claim that may be made against the Trust in respect of such lost, stolen or
destroyed certificate.

SECTION 4. FIXING OF RECORD DATE.

For purposes of determining the Shareholders entitled to notice of, or to
vote at, any meeting of Shareholders or at any adjournment thereof in respect
of which a new record date is not fixed, or entitled to express written consent
to or dissent from the taking of action by Shareholders without a meeting, or
for the purpose of determining the Shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights, or to exercise
any rights in respect of any change, conversion or exchange of Shares, or for
the purpose of any other lawful action, the Trustees may fix, in advance, a
date as the record date for any such determination of Shareholders. Such date
shall not be more than ninety (90) days, and in case of a meeting of
Shareholders not less than ten (10) days, before the date on which the meeting
or particular action requiring such determination of Shareholders is to be held
or taken. If no record date is fixed, (a) the record date for the
determination of Shareholders entitled to notice of or to

<PAGE> 20

vote at a meeting of Shareholders shall be the later of: (i) the close of
business on the day on which the notice of meeting is first mailed to any
Shareholder; or (ii) the thirtieth (30th) day before the meeting; (b) the
record date for determining the Shareholders entitled to express written
consent to the taking of any action without a meeting, when no prior action by
the Trustees is necessary, shall be the day on which the first written consent
is expressed; and (c) the record date for the determination of Shareholders
entitled to receive payment of a dividend or other distribution or an allotment
of any other rights shall be at the close of business on the day on which the
resolution of the Trustees, declaring the dividend, distribution or allotment
of rights, is adopted.

ARTICLE X

FISCAL YEAR

The fiscal year of the Trust or any Series shall be fixed and may from
time to time be changed by resolution of the Trustees.

ARTICLE XI

SEAL

The Trustees shall adopt a seal, which shall be in such form and shall
have such inscription thereon as the Trustees may from time to time provide.
The seal of the Trust may be affixed to any document, and the seal and its
attestation may be lithographed, engraved or otherwise printed on any document.

ARTICLE XII

FEDERAL SUPREMACY

If at any time when the Trust is registered as an investment company under
the 1940 Act, any of the foregoing provisions of these By-Laws or the law of
the State of Delaware relating to business trusts shall conflict or be
inconsistent with any applicable provision of the 1940 Act, the applicable
provision of the 1940 Act shall be controlling and the Trust shall not take any
action which is in conflict or inconsistent therewith.

ARTICLE XIII

DECLARATION OF TRUST

The Declaration of Trust establishing the Trust, dated December 19, 1996,
and all amendments thereto, provides that the name "Granum Series Trust" refers
to the Trustees under the Declaration collectively as Trustees, but not as
individuals or personally; and that no Trustee, Shareholder, officer, employee
or agent of the Trust shall be held personally liable, nor shall

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resort be had to their private property for the satisfaction of any obligation
or claim or otherwise, in connection the affairs of the Trust, but the Trust
Property only shall be liable.

ARTICLE XIV

AMENDMENTS

These By-Laws may be amended, altered or repealed, or new By-Laws may be
adopted by the Trustees. The Trustees shall in no event adopt By-Laws which
are in conflict with the Declaration, and, subject to Article XII of these
By-Laws, any apparent inconsistency shall be construed in favor of the related
provisions in the Declaration.