ANNUITY BOARD FUNDS TRUST, N-1A, 2001-01-09

ANNUITY BOARD FUNDS TRUST
N-1A, 2001-01-09

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<PAGE> 1

As filed with the Securities and Exchange Commission on January 9, 2001
Registration Nos. 33- ___
811-10263
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

______________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. ___ [ ]

AND

REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO.__________ [ ]

(CHECK APPROPRIATE BOX OR BOXES)

ANNUITY BOARD FUNDS TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

2401 CEDAR SPRINGS ROAD 75201-1407
DALLAS, TX (Zip Code)

(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: (214) 720-1171

RODNEY R. MILLER, ESQ.
SECRETARY
2401 CEDAR SPRINGS ROAD
DALLAS, TX 75201-1407
(Name and Address of Agent for Service)

COPIES TO:
DONALD W. SMITH, ESQ.
KIRKPATRICK & LOCKHART LLP
1800 MASSACHUSETTS AVENUE, N.W.
WASHINGTON, DC 20036-1800
TELEPHONE: (202) 778-9079

Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.

Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
Title of Securities Being Registered:

Flexible Income Fund
Growth & Income Fund
Capital Opportunities Fund
Global Equity Fund
Money Market Fund
Short-Term Bond Fund
Intermediate-Term Bond Fund
Long-Term Bond Fund
Equity Index Fund
Value Equity Fund
Growth Equity Fund
Small Cap Equity Fund
International Equity Fund
<PAGE> 3
[ANNUITY LOGO]

ANNUITY BOARD
FUNDS TRUST

THE BLENDED FUNDS

FLEXIBLE INCOME FUND
GROWTH & INCOME FUND
CAPITAL OPPORTUNITIES FUND
GLOBAL EQUITY FUND

THE SELECT FUNDS

MONEY MARKET FUND EQUITY INDEX FUND
SHORT-TERM BOND FUND VALUE EQUITY FUND
INTERMEDIATE-TERM BOND FUND GROWTH EQUITY FUND
LONG-TERM BOND FUND SMALL CAP EQUITY FUND
INTERNATIONAL EQUITY FUND

================================================================================

RETAIL CLASS - RETIREMENT CLASS

PROSPECTUS DATED _____, 2001

This prospectus contains important information about the Funds, including
information on investment policies, risks and fees. For your own benefit and
protection, you should read it before you invest, and keep it on hand for future
reference.

Like all mutual fund shares, these securities have not been approved or
disapproved by the Securities and Exchange Commission (the "SEC") nor has the
SEC determined whether this prospectus is accurate or complete. Anyone who tells
you otherwise is committing a criminal offense.
<PAGE> 4
TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
A look at the goals, strategies, RISK & RETURN SUMMARIES
risks and expenses of each Introduction...............................................3
Fund. THE BLENDED FUNDS
Flexible Income Fund.......................................4
Growth & Income Fund.......................................9
Capital Opportunities Fund................................14
Global Equity Fund........................................19
THE SELECT FUNDS
Money Market Fund.........................................23
Short-Term Bond Fund......................................25
Intermediate-Term Bond Fund...............................29
Long-Term Bond Fund.......................................33
Equity Index Fund.........................................38
Value Equity Fund.........................................41
Growth Equity Fund........................................43
Small Cap Equity Fund.....................................47
International Equity Fund.................................50

ADDITIONAL INVESTMENT & RISK INFORMATION..................53

Details about the Funds' MANAGEMENT OF THE FUND
management and service Investment Adviser........................................54
providers. Sub-Advisers..............................................55
Service Providers.........................................59

SHAREHOLDER INFORMATION
Eligible Investors........................................61
Minimum Investments.......................................61
Minimum Account Size......................................61

Policies and instructions for TRANSACTIONS WITH THE FUNDS...............................62
opening, maintaining and
closing an account. MORE SHAREHOLDER INFORMATION..............................66

FOR MORE INFORMATION..............................back cover
</TABLE>

--------------------------------------------------------------------------------
DO YOU HAVE QUESTIONS ABOUT TERMS WE USE IN THIS PROSPECTUS?
For information about key terms and concepts, look for our explanations
shown in boxes.
--------------------------------------------------------------------------------

- 2 -
<PAGE> 5
RISK & RETURN SUMMARIES

INTRODUCTION

--------------------------------------------------------------------------------
WHAT IS A MUTUAL FUND?
A mutual fund pools shareholders' money and, using professional management,
invests in securities like stocks and bonds.
--------------------------------------------------------------------------------

Each Fund is a separate mutual fund with its own investment objective,
strategies and risks. There is a separate Risk & Return Summary for each Fund
and other detailed information in the following pages. Please read each Fund
description carefully before you invest. The more you know about your investment
choices, the more informed your investment decisions will be. But first, a word
about the risks and returns that apply to all the Funds.

The Funds are divided into two groups:

- Blended Funds -- Each Blended Fund invests in a different mix of the Select
Funds to meet a specified investment strategy. The Funds' Investment Adviser
believes that blending investment styles and money managers may reduce risk
over the long term.

- Flexible Income Fund

- Growth & Income Fund

- Capital Opportunities Fund

- Global Equity Fund

- Select Funds -- Each Select Fund invests directly in different types of
fixed income obligations, stocks, or other investments to meet its
investment objective.

- Money Market Fund

- Short-Term Bond Fund

- Intermediate-Term Bond Fund

- Long-Term Bond Fund

- Equity Index Fund

- Value Equity Fund

- Growth Equity Fund

- Small Cap Equity Fund

- International Equity Fund

--------------------------------------------------------------------------------
WHO IS THE INVESTMENT ADVISER?
SBC Financial Services, Inc. serves as the Investment Adviser to the Funds. It
is a controlled affiliate of the Annuity Board of the Southern Baptist
Convention ("Annuity Board"). Rather than making the day-to-day investment
decisions for the Select Funds, it retains the services of other investment
management firms to do so. It also allocates each Blended Fund's investments
among the Select Funds.
--------------------------------------------------------------------------------

Each Select Fund uses various investment management firms to manage its assets.
The Investment Adviser reviews the firms' performance, allocates the assets of
each Select Fund among them and makes recommendations to the Funds' Board of
Trustees regarding changes to the firms selected.

The Funds do not invest in any company that is publicly recognized, as
determined by the Annuity Board, as being in the liquor, tobacco, gambling,
pornography, or abortion industries, or any company whose products, services or
activities are publicly recognized as being incompatible with the moral and
ethical posture of the Annuity Board. The Funds may not be able to take
advantage of certain investment opportunities due to these restrictions. This
policy may not be changed without shareholder approval.

The Funds are not insured or guaranteed by the Annuity Board, any bank, the
Federal Deposit Insurance Corporation, or any government agency. As with all
mutual funds, your investment in the Funds involves investment risk, including
the possible loss of the principal amount you invested. There is no guarantee
that any of the Funds will be able to meet their investment objectives.

- 3 -
<PAGE> 6
THE BLENDED FUNDS

THE FLEXIBLE INCOME FUND SUMMARY

--------------------------------------------------------------------------------
WHAT ARE THE BLENDED FUNDS?
Each Blended Fund is a "fund of funds". It invests in a different mix of the
Select Funds to meet a specified investment strategy. The Investment Adviser
believes blending investment styles and money managers reduces risk over the
long term.
--------------------------------------------------------------------------------

PORTFOLIO DESCRIPTION

Investment - The FLEXIBLE INCOME FUND seeks current income and modest
Objective capital appreciation.
--------------------------------------------------------------------------------
Principal - The Fund, through investments in the Select Funds,
Investment combines a greater percentage of fixed income investments
Strategies with a smaller percentage of stock investments.

- The Investment Adviser uses the following target and
potential ranges in allocating the Fund's assets among the
Select Funds.

ASSET CLASS TARGET RANGE
<S> <C> <C>
Bond Select Funds 75% 60-90%
U.S. Equity Select Funds 19% 10-30%
Non-U.S. Equity Select Funds 6% 2-10%

SELECT FUND
Equity Index 6% 2-10%
Value Equity 6% 2-10%
Growth Equity 6% 2-10%
Small Cap 1% 0-10%
International Equity 6% 2-10%
Short-Term Bond Fund 75% 60-90%
</TABLE>

- Target allocations represent the Fund's current target for
investments in the Select Funds. Actual allocations may
differ from the target due to market fluctuations and other
factors. The Investment Adviser may change these target
allocations from time to time without shareholder approval
based on the Fund's investment objective and asset class
allocation ranges.

- The Fund will rebalance its assets periodically to adjust
for changes in the values of the underlying Select Funds.

See "Additional Investment & Risk Information" below for more
about the Fund's investments. This prospectus also includes a
summary of each of the Select Funds in which the Fund may
invest.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks. Other
risks are described under "Additional Investment & Risk
Information."

- The Fund's value will go up and down in response to changes
in the share prices of the Select Funds that it owns. There
is no guarantee that the Select Funds or the underlying
investments made by the Select Funds will increase in
value. Therefore, it is possible for you to lose money by
investing in the Fund.

- Because the Fund owns Select Funds that buy bonds and other
fixed income investments, the Fund's value will fluctuate
due to changes in interest rates. When interest rates rise,
the prices of fixed income investments fall and vice versa.
Other factors may affect fixed income investments, such as
financial conditions of a particular issuer and general
economic conditions.

- To the extent the Fund owns Select Funds that buy stocks
and other equity investments, the Fund's value will
fluctuate due to business developments concerning a
particular issuer, industry or country, as well as general
market and economic conditions.

- Securities of foreign issuers may be negatively affected by
political events, economic conditions, or inefficient,
illiquid or unregulated markets in foreign countries.
Foreign issuers may be subject to inadequate regulatory or
accounting standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments.
--------------------------------------------------------------------------------

- 4 -
<PAGE> 7
RELATED PERFORMANCE

--------------------------------------------------------------------------------
WHAT IS TOTAL RETURN?
Total return is a measure of the per-share change in the total value of a Fund's
portfolio, including any distributions paid to you and assuming your
distributions were reinvested. It is measured from the beginning to the end of a
specific time period.
--------------------------------------------------------------------------------

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a flexible income strategy with a
"blended" fund of funds approach. The returns in the bar chart reflect the
anticipated fees and expenses of the Fund's Retail Class. The returns in the
table reflect the anticipated fees and expenses of the Fund's Retail Class and
Retirement Class, as indicated. In addition, the returns shown below have been
adjusted to reflect the anticipated fees and expenses of the Retirement Class of
those Select Funds in which the Fund currently expects to invest. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. Shown are changes in the
predecessor investment pool's performance from year to year, and how annualized
one-year, five-year and since inception returns compare with those of broader
measures of market performance. Past performance does not necessarily indicate
how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER MOST RECENT QUARTER WORST QUARTER
--------------------------------------------------------------------------------------------------
___% (Q__ '___) ___% (Q__ '___) ___% (Q__ '___)

-------------------------
* The Merrill Lynch 1-3 Year Treasury Index measures the performance of
publicly placed, coupon bearing U.S. Treasury debt, with a term to
maturity of at least one year and less than three years.

** The Russell 3000 Index measures the performance of the 3000 largest
U.S. companies based on market capitalization.

*** The MSCI All Country World Free Ex-US Index is a market capitalization
weighted index composed of companies representative of the market
structure of 46 developed and emerging countries, not including the
U.S. It excludes closed markets and shares in free markets that are not
purchasable by foreigners.

**** The Composite Benchmark is comprised of 75% Merrill Lynch 1-3 Year
Treasury Index, 19% Russell 3000 Index, and 6% MSCI All Country World
Free Ex-US Index.

- 5 -
<PAGE> 8
--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

- 6 -
<PAGE> 9
FEES AND EXPENSES

--------------------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Every mutual fund has operating expenses to pay for services, such as
professional advisory, distribution, administration and custody services. The
Fund's expenses in the table below are shown as a percentage of its average
annual net assets. Operating expenses are deducted from Fund assets, so you pay
these expenses indirectly.
--------------------------------------------------------------------------------

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------- ----------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee 0.05% 0.05%
Distribution (12b-1) fee ___% ___%
Other expenses* ___% ___%
Total annual operating expenses** ___% ___%
</TABLE>

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

** The Investment Adviser has voluntarily agreed to waive fees and
reimburse expenses to the extent needed to limit total annual operating
expenses to ___% for the Retail Class and ___% for the Retirement
Class. The Investment Adviser may terminate this arrangement at any
time.

EXAMPLE

This example is meant to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. It shows what you would pay if you
invested $10,000 over the time periods shown and then redeemed your shares at
the end of those periods. The example assumes that:

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

INDIRECT EXPENSES PAID BY THE FUND

The Fund invests in the Retirement Class shares of the Select Funds. The Fund
will bear its proportionate share of the operating expenses of the Select Funds
that it holds. This means that if you invest in the Fund, you will bear,
indirectly, the operating expenses of the underlying Select Funds. These
expenses are in addition to the expenses of the Fund described above. These
expenses will vary over time, depending on which Select Funds the Fund holds. In
order to give you an indication of these expenses, shown below is the average
expense ratio for the Select Funds, based on the Fund's current target
allocation among the Select Funds and the anticipated expenses of those Select
Funds for the current

- 7 -
<PAGE> 10
fiscal year. Based on these assumptions, the average expense ratio of the Select
Funds borne indirectly by the Fund would be ___%.

- 8 -
<PAGE> 11
THE GROWTH & INCOME FUND SUMMARY

--------------------------------------------------------------------------------
WHAT ARE THE BLENDED FUNDS?
Each Blended Fund is a "fund of funds." It invests in a different mix of the
Select Funds to meet a specified investment strategy. The Investment Adviser
believes blending investment styles and money managers reduces risk over the
long term.
--------------------------------------------------------------------------------

PORTFOLIO DESCRIPTION

Investment - The GROWTH & INCOME FUND seeks moderate capital
Objective appreciation with current income.

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

Principal - The Fund, through investments in the Select Funds,
Investment combines approximately equal percentages of fixed income
Strategies investments with stock investments.

- The Investment Adviser uses the following target and
potential ranges in allocating the Fund's assets among
the Select Funds.
<TABLE>
<CAPTION>

ASSET CLASS TARGET RANGE
<S> <C> <C>
Bond Select Funds 50% 35-65%
U.S. Equity Select Funds 37% 25-50%
Non-U.S. Equity Select Funds 13% 5-20%

SELECT FUND
Equity Index 11% 2-10%
Value Equity 12% 5-20%
Growth Equity 12% 5-20%
Small Cap 3% 0-10%
International Equity 13% 5-20%
Short-Term Bond Fund 15% 5-25%
Intermediate-Term Bond Fund 25% 15-35%
Long-Term Bond Fund 10% 5-20%
</TABLE>

- The Fund will rebalance its assets periodically to adjust
for changes in the values of the underlying Select Funds.

See "Additional Investment & Risk Information" below for more
about the Fund's investments. This prospectus also includes a
summary of each of the Select Funds in which the Fund
invests.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional Investment &
Risk Information."

- Because the Fund owns Select Funds that buy stocks and
other equity investments, the Fund's value will fluctuate
due to business developments concerning a particular
issuer, industry or country, as well as general market and
economic conditions.

- 9 -
<PAGE> 12
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a growth & income strategy with a
"blended" fund of funds approach. The returns in the bar chart reflect the
anticipated fees and expenses of the Fund's Retail Class. The returns in the
table reflect the anticipated fees and expenses of the Fund's Retail Class and
Retirement Class, as indicated. In addition, the returns shown below have been
adjusted to reflect the anticipated fees and expenses of the Retirement Class of
those Select Funds in which the Fund currently expects to invest. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. Shown are changes in the
predecessor investment pool's performance from year to year, and how annualized
one-year, five-year and since inception returns compare with those of broader
measures of market performance. Past performance does not necessarily indicate
how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

-------------------------
* The Lehman Brothers Aggregate Bond Index measures the performance of
U.S. government obligations, corporate debt securities and AAA rated
mortgage-backed securities. All securities in the index are rated
investment grade (BBB) or higher, with maturities of at least one year.

** The Russell 3000 Index measures the performance of the 3000 largest
U.S. companies based on market capitalization.

**** The Composite Benchmark is comprised of 50% Merrill Lynch 1-3 Year
Treasury Index, 37% Russell 3000 Index, and 13% MSCI All Country World
Free Ex-US Index.

- 10 -
<PAGE> 13
--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

- 11 -
<PAGE> 14
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

INDIRECT EXPENSES PAID BY THE FUND

- 12 -
<PAGE> 15
fiscal year. Based on these assumptions, the average expense ratio of the Select
Funds borne indirectly by the Fund would be ___%.

- 13 -
<PAGE> 16
THE CAPITAL OPPORTUNITIES FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The CAPITAL OPPORTUNITIES FUND seeks capital appreciation
Objective with modest current income.

--------------------------------------------------------------------------------
Principal - The Fund, through investments in the Select Funds, combines
Investment a greater percentage of stocks with a smaller percentage of
Strategies fixed income investments.

- The Investment Adviser uses the following target and
potential ranges in allocating the Fund's assets among the
Select Funds.

<TABLE>
<CAPTION>
ASSET CLASS TARGET RANGE
<S> <C> <C>
Bond Select Funds 25% 15-35%
U.S. Equity Select Funds 56% 40-70%
Non-U.S. Equity Select Funds 19% 10-30%

SELECT FUND
Equity Index 17% 5-30%
Value Equity 17% 5-30%
Growth Equity 17% 5-30%
Small Cap 4% 0-10%
International Equity 19% 10-30%
Short-Term Bond Fund 8% 2-15%
Intermediate-Term Bond Fund 13% 5-20%
Long-Term Bond Fund 5% 2-10%
</TABLE>
- Target allocations represent the Fund's current target for
investments in the Select Funds. Actual allocations may
differ from the target due to market fluctuations and other
factors. The Investment Adviser may change these target
allocations from time to time without shareholder approval
based on the Fund's investment objective and asset class
allocation ranges.

- The Fund will rebalance its assets periodically to adjust
for changes in the values of the underlying Select Funds.

See "Additional Investment & Risk Information" below for more
about the Fund's investments. This prospectus also includes a
summary of each of the Select Funds in which the Fund
invests.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks. Other
risks are described under "Additional Investment & Risk
Information."

- To the extent the Fund owns Select Funds that buy bonds and
other fixed income investments, the Fund's value will
fluctuate due to changes in interest rates. When interest
rates rise, the prices of fixed income investments fall and
vice versa. Other factors may affect fixed income
investments, such as financial conditions of a particular
issuer and general economic conditions.

- 14 -
<PAGE> 17
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a capital opportunities strategy
with a "blended" fund of funds approach. The returns in the bar chart reflect
the anticipated fees and expenses of the Fund's Retail Class. The returns in the
table reflect the anticipated fees and expenses of the Fund's Retail Class and
Retirement Class, as indicated. In addition, the returns shown below have been
adjusted to reflect the anticipated fees and expenses of the Retirement Class of
those Select Funds in which the Fund currently expects to invest. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. Shown are changes in the
predecessor investment pool's performance from year to year, and how annualized
one-year, five-year and since inception returns compare with those of broader
measures of market performance. Past performance does not necessarily indicate
how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

-------------------------
* The Russell 3000 Index measures the performance of the 3000 largest
U.S. companies based on market capitalization.

** The Lehman Brothers Aggregate Bond Index measures the performance of
U.S. government obligations, corporate debt securities and AAA rated
mortgage-backed securities. All securities in the index are rated
investment grade (BBB) or higher, with maturities of at least one year.

- 15 -
<PAGE> 18
**** The Composite Benchmark is comprised of 25% Merrill Lynch 1-3 Year
Treasury Index, 56% Russell 3000 Index, and 19% MSCI All Country World
Free Ex-US Index.

--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

- 16 -
<PAGE> 19
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

** The Investment Adviser has voluntarily agreed to waive fees and
reimburse expenses to the extent needed to limit total annual operating
expenses to __% for the Retail Class and ___% for the Retirement Class.
The Investment Adviser may terminate this arrangement at any time.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

INDIRECT EXPENSES PAID BY THE FUND

- 17 -
<PAGE> 20
fiscal year. Based on these assumptions, the average expense ratio of the Select
Funds borne indirectly by the Fund would be ___%.

- 18 -
<PAGE> 21
THE GLOBAL EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The GLOBAL EQUITY FUND seeks capital appreciation.
Objective
--------------------------------------------------------------------------------
Principal - The Fund, through investments in the Select Funds,
Investment combines a greater percentage of U.S stocks with a
Strategies smaller percentage of international stocks.

- The Investment Adviser uses the following target and
potential ranges in allocating the Fund's assets among
the Select Funds.

<TABLE>
<CAPTION>
ASSET CLASS TARGET RANGE
<S> <C> <C>
U.S. Equity Select Funds 75% 60-90%
Non-U.S. Equity Select Funds 25% 15-35%

SELECT FUND
Equity Index 23% 5-35%
Value Equity 23% 5-35%
Growth Equity 23% 5-35%
Small Cap 5% 0-10%
International Equity 25% 15-35%
</TABLE>

- Target allocations represent the Fund's current target
for investments in the Select Funds. Actual allocations
may differ from the target due to market fluctuations and
other factors. The Investment Adviser may change these
target allocations from time to time without shareholder
approval based on the Fund's investment objective and
asset class allocation ranges.

- The Fund will rebalance its assets periodically to adjust
for changes in the values of the underlying Select Funds.

See "Additional Investment & Risk Information" below for more
about the Fund's investments. This prospectus also includes a
summary of each of the Select Funds in which the Fund
invests.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks. Other
risks are described under "Additional Investment & Risk
Information."

- The Fund's value will go up and down in response to
changes in the share prices of the Select Funds that it
owns. There is no guarantee that the Select Funds or the
underlying investments made by the Select Funds will
increase in value. Therefore, it is possible for you to
lose money by investing in the Fund.

- Securities of foreign issuers may be negatively affected
by political events, economic conditions, or inefficient,
illiquid or unregulated markets in foreign countries.
Foreign issuers may be subject to inadequate regulatory
or accounting standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments.

- Investing in emerging markets involves even greater risk
than investing in more developed foreign markets because,
among other things, emerging markets often have more
political and economic instability.
--------------------------------------------------------------------------------

- 19 -
<PAGE> 22
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a global equity strategy with a
"blended" fund of funds approach. The returns in the bar chart reflect the
anticipated fees and expenses of the Fund's Retail Class. The returns in the
table reflect the anticipated fees and expenses of the Fund's Retail Class and
Retirement Class, as indicated. In addition, the returns shown below have been
adjusted to reflect the anticipated fees and expenses of the Retirement Class of
those Select Funds in which the Fund currently expects to invest. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. Shown are changes in the
predecessor investment pool's performance from year to year, and how annualized
one-year, five-year and since inception returns compare with those of broader
measures of market performance. Past performance does not necessarily indicate
how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

--------------------------
* The Russell 3000 Index measures the performance of the 3000 largest
U.S. companies based on market capitalization.

** The MSCI All Country World Free Ex-US Index is a market capitalization
weighted index composed of companies representative of the market
structure of 46 developed and emerging countries, not including the
U.S. It excludes closed markets and shares in free markets that are not
purchasable by foreigners.

*** The Composite Benchmark is comprised of 75% Russell 3000 Index and 25%
MSCI All Country World Free Ex-US Index.

- 20 -
<PAGE> 23
--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

- 21 -
<PAGE> 24
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

INDIRECT EXPENSES PAID BY THE FUND

- 22 -
<PAGE> 25
THE SELECT FUNDS

THE MONEY MARKET FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The MONEY MARKET FUND seeks to maximize current income to
Objective the extent consistent with the preservation of capital
and liquidity, and the maintenance of a stable per share
price of $1.00.
--------------------------------------------------------------------------------
Principal - The Fund invests in a broad range of high quality,
Investment short-term money market instruments denominated
Strategies exclusively in U.S. dollars.

- The Fund invests primarily in:

- Short-term obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks, and corporations; and

- Mortgage-backed and asset-backed securities.

- The Fund may enter into repurchase agreements relating to
the above instruments.

- The Fund expects, but does not guarantee, a net asset
value of $1.00 per share by valuing its portfolio
securities at amortized cost.

- High quality commercial paper and other obligations
generally must be rated as follows: (i) if rated by more
than one nationally recognized statistical rating
organizations ("NRSROs"), the obligation is rated in the
highest rating category of any two NRSROs, (ii) if only
one NRSRO has rated the obligation, it is rated in that
NRSRO's highest rating category, and (iii) if an
obligation is not rated by a NRSRO, the Fund's
Sub-Adviser must determine it is of equivalent quality to
an obligation rated in the highest rating category of an
NRSRO.

- The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less.

- The Fund's investments in securities will be limited to
obligations that mature in 397 days or less from the date
of purchase.

- The Fund may invest only in securities that comply with
the quality, maturity and diversification requirements of
Rule 2a-7 under the Investment Company Act of 1940, which
regulates money market funds.

- The Fund uses one or more Sub-Advisers to manage its
portfolio under the general supervision of the Investment
Adviser.

See "Additional Investment & Risk Information" for more about
the Fund's investments.

--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks. Other
risks are described under "Additional Investment & Risk
Information."

- Although the Fund seeks to preserve its value at $1.00
per share, it is possible for you to lose money by
investing in the Fund.

- The Fund's return will drop if short-term interest rates
drop.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest or
even principal due in a timely manner or at all.

- Obligations of foreign banks and other foreign issuers
may be negatively affected by political events, economic
conditions, or inefficient, illiquid or unregulated
markets in foreign countries. Foreign issuers, including
foreign banks, may be subject to inadequate regulatory or
accounting standards.

- The Fund's ability to concentrate its investments in the
banking industry may increase risks. Banks may be
affected by negative economic conditions, since they rely
on the availability and cost of funds, as well as the
ability of borrowers to repay their loans.
--------------------------------------------------------------------------------

- 23 -
<PAGE> 26
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 24 -
<PAGE> 27
THE SHORT-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The SHORT-TERM BOND FUND seeks current income consistent
Objective with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of investment
Strategies grade fixed income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks, and corporations; and

- Mortgage-backed and asset-backed securities.

- The average quality rating for the Fund's portfolio will
be greater than or equal to the "Aa" category as rated by
Moody's Investor Service ("Moody's") or the equivalent by
Standard and Poor's Corporation ("S&P"). The Fund will
not invest in fixed income securities that have a quality
rating less than "Baa" as rated by Moody's or the
equivalent by S&P (or, if unrated, determined by a
Sub-Adviser to be of the same quality.) If an investment
held by the Fund is downgraded below such rating, the
Sub-Adviser will sell it within a reasonable period but
not necessarily right away. If an investment held by the
Fund is downgraded below such rating, the Sub-Adviser
will take action that it believes to be advantageous to
the Fund.

- The average dollar-weighted duration of the Fund normally
varies between 1 and 3 years.

- The Fund may hold up to 20% of its assets in obligations
denominated in currencies other than the U.S. dollar, and
may invest beyond this limit when considering U.S. dollar
denominated securities of foreign issuers. However, such
foreign currency exposure will normally be hedged by at
least 75% of its value to the U.S. dollar in order to
reduce the risk of loss due to fluctuations in currency
exchange rates.

- The Fund may invest in derivative instruments such as,
but not limited to, futures contracts, options, and swap
agreements.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
The Sub-Advisers practice different investment styles and
make investment decisions for the Fund based on an
analysis of differing factors, such as interest rates,
yield spreads, durations, sectors, credit ratings, or
fundamental issuer selection.

See "Additional Investment & Risk Information" for more about
the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks. Other
risks are described under "Additional Investment & Risk
Information."

- The Fund's value will fluctuate in response to interest
rates and other economic factors. Bond prices typically
drop as interest rates rise, and vice versa. It is
possible for you to lose money by investing in the Fund.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest or
even principal due in a timely manner or at all.

- Securities rated "Baa" by Moody's or the equivalent by
S&P are considered investment grade, but they may have
some speculative characteristics. This means that the
issuers may have problems making principal and interest
payments during difficult economic conditions.

- The Fund may have a high portfolio turnover rate. High
turnover creates more transaction costs and negative tax
consequences that may have a negative impact on your
investment in the Fund.

- Obligations of foreign issuers may be negatively affected
by political
--------------------------------------------------------------------------------

- 25 -
<PAGE> 28
--------------------------------------------------------------------------------
events, economic conditions, or inefficient, illiquid or
unregulated markets in foreign countries. Foreign issuers
may be subject to inadequate regulatory or accounting
standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments that are not hedged to the U.S. dollar.

- The Fund's use of derivative instruments may increase
operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHAT IS DURATION?
Duration is a mathematical calculation of the average life of a bond or the
bonds in a bond mutual fund. It is a useful measure of sensitivity to interest
rate changes - the longer a bond's duration, the more sensitive it is to
interest rate changes. Generally, the stated maturity of a bond is longer than
its projected duration.
--------------------------------------------------------------------------------

- 26 -
<PAGE> 29
RELATED PERFORMANCE

--------------------------------------------------------------------------------
WHAT IS TOTAL RETURN?
Total return is a measure of the per-share change in the total value of a Fund's
portfolio including any distributions paid to you and assuming your
distributions were reinvested. It is measured from the beginning to the end of a
specific time period.
--------------------------------------------------------------------------------

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
short-term bond strategy. The returns in the bar chart have been adjusted to
reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

- 27 -
<PAGE> 30
FEES AND EXPENSES

--------------------------------------------------------------------------------
WHAT ARE FUND EXPENSES?
Every mutual fund has operating expenses to pay for services, such as
professional advisory, distribution, administration and custody services. The
Fund's expenses in the table below are shown as a percentage of its average
annual net assets. Operating expenses are deducted from Fund assets. Therefore,
if you own shares of the Fund you indirectly pay such expenses.
--------------------------------------------------------------------------------

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 28 -
<PAGE> 31
THE INTERMEDIATE-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The INTERMEDIATE-TERM BOND FUND seeks maximum total
return consistent Objective with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of investment
Strategies grade fixed income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks, and corporations; and

- Mortgage-backed and asset-backed securities.

- The average quality rating for the Fund's portfolio will
be greater than or equal to the "A" category as rated by
Moody's Investor Service ("Moody's") or the equivalent by
Standard and Poor's Corporation ("S&P"). The Fund invests
primarily in investment grade debt securities, but may
invest up to 10% of its assets in high yield securities
("junk bonds") rated "B" or higher by Moody's or S&P or
if unrated, determined by a Sub-Adviser to be of the same
quality. If an investment held by the Fund is downgraded
below such rating, the Sub-Adviser will sell it within a
reasonable period but not necessarily right away. If an
investment held by the Fund is downgraded below such
rating, the Sub-Adviser will take action that it believes
to be advantageous to the Fund.

- The average dollar-weighted duration of the Fund normally
varies between 3 and 7 years.

- The Fund may invest in derivative instruments such as,
but not limited to, futures contracts, options, and swap
agreements.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
The Sub-Advisers practice different investment styles and
will make investment decisions for the Fund based on an
analysis of differing factors, such as interest rates,
yield spreads, durations, sectors, credit ratings, or
fundamental issuer selection.

- The Fund's value will fluctuate in response to interest
rates and other economic factors. Bond prices typically
drop as interest rates rise, and vice versa. An investor
in this Fund should be able to accept some short-term
fluctuations in value. It is possible for you to lose
money by investing in the Fund.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest or
even principal due in a timely manner or at all.

- High yield securities ("junk bonds") involve greater
risks of default and are more volatile than bonds rated
investment grade. Issuers of these bonds may be more
--------------------------------------------------------------------------------

- 29 -
<PAGE> 32
--------------------------------------------------------------------------------
sensitive to economic downturns and may be unable to make
timely interest or principal payments. The Fund's value
could be hurt by price declines due to actual or
perceived changes in an issuer's ability to make such
payments.

- Obligations of foreign issuers may be negatively affected
by political events, economic conditions, or inefficient,
illiquid or unregulated markets in foreign countries.
Foreign issuers may be subject to inadequate regulatory
or accounting standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments that are not hedged to the U.S. dollar.

- The Fund's use of derivative instruments may increase
operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

- 30 -
<PAGE> 33
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and an
intermediate-term bond strategy. The returns in the bar chart have been adjusted
to reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

- 31 -
<PAGE> 34
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 32 -
<PAGE> 35
THE LONG-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The LONG-TERM BOND FUND seeks maximum total return
Objective consistent with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of fixed
Strategies income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks, and corporations; and

- Mortgage-backed and asset-backed securities.

- The average dollar-weighted duration of the Fund normally
will be greater than or equal to 7 years.

- The average quality rating for the Fund's portfolio will
be greater than or equal to the "Baa" category as rated
by Moody's Investor Service ("Moody's") or the equivalent
by Standard and Poor's Corporation ("S&P"). The Fund does
not currently expect to invest more than 20% of its
assets in fixed income securities rated lower than
investment grade. The Fund will not invest in fixed
income securities that have a quality rating less than
"B" as rated by Moody's or the equivalent by S&P (or, if
unrated, determined by a Sub-Adviser to be of the same
quality). If an investment held by the Fund is downgraded
below such rating, the Sub-Adviser will sell it within a
reasonable period but not necessarily right away. If an
investment held by the Fund is downgraded below such
rating, the Sub-Adviser will take action that it believes
to be advantageous to the Fund.

- The Fund may hold up to 30% of its assets in obligations
denominated in currencies other than the U.S. dollar, and
may invest beyond this limit when considering U.S. dollar
denominated securities of foreign issuers. However,
unhedged foreign currency exposure will normally not be
greater than 15% of the Fund's assets.

- The Fund may invest in derivative instruments such as,
but not limited to, futures contracts, options, and swap
agreements.

- The Fund's value will fluctuate in response to interest
rates and other economic factors. Bond prices typically
drop as interest rates rise, and vice versa. An investor
in this Fund should be able to accept some short-term
fluctuations in value. Longer-term bonds are generally
more volatile, as are lower-rated bonds. It is possible
for you to lose money by investing in the Fund.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest or
even principal due in a timely manner or at all.

- Bonds rated below investment grade involve greater risks
of default and are more volatile than bonds rated
investment grade. Issuers of these bonds may be more
sensitive to economic downturns and may be unable to make
timely interest or principal payments. The Fund's value
could be hurt by price declines due to actual or
perceived changes in an issuer's ability to make such
payments.
--------------------------------------------------------------------------------

- 33 -
<PAGE> 36
--------------------------------------------------------------------------------
- Obligations of foreign issuers may be negatively affected
by political events, economic conditions, or inefficient,
illiquid or unregulated markets in foreign countries.
Foreign issuers may be subject to inadequate regulatory
or accounting standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments that are not hedged to the U.S. dollar.

- The Fund's use of derivative instruments may increase
operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

- 34 -
<PAGE> 37
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
long-term bond strategy. The returns in the bar chart have been adjusted to
reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

-------------------------
* The Lehman Brothers Long-Term Government Index measures the performance
of all publicly issued, nonconvertible, domestic debt of the U.S.
government or its agencies, quasi-federal corporations, or corporate
debt guaranteed by the U.S. government, with maturities of 10 years or
more.

** The Lehman Brothers Long-Term Corporate Index measures the performance
of all publicly issued, fixed-rate, nonconvertible, investment grade
corporate debt with maturities of 10 years or more.

*** The composite benchmark comprises of 50% Lehman Brothers Long-Term
Government Index and 50% Lehman Brothers Long-Term Corporate Index.

- 35 -
<PAGE> 38
--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

- 36 -
<PAGE> 39
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) None

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.
</TABLE>

- 37 -
<PAGE> 40
THE EQUITY INDEX FUND SUMMARY

--------------------------------------------------------------------------------
WHAT IS THE S&P 500 INDEX?
The S&P 500 Index includes 500 of the largest market capitalized companies
operating across a broad spectrum of the U.S. economy, and its performance is
widely considered representative of the U.S. stock market as a whole. These
companies, in aggregate, represent approximately 70% of the total market
capitalization of all publicly traded U.S. stocks. You cannot invest directly in
the S&P 500 Index or any index.
--------------------------------------------------------------------------------

PORTFOLIO DESCRIPTION

Investment - The EQUITY INDEX FUND seeks to provide investment results
Objective approximating the aggregate price and dividend
performance of the securities included in the S&P 500
Index.
--------------------------------------------------------------------------------
Principal - Under normal market conditions, the Fund will invest
Investment substantially all (at least 80%) of its total assets in
Strategies the equity securities of the companies that make up the
S&P 500 Index, in weightings that approximate the
relative composition of the securities contained in the
S&P 500 Index.

- The Fund may invest to a lesser extent in derivative
instruments, including exchange listed options, futures,
and swap agreements, that are based on:

- The S&P 500 Index;

- Companies included in the S&P 500 Index; and

- Stock indexes other than but similar to the S&P
500 Index.

- The companies chosen for inclusion in the S&P 500 Index
tend to be industry leaders within the U.S. economy as
determined by Standard & Poor's. However, companies are
not selected by Standard & Poor's for inclusion because
they are expected to have superior stock price
performance relative to the market in general or other
stocks in particular.

- The Fund is passively managed, which means it tries to
duplicate the investment composition and performance of
the S&P 500 Index using computer programs and statistical
procedures. As a result, the Sub-Adviser(s) does not use
traditional methods of fund investment management for
this Fund, such as selecting securities on the basis of
economic, financial, and market analysis. Rather, the
Sub-Adviser(s) will buy and sell securities in response
to changes in the S&P 500 Index. Because the Fund will
have fees and transaction expenses (while the S&P 500
Index has none), returns are likely to be below those of
the S&P 500 Index.

- The Fund uses one or more Sub-Advisers to manage its
portfolio under the general supervision of the Investment
Adviser.

- The correlation between the Fund's performance and the
S&P 500 Index is expected to be greater than __%,
although it could be lower in certain market environments
and due to certain stocks that may be excluded from the
portfolio because of social investment policies and
restrictions. (100% would indicate perfect correlation.)

- S&P does not endorse any stock in the S&P 500 Index. It
is not a sponsor of the Equity Index Fund and is not
affiliated with the Fund in any way.

- There is no guarantee that the stock market or the stocks
that the Fund buys will increase in value. It is possible
for you to lose money by investing in the Fund.

- The Fund's value will go up and down in response to
changes in the market value of the Fund's investments.
Market value will change due to business developments
concerning a particular issuer or industry, as well as
general market and economic conditions. An investor in
this Fund should be able to accept significant short-term
--------------------------------------------------------------------------------

- 38 -
<PAGE> 41
--------------------------------------------------------------------------------
fluctuations in value.

- There is a risk that large capitalization stocks may not
perform as well as other asset classes or the U.S. stock
market as a whole. In the past, large capitalization
stocks have gone through cycles of doing better or worse
than the stock market in general.

- The Fund's use of derivatives, such as S&P 500 Index
futures, may reduce the Fund's returns and increase its
volatility.

- The Fund must pay various expenses, while the S&P 500
Index's total return does not reflect any expenses.
--------------------------------------------------------------------------------

- 39 -
<PAGE> 42
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

This example is meant to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. It shows what you would pay if you
invested $10,000 over the periods shown and then redeemed your shares at the end
of those periods. The example assumes that:

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 40 -
<PAGE> 43
THE VALUE EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The VALUE EQUITY FUND seeks to provide long-term capital
Objective appreciation.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of large and
Strategies medium-sized U.S. companies whose stocks are considered
by the Fund's Sub-Advisers to be value stocks. Value
stocks are generally those that are trading at prices
that the Sub-Advisers believe are below what the stocks
are worth or that may be out of favor with investors.

- These stocks typically have lower price/earnings ratios,
lower asset valuations, and higher dividend yields
relative to the U.S. market as a whole.

- The Fund may invest to a lesser extent in American
Depositary Receipts, which represent ownership of
underlying foreign securities that are denominated in
U.S. dollars.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
Each Sub-Adviser uses different investment strategies to
identify stocks it believes are undervalued or are
generally out of favor with investors.

- There is no guarantee that the stock market or the stocks
that the Fund buys will increase in value. It is possible
for you to lose money by investing in the Fund.

- The Fund's value will go up and down in response to
changes in the market value of the Fund's investments.
Market value will change due to business developments
concerning a particular issuer, industry or country, as
well as general market and economic conditions. An
undervalued stock may not increase in price as
anticipated by a Sub-Adviser if other investors fail to
recognize the company's value or the factors that the
Sub-Adviser believed would increase the price do not
occur. An investor in this Fund should be able to accept
significant short-term fluctuations in value.

- There is a risk that value stocks may not perform as well
as other asset classes or the U.S. stock market as a
whole. In the past, value stocks have tended to lag the
overall stock market during rising markets, and to
outperform it during periods of flat or declining
markets.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHAT ARE VALUE FUNDS?
Value funds generally emphasize stocks of companies that are believed to be
fundamentally attractive based on certain valuation factors. These stocks
generally have growth prospects regarded as subpar by the market. Reflecting
these market expectations, the prices of value stocks typically are
below-average in comparison with such factors as revenue, earnings, book value,
and dividends. This is in contrast to stocks with above-average growth
prospects, in which the Growth Equity Fund primarily invests. Both categories of
stocks have produced similar returns in the past, although each category has
periods when it outperforms the other.
--------------------------------------------------------------------------------

- 41 -
<PAGE> 44
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
value equity strategy. The returns shown below have been adjusted to reflect the
anticipated fees and expenses of the Fund's Retail Class. The predecessor
investment pool was not registered as a mutual fund and, thus, was not subject
to certain investment restrictions, limitations and diversification requirements
that laws and regulations impose on mutual funds. If it had been a mutual fund,
its performance may have been different. The Fund's current Sub-Advisers managed
the predecessor investment pool since 19__. Shown are changes in the predecessor
investment pool's performance from year to year, and how annualized one-year,
five-year and since inception returns compare with those of an index. Past
performance does not necessarily indicate how the Fund will perform in the
future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Equity Investment Pool ___% ___% ___%
Russell 1000 Value Index* ___% ___% ___%
</TABLE>
-------------------------
* The Russell 1000 Value Index measures the performance of securities with
less-than-average growth orientation from the Russell 1000 (the 1000 largest
U.S. companies based on market capitalization average growth).

- 42 -
<PAGE> 45
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___% ___%
Distribution (12b-1) fee ___% ___%
Other expenses* ___% ___%
Total annual operating expenses** ___% ___%
</TABLE>
-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 43 -
<PAGE> 46
THE GROWTH EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The GROWTH EQUITY FUND seeks to provide long-term capital
Objective appreciation. Any income is incidental to this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of large and
Strategies medium-sized U.S. companies whose stocks are considered
by the Fund's Sub-Advisers to have above-average growth
prospects.

- The Fund generally focuses on companies believed to have
above-average potential for growth in revenue and
earnings. Reflecting the market's high expectations for
superior growth, the prices of such stocks are typically
above-average in relation to such measures as revenue,
earnings, and book value.

- The Fund may invest to a lesser extent in American
Depositary Receipts, which represent ownership of
underlying foreign securities that are denominated in
U.S. dollars.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
Each Sub-Adviser uses both fundamental research and
quantitative analysis to select stocks it believes have
above-average growth prospects, but may make investment
decisions for the Fund based on an analysis of differing
factors, such as revenue and earnings growth and
unanticipated positive earnings.

- There is no guarantee that the stock market or the stocks
that the Fund buys will increase in value. It is possible
for you to lose money by investing in the Fund.

- Although the Fund will not concentrate in any particular
industry, it may be heavily invested in a particular
economic sector. If the Fund focuses on one or fewer
sectors, its performance is likely to be
disproportionately affected by factors influencing the
sectors, including market, economic, political or
regulatory developments. The Fund's performance may also
suffer if a sector does not perform as well as the
Sub-Adviser(s) expected. Prices of securities in the same
sector often change collectively regardless of the merits
of individual companies. The technology sector is a good
example where company stocks can be subject to abrupt or
erratic price movements. As of September 30, 2000,
greater than 40% of the companies that comprised the
predecessor fund were considered technology companies. As
a result, the Fund may be subject to greater price
volatility associated with investments in technology
securities.

- There is a risk that growth-oriented investments may not
perform as well as the rest of the U.S. stock market as a
whole. In the past, growth stocks have tended to
outperform the overall stock market during rising
markets, and to lag during periods of flat or declining
markets.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

- 44 -
<PAGE> 47
--------------------------------------------------------------------------------
WHAT ARE GROWTH FUNDS?
Growth funds invest in the stock of growth-oriented companies, seeking maximum
growth of earnings and share price with little regard for dividend earnings.
Generally, companies with high relative rates of growth tend to reinvest more of
their profits into the company and pay out less to shareholders in the form of
dividends. As a result, investors in growth funds tend to receive most of their
return in the form of capital appreciation.
--------------------------------------------------------------------------------

- 45 -
<PAGE> 48
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
growth equity strategy. The returns in the bar chart have been adjusted to
reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Investment Pool-Retail Class ___% ___% ___%
Growth Equity Investment Pool-Retirement ___% ___% ___%
Class
Russell 1000 Growth Index* ___% ___% ___%
</TABLE>
-------------------------
* The Russell 1000 Growth Index is a subset of the Russell 1000 Index. The
Russell 1000 Growth Index measures the performance of those Russell 1000
Index companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 1000 Index measures the performance of the
1000 largest U.S. companies based on total market capitalization and
represents approximately 92% of the investable U.S equity market.

- 46 -
<PAGE> 49
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 47 -
<PAGE> 50
THE SMALL CAP EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The SMALL CAP EQUITY FUND seeks to provide long-term
Objective capital appreciation. Any income received is incidental
to this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of common
Strategies stocks of U.S. companies that at the time of purchase,
are in the small capitalization segment of the U.S.
equity market, consistent with the range of the Russell
2000 Index.

- The Fund is generally diversified with respect to stocks
possessing attractive fundamental values and strong
growth prospects. Many of the companies in which the Fund
invests retain their earnings to finance current and
future growth. These companies generally pay little or no
dividends.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
The Sub-Advisers, using fundamental research and
quantitative analysis, select stocks that they believe
have favorable investment characteristics, and may make
investment decisions for the Fund based on an analysis of
differing factors, such as revenue and earnings growth,
relative valuation, business catalysts and quality of
management.

- There is no guarantee that the stock market or the stocks
that the Fund buys will increase in value. It is possible
for you to lose money by investing in the Fund.

- The Fund invests primarily in small companies. An
investment in a smaller company may be more volatile and
less liquid than an investment in a larger company. Small
companies generally are more sensitive to adverse
business and economic conditions than larger, more
established companies. Small companies may have limited
financial resources, management experience, markets and
product diversification.

- The Fund expects to have a high portfolio turnover rate.
High turnover creates more transaction costs and negative
tax consequences that may have a negative impact on your
investment in the Fund.

- The Fund may invest in initial public offerings which
entails special risks, including limited operating
history of the issuing companies, unseasoned trading and
limited liquidity.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
WHAT IS MARKET CAPITALIZATION?
Market capitalization is the total dollar value of all outstanding shares on a
market. It is a measure of corporate size. The market capitalization of a
security is equal to the number of shares outstanding multiplied by the price
per share.
--------------------------------------------------------------------------------

- 48 -
<PAGE> 51
RELATED PERFORMANCE

The bar chart and table below show that returns vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
small cap equity strategy. The returns in the bar chart have been adjusted to
reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

</TABLE>
-------------------------
* The Russell 2000 Index measures the performance of the 2000 smallest
companies in the Russell 3000 Index (the 3000 largest U.S. companies
based on market capitalization) and represents approximately 8% of the
investable U.S. equity market.

- 49 -
<PAGE> 52
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 50 -
<PAGE> 53
THE INTERNATIONAL EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION

Investment - The INTERNATIONAL EQUITY FUND seeks to provide long-term
Objective capital appreciation. Any income received is incidental
to this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets and
Investment typically more) in a diversified portfolio of common
Strategies stocks of foreign companies in countries having economies
and markets generally considered to be developed.

- The Fund may also invest to a lesser extent in common
stocks of foreign companies located in emerging markets.

- Common stocks of foreign companies are predominantly
traded on foreign stock exchanges.

- At least 65% of the Fund's total assets will be invested
in equity securities of issuers from at least three
foreign countries. An issuer is considered to be from the
country where it is located, where the issuer is
headquartered or incorporated, where the majority of its
assets are located or where it generates the majority of
its operating income.

- The Fund may invest to a lesser extent in American
Depositary Receipts and Global Depository Receipts and
other similar instruments, each of which represent
ownership of underlying foreign securities in currencies
other than the country of incorporation.

- The Fund uses a multi-manager approach, using two or more
Sub-Advisers that each manage a portion of its portfolio
under the general supervision of the Investment Adviser.
The Sub-Advisers, in managing their portion of the Fund's
portfolio, practice different investment styles that the
Investment Adviser believes complement one another.

- There is no guarantee that the international stock
markets or the stocks that the Fund buys will increase in
value. It is possible for you to lose money by investing
in the Fund.

- Securities of foreign issuers may be negatively affected
by political events, economic conditions, or inefficient,
illiquid or unregulated markets in foreign countries.
Foreign issuers may be subject to inadequate regulatory
or accounting standards.

- Changes in currency exchange rates relative to the U.S.
dollar may negatively affect the values of foreign
investments held by the Fund. Sub-Advisers may make
currency investment decisions independent of their
underlying stock selections.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

- 51 -
<PAGE> 54
RELATED PERFORMANCE

The bar chart and table below show that returns vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and an
international equity strategy. The returns in the bar chart have been adjusted
to reflect the anticipated fees and expenses of the Fund's Retail Class. The
returns in the table have been adjusted to reflect the anticipated fees and
expenses of the Fund's Retail Class and Retirement Class, as indicated. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
RETURNS
1996 1997 1998 1999 2000
<S> <C> <C> <C> <C>
0.00% 0.00%% 0.00%% 0.00%% 0.00%
</TABLE>

AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Investment Pool-Retail ___% ___% ___%
Class
International Equity Investment ___% ___% ___%
Pool-Retirement Class
MSCI All Country World Index Free Ex-US* ___% ___% ___%
</TABLE>
-------------------------
* The MSCI All Country World Free Ex-US Index is a market capitalization
weighted index composed of companies representative of the market structure
of 46 developed and emerging countries, not including the U.S. It excludes
closed markets and shares in free markets that are not purchasable by
foreigners.

- 52 -
<PAGE> 55
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Retail Class or Retirement Class.

<TABLE>
<CAPTION>
RETAIL CLASS RETIREMENT CLASS
-----------------------------------------
<S> <C> <C>
SHAREHOLDER FEES None None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

EXAMPLE

- You reinvested all dividends and other distributions.

- The Fund's average annual return was 5%.

- The Fund's maximum total operating expenses are charged and
remain the same.

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
RETAIL CLASS $___ $___
RETIREMENT CLASS $___ $___
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

- 53 -
<PAGE> 56
ADDITIONAL INVESTMENT & RISK INFORMATION

The following is a list of other investment strategies employed by the Funds and
certain risks that may apply to your investments in the Funds. These are in
addition to the investments and risks listed in each Fund's Risk & Return
Summary. Further information about investments and risks is available in our
Statement of Additional Information.

TEMPORARY DEFENSIVE POSITIONS: Each Fund may respond to adverse market,
economic, political or other conditions by investing up to 100% of its assets in
temporary defensive investments. Such investments may include cash, shares of
the Money Market Fund, high quality short-term debt obligations and other money
market instruments. During such periods, the Funds may not meet their investment
objectives.

SECURITIES LENDING: The Funds may lend their portfolio securities to generate
additional income. If they do so, they will use various strategies (for example,
only making fully collateralized and bank guaranteed loans) to reduce related
risks.

MORTGAGE-BACKED AND ASSET-BACKED OBLIGATIONS: The Bond Funds may invest in
collateralized debt instruments issued or underwritten by U.S. organizations and
organizations located in developed markets. The Bond Funds' use of these
securities has risks in addition to the risks of conventional debt securities.
Because principal is paid back over the life of the security rather than at
maturity, these securities are subject to the risk of early prepayment. This
means a loss of anticipated interest payments and any premium the Fund may have
paid. Prepayments generally increase when interest rates fall. Such obligations
may be unsecured or an issuer may have limited ability to enforce its interest
in the assets, which means there is no collateral for the Fund to seize if the
borrower defaults.

DERIVATIVES: The Select Funds may use derivatives such as, but not limited to,
equity futures contracts and U.S. Treasury futures contracts, as well as options
in order to maintain market exposure, reduce market risk, to maintain liquidity
or to commit cash pending investment. No more than 5% of any Select Fund's
assets may be invested in margin required for these or any other derivative
instrument.

The International Equity Fund may use currency transactions, such as forward
contracts, futures and options on currencies. The International Equity Fund may
use these currency transactions to hedge their non-U.S. dollar denominated
obligations and may also use them for investment purposes.

The Bond Funds may use currency transactions, such as forward contracts,
futures and options on currencies. The Bond Funds may use these currency
transactions to hedge their non-U.S. dollar denominated investments and to a
lesser extent for investment purposes.

Each of the Blended Funds may invest up to 10% of its assets directly in
exchange listed equity futures contracts and exchange listed in U.S. Treasury
futures contracts in order to gain exposure to the U.S. equity and fixed income
markets on cash balances. No more than 5% of any Blended Fund's assets may be
invested in margin required for these or any other derivative instrument.

The Funds' use of derivatives may reduce their return and increase volatility.
Derivatives also may involve additional expenses, which would reduce any benefit
or increase any loss of a Fund using the derivative.

--------------------------------------------------------------------------------
WHAT ARE DERIVATIVES?
Derivatives are investments whose values are based on (or "derived" from) a
stock, bond, asset or index. These investments include options, futures
contracts and similar investments. Futures and options are popular types of
derivatives since they are easily bought and sold, and have market values that
are regularly calculated and published.
--------------------------------------------------------------------------------

- 54 -
<PAGE> 57
MANAGEMENT OF THE FUND

INVESTMENT ADVISER

--------------------------------------------------------------------------------
WHAT IS A MANAGER OF MANAGERS?
The Investment Adviser does not make the day-to-day investment decisions for the
Select Funds. Rather, it retains the services of experienced investment
management firms to do so. The Investment Adviser continuously monitors the
performance of these Sub-Advisers and allocates assets among them.
--------------------------------------------------------------------------------

The Investment Adviser, a controlled affiliate of the Annuity Board, serves as
the investment adviser to the Funds, under its advisory agreement with the
Annuity Board Funds Trust (the "Trust") and subject to the supervision of the
Funds' Board of Trustees. As a manager of managers, it continually monitors the
performance and operations of the Select Funds' Sub-Advisers and allocates the
assets of each Select Fund among the Sub-Advisers. It oversees each
Sub-Adviser's adherence to its stated investment style and compliance with the
relevant Fund's investment objective, policies and limitations. It recommends to
the Board of Trustees the hiring or changing of Sub-Advisers. Changes are made
in a Select Fund's Sub-Advisers only when approved by the Board of Trustees.
Pursuant to an exemptive order given by the Securities and Exchange Commission
("SEC"), shareholder approval is not required for such change. However,
shareholders of the applicable Select Fund will be notified of such change
within 90 days.

The Investment Adviser allocates each Blended Fund's investments among the
Select Funds and rebalances their investments among the Select Funds as
discussed above. In addition, the Investment Adviser and the Trust have entered
into a Sub-Advisory Agreement with The Northern Trust Company whereby The
Northern Trust Company invests the cash balances of each Blended Fund.

The Investment Adviser has no prior experience managing a mutual fund. However,
the Investment Adviser's parent, Annuity Board, is responsible for managing
approximately $8 billion in retirement, welfare and other assets. The Annuity
Board was established in 1918 and exists to assist churches and other Southern
Baptist entities by making available retirement plan services, life and health
coverage, risk management programs and personal and institutional investment
programs. Each Fund pays monthly aggregate advisory fees to the Investment
Adviser and the Sub-Advisers at the following annual percentage rate of its
average daily net assets:

[INSERT FEE TABLE](+)

(*) In addition, the Blended Funds will indirectly bear their proportionate
share of the advisory fee and other expenses of the underlying Select Funds.

The Annuity Board will, at all times, directly or indirectly control the vote of
at least 60% of each Fund's shares. The Funds will refuse to accept any
investment that would result in a change of such control. This means that the
Annuity Board will control the vote on any matter that requires shareholder
approval.

(+)To be completed by amendment prior to effectiveness.

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<PAGE> 58
SUB-ADVISERS

--------------------------------------------------------------------------------
WHAT IS A SUB-ADVISER?
Each Sub-Adviser makes the day-to-day investment decisions for the Select Fund's
assets that it manages, subject to the supervision of the Investment Adviser and
the Board of Trustees. Each Sub-Adviser continuously reviews, supervises and
administers its own investment program.
--------------------------------------------------------------------------------

Below is a list of each Fund's Sub-Advisers and their staff who are primarily
responsible for the day-to-day management of the Select Fund's assets.

MONEY MARKET FUND:

The Northern Trust Company, Chicago, Illinois: Northern Trust has been managing
assets since it was founded in 1889. Northern Trust and its subsidiaries have
assets under management of approximately $330 billion. It uses a team approach
to manage its portion of the Money Market Fund.

Payden & Rygel, Los Angeles, California: Payden & Rygel, an independently owned
firm, was founded in 1983 and has continuously grown to its current size of $32
billion under management. It manages its portion of the Money Market Fund
utilizing a team approach. Oversight is provided by the Investment Policy
Committee, which is comprised of 6 senior managing principals, who average 18
years of industry experience and 10 years tenure with the company.

SHORT-TERM BOND FUND:

BlackRock Financial Management, Inc., New York, New York: Established in 1988,
BlackRock is a premier provider of global investment management and risk
management products. It manages $191 billion across various asset classes. A
team of portfolio managers, led by Scott Amero, manages BlackRock's portion of
the Short-Term Bond Fund. With BlackRock since 1990, Mr. Amero, Managing
Director, specializes in the short and intermediate duration sectors, including
asset-backed securities, adjustable rate mortgage securities and other short
duration mortgage products. BlackRock is affiliated with PFPC Distributors,
Inc., the Fund's Distributor, and PFPC Inc., which provides Transfer Agency and
Administration and Accounting services to the Fund. BlackRock, PFPC Inc. and
PFPC Distributors, Inc. are all members of The PNC Financial Services Group Inc.

STW Fixed Income Management, Santa Barbara, California: STW has been a specialty
bond manager since 1977. Investment grade fixed income management is its only
business and assets under management are approximately $10 billion. Investment
decisions for STW's portion of the Short-Term Bond Fund are made by its fixed
income investment team.

Pacific Investment Management Company, Newport Beach, California: PIMCO, an
institutional money management firm, was founded in 1971 to provide specialty
management of fixed income portfolios. PIMCO was one of the first investment
managers to specialize in fixed income and has successfully managed its total
return strategy on behalf of its clients since the 1970s. PIMCO has assets under
management of approximately $207 billion. John L. Hague serves as portfolio
manager for PIMCO's portion of the Short-Term Bond Fund. He is a Managing
Director, member of the executive committee and a senior member of PIMCO's
portfolio management and investment strategy groups. Mr. Hague has amassed 20
years of investment experience through his 13 years with PIMCO, his previous
position with Salomon Brothers Inc., where he specialized in international fixed
income products and mortgage securities and from his credit research with J.P.
Morgan.

INTERMEDIATE-TERM BOND FUND:

J. P. Morgan Investment Management, Inc., New York, New York: J. P. Morgan
Investment Management manages over $369 billion in assets, of which $158 billion
is fixed income for institutional clients. Robert J. Morena, Vice President,
serves as portfolio manager for J.P Morgan's portion of the

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<PAGE> 59
Intermediate-Term Bond Fund. Prior to joining J.P. Morgan in February 2000, Mr.
Morena was a Managing Director with Forest Investment Management and prior to
that, he spent 17 years as the Department Head of The Bank of New York's
Institutional Fixed Income Division.

Western Asset Management Co., Pasadena, California: Since 1971, Western has been
managing fixed-income assets. It currently manages $71.1 billion in assets that
span the yield curve and globe. Western's Investment Strategy Group manages its
portion of the Intermediate-Term Bond Fund. Western's fixed-income discipline is
a team approach that unites groups of specialists dedicated to different market
sectors.

Pacific Investment Management Company, Newport Beach, California: PIMCO, an
institutional money management firm, was founded in 1971 to provide specialty
management of fixed income portfolios. PIMCO was one of the first investment
managers to specialize in fixed income and has successfully managed its total
return strategy on behalf of its clients since the 1970s. PIMCO has assets under
management of approximately $207 billion. Chris P. Dialynas serves as portfolio
manager for PIMCO's portion of the Intermediate-Term Bond Fund. He joined PIMCO
in 1980 and serves as Managing Director, portfolio manager and a senior member
of PIMCO's investment strategy group. Mr. Dialynas has 22 years of investment
experience.

LONG-TERM BOND FUND:

Loomis, Sayles & Company, L.P., Boston, Massachusetts: Established in 1926,
Loomis, Sayles & Company, L.P. manages more than $67 billion in fixed income and
equity assets for institutional, high net worth and mutual fund clients. Daniel
J. Fuss serves as portfolio manager to its portion of the Long-Term Bond Fund.
With 42 years in the investment industry, Daniel J. Fuss has been with Loomis,
Sayles & Company, L.P. since 1976. He holds the position of Vice Chairman and
Director of Loomis, Sayles & Company, L.P.

STW Fixed Income Management, Santa Barbara, California: STW has been a specialty
bond manager since 1977. Investment grade fixed income management is its only
business and assets under management are approximately $10 billion. Investment
decisions for STW's portion of the Long-Term Bond Fund are made by its fixed
income investment team.

EQUITY INDEX FUND:

Goldman Sachs Asset Management, New York, New York: Goldman Sachs Asset
Management has been providing discretionary investment advisory services since
1989 to institutional investors. Together with other units of the Investment
Management Division of Goldman Sachs, it has assets under management of
approximately $280.9 billion. The portfolio team managing its portion of the
Equity Index Fund is lead by Robert C. Jones, CFA, Managing Director and Head of
Global Quantitative Equities. Mr. Jones developed Global Quantitative Equities
models and investment process in the late 1980s, and has been responsible for
overseeing their continuing development and evolution ever since.

Independence Investment Associates, Inc., Boston, Massachusetts: Independence
Investment Associates was founded in 1982. It combines fundamental research with
cutting edge investment technology. Today it manages $28.6 billion in assets for
over 100 institutional clients. John Montgomery, CFA, is the portfolio manager
of its portion of the Equity Index Fund. He was a founder of Independence
Investment Associates and he is the head of their U.S. equity management.

Northern Trust Global Investments and The Northern Trust Company, Chicago,
Illinois: Northern Trust has been managing assets since it was founded in 1889.
Northern Trust and its subsidiaries have assets under management of
approximately $330 billion. It uses a team approach to manage its portion of the
Equity Index Fund.

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<PAGE> 60
VALUE EQUITY FUND:

Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, Texas: BHMS was founded in
1979 to manage large capitalization equities for a limited number of
institutional clients. Assets under management total $26 billion in large, mid
and small cap value equities, as well as fixed income securities. Its strategy
is a team-oriented value approach utilizing fundamental research to construct
portfolios. With 23 years of investment experience, Ray Nixon, Jr., Principal,
is the portfolio manager of its portion of the Value Equity Fund. He joined BHMS
in 1994 from Salomon Smith Barney, Inc., where he was a member of the Investment
Policy Committee and served as their Lead Institutional Stockbroker for the
Southwest. During his 23-year investment career, he also served as a Research
Analyst.

Equinox Capital Management, LLC, New York, New York: Founded in 1989, Equinox
Capital Management now manages $10.4 billion in assets. Wendy D. Lee, Chief
Executive Officer, serves as portfolio manager for its portion of the Value
Equity Fund. Ms. Lee joined Equinox Capital Management in 1992 as Director of
Research. Ms. Lee has almost 20 years of investment management experience and
has had significant experience within the value-investing arena. She is a CFA
Charterholder.

Numeric Investors L.P., Cambridge, MA: Founded in 1989, Numeric is an investment
manager of U.S., Japanese and European equity portfolios using quantitative
stock selection and risk control techniques. It has approximately $3.8 billion
in assets under management. Arup Datta, CFA, is the portfolio manager for its
portion of the Value Equity Fund. Mr. Datta joined Numeric in 1993.

GROWTH EQUITY FUND:

Northern Trust Global Investments, Chicago, Illinois: Northern Trust has been
managing assets since it was founded in 1889. Northern Trust and its
subsidiaries have assets under management of approximately $330 billion. It uses
a team approach to manage its portion of the Growth Equity Fund.

Provident Investment Counsel, Pasadena, California: PIC has been in the
investment management industry since 1951. It is a growth equity manager with
approximately $23.0 billion in assets. Mr. Larry D. Tashjian, CFA, CIC, is the
Portfolio Manager of its portion of the Growth Equity Fund. Mr. Tashjian has
been in the investment industry since 1978, and has been with PIC since 1981,
where he is currently serving in the role of Executive Managing Director.

Dresdner RCM Global Investors LLC, San Francisco, California: The firm was
founded as a large cap growth equity manager in 1970 and became a wholly owned
subsidiary of Dresdner Bank AG in 1996. As of September 30, 2000, it has
approximately $51 billion under management and advice. William L. Price,
Chairman and Chief Investment Officer, is the portfolio manager for its portion
of the Growth Equity Fund. He joined in 1977 as a member of the Equity Portfolio
Management Team. He has 30 years experience in the industry.

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<PAGE> 61
SMALL CAP EQUITY FUND:

Aronson+Partners, Philadelphia, Pennsylvania: Aronson+Partners is a
value-oriented, quantitative domestic equity manager, founded in 1984. It
currently manages $4 billion for 33 clients. Its portion of the Small Cap Equity
Fund is managed by a team.

High Rock Capital, LLC, Boston, Massachusetts: High Rock manages approximately
$2 billion in small cap value accounts and commingled vehicles. David Diamond
serves as the portfolio manager for its portion of the Small Cap Equity Fund.
Prior to founding High Rock in 1997, Mr. Diamond was with The Boston Company
Asset Management, Inc., where he was the senior member of the firm's equity
policy committee.

Provident Investment Counsel, Pasadena, California: PIC has been in the
investment management industry since 1951. It is a growth equity manager with
approximately $23.0 billion in assets. Mr. Lauro Guerra, CFA, CIC, is the
Portfolio Manager of its portion of the Small Cap Equity Fund. Mr. Guerra has
been in the investment industry since 1983, and has been with PIC since 1983
where he is currently serving in the role of Managing Director.

Westpeak Investment Advisors, L.P., Boulder, Colorado: Westpeak, founded in
1991, manages a range of U.S. and non-U.S. equity strategies for many corporate
and public pension plans. In addition, it is sub-adviser for several mutual
funds. It manages approximately $10 billion in assets. Westpeak employs a highly
disciplined proprietary investment process that was developed over the past 25
years by Gerald H. Scriver, President, CEO and CIO of Westpeak. Mr. Scriver is
portfolio manager for its portion of the Small Cap Equity Fund.

INTERNATIONAL EQUITY FUND:

Brinson Partners, Inc., Chicago, Illinois: Brinson Partners is an investment
adviser, responsible for the management of over $199 billion institutional
assets. Brinson Partners and its predecessor entities have managed both U.S. and
non-U.S. investment portfolios since 1974 and global investment portfolios since
1982. Brinson Partners is a member of the UBS Asset Management Division of UBS
AG which performs institutional asset management operations worldwide. The UBS
Asset Management Division manages over $300 billion in assets. Investment
decisions for its portion of the International Equity Fund are made by an
investment management team at Brinson Partners.

Walter Scott & Partners Limited, Edinburgh, Scotland: Established in 1983,
Walter Scott & Partners specializes in global equity investment management. It
has assets under management of some $4 billion. Dr. Walter Grant Scott and Dr.
Kenneth J. Lyall share responsibility as the Senior Investment Directors
overseeing its portion of the International Equity Fund. Walter Scott has 28
years' experience in equity investment and Kenneth Lyall has 18 years'
experience.

Genesis Asset Managers Limited, Guernsey, Channel Islands: Genesis was formed in
1990 and is affiliated through common management with the Genesis Group which
specializes in the investment management of institutional funds in Emerging
Markets. Investment decisions for its portion of the International Equity Fund
are made by a team of country, sector and industry specialists within the
Genesis Group.

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<PAGE> 62
twenty years of investment experience. Prior to joining Montgomery in 1991, Ms.
Jimenez worked as Portfolio Manager at Emerging Markets Investors Corporation,
from 1981 through 1988.

Capital Guardian Trust Company, Los Angeles, California: CGTC, has been
providing investment management services since 1968 and has approximately $133.4
billion in assets. CGTC's approach to investing is fundamental and
research-driven. CGTC uses a multiple portfolio management system under which
several portfolio managers each have investment discretion over a portion of a
client's account.

BLENDED FUNDS:

In addition, the Investment Adviser and the Trust have entered into a
Sub-Advisory Agreement with The Northern Trust Company whereby The Northern
Trust Company invests the cash balances of each Blended Fund. The Northern Trust
Company has been managing assets since it was founded in 1889. Northern Trust
and its subsidiaries have assets under management of approximately $330 billion.
It uses a team approach to manage the cash portion of each Blended Fund.

SERVICE PROVIDERS

The following chart provides information on the Fund's primary service
providers.

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<PAGE> 63
[FLOWCHART]

- 61 -
<PAGE> 64
ELIGIBLE INVESTORS

Shares of the Funds are not offered to the general public. The Funds reserve the
right to refuse to accept investments at any time.

SHAREHOLDER INFORMATION- RETIREMENT CLASS

Retirement Class shares of the Fund are sold only to retirement, savings and
welfare benefit plans (such as 403(b), 401(k) and other plans) offered through
the Annuity Board ("Annuity Board Plans"). If you participate in an Annuity
Board Plan offered by your employer, contact your employer, your plan
administrator or the Annuity Board at (800) 262-0511. Your Annuity Board Plan
may require separate applications and its policies and procedures, including
minimum investments, may be different than those described below. Your Annuity
Board Plan procedures may require additional days to process contributions,
withdrawls and other transactions.

SHAREHOLDER INFORMATION -RETAIL CLASS

Retail Class shares of the Funds are sold only to the following persons:

- Participants in Annuity Board Plans;

- Persons eligible to be participants in Annuity Board Plans;

- Annuitants under Annuity Board Plans; and

- Spouses of all the above persons.

Eligible investors may purchase Retail Class shares of the Funds by following
one of the methods for opening an account shown below under "Transactions with
the Funds."

OPEN AN IRA OR AN ACCOUNT FOR A MINOR: Retail Class shares of the Funds are
available to eligible investors for purchase through Individual Retirement
Accounts (IRAs) and Roth IRAs. SBC Trust Services, Inc., a controlled affiliate
of the Annuity Board, and an affiliate of the Investment Adviser will serve as
custodian to the IRAs. Eligible investors may also establish a Retail Class
account for a minor. Uniform Gift to Minors Act and Uniform Transfers to Minors
Act accounts may provide special tax advantages. For more details and
applications, call SBC Trust Services, Inc. at (800) 262-0511.

MINIMUM INVESTMENTS

You must initially invest a minimum of $1,000 in each of your Fund accounts
holding Retail Class shares. The $1,000 minimum applies separately to each Fund
that you own.

<TABLE>
<CAPTION>
SUBSEQUENT PURCHASES
--------------------
<S> <C>
For Most Accounts $100
Automatic Monthly Investment Plan $100
Exchanges from another Fund $250
IRA and Uniform Transfer to Minors Accounts $100
</TABLE>

MINIMUM ACCOUNT SIZE

Each Fund reserves the right to close any account (except Annuity Board Plan
accounts) if the balance falls below $1,000 due to redemptions not market
action. The $1,000 minimum applies separately to each Fund that you own. We may
close your account and send you a check for the redemption proceeds if you do
not bring your account up to the minimum within 30 days after we mail you a
written notice.

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<PAGE> 65
TRANSACTIONS WITH THE FUNDS

The following transaction procedures do not apply to Annuity Board Plan
accounts. If you own Retirement Class shares through an Annuity Board Plan, you
should consult your employer, your plan administrator or the Annuity Board for
proper instructions.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
METHOD OPEN AN ACCOUNT ADD TO AN ACCOUNT
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
By Mail Complete and sign the Send in a check for the
application. Mail it with your appropriate minimum amount (or
Annuity Board Funds Trust check made payable to Annuity more). Make your check payable
c/o PFPC Inc. Board Funds Trust. Your initial to Annuity Board Funds Trust.
P.O. Box 8990 investment must meet the minimum Always show your account name and
Wilmington, DE 19899-8980 amount. number or include the detachable
stub from your confirmation
statement.
--------------------------------------------------------------------------------------------------------------------------------
By Telephone If you already have an account You may make investments by
with us and you have authorized telephone ($100 minimum) if you
(800) 262-0511 telephone transactions, you may have previously authorized it.
For each type of telephone call to open an account in another Once you call, we will deduct the
transaction, you must Fund. You may direct us to deduct dollar amount you designate from
complete the appropriate an amount from your previously your previously authorized
section on your initial authorized checking account or to checking account.
application or complete an exchange shares from your existing
authorization form, account in another Fund, or you may
available upon request. send us a wire. {For exchanges, the
names and addresses on the accounts
must be identical.) Your initial
investment in the new Fund must
meet the minimum amount.
--------------------------------------------------------------------------------------------------------------------------------
Online If you do not have an existing You may make investments online
account, you may download an if you have previously authorized
www.absbc.org application from our Website and it. Once you place your order
Register through our forward your signed application through our Website, we will
Website. You can then to: deduct the dollar amount you
establish a personal Annuity Board Funds Trust designate from your previously
identification number c/o PFPC Inc. authorized checking account.
("PIN") on our Website that P.O. Box 8980
will enable you to make Wilmington, DE 19899-8980
transactions with the Funds Existing Shareholders may open an
online. account in another Fund through
our Website. You may instruct us
to deduct an amount from your
previously authorized checking
accounts or to exchange shares
from your existing account in
another Fund. (For exchanges, the
names and addresses on the
accounts must be identical.) Your
initial investment in the new Fund
must meet the minimum amount.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE> 66
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
METHOD OPEN AN ACCOUNT ADD TO AN ACCOUNT
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Transaction Plans Not applicable. Automatic Investment Plan:
You may authorize automatic
For each type of automatic monthly investments in a constant
transaction plan, you must dollar amount ($100 minimum). We
complete the appropriate will withdraw the designated
section on your initial dollar amount from your checking
application or complete an account on the 5th or 20th day
authorization form, (whichever you designate) each
available upon request. month and invest it into the Fund
that you have designated. If the 5th
or the 20th of the month do not fall
on a business day, we will withdraw
the designated dollar amount on the
following business day.
--------------------------------------------------------------------------------------------------------------------------------
By Wire Call your bank with the wire Call (800) 262-0511 to notify us
instructions shown to the left. of the wire. Call your bank with
PNC Bank, NA The wire must be received by 4:00 the wire instructions shown to
ABA#: 031000053 p.m. Eastern time for same day the left. The wire must be
{Designate the Fund} processing. received by 4:00 p.m. Eastern
DA#: __________ time for same day processing.
FBO: Shareholder Name and You must send a completed
Account Number application by overnight delivery
in advance of the wire to:
Note: Your bank may charge Annuity Board Funds Trust
you a fee for handling a {Designate the Fund}
wire transaction. c/o PFPC Inc.
P.O. Box 8980
Wilmington, DE 19899-8980
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- 64 -
<PAGE> 67
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
METHOD REDEEM SHARES EXCHANGE SHARES
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
By Mail Send a letter of instruction that Send a letter of instruction that
includes: includes:
Annuity Board Funds Trust - The Fund name, your - Your account number, the
c/o PFPC Inc. account number, the name of name of each owner (exactly as
P.O. Box 8980 each owner (exactly as they they appear on the account),
Wilmington, DE 19899-8980 appear on the account) and the the dollar amount you wish to
dollar amount you wish to exchange ($250 minimum) and
redeem. the new Fund into which the
- Include all genuine amount is being invested.
signatures (exactly as they - Include all genuine
appear on the account) and any signatures (exactly as they
documents that may be required appear on the account) and any
(and a medallion signature documents that may be required.
guarantee, if required). The names and addresses on the
You will receive your redemption accounts must be identical.
payment in the form you previously Shares will be exchanged into the
authorized: check, deposit to your same class.
bank account, or wire transfer
(for wire transfers, a fee will be
charged).
--------------------------------------------------------------------------------------------------------------------------------
By Telephone If you have previously authorized If you have previously authorized
telephone redemptions, you may it, you may exchange shares for
(800) 262-0511 redeem shares by calling us shares of another Fund ($250
For each type of telephone ($25,000 limit). minimum) over the telephone. The
transaction, you must names and addresses on the
complete the appropriate You will receive your redemption accounts must be identical.
section on your initial payment in the form you previously Shares will be exchanged into the
application or complete an authorized: check, deposit to your same class.
authorization form, bank account, or wire transfer
available upon request. (for wire transfers, a fee will be
When you call, we may charged).
request personal
identification and tape If you have changed your address
record your call. within the past 10 business days,
your redemption request must be in
writing (follow the instructions
in this table above for how to
Redeem Shares: By Mail).
--------------------------------------------------------------------------------------------------------------------------------
Online You may redeem shares through our You may exchange shares for shares
Website. You will receive your of another Fund ($250 minimum)
www.absbc.org redemption payment in the form you through our Website. The names
Register through our previously authorized: check or and addresses on the accounts must
Website. You can then deposit to your bank account. be identical. Shares will be
establish a personal exchanged into the same class.
identification number If you have changed your address
("PIN") on our Website within the past 10 business days,
that will enable you to your redemption request must be in
make transactions with the writing (follow the instructions
Funds online. in this table above for how to
Redeem Shares: By Mail).
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- 65 -
<PAGE> 68
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
METHOD REDEEM SHARES EXCHANGE SHARES
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Automatic Transaction Plans Systematic Withdrawal Plan: Not Applicable.
You may specify a percent of your
You must complete the account or a dollar amount ($250
appropriate section on minimum) to be withdrawn on the
your initial application 25th of each month. (If the 25th
or complete an does not fall on a business day,
authorization form, we process withdraws on the prior
available upon request. business day.) We reserve the
right to charge you for each
withdrawal. At the time you
authorize the withdrawal plan,
you must have a minimum account
balance of $5,000. You must have
all dividends and distributions
reinvested. We will continue the
withdrawals until your shares are
gone or you cancel the plan. You
may cancel or change your plan or
redeem all your shares at any
time.

You will receive your redemption
payment in the form you previously
authorized: check or deposit to
your bank account.
--------------------------------------------------------------------------------------------------------------------------------
By Wire You may redeem shares by Not applicable.
contacting us by mail or by
Note: Your bank may telephone and instructing us to
charge you a fee for wire your proceeds to your bank
handling a wire ($10,000 minimum). (Follow the
transaction. instructions in this table for how
to Redeem Shares: By Mail, By
Note: The Funds and their Telephone or Online.) Wire
transfer agent are not redemptions can be made only if
responsible for the you have previously authorized it
efficiency of the federal on your initial application or an
wire system or your bank. authorization form, available upon
request (including attaching a
voided check from the account
where proceeds are to be wired).
A fee will be charged for wire
transfers.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- 66 -
<PAGE> 69
MORE SHAREHOLDER INFORMATION

HOW SHARE PRICE IS CALCULATED

PFPC determines the NAV per share of each Fund as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each day that the Exchange is open (except the Friday after Thanksgiving when
the Funds are closed). A Fund's NAV is calculated by adding the value of all
securities and other assets of the Fund, deducting its liabilities and dividing
the balance by the number of outstanding shares of the Fund.

--------------------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares

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

Each Fund, except the Money Market Fund, values its assets based on current
market values when such values are readily available. These prices normally are
supplied by a pricing service. Any assets that are denominated in foreign
currencies are valued daily in U.S. dollars at the foreign currency exchange
rates that are prevailing at the time that PFPC determines the Fund's daily NAV.
In rare cases, events that occur after certain markets have closed may render
prices unreliable. When a Fund believes a market price does not reflect a
security's true value, the Fund may substitute a fair value estimate through
procedures established by, or under the direction of, the Board of Trustees. A
Fund may also use these procedures to value securities that do not have a
readily available current market value. Each Fund is subject to the risk that it
has valued certain of its securities at a higher price than it can sell them.

PFPC prices at amortized cost all instruments held by the Money Market Fund and
those fixed-income securities held by the other Funds that have maturities of
less than 60 days. The amortized cost method involves valuing a security at its
cost and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.

To the extent the International Equity Fund has portfolio securities that are
primarily listed on foreign exchanges that trade on weekends or other days when
the Funds do not price their shares, the NAV of its shares and the shares of the
Blended Funds investing in it may change on days when you will not be able to
purchase or redeem.

PURCHASE OF SHARES

Fund shares are sold at net asset value without a sales load. Orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good order. Your purchase will be
made in full and fractional shares calculated to three decimal places.
Certificates for shares are not issued.

The Funds reserve the right to suspend the offering of shares or to limit or
reject any purchase or exchange order at any time, without notice. This includes
orders from any investor who engages in excessive purchases, exchanges or
redemptions in their accounts. The Funds also reserve the right to waive or
change investment minimums at any time, without notice. The Funds also reserve
the right to redeem shares in any account and return the proceeds to the
investor. These actions may be taken when, in the sole discretion of the Funds'
management, they are deemed to be in the best interest of the Funds. The Funds
will not accept any third party or foreign checks.

REDEMPTION OF SHARES

You may redeem some or all of your shares on any business day that the New York
Stock Exchange is open (except the Friday after Thanksgiving when the Funds are
closed). Shares will be redeemed at the net asset value next determined after
your redemption request is received in good order. A redemption is

- 67 -
<PAGE> 70
a taxable transaction on which you may recognize a gain or loss. (Generally, a
gain or loss is not expected to be realized on a redemption of the Money Market
Fund, which seeks to maintain a stable $1.00 per share net asset value.)

We will ordinarily send redemption proceeds on the next business day, but we may
take up to seven days to make payment. The Funds may stop selling their shares
and postpone redemption payments at times when the New York Stock Exchange is
closed or has restricted trading or the SEC has determined an emergency
condition exists. We will send redemption proceeds only in the form that you
previously authorized. If you have authorized payment by check, we will send the
check to the shareholder and address of record.

CHECKWRITING OPTION

If you own shares of the Money Market Fund, you may draw money from your Money
Market Fund account by writing a check of $250 or more. You must complete the
appropriate section on your initial application or complete an authorization
form, available upon request. Because the amount in your Money Market Fund
account is likely to change frequently, you should verify this amount before
writing a check. You may not write a check to close your account. We will impose
charges for stop payment orders and returned checks. We will redeem an
appropriate amount of shares from your Money Market Fund account to pay for
these charges.

Checkwriting privileges are not available for retirement plan accounts or other
tax-deferred accounts. Such privileges would result in significant, negative tax
consequences to the shareholder.

REQUEST IN GOOD ORDER

All purchase, exchange and redemption requests must be received by the Funds or
their transfer agent in good order. Requests in good order must include the
following documents: (1) a letter of instruction, if required, signed by all
registered owners of the shares in the exact names in which they are registered;
(2) any required medallion signature guarantees (see "Medallion Signature
Guarantees" below); and (3) other supporting legal documents, if required, in
the case of estates, trusts, guardianships, custodianships and other
organizations.

Written redemption requests also must include the Fund name, your account
number, and the dollar amount of the transaction. Purchase orders are not in
good order until the Funds' transfer agent has received payment in federal
funds.

If you are investing through an Annuity Board Plan, your employer, plan
administrator or the Annuity Board have their own procedures for transmitting
transaction orders and payments to the Funds' transfer agent on a timely basis
and in good order. These procedures may require additional days to process
contributions, withdraws and other transactions.

MEDALLION SIGNATURE GUARANTEES

To protect shareholder accounts, the Funds, and the transfer agent from fraud,
medallion signature guarantees are required in certain cases. This enables us to
verify the identity of the person who has authorized a redemption from an
account. We will require a medallion signature guarantee for any of the
following:

- Any written redemption request for $25,000 or more.

- Redemptions where the proceeds are to be sent to someone other
than the registered shareholder(s) and at the registered
address.

- Transfers into an account with a different registration
(including a different name, address, taxpayer identification
number, or account type).

- 68 -
<PAGE> 71
A notary public does not qualify as a medallion signature guarantee. You may
obtain a medallion signature guarantee from a domestic bank or trust company,
broker, dealer, clearing agency, savings association, or other participating
financial institution. The three recognized medallion programs are Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) and New York Stock Exchange, Inc. Medallion Signature Program (NYSE MSP).
Signature guarantees from financial institutions that are not participating in
one of these programs will not be accepted. You may call us at (800) 262-0511
for further details.

REDEEMING RECENTLY PURCHASED SHARES

If you are redeeming shares that you recently purchased by check, we may delay
sending your redemption proceeds until your check has cleared. This may take up
to fifteen calendar days after we received your check. To avoid this delay, pay
for your shares by federal funds wire transfer.

RIGHT TO REDEEM IN KIND

The Funds reserve the right to pay part or all of your redemption proceeds in
securities rather than cash. If payment is made in securities, you may incur
brokerage commissions if you elect to sell the securities for cash.

ACCOUNT STATEMENTS

Each shareholder's transactions in Fund shares will be reflected in a quarterly
statement. If your Fund shares are held by a nominee, the nominee decides
whether the statement will be sent to you.

EXCHANGING SHARES

--------------------------------------------------------------------------------
WHAT IS AN EXCHANGE?
An exchange between Funds is really two transactions - a sale of one Fund and
the purchase of another. In general, the same policies that apply to purchases
and sales apply to exchanges, including minimum investment amounts. Exchanges
also have the same tax consequences as ordinary sales and purchases.
--------------------------------------------------------------------------------

The Funds reserve the right to revise or cancel the exchange privilege, limit
the amount or number of an exchange or reject an exchange at any time, without
notice. An exchange is a taxable transaction on which you may recognize a gain
or loss, unless you are investing through a tax-deferred account, such as a
retirement plan account or an IRA. (Generally, a gain or loss is not expected to
be realized on a redemption of the Money Market Fund, which seeks to maintain a
stable $1.00 per share net asset value.)

TELEPHONE AND ONLINE TRANSACTION

The Funds reserve the right to refuse a telephone redemption or online
redemption request if the requestor is unable to provide information such as
the: 1) account number; 2) name and address exactly as registered with us; or 3)
the primary social security or tax identification number.

We are not responsible for any account losses due to fraud, so long as we have
taken reasonable steps to verify the identity of the person making a telephone
or online request. If you wish to remove the telephone redemption or online
redemption option from your account, please notify us in writing.

The Funds reserve the right to terminate or limit the telephone or online
redemption privilege at any time, without prior notice. If you experience
difficulty reaching us by telephone or through our Website, during periods of
unusual market activity, contact us by regular or express mail.

- 69 -
<PAGE> 72
DUPLICATE MAILINGS TO SAME HOUSEHOLD

We try to eliminate duplicate mailings to the same household. If two Fund
shareholders have the same last name and address, we send just one shareholder
report, instead of two. If you prefer separate reports, notify us by mail or
telephone. This practice does not apply to participants in an Annuity Board
Plan. Annuity Board Plan participants will receive individual reports.

DISTRIBUTIONS

--------------------------------------------------------------------------------
WHAT IS NET INVESTMENT INCOME?
Net investment income consists of interest and dividends earned by a Fund on its
investments less accrued expenses.
--------------------------------------------------------------------------------

The Flexible Income Fund, Growth & Income Fund, Capital Opportunities Fund,
Short-Term Bond Fund, Intermediate-Term Bond Fund and Long-Term Bond Fund will
declare and pay distributions from net investment income monthly. The Global
Equity Fund, Equity Index Fund, Value Equity Fund, Growth Equity Fund, Small Cap
Equity Fund and International Equity Fund will declare and pay distributions
from net investment income semi-annually. The Money Market Fund's income
dividends accrue daily and are distributed on the __ day of every month. Each
Fund will also distribute to its shareholders at least annually any realized net
capital gains. It is expected that the distributions of the Money Market Fund
and Short-Term Bond Fund will consist primarily of ordinary income.

Distributions are payable to shareholders of record at the time distributions
are declared. This includes shareholders of shares being purchased, but excludes
shareholders of shares being redeemed on record date. Your distributions will be
reinvested in additional Fund shares, unless you have elected to receive your
distributions in cash.

TAXES

This section is only a summary of some important income tax considerations that
may affect your investment in a Fund. If you are investing through a
tax-deferred account, such as a retirement plan account or an IRA, special tax
rules apply. You are urged to consult your tax adviser regarding the effects of
an investment on your tax situation.

FEDERAL INCOME TAX: As long as a Fund meets the requirements for being a
"regulated investment company," it pays no Federal income tax on the earnings
and gains it distributes to shareholders. The Funds will notify you following
the end of the calendar year of the amount of dividends and other distributions
paid that year.

Dividends you receive from a Fund, whether reinvested in Fund shares or taken as
cash, are generally taxable to you as ordinary income, except if you invest
through a retirement plan account, IRA or other tax-deferred account. A Fund's
distributions of net capital gain, whether received in cash or reinvested in
additional Fund shares, are taxable to you as long-term capital gain, regardless
of the length of time you have held your shares, except if you invest through a
retirement plan account, IRA or other tax-deferred account.

Unless you are investing through a retirement plan account, IRA or other
tax-deferred account, you should be aware that if you purchase Fund shares
shortly before the record date for any dividend or capital gain distribution,
you will pay the full price for the shares and will receive some portion of the
price back as a taxable distribution. You can avoid this situation by waiting to
invest until after the distribution has been made.

- 70 -
<PAGE> 73
responsible for any tax liability generated by your transactions. The exception,
once again, is a retirement plan account, IRA or other tax-deferred account.
(Generally, a gain or loss is not expected to be realized on a redemption of the
Money Market Fund, which seeks to maintain a stable $1.00 per share net asset
value.)

STATE AND LOCAL INCOME TAXES: You should consult your tax adviser concerning
state and local taxes, which may have different consequences from those of the
Federal income tax law.

DISTRIBUTION ARRANGEMENTS

Shares of the Funds are sold without a sales load on a continuous basis by PFPC
Distributors, Inc., located at 3200 Horizon Drive, King of Prussia, PA 19406
(the "Distributor"). The Funds' Board of Trustees has adopted a separate Plan of
Distribution for the Retirement Class and Retail Class ("12b-1 Plans") pursuant
to Rule 12b-1 under the Investment Company Act of 1940. Under the 12b-1 Plans,
each class is authorized to pay the Distributor, the Investment Adviser or
others, shareholder servicing and distribution fees. The maximum fees under each
12b-1 Plan, as a percentage of average daily net assets, are as follows: 0.__%
for the Retirement Class and 0.__% for the Retail Class.

Such fees will be used to reimburse persons who provide, or make payments for,
administration, shareholder servicing and distribution assistance for the Funds,
including paying for the preparation of advertising and sales literature, the
printing and distribution of such materials to prospective investors and related
advertising and promotional expenses. Payments under the 12b-1 Plans are not
based on expenses actually incurred, and the payments may exceed distribution
expenses actually incurred. Because these fees are paid out of the Funds' assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

--------------------------------------------------------------------------------
WHAT ARE 12b-1 FEES?
12b-1 fees, charged by some mutual funds, are deducted from fund assets to pay
for marketing and advertising expenses or to compensate sales professionals for
selling shares of the mutual funds.
--------------------------------------------------------------------------------

SHARE CLASSES

The Funds also offer Institutional Class shares to certain Southern Baptist
foundations.

- 71 -
<PAGE> 74
FOR MORE INFORMATION

IF YOU WANT MORE INFORMATION ABOUT THE FUNDS, REQUEST THE FOLLOWING FREE
DOCUMENTS:

STATEMENT OF ADDITIONAL INFORMATION ("SAI"): Provides a technical and legal
description of the Funds' policies, investment restrictions, risks, and business
structure. The SAI is legally considered a part of this prospectus.

ANNUAL/SEMI-ANNUAL REPORTS: Contain performance data and information on
portfolio holdings for the last completed fiscal year or half year. The Annual
Report also contains the auditor's report and a discussion by management of the
market conditions and investment strategies that affected the Funds'
performance.

If you have questions or need information about your Annuity Board Plan account,
contact your employer, your plan administrator or the Annuity Board at (800)
262-0511 (7 a.m. to 6 p.m. Central time).

To request these free documents or for other information (except Annuity Board
Plan accounts) contact:

Annuity Board Funds Trust
c/o PFPC Inc.
P.O. Box 8980
Wilmington, DE 19899-8980

You may also get free copies by:

- Accessing them (except SAI) on our Website at www.absbc.org.

- Accessing them on the SEC's Internet site -- http://www.sec.gov.

- Reviewing and copying them at the SEC's Public Reference Room in
Washington D.C.

- Requesting copies from the Public Reference Section of the SEC,
Washington, D.C. 20549 (you will be charged a copying fee).

The investment company registration number is 811-______.

<PAGE> 75
--------------------------------------------------------------------------------

[ANNUITY BOARD LOGO] ANNUITY BOARD
FUNDS TRUST

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

MONEY MARKET FUND EQUITY INDEX FUND
SHORT-TERM BOND FUND VALUE EQUITY FUND
INTERMEDIATE-TERM BOND FUND GROWTH EQUITY FUND
LONG-TERM BOND FUND SMALL CAP EQUITY FUND
INTERNATIONAL EQUITY FUND

================================================================================

INSTITUTIONAL CLASS

PROSPECTUS DATED _____, 2001

<TABLE>
<S> <C> <C>
A look at the goals, strategies, RISK & RETURN SUMMARIES
risks and expenses of each Introduction................................................... 3
Fund. Money Market Fund.............................................. 4
Short-Term Bond Fund........................................... 6
Intermediate-Term Bond Fund.................................... 10
Long-Term Bond Fund............................................ 14
Equity Index Fund.............................................. 19
Value Equity Fund.............................................. 22
Growth Equity Fund............................................. 25
Small Cap Equity Fund.......................................... 29
International Equity Fund...................................... 32

ADDITIONAL INVESTMENT & RISK INFORMATION....................... 35

Details about the Funds' MANAGEMENT OF THE FUND
management and service Investment Adviser............................................. 36
providers. Sub-Advisers................................................... 37
Service Providers.............................................. 41

SHAREHOLDER INFORMATION
Eligible Investors............................................. 43
No-Load Class.................................................. 43
Minimum Investments & Account Size............................. 43

Policies and instructions for TRANSACTIONS WITH THE FUNDS.................................... 44
opening, maintaining and
closing an account. MORE SHAREHOLDER INFORMATION................................... 46

FOR MORE INFORMATION........................................... back cover
</TABLE>

--------------------------------------------------------------------------------
DO YOU HAVE QUESTIONS ABOUT TERMS WE USE IN THIS PROSPECTUS?
For information about key terms and concepts, look for our explanations shown in
boxes.
--------------------------------------------------------------------------------

2
<PAGE> 77
RISK & RETURN SUMMARIES

INTRODUCTION

--------------------------------------------------------------------------------
WHO IS THE INVESTMENT ADVISER?
SBC Financial Services, Inc. serves as the Investment Adviser to the Funds. It
is a controlled affiliate of the Annuity Board of the Southern Baptist
Convention ("Annuity Board"). Rather than making the day-to-day investment
decisions for the Funds, it retains the services of other investment management
firms to do so.
--------------------------------------------------------------------------------

Each Fund uses various investment management firms to manage its assets. The
Investment Adviser reviews the firms' performance, allocates the assets of each
Fund among them and makes recommendations to the Funds' Board of Trustees
regarding changes to the firms selected.

3
<PAGE> 78
THE MONEY MARKET FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The MONEY MARKET FUND seeks to maximize current
Objective income to the extent consistent with the preservation
of capital and liquidity, and the maintenance of a
stable per share price of $1.00.
--------------------------------------------------------------------------------
Principal - The Fund invests in a broad range of high quality,
Investment short-term money market instruments denominated
Strategies exclusively in U.S. dollars.

- The Fund invests primarily in:

- Short-term obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks and corporations; and

- Mortgage-backed and asset-backed securities.

- The Fund may enter into repurchase agreements
relating to the above instruments.

- The Fund expects, but does not guarantee, a net
asset value of $1.00 per share by valuing its
portfolio securities at amortized cost.

- High quality commercial paper and other obligations
generally must be rated as follows: (i) if rated by
more than one nationally recognized statistical
rating organizations ("NRSRO's"), the obligation is
rated in the highest rating category of any two
NRSROs, (ii) if only one NRSRO has rated the
obligation, it is rated in that NRSRO's highest
rating category, and (iii) if an obligation is not
rated by a NRSRO, the Fund's Sub-Adviser must
determine it is of equivalent quality to an
obligation rated in the highest rating category of an
NRSRO.

- The Fund will maintain a dollar-weighted average
portfolio maturity of 90 days or less.

- The Fund's investments in securities will be
limited to obligations that mature in 397 days or
less from the date of purchase.

- The Fund may invest only in securities that comply
with the quality, maturity and diversification
requirements of Rule 2a-7 under the Investment
Company Act of 1940, which regulates money market
funds.

- The Fund uses one or more Sub-Advisers to manage
its portfolio under the general supervision of the
Investment Adviser.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- Although the Fund seeks to preserve its value at
$1.00 per share, it is possible for you to lose money
by investing in the Fund.

- The Fund's return will drop if short-term interest
rates drop.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest
or even principal due in a timely manner or at all.

- Obligations of foreign banks and other foreign
issuers may be negatively affected by political
events, economic conditions, or inefficient, illiquid
or unregulated markets in foreign countries. Foreign
issuers, including foreign banks, may be subject to
inadequate regulatory or accounting standards.

- The Fund's ability to concentrate its investments in
the banking industry may increase risks. Banks may be
affected by negative economic conditions, since they
rely on the availability and cost of funds, as well
as the ability of borrowers to repay their loans.
--------------------------------------------------------------------------------

4
<PAGE> 79
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%

-------------------------
* "Other expenses" are based on estimated amounts for the current fiscal
year.
** The Investment Adviser has voluntarily agreed to waive fees and reimburse
expenses to the extent needed to limit total annual operating expenses to
___% for the Retail Class and ___% for the Retirement Class. The Investment
Adviser may terminate this arrangement at any time.

EXAMPLE
This example is meant to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. It shows what you would pay if you
invested $10,000 over the time periods shown and then redeemed your shares at
the end of those periods. The example assumes that:
- You reinvested all dividends and other distributions.
- The Fund's average annual return was 5%.
- The Fund's maximum total operating expenses are charged and remain
the same.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

5
<PAGE> 80
THE SHORT-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The SHORT-TERM BOND FUND seeks current income
Objective consistent with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies investment grade fixed income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks and corporations; and

- Mortgage-backed and asset-backed securities.

- The average quality rating for the Fund's portfolio
will be greater than or equal to the "Aa" category as
rated by Moody's Investor Service ("Moody's") or the
equivalent by Standard and Poor's Corporation
("S&P"). The Fund will not invest in fixed income
securities that have a quality rating less than "Baa"
as rated by Moody's or the equivalent by S&P (or, if
unrated, determined by a Sub-Adviser to be of the
same quality.) If an investment held by the Fund is
downgraded below such rating, the Sub-Adviser will
sell it within a reasonable period but not
necessarily right away. If an investment held by the
Fund is downgraded below such rating, the Sub-Adviser
will take action that it believes to be advantageous
to the Fund.

- The average dollar-weighted duration of the Fund
normally varies between 1 and 3 years.

- The Fund may hold up to 20% of its assets in
obligations denominated in currencies other than the
U.S. dollar, and may invest beyond this limit when
considering U.S. dollar denominated securities of
foreign issuers. However, such foreign currency
exposure will normally be hedged by at least 75% of
its value to the U.S. dollar in order to reduce the
risk of loss due to fluctuations in currency exchange
rates.

- The Fund may invest in derivative instruments such
as, but not limited to, futures contracts, options,
and swap agreements.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. The Sub-Advisers practice
different investment styles and make investment
decisions for the Fund based on an analysis of
differing factors, such as interest rates, yield
spreads, durations, sectors, credit ratings, or
fundamental issuer selection.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- The Fund's value will fluctuate in response to
interest rates and other economic factors. Bond
prices typically drop as interest rates rise, and
vice versa. It is possible for you to lose money by
investing in the Fund.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest
or even principal due in a timely manner or at all.

- Securities rated "Baa" by Moody's or the equivalent
by S&P are considered investment grade, but they may
have some speculative characteristics. This means
that the issuers may have problems making principal
and interest payments during difficult economic
conditions.

- The Fund may have a high portfolio turnover rate.
High turnover creates more transaction costs and
negative tax consequences that may have a negative
impact on your investment in the Fund.

- Obligations of foreign issuers may be negatively
affected by political events,
--------------------------------------------------------------------------------

6
<PAGE> 81
--------------------------------------------------------------------------------
economic conditions, or inefficient, illiquid or
unregulated markets in foreign countries. Foreign
issuers may be subject to inadequate regulatory or
accounting standards.

- Changes in currency exchange rates relative to the
U.S. dollar may negatively affect the values of
foreign investments that are not hedged to the U.S.
dollar.

- The Fund's use of derivative instruments may
increase operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

7
<PAGE> 82
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
short-term bond strategy. The returns shown below have been adjusted to reflect
the anticipated fees and expenses of the Institutional Class of the Fund. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER MOST RECENT QUARTER WORST QUARTER
--------------------------------------------------------------------------------
<S> <C> <C>
___% (Q__'__) ___% (Q__'__) ___% (Q__'__)
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Short-Term Bond Investment Pool ___% ___% ___%
Merrill Lynch 1-3 Year Treasury Index* ___% ___% ___%
</TABLE>

8
<PAGE> 83
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

9
<PAGE> 84
THE INTERMEDIATE-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The INTERMEDIATE-TERM BOND FUND seeks maximum total
Objective return consistent with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies investment grade fixed income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks and corporations; and

- Mortgage-backed and asset-backed securities.

- The average quality rating for the Fund's portfolio
will be greater than or equal to the "A" category as
rated by Moody's Investor Service ("Moody's") or the
equivalent by Standard and Poor's Corporation
("S&P"). The Fund invests primarily in investment
grade debt securities, but may invest up to 10% of
its assets in high yield securities ("junk bonds")
rated "B" or higher by Moody's or S&P or if unrated,
determined by a Sub-Adviser to be of the same
quality. If an investment held by the Fund is
downgraded below such rating, the Sub-Adviser will
sell it within a reasonable period but not
necessarily right away. If an investment held by the
Fund is downgraded below such rating, the Sub-Adviser
will take action that it believes to be advantageous
to the Fund.

- The average dollar-weighted duration of the Fund
normally varies between 3 and 7 years.

- The Fund may hold up to 20% of its assets in
obligations denominated in currencies other than the
U.S. dollar, and may invest beyond this limit when
considering U.S. dollar denominated securities of
foreign issuers. However, such foreign currency
exposure will normally be hedged by at least 75% of
its value to the U.S. dollar in order to reduce the
risk of loss due to fluctuations in currency exchange
rates.

- The Fund may invest in derivative instruments such
as, but not limited to, futures contracts, options,
and swap agreements.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. The Sub-Advisers practice
different investment styles and will make investment
decisions for the Fund based on an analysis of
differing factors, such as interest rates, yield
spreads, durations, sectors, credit ratings, or
fundamental issuer selection.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------

Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- The Fund's value will fluctuate in response to
interest rates and other economic factors. Bond
prices typically drop as interest rates rise, and
vice versa. An investor in this Fund should be able
to accept some short-term fluctuations in value. It
is possible for you to lose money by investing in the
Fund.

- Investing in emerging markets involves even greater
risk than investing in more developed foreign markets
because, among other things, emerging markets often
have more political and economic instability.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest
or even principal due in a timely manner or at all.

- High yield securities ("junk bonds") involve
greater risks of default and are more volatile than
bonds rated investment grade. Issuers of these bonds
may be more sensitive to economic downturns and may
be unable to make timely interest or principal
payments. The Fund's value could be hurt by price
declines due to actual or perceived changes in an
issuer's ability to make such payments.

- Obligations of foreign issuers may be negatively
affected by political events,
--------------------------------------------------------------------------------

10
<PAGE> 85
--------------------------------------------------------------------------------
economic conditions, or inefficient, illiquid or
unregulated markets in foreign countries. Foreign
issuers may be subject to inadequate regulatory or
accounting standards.

- Changes in currency exchange rates relative to the
U.S. dollar may negatively affect the values of
foreign investments that are not hedged to the U.S.
dollar.

- The Fund's use of derivative instruments may
increase operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

11
<PAGE> 86
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and an
intermediate-term bond strategy. The returns shown below have been adjusted to
reflect the anticipated fees and expenses of the Institutional Class of the
Fund. The predecessor investment pool was not registered as a mutual fund and,
thus, was not subject to certain investment restrictions, limitations and
diversification requirements that laws and regulations impose on mutual funds.
If it had been a mutual fund, its performance may have been different. The
Fund's current Sub-Advisers managed the predecessor investment pool since 19__.
Shown are changes in the predecessor investment pool's performance from year to
year, and how annualized one-year, five-year and since inception returns compare
with those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Intermediate-Term Bond Investment Pool ___% ___% ___%
Lehman Brothers Aggregate Bond Index* ___% ___% ___%
</TABLE>

12
<PAGE> 87
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

13
<PAGE> 88
THE LONG-TERM BOND FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The LONG-TERM BOND FUND seeks maximum total return
Objective consistent with preservation of capital.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies fixed income securities.

- The Fund invests primarily in:

- Obligations issued or guaranteed by:

- U.S. government, banks, and corporations;

- Foreign governments, banks and corporations; and

- Mortgage-backed and asset-backed securities.

- The average dollar-weighted duration of the Fund
normally will be greater than or equal to 7 years.

- The average quality rating for the Fund's portfolio
will be greater than or equal to the "Baa" category
as rated by Moody's Investor Service ("Moody's") or
the equivalent by Standard and Poor's Corporation
("S&P"). The Fund does not currently expect to invest
more than 20% of its assets in fixed income
securities rated lower than investment grade. The
Fund will not invest in fixed income securities that
have a quality rating less than "B" as rated by
Moody's or the equivalent by S&P (or, if unrated,
determined by a Sub-Adviser to be of the same
quality). If an investment held by the Fund is
downgraded below such rating, the Sub-Adviser will
sell it within a reasonable period but not
necessarily right away. If an investment held by the
Fund is downgraded below such rating, the Sub-Adviser
will take action that it believes to be advantageous
to the Fund.

- The Fund may hold up to 30% of its assets in
obligations denominated in currencies other than the
U.S. dollar, and may invest beyond this limit when
considering U.S. dollar denominated securities of
foreign issuers. However, unhedged foreign currency
exposure will normally not be greater than 15% of the
Fund's assets.

- The Fund may invest in derivative instruments such
as, but not limited to, futures contracts, options,
and swap agreements.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. The Sub-Advisers practice
different investment styles and make investment
decisions for the Fund based on an analysis of
differing factors, such as interest rates, yield
spreads, durations, sectors, credit ratings, or
fundamental issuer selection.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- The Fund's value will fluctuate in response to
interest rates and other economic factors. Bond
prices typically drop as interest rates rise, and
vice versa. An investor in this Fund should be able
to accept some short-term fluctuations in value.
Longer-term bonds are generally more volatile, as are
lower-rated bonds. It is possible for you to lose
money by investing in the Fund.

- Investing in emerging markets involves even greater
risk than investing in more developed foreign markets
because, among other things, emerging markets often
have more political and economic instability.

- There is a risk that the issuer of a fixed income
investment owned by the Fund may fail to pay interest
or even principal due in a timely manner or at all.

- Bonds rated below investment grade involve greater
risks of default and are more volatile than bonds
rated investment grade. Issuers of these bonds may be
more sensitive to economic downturns and may be
unable to make timely interest or principal payments.
The Fund's value could be hurt by price declines due
to actual or perceived changes in an issuer's ability
to make such payments.

- Obligations of foreign issuers may be negatively
affected by political events,
--------------------------------------------------------------------------------

14
<PAGE> 89
--------------------------------------------------------------------------------
economic conditions, or inefficient, illiquid or
unregulated markets in foreign countries. Foreign
issuers may be subject to inadequate regulatory or
accounting standards.

- Changes in currency exchange rates relative to the
U.S. dollar may negatively affect the values of
foreign investments that are not hedged to the U.S.
dollar.

- The Fund's use of derivative instruments may
increase operating costs and the risk of loss.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

15
<PAGE> 90
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
long-term bond strategy. The returns shown below have been adjusted to reflect
the anticipated fees and expenses of the Institutional Class of the Fund. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Long-Term Bond Investment Pool ___% ___% ___%
Lehman Brothers Long-Term Government Index* ___% ___% ___%
Lehman Brothers Long-Term Corporate Index** ___% ___% ___%
Composite Benchmark*** ___% ___% ___%
</TABLE>

** The Lehman Brothers Long-Term Corporate Index measures the performance
of all publicly issued, fixed-rate, nonconvertible, investment grade
corporate debt with maturities of 10 years or more.

*** The composite benchmark comprises of 50% Lehman Brothers Long-Term
Government Index and 50% Lehman Brothers Long-Term Corporate Index.

16
<PAGE> 91
--------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index is a broad measure of the market performance of a specific group of
securities in a particular market, or securities in a market sector. You cannot
invest directly in an index. An index does not have an investment adviser and
does not pay any commissions or expenses. If an index had expenses, its
performance would be lower.
--------------------------------------------------------------------------------

17
<PAGE> 92
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

18
<PAGE> 93
THE EQUITY INDEX FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The EQUITY INDEX FUND seeks to provide investment
Objective results approximating the aggregate price and
dividend performance of the securities included in
the S&P 500 Index.
--------------------------------------------------------------------------------
Principal - Under normal market conditions, the Fund will
Investment invest substantially all (at least 80%) of its total
Strategies assets in the equity securities of the companies that
make up the S&P 500 Index, in weightings that
approximate the relative composition of the
securities contained in the S&P 500 Index.

- The Fund may invest to a lesser extent in
derivative instruments, including exchange listed
options, futures, and swap agreements, that are based
on:

- The S&P 500 Index;

- Companies included in the S&P 500 Index; and

- Stock indexes other than but similar to the S&P
500 Index.

- The companies chosen for inclusion in the S&P 500
Index tend to be industry leaders within the U.S.
economy as determined by Standard & Poor's. However,
companies are not selected by Standard & Poor's for
inclusion because they are expected to have superior
stock price performance relative to the market in
general or other stocks in particular.

- The Fund is passively managed, which means it tries
to duplicate the investment composition and
performance of the S&P 500 Index using computer
programs and statistical procedures. As a result, the
Sub-Adviser(s) does not use traditional methods of
fund investment management for this Fund, such as
selecting securities on the basis of economic,
financial, and market analysis. Rather, the
Sub-Adviser(s) will buy and sell securities in
response to changes in the S&P 500 Index. Because the
Fund will have fees and transaction expenses (while
the S&P 500 Index has none), returns are likely to be
below those of the S&P 500 Index.

- The Fund uses one or more Sub-Advisers to manage
its portfolio under the general supervision of the
Investment Adviser.

- The correlation between the Fund's performance and
the S&P 500 Index is expected to be greater than __%,
although it could be lower in certain market
environments and due to certain stocks that may be
excluded from the portfolio because of social
investment policies and restrictions. (100% would
indicate perfect correlation.)

- S&P does not endorse any stock in the S&P 500
Index. It is not a sponsor of the Equity Index Fund
and is not affiliated with the Fund in any way.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- There is no guarantee that the stock market or the
stocks that the Fund buys will increase in value. It
is possible for you to lose money by investing in the
Fund.

- The Fund's value will go up and down in response to
changes in the market value of the Fund's
investments. Market value will change due to business
developments concerning a particular issuer or
industry, as well as general market and economic
conditions. An investor in this Fund should be able
to accept significant short-term
--------------------------------------------------------------------------------

19
<PAGE> 94
--------------------------------------------------------------------------------
fluctuations in value.

- There is a risk that large capitalization stocks
may not perform as well as other asset classes or the
U.S. stock market as a whole. In the past, large
capitalization stocks have gone through cycles of
doing better or worse than the stock market in
general.

- The Fund's use of derivatives, such as S&P 500
Index futures, may reduce the Fund's returns and
increase its volatility.

- The Fund must pay various expenses, while the S&P
500 Index's total return does not reflect any
expenses.
--------------------------------------------------------------------------------

20
<PAGE> 95
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

EXAMPLE
This example is meant to help you compare the cost of investing in the Fund with
the cost of investing in other mutual funds. It shows what you would pay if you
invested $10,000 over the periods shown and then redeemed your shares at the end
of those periods. The example assumes that:
- You reinvested all dividends and other distributions.
- The Fund's average annual return was 5%.
- The Fund's maximum total operating expenses are charged and remain
the same.
Although your actual cost may be higher or lower, based on these assumptions,
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

21
<PAGE> 96
THE VALUE EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The VALUE EQUITY FUND seeks to provide long-term
Objective capital appreciation.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies large and medium-sized U.S. companies whose stocks
are considered by the Fund's Sub-Advisers to be value
stocks. Value stocks are generally those that are
trading at prices that the Sub-Advisers believe are
below what the stocks are worth or that may be out of
favor with investors.

- These stocks typically have lower price/earnings
ratios, lower asset valuations, and higher dividend
yields relative to the U.S. market as a whole.

- The Fund may invest to a lesser extent in American
Depositary Receipts, which represent ownership of
underlying foreign securities that are denominated in
U.S. dollars.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. Each Sub-Adviser uses different
investment strategies to identify stocks it believes
are undervalued or are generally out of favor with
investors.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- There is no guarantee that the stock market or the
stocks that the Fund buys will increase in value. It
is possible for you to lose money by investing in the
Fund.

- The Fund's value will go up and down in response to
changes in the market value of the Fund's
investments. Market value will change due to business
developments concerning a particular issuer, industry
or country, as well as general market and economic
conditions. An undervalued stock may not increase in
price as anticipated by a Sub-Adviser if other
investors fail to recognize the company's value or
the factors that the Sub-Adviser believed would
increase the price do not occur. An investor in this
Fund should be able to accept significant short-term
fluctuations in value.

- There is a risk that value stocks may not perform
as well as other asset classes or the U.S. stock
market as a whole. In the past, value stocks have
tended to lag the overall stock market during rising
markets, and to outperform it during periods of flat
or declining markets.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

22
<PAGE> 97
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
value equity strategy. The returns shown below have been adjusted to reflect the
anticipated fees and expenses of the Institutional Class of the Fund. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of an index. Past performance does not necessarily indicate how the Fund
will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
-------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Value Equity Investment Pool ___% ___% ___%
Russell 1000 Value Index* ___% ___% ___%
</TABLE>

-------------------------
* The Russell 1000 Value Index measures the performance of securities with
less-than-average growth orientation from the Russell 1000 (the 1000
largest U.S. companies based on market capitalization average growth).

23
<PAGE> 98
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

24
<PAGE> 99
THE GROWTH EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The GROWTH EQUITY FUND seeks to provide long-term
Objective capital appreciation. Any income is incidental to
this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies large and medium-sized U.S. companies whose stocks
are considered by the Fund's Sub-Advisers to have
above-average growth prospects.

- The Fund generally focuses on companies believed to
have above-average potential for growth in revenue
and earnings. Reflecting the market's high
expectations for superior growth, the prices of such
stocks are typically above-average in relation to
such measures as revenue, earnings, and book value.

- The Fund may invest to a lesser extent in American
Depositary Receipts, which represent ownership of
underlying foreign securities that are denominated in
U.S. dollars.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. Each Sub-Adviser uses both
fundamental research and quantitative analysis to
select stocks it believes have above-average growth
prospects, but may make investment decisions for the
Fund based on an analysis of differing factors, such
as revenue and earnings growth and unanticipated
positive earnings.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- There is no guarantee that the stock market or the
stocks that the Fund buys will increase in value. It
is possible for you to lose money by investing in the
Fund.

- Although the Fund will not concentrate in any
particular industry, it may be heavily invested in a
particular economic sector. If the Fund focuses on
one or fewer sectors, its performance is likely to be
disproportionately affected by factors influencing
the sectors, including market, economic, political or
regulatory developments. The Fund's performance may
also suffer if a sector does not perform as well as
the Sub-Adviser(s) expected. Prices of securities in
the same sector often change collectively regardless
of the merits of individual companies. The technology
sector is a good example where company stocks can be
subject to abrupt or erratic price movements. As of
September 30, 2000, greater than 40% of the companies
that comprised the predecessor fund were considered
technology companies. As a result, the Fund may be
subject to greater price volatility associated with
investments in technology securities.

- There is a risk that growth-oriented investments
may not perform as well as the rest of the U.S. stock
market as a whole. In the past, growth stocks have
tended to outperform the overall stock market during
rising markets, and to lag during periods of flat or
declining markets.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

25
<PAGE> 100
--------------------------------------------------------------------------------
WHAT ARE GROWTH FUNDS?
Growth funds invest in the stock of growth-oriented companies, seeking maximum
growth of earnings and share price with little regard for dividend earnings.
Generally, companies with high relative rates of growth tend to reinvest more of
their profits into the company and pay out less to shareholders in the form of
dividends. As a result, investors in growth funds tend to receive most of their
return in the form of capital appreciation.
--------------------------------------------------------------------------------

26
<PAGE> 101
RELATED PERFORMANCE

The bar chart and table below show that returns will vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
growth equity strategy. The returns shown below have been adjusted to reflect
the anticipated fees and expenses of the Institutional Class of the Fund. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
--------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Investment Pool ___% ___% ___%
Russell 1000 Growth Index* ___% ___% ___%
</TABLE>

-------------------------
* The Russell 1000 Growth Index is a subset of the Russell 1000 Index.
The Russell 1000 Growth Index measures the performance of those Russell
1000 Index companies with higher price-to-book ratios and higher
forecasted growth values. The Russell 1000 Index measures the
performance of the 1000 largest U.S. companies based on total market
capitalization and represents approximately 92% of the investable U.S
equity market.

27
<PAGE> 102
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

28
<PAGE> 103
THE SMALL CAP EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The SMALL CAP EQUITY FUND seeks to provide
Objective long-term capital appreciation. Any income received
is incidental to this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies common stocks of U.S. companies that, at the time of
purchase, are in the small capitalization segment of
the U.S. equity market, consistent with the range of
the Russell 2000 Index.

- The Fund is generally diversified with respect to
stocks possessing attractive fundamental values and
strong growth prospects. Many of the companies in
which the Fund invests retain their earnings to
finance current and future growth. These companies
generally pay little or no dividends.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. The Sub-Advisers, using
fundamental research and quantitative analysis,
select stocks that they believe have favorable
investment characteristics, and may make investment
decisions for the Fund based on an analysis of
differing factors, such as revenue and earnings
growth, relative valuation, business catalysts and
quality of management.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- There is no guarantee that the stock market or the
stocks that the Fund buys will increase in value. It
is possible for you to lose money by investing in the
Fund.

- The Fund invests primarily in small companies. An
investment in a smaller company may be more volatile
and less liquid than an investment in a larger
company. Small companies generally are more sensitive
to adverse business and economic conditions than
larger, more established companies. Small companies
may have limited financial resources, management
experience, markets and product diversification.

- The Fund expects to have a high portfolio turnover
rate. High turnover creates more transaction costs
and negative tax consequences that may have a
negative impact on your investment in the Fund.

- The Fund may invest in initial public offerings
which entails special risks, including limited
operating history of the issuing companies,
unseasoned trading and limited liquidity.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue their investment
strategies.
--------------------------------------------------------------------------------

29
<PAGE> 104
RELATED PERFORMANCE

The bar chart and table below show that returns vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and a
small cap equity strategy. The returns shown below have been adjusted to reflect
the anticipated fees and expenses of the Institutional Class of the Fund. The
predecessor investment pool was not registered as a mutual fund and, thus, was
not subject to certain investment restrictions, limitations and diversification
requirements that laws and regulations impose on mutual funds. If it had been a
mutual fund, its performance may have been different. The Fund's current
Sub-Advisers managed the predecessor investment pool since 19__. Shown are
changes in the predecessor investment pool's performance from year to year, and
how annualized one-year, five-year and since inception returns compare with
those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Small Cap Equity Investment Pool ___% ___% ___%
Russell 2000 Index* ___% ___% ___%
</TABLE>

-------------------------
* The Russell 2000 Index measures the performance of the 2000 smallest
companies in the Russell 3000 Index (the 3000 largest U.S. companies
based on market capitalization) and represents approximately 8% of the
investable U.S. equity market.

30
<PAGE> 105
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

31
<PAGE> 106
THE INTERNATIONAL EQUITY FUND SUMMARY

PORTFOLIO DESCRIPTION
Investment - The INTERNATIONAL EQUITY FUND seeks to provide
Objective long-term capital appreciation. Any income received
is incidental to this objective.
--------------------------------------------------------------------------------
Principal - The Fund invests mainly (at least 65% of its assets
Investment and typically more) in a diversified portfolio of
Strategies common stocks of foreign companies in countries
having economies and markets generally considered to
be developed.

- The Fund may also invest to a lesser extent in
common stocks of foreign companies located in
emerging markets.

- Common stocks of foreign companies are predominantly
traded on foreign stock exchanges.

- At least 65% of the Fund's total assets will be
invested in equity securities of issuers from at
least three foreign countries. An issuer is
considered to be from the country where it is
located, where the issuer is headquartered or
incorporated, where the majority of its assets are
located or where it generates the majority of its
operating income.

- The Fund may invest to a lesser extent in American
Depositary Receipts and Global Depository Receipts
and other similar instruments, each of which
represent ownership of underlying foreign securities
in currencies other than the country of
incorporation.

- The Fund uses a multi-manager approach, using two
or more Sub-Advisers that each manage a portion of
its portfolio under the general supervision of the
Investment Adviser. The Sub-Advisers, in managing
their portion of the Fund's portfolio, practice
different investment styles that the Investment
Adviser believes complement one another.

See "Additional Investment & Risk Information" for
more about the Fund's investments.
--------------------------------------------------------------------------------
Principal Risks The Fund is subject to the following principal risks.
Other risks are described under "Additional
Investment & Risk Information."

- There is no guarantee that the international stock
markets or the stocks that the Fund buys will
increase in value. It is possible for you to lose
money by investing in the Fund.

- Securities of foreign issuers may be negatively
affected by political events, economic conditions, or
inefficient, illiquid or unregulated markets in
foreign countries. Foreign issuers may be subject to
inadequate regulatory or accounting standards.

- Changes in currency exchange rates relative to the
U.S. dollar may negatively affect the values of
foreign investments held by the Fund. Sub-Advisers
may make currency investment decisions independent of
their underlying stock selections.

- Investing in emerging markets involves even greater
risk than investing in more developed foreign markets
because, among other things, emerging markets often
have more political and economic instability.

- The performance of the Fund will depend on how
successfully its Sub-Advisers pursue its investment
strategy.
--------------------------------------------------------------------------------

32
<PAGE> 107
RELATED PERFORMANCE

The bar chart and table below show that returns vary and give you some
indication of the risk of investing in the Fund. Because the Fund is new, the
returns shown in the bar chart and table are for the predecessor investment
pool, which the Annuity Board managed using a multiple manager approach and an
international equity strategy. The returns shown below have been adjusted to
reflect the anticipated fees and expenses of the Institutional Class of the
Fund. The predecessor investment pool was not registered as a mutual fund and,
thus, was not subject to certain investment restrictions, limitations and
diversification requirements that laws and regulations impose on mutual funds.
If it had been a mutual fund, its performance may have been different. The
Fund's current Sub-Advisers managed the predecessor investment pool since 19__.
Shown are changes in the predecessor investment pool's performance from year to
year, and how annualized one-year, five-year and since inception returns compare
with those of broader measures of market performance. Past performance does not
necessarily indicate how the Fund will perform in the future.

ANNUAL TOTAL RETURNS AS OF DECEMBER 31

[GRAPH]

<TABLE>
<CAPTION>
Returns
<S> <C>
1996 0.00%
1997 0.00%
1998 0.00%
1999 0.00%
2000 0.00%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS AS OF 12/31/00 1 YEAR 5 YEARS SINCE INCEPTION 10/1/95
---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
International Equity Investment Pool ___% ___% ___%
MSCI All Country World Index Free Ex-US* ___% ___% ___%
</TABLE>

-------------------------
* The MSCI All Country World Free Ex-US Index is a market capitalization
weighted index composed of companies representative of the market
structure of 46 developed and emerging countries, not including the U.S.
It excludes closed markets and shares in free markets that are not
purchasable by foreigners.

33
<PAGE> 108
FEES AND EXPENSES

The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Fund's Institutional Class.

<TABLE>
<S> <C>
SHAREHOLDER FEES None
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
Management fee ___%
Distribution (12b-1) fee ___%
Other expenses* ___%
Total annual operating expenses** ___%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C>
$ $
$ $
</TABLE>

The above example is for comparison purposes only and is not a representation of
the Fund's actual expenses and returns, either past or future.

34
<PAGE> 109
ADDITIONAL INVESTMENT & RISK INFORMATION

DERIVATIVES: The Funds may use derivatives such as, but not limited to, equity
futures contracts and U.S. Treasury futures contracts, as well as options in
order to maintain market exposure, reduce market risk, to maintain liquidity or
to commit cash pending investment. No more than 5% of any Fund's assets may be
invested in margin required for these or any other derivative instrument.

The Bond Funds may use currency transactions, such as forward contracts, futures
and options on currencies. The Bond Funds may use these currency transactions to
hedge their non-U.S. dollar denominated investments and to a lesser extent for
investment purposes.

35
<PAGE> 110
MANAGEMENT OF THE FUND

INVESTMENT ADVISER

--------------------------------------------------------------------------------
WHAT IS A MANAGER OF MANAGERS?
The Investment Adviser does not make the day-to-day investment decisions for the
Funds. Rather, it retains the services of experienced investment management
firms to do so. The Investment Adviser continuously monitors the performance of
these Sub-Advisers and allocates assets among them.
--------------------------------------------------------------------------------

The Investment Adviser, a controlled affiliate of the Annuity Board, serves as
the investment adviser to the Funds, under its advisory agreement with the
Annuity Board Funds Trust (the "Trust") and subject to the supervision of the
Funds' Board of Trustees. As a manager of managers, it continually monitors the
performance and operations of the Funds' Sub-Advisers and allocates the assets
of each Fund among the Sub-Advisers. It oversees each Sub-Adviser's adherence to
its stated investment style and compliance with the relevant Fund's investment
objective, policies and limitations. It recommends to the Board of Trustees the
hiring or changing of Sub-Advisers. Changes are made in a Fund's Sub-Advisers
only when approved by the Board of Trustees. Pursuant to an exemptive order
given by the Securities and Exchange Commission ("SEC"), shareholder approval is
not required for such change. However, shareholders of the applicable Fund will
be notified of such change within 90 days.

The Investment Adviser has no prior experience managing a mutual fund. However,
the Investment Adviser's parent, Annuity Board, is responsible for managing
approximately $8 billion in retirement, welfare and other assets. It was
established in 1918 and exists to assist churches and other Southern Baptist
entities by making available retirement plan services, life and health coverage,
risk management programs and personal and institutional investment programs.
Each Fund pays monthly aggregate advisory fees to the Investment Adviser and the
Sub-Advisers at the following annual percentage rate of its average daily net
assets:

[INSERT FEE TABLE](+)

(+) To be completed by amendment prior to effectiveness.

36
<PAGE> 111
SUB-ADVISERS

--------------------------------------------------------------------------------
WHAT IS A SUB-ADVISER?
Each Sub-Adviser makes the day-to-day investment decisions for the Fund's assets
that it manages, subject to the supervision of the Investment Adviser and the
Board of Trustees. Each Sub-Adviser continuously reviews, supervises and
administers its own investment program.
--------------------------------------------------------------------------------

Below is a list of each Fund's Sub-Advisers and their staff who are primarily
responsible for the day-to-day management of the Fund's assets.

MONEY MARKET FUND:
The Northern Trust Company, Chicago, Illinois: Northern Trust has been managing
assets since it was founded in 1889. Northern Trust and its subsidiaries have
assets under management of approximately $330 billion. It uses a team approach
to manage its portion of the Money Market Fund.

SHORT-TERM BOND FUND:
BlackRock Financial Management Inc., New York, New York: Established in 1988,
BlackRock is a premier provider of global investment management and risk
management products. It manages $191 billion across various asset classes. A
team of portfolio managers, led by Scott Amero, manages BlackRock's portion of
the Short-Term Bond Fund. With BlackRock since 1990, Mr. Amero, Managing
Director, specializes in the short and intermediate duration sectors, including
asset-backed securities, adjustable rate mortgage securities and other short
duration mortgage products. BlackRock is affiliated with PFPC Distributors,
Inc., the Fund's Distributor, and PFPC Inc., which provides Transfer Agency and
Administration and Accounting services to the Fund. BlackRock, PFPC Inc. and
PFPC Distributors, Inc. are all members of The PNC Financial Services Group Inc.

INTERMEDIATE-TERM BOND FUND:
J. P. Morgan Investment Management, Inc., New York, New York: J. P. Morgan
Investment Management manages over $369 billion in assets, of which $158 billion
is fixed income for institutional clients. Robert J. Morena, Vice President,
serves as portfolio manager for J.P Morgan's portion of the

37
<PAGE> 112
Intermediate-Term Bond Fund. Prior to joining J.P. Morgan in February 2000, Mr.
Morena was a Managing Director with Forest Investment Management and prior to
that, he spent 17 years as the Department Head of The Bank of New York's
Institutional Fixed Income Division.

Pacific Investment Management Company, Newport Beach, California: PIMCO, an
institutional money management firm, was founded in 1971 to provide specialty
management of fixed income portfolios. PIMCO was one of the first investment
managers to specialize in fixed income and has successfully managed its total
return strategy on behalf of its clients since the 1970s. PIMCO has assets under
management of approximately $207 billion. Chris P. Dialynas serves as portfolio
manager for PIMCO's portion of the Intermediate-Term Bond Fund. He joined PIMCO
in 1980 and serves as Managing Director, portfolio manager and a senior member
of PIMCO's investment strategy group. Mr. Dialynas has 22 years of investment
experience.

LONG-TERM BOND FUND:
Loomis, Sayles & Company, L.P., Boston, Massachusetts: Established in 1926,
Loomis, Sayles & Company, L.P. manages more than $67 billion in fixed income and
equity assets for institutional, high net worth and mutual fund clients. Daniel
J. Fuss serves as portfolio manager to its portion of the Long-Term Bond Fund.
With 42 years in the investment industry, Daniel J. Fuss has been with Loomis,
Sayles & Company, L.P. since 1976. He holds the position of Vice Chairman and
Director of Loomis, Sayles & Company, L.P.

STW Fixed Income Management, Santa Barbara, California: STW has been a specialty
bond manager since 1977. Investment grade fixed income management is its only
business and assets under management are approximately $10 billion. Investment
decisions for STW's portion of the Long-Term Bond Fund are made by its fixed
income investment team.

EQUITY INDEX FUND:
Goldman Sachs Asset Management, New York, New York: Goldman Sachs Asset
Management has been providing discretionary investment advisory services since
1989 to institutional investors. Together with other units of the Investment
Management Division of Goldman Sachs, it has assets under management of
approximately $280.9 billion. The portfolio team managing its portion of the
Equity Index Fund is lead by Robert C. Jones, CFA, Managing Director and Head of
Global Quantitative Equities. Mr. Jones developed Global Quantitative Equities
models and investment process in the late 1980s, and has been responsible for
overseeing their continuing development and evolution ever since.

38
<PAGE> 113
VALUE EQUITY FUND:
Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, Texas: BHMS was founded in
1979 to manage large capitalization equities for a limited number of
institutional clients. Assets under management total $26 billion in large, mid
and small cap value equities, as well as fixed income securities. Its strategy
is a team-oriented value approach utilizing fundamental research to construct
portfolios. With 23 years of investment experience, Ray Nixon, Jr., Principal,
is the portfolio manager of its portion of the Value Equity Fund. He joined BHMS
in 1994 from Salomon Smith Barney, Inc., where he was a member of the Investment
Policy Committee and served as their Lead Institutional Stockbroker for the
Southwest. During his 23-year investment career, he also served as a Research
Analyst.

GROWTH EQUITY FUND:
Northern Trust Global Investments, Chicago, Illinois: Northern Trust has been
managing assets since it was founded in 1889. Northern Trust and its
subsidiaries have assets under management of approximately $330 billion. It uses
a team approach to manage its portion of the Growth Equity Fund.

SMALL CAP EQUITY FUND:
Aronson+Partners, Philadelphia, Pennsylvania: Aronson+Partners is a
value-oriented, quantitative domestic equity manager, founded in 1984. It
currently manages $4 billion for 33 clients. Its portion of the Small Cap Equity
Fund is managed by a team.

39
<PAGE> 114
High Rock Capital, LLC, Boston, Massachusetts: High Rock manages approximately
$2 billion in small cap value accounts and commingled vehicles. David Diamond
serves as the portfolio manager for its portion of the Small Cap Equity Fund.
Prior to founding High Rock in 1997, Mr. Diamond was with The Boston Company
Asset Management, Inc., where he was the senior member of the firm's equity
policy committee.

Provident Investment Counsel, Pasadena, California: PIC has been in the
investment management industry since 1951. It is a growth equity manager with
approximately $23.0 billion in assets. Mr. Lauro Guerra, CFA, CIC, is the
Portfolio Manager of its portion of the Small Cap Equity Fund. Mr. Guerra has
been in the investment industry since 1983, and has been with PIC since 1983
where he is currently serving in the role of Managing Director.

INTERNATIONAL EQUITY FUND:
Brinson Partners, Inc., Chicago, Illinois: Brinson Partners is an investment
adviser, responsible for the management of over $199 billion institutional
assets. Brinson Partners and its predecessor entities have managed both U.S. and
non-U.S. investment portfolios since 1974 and global investment portfolios since
1982. Brinson Partners is a member of the UBS Asset Management Division of UBS
AG which performs institutional asset management operations worldwide. The UBS
Asset Management Division manages over $300 billion in assets. Investment
decisions for its portion of the International Equity Fund are made by an
investment management team at Brinson Partners.

Montgomery Asset Management, San Francisco, California: Montgomery was founded
in 1990 and currently has approximately $11 billion in assets under management.
Josephine Jimenez, CFA, is the Senior Portfolio Manager responsible for its
portion of the International Equity Fund. She has more than twenty years of
investment experience. Prior to joining Montgomery in 1991, Ms. Jimenez worked
as Portfolio Manager at Emerging Markets Investors Corporation, from 1981
through 1988.

40
<PAGE> 115
The Northern Trust Company, Chicago, Illinois: Northern Trust has been managing
assets since it was founded in 1889. Northern Trust and its subsidiaries have
assets under management of approximately $330 billion. It uses a team approach
to manage the cash portion of the International Equity Fund.

SERVICE PROVIDERS
The following chart provides information on the Fund's primary service
providers.

42
<PAGE> 117
SHAREHOLDER INFORMATION

ELIGIBLE INVESTORS
Shares of the Funds are not offered to the general public. The Funds reserve the
right to refuse to accept investments at any time.

INSTITUTIONAL CLASS: The Funds' Institutional Class shares are sold only to
certain foundations affiliated with the Southern Baptist Convention. Eligible
investors may purchase Institutional Class shares of the Funds directly from the
Adviser's Investment Relations unit. Just follow one of the methods for opening
an account shown below under "Transactions with the Funds."

OTHER CLASSES: The Funds also offer Retail Class and Retirement Class shares
through a separate prospectus.

NO LOAD CLASS
Shares of the Institutional Class are sold without sales loads.

MINIMUM INVESTMENTS & ACCOUNT SIZE

<TABLE>
<CAPTION>
INITIAL PURCHASE
<S> <C>
For Institutional Accounts $500,000
</TABLE>

43
<PAGE> 118
TRANSACTIONS WITH THE FUNDS

<TABLE>
<CAPTION>
----------------------------------- -------------------------------------------- --------------------------------------------
METHOD OPEN AN ACCOUNT ADD TO AN ACCOUNT
----------------------------------- -------------------------------------------- --------------------------------------------
<S> <C> <C>
By Mail Complete and sign the application. Mail Not Applicable.
it with your check made payable to Annuity
Annuity Board Funds Trust Board Funds Trust. Your initial
c/o PFPC Inc. investment must meet the minimum amount.
P.O. Box 8980
Wilmington, DE 19899-8980
----------------------------------- -------------------------------------------- --------------------------------------------
By Telephone If you already have an account with us and Not Applicable.
you have authorized telephone
(214) ________ transactions, you may call to open an
For each type of telephone account in another Fund, or you may send us
transaction, you must complete a wire. Your initial investment in the new
the appropriate section on your Fund must meet the minimum amount.
initial application or complete
an authorization form, available
upon request.
----------------------------------- -------------------------------------------- --------------------------------------------
By Wire Call your bank with the wire instructions Call (214) ________ to notify us of the
shown to the left. The wire must be wire. Call your bank with the wire
PNC Bank, NA received by 4:00 p.m. Eastern time for instructions shown to the left. The wire
ABA#: 031000053 same day processing. must be received by 4:00 p.m. Eastern time
{Designate the Fund} for same day processing.
DA#: __________ You must send a completed application by
FBO: Shareholder Name and Account overnight delivery in advance of the wire
Number to:
Annuity Board Funds Trust
Note: Your bank may charge you a {Designate the Fund}
fee for handling a wire c/o PFPC Inc.
transaction. P.O. Box 8980
Wilmington, DE 19899-8980.
----------------------------------- -------------------------------------------- --------------------------------------------
</TABLE>

44
<PAGE> 119
<TABLE>
<CAPTION>
---------------------------------- -------------------------------------------- --------------------------------------------
METHOD REDEEM SHARES EXCHANGE SHARES
---------------------------------- -------------------------------------------- --------------------------------------------
<S> <C> <C>
By Mail Send a letter of instruction that includes: Send a letter of instruction that includes:
- The Fund name, your account - Your account number, the name of
Annuity Board Funds Trust number, the name of each owner each owner (exactly as they appear on
c/o PFPC Inc. (exactly as they appear on the the account), the dollar amount or
P.O. Box 8980 account) and the dollar amount or number of shares you wish to exchange
Wilmington, DE 19899-8980 number of shares you wish to redeem. _____ minimum) and the new Fund into
- Include all genuine signatures which the amount is being invested.
(exactly as they appear on the - Include all genuine signatures
account) and any documents that may (exactly as they appear on the
be required. account) and any documents that may
You will receive your redemption payment be required.
in the form you previously authorized: The names and addresses on the accounts
check, deposit to your bank account, or must be identical. Shares will be
wire transfer (for wire transfers, a fee exchanged into the same class.
will be charged).
---------------------------------- -------------------------------------------- --------------------------------------------
By Telephone If you have previously authorized If you have previously authorized it, you
telephone redemptions, you may redeem may exchange shares for shares of another
(214) ________ shares by calling us. Fund over the telephone. The names and
For each type of telephone addresses on the accounts must be
transaction, you must complete You will receive your redemption payment identical. Shares will be exchanged into
the appropriate section on your in the form you previously authorized: the same class.
initial application or complete check, deposit to your bank account, or
an authorization form, available wire transfer (for wire transfers, a fee
upon request. When you call, we will be charged).
may request personal
identification and tape record
your call.
---------------------------------- -------------------------------------------- --------------------------------------------
By Wire You may redeem shares by contacting us by Not applicable.
mail or by telephone and instructing us to
Note: Your bank may charge you wire your proceeds to your bank ($10,000
a fee for handling a wire minimum). (Follow the instructions in
transaction. this table for how to Redeem Shares: By
Mail, By Telephone or Online.) Wire
Note: The Funds and their redemptions can be made only if you have
transfer agent are not previously authorized it on your initial
responsible for the efficiency application or an authorization form,
of the federal wire system or available upon request (including
your bank. attaching a voided check from the account
where proceeds are to be wired). A fee
will be charged for wire transfers.
---------------------------------- -------------------------------------------- --------------------------------------------
</TABLE>

45
<PAGE> 120
MORE SHAREHOLDER INFORMATION

HOW SHARE PRICE IS CALCULATED
PFPC determines the NAV per share of each Fund as of the close of regular
trading on the New York Stock Exchange (currently 4:00 p.m., Eastern time), on
each day that the Exchange is open (except the Friday after Thanksgiving when
the Funds are closed). A Fund's NAV is calculated by adding the value of all
securities and other assets of the Fund, deducting its liabilities and dividing
the balance by the number of outstanding shares of the Fund.

--------------------------------------------------------------------------------
WHAT IS THE NET ASSET VALUE or "NAV"?
NAV = Assets - Liabilities
--------------------
Outstanding Shares
--------------------------------------------------------------------------------

To the extent the International Equity Fund has portfolio securities that are
primarily listed on foreign exchanges that trade on weekends or other days when
the Funds do not price their shares, the NAV of its shares may change on days
when you will not be able to purchase or redeem.

PURCHASE OF SHARES
Shares of the Institutional Class are sold at net asset value without a sales
load. Orders for the purchase of shares will be executed at the net asset value
per share next determined after an order has been received in good order. Your
purchase will be made in full and fractional shares calculated to three decimal
places. Certificates for shares are not issued.

REDEMPTION OF SHARES
You may redeem some or all of your shares on any business day that the New York
Stock Exchange is open (except the Friday after Thanksgiving when the Funds are
closed). Shares will be redeemed at the net asset value next determined after
your redemption request is received in good order. A redemption is a taxable
transaction on which you may recognize a gain or loss. (Generally, a gain or
loss is not

46
<PAGE> 121
expected to be realized on a redemption of the Money Market Fund, which seeks to
maintain a stable $1.00 per share net asset value.)

REQUEST IN GOOD ORDER
All purchase, exchange and redemption requests must be received by the Funds or
their transfer agent in good order. Requests in good order must include the
following documents: (1) a letter of instruction, if required, signed by all
registered owners of the shares in the exact names in which they are registered;
(2) any required medallion signature guarantees (see "Medallion Signature
Guarantees" below); and (3) other supporting legal documents, if required, in
the case of estates, trusts, guardianships, custodianships and other
organizations. You may call us at (214) ___-____ for further details.

Written redemption requests also must include the Fund name, your account
number, and the amount of the transaction (in dollar amount or number of
shares). Purchase orders are not in good order until the Funds' transfer agent
has received payment in federal funds.

REDEEMING RECENTLY PURCHASED SHARES
If you are redeeming shares that you recently purchased by check, we may delay
sending your redemption proceeds until your check has cleared. This may take up
to fifteen calendar days after we received your check. To avoid this delay, pay
for your shares by federal funds wire transfer.

RIGHT TO REDEEM IN KIND
The Funds reserve the right to pay part or all of your redemption proceeds in
securities rather than cash. If payment is made in securities, you may incur
brokerage commissions if you elect to sell the securities for cash.

ACCOUNT STATEMENTS
Each shareholder's transactions in Fund shares will be reflected in a quarterly
statement. If your Fund shares are held by a nominee, the nominee decides
whether the statement will be sent to you.

EXCHANGING SHARES

The Funds reserve the right to revise or cancel the exchange privilege, limit
the amount or number of an exchange or reject an exchange at any time, without
notice. An exchange is a taxable transaction on which you may recognize a gain
or loss. (Generally, a gain or loss is not expected to be realized on a
redemption of the Money Market Fund, which seeks to maintain a stable $1.00 per
share net asset value.)

TELEPHONE AND ONLINE TRANSACTION
The Funds reserve the right to refuse a telephone redemption or online
redemption request if the requestor is unable to provide information such as
the: 1) account number; 2) name and address exactly as

47
<PAGE> 122
registered with us; 3) the primary social security or tax identification number;
or 4) the assigned personal identification number, if applicable.

48
<PAGE> 123
DISTRIBUTIONS

The Short-Term Bond Fund, Intermediate-Term Bond Fund and Long-Term Bond Fund
will declare and pay distributions from net investment income monthly. The
Equity Index Fund, Value Equity Fund, Growth Equity Fund, Small Cap Equity Fund
and International Equity Fund will declare and pay distributions from net
investment income semi-annually. The Money Market Fund's income dividends accrue
daily and are distributed on the __ day of every month. Each Fund will also
distribute to its shareholders at least annually any realized net capital gains.
It is expected that the distributions of the Money Market Fund and Short-Term
Bond Fund will consist primarily of ordinary income.

TAXES
This section is only a summary of some important income tax considerations that
may affect your investment in a Fund. If you are investing through a
tax-deferred account, special tax rules apply. You are urged to consult your tax
adviser regarding the effects of an investment on your tax situation.

Dividends you receive from a Fund, whether reinvested in Fund shares or taken as
cash, are generally taxable to you as ordinary income. A Fund's distributions of
net capital gain, whether received in cash or reinvested in additional Fund
shares, are taxable to you as long-term capital gain, regardless of the length
of time you have held your shares. You should be aware that if you purchase Fund
shares shortly before the record date for any dividend or capital gain
distribution, you will pay the full price for the shares and will receive some
portion of the price back as a taxable distribution. You can avoid this
situation by waiting to invest until after the distribution has been made.

It is a taxable event for you if you redeem or exchange Fund shares. Depending
on the purchase price and the sale price of the shares you exchange, you may
have a taxable gain or loss on the transaction. You are responsible for any tax
liability generated by your transactions. (Generally, a gain or loss is not
expected to be realized on a redemption of the Money Market Fund, which seeks to
maintain a stable $1.00 per share net asset value.)

STATE AND LOCAL INCOME TAXES: You should consult your tax advisers concerning
state and local taxes, which may have different consequences from those of the
Federal income tax law.

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ANNUITY BOARD FUNDS TRUST

THE BLENDED FUNDS

FLEXIBLE INCOME FUND
GROWTH & INCOME FUND
CAPITAL OPPORTUNITIES FUND
GLOBAL EQUITY FUND

THE SELECT FUNDS

MONEY MARKET FUND
SHORT-TERM BOND FUND
INTERMEDIATE-TERM BOND FUND
LONG-TERM BOND FUND
EQUITY INDEX FUND
VALUE EQUITY FUND
GROWTH EQUITY FUND
SMALL CAP EQUITY FUND
INTERNATIONAL EQUITY FUND

2401 Cedar Springs Road
Dallas, TX 75201-1407

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

STATEMENT OF ADDITIONAL INFORMATION

__________________, 2001

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

This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Funds' current Prospectus, dated
__________________, 2001, as amended from time to time. You can obtain a free
copy of the current Prospectus on our Website at www.absbc.org or by calling
(800) 262-0511. Because the Funds are new, they do not yet have an annual
report.
<PAGE> 125
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HISTORY OF THE FUNDS.........................................................................3
DESCRIPTION OF INVESTMENTS AND RISKS.........................................................3
INVESTMENT RESTRICTIONS.....................................................................32
MANAGEMENT OF THE FUNDS.....................................................................34
OTHER SERVICE PROVIDERS.....................................................................41
SHARES OF BENEFICIAL INTEREST...............................................................42
TAXATION....................................................................................45
VALUATION OF SHARES.........................................................................48
TELEPHONE INSTRUCTIONS......................................................................50
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.........................................50
CALCULATION OF PERFORMANCE DATA.............................................................51
APPENDIX A - DESCRIPTION OF SECURITIES RATINGS.............................................A-1
FINANCIAL STATEMENTS.......................................................................F-1
</TABLE>

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HISTORY OF THE FUNDS

The Annuity Board Funds Trust (the "Trust") is an open-end management investment
company organized as a Delaware business trust on March 2, 2000. The Trust has
established thirteen series (each, a "Fund" and together, the "Funds"), which
are described in this SAI. The Flexible Income Fund, Growth & Income Fund,
Capital Opportunities Fund and Global Equity Fund are each referred to as a
"Blended Fund" and are together referred to as the "Blended Funds." The
remaining Funds are each referred to as a "Select Fund" and are together
referred to as the "Select Funds." The Short-Term Bond Fund, Intermediate-Term
Bond Fund and Long-Term Bond Fund are together referred to as the "Bond Funds."
The Equity Index Fund, Value Equity Fund, Growth Equity Fund, Small Cap Equity
Fund and International Equity Fund are together referred to as the "Equity
Funds." Currently, there are three classes of shares issued by the Trust, the
Retail Class, Retirement Class and Institutional Class (each, a "Class" and
together, the "Classes"). The Board of Trustees may issue additional classes of
shares or series at any time without prior approval of the shareholders.

Each Fund is a separate mutual fund with its own investment objective,
strategies and risks. The Funds are divided into two groups: Select Funds (which
invest directly in particular types of fixed income obligations, stocks and
other investments) and Blended Funds (which invest in a different mix of the
Select Funds to meet a specified investment strategy).

DESCRIPTION OF INVESTMENTS AND RISKS

You should understand that all investments involve risk and there can be no
guarantee against loss resulting from an investment in the Funds. Unless
otherwise indicated, all percentage limitations governing the investments of the
Funds apply only at the time of transaction.

The following supplements and should be read in conjunction with sections of the
Funds' Prospectus entitled "Investment Objective," "Principal Investment
Strategies" and "Principal Risks" for each Fund. Unless otherwise defined in
this SAI, the terms used have the meaning assigned to them in the Prospectus.

SBC Financial Services, Inc. serves as the Investment Adviser to the Funds. It
is a controlled affiliate of the Annuity Board of the Southern Baptist
Convention ("Annuity Board"). Rather than making the day-to-day investment
decisions for the Select Funds, it acts as a manager of managers and retains
various Sub-Advisers to do so. The Sub-Advisers employ portfolio managers to
make the day-to-day investment decisions regarding portfolio holdings of the
Select Funds. The Investment Adviser also allocates each Blended Fund's
investments among the Select Funds.

The Funds do not invest in any company that is publicly recognized, as
determined by the Annuity Board, as being in the liquor, tobacco, gambling,
pornography, or abortion industries or any company whose products, services or
activities are publicly recognized as being incompatible with the moral and
ethical posture of the Annuity Board. The Funds may not be

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able to take advantage of certain investment opportunities due to these
restrictions. This policy may not be changed without shareholder approval.

The Funds are classified as open-end, management investment companies as defined
in the Investment Company Act of 1940 (the "1940 Act"). The Funds are
diversified under the 1940 Act. This generally means that, with respect to 75%
of its total assets, a Fund will not invest more than 5% of its assets in the
securities of any single issuer. The Blended Funds invest primarily in the
shares of the Select Funds and, unless indicated otherwise, the description of
investments and risks in this SAI applies to the Blended Funds through their
investments in the Select Funds. The Blended Funds may from time to time invest
up to 5% of their assets directly in exchange listed equity futures contracts
and exchange listed U.S. Treasury futures contracts in order to gain exposure to
the U.S. equity and fixed income markets on cash balances. Any such investment
will be made for cash management purposes and will seek to provide market
exposure approximating the strategic asset allocation of the applicable Blended
Fund.

ASSET-BACKED & MORTGAGE BACKED SECURITIES. To the extent described in the
Prospectus, the Bond Funds may purchase asset-backed securities, which are
securities backed by mortgages, installment contracts, credit card receivables
or other financial assets. Asset-backed securities represent interests in
"pools" of assets in which payments of both interest and principal on the
securities are made periodically, thus in effect "passing through" such payments
made by the individual borrowers on the assets that underlie the securities, net
of any fees paid to the issuer or guarantor of the securities. The average life
of asset-backed securities varies with the maturities of the underlying
instruments, and the average life of a mortgage-backed instrument, in
particular, is likely to be substantially less than the original maturity of the
mortgage pools underlying the securities as a result of mortgage prepayments.
For this and other reasons, an asset-backed security's stated maturity may be
shortened, and the security's total return may be difficult to predict
precisely.

If an asset-backed security is purchased at a premium, a prepayment rate that is
faster than expected will reduce yield to maturity, while a prepayment rate that
is slower than expected will have the opposite effect of increasing yield to
maturity. Conversely, if an asset-backed security is purchased at a discount,
faster than expected prepayments will increase, while slower than expected
prepayments will decrease, yield to maturity. In calculating a Fund's average
weighted maturity, the maturity of asset-backed securities will be based on
estimates of average life.

Prepayments on asset-backed securities generally increase with falling interest
rates and decrease with rising interest rates; furthermore, prepayment rates are
influenced by a variety of economic and social factors. In general, the
collateral supporting non-mortgage asset-backed securities is of shorter
maturity than mortgage loans and is less likely to experience substantial
prepayments.

Asset-backed securities acquired by the Bond Funds may include collateralized
mortgage obligations ("CMOs") issued by private companies. CMOs provide the
holder with a specified interest in the cash flow of a pool of underlying
mortgages or other mortgage-backed securities. Issuers of such obligations
ordinarily elect to be taxed as pass-through entities known as real estate
mortgage investment conduits. CMOs are issued in multiple classes, each with a
specified fixed or floating interest rate and a final distribution date. The
relative payment rights of the

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various classes may be structured in a variety of ways. The Bond Funds will not
purchase "residual" CMO interests, which normally exhibit greater price
volatility.

There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities guaranteed
by the Government National Mortgage Association (the "GNMA") include GNMA
Mortgage Pass-Through Certificates (also known as "Ginnie Maes"), which are
guaranteed as to the timely payment of principal and interest by GNMA and backed
by the full faith and credit of the United States. GNMA is a wholly-owned U.S.
government corporation within the Department of Housing and Urban Development.
GNMA certificates also are supported by the authority of GNMA to borrow funds
from the U.S. Treasury to make payments under its guarantee. Mortgage-backed
securities issued by the Federal National Mortgage Association (the "FNMA")
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes"), which are solely the obligations of FNMA and are not backed by
or entitled to the full faith and credit of the United States, but are supported
by the right of the issuer to borrow from the Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of the principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed and do not constitute a
debt or obligation of the United States or of any Federal Home Loan Bank.
Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.

Some, but not all, mortgage pass-through securities created by non-governmental
issuers (such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers) may be supported in various forms of insurance or guarantees issued by
governmental entities. Commercial mortgage backed securities issued by private
issuers, whether or not such obligations are subject to guarantees by the
private issuer, may entail greater risk than obligations directly or indirectly
guaranteed by the U.S. government.

Non-mortgage asset-backed securities involve certain risks that are not
presented by mortgage-backed securities. Primarily, these securities do not have
the benefit of the same security interest in the underlying collateral. Credit
card receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to set off certain amounts owed on the credit
cards, thereby reducing the balance due. Most issuers of automobile receivables
permit the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a

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typical issuance and technical requirements under state laws, the trustee for
the holders of the automobile receivables may not have an effective security
interest in all of the obligations backing such receivables. Therefore, there is
a possibility that recoveries on repossessed collateral may not, in some cases,
be able to support payments on these securities.

BANKERS' ACCEPTANCES, CERTIFICATES OF DEPOSIT, TIME DEPOSITS AND BANK NOTES. The
Equity Funds may invest in such obligations issued by U.S. banks. The Bond Funds
and the Money Market Fund may invest in such obligations issued by U.S. or
foreign issuers. Certificates of deposit are negotiable certificates issued
against funds deposited in a commercial bank for a definite period of time and
earning a specified return. Bankers' acceptances are negotiable drafts or bills
of exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning, in effect, that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Fixed time deposits are bank obligations payable at a stated maturity date and
bearing interest at a fixed rate. Fixed time deposits may be withdrawn on demand
by the investor, but may be subject to early withdrawal penalties that vary
depending upon market conditions and the remaining maturity of the obligation.
There are no contractual restrictions on the right to transfer a beneficial
interest in a fixed time deposit to a third party. Bank notes and bankers'
acceptances rank junior to deposit liabilities of the bank and pari passu with
other senior, unsecured obligations of the bank. Bank notes are classified as
"other borrowings" on a bank's balance sheet, while deposit notes and
certificates of deposit are classified as deposits. Bank notes are not insured
by the Federal Deposit Insurance Corporation (the "FDIC") or any other insurer.
Deposit notes are insured by the FDIC only to the extent of $100,000 per
depositor per bank.

The Bond Funds may invest in the obligations of foreign banks and foreign
branches of domestic banks. Such obligations include Eurodollar certificates of
deposit, which are U.S. dollar-denominated certificates of deposit issued by
offices of foreign and domestic banks located outside the United States;
Eurodollar time deposits, which are U.S. dollar-denominated deposits in a
foreign branch of a U.S. bank or a foreign bank; Canadian time deposits, which
are essentially the same as Eurodollar time deposits except they are issued by
Canadian offices of major Canadian banks; Schedule Bs, which are obligations
issued by Canadian branches of foreign or domestic banks; Yankee certificates of
deposit, which are U.S. dollar-denominated certificates of deposit issued by a
U.S. branch of a foreign bank and held in the United States; and Yankee bankers'
acceptances, which are U.S. dollar-denominated bankers' acceptances issued by a
U.S. branch of a foreign bank and held in the United States.

Obligations of foreign banks involve somewhat different investment risks than
those affecting obligations of U.S. banks, including the possibilities that
their liquidity could be impaired because of future political and economic
developments, that the obligations may be less marketable than comparable
obligations of U.S. banks, that a foreign jurisdiction might impose withholding
taxes on interest income payable on those obligations, that foreign deposits may
be seized or nationalized, that foreign governmental restrictions such as
exchange controls may be adopted which might adversely affect the payment of
principal and interest on those obligations and that the selection of those
obligations may be more difficult because there may be less publicly available
information concerning foreign banks or the accounting, auditing and financial

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reporting standards, practices and requirements applicable to foreign banks may
differ from those applicable to U.S. banks.

Investments in Eurodollar and Yankeedollar obligations involve additional risks.
Most notably, there generally is less publicly available information about
foreign companies; there may be less governmental regulation and supervision;
they may use different accounting and financial standards; and the adoption of
foreign governmental restrictions may adversely affect the payment of principal
and interest on foreign investments. In addition, not all foreign branches of
U.S. banks are supervised or examined by regulatory authorities as are U.S.
banks, and such branches may not be subject to reserve requirements.

COMMERCIAL PAPER. The Funds may invest in commercial paper, which includes
short-term unsecured promissory notes, variable rate demand notes and variable
rate master demand notes issued by bank holding companies, corporations and
financial institutions, and similar taxable instruments issued by government
agencies and instrumentalities. A Fund will only invest in commercial paper to
the extent consistent with the Fund's investment policies, including its
policies regarding quality and ratings.

CONVERTIBLE SECURITIES. The Equity Funds may invest in convertible securities.
The Bond Funds may invest in convertible securities that are issued at or near
such obligation's pure debt value. Convertible securities entitle the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible securities mature or are redeemed, converted or exchanged.
Prior to conversion, convertible securities have characteristics similar to
ordinary debt securities in that they normally provide a stable stream of income
with generally higher yields than those of common stock of the same or similar
issuers. Convertible securities rank senior to common stock in a corporation's
capital structure and therefore generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security.

The value of convertible securities is a function of their investment value
(determined by yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and
their conversion value (their worth, at market value, if converted into the
underlying common stock). The investment value of convertible securities is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline, and by the
credit standing of the issuer and other factors. The conversion value of
convertible securities is determined by the market price of the underlying
common stock. If the conversion value is low relative to the investment value,
the price of the convertible securities is governed principally by their
investment value. To the extent the market price of the underlying common stock
approaches or exceeds the conversion price, the price of the convertible
securities will be increasingly influenced by their conversion value. In
addition, convertible securities generally sell at a premium over their
conversion value determined by the extent to which investors place value on the
right to acquire the underlying common stock while holding fixed income
securities.

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Capital appreciation for a Fund may result from an improvement in the credit
standing of an issuer whose securities are held in the Fund or from a general
lowering of interest rates, or a combination of both. Conversely, a reduction in
the credit standing of an issuer whose securities are held by a Fund or a
general increase in interest rates may be expected to result in capital
depreciation to the Fund.

In general, investments in lower quality convertible securities are subject to a
significant risk of a change in the credit rating or financial condition of the
issuing entity. Investments in convertible securities of medium or lower quality
are also likely to be subject to greater market fluctuation and to greater risk
of loss of income and principal due to default than investments of higher
quality fixed-income securities. Such lower quality securities generally tend to
reflect short-term corporate and market developments to a greater extent than
higher quality securities, which react more to fluctuations in the general level
of interest rates. A Fund will generally reduce risk to the investor by
diversification, credit analysis and attention to current developments in trends
of both the economy and financial markets. However, while diversification
reduces the effect on a Fund of any single investment, it does not reduce the
overall risk of investing in lower quality securities.

DEPOSITORY ARRANGEMENTS. Each Equity Fund may invest in American Depository
Receipts ("ADRs"). ADRs are receipts typically generally issued by a United
States bank or trust company evidencing ownership of the underlying foreign
securities. ADRs are denominated in U.S. dollars. They are publicly traded on
exchanges or over-the-counter in the United States.

The Funds may invest in both sponsored and unsponsored ADR programs. There are
certain risks associated with investments in unsponsored ADR programs. Because
the non-U.S. securities issuer does not actively participate in the creation of
the ADR program, the underlying agreement for service and payment will be
between the depository and the shareholder. The company issuing the stock
underlying the ADR pays nothing to establish the unsponsored facility because
fees for ADR issuance and cancellation are paid by brokers. Investors directly
bear the expenses associated with certificate transfer, custody and dividend
payment.

In an unsponsored ADR program, there also may be several depositories with no
defined legal obligations to the non-U.S. company. The duplicate depositories
may lead to marketplace confusion because there would be no central source of
information for buyers, sellers and intermediaries. The efficiency of
centralization gained in a sponsored program can greatly reduce the delays in
delivery of dividends and annual reports. In addition, with respect to all ADRs
there is always the risk of loss due to currency fluctuations.

Investments in ADRs involve certain risks not typically involved in purely
domestic investments. These risks are set forth under "Foreign Securities" in
this SAI.

The International Equity Fund may also invest in European Depository Receipts
("EDRs"), International Depository Receipts ("IDRs") and Global Depository
Receipts ("GDRs"). These are receipts issued by a non-U.S. financial institution
evidencing ownership of underlying foreign or U.S. securities and are usually
denominated in foreign currencies. They may not be

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denominated in the same currency as the securities they represent. Generally,
EDRs, GDRs and IDRs are designed for use in the foreign securities markets.
Investments in EDRs, GDRs and IDRs involve certain risks not typically involved
in purely domestic investments, including currency exchange risk. These risks
are set forth under "Foreign Securities" in this SAI.

FOREIGN CURRENCY TRANSACTIONS.

Foreign Currency Exchange Contracts. The International Equity Fund and the Bond
Funds may enter into forward currency exchange contracts. The International
Equity Fund and the Bond Funds may use currency exchange contracts to hedge to
the U.S. dollar and the International Equity Fund may hedge one foreign currency
against changes in exchange rates for a different foreign currency. In addition,
the International Equity Fund may use currency exchange contracts for
non-hedging purposes when the Sub-Adviser anticipates that a currency will
appreciate in value, but the Fund will only do so when it owns securities
denominated in that currency.

These contracts involve an obligation to purchase or sell a specified currency
at a future date at a price set at the time of the contract. Forward currency
contracts do not eliminate fluctuations in the values of portfolio securities
but rather may allow a Fund to establish a rate of exchange for a future point
in time.

When entering into a contract for the purchase or sale of a security, a Fund may
enter into a forward foreign currency exchange contract for the amount of the
purchase or sale price to protect against variations, between the date the
security is purchased or sold and the date on which payment is made or received,
in the value of the foreign currency relative to the U.S. dollar or other
foreign currency.

In addition, when the Sub-Adviser anticipates that a particular foreign currency
may decline substantially relative to the U.S. dollar or other leading
currencies, in order to reduce risk, a Fund may enter into a forward contract to
sell, for a fixed amount, the amount of foreign currency approximating the value
of some or all of the Fund's securities denominated in such foreign currency.
Similarly, when the securities held by a Fund create a short position in a
foreign currency, a Fund may enter into a forward contract to buy, for a fixed
amount, an amount of foreign currency approximating the short position. A Fund's
net long and short foreign currency exposure will not exceed its total asset
value.

With respect to any forward foreign currency contract, it will not generally be
possible to match precisely the amount covered by that contract and the value of
the securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is entered
into and the date it matures. Such imperfect correlation may cause a Fund to
sustain losses which will prevent the Fund from achieving a complete hedge or
expose the Fund to risk of foreign exchange loss. While forward contracts may
offer protection from losses resulting from declines or appreciation in the
value of a particular foreign currency, they also limit potential gains which
might result from changes in the value of such currency. A Fund will also incur
costs in connection with forward foreign currency exchange contracts and
conversions of foreign currencies and U.S. dollars.

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In addition, the International Equity Fund may purchase or sell forward currency
exchange contracts to seek to increase total return when the Sub-Adviser
anticipates that the foreign currency will appreciate or depreciate in value.
The International Equity Fund may engage in cross-hedging by using forward
contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if the Sub-Adviser believes that
there is a pattern of correlation between the two currencies.

Liquid assets equal to the amount of a Fund's assets that could be required to
consummate forward contracts will be segregated except to the extent the
contracts are otherwise "covered." The segregated assets will be valued at
market or fair value. If the market or fair value of such assets declines,
additional liquid assets will be segregated daily so that the value of the
segregated assets will equal the amount of such commitments by the Fund. A
forward contract to sell a foreign currency is "covered" if a Fund owns the
currency (or securities denominated in the currency) underlying the contract, or
holds a forward contract (or call option) permitting the Fund to buy the same
currency at a price that is (i) no higher than the Fund's price to sell the
currency or (ii) greater than the Fund's price to sell the currency provided the
Fund segregates liquid assets in the amount of the difference. A forward
contract to buy a foreign currency is "covered" if a Fund holds a forward
contract (or put option) permitting the Fund to sell the same currency at a
price that is (i) as high as or higher than the Fund's price to buy the currency
or (ii) lower than the Fund's price to buy the currency provided the Fund
segregates liquid assets in the amount of the difference.

Currency Futures Contracts and Options Thereon. The International Equity Fund
and the Bond Funds may also engage in futures contracts on foreign currencies
and related options transactions, for the same purposes that they are permitted
to use currency exchange contracts. A currency futures contract is a
standardized contract for the future delivery of a specified amount of currency
at a future date at a price set at the time of the contract. The Funds may enter
into currency futures contracts traded on regulated commodity exchanges,
including non-U.S. exchanges. The Funds may either accept or make delivery of
the currency specified at the maturity of a forward or futures contract or,
prior to maturity, enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract.

Writing and Purchasing Currency Call and Put Options. The International Equity
Fund and the Bond Funds may also write covered put and call options and purchase
put and call options on foreign currencies, for the same purposes that they are
permitted to use currency exchange contracts.

A call option written by a Fund obligates the Fund to sell specified currency to
the holder of the option at a specified price at any time before the expiration
date. A put option written by the Fund would obligate the Fund to purchase
specified currency from the option holder at a specified time before the
expiration date. The writing of currency options involves risk that the Fund
will, upon exercise of the option, be required to sell currency subject to a
call at a price that is less than the currency's market value or be required to
purchase currency subject to a put at a price that exceeds the currency's market
value.

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A Fund may terminate its obligations under a call or put option by purchasing an
option identical to the one it has written. This purchase is referred to as
"closing purchase transaction." The Fund would also be able to enter into a
closing sale transaction in order to realize a gain or minimize a loss on an
option purchased by the Fund.

The purchase of a call option would entitle the Fund, in return for the premium
paid, to purchase specified currency at a specified price during the option
period. The Fund would ordinarily realize a gain if, during the option period,
the value of the currency exceeded the sum of the exercise price, the premium
paid and transaction costs; otherwise the Fund would realize either no gain or a
loss on the purchase of the call option. The Fund may forfeit the entire amount
of the premium plus related transaction costs if exchange rates move in a manner
adverse to the Fund's position.

A Fund may, for example, purchase put options in anticipation of a decline in
the dollar value of currency in which securities in its portfolio are
denominated ("protective puts"). The purchase of a put option would entitle the
Fund, in exchange for the premium paid, to sell specific currency at a specified
price during the option period. The purchase of protective puts is designed
merely to offset or hedge against a decline in the dollar value of the Fund's
portfolio securities due to currency exchange rate fluctuations. The Fund would
ordinarily realize a gain if, during the option period, the value of the
underlying currency decreased below the exercise price sufficiently to more than
cover the premium and transaction costs; otherwise the Fund would realize either
no gain or a loss on the purchase of the put option. Gains and losses on the
purchase of protective put options would tend to be offset by countervailing
changes in the value of the underlying currency. Foreign currency options to be
written or purchased by the Fund will be traded on U.S. or foreign exchanges or
over-the-counter.

Buyers and sellers of currency futures and options thereon are subject to the
same risks that apply to the use of futures generally. Further settlement of a
currency futures contract for the purchase of most currencies must occur at a
bank based in the issuing nation. Trading options on currency futures is
relatively new, and the ability to establish and close out positions on such
options is subject to the maintenance of a liquid market which may not always be
available. Currency exchange rates may fluctuate based on factors extrinsic to
that country's economy.

FOREIGN SECURITIES AND OBLIGATIONS. The International Equity Fund intends to
invest primarily in the securities of foreign issuers. In addition, the Bond
Funds may invest a portion of their assets in obligations issued by foreign
issuers, including Eurodollar convertible securities, which are fixed income
securities that are issued in U.S. dollars outside the United States and are
convertible into or exchangeable for equity securities of the same or a
different issuer. The Money Market Fund may also invest in dollar-denominated
obligations issued or guaranteed by one or more foreign governments or any of
their political subdivisions, agencies or instrumentalities, as well as other
foreign issuers. These obligations may be issued by supranational entities,
including international organizations (such as the European Coal and Steel
Community) designed or supported by governmental entities to promote economic
reconstruction or development and international banking institutions and related
government agencies.

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Investment in foreign securities and obligations involves special risks. These
include market risk, interest rate risk and the risks of investing in securities
of foreign issuers and of companies whose securities are principally traded
outside the United States and in investments denominated in foreign currencies.
Market risk involves the possibility that stock prices will decline over short
or even extended periods. The stock markets tend to be cyclical, with periods of
generally rising prices and periods of generally declining prices. These cycles
will affect the value of a Fund that invests in foreign stocks. The holdings of
a Fund that invests in fixed income securities will be sensitive to changes in
interest rates and the interest rate environment. Generally, the prices of bonds
and debt securities fluctuate inversely with interest rate changes. In addition,
the performance of investments in securities and obligations denominated in a
foreign currency will depend on the strength of the foreign currency against the
U.S. dollar and the interest rate environment in the country issuing the
currency. Absent other events which could otherwise affect the value of a
foreign security or obligation (such as a change in the political climate or an
issuer's credit quality), appreciation in the value of the foreign currency
generally can be expected to increase the value of a foreign
currency-denominated security or obligation in terms of U.S. dollars. A rise in
foreign interest rates or decline in the value of the foreign currency relative
to the U.S. dollar generally can be expected to depress the value of a foreign
currency-denominated security or obligation.

There are other risks and costs involved in investing in foreign securities and
obligations which are in addition to the usual risks inherent in domestic
investments. Investment in foreign securities and obligations involves higher
costs than investment in U.S. securities and obligations, including higher
transaction and custody costs as well as the imposition of additional taxes by
foreign governments. Foreign investments also involve risks associated with the
level of currency exchange rates, less complete financial information about the
issuers, less market liquidity, more market volatility and political
instability. Future political and economic developments, the possible imposition
of withholding taxes on dividend income, the possible seizure or nationalization
of foreign holdings, the possible establishment of exchange controls, or the
adoption of other governmental restrictions might adversely affect an investment
in foreign securities or obligations. Additionally, foreign banks and foreign
branches of domestic banks are subject to less stringent reserve requirements,
and to different accounting, auditing and recordkeeping requirements.

The International Equity Fund, the Money Market Fund and the Bond Funds may
invest in foreign debt, including the securities of foreign governments. Several
risks exist concerning such investments, including the risk that foreign
governments may default on their obligations, may not respect the integrity of
such debt, may attempt to renegotiate the debt at a lower rate, and may not
honor investments by U.S. entities or citizens.

To the extent consistent with their investment objectives, these Funds may also
invest in obligations of the International Bank for Reconstruction and
Development (also known as the World Bank) which are supported by subscribed,
but unpaid, commitments of its member countries. There is no assurance that
these commitments will be undertaken or complied with in the future.

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The end of the Cold War, the reunification of Germany, the accession of new
Western European members to the European Economic and Monetary Union and the
aspirations of Eastern European states to join and other political and social
events in Europe have caused considerable economic, social and political
dislocation. In addition, events in the Japanese economy, as well as social and
political developments there have affected Japanese securities and currency
markets, and have disrupted the relationship of the Japanese yen with other
currencies and with the U.S. dollar. Future political, economic and social
developments in Europe, Japan and in the Asia\Pacific regional context can be
expected to produce continuing effects on securities and currency markets.

In addition, the International Equity Fund and the Bond Funds may invest their
assets in countries with emerging economies or securities markets. These
countries are located in the Asia-Pacific region, Eastern Europe, Latin and
South America and Africa. Political and economic structures in many of these
countries may be undergoing significant evolution and rapid development, and
these countries may lack the social, political and economic stability
characteristics of more developed countries. Some of these countries may have in
the past failed to recognize private property rights and may have at times
nationalized or expropriated the assets of private companies. In general, the
securities markets of these countries are less liquid, subject to greater price
volatility, have smaller market capitalizations and have problems with
securities registration and custody. As a result, the risks presented by
investments in these countries are heightened. Additionally, settlement
procedures in emerging countries are frequently less developed and reliable than
those in the United States and may involve a Fund's delivery of securities
before receipt of payment for their sale. Settlement or registration problems
may make it more difficult for a Fund to value its portfolio securities and
could cause the Fund to miss attractive investment opportunities, to have a
portion of its assets uninvested or to incur losses due to the failure of a
counterparty to pay for securities the Fund has delivered or the Fund's
inability to complete its contractual obligations.

Although a Fund (other than the Money Market Fund) may invest in securities
denominated in foreign currencies, its portfolio securities and other assets are
valued in U.S. dollars. Currency exchange rates may fluctuate significantly over
short periods of time causing, together with other factors, a Fund's net asset
value to fluctuate as well. Currency exchange rates can be affected
unpredictably by the intervention or the failure to intervene by U.S. or foreign
governments or central banks, or by currency controls or political developments
in the U.S. or abroad. To the extent that a Fund's total assets, adjusted to
reflect the Fund's net position after giving effect to currency transactions,
are denominated in the currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political developments within
those countries. In addition, through the use of forward currency exchange
contracts and with other instruments, the respective net currency positions of
the Funds may expose them to risks independent of their securities positions.
Although the net long and short foreign currency exposure of the International
Equity Fund will not exceed its total asset value, to the extent that it is
fully invested in foreign securities while also maintaining currency positions,
it may be exposed to greater risk than it would have if it did not maintain the
currency positions. The Funds are also subject to the possible imposition of
exchange control regulations or freezes on the convertibility of currency.

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Investors should understand that the expense ratios of the International Equity
Fund can be expected to be higher than those of Funds investing primarily in
domestic securities. The costs attributable to investing abroad are usually
higher for several reasons, such as the higher cost of investment research,
higher costs of custody of foreign securities, higher commissions paid on
comparable transactions on foreign markets and additional costs arising from
delays in settlements of transactions involving foreign securities.

Dividends and interest payable on a Fund's foreign portfolio securities may be
subject to foreign withholding taxes. To the extent such taxes are not offset by
credits or deductions allowed to investors under U.S. federal income tax law,
they may reduce the net return to the shareholders.

FORWARD COMMITMENTS, WHEN-ISSUED SECURITIES AND DELAYED-DELIVERY TRANSACTIONS.
To the extent consistent with their respective investment objectives, each Fund
may purchase securities on a when-issued basis or purchase or sell securities on
a forward commitment (sometimes called delayed delivery) basis. These
transactions involve a commitment by the Fund to purchase or sell securities at
a future date. The price of the underlying securities (usually expressed in
terms of yield) and the date when the securities will be delivered and paid for
(the settlement date) are fixed at the time the transaction is negotiated.
When-issued purchases and forward commitment transactions are normally
negotiated directly with the other party.

A Fund will purchase securities on a when-issued basis or purchase or sell
securities on a forward commitment basis only with the intention of completing
the transaction and actually purchasing or selling the securities. If deemed
advisable as a matter of investment strategy, however, a Fund may dispose of or
negotiate a commitment after entering into it. A Fund also may sell securities
it has committed to purchase before those securities are delivered to the Fund
on the settlement date.

When a Fund purchases securities on a when-issued, delayed-delivery or forward
commitment basis, the Fund will segregate liquid assets having a value
(determined daily) at least equal to the amount of the Fund's purchase
commitments until three days prior to the settlement date, or will otherwise
cover its position. These procedures are designed to ensure that the Fund will
maintain sufficient assets at all times to cover its obligations under
when-issued purchases, forward commitments and delayed-delivery transactions.
For purposes of determining a Fund's average dollar-weighted maturity, the
maturity of when-issued, delayed-delivery or forward commitment securities will
be calculated from the commitment date.

FUTURES AND OPTIONS GENERALLY. The Equity Funds may purchase or sell (i)
exchange listed put and call options on securities, indexes and other financial
instruments and (ii) financial futures contracts and options thereon. The Equity
Funds may enter into such futures transactions on domestic exchanges and, to the
extent such transactions have been approved by the Commodities Futures Trading
Commission for sale to customers in the U.S., on foreign exchanges. The Bond
Funds may purchase and sell financial futures contracts and options thereon. At
the time of purchase no more than 5% of a Fund's market value may be invested in
the margin required for futures transactions and other derivative instruments
(exclusive of any in-the-money portion of the premium). The use of futures and
options is a highly specialized

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activity which entails greater than ordinary investment risk. Investments in
futures and options may involve a small investment relative to the amount of
risk assumed. To the extent a Fund enters into these transactions, their success
will depend on the Sub-Adviser's ability to predict market movements.

Futures Contracts. To the extent a Fund enters into a futures contract, it will
deposit in a segregated account with its custodian, cash or U.S. Treasury
obligations equal to a specified percentage of the value of the futures contract
(the "initial margin"), as required by the relevant contract market and futures
commission merchant. The futures contract will be marked-to-market daily. Should
the value of the futures contract decline relative to the Fund's position, the
Fund will be required to pay to the futures commission merchant an amount equal
to such change in value. In the event the Fund has insufficient cash, it may
have to sell portfolio securities at a time when it may be disadvantageous to do
so in order to meet such daily variations in margins.

A futures contract may generally be described as an agreement between two
parties to buy and sell particular financial instruments for an agreed price
during a designated month (or to deliver the final cash settlement price, in the
case of a contract relating to an index or otherwise not calling for physical
delivery at the end of trading in the contract). When interest rates are rising
or securities prices are falling, a Fund can seek, through the sale of futures
contracts, to offset a decline in the value of its current portfolio securities.
When rates are falling or prices are rising, the Fund, through the purchase of
futures contracts, can attempt to secure better rates or prices than might later
be available in the market when they affect anticipated purchases.

Although futures contracts by their terms generally call for the actual delivery
or acquisition of underlying securities or the cash value of the index, in most
cases the contractual obligation is fulfilled before the date of the contract
without having to make or take such delivery. The contractual obligation is
offset by buying (or selling, as the case may be) on a commodities exchange an
identical futures contract calling for delivery in the same month. Such a
transaction, which is effected through a member of an exchange, cancels the
obligation to make or take delivery of the securities or the cash value of the
index underlying the contractual obligations. The Fund may incur brokerage fees
when it purchases or sells futures contracts.

Positions taken in the futures markets are not normally held to maturity, but
are instead liquidated through offsetting transactions which may result in a
profit or loss. While each Fund's futures contracts on securities or currency
will usually be liquidated in this manner, a Fund may instead make or take
delivery of the underlying securities or currency whenever it appears
economically advantageous for it to do so. A clearing corporation associated
with the exchange on which futures on securities or currency are traded
guarantees that, if still open, the sale or purchase will be performed on the
settlement date.

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Options on Futures Contracts. The acquisition of put and call options on futures
contracts will give a Fund the right (but not the obligation), for a specified
price, to sell or to purchase, respectively, the underlying futures contract at
any time during the option period. As the purchaser of an option on a futures
contract, the Fund obtains the benefit of the futures position if prices move in
a favorable direction but limits its risk of loss in the event of an unfavorable
price movement to the loss of the premium and transaction costs.

Financial Futures Contracts. Financial futures are contracts that obligate the
holder to take or make delivery of a specified quantity of a financial
instrument, such as a U.S. Treasury security or foreign currency, during a
specified future period at a specified price. A "sale" of a financial futures
contract means the acquisition of a contractual obligation to deliver the
securities called for by the contract at a specified price on a specified date.
A "purchase" of a financial futures contract means the acquisition of a
contractual obligation to acquire the securities called for by the contract at a
specified price on a specified date.

Interest Rate Futures and Options. Interest rate futures contracts are contracts
for the future delivery of U.S. government securities and index-based futures
contracts. The value of these instruments changes in response to changes in the
value of the underlying security or index, which depends primarily on prevailing
interest rates.

A Fund may, for example, enter into interest rate futures contracts in order to
protect its portfolio securities from fluctuations in interest rates without
necessarily buying or selling the underlying fixed-income securities. For
example, if the Fund owns bonds, and interest rates are expected to increase, it
might sell futures contracts on debt securities having characteristics similar
to those held in the portfolio. Such a sale would have much the same effect as
selling an equivalent value of the bonds owned by the Fund. If interest rates
did increase, the value of the debt securities in the portfolio would decline,
but the value of the futures contract to the Fund would increase at
approximately the same rate, thereby keeping the net asset value of the Fund
from declining as much as it otherwise would have.

Stock Index Futures Contracts. A stock index futures contract obligates the
seller to deliver (and the purchaser to take) an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement was made. Open futures contracts are valued on a daily
basis, and a Fund may be obligated to provide or receive cash reflecting any
decline or increase in the contract's value. No physical delivery of the
underlying stocks in the index is made in the future.

For example, a Fund may sell stock index futures contracts in anticipation of or
during a market decline to attempt to offset the decrease in market value of its
equity securities that might otherwise result. When a Fund is not fully invested
in stocks and it anticipates a significant market advance, it may buy stock
index futures in order to gain rapid market exposure that may in part or
entirely offset increases in the cost of stocks that it intends to buy.

Options on Stock Index Futures. The Funds may buy and sell call and put options
on stock index futures. Call and put options on stock index futures are similar
to options on securities except that, rather than the right to buy stock at a
specified price, options on stock index futures give the holder the right to
receive cash. Upon exercise of the option, the delivery of the futures position

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by the writer of the option to the holder of the option will be accompanied by
delivery of the accumulated balance in the writer's futures margin account which
represents the amount by which the market price of the futures contract, at
exercise, exceeds, in the case of a call, or is less than, in the case of a put,
the exercise price of the option on the futures contract. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash equal to the difference between the
exercise price of the option and the closing price of the futures contract on
the expiration date.

Bond Index Futures and Options on Such Futures. The Funds may buy and sell
futures contracts based on an index of debt securities and options on such
futures contracts to the extent they currently exist and, in the future, may be
developed. The Funds reserve the right to conduct futures and options
transactions based on an index that may be developed in the future to correlate
with price movements in certain categories of debt securities. The Fund's
investment strategy in employing futures contracts based on an index of debt
securities may be similar to that used by it in other financial futures
transactions. The Funds may also buy and write put and call options on such
index futures and enter into closing transactions with respect to such options.

Options Generally. Options may relate to particular securities, foreign and
domestic securities indexes, financial instruments, foreign currencies or the
yield differential between two securities and may or may not be listed on a
domestic or foreign securities exchange and may or may not be issued by the
Options Clearing Corporation. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price prior to the expiration of
the option, regardless of the market price of the security. The premium paid to
the writer is in consideration for undertaking the obligation under the option
contract. A put option for a particular security gives the purchaser the right
to sell the security at the stated exercise price prior to the expiration date
of the option, regardless of the market price of the security. Options on
indexes and yield curve options provide the holder with the right to make or
receive a cash settlement upon exercise of the option. With respect to options
on indexes, the amount of the settlement will equal the difference between the
closing price of the index at the time of exercise and the exercise price of the
option expressed in dollars, times a specified multiple. With respect to yield
curve options, the amount of the settlement will equal the difference between
the yields of designated securities.

Options trading is a highly specialized activity which entails greater than
ordinary investment risk. Options may be more volatile than the underlying
instruments and, therefore, on a percentage basis, an investment in options may
be subject to greater fluctuation than an investment in the underlying
instruments themselves.

The Funds will write call options only if they are "covered." In the case of a
call option on a security or currency, the option is "covered" if a Fund owns
the instrument underlying the call or has an absolute and immediate right to
acquire that instrument without additional cash consideration (or, if additional
cash consideration is required, liquid assets in such amount are segregated)
upon conversion or exchange of other securities held by it. For a call option on
an index, the option is covered if a Fund maintains with its custodian
securities comprising the index or liquid assets equal to the contract value. A
call option is also covered if a Fund holds a call on the same instrument or
index as the call written where the exercise price of the call held is

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(i) equal to or less than the exercise price of the call written, or (ii)
greater than the exercise price of the call written provided the Fund segregates
liquid assets in the amount of the difference. The Funds will write put options
only if they are "secured" by segregated liquid assets in an amount not less
than the exercise price of the option at all times during the option period.

With respect to yield curve options, a call (or put) option is covered if the
Fund holds another call (or put) option on the spread between the same two
securities and maintains in a segregated account liquid assets sufficient to
cover the Fund's net liability under the two options. Therefore, the Fund's
liability for such a covered option is generally limited to the difference
between the amount of the Fund's liability under the option written by the Fund
less the value of the option held by the Fund. Yield curve options may also be
covered in such other manner as may be in accordance with the requirements of
the counterparty with which the option is traded and applicable laws and
regulations. Yield curve options are traded over-the-counter, and because they
have been only recently introduced, established trading markets for these
securities have not yet developed.

A Fund's obligation to sell an instrument subject to a covered call option
written by it, or to purchase an instrument subject to a secured put option
written by it, may be terminated prior to the expiration date of the option by
the Fund's execution of a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
instrument, exercise price and expiration date) as the option previously
written. Such a purchase does not result in the ownership of an option. A
closing purchase transaction will ordinarily be effected to realize a profit on
an outstanding option, to prevent an underlying instrument from being called, to
permit the sale of the underlying instrument or to permit the writing of a new
option containing different terms on such underlying instrument. The cost of
such a liquidation purchase plus transaction costs may be greater than the
premium received upon the original option, in which event the Fund will have
incurred a loss in the transaction. There is no assurance that a liquid
secondary market will exist for any particular option. An option writer, unable
to effect a closing purchase transaction, will not be able to sell the
underlying instrument (in the case of a covered call option) or liquidate the
segregated assets (in the case of a secured put option) until the option expires
or the optioned instrument or currency is delivered upon exercise with the
result that the writer in such circumstances will be subject to the risk of
market decline or appreciation in the instrument during such period.

When a Fund purchases an option, the premium paid by it is recorded as an asset
of the Fund. When a Fund writes an option, an amount equal to the net premium
(the premium less the commission) received by a Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the current bid price. If an option
purchased by a Fund expires unexercised, the Fund realizes a loss equal to the
premium paid. If a Fund enters into a closing sale transaction on an option
purchased by it, the Fund will realize a gain if the premium received by the
Fund on the closing transaction is more than the premium paid to purchase the
option, or a loss if it is less. If an option written by a Fund expires on the
stipulated expiration date or if a Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the

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net premium received when the option is sold) and the deferred credit related to
such option will be eliminated. If an option written by a Fund is exercised, the
proceeds of the sale will be increased by the net premium originally received
and the Fund will realize a gain or loss.

There are several risks associated with transactions in options. For example,
there are significant differences between the securities, currency and options
markets that could result in an imperfect correlation between these markets,
causing a given transaction not to achieve its objectives. In addition, a liquid
secondary market for particular options, whether traded over-the-counter or on
an exchange may be absent for reasons which include the following: there may be
insufficient trading interest in certain options; restrictions may be imposed by
an exchange on opening transactions or closing transactions or both; trading
halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities or currencies;
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; the facilities of an exchange or the Options Clearing Corporation may
not at all times be adequate to handle current trading value; or one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or in
that class or series of options) would cease to exist, although outstanding
options that had been issued by the Options Clearing Corporation as a result of
trades on that exchange would continue to be exercisable in accordance with
their terms.

Future Developments. The Funds may take advantage of opportunities in the area
of options and futures contracts and options on futures contracts and any other
derivative investments that are not presently contemplated for use by the Funds
or which are not currently available but that may be developed, to the extent
such opportunities are both consistent with the Funds' investment goals and
legally permissible for the Funds.

HIGH YIELD, HIGH RISK SECURITIES. The Long-Term Bond Fund may invest up to 30%
of its assets in fixed-income securities which are rated below investment grade
(hereinafter referred to as "lower rated securities") or which are unrated but
deemed equivalent to those rated below investment grade by the Sub-Adviser. The
Intermediate-Term Bond Fund may invest up to 5% of its assets in lower rated
securities or which are unrated but deemed equivalent by the Sub-Adviser. The
lower the ratings of such securities, the greater their risks. Lower rated
securities generally offer a higher current yield than that available from
higher grade issues, and typically involve greater risk. The yields on lower
rated securities will fluctuate over time. In general, prices of all bonds rise
when interest rates fall and fall when interest rates rise. While less sensitive
to changing interest rates than investment grade securities, lower rated
securities are especially subject to adverse changes in general economic
conditions and to changes in the financial condition of their issuers. During
periods of economic downturn or rising interest rates, issuers of these
instruments may experience financial stress that could adversely affect their
ability to make payments of principal and interest, and increase the possibility
of default.

The risk of loss through default is greater because lower rated securities are
usually unsecured and are often subordinate to an issuer's other obligations.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments and rising interest rates. Consequently, the

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market price of these securities may be quite volatile and may result in wider
fluctuations of a Fund's net asset value per share.

Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may also decrease the values and liquidity of these securities,
especially in a market characterized by only a small amount of trading and with
relatively few participants. These factors can also limit a Fund's ability to
obtain accurate market quotations for these securities, making it more difficult
to determine the Fund's net asset value. In cases where market quotations are
not available, lower rated securities are valued using guidelines established by
the Fund's Board of Trustees. Perceived credit quality in this market can change
suddenly and unexpectedly, and may not fully reflect the actual risk posed by a
particular lower rated or unrated security.

Ratings, however, are general and are not absolute standards of quality.
Consequently, obligations with the same rating, maturity and interest rate may
have different market prices. For a more complete discussion of ratings, see
Appendix A to this SAI.

ILLIQUID AND RESTRICTED SECURITIES. The Funds will invest no more than 15% (10%
with respect to the Money Market Fund) of the value of their net assets in
illiquid securities. Generally, an "illiquid security" is any security that
cannot be disposed of promptly (e.g., within seven days) and in the ordinary
course of business at approximately the amount at which the Fund has valued the
instrument. It includes, among other things, repurchase agreements maturing in
more than seven days.

Subject to this limitation, the Board of Trustees has authorized the Funds to
invest in restricted securities where such investment is consistent with the
Fund's investment goals and has authorized such securities to be considered
liquid to the extent the Investment Adviser or Sub-Adviser determines that there
is a liquid institutional or other market for such securities, such as
restricted securities that may be freely transferred among qualified
institutional buyers pursuant to Rule 144A under the 1933 Act, as amended, and
for which a liquid institutional market has developed. The Board of Trustees
will review periodically any determination by the Investment Adviser or
Sub-Adviser to treat a restricted security as liquid, including the Investment
Adviser's or Sub-Adviser's assessment of current trading activity and the
availability of reliable price information.

Restricted securities are securities that may not be sold to the public without
registration under the Securities Act of 1933 or an exemption from registration.
Restricted securities involve certain risks, including the risk that a secondary
market may not exist when a holder wants to sell them. In addition, the price
and valuation of these securities may reflect a discount because they are
perceived as having less liquidity than the same securities that are not
restricted. If a Fund suddenly has to sell restricted securities, time
constraints or lack of interested, qualified buyers may prevent the Fund from
receiving the value at which the securities are carried on the books of the Fund
at the time of the sale. Alternatively, the Investment Adviser or Sub-Adviser
may sell unrestricted securities it might have retained if the Fund had only
held unrestricted securities.

INTEREST RATE SWAPS, FLOORS AND CAPS AND CURRENCY SWAPS. The Bond Funds may
enter into interest rate swaps for hedging purposes and not for speculation. The
Bond

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Funds may also purchase interest rate floors or caps for hedging purposes and
not for speculation. A Fund will typically use interest rate swaps to preserve a
return on a particular investment or portion of its portfolio or to shorten the
effective duration of its portfolio investments. Interest rate swaps involve the
exchange by a Fund with another party of their respective commitments to pay or
receive interest, such as an exchange of fixed rate payments for floating rate
payments. The purchase of an interest rate floor or cap entitles the purchaser
to receive payments of interest on a notional principal amount from the seller,
to the extent the specified index falls below (floor) or exceeds (cap) a
predetermined interest rate. The International Equity Fund and the Bond Funds
may also enter into currency swaps, which involve the exchange of the rights of
a Fund and another party to make or receive payments in specific currencies.

A Fund will only enter into interest rate swaps or interest rate floor or cap
transactions on a net basis, i.e. the two payment streams are netted out, with a
Fund receiving or paying, as the case may be, only the net amount of the two
payments. In contrast, currency swaps usually involve the delivery of the entire
principal value of one designated currency in exchange for the other designated
currency. Inasmuch as these transactions are entered into for good faith hedging
purposes, the Funds and the Investment Adviser believe that such obligations do
not constitute senior securities as defined in the 1940 Act and, accordingly,
will not treat them as being subject to the Funds' borrowing restrictions.

The net amount of the excess, if any, of the Funds' obligations over their
entitlements with respect to each interest rate or currency swap will be accrued
on a daily basis, and an amount of liquid assets having an aggregate net asset
value at least equal to such accrued excess, will be segregated by the Funds.

If there is a default by the other party to such transaction, a Fund will have
contractual remedies pursuant to the agreements related to the transaction. The
swap market has grown substantially in recent years with a large number of banks
and investment banking firms acting both as principals and as agents utilizing
standardized swap documentation. As a result, the swap market has become
relatively liquid in comparison with markets for other similar instruments which
are traded in the Interbank market.

INVESTMENT COMPANIES. Each Select Fund may invest in shares of other investment
companies, to the extent permitted by the 1940 Act and by exemptive orders
granted by the SEC. This includes shares of other open-end, management
investment companies (commonly called mutual funds), closed-end funds and
exchange-traded funds. Pursuant to an exemptive order granted by the SEC, the
Select Funds (other than the Money Market Fund) may invest cash reserves in the
Money Market Fund. Pursuant to this exemptive order, the Money Market Fund shall
not acquire the securities of any other investment company in excess of the
limits contained in Section 12(d)(1)(A) of the 1940 Act, except as permitted by
Section 12(d)(1)(E) of the 1940 Act.

Exchange-traded funds ("ETFs") are open-end investment companies whose shares
are listed for trading on a national securities exchange or the NASDAQ National
Market System. ETF shares such as iShares and SPDRs typically trade like a share
of common stock and provide investment

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results that generally correspond to the price and yield performance of the
component stocks of a widely recognized index such as the S&P 500. There can be
no assurance, however, that this can be accomplished as it may not be possible
for an ETF to replicate the composition and relative weightings of the
securities of its corresponding index. ETFs are subject to the risks of an
investment in a broadly based portfolio of common stocks, including the risk
that the general level of stock prices may decline, thereby adversely affecting
the value of such investment. Individual shares of an ETF are generally not
redeemable at their net asset value, but trade on an exchange during the day at
prices that are normally close to, but not the same as, their net asset value.
There is no assurance that an active trading market will be maintained for the
shares of an ETF or that market prices of the shares of an ETF will be close to
their net asset values.

As described in the Prospectus, the Blended Funds invest primarily in the shares
of the Select Funds. This diversification offers the opportunity to benefit from
a variety of investment approaches and strategies employed by experienced
investment professionals.

The Funds may also acquire investment company shares received or acquired as
dividends, through offers of exchange, or as a result of reorganization,
consolidation, or merger. The purchase of shares of other investment companies
may result in duplication of expenses such that investors indirectly bear a
proportionate share of the expenses of such mutual funds including operating
costs, and investment advisory and administrative fees.

INITIAL PUBLIC OFFERINGS. The Equity Funds may purchase stock in an initial
public offering ("IPO"). By definition, and IPO has not traded publicly until
the time of its offering. Special risks associated with IPOs may include a
limited number of shares available for trading, unseasoned trading, lack of
investor knowledge of the company, and limited operating history, all of which
may contribute to price volatility. IPOs are involved in relatively new
industries or lines of business, which may not be widely understood by
investors. Some of the companies involved in new industries maybe regarded as
developmental stage companies, without revenues or operating income, or the
near-term prospects of such. Foreign initial public offerings are subject to
foreign political and currency risks. Many IPOs are issued by undercapitalized
companies of small or microcap size. Investing in IPOs entails other risks,
including possible high portfolio turnover and limited liquidity.

MONEY MARKET INSTRUMENTS. To the extent consistent with their respective
investment objectives and strategies, each Select Fund may invest a portion of
its assets in short-term high-quality instruments, such as those that are
eligible for investment by the Money Market Fund. In addition, each Select Fund
(except the Money Market Fund) may invest its cash reserves in shares of the
Money Market Fund.

MUNICIPAL INSTRUMENTS. The Bond Funds and the Money Market Fund may invest in
obligations issued or guaranteed by municipalities and states. Municipal
instruments are generally issued to finance public works, such as airports,
bridges, highways, housing, health-related entities, transportation-related
projects, educational programs, water and pollution control and sewer works.
They are also issued to repay outstanding obligations, to raise funds for
general operating expenses and to make loans to other public institutions and
for other facilities. Municipal instruments include private activity bonds
issued by or on behalf of public authorities.

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Private activity bonds are or have been issued to obtain funds to provide, among
other things, privately operated housing facilities, pollution control
facilities, convention or trade show facilities, mass transit, airport, port or
parking facilities and certain local facilities for water supply, gas,
electricity or sewage or solid waste disposal. Private activity bonds are also
issued to privately held or publicly owned corporations in the financing of
commercial or industrial facilities. State and local governments are authorized
in most states to issue private activity bonds for such purposes in order to
encourage corporations to locate within their communities. The principal and
interest on these obligations may be payable from the general revenues of the
users of such facilities.

Municipal instruments include both "general" and "revenue" obligations. General
obligations are secured by the issuer's pledge of its full faith, credit and
taxing power for the payment of principal and interest. Revenue obligations are
payable only from the revenues derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise tax or other
specific revenue source such as lease revenue payments from the user of the
facility being financed. Private activity bonds are in most cases revenue
securities and are not payable from the unrestricted revenues of the issuer.
Consequently, the credit quality of a private activity bond is usually directly
related to the credit standing of the private user of the facility involved.

The Bond Funds and the Money Market Fund may also invest in "moral obligation"
bonds, which are normally issued by special purpose public authorities. If the
issuer of a moral obligation bond is unable to meet its debt service obligations
from current revenues, it may draw on a reserve fund (if such a fund has been
established), the restoration of which is a moral commitment but not a legal
obligation of the state or municipality which created the issuer.

Within the principal classifications of municipal instruments described above
there are a variety of categories, including municipal bonds, municipal notes,
municipal leases, custodial receipts and participation certificates. Municipal
notes include tax, revenue and bond anticipation notes of short maturity,
generally less than three years, which are issued to obtain temporary funds for
various public purposes. Municipal leases and participation certificates are
obligations issued by state or local governments or authorities to finance the
acquisition of equipment and facilities. Participation certificates may
represent participations in a lease, an installment purchase contract, or a
conditional sales contract. Certain municipal lease obligations (and related
participation certificates) may include "non-appropriation" clauses which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
on a yearly basis. Custodial receipts are underwritten by securities dealers or
banks and evidence ownership of future interest payments, principal payments or
both on certain municipal securities. Municipal leases (and participations in
such leases) present the risk that a municipality will not appropriate funds for
the lease payments.

An issuer's obligations under its municipal instruments are subject to the
provisions of bankruptcy, insolvency and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes. The power or ability of an issuer to meet its obligations for the payment
of interest on and principal

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of its municipal instruments may be materially adversely affected by litigation
or other conditions.

Certain of the municipal instruments held by a Fund may be insured as to the
timely payment of principal and interest. The insurance policies will usually be
obtained by the issuer of the municipal instrument at the time of its original
issuance. In the event that the issuer defaults on an interest or principal
payment, the insurer will be notified and will be required to make payment to
the bondholders. There is, however, no guarantee that the insurer will meet its
obligations. In addition, such insurance will not protect against market
fluctuations caused by changes in interest rates and other factors.

In addition, municipal instruments may be backed by letters of credit or
guarantees issued by domestic or foreign banks or other financial institutions
which are not subject to federal deposit insurance. Adverse developments
affecting the banking industry generally or a particular bank or financial
institution that has provided its credit or guarantee with respect to a
municipal instrument held by a Fund, including a change in the credit quality of
any such bank or financial institution, could result in a loss to the Fund and
adversely affect the value of its shares. As described under "Foreign
Securities," letters of credit and guarantees issued by foreign banks and
financial institutions involve certain risks in addition to those of similar
instruments issued by domestic banks and financial institutions.

The Bond Funds may invest in municipal leases, which may be considered liquid
under guidelines established by the Trust's Board of Trustees. The guidelines
will provide for determination of the liquidity of a municipal lease obligation
based on factors including the following: (1) the frequency of trades and quotes
for the obligation; (2) the number of dealers willing to purchase or sell the
security and the number of other potential buyers; (3) the willingness of
dealers to undertake to make a market in the security; and (4) the nature of the
marketplace trades, including the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer. The Fund, under the
supervision of the Sub-Adviser, will also consider the continued marketability
of a municipal lease obligation based upon an analysis of the general credit
quality of the municipality issuing the obligation and the essentiality to the
municipality of the property covered by the lease.

Currently it is not the intention of the Bond Funds to invest more than 25% of
the value of their total assets in municipal instruments whose issuers are in
the same state.

PORTFOLIO TURNOVER RATE. The higher the portfolio turnover, the higher the
overall brokerage commissions, dealer mark-ups and mark-downs, and other direct
transaction costs incurred. The Funds' Investment Adviser and Sub-Advisers do
take these costs into account, since they affect overall investment performance.
However, portfolio turnover may vary greatly from year to year as well as within
a particular year, and may be affected by changes in the holdings of specific
issuers, changes in country and currency weightings, cash requirements for
redemption of shares and by requirements which enable the Funds to receive
favorable tax treatment. The Funds are not restricted by policy with regard to
portfolio turnover and will make changes in their investment portfolio from time
to time as business and economic conditions as well as market prices may
dictate.

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PREFERRED STOCKS. The Equity Funds may invest in preferred stock. Preferred
stockholders have a greater right to receive liquidation payments and usually
dividends than do common stockholders. However, preferred stock is subordinated
to the liabilities of the issuer in all respects. Preferred stock may or may not
be convertible into common stock.

As a general rule, the market value of preferred stock with a fixed dividend
rate and no conversion element will decline as interest rates and perceived
credit risk rises. Because preferred stock is junior to debt securities and
other obligations of the issuer, deterioration in the credit quality of the
issuer will cause greater changes in the value of a preferred stock than in a
more senior debt security with similar stated yield characteristics.

REAL ESTATE INVESTMENT TRUSTS. Each Fund may invest in real estate investment
trusts ("REITs"). Equity REITs invest directly in real property while mortgage
REITs invest in mortgages on real property. REITs may be subject to certain
risks associated with the direct ownership of real estate, including declines in
the value of real estate, risks related to general and local economic
conditions, overbuilding and increased competition, increases in property taxes
and operating expenses, and variations in rental income. Generally, increases in
interest rates will decrease the value of high-yielding securities and increase
the costs of obtaining financing, which could decrease the value of a REIT's
investments. In addition, equity REITs may be affected by changes in the value
of the underlying property owned by the REITs, while mortgage REITs may be
affected by the quality of credit extended. Equity and mortgage REITs are
dependent upon management skill, and are subject to the risks of financing
projects. REITs are also subject to heavy cash flow dependency, defaults by
borrowers and self-liquidation.

REPURCHASE AGREEMENTS. Each Fund may agree to purchase portfolio securities from
financial institutions subject to the seller's agreement to repurchase them at a
mutually agreed upon date and price ("repurchase agreements"). Repurchase
agreements are considered to be loans under the 1940 Act. Although the
securities subject to a repurchase agreement may bear maturities exceeding one
year, settlement for the repurchase agreement will never be more than one year
after a Fund's acquisition of the securities and normally will be within a
shorter period of time. Securities subject to repurchase agreements are held
either by the Fund's custodian or subcustodian (if any), or in the Federal
Reserve/Treasury Book-Entry System. The seller under a repurchase agreement will
be required to maintain the value of the securities subject to the agreement in
an amount exceeding the repurchase price (including accrued interest). Default
by the seller would, however, expose a Fund to possible loss because of adverse
market action or delay in connection with the disposition of the underlying
obligations.

REVERSE REPURCHASE AGREEMENTS. Each Fund may borrow funds by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). The Funds may use the proceeds of reverse repurchase
agreements to purchase other securities either maturing, or under an agreement
to resell, on a date simultaneous with or prior to the expiration of the reverse
repurchase agreement. Reverse repurchase agreements are considered to be
borrowings under the 1940 Act. Reverse repurchase agreements involve the risk
that the market value of the securities sold by a Fund may decline below the
repurchase price. A Fund will pay interest on

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amounts obtained pursuant to a reverse repurchase agreement. While reverse
repurchase agreements are outstanding, a Fund will segregate liquid assets in an
amount at least equal to the market value of the securities, plus accrued
interest, subject to the agreement.

SECURITIES LENDING. The Funds may lend portfolio securities. Collateral for
loans of portfolio securities made by a Fund may consist of cash, cash
equivalents, securities issued or guaranteed by the U.S. government or its
agencies or irrevocable bank letters of credit (or any combination thereof). The
borrower of securities will be required to maintain the market value of the
collateral at not less than the market value of the loaned securities, and such
value will be monitored on a daily basis. When a Fund lends its securities, it
continues to receive dividends and interest on the securities loaned and may
simultaneously earn interest on the investment of the cash collateral. Although
voting rights, or rights to consent, attendant to securities on loan pass to the
borrower, such loans will be called so that the securities may be voted by a
Fund if a material event affecting the investment is to occur.

SMALL COMPANY SECURITIES. The Small Cap Equity Fund invests primarily in
securities issued by smaller companies. Investing in the securities of smaller
companies involves greater risk, portfolio price volatility and cost.
Historically, small capitalization stocks and stocks of recently organized
companies have been more volatile in price than the larger capitalization stocks
included in the S&P 500 Index. Among the reasons for this greater price
volatility are the lower degree of market liquidity (the securities of companies
with small stock market capitalizations may trade less frequently and in limited
volume) and the greater sensitivity of small companies to changing economic
conditions. For example, these companies are associated with higher investment
risk due to the greater business risks of small size and limited product lines,
markets, distribution channels and financial and managerial resources.

The values of small company stocks will frequently fluctuate independently of
the values of larger company stocks. Small company stocks may decline in price
as large company stock prices rise, or rise in price as large company stock
prices decline. You should, therefore, expect that the net asset value of the
Small Cap Equity Fund's shares will be more volatile than, and may fluctuate
independently of, broad stock market indexes such as the S&P 500 Index.

The additional costs associated with the acquisition of small company stocks
include brokerage costs, market impact costs (that is, the increase in market
prices which may result when a Fund purchases thinly traded stock) and the
effect of the "bid-ask" spread in small company stocks. These costs will be
borne by all shareholders and may negatively impact investment performance.

STRIPPED OBLIGATIONS. The Treasury Department has facilitated transfers of
ownership of zero coupon securities by accounting separately for the beneficial
ownership of particular interest coupon and principal payments on Treasury
securities through the Federal Reserve book-entry record-keeping system. The
Federal Reserve program as established by the Treasury Department is known as
"STRIPS" or "Separate Trading of Registered Interest and Principal of
Securities." The Funds may purchase securities registered in the STRIPS program.
Under the STRIPS program, the Funds are able to have their beneficial ownership
of zero coupon securities

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recorded directly in the book-entry record-keeping system in lieu of having to
hold certificates or other evidences of ownership of the underlying U.S.
Treasury securities.

In addition, to the extent consistent with their respective investment
objectives and strategies, the Funds may acquire U.S. government obligations and
their unmatured interest coupons that have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
government obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners. Counsel to the underwriters of these certificates or other
evidences of ownership of U.S. Treasury securities have stated that, in their
opinion, purchasers of the stripped securities most likely will be deemed the
beneficial holders of the underlying U.S. government obligations for federal tax
purposes. The Funds are unaware of any binding legislative, judicial or
administrative authority on this issue.

The Funds may buy Treasury inflation-linked securities. When a Fund buys
inflation-indexed securities, the Treasury Department pays the Fund interest on
the inflation-adjusted principal amount. Competitive bidding before the
security's issue determines the fixed interest or coupon rate. At maturity, the
Treasury Department redeems the Fund's securities at their inflation-adjusted
principal or par amount, whichever is greater. Treasury securities are backed by
the full faith and credit of the U.S. government. Every six months Treasury will
pay interest based on a fixed rate of interest at auction. Semiannual interest
payments are determined by multiplying the inflation-adjusted principal amount
by one-half the stated rate of interest on each interest payment date.

Other types of stripped securities may be purchased by the Funds, including
stripped mortgage-backed securities ("SMBS"). SMBS are usually structured with
two or more classes that receive different proportions of the interest and
principal distributions from a pool of mortgage-backed obligations. A common
type of SMBS will have one class receiving all of the interest payments -
"interest only", while the other class receives all of the principal repayments
- "principal only." However, in some instances, one class will receive some of
the interest and most of the principal while the other class will receive most
of the interest and the remainder of the principal. If the underlying
obligations experience greater than anticipated prepayments of principal, a Fund
may fail to fully recoup its initial investment in these securities. The market
value of the class consisting entirely of principal payments generally is
extremely volatile in response to changes in interest rates. The yield on a
class of SMBS that receives all or most of the interest are generally higher
than prevailing market yields on other mortgage-backed obligations because their
cash flow patterns are also volatile and there is a risk that the initial
investment will not be fully recouped. SMBS issued by the U.S. government (or a
U.S. government agency or instrumentality) may be considered liquid under
guidelines established by the Trust's Board of

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Trustees if they can be disposed of promptly in the ordinary course of business
at a value reasonably close to that used in the calculation of the net asset
value per share.

SUPRANATIONAL ORGANIZATION OBLIGATIONS. The Bond Funds and the Money Market Fund
may invest in obligations of supranational organizations. Supranational
organizations are international banking institutions designed or supported by
national governments to promote economic reconstruction, development or trade
among nations (e.g., the International Bank for Reconstruction and Development).
Obligations of supranational organizations may be supported by appropriated but
unpaid commitments of their member countries and there is no assurance that
these commitments will be undertaken or met in the future.

SWAPS. The use of swaps is a highly specialized activity which involves
investment techniques and risks different from those associated with ordinary
portfolio securities transactions. A Fund's investment in swaps may involve a
small investment relative to the amount of risk assumed. If the Sub-Adviser is
incorrect in its forecasts, the investment performance of a Fund would be less
favorable than it would have been if this investment technique were not used.

Equity Swaps. Each Equity Fund may enter into equity swap contracts to invest in
a market without owning or taking physical custody of securities in
circumstances in which direct investment is restricted for legal reasons or is
otherwise impracticable. Equity swaps may also be used for hedging purposes or
to seek to increase total return. The counterparty to an equity swap contract
will typically be a bank, investment banking firm or broker/dealer. Equity swap
contracts may be structured in different ways. For example, a counterparty may
agree to pay the Fund the amount, if any, by which the notional amount of the
equity swap contract would have increased in value had it been invested in
particular stocks (or an index of stocks), plus the dividends that would have
been received on those stocks. In these cases, the Fund may agree to pay to the
counterparty the amount, if any, by which that notional amount would have
decreased in value had it been invested in the stocks. Therefore, the return to
the Fund on any equity swap contract should be the gain or loss on the notional
amount plus dividends on the stocks less the interest paid by the Fund on the
notional amount. In other cases, the counterparty and the Fund may each agree to
pay the other the difference between the relative investment performances that
would have been achieved if the notional amount of the equity swap contract had
been invested in different stocks (or indexes of stocks).

An Equity Fund will enter into equity swaps only on a net basis, which means
that the two payment streams are netted out, with the Fund receiving or paying,
as the case may be, only the net amount of the two payments. Payments may be
made at the conclusion of an equity swap contract or periodically during its
term. Equity swaps do not involve the delivery of securities or other underlying
assets. Accordingly, the risk of loss with respect to equity swaps is limited to
the net amount of payments that a Fund is contractually obligated to make. If
the other party to an equity swap defaults, a Fund's risk of loss consists of
the net amount of payments that such Fund is contractually entitled to receive,
if any. In as much as these transactions are entered into for hedging purposes
or are offset by segregated cash or liquid assets to cover the Funds' potential
exposure, the Funds and their Sub-Advisers believe that transactions do not
constitute

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senior securities under the 1940 Act and, accordingly, will not treat them as
being subject to a Fund's borrowing restrictions.

Credit Default Swaps. Each Bond Fund and the International Equity Fund may use
credit default swaps to limit or reduce exposure of a Fund against events of
default by issuers of debt (primarily investments in emerging markets debt).
With these instruments, a Fund pays what is, in effect an insurance premium and,
in return, has the right to put forth certain bonds or loans upon issuer default
(or similar events) and to receive in return the par value of those bonds or
loans.

Total Return Swaps. Each Select Fund may enter into total return swaps. This
gives a Fund the right to receive the appreciation in value of an underlying
asset in return for paying a fee to the counterparty. The fee paid by the Fund
will typically be determined by multiplying the face value of the swap agreement
by an agreed-upon interest rate. If the underlying asset declines in value over
the term of the swap, the Fund would also be required to pay the dollar value of
that decline to the counterparty.

TEMPORARY DEFENSIVE POSITIONS. For temporary defensive purposes, the Funds may
invest without limit in short-term high-quality money market obligations such as
those eligible for purchase by the Money Market Fund. The Funds may also, for
temporary defensive purposes, invest in shares of the Money Market Fund.

THE EQUITY INDEX FUND. The Equity Index Fund seeks total return matching the
total return performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index"). The S&P 500 Index is a market value-weighted index
consisting of 500 common stocks which are traded on the New York Stock Exchange,
American Stock Exchange and the NASDAQ National Market System and selected by
Standard & Poor's Corporation ("Standard & Poor's") through a detailed screening
process starting on a macro-economic level and working toward a micro-economic
level dealing with company-specific information such as market value, industry
group classification, capitalization and trading activity. Standard & Poor's
primary objective for the S&P 500 Index is to be the performance benchmark for
the U.S. equity markets. The companies chosen for inclusion in the S&P 500 Index
tend to be leaders in important industries within the U.S. economy. However,
companies are not selected by Standard & Poor's for inclusion because they are
expected to have superior stock price performance relative to the market in
general or other stocks in particular. Standard & Poor's makes no representation
or warranty, implied or express, to purchasers of Equity Index Fund shares or
any member of the public regarding the advisability of investing in the Fund or
the ability of the S&P 500 Index to track general stock market performance.

As discussed in the Prospectus, the Equity Index Fund is subject to the risk of
tracking variance. It may exclude the stocks of certain companies included in
the S&P 500 Index that are publicly recognized as being incompatible with the
moral and ethical posture of the Annuity Board. Tracking variance also may
result from share purchases and redemptions, transaction costs, expenses and
other factors. Share purchases and redemptions may necessitate the purchase and
sale of securities by the Fund and the resulting transaction costs which may be
substantial because of the number and the characteristics of the securities
held. In addition, transaction costs

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are incurred because sales of securities received in connection with spin-offs
and other corporate organizations are made to conform the Fund's holdings with
its investment objective. Tracking variance may also occur due to factors such
as the size of the Fund, the maintenance of a cash reserve pending investment or
to meet expected redemptions, changes made in the Fund's designated Index or the
manner in which the Index is calculated or because the indexing and investment
approaches of the Sub-Advisers do not produce the intended goal of the Fund.
Tracking variance is monitored by the Investment Adviser at least quarterly. In
the event the performance of the Equity Index Fund is not comparable to the
performance of its designated Index, the Board of Trustees will evaluate the
reasons for the deviation and the availability of corrective measures. If
substantial deviation in performance were to continue for extended periods, it
is expected that the Board of Trustees would consider recommending to
shareholders possible changes to the Fund's investment objective.

THE MONEY MARKET FUND. The Money Market Fund is subject to diversification
requirements. It will not invest more than 5% of its total assets in the
securities (including securities collateralizing a repurchase agreement) of a
single issuer except that the Fund may invest in U.S. government securities or
repurchase agreements that are collateralized by U.S. government securities
without any such limitation.

The Money Market Fund's diversification tests are measured at the time of
initial purchases, and are calculated as specified in Rule 2a-7 of the 1940 Act
which may allow the Fund to exceed limits specified in the Prospectus and SAI
for certain securities subject to guarantees or demand features. The Fund will
be deemed to satisfy the maturity requirements described in the Prospectus and
SAI to the extent the Fund satisfies Rule 2a-7 maturity requirements.

UNITED STATES GOVERNMENT OBLIGATIONS. Examples of the types of U.S. government
obligations that may be acquired by the Funds include U.S. Treasury Bills,
Treasury Notes, and Treasury Bonds and Stripped Treasury obligations and the
obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land
Banks, the Federal Housing Administration, Farmers Home Administration,
Export-Import Bank of the United States, Small Business Administration, Federal
National Mortgage Association ("FNMA"), Government National Mortgage Association
("GNMA"), General Services Administration, Central Bank for Cooperatives,
Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Intermediate Credit
Banks and Maritime Administration.

VARIABLE AND FLOATING RATE INSTRUMENTS. The Bond Funds and the Money Market Fund
may invest in variable and floating rate instruments to the extent consistent
with their investment objectives and policies described in the Prospectus.
Generally, the Sub-Adviser will consider the earning power, cash flows and other
liquidity ratios of the issuers and guarantors of such instruments and, if the
instruments are subject to demand features, will monitor their financial status
and ability to meet payment on demand. In determining weighted average portfolio
maturity, an instrument may, subject to applicable SEC regulations, be deemed to
have a maturity shorter than its nominal maturity based on the period remaining
until the next interest rate adjustment or the time a Fund can recover payment
of principal as specified in the instrument. Where necessary to ensure that a
variable or floating rate instrument is of the minimum required credit quality
for a Fund, the issuer's obligation to pay the principal of the

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instrument will be backed by an unconditional bank letter or line of credit,
guarantee or commitment to lend.

Variable and floating rate instruments eligible for purchase by the Funds
include variable amount master demand notes (which permit the indebtedness
thereunder to vary in addition to providing for periodic adjustments in the
interest rate), U.S., Yankee and Eurodollar floating rate notes, and (except for
the Money Market Fund) leveraged inverse floating rate debt instruments and
notes ("inverse floaters"). The interest rate on an inverse floater resets in
the opposite direction from the market rate of interest to which the inverse
floater is indexed. An inverse floater may be considered to be leveraged to the
extent that its interest rate varies by a magnitude that exceeds the magnitude
of the change in the index rate of interest. The higher degree of leverage
interest in inverse floaters is associated with greater volatility in their
market values. Accordingly, the duration of an inverse floater may exceed its
stated final maturity. The Funds may deem the maturity of variable and floating
rate instruments to be less than their stated maturities based on their variable
and floating rate features and/or their put features. Unrated variable and
floating rate instruments will be determined by the Sub-Adviser to be of
comparable quality at the time of purchase to rated instruments which may be
purchased by the Funds.

Variable and floating rate instruments including inverse floaters held by a Fund
will be subject to the Fund's limitation on illiquid investments when the Fund
may not demand payment of the principal amount within seven days absent a
reliable trading market.

WARRANTS AND RIGHTS. The Equity Funds may purchase warrants and rights, which
are privileges issued by corporations enabling the owners to subscribe to and
purchase a specified number of shares of the corporation at a specified price
during a specified period of time. The prices of warrants and rights do not
necessarily correlate with the prices of the underlying shares. The purchase of
warrants and rights involves the risk that a Fund could lose the purchase value
of a warrant or right if the right to subscribe to additional shares is not
exercised prior to the expiration. Also, the purchase of warrants and rights
involves the risk that the effective price paid for the warrant or right added
to the subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security.

YANKEE BONDS. To the extent consistent with their respective investment
policies, each Bond Fund may invest in Yankee bonds. These are
dollar-denominated bonds issued inside the United States by foreign entities.
Investment in these securities involve certain risks which are not typically
associated with investing in domestic securities. These risks are set forth
under "Foreign Securities" in the SAI.

ZERO COUPON, PAY-IN-KIND AND CAPITAL APPRECIATION BONDS. To the extent
consistent with their respective investment policies, each Bond Fund may invest
in zero coupon bonds, capital appreciation bonds and pay-in-kind ("PIK")
securities. Zero coupon and capital appreciation bonds are debt securities
issued or sold at a discount from their face value and which do not entitle the
holder to any periodic payment of interest prior to maturity or a specified
date. The original issue discount varies depending on the time remaining until
maturity or cash payment date, prevailing interest rates, the liquidity of the
security and the perceived credit

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quality of the issuer. These securities also may take the form of debt
securities that have been stripped of their unmatured interest coupons, the
coupons themselves or receipts or certificates representing interests in such
stripped debt obligations or coupons. The market prices of zero coupon bonds,
capital appreciation bonds and PIK securities generally are more volatile than
the market prices of interest bearing securities and are likely to respond to a
greater degree to changes in interest rates than interest bearing securities
having similar maturities and credit quality.

PIK securities may be debt obligations or preferred shares that provide the
issuer with the option of paying interest or dividends on such obligations in
cash or in the form of additional securities rather than cash. Similar to zero
coupon bonds, PIK securities are designed to give an issuer flexibility in
managing cash flow. PIK securities that are debt securities can either be senior
or subordinated debt and generally trade flat (i.e., without accrued interest).
The trading price of PIK debt securities generally reflects the market value of
the underlying debt plus an amount representing accrued interest since the last
interest payment.

Zero coupon bonds, capital appreciation bonds and PIK securities involve the
additional risk that, unlike securities that periodically pay interest to
maturity, a Fund will realize no cash until a specified future payment date
unless a portion of such securities is sold and, if the issuer of such
securities defaults, a Fund may obtain no return at all on its investment. In
addition, even though such securities do not provide for the payment of current
interest in cash, the Funds are nonetheless required to accrue income on such
investments for each taxable year and generally are required to distribute such
accrued amounts (net of deductible expenses, if any) to avoid being subject to
tax. Because no cash is generally received at the time of the accrual, a Fund
may be required to liquidate other portfolio securities to obtain sufficient
cash to satisfy federal tax distribution requirements applicable to the Fund.

INVESTMENT RESTRICTIONS

FUNDAMENTAL INVESTMENT RESTRICTIONS. The following investment restrictions are
applicable to each Fund and are considered fundamental, which means that they
may only be changed by the vote of a majority of a Fund's outstanding shares,
which as used herein and in the Prospectus, means the lesser of: (1) 67% of such
Fund's outstanding shares present at a meeting, if the holders of more than 50%
of the outstanding shares are present in person or by proxy, or (2) more than
50% of such Fund's outstanding shares. The percentage restrictions described
below are applicable only at the time of investment and require no action by the
Funds as a result of subsequent changes in value of the investments or the size
of the Fund. The Funds may not:

1. Invest in any company that is publicly recognized, as determined by the
Annuity Board, as being in the liquor, tobacco, gambling, pornography, or
abortion industries or any company whose products, services or activities
are publicly recognized as being incompatible with the moral and ethical
posture of the Annuity Board.

2. Purchase securities which would cause 25% or more of the value of the Fund's
total assets at the time of such purchase to be invested in the securities
of one or more issuers conducting their principal activities in the same
industry, except that this restriction does not apply to

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securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities or to municipal securities or, for the Money Market Fund,
securities issued by domestic banks.

3. Borrow money or issue senior securities as defined in the 1940 Act except
that (a) the Fund may borrow money in an amount not exceeding one-third of
the Fund's total assets (including the amount of the senior securities
issued but reduced by any liabilities not constituting senior securities) at
the time of such borrowings, (b) the Fund may borrow up to an additional 5%
of its total assets (not including the amount borrowed) for temporary or
emergency purposes, and (c) the Fund may issue multiple classes of shares.
The purchase or sale of futures contracts and related options shall not be
considered to involve the borrowing of money or the issuance of shares of
senior securities.

4. With respect to 75% of a Fund's total assets, purchase securities of any one
issuer if, as a result, (a) more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or (b) the Fund would hold more
than 10% of the outstanding voting securities of that issuer, except that up
to 25% of the Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to securities
issued or guaranteed by the U.S. government, its agencies and
instrumentalities or to securities issued by other investment companies. The
Money Market Fund is further subject to the diversification requirements of
Rule 2a-7 under the 1940 Act.

5. Make loans or lend securities, except through loans of portfolio securities
or through repurchase agreements, provided that for purposes of this
restriction, the acquisition of bonds, debentures, other debt securities or
instruments, or participations or other interests therein and investments in
government obligations, commercial paper, certificates of deposit, bankers'
acceptances or similar instruments will not be considered the making of a
loan.

6. Purchase or sell real estate, except that investments in securities of
issuers that invest in real estate and investments in mortgage-backed
securities, mortgage participations or other instruments supported by
interests in real estate are not subject to this limitation, and except that
the Fund may exercise rights under agreements relating to such securities,
including the right to enforce security interests and to hold real estate
acquired by reason of such enforcement until that real estate can be
liquidated in an orderly manner.

7. Underwrite securities issued by any other person, except to the extent that
the Fund might be considered an underwriter under the federal securities
laws in connection with its disposition of portfolio securities.

8. Purchase or sell commodities, unless acquired as a result of owning
securities or other instruments, but the Fund may purchase, sell or enter
into financial options and futures, forward and spot currency contracts,
swap transactions and other financial contracts or derivatives.

NON-FUNDAMENTAL INVESTMENT RESTRICTIONS. The Funds have adopted the following
non-fundamental restrictions. These non-fundamental restrictions may be changed
without shareholder approval, in compliance with applicable law and regulatory
policy. Unless otherwise indicated, these non-fundamental restrictions apply to
all the Funds.

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<PAGE> 157
1. The Funds shall not invest in companies for purposes of exercising control
or management.

2. The Funds shall not purchase securities on margin, except that the Funds may
obtain such short-term credits as are necessary for the clearance of
transactions, and may make margin deposits not exceeding 5% of total assets
in connection with their use of financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments.

3. The Funds shall not sell securities short, unless the Fund owns or has the
right to obtain securities equivalent in kind and amount to the securities
sold short. Provided, however, that the Funds may maintain short positions
in connection with their use of financial options and futures, forward and
spot currency contracts, swap transactions and other financial contracts or
derivative instruments.

4. The Funds shall not purchase any portfolio security while borrowings
representing more than 5% of the Fund's total assets are outstanding
(investment in repurchase agreements will not be considered to be loans for
purposes of this restriction).

5. The Funds will invest no more than 15% (10% with respect to the Money Market
Fund) of the value of their net assets in illiquid securities, a term which
means securities that cannot be disposed of within seven days in the
ordinary course of business at approximately the amount at which the Fund
has valued the securities and includes, among other things, repurchase
agreements maturing in more than seven days.

6. The Funds may invest in shares of investment companies only to the extent
permitted by the 1940 Act and by exemptive orders granted by the SEC.

If a percentage restriction on the investment or use of assets set forth in the
Prospectus or this SAI is adhered to at the time a transaction is effected,
later changes in percentage resulting from changing asset values will not be
considered a violation. It is the intention of the Funds, unless otherwise
indicated, that with respect to the Funds' policies that are a result of
application of law, the Funds will take advantage of the flexibility provided by
rules or interpretations of the SEC currently in existence or promulgated in the
future, or changes to such laws. None of these restrictions are intended to
limit investments by the Blended Funds in shares of the Select Funds.

MANAGEMENT OF THE FUNDS

THE BOARD OF TRUSTEES. The operations of each Fund are under the direction of
the Board of Trustees. The Board establishes each Fund's policies and oversees
and reviews the management of each Fund. The Board meets regularly to review the
activities of the officers, who are responsible for day-to-day operations of the
Funds. The Trustees and executive officers of the Funds, their ages, business
addresses and their principal occupations during the past five years are set
forth below. An asterisk indicates a Trustee who may be deemed to be an
"interested person" of the Funds (as that term is defined in the 1940 Act).

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<PAGE> 158
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
NAME, ADDRESS AND AGE WITH THE FUNDS PAST 5 YEARS**
<S> <C> <C>
*George Tous Van Nijkerk (Age 61) Trustee Administrative Services Director,
Providence Baptist Church Providence Baptist Church, 1990-Present.
Administrative Services
6339 Glenwood Ave.
Raleigh, NC 27612

*Gerald B. Jones (Age 69) Trustee Chairman, Jones Motorcars, Inc.
Jones Motorcars, Inc. _____-Present.
3535 N. College Ave.
Fayetteville, AR 72703-5108

Dr. John D. Morgan (Age 60) Trustee Pastor, Sagemont Baptist Church for over
Sagemont Baptist Church 30 years.
11323 Hughes Road
Houston, TX 77089-4637

Mr. Stephen C. Reynolds (Age 55) Trustee President and CEO of Baptist Memorial
Baptist Memorial Health Care Corp. Health Corporation, 1994-Present.
899 Madison Avenue
Memphis, TN 38146

Dr. Anthony Jordan (Age 52) Trustee Executive Director and Treasurer, Baptist
Baptist General Convention of Oklahoma General Convention of Oklahoma, 1996-Present.
3800 North May Avenue
Oklahoma City, OK 73112-6506

Mr. Earl B. Patrick (Age 57) Trustee President and Chief Operating Officer, Jim
Jim Stewart Realtors, Inc. Stewart, Realtors, Inc. dba Coldwell
500 N. Valley Mills Drive Banker Jim Stewart, Realtors since 1975.
Waco, TX 76710

O.S. Hawkins (Age 53) President President and CEO, Annuity Board of the
2401 Cedar Springs Road Southern Baptist Convention, 1997-Present;
Dallas, TX 75201-1407 Pastor, First Baptist Church, ____________.

John R. Jones (Age 47) Senior Vice President Senior Vice President, Annuity Board of
2401 Cedar Springs Road the Southern Baptist Convention, 1995-Present.
Dallas, TX 75201-1407
</TABLE>

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<PAGE> 159
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S) DURING
NAME, ADDRESS AND AGE WITH THE FUNDS PAST 5 YEARS**
<S> <C> <C>
Rodric E. Cummins (Age 43) Vice President Vice President, Annuity Board of the
2401 Cedar Springs Road Southern Baptist Convention, 1998-Present;
Dallas, TX 75201-1407 _____, Texas Baptist Foundation, _________.

Jeffrey P. Billinger (Age 54) Treasurer Treasurer, Annuity Board of the Southern
2401 Cedar Springs Road Baptist Convention, 1995-Present.
Dallas, TX 75201-1407

Rodney R. Miller (Age 47) Secretary Secretary, Annuity Board of the Southern
2401 Cedar Springs Road Baptist Convention, 1995-Present.
Dallas, TX 75201-1407
</TABLE>

(** To be completed by amendment prior to effectiveness)

The Trust pays no compensation to the Trustees. The Trust reimburses Trustees
for any expenses incurred in attending meetings. The Trust does not compensate
the officers for the services they provide to the Funds.

THE INVESTMENT ADVISER. The Funds have employed SBC Financial Services, Inc. as
their Investment Adviser. Although the Investment Adviser has no prior
experience in managing registered investment companies, it is a controlled
affiliate of the Annuity Board, which is responsible for managing approximately
$8 billion in retirement, welfare and other assets. The Annuity Board was
established in 1918 and exists to assist churches and other Southern Baptist
entities by making available retirement plan services, life and health coverage,
risk management programs and personal and institutional investment programs.

The Funds and the Investment Adviser have entered into an Investment Advisory
Agreement with respect to each Fund which is renewable annually, after an
initial term of two years, by the Board of Trustees or by votes of a majority of
each Fund's outstanding voting securities. The Agreement will continue in effect
from year to year thereafter only if such continuance is approved annually by
either the Board of Trustees or by a vote of a majority of the outstanding
voting securities of the respective Fund, and in either case by the vote of a
majority of the Trustees who are not parties to the Agreements or "interested
persons" of any party to the Agreements, voting in person at a meeting called
for the purpose of voting on such approvals. The Agreement may be terminated at
any time without penalty by the Board of Trustees, by votes of the shareholders
or by the Investment Adviser, upon sixty days written notice. The Agreement
terminates automatically if assigned.

THE SUB-ADVISERS. The Investment Adviser and the Fund have entered into
Sub-Advisory Agreements with the Sub-Advisers to assist in the selection and
management of each Select Fund's investment securities. It is the responsibility
of the Sub-Advisers, under the direction of the Investment Adviser, to make
day-to-day investment decisions for the Select Funds. The Sub-Advisers also
place purchase and sell orders for portfolio transactions of the Select Funds in
accordance with each Select Fund's investment objectives and policies. The
Investment Adviser

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<PAGE> 160
allocates the portion of each Select Fund's assets for which a Sub-Adviser will
make investment decisions. The Investment Adviser may make reallocations at any
time in its discretion.

Continuance of the Sub-Advisory Agreements, after the second year, must be
specifically approved at least annually (i) by vote of the Trustees or by vote
of the shareholders of the Funds, and (ii) by vote of a majority of the Trustees
who are not parties to the Sub-Advisory Agreements or "interested persons" of
any part thereto, cast in person at a meeting called for the purpose of voting
on such approval. The Sub-Advisory Agreements will terminate if assigned, and
are terminable at any time without penalty by the Sub-Adviser or by the Trustees
of the Funds, or by a majority of the outstanding shares of the Funds, on 60
days' written notice to the Investment Adviser and the Sub-Advisers.

ADVISORY FEES. Under the Investment Advisory Agreement and Sub-Advisory
Agreements, each Fund pays to the Investment Adviser and its Sub-Advisers fees
which are computed daily and paid monthly. The aggregate advisory fees paid by
each Fund are set forth in the Prospectus.

[EXPENSE LIMITATION, IF ANY, WILL BE DISCLOSED AND FILED BY AMENDMENT PRIOR TO
EFFECTIVENESS.]

The Funds have received from the SEC an exemptive order that permits the Trust
to disclose only the aggregated advisory fees paid by the Funds and permits the
Investment Adviser, subject to approval by the Board of Trustees, to hire and
terminate Sub-Advisers without shareholder approval. Shareholders of the
applicable Select Fund will be notified of such a change within 90 days.

CONTROL PERSONS OF SUB-ADVISERS. The following is a description of parties who
control the Sub-Advisers. [WILL BE COMPLETED BY AMENDMENT PRIOR TO
EFFECTIVENESS.]

MONEY MARKET FUND:

The Northern Trust Company, Chicago, Illinois: Northern Trust...

Payden & Rygel, Los Angeles, California: Joan A. Payden, CFA, is the President
and majority interest holder in the firm, at 75%. Active employees own all other
shares of the firm. No other entity holds any controlling interest in the firm.

SHORT-TERM BOND FUND:

BlackRock Financial Management L.P., New York, New York: BlackRock Financial
Management, Inc., located at 345 Park Avenue, New York, New York 10154, serves
as a sub-adviser to the fund. It is a wholly owned subsidiary of BlackRock
Advisors, Inc. BlackRock Advisors was organized in 1994 to perform advisory
services for investment companies and is a wholly-owned subsidiary of BlackRock,
Inc., one of the largest publicly traded investment management firms in the
United States with $164.5 billion of assets under management as of December 31,
1999. BlackRock, Inc. is a majority-owned subsidiary of PNC Bank Corp., one of
the largest diversified financial services companies in the United States.

STW Fixed Income Management, Santa Barbara, California: STW's controlling person
is Billy Williams, CEO and CIO, who owns 100% of the common stock.

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<PAGE> 161
Pacific Investment Management Company, Newport Beach, California: PIMCO...

INTERMEDIATE-TERM BOND FUND:

J. P. Morgan Investment Management, Inc., New York, New York: J. P. Morgan
Investment Management...

Western Asset Management Co., Pasadena, California: Western Asset is owned by
Legg Mason, Inc. a NYSE-listed, diversified financial services company based in
Baltimore, Maryland.

Pacific Investment Management Company, Newport Beach, California: PIMCO

LONG-TERM BOND FUND:

Loomis, Sayles & Company, L.P., Boston, Massachusetts: Loomis, Sayles & Company
L.P. is a limited partnership that is a wholly owned subsidiary of Nvest
Holdings, L.P., which is a wholly owned subsidiary of Nvest Companies. Nvest
Companies' general partner, CDCAM North America, LLC, is a wholly owned
subsidiary of CDC Asset Management North America Corporation, which is the sole
limited partner of Nvest Companies and a wholly owned subsidiary of CDC Asset
Management S.A., a French Company. CDC Asset Management is majority-owned by CDC
Finance and indirectly owned through, CDC Finance, Caisse Nationale des Caisses
D'Epargne and CNP Assurances, by Caisse des Depots et Consignations ("CDC"). CDC
was created by French Government legislation and currently is supervised by the
French Parliament.

STW Fixed Income Management, Santa Barbara, California: STW's controlling person
is Billy Williams, CEO and CIO, who owns 100% of the common stock.

EQUITY INDEX FUND:

Goldman Sachs Asset Management, New York, New York: GSAM is a unit of the
Investment Management Division of Goldman Sachs. The Goldman Sachs Group, L.P.,
which controlled GSAM, merged into The Goldman Sachs Group, Inc. as a result of
an initial public offering. Goldman, Sachs & Co., founded in 1869, is the
principal United States broker-dealer subsidiary of The Goldman Sachs Group,
Inc. Headquartered in New York, GSAM has 16 offices worldwide.

Independence Investment Associates, Inc., Boston, Massachusetts: Independence
Investment Associates...

Northern Trust Global Investments and The Northern Trust Company, Chicago,
Illinois: Northern Trust...

VALUE EQUITY FUND:

Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, Texas: BHMS is wholly owned
by United Asset Management Corporation, which is a wholly owned subsidiary of
Old Mutual plc, an international financial services group based in London.

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<PAGE> 162
Equinox Capital Management, LLC, New York, New York: Equinox Capital Management,
LLC is owned entirely by active employees. It is not affiliated with, nor
participates in joint ventures with, any other firm. Ronald J. Ulrich, Chairman,
owns a controlling interest.

Northern Trust Global Investments and The Northern Trust Company, Chicago,
Illinois: Northern Trust...

Numeric Investors L.P., Cambridge, MA: Numeric...

GROWTH EQUITY FUND:

Northern Trust Global Investments, Chicago, Illinois: Northern Trust...

Provident Investment Counsel, Pasadena, California: PIC...

Dresdner RCM Global Investors LLC, San Francisco, California: Dresdner is a
wholly owned subsidiary of Dresdner Bank AG.

The Northern Trust Company, Chicago, Illinois: Northern Trust...

SMALL CAP EQUITY FUND:

Aronson+Partners, Philadelphia, Pennsylvania: Aronson+Partners is wholly owned
and operated by four active partners. Founder of the firm, Theodore R. Aronson,
whose ownership in the firm is greater than 25%, is the only control person.

High Rock Capital, LLC, Boston, Massachusetts: High Rock is a limited liability
company organized under the laws of Delaware. David Diamond, founder and
portfolio manager, is the sole member of the LLC.

Provident Investment Counsel, Pasadena, California: PIC...

Westpeak Investment Advisors, L.P., Boulder, Colorado: Westpeak Investment
Advisors, L.P. is a limited partnership that has one general partner, Westpeak
Investment Advisors, Inc. Gerald H. Scriver is the principal executive officer
of both entities, however, his principal occupation is with Westpeak Investment
Advisors, L.P. Westpeak Investment Advisors, Inc. is a directly owned subsidiary
of Nvest Holdings, Inc, which is a direct wholly-owned subsidiary of Nvest
Companies, L.P. Nvest Companies owns the entire limited partnership interest in
Westpeak Investment Advisors, L.P.

The Northern Trust Company, Chicago, Illinois: Northern Trust...

INTERNATIONAL EQUITY FUND:

Brinson Partners, Inc., Chicago, Illinois: Brinson Partners, Inc., a Delaware
corporation, was organized in 1989 when it acquired the institutional asset
management business of The First National Bank of Chicago and First Chicago
Investment Advisors, N.A. Brinson Partners and its predecessor entities have
managed domestic and international investment portfolios since 1974 and global
investment portfolios since 1982. In 1995, Brinson Partners and Swiss Bank

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<PAGE> 163
Corporation combined their institutional investment management organizations
into a single investment management business, and in June 1998, Swiss Bank
Corporation and United Bank of Switzerland merged to form UBS AG, a Swiss
banking corporation headquartered in Zurich, Switzerland. Brinson Partners is an
indirect wholly owned subsidiary of UBS AG. Brinson Partners is a member of the
UBS Asset Management Division of UBS AG, which manages over $300 billion in
assets worldwide.

Walter Scott & Partners Limited, Edinburgh, Scotland: Walter Scott & Partners...

Genesis Asset Managers Limited, Guernsey, Channel Islands: Genesis Asset
Managers Limited is a wholly owned subsidiary of the Genesis Overseas Pension
Fund, a retirement benefits plan for the benefit of the employees of Genesis
Holdings International Limited and its subsidiaries and affiliates. The Fund is
a trust organized under laws of Guernsey, Channel Islands.

Montgomery Asset Management, San Francisco, California: Montgomery...

The Northern Trust Company, Chicago, Illinois: Northern Trust...

Capital Guardian Trust Company, Los Angeles, California: CGTC is a wholly owned
subsidiary of Capital Group International, Inc. which itself is a wholly owned
subsidiary of The Capital Group Companies, Inc., a financial services holding
company.

BLENDED FUNDS:

The Northern Trust Company, Chicago, Illinois: Northern Trust...

EXPENSES. Each Fund pays the expenses incurred in its operations, including its
pro rata share of expenses of the Trust. These expenses include investment
advisory and administrative fees; registration fees; interest charges; taxes;
expenses connected with the execution, recording and settlement of security
transactions; fees and expenses of the custodian for all services to the Fund,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of preparing and mailing reports to investors and to
government offices and commissions; expenses of meetings of investors; fees and
expenses of independent accountants and legal counsel; insurance premiums; and
expenses of calculating the net asset value of, and the net income on, shares.
In addition, the Fund may allocate transfer agency and certain other expenses by
Class.

BROKERAGE. The Investment Adviser and Sub-Advisers, in effecting the purchases
and sales of portfolio securities for the account of the Funds, will seek
execution of trades either, (1) at the most favorable and competitive rate of
commission charged by any broker, dealer or member of an exchange, or (2) at a
higher rate of commission charged, if reasonable in relation to brokerage and
research services provided to the Trust or the Investment Adviser or Sub-Adviser
by such member, broker or dealer. Such services may include, but are not limited
to, information as to the availability of securities for purchase or sale and
statistical or factual information or opinions pertaining to investments. The
Investment Adviser or Sub-Advisers may use research and services provided to it
by brokers and dealers in servicing all its clients.

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<PAGE> 164
The Investment Adviser or Sub-Adviser may, from time to time, receive services
and products which serve both research and non-research functions. In such
event, the Investment Adviser or Sub-Adviser makes a good faith determination of
the anticipated research and non-research use of the product or service and
allocates brokerage only with respect to the research component.

The Investment Adviser may direct the Sub-Advisers to place trades through
designated brokers, to the extent permissible by law. Fund orders may be placed
with an affiliated broker-dealer. Portfolio orders will be placed with an
affiliated broker-dealer only where the price being charged and the services
being provided compare favorably with those charged to the Funds by
non-affiliated broker-dealers. Over-the-counter transactions are usually placed
with a principal market-maker unless a better net security price is obtainable
elsewhere.

If the Investment Adviser or Sub-Adviser provides investment advisory services
to individuals and other institutional clients, there may be occasions on which
these investment advisory clients may also invest in the same securities as the
Fund. When these clients buy or sell the same securities at substantially the
same time, the Investment Adviser or Sub-Adviser may average the transactions as
to price and allocate the amount of available investments in a manner which the
Investment Adviser or Sub-Adviser believes to be equitable to each client,
including the Fund. On the other hand, to the extent permitted by law, the
Investment Adviser or Sub-Adviser may aggregate the securities to be sold or
purchased for the Fund with those to be sold or purchased for other clients
managed by it in order to obtain lower brokerage commissions, if any.

CODE OF ETHICS. The Trust, the Investment Adviser and each of the Sub-Advisers
have adopted codes of ethics addressing personal securities transactions and
other conduct by investment personnel and access persons who may have access to
information about the Funds' securities transactions. The codes are intended to
address potential conflicts of interest that can arise in connection with
personal trading activities of such persons. Persons subject to the codes are
generally permitted to engage in personal securities transactions, subject to
certain prohibitions, which may include pre-clearance requirements, blackout
periods, annual and quarterly reporting of personal securities holdings and
limitations on personal trading of initial public offerings. Violations of the
codes are subject to review by the Funds' Board of Trustees and could result in
severe penalties.

OTHER SERVICE PROVIDERS

DISTRIBUTOR. PFPC Distributors, Inc. (the "Distributor"), 3200 Horizon Drive,
King of Prussia, PA 19406, is the distributor of each Fund's shares pursuant to
a Distribution Agreement. The Agreement is for an initial two year term and is
renewable annually thereafter. The Agreement is terminable without penalty on
sixty days' written notice, by the Board of Trustees, by vote of a majority of
the outstanding voting securities of the Fund, or by the Distributor. The
Agreement will also terminate automatically in the event of its assignment. The
Funds do not pay any fees to the Distributor in its capacity as distributor. The
Distributor may enter into agreements with affiliates of the Investment Adviser
in connection with distribution.

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<PAGE> 165
TRANSFER AGENCY SERVICES. PFPC Inc. ("PFPC"), which has its principal business
address at 400 Bellevue Parkway, Wilmington, DE 19809, provides transfer agency
and dividend disbursing agent services for the Funds. As part of these services,
PFPC maintains records pertaining to the sale, redemption, and transfer of Fund
shares and distributes each Fund's cash distributions to shareholders.

ADMINISTRATIVE AND ACCOUNTING SERVICES. PFPC also provides administrative and
accounting services to the Funds. The services include certain accounting,
clerical and bookkeeping services; assistance in the preparation of reports to
shareholders; preparation for signature by an officer of the Trust of documents
required to be filed for compliance by the Trust with applicable laws and
regulations including those of the SEC and the securities laws of various
states; arranging for the computation of data, including daily computation of
net asset value; and arranging for the maintenance of books and records of the
Trust and providing, at its own expense, office facilities, equipment and
personnel necessary to carry out its duties. PFPC does not have any
responsibility or authority for the management of the Funds or the determination
of investment policy. In consideration of the services provided pursuant to the
Administration and Accounting Services Agreement, PFPC receives from each Fund a
fee computed daily and paid monthly.

CUSTODIAN. The Northern Trust Company serves as custodian for the Funds pursuant
to a Custodian Agreement. As custodian, The Northern Trust Company holds or
arranges for the holding of all portfolio securities and other assets of the
Funds. It is located at 50 South La Salle Street, Chicago, IL 60675.

INDEPENDENT AUDITORS. The accounting firm of PricewaterhouseCoopers LLP, located
at Two Commerce Square, 2001 Market Street, Philadelphia, PA 19103-7042, serves
as independent auditors for the Funds. PricewaterhouseCoopers performs annual
audits of each Fund and is periodically called upon to provide accounting and
tax advice.

LEGAL COUNSEL. The law firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036-1800, serves as counsel to the Trust.

SHARES OF BENEFICIAL INTEREST

The Trust's trust instrument authorizes the issuance of an unlimited number of
shares for each of the Funds and their Classes, and each share has a par value
of $0.001 per share. There are no conversion or preemptive rights in connection
with any shares. All issued shares will be fully paid and non-assessable and
will be redeemable at net asset value per share. Certificates certifying the
ownership of shares will not be issued.

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<PAGE> 166
The assets belonging to a Fund shall be held and accounted for separately from
other assets of the Trust. Each share of a Fund represents an equal beneficial
interest in the net assets of such Fund. Each Class of a Fund represent
interests in the assets of that Fund and have identical voting, dividend,
liquidation and other rights, except that expenses allocated to a Class will be
borne by such Class. Expenses of the Trust which are not readily identifiable as
belonging to a particular Fund or Class are allocated among all the Funds in a
manner the Trustees believe to be fair and equitable.

The Board of Trustees has authority, without necessity of a shareholder vote, to
create any number of new funds or classes and to issue an unlimited number of
shares of beneficial interest of the Trust. The Trustees have authorized
thirteen Funds and three Classes of shares to be issued currently. The Funds
offer the Retirement Class, Retail Class and Institutional Class shares.
Expenses borne by each Class differ slightly because of the allocation of
class-specific expenses. For example, a higher transfer agency fee may be
imposed on certain Classes. The relative impact of ongoing annual expenses will
depend on the length of time a share is held.

Each share is entitled to one vote and each fractional share is entitled to a
proportionate fractional vote. There shall be no cumulative voting in the
election of Trustees. Shares will generally be voted by shareholders of the
individual Fund or Class, except in the case of election or removal of Trustees,
the amendment of the Trust's trust instrument, when required by the 1940 Act or
when the Trustees have determined that the matter affects the interests of more
than one Fund or Class.

The Trust is not required to and does not currently intend to hold annual
meetings of shareholders. Special meetings of shareholders may be called by the
Board of Trustees or upon the written request of shareholders owning at least
50% of the applicable Fund or Class. Amendments and supplements to the Trust's
trust instrument may be made only by majority vote of shareholders.

The Board of Trustees consists of four Trustees not deemed to be "interested
persons" of the Funds, as defined in the 1940 Act, and two Trustees serving as
members of the Annuity Board's board of trustees. All trustees serving on the
Funds' Board of Trustees at all times must be active members of a Baptist church
in friendly cooperation with the Southern Baptist Convention. Only shareholders
of the Trust, by a vote of a majority of the outstanding shares, may fill
vacancies or otherwise elect a Trustee.

DISTRIBUTION PLANS

The Board of Trustees has adopted a Distribution Plan on behalf of each class of
shares of the Funds, in accordance with Rule 12b-1 ("12b-1 Plan") under the 1940
Act. Under the 12b-1 Plans, the assets of the Funds may be used to compensate
the Investment Adviser, the Distributor or others for certain activities
relating to the distribution of shares of the Funds to investors and the
provision of shareholder services. The maximum amounts payable under the 12b-1
Plans as a percentage of average daily net assets on an annual basis, are as
follows: 0.__% for the Retirement Class, 0.__% for the Retail Class and 0.__%
for the Institutional Class.

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The NASD's maximum sales charge rule relating to mutual fund shares establishes
limits on all types of sales charges, whether front-end, deferred or
asset-based. This rule may operate to limit the aggregate distribution fees to
which shareholders may be subject under the terms of the 12b-1 Plans.

The 12b-1 Plans authorize the use of the Funds' assets to compensate parties
which provide distribution assistance or shareholder services, including, but
not limited to, printing and distributing prospectuses to persons other than
shareholders, printing and distributing advertising and sales literature and
reports to shareholders used in connection with selling shares of the Funds, and
furnishing personnel and communications equipment to service shareholder
accounts and prospective shareholder inquiries.

The 12b-1 Plans require that any person authorized to direct the disposition of
monies paid or payable by the Funds pursuant to the 12b-1 Plans or any related
agreement prepare and furnish to the Board of Trustees, for its review, at least
quarterly, written reports complying with the requirements of Rule 12b-1 and
setting out the amounts expended under the 12b-1 Plans and the purposes for
which those expenditures were made. The 12b-1 Plans provide that so long as they
are in effect, the selection and nomination of Trustees who are not deemed to be
"interested persons" of the Funds as defined in the 1940 Act (the "Independent
Trustees") will be committed to the discretion of the Independent Trustees then
in office.

Neither the 12b-1 Plans nor any related agreements can take effect until
approved by a majority vote of the Trustees, as well as the vote of a majority
of the Independent Trustees who have no direct or indirect financial interest in
the operation of the 12b-1 Plans or in any agreements related to the 12b-1
Plans, cast in person at a meeting called for the purpose of voting on the 12b-1
Plans and the related agreements. The Board of Trustees, as well as a majority
of the Independent Trustees, approved the 12b-1 Plans on May ___, 2001.

Each 12b-1 Plan will continue in effect only so long as its continuance is
specifically approved at least annually by the Board of Trustees and the
Independent Trustees in the manner described above. A 12b-1 Plan may be
terminated at any time by a majority vote of the Independent Trustees who have
no direct or indirect financial interest in the operations of the 12b-1 Plan or
in any agreement related to the 12b-1 Plan or by vote of a majority of the
outstanding voting securities of the applicable class.

A 12b-1 Plan may not be amended to materially increase the amount of the
distribution fees unless the amendment is approved by a vote of at least a
majority of the outstanding voting securities of the applicable class. In
addition, no material amendment may be made unless approved by the Board of
Trustees and the Independent Trustees in the manner described above.

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TAXATION

This discussion of certain U.S. federal income tax issues concerning the Funds
and the purchase, ownership, and disposition of Fund shares is not complete and
may not deal with all aspects of federal income taxation that may be relevant to
you in light of your particular circumstances. This discussion is based upon
present provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the regulations promulgated thereunder, and judicial and administrative
ruling authorities, all of which are subject to change, which change may be
retroactive. If you are investing through a tax-deferred account, such as a
retirement plan account or an IRA, special tax rules apply. You should consult
your own tax advisers with regard to the federal tax consequences of the
purchase, ownership, or disposition of Fund shares, as well as the tax
consequences arising under the laws of any state, foreign country, or other
taxing jurisdiction.

DISTRIBUTIONS OF NET INVESTMENT INCOME. The Funds receive income generally in
the form of dividends on their investments. This income, less expenses incurred
in the operation of a Fund, constitutes the Fund's net investment income from
which dividends may be paid to you. Unless your investment is held in a
tax-deferred account, such as a retirement plan account or an IRA, any
distributions by a Fund from such income will be taxable to you as ordinary
income, whether you take them in cash or in additional shares. Retirement plan
accounts and other tax- deferred accounts are not eligible to receive
distributions in cash and must have shares reinvested to avoid significant,
negative tax consequences.

DISTRIBUTIONS OF CAPITAL GAINS. The Funds may derive capital gains and losses in
connection with sales or other dispositions of their portfolio securities.
Distributions from net short-term capital gains will be taxable to you as
ordinary income. Distributions from net long-term capital gains will be taxable
to you as long-term capital gain, regardless of how long you have held your
shares in the Fund. The exception, again, is a tax-deferred account, such as a
retirement plan account or an IRA. Any net capital gains realized by a Fund
generally will be distributed once each year, and may be distributed more
frequently, if necessary, in order to reduce or eliminate excise or income taxes
on the Fund.

INFORMATION ON THE TAX CHARACTER OF DISTRIBUTIONS. Unless your investment is
held in a tax-deferred account, such as a retirement plan account or an IRA, the
Funds will inform you of the amount of your ordinary income dividends and
capital gains distributions at the time they are paid, and will advise you of
their tax status for federal income tax purposes shortly after the close of each
calendar year. If you have not held Fund shares for a full year, a Fund may
designate and distribute to you, as ordinary income or capital gain, a
percentage of income that is not equal to the actual amount of such income
earned during the period of your investment in the Fund.

REDEMPTION OF FUND SHARES. Unless your investment is held in a tax-deferred
account, such as a retirement plan account or an IRA, redemptions of Fund shares
are taxable transactions for federal and state income tax purposes. If you
redeem your Fund shares, the IRS will require that you report a gain or loss on
your redemption. If you hold your shares as a capital asset, the gain or loss
that you realize will be capital gain or loss and will be long-term or
short-term, generally depending on how long you hold your shares. Any loss
incurred on the redemption of

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shares held for six months or less will be treated as a long-term capital loss
to the extent of any long-term capital gains distributed to you by the Fund on
those shares.

All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in the same
Fund (through reinvestment of dividends or otherwise) within 30 days before or
after your share redemption. Any loss disallowed under these rules will be added
to your tax basis in the new shares you buy.

ELECTION TO BE TAXED AS A REGULATED INVESTMENT COMPANY. Each Fund intends to
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code and intends to so qualify during the current fiscal year.
As a regulated investment company, a Fund generally pays no federal income tax
on the income and gains it distributes to you. The Board of Trustees reserves
the right not to maintain the qualification of a Fund as a regulated investment
company if the Board determines such course of action to be beneficial to
shareholders. In such a case, the Fund will be subject to federal, and possibly
state, corporate taxes on its taxable income and gains, and distributions to you
will be taxed as ordinary dividend income to the extent of the Fund's earnings
and profits.

EXCISE TAX DISTRIBUTION REQUIREMENTS. To avoid federal excise taxes, the
Internal Revenue Code requires each Fund to distribute to shareholders by
December 31 of each year, at a minimum, the following amounts: 98% of its
taxable ordinary income earned during the calendar year; 98% of its capital gain
net income earned during the twelve month period ending October 31; and 100% of
any undistributed amounts from the prior year. The Funds intend to declare and
pay these amounts in December (or in January that are treated by you as received
in December) to avoid these excise taxes, but the Funds can give no assurance
that their distributions will be sufficient to eliminate all taxes.

BACKUP WITHHOLDING. The Funds generally will be required to withhold federal
income tax at a rate of 31% ("backup withholding") from dividends paid, capital
gain distributions, and redemption proceeds to you if (1) you fail to furnish
the Fund with your correct taxpayer identification number or social security
number, (2) the IRS notifies you or the Funds that you have failed to report
properly certain interest and dividend income to the IRS and to respond to
notices to that effect, or (3) when required to do so, you fail to certify that
you are not subject to backup withholding. Any amounts withheld may be credited
against your federal income tax liability.

OTHER TAXATION. Distributions may be subject to additional state, local and
foreign taxes, depending on your particular situation. Non-U.S. shareholders may
be subject to U.S. tax rules that differ significantly from those summarized
above, including the likelihood that ordinary income dividends to them would be
subject to withholding of U.S. tax at a rate of 30% (or a lower treaty rate, if
applicable).

TAX TREATMENT OF FUND INVESTMENTS.

MARKET DISCOUNT. If a Fund purchases a debt security at a price lower than the
stated redemption price of such debt security, the excess of the stated
redemption price over the

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purchase price is "market discount." If the amount of market discount is more
than a de minimis amount, a portion of such market discount must be included as
ordinary income (not capital gain) by the Fund in each taxable year in which the
Fund owns an interest in such debt security and receives a principal payment on
it. In particular, a Fund will be required to allocate that principal payment
first to the portion of the market discount on the debt security that has
accrued but has not previously been includable in income. In general, the amount
of market discount that must be included for each period is equal to the lesser
of (i) the amount of market discount accruing during such period (plus any
accrued market discount for prior periods not previously taken into account) or
(ii) the amount of the principal payment with respect to such period. Generally,
market discount accrues on a daily basis for each day the debt security is held
by the Fund at a constant rate over the time remaining to the debt security's
maturity or, at the election of the Fund, at a constant yield to maturity which
takes into account the semi-annual compounding of interest. Gain realized on the
disposition of a market discount obligation must be recognized as ordinary
interest income (not capital gain) to the extent of the "accrued market
discount."

ORIGINAL ISSUE DISCOUNT. Certain debt securities acquired by a Fund may be
treated as debt securities that were originally issued at a discount. Very
generally, original issue discount is defined as the difference between the
price at which a security was issued and its stated redemption price at
maturity. Although no cash income on account of such discount is actually
received by a Fund, original issue discount that accrues on a debt security in a
given year generally is treated for federal income tax purposes as interest and,
therefore, such income would be subject to the distribution requirements
applicable to regulated investment companies. Some debt securities may be
purchased by a Fund at a discount that exceeds the original issue discount on
such debt securities, if any. This additional discount represents market
discount for federal income tax purposes (see above).

EFFECT OF FOREIGN INVESTMENTS ON DISTRIBUTIONS. Most foreign exchange gains
realized on the sale of debt securities are treated as ordinary income by the
Funds. Similarly, foreign exchange losses realized by a Fund on the sale of debt
securities are generally treated as ordinary losses by the Fund. These gains
when distributed will be taxable to you as ordinary dividends (unless your
investment is held in a tax-deferred account, such as a retirement plan account
or an IRA), and any losses will reduce the Fund's ordinary income otherwise
available for distribution to you. This treatment could increase or reduce
ordinary income distributions to you, and may cause some or all of a Fund's
previously distributed income to be classified as a return of capital.

The Funds may be subject to foreign withholding taxes on income from certain
foreign securities. If more than 50% of a Fund's total assets at the end of the
fiscal year are invested in securities of foreign corporations, the Fund may
elect to pass-through to you your pro rata share of foreign taxes paid by the
Fund. If this election is made, the year-end statement you receive from the Fund
will show more taxable income than was actually distributed to you. However, you
will be entitled to either deduct your share of such taxes in computing your
taxable income or (subject to limitations) claim a foreign tax credit for such
taxes against your U.S. federal income tax. You will be provided with the
information necessary to complete your individual income tax return if your Fund
makes this election. The exception, again, is a tax-deferred account, such as a
retirement plan account or an IRA.

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PASSIVE FOREIGN INVESTMENT COMPANIES. The International Equity Fund and the Bond
Funds may invest in shares of foreign corporations that may be classified under
the Code as passive foreign investment companies ("PFICs"). In general, a
foreign corporation is classified as a PFIC if at least one-half of its assets
constitute investment-type assets, or 75% or more of its gross income is
investment-type income. If a Fund receives a so-called "excess distribution"
with respect to PFIC stock, the Fund itself may be subject to a tax on a portion
of the excess distribution, whether or not the corresponding income is
distributed by the Fund to shareholders. In general, under the PFIC rules, an
excess distribution is treated as having been realized ratably over the period
during which the Fund held the PFIC shares. The Fund will itself be subject to
tax on the portion, if any, of an excess distribution that is so allocated to
prior Fund taxable years and an interest factor will be added to the tax, as if
the tax had been payable in such prior taxable years. Certain distributions from
a PFIC as well as gain from the sale of PFIC shares are treated as excess
distributions. Excess distributions are characterized as ordinary income even
though, absent application of the PFIC rules, certain excess distributions might
have been classified as capital gain.

A Fund may be eligible to elect alternative tax treatment with respect to PFIC
shares. Under an election that currently is available in some circumstances, a
Fund would be required to include in its gross income its share of the earnings
of a PFIC on a current basis, regardless of whether distributions were received
from the PFIC in a given year. If this election were made, the special rules,
discussed above, relating to the taxation of excess distributions would not
apply. In addition, another election would involve marking to market the Fund's
PFIC shares at the end of each taxable year, with the result that unrealized
gains would be treated as though they were realized and reported as ordinary
income. Any mark-to-market losses and any loss from an actual disposition of
PFIC shares would be deductible as ordinary losses to the extent of any net
mark-to-market gains included in income in prior years.

VALUATION OF SHARES

The Funds value their portfolio securities and compute their net asset values
per share on each day that the New York Stock Exchange is open for trading
(except for the Friday after Thanksgiving), in accordance with the procedures
discussed in the Prospectus. This section provides a more detailed description
of the Funds' methods for valuing their portfolio securities. As of the date of
this SAI, the New York Stock Exchange is open for trading every weekday except
for the following holidays: New Year's Day, Martin Luther King Jr.'s Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

The Funds (except the Money Market Fund) each value portfolio securities listed
on an exchange on the basis of the last sale prior to the time the valuation is
made. If there has been no sale since the immediately previous valuation, then
the current bid price is used. Quotations are taken from the exchange where the
security is primarily traded. Portfolio securities which are primarily traded on
foreign exchanges may be valued with the assistance of a pricing service and are
generally valued at the preceding closing values of such securities on their
respective exchanges, except that when an occurrence subsequent to the time a
foreign security is valued is likely to

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have changed such value, then the fair value of those securities will be
determined through procedures established by, or under the direction of, the
Board of Trustees. Such fair value may also be used when it is believed that
market price does not reflect a security's true value or when a security does
not have a readily available current market value. Equity securities which are
traded in the over-the-counter market only, but which are not included in the
NASDAQ National Market System, will be valued at the mean between the last
preceding bid and asked prices. Valuations may also be obtained from pricing
services when such prices are believed to reflect fair market value.

Notwithstanding the above, bonds and other fixed income securities are valued by
using market quotations and may be valued on the basis of prices provided by a
pricing service approved by the Board of Trustees. Securities with a remaining
maturity of less than sixty days are valued at amortized cost, which
approximates market value. Short-term notes are valued at cost. Corporate bonds,
municipal bonds, receivables and portfolio securities not currently quoted as
indicated above will be valued at fair value through procedures established by,
or under the direction of, the Board of Trustees.

The Funds translate prices for investments quoted in foreign currencies into
U.S. dollars at current exchange rates. As a result, changes in the value of
those currencies in relation to the U.S. dollar may affect a Fund's net asset
value. Because foreign markets may be open at different times than the New York
Stock Exchange, the value of Fund shares, particularly shares of the
International Fund, may change on days when shareholders will not be able to buy
or redeem Fund shares.

The Money Market Fund uses the amortized cost method to determine the value of
its portfolio securities pursuant to Rule 2a-7 under the 1940 Act. The amortized
cost method involves valuing a security at its cost and amortizing any discount
or premium over the period until maturity regardless of the impact of
fluctuating interest rates on the market value of the security. While this
method provides certainty in valuation, it may result in periods during which
the value, as determined by amortized cost, is higher or lower than the price
which the Fund would receive if the security were sold. During these periods,
the yield to a shareholder may differ somewhat from that which could be obtained
from a similar fund which utilizes a method of valuation based upon market
prices. Thus, during periods of declining interest rates, if the use of the
amortized cost method resulted in a lower value of the Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.

Rule 2a-7 provides that in order to value its portfolio using the amortized cost
method, the Money Market Fund must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase securities having remaining maturities of
397 days or less and invest only in U.S. dollar denominated eligible securities
determined by the Trust's Board of Trustees to be of minimal credit risks and
which (1) have received the highest short-term rating by at least two NRSROs,
such as "A-1" by Standard & Poor's and "P-1" by Moody's; (2) are single rated
and have received the highest short-term rating by a NRSRO; or (3) are unrated,
but are determined to be of comparable quality by the Investment Adviser
pursuant to guidelines approved by the Board. Investments in

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rated securities not rated in the highest category by at least two rating
organizations (or one rating organization if the instrument was rated by only
one such organization), and unrated securities not determined by the Board of
Trustees, Investment Adviser or Sub-Adviser to be comparable to those rated in
the highest rating category, will be limited.

Pursuant to Rule 2a-7, the Board of Trustees is also required to establish
procedures designed to stabilize, to the extent reasonably possible, the price
per share of the Money Market Fund, as computed for the purpose of sales and
redemptions, at $1.00. Such procedures include review of the Fund's portfolio
holdings by the Board of Trustees, at such intervals as it may deem appropriate,
to determine whether the net asset value of the Fund calculated by using
available market quotations deviates from $l.00 per share based on amortized
cost. The extent of any deviation will be examined by the Board of Trustees. If
such deviation exceeds 1/2 of 1%, the Board of Trustees will promptly consider
what action, if any, will be initiated. In the event the Board of Trustees
determines that a deviation exists which may result in material dilution or
other unfair results to investors or existing shareholders, the Board of
Trustees will take such corrective action as it regards as necessary and
appropriate, which may include selling portfolio instruments prior to maturity
to realize capital gains or losses or to shorten average portfolio maturity,
withholding dividends or establishing a net asset value per share by using
available market quotations.

TELEPHONE INSTRUCTIONS

Neither the Funds nor any of their service providers will be liable for any loss
or expense in acting upon telephone instructions that are reasonably believed to
be genuine. In attempting to confirm that telephone instructions are genuine,
they will use procedures that are considered reasonable. Shareholders assume the
risk to the full extent of their accounts that telephone requests may be
unauthorized. To the extent that the Funds or their service providers fail to
use reasonable procedures to verify the genuineness of telephone instructions,
the Funds or their service providers may be liable for any such instructions
that prove to be fraudulent or unauthorized. All telephone conversations with
the Funds, the Annuity Board and PFPC may be recorded.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of __________, 2001, which was before the public offering of the Funds'
shares, the Annuity Board was the holder of 100% of each Fund's shares and each
Class of shares, and there were otherwise no control persons or principal
holders. Control persons are persons deemed to control a Fund because they own
beneficially over 25% of the Fund's outstanding shares. Principal holders are
persons that own beneficially 5% or more of any Class of a Fund's outstanding
shares.

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CALCULATION OF PERFORMANCE DATA

The Funds may, from time to time, include their yield, effective yield, tax
equivalent yield and average annual total return in advertisements or
shareholder reports or other communications to shareholders or prospective
investors. Performance is calculated separately for each Class of a Fund.

Current yield for the shares of the Money Market Fund will be based on the
change in the value of a hypothetical investment (exclusive of capital changes
such as gains or losses from the sale of securities and unrealized appreciation
and depreciation) over a particular seven-day period, less a pro-rata share of
each Fund's expenses accrued over that period (the "base period"), and stated as
a percentage of the investment at the start of the base period (the "base period
return"). The base period return is then annualized by multiplying by 365/7,
with the resulting yield figure carried to at least the nearest hundredth of one
percent. "Effective yield" for the shares of the Money Market Fund assumes that
all dividends received during the base period have been reinvested. Calculation
of "effective yield" begins with the same "base period return" used in the
calculation of yield, which is then annualized to reflect weekly compounding
pursuant to the following formula:

Effective Yield = [(Base Period Return + 1)(365/7)] - 1.

Quotations of yield will be based on the investment income per share earned
during a particular 30-day (or one month) period, less expenses accrued during a
period ("net investment income") and will be computed by dividing net investment
income by the maximum offering price per share on the last day of the period,
according to the following formula:

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

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

Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in a Fund
over periods of 1, 5 and 10 years and since inception (up to the life of the
Fund), calculated pursuant to the following formula:

P (1 + T)(n) = ERV

(where P = a hypothetical initial payment of $l,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of the period). All total
return figures will reflect the deduction of a proportional share of Fund
expenses (net of certain reimbursed expenses) on an annual basis, and will
assume that all dividends and distributions are reinvested when paid. No
adjustment is made for taxes, if any, payable on dividends and distributions.

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Quotations of yield and total return will reflect only the performance of a
hypothetical investment in the Funds during the particular time period shown.
Yield and total return for a Fund will vary based on changes in the market
conditions, portfolio management and the level of the applicable Fund's
expenses. Therefore, no reported performance figure should be considered an
indication of future performance.

In connection with communicating their yields or total returns to current or
prospective investors, the Funds also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.

Performance information for the Funds may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, or other unmanaged indexes so that investors may compare the
Funds' results with those of a group of unmanaged securities widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria; and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.

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APPENDIX A -- DESCRIPTIONS OF SECURITIES RATINGS

A description of the rating policies of Moody's and S&P with respect to bonds
and commercial paper appears below.

MOODY'S INVESTORS SERVICE'S CORPORATE BOND RATINGS.

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

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

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

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

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

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

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

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

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

Moody's applies numerical modifiers "1", "2", and "3" to certain of its rating
classifications. The modifier "1" indicates that the security ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the issue ranks in the
lower end of its generic rating category.

STANDARD & POOR'S RATINGS GROUP CORPORATE BOND RATINGS.

AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to repay principal and pay
interest.

AA--Bonds rated "AA" also qualify as high quality debt obligations. Capacity to
pay principal and interest is very strong, and differs from "AAA" issues only in
small degree.

A--Bonds rated "A" have a strong capacity to repay principal and pay interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

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

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

CI--Bonds rated "CI" are income bonds on which no interest is being paid.

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

The ratings set forth above may be modified by the addition of a plus or minus
to show relative standing within the major rating categories.

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MOODY'S INVESTORS SERVICE'S COMMERCIAL PAPER RATINGS.

Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have a
superior ability for repayment of senior short-term debt obligations. "Prime-1"
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

Prime-2--Issuers (or related supporting institutions) rated "Prime-2" have a
strong ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more subject
to variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternative liquidity is maintained.

Prime-3--Issuers (or related supporting institutions) rated "Prime-3" have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and the requirement for relatively high financial
leverage. Adequate alternate liquidity is maintained.

Not Prime--Issuers rated "Not Prime" do not fall within any of the Prime rating
categories.

STANDARD & POOR'S RATINGS GROUP COMMERCIAL PAPER RATINGS.

S&P commercial paper rating is current assessment of the likelihood of timely
payment of debt having an original maturity of no more than 365 days. Ratings
are graded in several categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest. The four categories are as follows:

A-1--This highest category indicates that the degree of safety regarding timely
payment is strong. Those issues determined to possess extremely strong safety
characteristics are denoted with a plus (+) sign designation.

A-2--Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-13".

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

A-3
<PAGE> 179
B--Issues rated "B" are regarded as having only speculative capacity for timely
payment.

C--This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

D--Debt rated "D" is in payment default. The "D" rating category is used when
interest payments or principal payments are not made on the date due, even if
the applicable grace period has not expired, unless S&P believes that such
payments will be made during such grace period.

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<PAGE> 180
FINANCIAL STATEMENTS

[SEED AUDIT TO BE FILED BY AMENDMENT PRIOR TO EFFECTIVENESS]

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<PAGE> 181
ANNUITY BOARD FUNDS TRUST
N-1A
PART C: OTHER INFORMATION

Item 23. EXHIBITS:

(a) Trust Instrument.

1. Certificate of Trust, dated February 29, 2000, filed in the
State of Delaware, is electronically filed herewith as Exhibit
EX-99.a.1.

2. Agreement and Declaration of Trust, dated February 29, 2000,
is electronically filed herewith as Exhibit EX-99.a.2.

(b) By-Laws.
By-Laws of the Registrant, dated February 29, 2000, are
electronically filed herewith as Exhibit EX-99.b.

(d) Investment Advisory Contracts.
To be filed by amendment prior to effectiveness.

(e) Underwriting Contracts.
To be filed by amendment prior to effectiveness.

(f) Bonus or Profit Sharing Contracts.
Not Applicable.

(g) Custodian Agreements.
To be filed by amendment prior to effectiveness.

(h) Other Material Contracts.
To be filed by amendment prior to effectiveness.

(i) Legal Opinion.
To be filed by amendment prior to effectiveness.

(j) Other Opinions.
(1) Auditor Consent.
To be filed by amendment prior to effectiveness.

(2) Power of Attorney.
Electronically filed herewith as Exhibit EX-99.j.2.

(k) Omitted Financial Statements.
Not Applicable.

(l) Initial Capital Agreement.
To be filed by amendment prior to effectiveness.

(m) Rule 12b-1 Plan.
To be filed by amendment prior to effectiveness.

(n) Rule 18f-3 Plan.
To be filed by amendment prior to effectiveness.

(p) Codes of Ethics.

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<PAGE> 182
To be filed by amendment prior to effectiveness.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL OF THE FUND.

None.

Item 25. INDEMNIFICATION.

Reference is made to Article IX of Registrant's Trust
Instrument

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

Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISOR.

Item 27. PRINCIPAL UNDERWRITERS.

(a) PFPC Distributors, Inc. (the "Distributor") acts as
principal underwriter for the following investment companies
as of 1/02/01:

International Dollar Reserve Fund I, Ltd.
Provident Institutional Funds Trust
Columbia Common Stock Fund, Inc.
Columbia Growth Fund, Inc.
Columbia International Stock Fund, Inc.
Columbia Special Fund, Inc.
Columbia Small Cap Fund, Inc.
Columbia Real Estate Equity Fund, Inc.
Columbia Balanced Fund, Inc.
Columbia Daily Income Company
Columbia U.S. Government Securities Fund, Inc.
Columbia Fixed Income Securities Fund, Inc.
Columbia Municipal Bond Fund, Inc.
Columbia High Yield Fund, Inc.
Columbia National Municipal Bond Fund, Inc.
Columbia Strategic Value Fund, Inc.
Columbia Technology Fund, Inc.
GAMNA Series Funds, Inc.
WT Investment Trust
Kalmar Pooled Investment Trust
The RBB Fund, Inc.
Robertson Stephens Investment Trust
Harris Insight Funds Trust
AFBA 5 Star Funds
Alleghany Funds
Deutsche Asset Management VIT Funds
First Choice Funds Trust
Forward Funds, Inc.
Hillview Investment Trust II

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<PAGE> 183
IBJ Funds Trust
LKCM Funds
Matthews International Funds
McM Funds
Metropolitan West Funds
New Covenant Funds, Inc.
Pictet Funds
Stratton Growth Fund, Inc.
Stratton Monthly Dividend REIT Shares, Inc.
The Stratton Funds, Inc.
The Galaxy Fund
The Galaxy VIP Fund
Galaxy Fund II
Trainer, Wortham First Mutual Funds
Undiscovered Managers Funds
Wilshire Target Funds, Inc.
Weiss, Peck & Greer Funds Trust
Weiss, Peck & Greer International Fund
WPG Growth and Income Fund
WPG Tudor Fund
RWB/WPG U.S. Large Stock Fund
Tomorrow Funds Retirement Trust

The BlackRock Funds, Inc. (Distributed by BlackRock
Distributors, Inc., a wholly owned subsidiary of PFPC
Distributors, Inc.)

Northern Funds Trust and Northern Institutional Funds Trust
(Distributed by Northern Funds Distributors, LLC., a wholly
owned subsidiary of PFPC Distributors, Inc.)

The Offit Investment Fund, Inc. (Distributed by Offit Funds
Distributor, Inc., a wholly owned subsidiary of PFPC
Distributors, Inc.)

The Offit Variable Insurance Fund, Inc. (Distributed by Offit
Funds Distributor, Inc., a wholly owned subsidiary of PFPC
Distributors, Inc.)

ABN AMRO Funds (Distributed by ABN AMRO Distribution Services
(USA), Inc., a wholly owned subsidiary of PFPC Distributors,
Inc.)

(b) The following table provides the information required by
Item 27(b) with respect to each director, officer or partner
of PFPC Distributors, Inc.:

<TABLE>
<CAPTION>
Name Business Address Title with PFPC Title with Registrant
---- ---------------- --------------- ---------------------
Distributors
------------
<S> <C> <C> <C>
Joseph Gramlich 400 Bellevue Parkway Chairman and Director None
Wilmington, DE 19809
Gary M. Gardner 400 Bellevue Parkway President and Director None
Wilmington, DE 19809
Lisa M. Colon 3200 Horizon Drive Vice President None
King of Prussia, PA 19406
Bruno S. DiStefano 3200 Horizon Drive Vice President
King of Prussia, PA 19406
Rita G. Adler 400 Bellevue Parkway Chief Compliance Officer None
Wilmington, DE 19809
Douglas D. Castagna 400 Bellevue Parkway Controller and None
Wilmington, DE 19809 Assistant Treasurer
Robert F. Crouse 400 Bellevue Parkway Director None
Wilmington, DE 19809
Elizabeth T. Holtsbery 4400 Computer Drive Vice President None
Westborough, MA 01581
Francis Koudelka 4400 Computer Drive Director, Vice President None
Westborough, MA 01581
Susan K. Moscaritolo 4400 Computer Drive Vice President None
Westborough, MA 01581
Christine P. Ritch 4400 Computer Drive Chief Legal Officer, None
Westborough, MA 01581 Secretary and Clerk
Bradley A. Stearns 4400 Computer Drive Assistant Secretary None
Westborough, MA 01581 and Assistant Clerk
Craig D. Stokarski 400 Bellevue Parkway Treasurer and None
Wilmington, DE 19809 Financial and
Operations Principal
</TABLE>

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<PAGE> 184
Item 28. LOCATION OF ACCOUNTS AND RECORDS.

The books and other documents required by paragraph (b)(4) of
Rule 31a-1 under the Investment Company Act of 1940 are
maintained in the physical possession of SBC, 2401 Cedar
Springs Road, Dallas, Texas 75201. Other accounts, books and
documents required by Rule 31a-1 are maintained in the
physical possession of the Registrant's transfer agent, PFPC
Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809.

Item 29. MANAGEMENT SERVICES.

Not Applicable.

Item 30. UNDERTAKINGS.

The Registrant undertakes to file an amendment to this
registration statement with certified financial statements
showing the initial capital received before accepting
subscriptions from more than 25 persons.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
on Form N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on the 9th day of January,
2001.

ANNUITY BOARD FUNDS TRUST

By: /s/ O.S. Hawkins
-------------------------------
O.S. Hawkins
President

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

/s/ George J. Tous van Nijkerk Trustee, Chairman of the Board January 9, 2001
------------------------------
George J. Tous van Nijkerk*

/s/ Alton L. Fannin Trustee January 9, 2001
-----------------------------
Alton L. Fannin*

By: /s/ O.S. Hawkins
-------------------------
* O.S. Hawkins
Attorney-in-Fact

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<PAGE> 185
ANNUITY BOARD FUNDS TRUST
N-1A
EXHIBIT INDEX

EXHIBIT NO. DESCRIPTION
----------- -----------

EX-99.a.1 Certificate of Trust

EX-99.a.2 Agreement and Declaration of Trust

EX-99.b By-Laws

EX-99.j.2 Power of Attorney

C-5