ASSETMARK FUNDS, N-1A, 2001-01-09

ASSETMARK FUNDS
N-1A, 2001-01-09

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As filed with the Securities and Exchange Commission on January 9, 2001

File Nos. ________ and __________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

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

AND/OR

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

ASSETMARK FUNDS
---------------
(Exact Name of Registrant as Specified in Charter)

2300 Contra Costa Boulevard, Suite 425
Pleasant Hill, CA 94523-3967
(Address of Principal Executive Offices) (Zip Code)

(800) 664-5345
(Registrant's Telephone Numbers, Including Area Code)

Carrie Hansen
2300 Contra Costa Boulevard, Suite 425
Pleasant Hill, CA 94523-3967
(Name and Address of Agent for Service)

Copies to:

Elaine Richards, Esq.
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202

As soon as practicable after this Registration Statement is declared effective.
(Approximate Date of Proposed Public Offering)

It is proposed that this filing will become effective (check
appropriate box):

[ ] immediately upon filing pursuant to paragraph (b).
[ ] on (date) pursuant to paragraph (b).
[ ] 60 days after filing pursuant to paragraph (a)(1).
[ ] on (date) pursuant to paragraph (a)(1).
[ ] 75 days after filing pursuant to paragraph (a)(2).
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

SUBJECT TO COMPLETION, DATED JANUARY 9, 2001

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS

____________ __, 2001

LARGE CAP VALUE FUND

LARGE CAP GROWTH FUND

SMALL/MID CAP VALUE FUND

SMALL/MID CAP GROWTH FUND

INTERNATIONAL EQUITY FUND

REAL ESTATE SECURITIES FUND

TAX-EXEMPT FIXED INCOME FUND

CORE PLUS FIXED INCOME FUND

Each a series of AssetMark Funds

INVESTMENT ADVISOR

AssetMark Investment Services, Inc.

INVESTMENT SUB-ADVISORS

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

OVERVIEW......................................................................1

THE MULTI-ADVISOR APPROACH....................................................2

THE LARGE CAP VALUE FUND......................................................4

THE LARGE CAP GROWTH FUND.....................................................6

THE SMALL/MID CAP VALUE FUND..................................................8

THE SMALL/MID CAP GROWTH FUND................................................11

THE INTERNATIONAL EQUITY FUND................................................14

THE REAL ESTATE SECURITIES FUND..............................................17

THE TAX-EXEMPT FIXED INCOME FUND.............................................20

THE CORE PLUS FIXED INCOME FUND..............................................23

TEMPORARY INVESTMENTS........................................................26

MANAGEMENT OF THE FUNDS......................................................26

VALUATION OF FUND SHARES.....................................................27

PURCHASING FUND SHARES.......................................................28

SELLING (REDEEMING) FUND SHARES..............................................28

EXCHANGE PRIVILEGE...........................................................29

DISTRIBUTION OF FUND SHARES..................................................29

COUNSEL, INDEPENDENT AUDITORS AND SERVICE PROVIDERS..........................29

DISTRIBUTIONS AND TAXES......................................................29

FINANCIAL HIGHLIGHTS.........................................................31

OVERVIEW

This combined prospectus discusses each of the following series (each a "Fund"
and collectively the "Funds") of AssetMark Funds (the "Trust"), an open-end
management investment company. Each Fund is a separate no-load, non-diversified
investment company with separate investment strategies and goals. The Funds are
designed primarily for institutional investors and clients of registered
investment advisors, broker/dealers and other financial institutions.

THE LARGE CAP VALUE FUND seeks to provide investors with capital appreciation
over the long term by investing primarily in equity securities of U.S. companies
with large market capitalization that are undervalued in light of a company's
fundamental characteristics such as book value to price, earnings, dividends,
and management.

THE LARGE CAP GROWTH FUND seeks to provide investors with capital appreciation
over the long term by investing primarily in equity securities of U.S. companies
with large market capitalization that have the potential for significant growth
in light of a company's fundamental characteristics and history or current
prospects for earnings growth and market price appreciation.

THE SMALL/MID CAP VALUE FUND seeks to provide investors with capital
appreciation over the long term by investing primarily in equity securities of
U.S. companies with small to medium market capitalization that are undervalued
in light of a company's fundamental characteristics such as book value to price,
earnings, dividends, and management.

THE SMALL/MID CAP GROWTH FUND seeks to provide investors with capital
appreciation over the long term by investing primarily in equity securities of
U.S. companies with small to medium market capitalization that have the
potential for significant growth in light of the company's fundamental
characteristics and history or current prospects for earnings growth and market
price appreciation.

THE INTERNATIONAL EQUITY FUND seeks to provide investors with capital
appreciation over the long term by investing primarily in equity securities of
foreign companies.

THE REAL ESTATE SECURITIES FUND seeks to provide investors with capital
appreciation over the long term and current income by investing primarily in
U.S. and foreign companies deriving their revenues from the ownership,
construction, financing, management, or sale of commercial, industrial or
residential real estate.

THE TAX-EXEMPT FIXED INCOME FUND seeks to provide investors with current income
exempt from federal income tax by primarily investing in intermediate to
long-term, investment grade municipal securities.

THE CORE PLUS FIXED INCOME FUND seeks to provide investors with current income
directly by investing in a wide variety of high-quality, fixed income securities
or indirectly by investing in shares of mutual funds that invest in such
securities.

THE MULTI-ADVISOR APPROACH

The Funds each possess their own distinct investment objectives, strategies, and
risks. The Funds' investment advisor, AssetMark Investment Services, Inc. (the
"Advisor") is responsible for constructing and maintaining the asset allocation
and portfolio strategy for each Fund. Each of the Funds offer investment
opportunities in a wide range of market segments and asset classes within those
market segments. Your potential risk and return varies with the degree to which
you invest in a particular market segment and/or asset class represented by
these Funds.

The Advisor believes that it is possible to enhance shareholder value by using
one or more sub-advisory firms to manage the assets of each Fund, rather than
simply the portfolio managers from one company. Except with respect to the Core
Plus Fixed Income Fund, the Advisor intends to select one or more sub-advisors
to manage in distinct segments of the market or asset class for each Fund based
upon the Advisor's evaluation of their expertise and performance in managing the
appropriate asset classes. The investment styles and disciplines of the
sub-advisors to each Fund are expected to complement one another. Accordingly,
in constructing and overseeing the entire Fund portfolio, the Advisor may give
instructions to a sub-advisor for a specific portion of a Fund's assets, which
may be more restrictive than those of the portfolio as a whole. The Advisor
reviews and rebalances the Funds as it deems necessary to reflect its current
analysis of the appropriate mix of assets among and within asset classes. The
Advisor monitors the sub-advisors for adherence to each Fund's specific
investment objective and strategy with the goal of predictable and reliable
investment results.

RISK/RETURN INFORMATION COMMON TO THE FUNDS

The principal risks of investing in each Fund are described later in this
Prospectus. These are the main risks common to all of the Funds.

INVESTING IN MUTUAL FUNDS

Mutual funds pool shareholders' money and, using professional investment
managers, invest it in securities. Owning securities, including mutual funds,
has risks that may cause you to lose money on your investment in one or more of
the Funds. As all investment securities are subject to inherent market risks and
fluctuations in value due to earnings, economic and political conditions and
other factors, no Fund can give any assurance that its investment objective will
be achieved.

MARKET RISK

The net asset value of each Fund will fluctuate based on changes in the value of
its underlying portfolio of securities. Securities markets in general, as well
as individual securities, are subject to volatile fluctuations in price. Market
prices of securities in which each Fund invests may be adversely affected by
many factors, such as an issuer's having experienced losses or by the lack of
earnings or by the issuer's failure to meet the market's expectations with
respect to new products or services, or even by factors wholly unrelated to the
value or condition of the issuer. The value of the securities held by each Fund
is also subject to the risk that a specific segment of a securities market does
not perform as well as the overall market. Under any of these circumstances, the
value of each Fund's shares and total return will fluctuate, and your investment
may be worth less than your original cost when you redeem your shares. The
estimated level of volatility for each Fund is set forth in the Fund summaries
that follow.

NON-DIVERSIFICATION

Each Fund is classified as "non-diversified" under federal securities laws which
means that one-half of each Fund's assets may be invested in two or more stocks
while the other half is spread out among various investments not exceeding 5% of
a Fund's total assets. As a result of their non-diversified status, a Fund's
shares may be more susceptible to adverse changes in the value of the securities
of a particular company than would be the shares of a diversified mutual fund.

SECURITIES SELECTION RISK

Judgments made by the Advisor and sub-advisors as to securities markets and the
economy in general may not anticipate actual market movements or the impact of
economic conditions on company performance. In fact, no matter how good a job
the Advisor and the sub-advisors do, you could lose money on your investment in
a Fund, just as you could with other investments.

THE LARGE CAP VALUE FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE
The investment objective of the Large Cap Value Fund is capital appreciation
over the long term. This objective is fundamental, which means that it cannot be
changed without shareholder approval. The investment strategies described below
are non-fundamental, which means that they may be changed by action of the
Fund's Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES
Under normal market conditions, the Large Cap Value Fund invests at least 80% of
its total assets in equity securities of U.S. companies with market
capitalization of more than $1 billion at the time of purchase, including common
stocks, preferred stocks, and convertible securities. The Large Cap Value Fund
may also invest up to 10% of its assets in American Depositary Receipts ("ADRs")
and securities of foreign companies. ADRs are equity securities trading on U.S.
exchanges that are generally issued by banks or trust companies to evidence
ownership of foreign equity securities.

Under the general supervision of the Advisor, each sub-advisor selects stocks
according to a "value style" investment strategy. The determination of whether a
security is a "value stock" is based upon a comparison of a security's current
market price to those of other companies in its industry or sector in light of
the company's fundamentals such as:

o price/earnings ratio;

o dividend yield;

o book value;

o assets to liabilities ratio;

o management ownership; and

o average daily trading volume.

In assessing value, the sub-advisor(s) may also consider earnings and dividend
growth prospects, product positioning or market share, and risk and volatility
of an industry. Based upon the foregoing, from time to time, the Large Cap Value
Fund may have a significant portion of its assets in one or more market sectors,
such as financial services and basic industries.

PRINCIPAL RISKS OF INVESTMENT
Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Large Cap Value Fund are listed
below and could adversely affect the net asset value, total return and the value
of the Large Cap Value Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the Large Cap Value Fund is likely to decline in value. The Large
Cap Value Fund's focus on large capitalization stocks and value-style of
investing subjects it to the risk that its performance may be lower than
that of other types of equity funds that focus on other types of stocks
(such as small or mid-cap) or that have a broader investment style (such as
growth or general market). The Large Cap Value Fund is also subject to the
risk that large capitalization and/or value stocks may under-perform other
segments of the equity market or the equity market as a whole.

o STOCK SELECTION RISKS: The portfolio securities held by the Large Cap Value
Fund may decline in value or not increase in value when the stock market in
general is rising and may fail to meet the Large Cap Value Fund's
investment objective.

o FOREIGN SECURITIES RISKS: The Large Cap Value Fund may invest up to 10% of
its assets in ADRs and foreign securities. ADRs and foreign securities may
involve more risks than those associated with U.S. investments. Additional
risks include currency fluctuations, political and economic instability,
differences in financial reporting standards and less stringent regulation
of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more
of the Large Cap Value Fund's assets may be invested in the common stock of
any single issuer, which may make the value of the Large Cap Value Fund's
shares more susceptible to certain risks than shares of a diversified
mutual fund. In addition, to the extent that the Large Cap Value Fund
focuses on one or more sectors, such as financial services and basic
industries, it may be subject to the risks affecting that sector more than
would a more broadly diversified fund. The financial services sector may
be adversely affected by changes in economic conditions and interest rates
as well as legislative initiatives both of which may impact the
profitability of companies in that sector. Companies in the basic
industries sector are subject to general risks posed by economic slow
down or recession as well as market risk to the extent that investors
prefer securities of issuers in other sectors perceived to offer greater
opportunities for faster growth.

PERFORMANCE OF THE LARGE CAP VALUE FUND

Because the Large Cap Value Fund has recently commenced operations, there is no
performance information available at this time.

FEES AND EXPENSES OF THE LARGE CAP VALUE FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Large Cap Value Fund. These fees and expenses are described in the table
below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.90%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 0.55%
Total Annual Fund Operating Expenses 1.70%
-----
Less Expense Reimbursement -0.30%
Net Annual Fund Operating Expenses(2) 1.40%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor
dated __________, 2001. The Agreement provides that the annual management fee
shall be 0.90% from which the Advisor pays the sub-advisor(s). The Advisor has
also entered into an Expense Waiver and Reimbursement Contract dated ________,
2001, with the Fund under which the Advisor has agreed to waive its fees and
absorb expenses to the extent that the total annual fund operating expenses
exceed 1.40%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

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

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

1 YEAR 3 YEARS
------ -------
$143 $506

THE LARGE CAP GROWTH FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Large Cap Growth Fund is capital appreciation
over the long term. This objective is fundamental, which means that it cannot be
changed without shareholder approval. The investment strategies described below
are non-fundamental, which means that they may be changed by action of the
Fund's Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the Large Cap Growth Fund invests at least 80%
of its total assets in equity securities of U.S. companies with market
capitalization of more than $1 billion at the time of purchase, including common
stocks, preferred stocks, and convertible securities. The Large Cap Growth Fund
may also invest up to 10% of its assets in ADRs and securities of foreign
companies. ADRs are equity securities trading on U.S. exchanges that are
generally issued by banks or trust companies to evidence ownership of foreign
securities.

Under the general supervision of the Advisor, each sub-advisor selects stocks it
believes have potential for significant growth, in comparison to other company's
in its industry or the market, in light of certain characteristics of a company
such as:

o price/earnings ratio;

o leadership positions in their markets;

o strong balance sheet;

o experienced management;

o a consistent history of earnings stability and growth; and

o proprietary products, processes and/or services.

Generally, growth companies are financially sound, leaders in their respective
industries, and have a historical record of consistent growth and stability of
earnings and dividends, including positive earning surprises, but these are not
limiting factors in the selection of securities for the Large Cap Growth Fund.
Based upon the foregoing, from time to time, the Large Cap Growth Fund may have
a significant portion of its assets in one or more market sectors, such as
technology and health care.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Large Cap Growth Fund are listed
below and could adversely affect the net asset value, total return and the value
of the Large Cap Growth Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the Large Cap Growth Fund is likely to decline in value. The Large
Cap Growth Fund's focus on large capitalization stocks and growth-style of
investing subjects it to the risk that is performance may be lower than
that of other equity funds that focus on other types of stocks (such as
small or mid-cap) or that have a broader investment style (such as value or
general market). The Large Cap Growth Fund is subject to the risk that
large capitalization and/or growth stocks may under-perform other segments
of the equity market or the equity market as a whole.

o STOCK SELECTION RISKS: The portfolio securities held by the Large Cap
Growth Fund may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Large Cap Growth
Fund's investment objective.

o FOREIGN SECURITIES RISKS: The Large Cap Growth Fund may invest up to 10% of
its assets in ADRs and foreign securities. ADRs and foreign securities may
involve more risks than those associated with U.S. investments. Additional
risks include currency fluctuations, political and economic instability,
differences in financial reporting standards and less stringent regulation
of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more
of the Large Cap Growth Fund's assets may be invested in the common stock
of any single issuer, which may make the value of the Large Cap Growth
Fund's shares more susceptible to certain risks than shares of a
diversified mutual fund. In addition, to the extent that the Large Cap
Growth Fund focuses on one or more sectors, such as technology and health
care, it may be subject to the risks affecting that sector more than
would a more broadly diversified fund. Companies in the technology
sector are subject to risks such as those relating to potential rapid
obsolescence of technology, failure of the market to accept new
technologies, and difficulty in obtaining financing for necessary
research and development or expansion. Companies in the health care
sector are subject to many of the same risks as those facing companies
in the technology sector, in addition to those risks related to
legislative and regulatory action which may affect profitability of
companies in that sector.

PERFORMANCE OF THE LARGE CAP GROWTH FUND

Because the Large Cap Growth Fund has recently commenced operations, there is no
performance information available at this time.

FEES AND EXPENSES OF THE LARGE CAP GROWTH FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Large Cap Growth Fund. These fees and expenses are described in the table
below and are further explained in the example that follows.

FEE TABLE

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall
be 0.90% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
1.40%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

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

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

1 YEAR 3 YEARS
------ -------
$143 $506

THE SMALL/MID CAP VALUE FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Small/Mid Cap Value Fund is capital appreciation
over the long term. This objective is fundamental, which means that it cannot be
changed without shareholder approval. The investment strategies described below
are non-fundamental, which means that they be changed by action of the Fund's
Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the Small/Mid Cap Value Fund invests at least
80% of its total assets in equity securities of U.S. companies with market
capitalization of less than $5 billion at the time of purchase, including common
stocks, preferred stocks, and convertible securities. The Small/Mid Cap Value
Fund may also invest up to 10% of its assets in ADRs and securities of foreign
companies. ADRs are equity securities trading on U.S. exchanges that are
generally issued by banks or trust companies to evidence ownership of foreign
equity securities.

o price/earnings ratio;

o dividend yield;

o book value;

o assets to liabilities ratio;

o management ownership; and

o average daily trading volume.

In assessing value, the sub-advisor(s) may also consider earnings and dividend
growth prospects, product positioning or market share, and risk and volatility
of an industry. Based upon the foregoing, from time to time, the Small/Mid Cap
Value Fund may have a significant portion of its assets in one or more market
sectors, such as financial services and basic industries.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Small/Mid Cap Value Fund are
listed below and could adversely affect the net asset value, total return and
the value of the Small/Mid Cap Value Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the Small/Mid Cap Value Fund is likely to decline in value. The
Small/Mid Cap Value Fund's focus on small to medium capitalization stocks
and value-style of investing subjects it to the risk that its performance
may be lower than that of other types of equity funds that focus on other
types of stocks (such as large cap) or that have a broader investment style
(such as growth or general market).

o STOCK SELECTION RISKS: The portfolio securities held by the Small/Mid Cap
Value Fund may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Small/Mid Cap Value
Fund's investment objective.

o SMALL AND MEDIUM CAPITALIZATION RISKS: The Small/Mid Cap Value Fund invests
in the equity securities of companies with small and medium size
capitalization. Companies with small and medium size capitalization often
have narrower markets, fewer products or services to offer and more limited
managerial and financial resources than do larger, more established
companies. As a result, their performance can be more volatile and they
face a greater risk of business failure, which could increase the
volatility and risk of loss of the Small/Mid Cap Value Fund's assets.

o LIQUIDITY RISK: The securities of many of the companies in which the
Small/Mid Cap Value Fund invests may have less "float" (the number of
shares that normally trade) and less interest in the market and therefore
are subject to liquidity risk. Liquidity risk is the risk that certain
securities may be difficult or impossible to sell at the time and price
that the Fund would like to sell. If that happens, the Fund may have to
lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund performance.

o FOREIGN SECURITIES RISKS: The Small/Mid Cap Value Fund may invest up to 10%
of its assets in ADRs and foreign securities. ADRs and foreign securities
may involve more risks than those associated with U.S. investments.
Additional risks include currency fluctuations, political and economic
instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company,
more of the Small/Mid Cap Value Fund's assets may be invested in the
common stock of any single issuer, which may make the value of the
Small/Mid Cap Value Fund's shares more susceptible to certain risks
than shares of a diversified mutual fund. In addition, to the extent that
the Small/Mid Cap Value Fund focuses on one or more sectors, such as
financial services and basic industries, it may be subject to the risks
affecting that sector more than would a more broadly diversified fund.
The financial services sector may be adversely affected by changes in
economic conditions and interest rates as well as legislative initiatives
both of which may impact the profitability of companies in that sector.
Companies in the basic industries sector are subject to general risks
posed by economic slow down or recession as well as market risk to the
extent that investors prefer securities of issuers in other sectors
perceived to offer greater opportunities for faster growth.

PERFORMANCE OF THE SMALL/MID CAP VALUE FUND

Because the Small/Mid Cap Value Fund has recently commenced operations, there is
no performance information available at this time.

FEES AND EXPENSES OF THE SMALL/MID CAP VALUE FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Small/Mid Cap Value Fund. These fees and expenses are described in the table
below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 1.00%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 0.73%
Total Annual Fund Operating Expenses 1.98%
-----
Less Expense Reimbursement -0.48%
Net Annual Fund Operating Expenses(2) 1.50%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall be
1.00% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
1.50%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Small/Mid Cap Value Fund with the cost of investing in other mutual funds.

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

1 YEAR 3 YEARS
------ -------
$153 $575

THE SMALL/MID CAP GROWTH FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Small/Mid Cap Growth Fund is capital
appreciation over the long term. This objective is fundamental, which means that
it cannot be changed without shareholder approval. The investment strategies
described below are non-fundamental, which means that they may be changed by
action of the Fund's Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the Small/Mid Cap Growth Fund invests at least
80% of its total assets in equity securities of U.S. companies with market
capitalization of less than $5 billion at the time of purchase, including common
stocks, preferred stocks, and convertible securities. The Small/Mid Cap Growth
Fund may also invest up to 10% of its assets in ADRs and securities of foreign
companies. ADRs are equity securities trading on U.S. exchanges that are
generally issued by banks or trust companies to evidence ownership of foreign
securities.

o price/earnings ratio;

o leadership positions in their markets;

o strong balance sheet;

o experienced management;

o a consistent history of earnings stability and growth; and

o proprietary products, processes and/or services.

Generally, growth companies are financially sound, leaders or potential leaders
in their respective industries, and have a historical record of consistent
growth and stability of earnings and dividends, including positive earning
surprises, but these are not limiting factors in the selection of securities for
the Small/Mid Cap Growth Fund. Based upon the foregoing, from time to time, the
Small/Mid Cap Growth Fund may have a significant portion of its assets in one or
more market sectors, such as technology and health care.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Small/Mid Cap Growth Fund are
listed below and could adversely affect the net asset value, total return and
the value of the Small/Mid Cap Growth Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the Small/Mid Cap Growth Fund is likely to decline in value. The
Small/Mid Cap Growth Fund's focus on small to medium capitalization stocks
and growth-style of investing subjects it to the risk that its performance
may be lower than that of other types of equity funds that focus on other
types of stocks (such as large cap) or that have a broader investment style
(such as value or general market).

o STOCK SELECTION RISKS: The portfolio securities held by the Small/Mid Cap
Growth Fund may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the Small/Mid Cap Growth
Fund's investment objective.

o SMALL AND MEDIUM CAPITALIZATION RISKS: The Small/Mid Cap Growth Fund
invests in the equity securities of companies with small and medium size
capitalization. Companies with small and medium size capitalization often
have narrower markets, fewer products or services to offer and more limited
managerial and financial resources than do larger, more established
companies. As a result, their performance can be more volatile and they
face a greater risk of business failure, which could increase the
volatility and risk of loss of the Small/Mid Cap Growth Fund's assets.

o LIQUIDITY RISK: The securities of many of the companies in which the
Small/Mid Cap Growth Fund invests may have less "float" (the number of
shares that normally trade) and less interest in the market and therefore
are subject to liquidity risk. Liquidity risk is the risk that certain
securities may be difficult or impossible to sell at the time and price
that the Fund would like to sell. If that happens, the Fund may have to
lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund performance.

o FOREIGN SECURITIES RISKS: The Small/Mid Cap Growth Fund may invest up to
10% of its assets in ADRs and foreign securities. ADRs and foreign
securities may involve more risks than those associated with U.S.
investments. Additional risks include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company,
more of the Small/Mid Cap Growth Fund's assets may be invested in the
common stock of any single issuer, which may make the value of the
Small/Mid Cap Growth Fund's shares more susceptible to certain risks
than shares of a diversified mutual fund. In addition, to the extent that
the Small/Mid Cap Growth Fund focuses on one or more sectors, such
as technology and health care, it may be subject to the risks affecting
that sector more than would a more broadly diversified fund. Companies
in the technology sector are subject to risks such as those relating
to potential rapid obsolescence of technology, failure of the market
to accept new technologies, and difficulty in obtaining financing for
necessary research and development or expansion. Companies in the
health care sector are subject to many of the same risks as those
facing companies in the technology sector, in addition to those
risks related to legislative and regulatory action which may affect
profitability of companies in that sector.

PERFORMANCE OF THE SMALL/MID CAP GROWTH FUND

Because the Small/Mid Cap Growth Fund has recently commenced operations, there
is no performance information available at this time.

FEES AND EXPENSES OF THE SMALL/MID CAP GROWTH FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Small/Mid Cap Growth Fund. These fees and expenses are described in the
table below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 1.00%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 0.75%
Total Annual Fund Operating Expenses 2.00%
-----
Less Expense Reimbursement -0.50%
Net Annual Fund Operating Expenses(2) 1.50%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall be
1.00% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
1.50%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Small/Mid Cap Growth Fund with the cost of investing in other mutual funds.

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

1 YEAR 3 YEARS
------ -------
$153 $578

THE INTERNATIONAL EQUITY FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the International Equity Fund is to provide capital
appreciation over the long term. This objective is fundamental, which means that
it cannot be changed without shareholder approval. The investment strategies
described below are non-fundamental, which means that they may be changed by
action of the Fund's Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the International Equity Fund invests at least
80% of its total assets in the equity securities, including common stocks,
preferred stocks, and convertible securities, of companies headquartered outside
of the United States, or that derive more than 50% of their gross revenues
outside of the United States, or have more than 50% of their assets outside of
the United States. Generally, the International Equity Fund's assets will be
invested in securities of companies located in developed countries. The
International Equity Fund, however, may also invest in companies located in
countries with emerging markets or economies. The International Equity Fund may
also invest in ADRs or Global Depositary Receipts ("GDRs"). ADRs are equity
securities trading on U.S. exchanges that are generally issued by banks or trust
companies to evidence ownership of foreign equity securities. GDRs have the same
qualities as ADRs except that they may be traded in several international
trading markets.

By investing in various foreign stocks, the International Equity Fund attempts
to achieve broad diversification and take advantage of differences between
economic trends and the performance of securities markets in different
countries, regions and geographic areas. The International Equity Fund may, from
time to time, have a significant portion of its assets in the securities of
companies in one or more countries or regions, such as Europe and Asia. In that
case, the International Equity Fund would be subject to the economic and market
developments in such countries or regions. The Fund will attempt to focus on
companies that represent the best values relative to their growth prospects by
examining a company's sustainable growth rate in relation to that of its local
market. In addition, the Fund may use index or currency futures for hedging
and/or asset allocation purposes. The International Equity Fund will not
routinely hedge against currency risk.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the International Equity Fund are
listed below and could adversely affect the net asset value, total return and
the value of the International Equity Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the International Equity Fund is likely to decline in value.

o STOCK SELECTION RISKS: The portfolio securities held by the International
Equity Fund may decline in value or not increase in value when the stock
market in general is rising and may fail to meet the International Equity
Fund's investment objective.

o FOREIGN SECURITIES RISKS: Foreign securities may involve more risks
than those associated with U.S. investments. The economies of foreign
countries may differ from the U.S. economy in such respects as growth
of gross domestic product, rate of inflation, currency depreciation,
capital reinvestment, resource self-sufficiency, and balance of payments
position. Funds may be required to obtain prior governmental approval
for foreign investments in some countries under certain circumstances.
Governments may require approval to invest in certain issuers or
industries deemed sensitive to national interests, and the extent of
foreign investment in certain debt securities and domestic companies
may be subject to limitation. Additional risks include currency
fluctuations, political and economic instability, differences in
financial reporting standards and less stringent regulation of securities
markets.

o EMERGING MARKET RISKS: In addition to developed markets, the International
Equity Fund may invest up to 20% of its assets in emerging markets.
Emerging markets countries are those as defined by the World Bank
International Financial Corporation or the Morgan Stanley Capital
International (MSCI) index. In addition to the risks of foreign securities
in general, countries in emerging markets can have relatively unstable
governments, social and legal systems that do not protect shareholders,
economies based on only a few industries, and securities markets that trade
a small number of issues.

o SMALL AND MEDIUM CAPITALIZATION RISKS: The International Equity Fund may
invest in the equity securities of companies with small and medium size
capitalization. Companies with small and medium size capitalization often
have narrower markets, fewer products or services to offer and more limited
managerial and financial resources than do larger, more established
companies. As a result, their performance can be more volatile and they
face a greater risk of business failure, which could increase the
volatility and risk of loss of the International Equity Fund's assets.

o LIQUIDITY RISK: The securities of many of the companies in which the
International Equity Fund invests may have less "float" (the number of
shares that normally trade) and less interest in the market and therefore
are subject to liquidity risk. Liquidity risk is the risk that certain
securities may be difficult or impossible to sell at the time and price
that the investment advisor would like to sell. If that happens, the Fund
may have to lower the price, sell other securities instead, or forego an
investment opportunity, any of which could have a negative effect on fund
performance.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more of
the International Equity Fund's assets may be invested in the common stock
of any single issuer, which may make the value of the International Equity
Fund's shares more susceptible to certain risks than shares of a
diversified mutual fund. To the extent that the International Equity Fund
has a substantial amount of its assets in one or a few countries or
regions, it will also be more heavily subject to the risks related to those
countries or regions.

o INDEX FUTURES CONTRACTS RISKS: Although stock index futures contracts
may be useful in hedging against adverse changes in the value of the
International Equity Fund's investment securities, they are derivative
instruments that are subject to a number of risks. During certain market
conditions, purchases and sales of stock index futures contracts may
not completely offset a decline or rise in the value of the Fund's
investments. In the futures markets, it may not always be possible to
execute a buy or sell order at the desired price, or to close out an open
position due to market conditions, limits on open positions and/or
daily price fluctuations. Changes in the market value of the
International Equity Fund's investment securities may differ
substantially from the changes when it established the hedged
positions, and unanticipated price movements in a futures contract may
result in a loss substantially greater than the Fund's initial investment
in such a contract.

PERFORMANCE OF THE INTERNATIONAL EQUITY FUND

Because the International Equity Fund has recently commenced operations, there
is no performance information available at this time.

FEES AND EXPENSES OF THE INTERNATIONAL EQUITY FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the International Equity Fund. These fees and expenses are described in the
table below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.90%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 0.63%
Total Annual Fund Operating Expenses 1.78%
-----
Less Expense Reimbursement -0.28%
Net Annual Fund Operating Expenses(2) 1.50%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall
be 0.90% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
1.50%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

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

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

1 YEAR 3 YEARS
------ -------
$143 $503

THE REAL ESTATE SECURITIES FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Real Estate Securities Fund is capital
appreciation over the long term. Current income is a secondary objective. This
objective is fundamental, which means that it cannot be changed without
shareholder approval. The investment strategies described below are
non-fundamental, which means that they may be changed by action of the Fund's
Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the Real Estate Securities Fund invests at least
80% of its total assets in U.S. real estate equity securities, including shares
and units of beneficial interest of real estate investment trusts ("REITs"),
preferred shares, and convertible debt securities of real estate companies. Real
estate equity securities include those securities issued by companies
principally engaged in the real estate business such as ownership, construction,
financing, management or sale of commercial, industrial or residential real
estate.

The types of REITs in which the Real Estate Securities Fund may invest include
equity, mortgage and hybrid REITs. An equity REIT invests primarily in the fee
ownership or leasehold ownership of land and buildings and derives its income
primarily from rental income. An equity REIT may also realize capital gains (or
losses) by selling real estate properties in its portfolio that have appreciated
(or depreciated) in value. Equity REITs generally exercise some degree of
control over the operational aspect of their real estate investments, lease
terms and property maintenance and repair. A mortgage REIT invests primarily in
mortgages in real estate, which may secure construction, development or
long-term loans, and derives its income primarily from interest payments on
credit it has extended. Hybrid REITs combine the characteristics of equity and
mortgage REITs, generally by holding both ownership interests and mortgage
interests in real estate. It is anticipated, though not required, that under
normal circumstances a majority of the Real Estate Securities Fund's investments
in REITs will consist of securities issued by equity REITs. The Real Estate
Securities Fund will not invest more than 10% of its assets in mortgage REITs
under normal circumstances.

The Real Estate Securities Fund selects shares of REITs and other real estate
securities by analyzing property sectors and individual companies within the
selected property sectors.The Real Estate Securities Fund evaluates potential
investments based on a variety of factors including:

o overall investment strategy;
o strength of company management;
o fundamental analysis of financial statements; and
o yields.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Real Estate Securities Fund are
listed below and could adversely affect the net asset value, total return and
the value of the Real Estate Securities Fund and your investment.

o STOCK MARKET RISKS: Equity mutual funds are subject to stock market risks
and significant fluctuations in value. If the stock market declines in
value, the Real Estate Securities Fund is likely to decline in value.

o STOCK SELECTION RISKS: The portfolio securities held by the Real Estate
Securities Fund may decline in value or not increase in value when the
stock market in general is rising and may fail to meet the Real Estate
Securities Fund's investment objective.

o REAL ESTATE INDUSTRY CONCENTRATION RISK: The concentration of the
Real Estate Securities Fund's investments in the real estate industry
will subject the Real Estate Securities Fund to risks in addition
to those that apply to the general equity markets. Economic, legislative
or regulatory developments may occur which significantly affect the
entire real estate industry and thus may subject the Real Estate
Securities Fund to greater market fluctuations than a fund that does
not concentrate in a particular industry. In addition, the Real Estate
Securities Fund will generally be subject to risks associated with direct
ownership of real estate, such as decreases in real estate value or
fluctuations in rental income caused by a variety of factors, including
increases in interest rates, increases in property taxes and other
operating costs, casualty or condemnation losses, possible environmental
liabilities and changes in supply and demand for properties. Because of
the Real Estate Securities Fund's strategy to concentrate in the real
estate industry, it may not perform as well as other mutual funds that do
not concentrate in only one industry.

o REAL ESTATE INVESTMENT TRUST RISKS: Some of the risks of equity and
mortgage REITs are that they depend on management skills and are not
diversified. As a result, REITs are subject to the risk of obtaining
financing for either single or multiple projects. An equity REIT holds
equity positions in real estate and provides its shareholders with income
from the leasing of its properties and capital gains from any sale of
properties. Accordingly, equity REITs may be affected by any changes
in the value of the underlying property owned by the trusts. A mortgage
REIT specializes in lending money to developers of properties and pass any
interest income earned to its shareholders. Accordingly, mortgage
REITs may be affected by the quality of any credit extended. The Real
Estate Securities Fund tries to minimize these risks by selecting REITs
diversified by sector (i.e., shopping malls, apartment building
complexes, health care facilities) and geographic location.

o SMALL AND MEDIUM CAPITALIZATION RISKS: The Real Estate Securities Fund may
invest in the equity securities of companies with small and medium size
capitalization. Companies with small and medium size capitalization often
have narrower markets, fewer products or services to offer and more limited
managerial and financial resources than do larger, more established
companies. As a result, their performance can be more volatile and they
face a greater risk of business failure, which could increase the
volatility and the risk of loss of the Real Estate Securities Fund's
assets.

o LIQUIDITY RISK: The securities of many of the REITs in which the Real
Estate Securities Fund invests may have less "float" (the number of shares
that normally trade) and therefore are subject to liquidity risk. Liquidity
risk is the risk that certain securities may be difficult or impossible to
sell at the time and price that an investment advisor would like to sell.
If that happens, the Fund may have to lower the price, sell other
securities instead, or forego an investment opportunity, any of which could
have a negative effect on fund management or performance.

o FOREIGN SECURITIES RISKS: The Real Estate Securities Fund may invest in
ADRs and foreign securities. ADRs and foreign securities may involve more
risks than those associated with U.S. investments. Additional risks include
currency fluctuations, political and economic instability, differences in
financial reporting standards and less stringent regulation of securities
markets.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more of
the Real Estate Securities Fund's assets may be concentrated in the common
stock of any single issuer, which may make the value of the Real Estate
Securities Fund's shares more susceptible to certain risks than shares of a
diversified mutual fund.

PERFORMANCE OF THE REAL ESTATE SECURITIES FUND

Because the Real Estate Securities Fund has recently commenced operations, there
is no performance information available at this time.

FEES AND EXPENSES OF THE REAL ESTATE SECURITIES FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Real Estate Securities Fund. These fees and expenses are described in the
table below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.90%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 0.86%
Total Annual Fund Operating Expenses 2.01%
-----
Less Expense Reimbursement -0.61%
Net Annual Fund Operating Expenses(2) 1.40%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall be
0.90% from which it pays the sub-advisor(s). The Advisor has also entered into
an Expense Waiver and Reimbursement Contract dated ________, 2001, with the Fund
under which the Advisor has agreed to waive its fees and absorb expenses to the
extent that the total annual fund operating expenses exceed 1.40%. The Advisor
may recapture any fees or expenses it has waived or reimbursed within a
three-year period. The Expense Waiver and Reimbursement Contract is in effect
for one year and expires ________, 2002.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Real
Estate Securities Fund with the cost of investing in other mutual funds.

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

1 YEAR 3 YEARS
------ -------
$143 $571

THE TAX-EXEMPT FIXED INCOME FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Tax-Exempt Fixed Income Fund is to provide
current income exempt from federal income tax. This objective is fundamental,
which means that it cannot be changed without shareholder approval. The
investment strategies described below are non-fundamental, which means that they
may be changed by action of the Fund's Trustees, without shareholder approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal circumstances, the Tax-Exempt Fixed Income Fund invests at least
80% of its assets in intermediate to long-term, investment grade municipal
securities the interest on which is exempt from federal income tax and not
subject to the alternative minimum tax ("AMT"). All tax-exempt interest income
earned by the Tax-Exempt Fixed Income Fund will remain tax-free when it is
distributed to you.

Municipal securities are debt obligations issued by or on behalf of the cities,
districts, states, territories and other possessions of the United States that
pay income exempt from regular federal income tax. Municipal securities are
generally issued to finance public works, such as airports, highways, bridges,
hospitals, schools, housing, streets, mass transportation projects and water and
sewer works. Municipal Securities are also issued to repay outstanding
obligations, raise fund for general operating expenses, and make loans for other
public institutions and facilities. Examples of Municipal Securities include:

o Tax and revenue anticipation notes issued to finance working capital needs
in anticipation of receiving taxes or other revenues

o Bond anticipation notes that are intended to be refinanced through a later
issuance of longer term bonds

o Municipal commercial paper and other short-term notes

o Variable rate demand notes

o Construction loan notes insured by the the Federal Housing Administration
and financed by the Federal or Government National Mortgage Associations

o Participation interests in any of above including municipal securities from
financial institutions such as commercial and investment banks, savings
associations and insurance companies to the extent that they pay tax-exempt
interest.

o Municipal bonds and leases

The municipal securities in which the Tax Exempt Fixed Income Fund invests, will
generally be investment grade at the time of purchase, or in other words, rated
within the four highest rating categories by a nationally recognized statistical
rating organization (NRSRO) or determined to be of comparable quality to the
above rating categories by the Fund's Advisor or sub-advisor if the security is
unrated.

Some of the securities in the Tax-Exempt Fixed Income Fund's portfolio may carry
credit enhancements such as insurance, guarantees, or letters of credit. While
these enhancements may provide additional protection for the timely payment of
interest or principal of a municipal security, they do not protect against
decreases in market value of the security, or in the share price of the Fund.

Although the Tax-Exempt Fixed Income Fund is permitted to make taxable,
temporary investments, the Advisor currently does not intend to generate income
subject to federal regular income tax. There are no applicable rating
requirements to temporary investments with the exception of temporary municipal
securities. These securities are subject to the same rating requirements as all
other municipal securities in which the Tax-Exempt Fixed Income Fund invests.

PRINCIPAL RISKS OF INVESTMENT

Investing in municipal securities has inherent risks that could cause you to
lose money. The principal risks of investing in the Tax-Exempt Fixed Income Fund
are listed below and could adversely affect the net asset value, total return
and the value of the Tax-Exempt Fixed Income Fund and your investment.

o INTEREST RATE RISKS: The Tax-Exempt Fixed Income Fund's investments will
fluctuate with changes in interest rates. Generally, when interest rates
decline, the market value of fixed income securities rise and when interest
rates increase, the market value of fixed-income securities declines. If
the value of the Tax-Exempt Fixed Income Fund's investments go down, you
may lose money.

o BOND SELECTION RISKS: The portfolio securities held by the Tax-Exempt Fixed
Income Fund may decline in value or not increase in value when the market
in general is rising and may fail to meet the Tax-Exempt Fixed Income
Fund's investment objective.

o MUNICIPAL SECURITIES RISKS: The ability of the Tax-Exempt Fixed Income Fund
to achieve its investment objective depends on the ability of the issuers
of the municipal securities and demand features, or the credit enhancers of
either to continue to meet their obligations for the payment of interest
and principal when due. Any adverse economic conditions or developments
affecting the states or municipalities could negatively impact the Fund's
portfolio.

o TAX RISKS: The Tax-Exempt Fixed Income Fund may be more adversely
impacted by changes in tax rates and policies than other mutual funds.
Because interest income on municipal obligations is normally not subject
to regular federal income taxation, the attractiveness of municipal
obligations in relation to other investment alternatives is affected by
changes in federal income tax rates applicable to, or the continuing
tax-exempt status of, such interest income. Therefore, any proposed or
actual changes in such rates or exempt status can significantly affect
the demand for and supply, liquidity and marketability of municipal
obligations, which could in turn affect the Tax-Exempt Fixed Income
Fund's ability to acquire and dispose of municipal obligations at desirable
yield and price levels.

o CREDIT RISK: Individual issues of fixed-income securities may be subject to
the credit risk of the issuer. This means that the underlying municipality
or issue may experience financial problems causing it to be unable to meet
its payment obligations. This would reduce the income available for
distribution to shareholders as well as the value of the Tax-Exempt Fixed
Income Fund's shares.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more of
the Tax-Exempt Fixed Income Fund's assets may be concentrated in the common
stock of any single issuer, which may make the value of the Tax-Exempt
Fixed Income Fund's shares more susceptible to certain risks than shares of
a diversified mutual fund.

PERFORMANCE OF THE TAX-EXEMPT FIXED INCOME FUND

Because the Tax-Exempt Fixed Income Fund has recently commenced operations,
there is no performance information available at this time.

FEES AND EXPENSES OF THE TAX-EXEMPT FIXED INCOME FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Tax-Exempt Fixed Income Fund. These fees and expenses are described in the
table below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.65%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 2.15%
Total Annual Fund Operating Expenses 3.05%
-----
Less Expense Reimbursement -1.80%
Net Annual Fund Operating Expenses(2) 1.25%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall
be 0.65% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
1.25%. The Advisor may recapture any fees or expenses it has waived or
reimbursed within a three-year period. The Expense Waiver and Reimbursement
Contract is in effect for one year and expires ________, 2002.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Tax-Exempt Fixed Income Fund with the cost of investing in other mutual funds.

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

1 YEAR 3 YEARS
------ -------
$127 $773

THE CORE PLUS FIXED INCOME FUND
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

The investment objective of the Core Plus Fixed Income Fund is to provide
current income consistent with lower volatility of principal. This objective is
fundamental, which means that it cannot be changed without shareholder approval.
The investment strategies described below are non-fundamental, which means that
they may be changed by action of the Fund's Trustees, without shareholder
approval.

PRINCIPAL INVESTMENT STRATEGIES

Under normal market conditions, the Core Plus Fixed Income Fund invests at least
80% of its total assets in shares of other investment companies that invest
primarily in fixed income securities that are rated investment grade or better
(i.e., rated in one of the four highest rating categories by a NRSRO or
determined to be of comparable quality by the Advisor or sub-advisor(s)). As an
operational policy, the Fund will likely invest substantially all of its assets
in fixed-income funds, but may invest a small portion of its assets in
individual bonds. The Core Plus Fixed Income Fund will look for mutual funds
that hold the following types of fixed-income securities:

o U.S. and non-U.S. corporate bonds and debentures

o Obligations issued by the U.S. Government, its agencies or
instrumentalities

o Mortgage-backed securities

o Asset-backed securities

o Receipts involving U.S. Treasury obligations

o zero coupon, pay-in-kind or deferred payment securities

o Municipal securities of issuers located in o securities issued on a
when-issued and a all fifty states, the District of Columbia, or
delayed-delivery basis, including TBA other U.S. territories and
possessions, mortgage-backed securities consisting of municipal bonds,
municipal notes, tax-exempt commercial paper and municipal lease
obligations

o high yield debt securities (junk bonds)

The Core Plus Fixed Income Fund will try to monitor the underlying portfolio
securities of the funds in which it invests to try to have no more than 20% of
its total assets invested in fixed income securities of foreign corporations and
foreign governments, and no more than 20% of its total assets in high yield debt
securities or junk bonds. Because of delays in information available to the Fund
as its advisors, it may not be possible to assure that this desired level is
maintained at all times. The Fund (or the underlying funds) may also invest in
futures, options and similar derivatives for hedging purposes.

PRINCIPAL RISKS OF INVESTMENT

Investing in common stocks or bonds has inherent risks that could cause you to
lose money. The principal risks of investing in the Core Plus Fixed Income Fund
are listed below and could adversely affect the net asset value, total return
and the value of the Core Plus Fixed Income Fund and your investment.

o FUND OF FUNDS STRUCTURE AND EXPENSE: The Core Plus Fixed Income Fund
is currently a "fund of funds." The term "fund of funds" is typically
used to describe an investment company, such as the Core Plus Fixed
Income Fund, that pursues its investment objective by investing in other
investment companies. Federal law prohibits the Core Plus Fixed Income
Fund from acquiring shares of another mutual fund if, immediately
after such acquisition, the Core Plus Fixed Income Fund and/or its
affiliated persons would hold more than 3% of such mutual fund's total
outstanding stock. This prohibition may prevent the Core Plus Fixed
Income Fund from allocating its investment in the manner its investment
advisor considers optimal. As a means to achieve its investment
objective, the Core Plus Fixed Income Fund may in the future pursue an
investment strategy of direct investment in lieu of indirect investments
through other investment companies.

Your cost of investing the Core Plus Fixed Income Fund will generally be
higher than the cost of investing directly in shares of the mutual funds in
which it invests. By investing in the Core Plus Fixed Income Fund, you will
indirectly bear fees and expenses charged by the underlying mutual funds in
which the Core Plus Fixed Income Fund invests in addition to the Core Plus
Fixed Income Fund's direct fees and expenses. Furthermore, the use of a
fund of funds structure could affect the timing, amount, and character of
distributions to you and therefore may increase the amount of taxes payable
by you. Funds of funds are best suited for long-term investors.

o INTEREST RATE RISKS: The Core Plus Fixed Income Fund invests indirectly in
fixed-income securities held by the mutual funds in which it holds shares.
Fixed-income securities will fluctuate with changes in interest rates.
Generally, when interest rates decline, the market value of fixed income
securities rise and when interest rates increase, the market value of
fixed-income securities declines. If the value of the fixed-income
securities in which the Core Plus Fixed Income Fund is indirectly invested
goes down, you may lose money.

o BOND SELECTION RISKS: The portfolio securities held by the Core Plus Fixed
Income Fund may decline in value or not increase in value when the market
in general is rising and may fail to meet the Core Plus Fixed Income Fund's
investment objective.

o CREDIT RISKS: Individual issues of fixed-income securities may be subject
to the credit risk of the issuer. This means that the underlying company
may experience unanticipated financial problems causing it to be unable to
meet its payment obligations. Bonds receiving the lowest investment grade
rating may have speculative characteristics, and, compared to higher-grade
securities, may have a weakened capacity to make principal and interest
payments due to changes in economic conditions or other circumstances. The
Core Plus Fixed Income Fund may have up to 20% of its assets invested in
junk bonds.

o FOREIGN SECURITIES RISKS: As much as 20% of the Core Plus Fixed Income
Fund's assets may be invested in ADRs and foreign securities either
directly or via the underlying mutual funds in which it invests. ADRs and
foreign securities may involve more risks than those associated with U.S.
investments. Additional risks include currency fluctuations, political and
economic instability, differences in financial reporting standards and less
stringent regulation of securities markets.

o MORTGAGE- AND ASSET-BACKED SECURITIES RISKS: Mortgage-backed and
asset-backed securities are subject to prepayment risk, which is the risk
that the borrower will prepay some or all of the principal owed to the
issuer. If that happens, the underlying mutual fund holding such security
may have to replace it by investing the proceeds in a less attractive
security. This may reduce such fund's share price and its income
distributions.

o GOVERNMENT OBLIGATIONS RISKS: To the extent that the Core Plus Fixed
Income Fund is invested in securities issued or guaranteed by the U.S.
government, its agencies and/or instrumentalities via the underlying mutual
funds in which it invests, no assurance can be given that the U.S.
government will provide financial support to U.S. government-sponsored
agencies or instrumentalities where it is not obligated to do so by law.

o DERIVATIVES RISKS: The Core Plus Fixed Income Fund may utilize derivatives
for hedging purposes. Derivatives contain certain special risks including
the imperfect correlation between the value of the derivative instrument
and the value of the underlying asset.

o NON-DIVERSIFICATION RISKS: As a non-diversified investment company, more of
the Core Plus Fixed Income Fund's assets may be concentrated in the shares
of any single investment company, which may make the value of the Core Plus
Fixed Income Fund's shares more susceptible to certain risks than shares of
a diversified mutual fund.

PERFORMANCE OF THE CORE PLUS FIXED INCOME FUND

Because the Core Plus Fixed Income Fund has recently commenced operations, there
is no performance information available at this time.

FEES AND EXPENSES OF THE CORE PLUS FIXED INCOME FUND

As an investor, you pay certain fees and expenses if you buy and hold shares of
the Core Plus Fixed Income Fund. These fees and expenses are described in the
table below and are further explained in the example that follows.

FEE TABLE

ANNUAL OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)
Management Fees 0.65%
Distribution (Rule 12b-1) Fees 0.25%
Other Expenses(1) 1.05%
Total Annual Fund Operating Expenses 1.95%
-----
Less Expense Reimbursement -0.70%
Net Annual Fund Operating Expenses(2) 1.25%
=====

(1) These expenses, which include custodian, transfer agency, shareholder
servicing and other customary Fund expenses, are based on estimated amounts for
the Fund's current fiscal year. You will indirectly bear your proportionate
share of any fees and expenses charged by the underlying mutual funds in which
the Fund invests. The actual expenses for the Fund are expected to vary with
changes in the allocation of the Fund's assets among various mutual funds. These
expenses are not included in the table above or the example below.
(2) The Fund has an Investment Advisory Agreement with the Advisor dated
__________, 2001. The Agreement provides that the annual management fee shall
be 0.65% from which the Advisor pays the sub-advisor(s). The Advisor has also
entered into an Expense Waiver and Reimbursement Contract dated ________, 2001,
with the Fund under which the Advisor has agreed to waive its fees and absorb
expenses to the extent that the total annual fund operating expenses exceed
___%. The Advisor may recapture any fees or expenses it has waived or reimbursed
within a three-year period. The Expense Waiver and Reimbursement Contract is in
effect for one year and expires ________, 2002.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Core
Plus Fixed Income Fund with the cost of investing in other mutual funds.

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

1 YEAR 3 YEARS
------ -------
$127 $544

TEMPORARY INVESTMENTS

Each Fund may from time to time have a portion of its assets invested in cash or
similar short-term, high-quality investment grade securities while waiting to
invest monies from purchases of Fund shares, or received on the sale of other
portfolio securities, into investments that are consistent with such Fund's
investment objective. While each Fund is permitted to invest any amount in such
temporary investments as a temporary defensive position during adverse market,
economic, political or other conditions to protect the value of its assets or
maintain liquidity, it is anticipated that the Funds will be fully invested in
securities consistent with each Fund's investment objective during such adverse
conditions. Temporary investments may include investment grade securities rated
in the highest four categories by S&P, Moody's, Fitch Inc. or another NRSRO.
Under normal market conditions, each Fund may hold cash or similar short-term,
high-quality investment grade securities such as:

o commercial paper

o certificates of deposit, demand and time deposits and banker's acceptance

o U.S. Government securities (i.e., U.S. Treasury obligations)

o repurchase agreements

The Funds may not achieve their respective investment objectives to the extent
that they invest in cash or engage in a temporary, defensive strategy.

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISOR

AssetMark Investment Services, Inc. (the "Advisor"), 2300 Contra Costa
Boulevard, Suite 425, Pleasant Hill, California, 94523-3967, serves as the
investment advisor to each of the Funds. The Advisor is an SEC-registered
investment advisor. The Advisor provides investment consulting and
administrative services to financial intermediaries and currently administers in
excess of $1.5 billion in assets, including mutual funds and privately managed
accounts.

The Advisor is ultimately responsible for the investment performance of each of
the Funds because it allocates each Fund's (except the Core Plus Fixed Income
Fund's) assets to one or more sub-advisors and recommends hiring or changing
sub-advisors to the Board of Trustees. The Advisor directly selects the mutual
funds in which the Core Plus Fixed Income Fund will invest. The Advisor is
entitled to an annual fee from each Fund for its services according to the
following table:

Advisory Fee (as a
Fund: percentage of average daily
net assets):
---------------------------------- -----------------------------
Large Cap Value Fund 0.90%
Large Cap Growth Fund 0.90%
Small/Mid Cap Value Fund 1.00%
Small/Mid Cap Growth Fund 1.00%
International Equity Fund 0.90%
Real Estate Securities Fund 0.90%
Tax-Exempt Fixed Income Fund 0.65%
Core Plus Fixed Income Fund 0.65%

The Advisor pays the sub-advisors out of the investment advisory fees it
receives. The Advisor has also entered into a Consulting Agreement with BARRA
RogersCasey ("BRC"), an institutional investment consulting firm in Darien,
Connecticut, to provide research to assist the Advisor in allocating fund assets
among sub-advisors and in making recommendations to the Board of Trustees about
hiring and changing sub-advisors as well as selecting mutual funds for the Core
Plus Fixed Income Fund. The Advisor is responsible for paying BRC's consulting
fees. Finally, the Advisor has entered into an Expense Waiver and Reimbursement
Contract in which it has agreed to keep each of the Fund's expenses to a certain
minimum (as described in the respective Fee Tables of each Fund). Under the
Expense Waiver and Reimbursement Contract, the Advisor may recapture waived or
reimbursed expenses for a three-year period under specified conditions. This
Contract is in effect for one year and expires on _____________, 2002.

Each sub-advisor makes investment decisions for the assets it manages. The
Advisor, with the research assistance of BRC, oversees the sub-advisors for
compliance with each of the Fund's investment policies and guidelines, and
monitors each sub-advisor's adherence to its investment style. The Board of
Trustees supervises the Advisor and the sub-advisors; establishes policies that
they must follow in their management activities; and oversees the hiring and
termination of sub-advisors recommended by the Advisor. The Trust has applied
for an exemptive order (the "Order") from the U.S. Securities and Exchange
Commission ("SEC") that would permit the Advisor, subject to certain conditions,
to retain new sub-advisors without shareholder approval of the contracts with
those sub-advisors. Within 90 days of retaining a new sub-advisor, shareholders
of any affected Fund will receive information similar to what would have been
provided in a proxy statement, except for fees to be paid to the Advisor. Once
granted, the Order would relieve the Funds from a requirement to disclose fees
paid to sub-advisors (except any sub-advisors affiliated with the Advisor) in
the prospectus and other documents.

SUB-ADVISORS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND:

LARGE CAP GROWTH FUND:

SMALL/MID CAP VALUE FUND:

SMALL/MID CAP GROWTH FUND:

INTERNATIONAL EQUITY FUND:

REAL ESTATE SECURITIES FUND:

TAX-EXEMPT FIXED INCOME FUND:

CORE PLUS FIXED INCOME FUND:

VALUATION OF FUND SHARES

Shares of each Fund are sold at net asset value per share (NAV), which is
determined by each Fund as of the close of regular trading (generally 4:00 p.m.
Eastern time) on each day that the New York Stock Exchange (NYSE) is open for
unrestricted business. Purchase and redemption requests are priced at the next
NAV calculated after receipt in good order and acceptance of a purchase or
redemption request. The NAV is determined by dividing the value of a Fund's
securities, cash and other assets, minus all expenses and liabilities, by the
number of shares outstanding (assets-liabilities/ # of shares = NAV). The NAV
takes into account the expenses and fees of each Fund, including management,
administration and shareholder servicing fees, which are accrued daily.

Each Fund's securities are valued each day at the last quoted sales price on the
securities' principal exchange. If market quotations are not readily available,
securities will be valued at their fair market value as determined in good faith
in accordance with procedures approved by the Board of Trustees. Each Portfolio
may use independent pricing services to assist in calculating the NAV of such
Fund's shares.

TRADING IN FOREIGN SECURITIES

Trading in foreign securities may be completed at times when the Exchange is
closed. In computing the NAV of each Fund, the Fund will value foreign
securities at the latest closing price on the exchange on which they are traded
immediately prior to the closing of the Exchange. Certain foreign currency
exchange rates may also be determined at the latest rate prior to the closing of
the Exchange. Prices of foreign securities quoted in foreign currencies are
translated into U.S. dollars at current rates. Occasionally, events that affect
these values and exchange rates may occur between the times at which they are
determined and the closing of the Exchange. If such events materially affect the
value of a Fund's securities, these securities may be valued at their fair value
as determined in good faith by the Trust's Board of Trustees.

PURCHASING FUND SHARES

HOW TO PURCHASE FUND SHARES

Financial institutions and intermediaries on behalf of their clients may
purchase shares on any day that the NYSE is open for business by placing orders
with the Funds' Transfer Agent (or their authorized agent). Institutions and
intermediaries that use certain proprietary systems of the Advisor may place
orders electronically through those systems. Cash investments must be
transmitted or delivered in federal funds to the Funds' wire agent by the close
of business on the day after the order is placed. Each of the Funds reserve the
right to refuse any purchase requests, particularly those that would not be in
the best interests of the Funds or their shareholders and could adversely affect
the Fund or its operations. This includes those from any individual or group
who, in a Fund's view, is likely to engage in or has a history of excessive
trading (usually defined as more than four transactions out of the Fund within a
calendar year).

Certain other intermediaries, including certain broker-dealers and shareholder
organizations, are authorized to accept purchase, redemption, and exchange
requests for Fund shares. These requests are normally executed at the NAV next
determined after the intermediary receives the request. These authorized
intermediaries are responsible for transmitting requests and delivering funds on
a timely basis.

MINIMUM PURCHASES

The Funds have no investment minimums, however, the financial institutions and
intermediaries that sell the Funds' shares may have established minimum values
for the accounts that they handle.

SELLING (REDEEMING) FUND SHARES

HOW TO SELL YOUR FUND SHARES

Shareholders may sell (redeem) their Fund shares through their financial
institutions or intermediaries on any business day by following the procedures
established when they opened their account or accounts. The sale price of each
share will be the next NAV determined after a Fund (or authorized intermediary)
receives a request to sell. Normally, each of the Funds will pay for redeemed
shares on the next business day after receiving a request, but it could take as
long as seven days.

REDEMPTION-IN-KIND

Each of the Funds generally pay sale (redemption) proceeds in cash. However,
under unusual conditions that make the payment of cash unwise (and for the
protection of a Fund's remaining shareholders) a Fund might pay all or part of a
shareholder's redemption proceeds in liquid securities with a market value equal
to the redemption price (redemption in kind). Although, it is highly unlikely
that shares would ever be redeemed in kind, a shareholder would probably have to
pay brokerage costs to sell the securities distributed, as well as taxes on any
capital gains from the sale as with any redemption.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

Each of the Funds may suspend a shareholder's right to sell shares if the NYSE
restricts trading, the SEC declares an emergency or for other reasons as
permitted by law.

EXCHANGE PRIVILEGE

Shareholders of record, such as financial institutions and intermediaries, may
exchange shares of any Fund for shares of any other Fund on any business day by
contacting the Funds' transfer agent directly. This exchange privilege may be
changed or canceled by a Fund at any time upon 60 days' notice. Exchanges are
generally made only between identically registered accounts unless a shareholder
sends written instructions with a signature guarantee requesting otherwise.
Exercising the exchange privilege consists of two transactions: a sale of shares
in one Fund and the purchase of shares in another so that there may be tax
consequences of the exchange. A shareholder could realize short- or long-term
capital gains or losses. An exchange request received prior to market close will
be made at that day's closing NAVs.

DISTRIBUTION OF FUND SHARES

DISTRIBUTOR
AssetMark Capital Corporation, an affiliate of the Advisor, 2300 Contra Costa
Boulevard, Suite 425, Pleasant Hill, California, 94523-3967, is the distributor
for the shares of each of the Funds. Quasar Distributors, LLC, 615 East Michigan
Street, Milwaukee, Wisconsin, 53202 serves as sub-distributor to each of the
Funds. Both AssetMark Capital Corporation and Quasar Distributors, LLC are
registered broker-dealers and members of the National Association of Securities
Dealers, Inc. Shares of each Fund are offered on a continuous basis.

DISTRIBUTION PLAN
The Trust, on behalf of the Funds, has adopted a Distribution Plan pursuant to
Rule 12b-1 of the Investment Company Act of 1940 to provide certain distribution
activities and services for the Funds and their shareholders. Each Fund may pay
0.25% per year of its average daily net assets for such distribution and service
activities. As these fees are paid out of a Fund's 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.

COUNSEL, INDEPENDENT AUDITORS AND SERVICE PROVIDERS

LEGAL COUNSEL AND INDEPENDENT AUDITORS
Stradley Ronon Stevens & Young, LLP, 1810 Gateway Drive, Suite 115, San Mateo,
California, 94404, pass upon legal matters in connection with the issuance of
shares of common stock of each Fund. PricewaterhouseCoopers LLP, 333 Market
Street, San Francisco, California, 94105, has been selected as independent
auditors for the Funds.

CUSTODIAN, TRANSFER AGENT, FUND ADMINISTRATOR, FUND ACCOUNTANT AND SHAREHOLDER
SERVICES
Firstar Bank, N.A. serves as Custodian for each Fund's cash and securities. The
Custodian does not assist in, and is not responsible for, investment decisions
involving assets of the Funds. Firstar Mutual Fund Services, LLC, serves as each
Fund's Administrator, Transfer Agent and Fund Accountant. In addition, certain
other organizations that provide bookkeeping and other shareholder services may
be entitled to receive fees from a Fund at an annual rate of up to 0.10% of the
average daily NAV of the shares covered by their respective agreements for
shareholder support. Such support may include, among other things, assisting
investors in processing their purchase, exchange, or redemption requests, or
processing dividend and distribution payments.

DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS
Each Fund pays its shareholders dividends from the Fund's net investment income
and distributes any net capital gains the Fund has realized. All Funds, other
than the Tax-Exempt Fixed Income Fund and the Core Plus Fixed Income Fund,
declare and pay dividends at least annually. The Tax-Exempt Fixed Income Fund
and the Core Plus Fixed Income Fund declare and pay dividends at least
quarterly. Capital gains, if any, are distributed at least once a year.

All of your dividends and capital gains distributions with respect to a
particular Fund will be reinvested in additional shares of that Fund unless you
provide us with a written request to receive your payments in cash. Dividends
paid in cash or additional share are treated the same for tax purposes.

TAXES
Each Fund intends to qualify and elect to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In any taxable year in which a Fund so qualifies and distributes at
least 90% of its investment company taxable income (which includes, among other
items, dividends, interest, and the excess of realized net short-term capital
gain over realized net long-term capital loss), the Fund will generally be
relieved of Federal income tax on its investment company taxable income and net
capital gain (the excess of realized net long-term capital gain over realized
net short-term capital loss) distributed to shareholders. Amounts not
distributed on a timely basis in accordance with a calendar distribution
requirement are also subject to a nondeductible 4% excise tax. To prevent
application of the excise tax, each Fund intends to make distributions in
accordance with the calendar year distribution requirement. A distribution will
be treated as though paid on December 31 of the calendar year if it is declared
by a Fund in October, November, or December of that year to shareholders of
record on a date in such a month and paid by a Fund during January of the
following calendar year. Such distributions will be taxable to shareholders in
the calendar year the distributions are declared, rather than the calendar year
in which the distributions are received.

Distributions from investment company taxable income are taxable to shareholders
as ordinary income. Distributions of net capital gains designated by a Fund as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time a shareholder may have held shares of the Fund. The tax treatment
of distributions treated as ordinary income or capital gains will be the same
whether the shareholder reinvests the distributions in additional shares or
elects to receive such distributions in cash. Shareholders will be notified each
year of the amounts and nature of dividends and distributions, including the
amount (if any) for that year that has been designated as capital gains
distributions. Investors should consult their tax advisers for specific
information on the tax consequences of particular types of distributions.

An exchange is not a tax-free transaction. An exchange of shares pursuant to a
Fund's exchange privilege is treated the same as an ordinary sale and purchase
for Federal income tax purposes and you will realize a capital gain or loss.

By law, the Fund must withhold 31% of your taxable distributions and redemption
proceeds if you do not provide your correct certified social security or
taxpayer identification number and certify that you are not subject to backup
withholding, or if the IRS instructs the Fund to do so.

ADDITIONAL TAX INFORMATION - TAX-EXEMPT FIXED INCOME FUND
If you are a shareholder of the Tax-Exempt Fixed Income Fund, you are not
required to pay federal regular income tax on any dividends you receive from the
Fund that represent net interest on tax-exempt municipal bonds. However,
shareholders of the Tax-Exempt Fixed Income Fund may be required to pay federal
alternative minimum taxes on dividends representing net interest earned on some
municipal bonds.

The alternative minimum tax (AMT) applies when it exceeds the regular tax for
the taxable year. AMT is equal to the regular taxable income of the taxpayer
increased by certain "tax preference" items not included in regular taxable
income and reduced by only a portion of the deductions allowed in the
calculation of the regular tax. The Tax Reform Act of 1986 treats interest on
certain private activity bonds as a tax preference item for both individuals and
corporations. Unlike traditional governmental purpose municipal bonds that
finance roads, schools, libraries, prisons and other public facilities, private
activity bonds provide benefits to private parties.

The Tax-Exempt Fixed Income Fund is permitted to purchase all types of municipal
bonds, including private activity bonds. As a result, if the Fund purchases any
private activity bonds, a portion of the Tax-Exempt Fixed Income Fund 's
dividends may be treated as a tax preference item.

Dividends of the Tax-Exempt Fixed Income Fund representing net income earned on
some temporary investments and any net realized short-term gains are taxed as
ordinary income. Dividends are treated the same for tax purposes whether they
are received in cash or as additional shares. Distributions paid by the Fund
from net realized long-term capital gains are taxable as long-term capital
gains. The capital gain holding period and the applicable tax rate is determined
by the length of time that the Fund has held the security and not the length of
time that you have held shares in the Fund.

FINANCIAL HIGHLIGHTS

Because the Funds have recently commenced operations, there are no financial
highlights available at this time.

ASSETMARK FUNDS

LARGE CAP VALUE FUND
LARGE CAP GROWTH FUND
SMALL/MID CAP VALUE FUND
SMALL/MID CAP GROWTH FUND
INTERNATIONAL EQUITY FUND
REAL ESTATE SECURITIES FUND
TAX-EXEMPT FIXED INCOME FUND
CORE PLUS FIXED INCOME FUND

Investment Advisor ASSETMARK INVESTMENT SERVICES, INC.
2300 CONTRA COSTA BLVD., SUITE 425
PLEASANT HILL, CA 94523

Legal Counsel STRADLEY RONON STEVENS & YOUNG, LLP
1810 GATEWAY DRIVE, SUITE 115
SAN MATEO, CA 94404

Independent Auditors PRICEWATERHOUSECOOPERS LLP
333 MARKET STREET
SAN FRANCISCO, CA 94105

Transfer Agent, Fund Accountant, FIRSTAR MUTUAL FUND SERVICES, LLC
and Fund Administrator 615 EAST MICHIGAN STREET
MILWAUKEE, WI 53202

Custodian FIRSTAR BANK, N.A.
425 WALNUT STREET
CINCINNATI, OH 45202

Distributor ASSETMARK CAPITAL CORPORATION
2300 CONTRA COSTA BLVD., SUITE 425
PLEASANT HILL, CA 94523

You may obtain the following and other information on the Funds free of charge:

Statements of Additional Information (SAI) dated , 2001
------------------------
The SAI of the Funds provides more details about each Fund's policies and
management. The Funds' SAI is incorporated by reference into this Prospectus.

Annual and Semi-Annual Report

The annual and semi-annual reports for each Fund provide the most recent
financial reports and portfolio listings. The annual report contains a
discussion of the market conditions and investment strategies that affected each
Fund's performance during the last fiscal year.

To receive any of these documents or the prospectus of AssetMark Funds or to
request additional information about AssetMark Funds, please contact us.

By Telephone:
(800) _________

By Mail:
ASSETMARK FUNDS.

C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701

MILWAUKEE, WI 53201-0701

SEC:

You may review and obtain copies of AssetMark Funds information (including the
SAI) at the SEC Public Reference Room in Washington, D.C. Please call
1-202-942-8090 for information relating to the operation of the Public Reference
Room. Reports and other information about each Fund are available on the EDGAR
Database on the SEC's Internet site at HTTP://WWW.SEC.GOV. Copies of the
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: [email protected], or by writing the
Public Reference Section, Securities and Exchange Commission, Washington, D.C.
20549-0102.

1940 Act File No. 811-_____

SUBJECT TO COMPLETION, DATED JANUARY 9, 2001

The information in this Statement of Additional Information is not complete and
may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission becomes effective.
This Statement of Additional Information is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.

ASSETMARK FUNDS

STATEMENT OF ADDITIONAL INFORMATION

___________ __, 2001

Large Cap Value Fund
Large Cap Growth Fund
Small/Mid Cap Value Fund
Small/Mid Cap Growth Fund
International Equity Fund
Real Estate Securities Fund
Tax-Exempt Fixed Income Fund
Core Plus Fixed Income Fund

This Statement of Additional Information ("SAI") provides general information
about each of the series (individually, a "Fund" and collectively, the "Funds")
of AssetMark Funds. This SAI is not a prospectus and should be read in
conjunction with the Funds' current Prospectus dated ________ __, 2001, as
supplemented and amended from time to time, which is incorporated hereto by
reference. To obtain a copy of the Prospectus, please write or call the Funds at
the address or telephone number below.

ASSETMARK FUNDS
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701
PHONE: (800) ___-____

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT ASSETMARK FUNDS.....................................1
DESCRIPTION OF THE FUNDS......................................................1
INVESTMENT RESTRICTIONS.......................................................2
INVESTMENT POLICIES AND ASSOCIATED RISKS......................................3
TEMPORARY INVESTMENTS.........................................................24
MANAGEMENT OF THE FUNDS.......................................................26
INVESTMENT ADVISOR AND SUB-ADVISORS...........................................27
DISTRIBUTION AND SHAREHOLDER SERVICING........................................29
SERVICE PROVIDERS.............................................................31
CODE OF ETHICS................................................................32
VALUATION OF SHARES...........................................................32
PURCHASE AND REDEMPTION OF SHARES.............................................33
PORTFOLIO TRANSACTIONS........................................................34
TAXES.........................................................................35
PERFORMANCE INFORMATION.......................................................36
INDEPENDENT AUDITORS..........................................................38
FINANCIAL STATEMENTS..........................................................38
APPENDIX......................................................................39

GENERAL INFORMATION ABOUT ASSETMARK FUNDS
--------------------------------------------------------------------------------

AssetMark Funds (the "Trust") is an open-end management investment company, or
mutual fund, organized as a Delaware business trust on January 2, 2001. The
Declaration of Trust permits the Trust to offer separate series (the "Funds") of
units of beneficial interest and separate classes. The Funds are the first of
several series that may be formed by the Trust and each currently consists of a
single class of shares of beneficial interest. The Funds are each
non-diversified series and have their own investment objectives and policies.
The Trust may start more series and offer shares of a new fund under the Trust
at any time.

The Trust is authorized to issue an unlimited number of interests (or shares) at
no par value. Shares of each series have equal voting rights and liquidation
rights, and are voted in the aggregate and not by the series except in matters
where a separate vote is required by the Investment Company Act of 1940 (the
"1940 Act") or when the matter affects only the interest of a particular Fund.
When matters are submitted to shareholders for a vote, each shareholder is
entitled to one vote for each full share owned and fractional votes for
fractional shares owned. The Trust does not normally hold annual meetings of
shareholders. The Trustees shall promptly call and give notice of a meeting of
shareholders for the purpose of voting upon removal of any Trustee when
requested to do so in writing by shareholders holding 10% or more of the Trust's
outstanding shares. The Trust will comply with the provisions of Section 16(c)
of the 1940 Act in order to facilitate communications among shareholders.

Each share of the Funds represent equal proportionate interest in the assets and
liabilities belonging to that Fund with each other share of that Fund and is
entitled to such dividends and distributions out of the income belonging to the
Fund as are declared by the Trustees. The shares do not have cumulative voting
rights or any preemptive or conversion rights, and the Trustees have the
authority from time to time to divide or combine the shares of any Fund into a
greater or lesser number of shares of that Fund so long as the proportionate
beneficial interests in the assets belonging to that Fund and the rights of
shares of any other Fund are in no way affected. In case of any liquidation of a
Fund, the holders of shares of the Fund being liquidated will be entitled to
receive as a class a distribution out of the assets, net of the liabilities,
belonging to that Fund. Expenses attributable to any Fund are borne by that
Fund. Any general expenses of the Trust not readily identifiable as belonging to
a particular Fund are allocated by or under the direction of the Trustees in
such manner as the Trustees allocate such expenses on the basis of relative net
assets or number of shareholders. No shareholder is liable to further calls or
to assessment by the Trust without his or her express consent.

The assets of the Fund received for the issue or sale of its shares, and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, shall constitute the underlying assets of the Fund. In the event of
the dissolution or liquidation of the Fund, the holders of shares of the Fund
are entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.

DESCRIPTION OF THE FUNDS
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THE LARGE CAP VALUE FUND, LARGE CAP GROWTH FUND, SMALL/MID CAP VALUE FUND,
SMALL/MID CAP GROWTH FUND and the INTERNATIONAL EQUITY FUND are each
non-diversified funds whose fundamental investment objective is capital
appreciation over the long term. The REAL ESTATE SECURITIES FUND is a
non-diversified fund whose fundamental investment objective is capital
appreciation over the long term, with current income as a secondary objective.
THE TAX-EXEMPT FIXED INCOME FUND is a non-diversified fund with a fundamental
investment objective of current income exempt from federal income tax. THE CORE
PLUS FIXED INCOME FUND is a non-diversified fund with a fundamental investment
objective of income generation. These fundamental objectives may not be changed
without shareholder approval. Unless otherwise noted, all of the other
investment policies and strategies described in the prospectus or hereafter are
non-fundamental, which means that they may be changed solely by action of the
Board of Trustees, without shareholder approval.

INVESTMENT RESTRICTIONS
--------------------------------------------------------------------------------

Unless otherwise noted, each of the Funds has adopted and is subject to
substantially identical fundamental investment restrictions. These investment
restrictions of the Funds may be changed only with the approval of the holders
of a majority of a Fund's outstanding voting securities. As used in this SAI, "a
majority of a Fund's outstanding voting securities" means the lesser of (1) 67%
of the shares of common stock/beneficial interest of the Fund represented at a
meeting at which more than 50% of the outstanding shares are present, or (2)
more than 50% of the outstanding shares of common stock/beneficial interest of
the Fund.

As a general rule, the percentage limitations referred to in these restrictions,
apply only at the time of investment. A later increase or decrease in a
percentage that results from a change in value in the portfolio securities held
by a Fund will not be considered a violation of such limitation, and a Fund will
not necessarily have to sell a portfolio security or adjust its holdings in
order to comply.

1. No Fund will act as underwriter for securities of other issuers except
as they may be deemed an underwriter in selling a portfolio security.

2. No Fund will make loans if, as a result, more than 33 1/3% of any Fund's
total assets would be loaned to other parties, except that each Fund may
(i) purchase or hold debt instruments in accordance with its investment
objective and policies; (ii) enter into repurchase agreements; (iii) lend
its securities (iv) loan money to other Funds within the Trust in
accordance with the terms of any applicable rule or regulation or exemptive
order pursuant to the 1940 Act.

3. With the exception of the Real Estate Securities Fund, no Fund will
purchase any securities that would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to the securities of other
investment companies or investments in obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities. The Real
Estate Securities Fund will generally invest as much as 80% of its total
assets in the equity securities of real estate companies and/or debt
securities issued or guaranteed by real estate companies.

4. No Fund will borrow money in an amount exceeding 33 1/3% of the value of
each Fund's total assets, provided that (i) investment strategies that
either obligate a Fund to purchase securities or require a Fund to
segregate assets or maintain a margin account to facilitate the settlement
of securities transactions are not considered borrowings for the purposes
of this limitation and (ii) each Fund may borrow money from other Funds
within the Trust in accordance with the terms of any applicable rule or
regulation or exemptive order pursuant to the 1940 Act.

5. No Fund will issue senior securities to the Funds' presently authorized
shares of beneficial interest, except that this restriction shall not be
deemed to prohibit the Funds from (i) making any permitted borrowings,
loans, mortgages, or pledges, (ii) entering into options, futures
contracts, forward contracts, repurchase transactions or reverse repurchase
transactions, or (iii) making short sales of securities to the extent
permitted by the 1940 Act and any rule or order thereunder, or SEC staff
interpretation thereof.

6. No Fund will purchase or sell real estate, physical commodities, or
commodities contracts, except that each Fund may purchase (i) marketable
securities issued by companies that own or invest in real estate, including
REITs, commodities, or commodities contracts; and (ii) commodities
contracts relating to financial instruments, such as financial futures
contracts and options on such contracts. Each Fund may temporarily hold and
sell real estate acquired through default, liquidation, or other
distributions of an interest in real estate as a result of such Fund's
ownership of real estate investment trusts, securities secured by real
estate or interests thereon or securities of companies engaged in the real
estate business.

INVESTMENT POLICIES AND ASSOCIATED RISKS
--------------------------------------------------------------------------------

The following paragraphs provide a more detailed description of each Fund's
investment policies and their associated risks identified in the Funds'
Prospectus. Unless otherwise noted, these policies pertain to all of the Funds
and are not fundamental and may be changed by the Board of Trustees of the Fund.
Each Fund is permitted to hold securities and engage in various strategies as
described hereafter, but none are obligated to do so, except as otherwise noted.

COMMON AND PREFERRED STOCK

Equity securities, such as common stocks, represent shares of ownership of a
corporation. Preferred stocks are equity securities that often pay dividends at
a specific rate and have a preference over common stocks in dividend payments
and liquidation of assets. Some preferred stocks may be convertible into common
stock. Convertible securities are securities (such as debt securities or
preferred stock) that may be converted into or exchanged for a specified amount
of common stock of the same or different issuer within a particular period of
time at a specified price or formula. Please see "Debt Securities" below.

DEBT SECURITIES

The Funds may invest in debt securities, including those convertible into common
stocks. Debt purchased by each Fund, except the Core Plus Fixed Income Fund,
will consist of obligations of medium-grade or higher, having at least adequate
capacity to pay interest and repay principal. Non-convertible debt obligations
will be rated BBB or higher by S&P, or Baa or higher by Moody's. Convertible
debt obligations will be rated B or higher by S&P or B or higher by Moody's.
Securities rated Baa by Moody's are considered by Moody's to be medium-grade
securities and have adequate capacity to pay principal and interest. Bonds in
the lowest investment grade category (BBB) have speculative characteristics,
with changes in the economy or other circumstances more likely to lead to a
weakened capacity of the bonds to make principal and interest payments than
would occur with bonds rated in higher categories. Securities rated B are
referred to as "high-risk" securities, generally lack characteristics of a
desirable investment, and are deemed speculative with respect to the issuer's
capacity to pay interest and repay principal over a long period of time. The
Core Plus Fixed Income Fund may invest in high yield debt securities or "junk
bonds" that are considered high risk. See "Appendix" to this Statement of
Additional Information for a description of debt security ratings.

DEBT SECURITIES RATINGS. The ratings of Standard & Poor's, Moody's and other
nationally recognized rating agencies represent their opinions as to the quality
of debt securities. It should be emphasized, however, that ratings are general
and are not absolute standards of quality, and debt securities with the same
maturity, interest rate and rating may have different yields while debt
securities of the same maturity and interest rate with different ratings may
have the same yield.

The payment of principal and interest on most debt securities purchased by a
Fund will depend upon the ability of the issuers to meet their obligations. An
issuer's obligations under its debt securities 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. The power or ability of an issuer to meet its obligations
for the payment of interest on, and principal of, its debt securities may be
materially adversely affected by litigation or other conditions.

Subsequent to its purchase by a Fund, a rated security may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund. The Advisor or respective sub-advisor will consider such an event in
determining whether the Fund involved should continue to hold the security. For
a more detailed description of ratings, see Appendix.

ELECTION TO INVEST FUND ASSETS PURSUANT TO MASTER/FEEDER FUND STRUCTURE

The Master/Feeder Fund Structure is an arrangement that allows several
investment companies with different shareholder-related features or distribution
channels, but having substantially the same investment objective, policies and
restrictions, to combine their investments by investing all of their assets in
the same portfolio instead of managing them separately.

In lieu of investing directly, the Funds are authorized to seek to achieve their
investment objective by converting to a Master/Feeder Fund Structure pursuant to
which the Funds would invest all of their investable assets in an investment
company having substantially the same investment objective and policies as the
Fund. Alternatively, one or more of the Funds could become Master funds in which
other funds, with either the same or different advisors might invest.

Conversion to a Master/Feeder Fund Structure may serve to attract other
collective investment vehicles with different shareholder servicing or
distribution arrangements and with shareholders that would not have invested in
the Funds. In this event, additional assets may allow for operating expenses to
be spread over a larger asset base. In addition, a Master/Feeder Fund Structure
may serve as an alternative for large, institutional investors in the Funds who
may prefer to offer separate, proprietary investment vehicles and who otherwise
might establish such vehicles outside of the Funds' current operational
structure. Conversion to a Master/Feeder Fund Structure may also allow the Funds
to stabilize their expenses and achieve certain operational efficiencies. No
assurance can be given, however, that the Master/Feeder Fund Structure will
result in the Funds stabilizing their expenses or achieving greater operational
efficiencies.

The Funds' methods of operation and shareholder services would not be materially
affected by their investment in other investment companies ("Master Portfolios")
having substantially the same investment objective and polices as the
corresponding Funds, except that the assets of the Funds may be managed as part
of a larger pool. If the Funds invested all of their assets in corresponding
Master Portfolios, they would hold only beneficial interests in the Master
Portfolios; the Master Portfolios would directly invest in individual securities
of other issuers. The Funds would otherwise continue their normal operation. The
Board of Trustees would retain the right to withdraw any Fund's investment from
its corresponding Master Portfolio at any time it determines that it would be in
the best interest of shareholders; such Fund would then resume investing
directly in individual securities of other issuers or invest in another Master
Portfolio.

There is no immediate intention to convert the Funds to a Master/Feeder Fund
structure. The Board of Trustees has authorized this non-fundamental investment
policy to facilitate such a conversion in the event that the Board of Trustees
determines that such a conversion is in the best interest of the Funds'
shareholders. If the Board of Trustees so determines, it will consider and
evaluate specific proposals prior to the implementation of the conversion to a
Master/Feeder Fund Structure. Further, the Funds' Prospectus and Statement of
Additional Information would be amended to reflect the implementation of the
Funds' conversion and their shareholders would be notified.

NON-DIVERSIFICATION OF INVESTMENTS

Each Fund is non-diversified under the 1940 Act. This means that under the 1940
Act, there is no restriction as to how much a Fund may invest in the securities
of any one issuer. However, to qualify for tax treatment as a regulated
investment company under the Internal Revenue Code ("Code"), the Funds intend to
comply, as of the end of each taxable quarter, with certain diversification
requirements imposed by the Code. Pursuant to these requirements, at the end of
each taxable quarter, each Fund, among other things, will not have investments
in the securities of any one issuer (other than U.S. Government securities or
securities of other regulated investment companies) of more than 25% of the
value of each Fund's total assets. In addition, each Fund, with respect to 50%
of its total assets, will not have investments in the securities of any issuer
equal to 5% of each Fund's total assets, and will not purchase more than 10% of
the outstanding voting securities of any one issuer. As non-diversified
investment companies, the Funds may be subject to greater risks than diversified
companies because of the larger impact of fluctuation in the values of
securities of fewer issues.

BORROWINGS

Each Fund may borrow funds to meet redemptions, for other emergency purposes or
to increase its portfolio holdings of securities. Such borrowings may be on a
secured or unsecured basis at fixed or variable rates of interest. The 1940 Act
requires a Fund to maintain continuous asset coverage of not less than 300% with
respect to all borrowings. This allows a Fund to borrow for such purposes an
amount (when taken together with any borrowings for temporary or emergency
purposes as described below) equal to as much as 50% of the value of its net
assets (not including such borrowings). If such asset coverage should decline to
less than 300% due to market fluctuations or other reasons, a Fund may be
required to dispose of some of its portfolio holdings within three days in order
to reduce the Fund's debt and restore the 300% asset coverage, even though it
may be disadvantageous from an investment standpoint to dispose of assets at
that time.

Conversely, if the income from the assets retained with borrowed funds is not
sufficient to cover the cost of borrowing, the net income of a Fund will be less
than if borrowing were not used, and, therefore, the amount available for
distribution to shareholders as dividends will be reduced. A Fund also may be
required to maintain minimum average balances in connection with such borrowing
or to pay a commitment or other fee to maintain a line of credit; either of
these requirements would increase the cost of borrowing over the stated interest
rate.

Borrowing by a Fund creates an opportunity for increased net income, but at the
same time, creates special risk considerations. For example, leveraging may
exaggerate the effect on net asset value of any increase or decrease in the
market value of a Fund's portfolio. To the extent the income derived from
securities purchased with borrowed funds exceeds the interest a Fund will have
to pay, the Fund's net income will be greater than if borrowing were not used.

SECURITIES LENDING

Each of the Funds may lend its portfolio securities to unaffiliated
broker/dealers and other institutional investors pursuant to agreements
requiring that the loans be secured by collateral equal in value to at least the
market value of the securities loaned in order to increase return on portfolio
securities. Collateral for such loans may include cash, securities of the U.S.
government, its agencies or instrumentalities, or an irrevocable letter of
credit issued by a bank which meets the investment standards stated below under
"Temporary Investments," or any combination thereof. There may be risks of delay
in receiving additional collateral or in recovering the securities loaned or
even a loss of rights in the collateral should the borrower of the securities
fail financially. However, loans will be made only to borrowers deemed to be of
good standing and when, the income to be earned from the loan justifies the
attendant risks.

When a Fund lends its securities, it continues to receive interest or dividends
on the securities loaned and may simultaneously earn interest on the investment
of the cash collateral which will be invested in readily marketable,
high-quality, short-term obligations. Although voting rights, or rights to
consent, attendant to securities on loan pass to the borrower, such loans may be
called at any time and will be called so that the securities may be voted by a
Fund if a material event affecting the investment is to occur.

Securities lending arrangements with broker/dealers require that the loans be
secured by collateral equal in value to at least the market value of the
securities loaned. During the term of such arrangements, a Fund will maintain
such value by the daily marking-to-market of the collateral.

RESTRICTED AND ILLIQUID SECURITIES

The Funds may invest up to 15% of their net assets in securities that are
illiquid at the time of purchase, which means that their may be legal or
contractual restrictions on their disposition, or that there are no readily
available market quotations for such a security. In either case, the Board of
Trustees, with the assistance of the Advisor, sub-advisors and/or pricing
services, will determine the value of such securities in good faith in
accordance with the provisions of the 1940 Act. Illiquid securities present the
risks that a Fund may have difficulty valuing these holdings and/or may be
unable to sell these holdings at the time or price desired. There are no
restrictions on each Fund's ability to invest in restricted securities (that is,
securities that are not registered pursuant to the Securities Act of 1933),
except to the extent such securities may be considered illiquid. Securities
issue pursuant to Rule 144A of the Securities Act of 1933 will be considered
liquid if determined to be so under procedures adopted by the Board of Trustees.

FOREIGN EQUITIES

Each Fund's investments in the securities of foreign issuers may include both
securities of foreign corporations and securities of foreign governments and
their political subdivisions. The International Equity Fund will invest
substantially all (and in any event, at least 80%) of the value of its total
assets in foreign securities and thus most of its portfolio will be subject to
these additional risks; as a result the net asset value of the International
Equity Fund may be more volatile, and the risks of loss greater, than for a
domestic fund.

Each Fund may invest in foreign securities directly, or through American
Depositary Receipts ("ADRs") or other forms of depositary receipts, such as
Global Depositary Receipts ("GDRs"). Depositary receipts are typically issued by
a U.S. or foreign bank or trust company and evidence ownership of underlying
securities issued by a foreign corporation. Investments in these types of
securities, as well as securities of issuers that have significant operations or
assets outside of the U.S., involve certain inherent risks generally associated
with investments in foreign securities, including the following:

POLITICAL AND ECONOMIC FACTORS. Individual foreign economies of certain
countries may differ favorably or unfavorably from the United States economy in
such respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency, diversification and balance of payments
position. The internal politics of certain foreign countries may not be as
stable as that of the United States. Governments in certain foreign countries
also continue to participate to a significant degree, through ownership interest
or regulation, in their respective economies. Action by these governments could
include restrictions on foreign investment, nationalization, expropriation of
goods or imposition of taxes, and could have a significant effect on market
prices of securities and payment of interest. The economies of many foreign
countries are heavily dependent upon international trade and are accordingly
affected by the trade policies and economic conditions of their trading
partners. Enactment by these trading partners of protectionist trade
legislation, or economic recessions or slow downs of those partners, could have
a significant adverse effect upon the securities markets of such countries.

CURRENCY FLUCTUATIONS. A change in the value of any foreign currency against
the U.S. dollar will result in a corresponding change in the U.S. dollar value
of securities held by a Fund, denominated in that currency. Such changes will
also affect a Fund to the extent that the Fund is invested in ADRs comprised of
foreign securities.

TAXES. The interest and dividends payable on certain foreign securities,
including those comprising an ADR, may be subject to foreign withholding taxes,
thus reducing the net amount of income to be paid to a Fund and that may
ultimately be available for distribution to the Fund's shareholders.

EMERGING MARKET COUNTRIES. The International Equity Fund may invest up to 20% of
its assets in emerging market countries or developing countries as defined by
World Bank International Financial Corporation or the Morgan Stanley Capital
International (MSCI) Index. Developing countries may impose restrictions on a
Fund's ability to repatriate investment income or capital. Even where there is
no outright restriction on repatriation of investment income or capital, the
mechanics of repatriation may affect certain aspects of the operations of the
Fund. For example, funds may be withdrawn from the People's Republic of China
only in U.S. or Hong Kong dollars and only at an exchange rate established by
the government once each week.

Some of the currencies in emerging markets have experienced de-valuations
relative to the U.S. dollar, and major adjustments have been made periodically
in certain of such currencies. Certain developing countries face serious
exchange constraints.

Governments of some developing countries exercise substantial influence over
many aspects of the private sector. In some countries, the government owns or
controls many companies, including the largest in the country. As such,
government actions in the future could have a significant effect on economic
conditions in developing countries in these regions, which could affect private
sector companies, a portfolio and the value of its securities. Furthermore,
certain developing countries are among the largest debtors to commercial banks
and foreign governments. Trading in debt obligations issued or guaranteed by
such governments or their agencies and instrumentalities involves a high degree
of risk.

FOREIGN CURRENCY TRANSACTIONS. Although each Fund values its assets daily in
U.S. dollars, they are not required to convert their holdings of foreign
currencies to U.S. dollars on a daily basis. A Fund's foreign currencies
generally will be held as "foreign currency call accounts" at foreign branches
of foreign or domestic banks. These accounts bear interest at negotiated rates
and are payable upon relatively short demand periods. If a bank became
insolvent, a Fund could suffer a loss of some or all of the amounts deposited. A
Fund may convert foreign currency to U.S. dollars from time to time. Although
foreign exchange dealers generally do not charge a stated commission or fee for
conversion, the prices posted generally include a "spread," which is the
difference between the prices at which the dealers are buying and selling
foreign currencies. None of the Funds currently expects to hedge its foreign
currency exposure under normal market conditions.

Although no Fund, except the International Equity Fund, currently has any
intention to enter into forward currency contracts, each Fund may do so, either
directly or, in the case of the Core Fixed Income Fund, through the underlying
mutual funds in which it invests. Except where segregated accounts are not
required under the 1940 Act, when a Fund enters into a forward contract or
currency futures, the Custodian will place cash, U.S. government securities, or
high-grade debt securities into segregated accounts of such Fund in an amount
equal to the value of that Fund's total assets committed to consummation of
forward contracts and currency futures. If the value of these segregated
securities declines, additional cash or securities will be placed in the
appropriate account on a daily basis so that the account value is at least equal
to the Fund's commitments to such contracts.

Transactions involving forward currency contracts may serve as long hedges (for
example, if a Fund seeks to buy a security denominated in a foreign currency, it
may purchase a forward currency contract to lock in the $US price of the
security) or as short hedges (if a Fund anticipates selling a security
denominated in a foreign currency it may sell a forward currency contract to
lock in the $US equivalent of the anticipated sales proceeds).

A Fund may seek to hedge against changes in the value of a particular currency
by using forward contracts on another foreign currency or a basket of
currencies, the value of which the Advisor or the respective sub-advisor
believes will have a positive correlation to the values of the currency being
hedged. In addition, although not currently anticipated, each Fund may use
forward currency contracts to shift exposure to foreign currency fluctuations
from one country to another. For example, if a Fund owns securities denominated
in a foreign currency and the Advisor or sub-advisor believes that currency will
decline relative to another currency, it might enter into a forward contract to
sell an appropriate amount of the first foreign currency, with payment to be
made in the second currency. Transactions that use two foreign currencies are
sometimes referred to as "cross hedges." Use of different foreign currency
magnifies the risk that movements in the price of the instrument will not
correlate or will correlate unfavorably with the foreign currency being hedged.

The cost to a Fund of engaging in forward currency contracts varies with factors
such as the currency involved, the length of the contract period and the market
conditions then prevailing. Because forward currency contracts are usually
entered into on a principal basis, no fees or commissions are involved. When a
Fund enters into a forward currency contract, it relies on the counter-party to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counter-party to do so would result in the loss of any
expected benefit of the transaction.

As is the case with future contracts, holders and writers of forward currency
contracts can enter into offsetting closing transactions, similar to closing
transactions on futures, by selling or purchasing, respectively, an instrument
identical to the instrument held or written. Secondary markets generally do not
exist for forward currency contracts, with the result that closing transactions
generally can be made for forward currency contacts only by negotiating directly
with the counter-party. Thus, there can be no assurance that a Fund will in fact
be able to close out a forward currency contract at a favorable price prior to
maturity. In addition, in the event of insolvency of the counter-party, a Fund
might be unable to close out a forward currency contract at any time prior to
maturity. In either event, the Fund would continue to be subject to market risk
with respect to the position, and would continue to be required to maintain a
position in securities denominated in the foreign currency or to maintain cash
or securities in a segregated account.

The precise matching of forward currency contract amounts and the value of the
securities involved generally will not be possible because the value of such
securities, measured in the foreign currency, will change after the foreign
currency contract has been established. Thus, a Fund might need to purchase or
sell foreign currencies in the spot (cash) market to the extent such foreign
currency market movements is extremely difficult, and the successful execution
of a short-term hedging strategy is highly uncertain.

SMALL CAP/MID CAP VOLATILITY

Many of the companies in which the Small/Mid Cap Value Fund, Small/Mid Cap
Growth Fund and Real Estate Securities Fund may invest will include those that
have limited product lines, or services, markets, or financial resources, or are
dependent on a small management group. In addition, because these stocks are not
well-known to the investing public, do not have significant institutional
ownership, and are followed by relatively few security analysts, there will
normally be less publicly available information concerning these securities
compared to what is available for the securities of larger companies. Adverse
publicity and investor perceptions, whether based on fundamental analysis, can
decrease the value and liquidity of securities held by a Fund.

Historically, smaller capitalization stocks have been more volatile in price
than larger capitalization stocks. Among the reasons for the greater price
volatility of these small company stocks are the less certain growth prospects
of smaller firms, the lower degree of liquidity in the markets for such stocks,
the greater sensitivity of small companies to changing economic conditions and
the fewer market makers and the wider spreads between quoted bid and asked
prices which exist in the over-the-counter market for such stocks. Besides
exhibiting greater volatility, small company stocks may, to a degree, fluctuate
independently of larger company stocks. Smaller company stocks may decline in
price as large company stocks rise, or rise in price as large company stocks
decline. Investors should therefore expect that a Fund that invests primarily in
Small and Mid Cap issuers will be more volatile than, and may fluctuate
independently of, broad stock market indices such as the S&P 500 Index.

MUNICIPAL SECURITIES

The Tax-Exempt Fixed Income Fund invests primarily in municipal securities.
Municipal securities are debt obligations issued by or on behalf of states,
territories, and possessions of the United States, including the District of
Columbia, and any political subdivisions or financing authority of any of these,
the income from which is, in the opinion of qualified legal counsel, exempt from
federal regular income tax ("Municipal Securities").

Municipal Securities are generally issued to finance public works such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, street, and water 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 facilities. Municipal Securities
include industrial development bonds issued by or on behalf of public
authorities to provide financing aid to acquire sites or construct and equip
facilities for privately or publicly owned corporations. The availability of
this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds. The Tax-Exempt Fixed Income Fund may invest in, but
is not limited to, the following types of Municipal Securities: industrial
development bonds; municipal notes and bonds; serial notes and bonds sold with a
series of maturity dates; tax anticipation notes and bonds sold to finance
working capital needs of municipalities in anticipation of receiving taxes at a
later date; bond anticipation notes sold in anticipation of the issuance of
longer-term bonds in the future; pre-refunded municipal bonds refundable at a
later date (payment of principal and interest on pre-refunded bonds are assured
through the first call date by the deposit in escrow of U.S. government
securities); and general obligation bonds secured by a municipality's pledge of
taxation.

The Tax-Exempt Fixed Income Fund is not required to sell a Municipal Security if
the security's rating is reduced below the required minimum subsequent to the
Fund's purchase of the security, However, it will consider this event in the
determination of whether the Fund should continue to hold the security in its
portfolio. If ratings made by Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's "S&P", or Fitch Investors Service, Inc. ("Fitch"), change
because of changes in those organizations or in their rating systems, the
Tax-Exempt Fixed Income Fund will try to use comparable ratings as standards in
accordance with the investment policies described in the Funds' prospectuses.

There are no restrictions on the maturity of municipal securities in which the
Tax-Exempt Fixed Income Fund may invest. The Fund will seek to invest in
Municipal Securities of such maturities as the investment adviser believes will
produce current income consistent with prudent investment. The Fund will also
consider current market conditions and the cost of the insurance obtainable on
such securities.

PARTICIPATION INTERESTS. The financial institutions from which the tax-free
funds purchase participation interests frequently provide or secure from other
financial institutions irrevocable letters of credit or guarantees and give the
Funds the right to demand payment on specified notice (normally within 7 days
for the money market funds and 30 days for the bond fund) from the issuer of the
letter of credit or guarantee. These financial institutions may charge certain
fees in connection with their repurchase commitments, including a fee equal to
the excess of the interest paid on the municipal securities over the negotiated
yield at which the participation interests were purchased by a Fund. By
purchasing participation interests, the Fund is buying a security meeting its
quality requirements and is also receiving the tax-free benefits of the
underlying securities.

In the acquisition of participation interests, the investment adviser will
consider the following quality factors: a high-quality underlying municipal
security (of which the Fund takes possession); a high-quality issuer of the
participation interest; or a guarantee or letter of credit from a high-quality
financial institution supporting the participation interest.

MUNICIPAL LEASES. The Tax-Exempt Fixed Income Fund may purchase Municipal
Securities in the form of participation interests that represent an undivided
proportional interest in lease payments by a governmental or nonprofit entity.
The lease payments and other rights under the lease provide for and secure
payments on the certificates. Municipal charters or the nature of the
appropriation for the lease may limit lease obligations. In particular, lease
obligations may be subject to periodic appropriation. If the entity does not
appropriate Funds for future lease payments, the entity cannot be compelled to
make such payments. Furthermore, a lease may provide that the participants
cannot accelerate lease obligations upon default. The participants would only be
able to enforce lease payments as they became due. In the event of a default or
failure of appropriation, unless the participation interests are credit
enhanced, it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.

Municipal leases may be considered illiquid so the Advisor must carefully
examine the liquidity of the lease before investing. The Advisor considers:
whether the lease can be terminated by the lessee; the potential recovery, if
any, from a sale of the leased property if the lease was terminated; the
lessee's general credit strength; the possibility that the lessee will
discontinue appropriating funding for the lease property because the property is
no longer deemed essential to its operations; and any credit enhancement or
legal recourse provided upon an event of nonappropriation or other termination
of the lease.

CREDIT ENHANCEMENT. Some of the investments of the Tax-Exempt Fixed Income Fund
may be credit enhanced by a guaranty, letter of credit or insurance. Any
bankruptcy, receivership, default or change in the credit quality of the credit
enhancer will adversely affect the quality and marketability of the underlying
security and could cause losses to the Tax-Exempt Fixed Income Fund and affect
its share prices. The Tax-Exempt Fixed Income Fund may invest in securities
credit-enhanced by banks, and thus the value of those credit enhancements will
be affected by developments affecting the economic health and viability of
banks. The Funds typically evaluate the credit quality and ratings of
credit-enhanced securities based upon the financial condition and ratings of the
party providing the credit enhancement, rather than the issuer.

VARIABLE RATE MUNICIPAL SECURITIES. The Tax-Exempt Fixed Income Fund may
purchase some municipal securities with variable interest rates. Variable
interest rates are ordinarily stated as a percentage of the prime rate of a bank
or some similar standard, such as the 91-day U.S. Treasury bill rate. Variable
interest rates are adjusted on a periodic basis (i.e., every 30 days). Many
variable rate municipal securities are subject to payment of principal on demand
by the Fund, usually in not more than seven days. If a variable rate municipal
security does not have this demand feature, or the demand feature extends beyond
seven days and the Advisor believes the security cannot be sold within seven
days, the Advisor may consider the security to be illiquid. However, the Fund's
investment limitations provide that it will not invest more than 15% of its net
assets in illiquid securities. All variable rate municipal securities will meet
the quality standards for the Fund. The Advisor has been instructed by the
Trustees to monitor the pricing quality and liquidity of the variable rate
municipal securities, including participation interests held by the Fund, on the
basis of published financial information and reports of NRSROs and other
analytical services.

Variable interest rates generally reduce changes in the market value of
municipal securities from their original purchase prices. Accordingly, as
interest rates decrease or increase, the potential for capital appreciation or
depreciation is less for variable rate municipal securities than for fixed
income obligations. Many municipal securities with variable interest rates
purchased by the Fund are subject to repayment of principal (usually within
seven days) on the Fund's demand. The terms of these variable rate demand
instruments require payment of principal and accrued interest from the issuer of
the municipal obligations, the issuer of the participation interests, or a
guarantor of either issuer.

INDUSTRIAL DEVELOPMENT BONDS. The Tax-Exempt Fixed Income Fund may invest in
industrial development bonds, which is a type of municipal security. Industrial
development bonds are generally issued to provide financing aid to acquire sites
or construct and equip facilities for use by privately or publicly owned
entities. Most state and local governments have the power to permit the issuance
of industrial development bonds to provide financing for such entities in order
to encourage the corporations to locate within their communities. Industrial
development bonds, which are in most cases revenue bonds, do not represent a
pledge of credit or create any debt of a municipality or a public authority, and
no taxes may be levied for the payment of principal or interest on these bonds.
The principal and interest is payable solely out of monies generated by the
entities using or purchasing the sites or facilities. These bonds will be
considered municipal securities eligible for purchase by the Fund if the
interest paid on them, in the opinion of bond counsel or in the opinion of the
officers of the Trust and/or the Advisor, is exempt from federal income tax. The
Fund may invest in industrial development bonds (including pollution control
revenue bonds) as long as they are not from the same facility or similar types
of facilities or projects.

RISKS. Yields on municipal securities depend on a variety of factors, including:
the general conditions of the money market and the taxable and municipal
securities markets; the size of the particular offering; the maturity of the
obligations; and the credit quality of the issue. The ability of the Fund to
achieve its investment objectives also depends on the continuing ability of the
issuers of municipal securities to meet their obligations for the payment of
interest and principal when due.

The value of the Tax-Exempt Fixed Income Fund's shares will fluctuate. The
amount of this fluctuation is dependent upon the quality and maturity of the
municipal securities in the Fund's portfolio, as well as on market conditions.
Municipal securities prices are interest rate sensitive, which means that their
value varies inversely with market interest rates. Thus, if market interest
rates have increased from the time a security was purchased, the security, if
sold, might be sold at a price less than its cost. Similarly, if market interest
rates have declined from the time a security was purchased, the security, if
sold, might be sold at a price greater than its cost. (In either instance, if
the security was held to maturity, no loss or gain normally would be realized as
a result of interim market fluctuations.)

Further, any adverse economic conditions or developments affecting the states or
municipalities could impact the Fund's portfolio. Investing in municipal
securities that meet the Fund's quality standards may not be possible if the
states and municipalities do not maintain their current credit ratings.

MUNICIPAL BOND INSURANCE. The Tax-Exempt Fixed Income Fund may purchase
municipal securities covered by insurance. The insurance guarantees the timely
payment of principal at maturity and interest on such securities. These insured
municipal securities are either: covered by an insurance policy applicable to a
particular security, whether obtained by the issuer of the security or by a
third party ("Issuer-Obtained Insurance"), or insured under master insurance
policies issued by municipal bond insurers, which may be purchased by the Fund
(the "Policies").

The Fund will require or obtain municipal bond insurance when purchasing
municipal securities that would not otherwise meet the Fund's quality standards.
The Fund may also require or obtain municipal bond insurance when purchasing or
holding specific municipal securities when, in the opinion of the Advisor, such
insurance would benefit the Fund, for example, through improvement of portfolio
quality or increased liquidity of certain securities. The Advisor anticipates
that the Fund may have investments in insured municipal securities.

Issuer-Obtained Insurance Policies are non-cancelable and continue in force as
long as the municipal securities are outstanding and their respective insurers
remain in business. If a municipal security is covered by Issuer-Obtained
Insurance, then such security need not be insured by the Policies purchased by
the Fund.

The Fund may purchase two types of Policies issued by municipal bond insurers.
One type of Policy covers certain municipal securities only during the period in
which they are in the Fund's portfolio. In the event that a municipal security
covered by such a Policy is sold from the Fund, the insurer of the relevant
Policy will be liable only for those payments of interest and principal which
are then due and owing at the time of sale. The other type of Policy covers
municipal securities not only while they remain in the Fund's portfolio, but
also until their final maturity even if they are sold out of the Fund's
portfolio. This allows the securities to have coverage that benefits all
subsequent holders of those municipal securities. The Fund will obtain insurance
covering municipal securities until final maturity even after they are sold out
of the Fund's portfolio only if, in the judgment of the Advisor, the Fund would
receive net proceeds from the sale of those securities. Net proceeds are
calculated AFTER deducting the cost of the permanent insurance and related fees.
Also, the proceeds received must be significantly more than the proceeds the
Fund would have received if the municipal securities were sold without
insurance. Payments received from municipal bond insurers may not be tax-exempt
income to shareholders of the Fund.

The Fund pays the premiums for the Policies and, as a result, the yield on the
Fund's portfolio is reduced. Premiums for the Policies are paid by the Fund
monthly, and are adjusted for purchases and sales of municipal securities during
the month. Depending upon the characteristics of the municipal security held by
the Fund, the annual premiums for the Policies are estimated to range from 0.10%
to 0.25% of the value of the municipal securities covered under the Policies,
with an average annual premium rate of approximately 0.175%.

The Fund may purchase Policies from Municipal Bond Investors Assurance Corp.
("MBIA"), AMBAC Indemnity Corporation ("AMBAC"), Financial Guaranty Insurance
Company ("Financial Guaranty"), Financial Security Assurance ("FSA") or any
other municipal bond insurer which is rated in the highest rating category by an
NRSRO. Under each Policy, the insurer is obligated to provide insurance payments
pursuant to valid claims. The claims must be equal to the payment of principal
and interest on those municipal securities the Policy insures. The Policies will
have the same general characteristics and features. A municipal security will be
eligible for coverage if it meets certain requirements set forth in a Policy. In
the event interest or principal on an insured municipal security is not paid
when due, the insurer covering the security will be obligated under its Policy
to make such payment not later than 30 days after it has been notified by the
Fund that such non-payment has occurred. The insurance feature is intended to
reduce financial risk, but the cost of the insurance and compliance with the
investment restrictions imposed by the guidelines in the Policies will reduce
the yield to shareholders of the Fund.

MBIA, AMBAC, Financial Guaranty and FSA will not have the right to withdraw
coverage on securities insured by their Policies so long as such securities
remain in the Fund's portfolio. Also neither, MBIA, AMBAC, Financial Guaranty or
FSA may cancel their Policies for any reason except failure to pay premiums when
due. MBIA, AMBAC, Financial Guaranty and FSA will reserve the right at any time
upon 90 days' written notice to the Fund to refuse to insure any additional
municipal securities purchased by the Fund after the effective date of such
notice. The Trustees will reserve the right to terminate any of the Policies if
they determine that the benefits to the Fund of having its portfolio insured
under such Policy are not justified by the expense involved. Additionally, the
Board of Trustees reserves the right to enter into contracts with insurance
carriers other than MBIA, AMBAC, Financial Guaranty or FSA if such carriers are
rated in the highest rating category by an NRSRO.

Under the Policies, municipal bond insurers unconditionally guarantee to the
Fund the timely payment of principal and interest on the insured municipal
securities when and as such payments become due. However, the issuer does not
pay principal and interest. In the event of any acceleration of the due date of
the principal, the guaranteed payments will be made in such amounts and at such
times as payments of principal would have been due had there been no
acceleration. Reasons for possible acceleration are mandatory or optional
redemption (other than acceleration by reason of mandatory sinking Fund
payments), default or otherwise. The municipal bond insurers will be responsible
for such payments less any amounts received by the Fund from any trustee for the
municipal bond holders or from any other source. The Policies do not guarantee
payment on an accelerated basis, the payment of any redemption premium, the
value for the shares of the Fund or payments of any tender purchase price upon
the tender of the municipal securities. The Policies also do not insure against
nonpayment of principal of or interest on the securities resulting from the
insolvency, negligence or any other act or omission of the trustee or other
paying agent for the securities. However, with respect to small-issue industrial
development municipal bonds and pollution-control revenue municipal bonds
covered by the Policies, the municipal bond insurers guarantee the full and
complete payments required to be made by or on behalf of an issuer. The insurers
do this if there are any changes in the tax-exempt status of interest on such
municipal securities, including principal, interest or premium payments required
to be made by or on behalf of the issuer pursuant to the terms of the municipal
securities. A "when-issued" municipal security will be covered under the
Policies upon the settlement date of the original issue of such "when-issued"
municipal security. In determining whether to insure municipal securities held
by the Fund, each municipal bond insurer will apply its own standard, which
corresponds generally to the standards it has established for determining the
insurability of new issues of municipal securities.

Regarding marketability of the Fund, if the Fund holds the first type of Policy
where the municipal bond insurers are liable only for the Fund's payments of
principal and interest, then the Fund has no marketability benefit because the
Policy terminates on the date of a sale. On the other hand, since
Issuer-Obtained Insurance will remain in effect as long as the insured municipal
securities are outstanding, such insurance may enhance the marketability of
municipal securities covered thereby, but the exact effect, if any, on
marketability cannot be estimated. The Fund generally intends to retain any
securities that are in default or subject to significant risk of default. The
Fund will also place a value on the insurance, which ordinarily will be the
difference between the market value of the defaulted security and the market
value of similar securities of minimum high grade (i.e., rated in the highest
rating category by an NRSRO) that are not in default. To the extent the Fund
holds defaulted securities, it may be limited in its ability to manage its
investment and to purchase other municipal securities. Except as described above
with respect to securities that are in default or subject to significant risk of
default, the Fund will not place any value on the insurance in valuing the
municipal securities that it holds.

DERIVATIVES

Although each Fund, other than the International Equity Fund, currently has no
intention to invest in derivative securities, each Fund may do so, either
directly or, in the case of the Core Fixed Income Fund, through the underlying
mutual funds in which it invests. Each Fund may invest in stock index futures to
hedge the value of their portfolio against changes in market conditions. The
Funds may invest in a wide range of derivatives, including call and put options,
futures, and forward contracts, for hedging purposes as well as direct
investment.

BUYING CALL AND PUT OPTIONS. Each Fund has the ability to purchase call options.
Such transaction may be entered into in order to limit the risk of a substantial
increase in the market price of the security that a Fund intends to purchase.
Prior to its expiration, a call option may be sold in a closing sale
transaction. Any profit or loss from the sale will depend on whether the amount
received is more or less than the premium paid for the call option plus the
related transaction cost.

Each Fund also has the ability to purchase put options. By buying a put, a Fund
has the right to sell the security at the exercise price, thus limiting its risk
of risk of loss through a decline in the market value of the security until the
put expires. The amount of any appreciation in the value of the underlying
security will be partially offset by the amount of the premium paid for the put
option and any related transaction cost. Prior to its expiration, a put option
may be sold in a closing sale transaction and any profit or loss from the sale
will depend on whether the amount received is more or less than the premium paid
for the put option plus the related transaction costs.

WRITING (SELLING) CALL AND PUT OPTIONS. Each Fund has the ability to write
covered options on equity and debt securities and indices. This means that, in
the case of call options, so long as a Fund is obligated as the writer of a call
option, it will own the underlying security subject to the option and, in the
case of put options, it will, through its custodian, deposit and maintain either
cash or securities with a market value equal to or greater than the exercise
price of the option.

Covered call options written by a Fund give the holder the right to buy the
underlying securities from the Fund as a stated exercise price. A call option
written by a Fund is "covered" if the Fund owns the underlying security that is
subject to the call or has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian bank) upon
conversion or exchange of other securities held in its portfolio. A call option
is also covered if the Fund holds a call on the same security and in the same
principal amount as the call written where the exercise price of the call held
(a) is equal to or less than the exercise price of the call written or (b) is
greater than the exercise price of the call written if the difference is
maintained by the Fund in cash and high grade debt securities in a segregated
account with its custodian bank. Each Fund may purchase securities, which may be
covered with call options solely on the basis of considerations consistent with
the investment objectives and policies of the Fund. A Fund's turnover may
increase through the exercise of a call option; this will generally occur if the
market value of a "covered" security increases and the Fund has not entered in
to a closing purchase transaction.

As a writer of an option, a Fund receives a premium less a commission, and in
exchange foregoes the opportunity to profit from any increase in the market
value of the security exceeding the call option price. The premium serves to
mitigate the effect of any depreciation in the market value of the security. The
premium paid by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price, the volatility of the
underlying security, the remaining term of the option, the existing supply and
demand, and the interest rates.

The writer of a call option may have no control over when the underlying
securities must be sold because the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Exercise of a call option
by the purchaser will cause each Fund to forego future appreciation of the
securities covered by the option. Whether or not an option expires unexercised,
the writer retains the amount of the premium. This amount may, in the case of a
covered call option, be offset by a decline in the market value of the
underlying security during the option period. If a call option is exercised, the
writer experiences a profit or loss from the sale of the underlying security.
Thus during the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying security or
currency above the exercise price. It retains the risk of the loss should the
price of the underlying security or foreign currency decline. Writing call
options also involves risks relating to each Fund's ability to close out the
option it has written.

Each Fund may write exchange-traded call options on its securities. Call options
may be written on portfolio securities indices, or foreign currencies. With
respect to securities and foreign currencies, the Fund may write call and put
options on an exchange or over-the-counter. Call options on portfolio securities
will be covered since the Fund will own the underlying securities. Call option
on securities indices will be written only to hedge in an economically
appropriate way portfolio securities that are not otherwise hedged with options
or financial futures contracts and will be "covered" by identifying the specific
portfolio securities being hedged. Options on foreign currencies will be covered
by securities denominated in that currency. Options on securities indices will
be covered by securities that substantially replicated the movement of the
index.

A put option on a security, security index, or foreign currency gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to sell the underlying security, index, or foreign currency at the
exercise price at any time during the option period. When a Fund writes a
secured put option, in will gain a profit in the amount of the premium, less a
commission, so long as the price of the underlying security remains above the
exercise price. However, each Fund remains obligated to purchase the underlying
security from the buyer of the put option (usually in the event the price of the
security falls bellows the exercise price) at any time during the option period.
If the price of the underlying security falls below the exercise price, the
Funds may realize a loss in the amount of the difference between the exercise
price and the sale price of the security, less the premium received. Upon
exercise by the purchaser, the writer of a put option has the obligation to
purchase the underlying security or foreign currency at the exercise price. A
put option on a securities index is similar to a put option on an individual
security, except that the value of the option depends on the weighted value of
the group of securities comprising the index and all settlements are made in
cash.

During the option period, the writer of a put option has assumed the risk that
the price of the underlying security or foreign currency will decline below the
exercise price. However, the writer of the put option has retained the
opportunity for an appreciated above the exercise price should the market price
of the underlying security or foreign currency increase. Writing put options
also involves risks relating to the Funds' ability to close out the option that
it has written.

The writer of an option who wishes to terminate its obligation may effect a
"closing purchase transaction" by buying an option of the same series as the
option previously written. The effect of the purchase is that the clearing
corporation will cancel the writer's position. However, a writer may not effect
a closing purchase transaction after being notified of the exercise of an
option. There is also no guarantee that the Funds will be able to effect a
closing purchase transaction for the options it has written.

Effecting a closing purchase transaction in the case of a written call option
will permit a Fund to write another call option on the underlying security with
a different exercise price, expiration date, or both. Effecting a closing
purchase transaction will also permit the Funds to use cash or proceeds from the
investments. If a Fund desires to sell a particular security from its portfolio
on which it has written a call option, it will effect a closing purchase
transaction before or at the same time as the sale of the security.

The Fund will realize a profit from a closing purchase transaction if the price
of the transaction is less than the premium received from writing the option.
Likewise, a Fund will realize a loss from a closing purchase transaction if the
price of the transaction is more than the premium received from writing the
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option is likely to be offset in whole
or in part by appreciation of the underlying security owned by a Fund.

WRITING OVER-THE-COUNTER ("OTC") OPTIONS. Each Fund has the ability to engage in
options transactions that trade on the OTC market to the same extent that it
intends to engage in exchange traded options. Just as with exchange traded
options, OTC options give the holder the right to buy an underlying security
from, or sell an underlying security to, an option writer at a stated exercise
price. However, OTC options differ from exchange traded options in certain
material respects.

OTC options are arranged directly with dealers and not, as is the case with
exchange traded options, through a clearing corporation. Thus, there is a risk
of non-performance by the dealer. Because there is no exchange, pricing is
typically done by reference to information obtained from market makers. Since
OTC options are available for a greater variety of securities and in a wider
range of expiration dates and exercise prices, the writer of an OTC option is
paid the premium in advance by the dealer.

A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. There can be no assurance that a
continuously liquid secondary market will exist for any particular option at any
specific time. Consequently, a Fund may be able to realize the value of an OTC
option it has purchased only by exercising it or entering into a closing sale
transaction with the dealer that issued it. Similarly, when a Fund writes an OTC
option, it generally can close out that option prior to its expiration only by
entering into a closing purchase transaction with the dealer to which it
originally wrote to option. If a covered call option writer cannot effect a
closing transaction, it cannot sell the underlying security or foreign currency
until the option expires or the option is exercised. Therefore, the writer of a
covered OTC call option may not be able to sell an underlying security even
though it might otherwise be advantageous to do so. Likewise, the writer of a
secured OTC put option may be unable to sell the securities pledged to secure
the put for other investment purposes while it is obligated as a put writer.
Similarly, a purchaser of an OTC put or call option might also find it difficult
to terminate its position on a timely basis in the absence of a secondary
market.

The staff of the U.S. Securities and Exchange Commission ("SEC") has often taken
the position that purchased OTC options and the assets used to "cover" written
OTC options are illiquid securities. The Funds will adopt procedures for
engaging in OTC options transactions for the purpose of reducing any potential
adverse effect of such transactions on the liquidity of the Funds.

FUTURES CONTRACTS. Each Fund has the ability to buy and sell stock index futures
contracts traded on domestic stock exchanges to hedge the value of its portfolio
against changes in market conditions. A stock index futures contract is an
agreement between two parties to take or make delivery of an amount of cash
equal to a specified dollar amount, times the difference between the stock index
value at the close of the last trading day of the contract and the price at
which the futures contract is originally struck. A stock index futures contract
does not involve the physical delivery of the underlying stocks in the index.
Although stock index futures contracts call for the actual taking or delivery or
cash, in most cases a Fund expects to liquidate its stock index futures
positions through offsetting transactions, which may result in a gain or a loss,
before cash settlement is required.

A Fund will incur brokerage fees when it purchases and sells stock index futures
contracts, and at the time a Fund purchases or sells a stock index futures
contract, it must make a good faith deposit known as the "initial margin".
Thereafter, a Fund may need to make subsequent deposits, known as "variation
margin", to reflect changes in the level of the stock index. Each Fund may buy
or sell a stock index futures contract so long as the sum of the amount of
margin deposits on open positions with respect to all stock index futures
contracts does not exceed 5% of a Fund's net assets.

To the extent a Fund enters into a stock index futures contract, it will
maintain with its custodian bank (to the extent required by the rules of the
SEC) assets in a segregated account to cover its obligations. Such assets may
consist of cash, cash equivalents, or high quality debt securities from its
portfolio in an amount equal to the difference between the fluctuating market
value of such futures contract and the aggregate value of the initial and
variation margin payments.

RISKS ASSOCIATED WITH OPTIONS AND FUTURES. Although each of the Funds may write
covered call options and purchase and sell stock index futures contracts to
hedge against declines in market value of its portfolio securities, the use of
these instruments involves certain risks. As the writer of covered call options,
a Fund receives a premium but loses any opportunity to profit from an increase
in the market price of the underlying securities declines, though the premium
received may partially offset such loss.

Although stock index futures contracts may be useful in hedging against adverse
changes in the value of a Fund's investment securities, they are derivative
instruments that are subject to a number of risks. During certain market
conditions, purchases and sales of stock index futures contracts may not
completely offset a decline or rise in the value of a Fund's investments. In the
futures markets, it may not always be possible to execute a buy or sell order at
the desired price, or to close out an open position due to market conditions,
limits on open positions and/or daily price fluctuations. Changes in the market
value of a Fund's investment securities may differ substantially from the
changes anticipated by a Fund when it established its hedged positions, and
unanticipated price movements in a futures contract may result in a loss
substantially greater than such Fund's initial investment in such a contract.

Successful use of futures contracts depends upon the sub-advisor's ability to
correctly predict movements in the securities markets generally or of a
particular segment of a securities market. No assurance can be given that the
sub-advisor's judgment in this respect will be correct.

The CFTC and the various exchanges have established limits referred to as
"speculative position limits" on the maximum net long or net short position that
any person may hold or control in a particular futures contract. Trading limits
are imposed on the number of contracts that any person may trade on a particular
trading day. An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose sanctions or restrictions. These
trading and positions limits will not have an adverse impact on a Fund's
strategies for hedging its securities.

Futures purchased or sold by the International Equity Fund (and related options)
will normally be traded in foreign securities. Participation in foreign futures
and foreign options transactions involves the execution and clearing of trades
on or subject to the rules of a foreign board of trade. Neither the National
Futures Association nor any domestic exchange regulates activities of any
foreign boards of trade, including the execution, delivery and clearing of
transactions, or has the power to compel enforcement of the rules of a foreign
board of trade or any applicable foreign law. This is true even if the exchange
is formally linked to a domestic market so that a position taken on the market
may be liquidated by a transaction on another market. Moreover, such laws or
regulations will vary depending on the foreign country in which the foreign
futures or foreign options transaction occurs.

For these reasons, customers who trade foreign futures of foreign options
contracts may not be afforded certain of the protective measures provided by the
Commodity Exchange Act, the Commodity Futures Trading Commission's ("CFTC")
regulations and the rules of the National Futures Association and any domestic
exchange, including the right to use reparations proceedings before the CFTC and
arbitration proceedings provided by the National Futures Association or any
domestic futures exchange. In particular, the International Equity Fund's
investments in foreign futures or foreign options transactions may not be
provided the same protections in respect of transactions on United States
futures exchanges. In addition, the price of any foreign futures or foreign
options contract and, therefore the potential profit and loss thereon may be
affected by any variance in the foreign exchange rate between the time an order
is placed and the time it is liquidated, offset or exercised.

OTHER INVESTMENT COMPANIES

Each Fund, except the Core Plus Fixed Income Fund, currently intends to limit
its investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not more
than 5% of the value of a Fund's total assets will be invested in the securities
of any one investment company; (ii) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment companies
as a group; and (iii) not more than 3% of the outstanding voting stock of any
one investment company will be owned by a Fund as a whole. The Core Plus Fixed
Income Fund is currently a "fund of funds" and is not subject to the above
restrictions except that it is prohibited from acquiring shares of another
mutual fund if, immediately after such acquisition, it and/or its affiliated
persons would hold more than 3% of such mutual fund's total outstanding stock.
This prohibition may prevent the Core Plus Fixed Income Fund from allocating its
investment in the manner the Advisor considers optimal. The Core Plus Fixed
Income Fund's investment strategy of indirect investment through other
investment companies is non-fundamental and may therefore be changed, without
shareholder approval, to a strategy of direct investment, using the
multi-manager approach, as a means to achieve its investment objective.

In addition, each of the Funds may invest from time to time in securities issued
by other investment companies that invest in high-quality, short-term debt
securities. Securities of other investment companies will be acquired by a Fund
within the limits prescribed by the 1940 Act. As a shareholder of another
investment company, a Fund would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses, including advisory
fees, and such fees and other expenses will be borne indirectly by a Fund's
shareholders. These expenses would be in addition to the advisory and other
expenses that a Fund bear directly in connection with their own operations.

WHEN-ISSUED PURCHASES, DELAYED DELIVERY AND FORWARD COMMITMENTS

Each Fund may purchase or sell particular securities with payment and delivery
taking place at a later date. The price or yield obtained in a transaction may
be less favorable than the price or yield available in the market when the
securities delivery takes place. A Fund's forward commitments and when-issued
purchases are not expected to exceed 25% of the value of its total assets absent
unusual market conditions. When any Fund agrees to purchase securities on a
when-issued or delayed delivery basis or enter into a forward commitment to
purchase securities, its custodian will set aside cash or liquid high grade debt
securities equal to the amount of the commitment in a segregated account.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case a Fund may be required subsequently to
place additional assets in the segregated account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments. It
may be expected that the market value of a Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash.

Because a Fund will set aside cash or liquid assets to satisfy its purchase
commitments in the manner described, a Fund's liquidity and ability to manage
its portfolio might be affected in the event its commitments ever exceeded 25%
of the value of its assets. In the case of a forward commitment to sell
portfolio securities, a Fund's custodian will hold the portfolio securities
themselves in a segregated account while the commitment is outstanding.
When-issued and forward commitment transactions involve the risk that the price
or yield obtained in a transaction (and therefore the value of a security) may
be less favorable then the price or yield (and therefore the value of a
security) available in the market when the securities delivery takes place.

A Fund will make commitments to purchase securities on a when-issued basis or to
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 renegotiate a commitment after it is entered into, and
may sell securities it has committed to purchase before those securities are
delivered to a Fund on the settlement date. In these cases a Fund may realize a
capital gain or loss.

When a Fund engages in when-issued, delayed delivery and forward commitment
transactions, it relies on the other party to consummate the trade. Failure of
such party to do so may result in a Fund incurring a loss or missing an
opportunity to obtain a price considered advantageous.

The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the net asset value
of a Fund starting on the day the Fund agrees to purchase the securities. A Fund
does not earn interest on the securities it has committed to purchase until they
are paid for and delivered on the settlement date. When a Fund makes a forward
commitment to sell securities it owns, the proceeds to be received upon
settlement are included in such Fund's assets. Fluctuations in the market value
of the underlying securities are not reflected in the Fund's net asset value as
long as the commitment remains in effect.

SHORT SALES

Although not currently part of any of the Fund's investment strategies, each
Fund has the ability to make short sales. Short sales are transactions where a
Fund sells securities it does not own in anticipation of a decline in the market
value of the securities. A Fund must borrow the security to deliver it to the
buyer. A Fund is then obligated to replace the security borrowed at the market
price at the time of replacement. Until the security is replaced, a Fund is
required to pay the lender any dividends or interest which accrue on the
security during the loan period. To borrow the security, a Fund also may be
required to pay a premium, which would increase the cost of the security sold.
To the extent necessary to meet margin requirements, the broker will retain
proceeds of the short sale until the short position is closed out. The Advisor
anticipates that the frequency of short sales will vary substantially under
different market conditions and each Fund does not intend that any significant
amount of its assets, as a matter of practice, will be in short sales, if any.

In addition to the short sales discussed above, each Fund also has the ability
to make short sales "against the box," a transaction in which a Fund enters into
a short sale of a security owned by such Fund. A broker holds the proceeds of
the short sale until the settlement date, at which time a Fund delivers the
security to close the short position. A Fund receives the net proceeds from the
short sale.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

The Core Plus Fixed Income Fund may, via the underlying investment companies in
which it invests, purchase residential and commercial mortgage-backed as well as
other asset-backed securities (collectively called "asset-backed securities").
These securities are secured or backed by automobile loans, installment sale
contracts, credit card receivables or other assets and are issued by entities
such as Government National Mortgage Association "GNMA"), Federal National
Mortgage Association "FNMA"), Federal Home Loan Mortgage Corporation "FHLMC"),
commercial banks, trusts, financial companies, finance subsidiaries of
industrial companies, savings and loan associations, mortgage banks and
investment banks. These securities represent interests in pools of assets in
which periodic payments of interest and/or principal on the securities are made,
thus, in effect passing through periodic 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 these securities varies with the maturities and the
prepayment experience of the underlying instruments. The average life of a
mortgage-backed instrument may be substantially less than the original maturity
of the mortgages underlying the securities as the result of scheduled principal
payments and mortgage prepayments. The rate of such mortgage prepayments, and
hence the life of the certificates, will be a function of current market rates
and current conditions in the relevant housing and commercial markets. In
periods of falling interest rates, the rate of mortgage prepayments tends to
increase. During such periods, the reinvestment of prepayment proceeds by a Fund
will generally be at lower rates than the rates that were carried by the
obligations that have been prepaid. As a result, the relationship between
mortgage prepayments and interest rates may give some high-yielding
mortgage-related securities less potential for growth in value than non-callable
bonds with comparable maturities. In calculating the average-weighted maturity
of each Fund, the maturity of asset-backed securities will be based on estimates
of average life. There can be no assurance that these estimates will be
accurate.

There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-backed securities
and among the securities that they issue. Mortgage-backed securities guaranteed
by 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 such guarantee is 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 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-backed securities issued
by the 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. Freddie Macs are not guaranteed
by the United States or by any Federal Home Loan Bank 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 the 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.

Mortgage-backed securities such as collateralized mortgage obligations ("CMOs")
may also be purchased. There are several types of mortgage-backed securities
which provide the holder with a pro rata interest in the underlying mortgages,
and CMOs which provide the holder with a specified interest in the cash flow of
a pool of underlying mortgages or other mortgage-backed securities. CMOs are
issued in multiple classes and their relative payment rights may be structured
in many ways. In many cases, however, payments of principal are applied to the
CMO classes in order of their respective maturities, so that no principal
payments will be made on a CMO class until all other classes having an earlier
maturity date are paid in full. The classes may include accrual certificates
(also known as "Z-Bonds"), which do not accrue interest at a specified rate
until other specified classes have been retired and are converted thereafter to
interest-paying securities. They may also include planned amortization classes
("PACs") which generally require, within certain limits, that specified amounts
of principal be applied to each payment date, and generally exhibit less yield
and market volatility than other classes. Investments in CMO certificates can
expose the Fund to greater volatility and interest rate risk than other types of
mortgage-backed obligations. Prepayments on mortgage-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.

The yield characteristics of asset-backed securities differ from traditional
debt securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected may reduce yield to maturity, while a prepayment rate that is slower
than expected may have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments may increase, while slower than expected prepayments may
decrease, yield to maturity. Moreover, asset-backed securities may involve
certain risks that are not presented by mortgage-backed securities arising
primarily from the nature of the underlying assets (i.e., credit card and
automobile loan receivables as opposed to real estate mortgages). For example,
credit card receivables are generally unsecured and may require the repossession
of personal property upon the default of the debtor, which may be difficult or
impracticable in some cases.

Asset-backed securities may be subject to greater risk of default during periods
of economic downturn than other instruments. Also, while the secondary market
for asset-backed securities is ordinarily quite liquid, in times of financial
stress the secondary market may not be as liquid as the market for other types
of securities, which could result in a Fund experiencing difficulty in valuing,
or liquidating such securities.

In general, the collateral supporting non-mortgage asset-backed securities is of
shorter maturity than mortgage loans. Like other fixed-income securities, when
interest rates rise the value of an asset-backed security generally will
decline; however, when interest rates decline, the value of an asset-backed
security with prepayment features may not increase as much as that of other
fixed-income securities.

Non-mortgage asset-backed securities do not have the benefit of the same
security in the collateral as mortgage-backed securities. 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 reduce the balance due on the credit cards. 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 the risk that the purchaser would acquire an interest
superior to that of the holders of related automobile receivables. In addition,
because of the large number of vehicles involved in a 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
payments on the receivables together with recoveries on repossessed collateral
may not, in some cases, be able to support payments on these securities.

WARRANTS

Each of the Funds have the ability to purchase warrants and similar rights,
which are privileges issued by corporations enabling the owners to subscribe to
and purchase a specified number of shares of the corporation at the specified
price during a specified period of time. Warrants basically are options to
purchase equity securities at a specific price valid for a specific period of
time. They do not represent ownership of the securities, but only the right to
buy them. They have no voting rights, pay no dividends and have no rights with
respect to the assets of the company issuing them. Warrants differ from call
options in that warrants are issued by the issuer of the security that may be
purchased on their exercise, whereas call options may be written or issued by
anyone. The prices of warrants do not necessarily move parallel to the prices of
the underlying securities.

The purchase of warrants involves the risk that a Fund could lose the purchase
value of a warrant if the right to subscribe to additional shares is not
exercised prior to the warrant's expiration. Also, the purchase of warrants
involves the risk that the effective price paid for the warrant 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. During normal market conditions, no more than
5% of each Fund's net assets will be invested in warrants. This 5% limit
includes warrants that are not listed on any stock exchange. Warrants acquired
by the International Equity Fund in units or attached to securities are not
subject to these limits.

STRIPPED SECURITIES

Each Fund has the ability to purchase participations in trusts that hold U.S.
Treasury and agency securities (such as TIGRs and CATs) and also may purchase
Treasury receipts and other "stripped" securities that evidence ownership in
either the future interest payments or the future principal payments of U.S.
government obligations. These participations are issued at a discount to their
"face value," and may (particularly in the case of stripped mortgage-backed
securities) exhibit greater price volatility than ordinary debt securities
because of the manner in which their principal and interest are returned to
investors.

TEMPORARY INVESTMENTS
--------------------------------------------------------------------------------

Under normal market conditions, each Fund may have money received from the
purchase of Fund shares, or money received on the sale of other portfolio
securities for which suitable investments consistent with such Fund's investment
objectives are not immediately available. In that case, each Fund may have such
monies invested in cash or cash equivalents. In addition, each Fund is
permitted, but does not normally intend to maintain all or a portion of its
assets in cash or cash equivalents for temporary defensive purposes during
abnormal market conditions. To earn income on this portion of their assets, each
Fund may enter into repurchase agreements or invest in "money market
instruments," a term that includes, among other things, U.S. government
obligations, repurchase agreements, cash, bank obligations, commercial paper,
variable amount master demand notes and corporate bonds with remaining
maturities of thirteen months or less. These investments are also used to help
meet anticipated redemption requests or if other suitable securities are
unavailable. A Fund may reduce its holdings in equity and other securities and
may invest in certain short-term (less than twelve months to maturity) and
medium-term (not greater than five years to maturity) debt securities and in
cash (U.S. dollars, foreign currencies, or multicurrency units) for temporary
defensive purposes, during periods in which the Advisor or sub-advisor believes
changes in economic, financial or political conditions make it advisable.

Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions. Although each of the Funds will invest in money market
obligations of foreign banks or foreign branches of U.S. banks only where the
Advisor and/or sub-advisor determines the instrument to present minimal credit
risks, such investments may nevertheless entail risks that are different from
those of investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations are limited to the obligations of financial institutions having
more than $1 billion in total assets at the time of purchase, and investments by
each Fund in the obligations of foreign banks and foreign branches of U.S. banks
will not exceed 10% of such Fund's total assets at the time of purchase. Each
Fund may also make interest-bearing savings deposits in commercial and savings
banks in amounts not in excess of 10% of its net assets.

Investments by a Fund in commercial paper will consist of issues rated at the
time A-1 and/or P-1 by Standard & Poor's, Moody's or similar rating by another
nationally recognized rating agency. In addition, a Fund may acquire unrated
commercial paper and corporate bonds that are determined by the Advisor or
sub-advisor at the time of purchase to be of comparable quality to rated
instruments that may be acquired by such Fund as previously described.

Each of the Funds may also purchase variable amount master demand notes which
are unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate. Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time. The notes are
not typically rated by credit rating agencies, but issuers of variable amount
master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper. If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default. A Fund invests in
variable amount master demand notes only when the Advisor and/or sub-advisor
deem the investment to involve minimal credit risk.

REPURCHASE AGREEMENTS. Under a repurchase agreement, a Fund agrees to buy
securities guaranteed as to payment of principal and interest by the U.S.
government or its agencies from a qualified bank or broker-dealer and then to
sell the securities back to the bank or broker-dealer after a short period of
time (generally, less than seven days) at a higher price. The bank or
broker-dealer must transfer to a Fund's custodian securities with an initial
market value of at least 100% of the dollar amount invested by a Fund in each
repurchase agreement. The Advisor or sub-advisor will monitor the value of such
securities daily to determine that the value equals or exceeds the repurchase
price.

Repurchase agreements may involve risks in the event of default or insolvency of
the bank or broker-dealer, including possible delays or restrictions upon a
Fund's ability to sell the underlying securities. A Fund will enter into
repurchase agreements only with parties who meet certain creditworthiness
standards, i.e., banks or broker-dealers that the manager has determined present
no serious risk of becoming involved in bankruptcy proceedings within the time
frame contemplated by the repurchase transaction.

A Fund may also enter into reverse repurchase agreements. Under a reverse
repurchase agreement, a Fund agrees to sell a security in its portfolio and then
to repurchase the security at an agreed-upon price, date, and interest payment.
A Fund will maintain cash or high-grade liquid debt securities with a value
equal to the value of its obligation under the agreement, including accrued
interest, in a segregated account with its custodian bank. The securities
subject to the reverse repurchase agreement will be marked-to-market daily.
Although reverse repurchase agreements are borrowings under the 1940 Act, a Fund
does not treat these arrangements as borrowings under its investment
restrictions so long as the segregated account is properly maintained.

The use of repurchase agreements by a Fund involves certain risks. For example,
if the other party to a repurchase agreement defaults on its obligation to
repurchase the underlying security at a time when the value of the security has
declined, a Fund may incur a loss upon disposition of the security. If the other
party to the agreement becomes insolvent and subject to liquidation or
reorganization under the bankruptcy code or other laws, a court may determine
that the underlying security is collateral for the loan by a Fund not within the
control of that Fund, and therefore the realization by a Fund on the collateral
may be automatically stayed. Finally, it is possible that a Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement. While the manager
acknowledges these risks, it is expected that if repurchase agreements are
otherwise deemed useful to a Fund, these risks can be controlled through careful
monitoring procedures.

U.S. GOVERNMENT OBLIGATIONS. The Funds may each invest in a variety of U.S.
Treasury obligations including bonds, notes and bills that mainly differ only in
their interest rates, maturities and time of issuance. The Funds may also each
invest in other securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities; such as 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, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration, Central
Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Maritime Administration, and Resolution Trust Corp.
No assurance can be given that the U.S. government will provide financial
support to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law.

MANAGEMENT OF THE FUNDS
--------------------------------------------------------------------------------
BOARD OF TRUSTEES

The management and affairs of the Funds are supervised by the Board of Trustees
of the Trust. The Board consists of the same five individuals, three of whom are
not "interested persons" of the Trust as that term is defined in the 1940 Act.
The Trustees are fiduciaries for the Funds' shareholders and are governed by the
laws of the State of Delaware in this regard. The Board establishes policies for
the operation of the Funds and appoints the officers who conduct the daily
business of the Funds. The Trustees of the Trust are listed below with their
addresses, present positions with the Trust and principal occupations over at
least the last five years.

------------------------ ---------- --------------- ----------------------------
NAME AND ADDRESS AGE POSITION WITH PRINCIPAL OCCUPATION
THE TRUST DURING THE PAST FIVE YEARS
------------------------ ---------- --------------- ----------------------------
*Ronald Cordes __ President
------------------------ ---------- --------------- ----------------------------
--
------------------------ ---------- --------------- ----------------------------
--
------------------------ ---------- --------------- ----------------------------
--
------------------------ ---------- --------------- ----------------------------

* "Interested persons" as defined in the 1940 Act.

COMPENSATION

For their service as Trustees of the Trust, the Independent Trustees receive a
retainer fee of $5,000 per year and $1,000 per meeting attended, as well as
reimbursement for expenses incurred in connection with attendance at such
meetings. The "interested persons" who serve as Trustees of the Trust receive no
compensation for their service as Trustees. These compensation amounts will
remain in place until the assets of the Trust reaches $500 million. At such
time, the independent trustees will receive retainer fees of $10,000 per year
and $2,500 per Board meeting attended, as well as reimbursement for expenses
incurred in connection with attendance at Board meetings. The members of the
Trust's Board of Trustees receive the following compensation:

TOTAL
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL COMPENSATION FROM
NAME OF PERSON/POSITION COMPENSATION FROM THE BENEFITS ACCRUED AS BENEFITS UPON TRUST PAID TO
TRUST(1) PART OF FUND EXPENSES RETIREMENT TRUSTEES
---------------------------- ----------------------- ----------------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Ronald Cordes, President None None None None
---------------------------- ----------------------- ----------------------- ------------------ -------------------
None None None None
---------------------------- ----------------------- ----------------------- ------------------ -------------------
None None None None
---------------------------- ----------------------- ----------------------- ------------------ -------------------
None None None None
---------------------------- ----------------------- ----------------------- ------------------ -------------------
None None None None
---------------------------- ----------------------- ----------------------- ------------------ -------------------
</TABLE>

(1) These represent estimates for the current fiscal year ending March 31, 2002.

CONTROL PERSONS, PRINCIPAL HOLDERS OF SECURITIES AND MANAGEMENT OWNERSHIP

A principal shareholder is any person who owns of record or beneficially 5% or
more of the outstanding shares of any of the Funds. As of _____, 2001, the
Advisor owned of record 100% of the shares of each of the Funds. Accordingly, as
of _____, 2001, the Advisor owned a controlling interest in each of the Funds. A
control person is one who owns beneficially or through controlled companies more
than 25% of the voting securities of a company or acknowledges the existence of
control.

MANAGEMENT OWNERSHIP

As of ________, 2001, for organizational purpose, AssetMark Investment Services,
Inc., investment advisor to the Funds, owned 100% of the outstanding shares of
each of the Funds.

INVESTMENT ADVISOR AND SUB-ADVISORS
--------------------------------------------------------------------------------

AssetMark Investment Services, Inc. (the "Advisor") is a California corporation
that serves as the investment adviser to the Funds. The Advisor is a
SEC-registered investment adviser that provides investment consulting and
administrative services to financial intermediaries. The Advisor currently
administers in excess of $1.5 billion in assets, including mutual funds and
privately managed accounts.

On March __, 2001, the Board of the Trustees of the Trust, on behalf of the
Funds, approved an initial two year investment advisory agreement (the
"Agreement") with the Advisor. After the first two years, this Agreement may
continue on a year-to-year basis provided that specific approval is voted at
least annually by the Board of Trustees of the Trust or by the vote of the
holders of a majority of the outstanding voting securities of the Funds. In
either event, it must also be approved by a majority of the trustees of Trust
who are neither parties to the Agreement nor "interested persons" as defined in
the 1940 Act at a meeting called for the purpose of voting on such approval. The
Agreement may be terminated at any time, without the payment of any penalty, by
the Board of Trustees or by vote of a majority of the outstanding voting
securities of the Funds. The Advisor's investment decisions are made subject to
the direction and supervision of the Board of Trustees. Ultimate decisions as to
the investment policy are made by the Trust's officers and the Trustees.

Under the Agreement, the Advisor currently operates as a "manager of managers",
except with respect to the Core Plus Fixed Income Fund. The Trust intends to
obtain an exemptive order from the SEC that permits the Advisor, with the
approval of the Trust's Board of Trustees, to retain sub-advisors unaffiliated
with the Advisor for the Funds without submitting the sub-advisor agreements to
a vote of the Fund's shareholders. The exemptive relief would permit the Advisor
to disclose only the aggregate amount payable by the Advisor to the sub-advisors
under all such sub-advisor agreements for each affected Fund. The Funds will
notify shareholders in the event of any addition or change in the identity of
its sub-advisors. Unlike the other Funds, the Core Plus Fixed Income Fund is
currently in a "fund of funds" structure and is not managed by sub-advisors. The
Core Plus Fixed Income Fund may, however, change its investment strategy to one
of direct investment. In this situation, the Advisor would retain one or more
sub-advisors to manage all or a portion of the Core Plus Fixed Income Fund's
assets.

With respect to each of the Funds other than the Core Plus Fixed Income Fund,
the Advisor oversees the investment advisory services provided to the Funds and
manages the cash portion of the Funds' assets. Pursuant to separate sub-advisory
agreements with the Advisor, and under the supervision of the Advisor and the
Board of Trustees, a number of sub-advisors are responsible for the day-to-day
investment management of all or a discrete portion of the assets of the Funds.
Sub-advisors are selected for the Funds based primarily upon the research of
BARRA RogersCasey ("BRC"), consultant to the Advisor, who evaluates
quantitatively and qualitatively a sub-advisor's skills and investment results
in managing assets for specific asset classes, investment styles and strategies.
The Advisor is responsible for the payment of all fees to BRC.

Subject to Board review and with the research assistance of BRC, the Advisor
allocates and, when appropriate, reallocates the Funds' assets among
sub-advisors, monitors and evaluates Sub-Advisor performance, and oversees
sub-advisor compliance with the Funds' investment objectives, policies and
restrictions. The advisor has ultimate responsibility for the investment
performance of the Funds pursuant to its responsibility to oversee the
sub-advisors and recommend their hiring and/or replacement. For its advisory
services, the Advisor is entitled to a fee, calculated daily and paid monthly,
at an annual fee from each Fund according to the following table:

Advisory Fee (as a percentage of
Fund: average daily net assets):
Large Cap Value Fund 0.90%
Large Cap Growth Fund 0.90%
Small/Mid Cap Value Fund 1.00%
Small/Mid Cap Growth Fund 1.00%
International Equity Fund 0.90%
Real Estate Securities Fund 0.90%
Tax-Exempt Fixed Income Fund 0.65%
Core Plus Fixed Income Fund 0.65%

The Advisor pays the sub-advisors a fee out of its advisory fee that is based on
a percentage of the average monthly market value of the assets managed by each
sub-advisor.

The Advisory Agreement and certain of the sub-advisory agreements provide that
the Advisor or any sub-advisor shall not be protected against any liability to
the Trust or its shareholders by reason of willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties, or from reckless
disregard of its obligations or duties thereunder. In addition, certain of the
sub-advisory agreements provide that the sub-advisor shall not be protected
against any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith or negligence on its part in the performance of its
duties, or from reckless disregard of its obligations or duties thereunder.

The continuance of each Advisory and sub-advisory agreement must be specifically
approved at least annually (i) by the vote of a majority of the outstanding
shares of that Fund or by the Trustees, and (ii) by the vote of a majority of
the Trustees who are not parties to such Agreement or "interested persons" of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval. Each Advisory or sub-advisory agreement will terminate
automatically in the event of its assignment, and is terminable at any time
without penalty by the Trustees of the Trust or, with respect to a Fund, by a
majority of the outstanding shares of that Fund, on not less than 30 days' nor
more than 60 days' written notice to the Advisor (or sub-advisor) or by the
Advisor (or sub-advisor) on 90 days' written notice to the Trust.

THE SUB-ADVISORS

DISTRIBUTION AND SHAREHOLDER SERVICING
--------------------------------------------------------------------------------

DISTRIBUTOR

AssetMark Capital Corporation, an affiliate of the Advisor (the "Distributor")
2300 Contra Costa Boulevard, Suite 425, Pleasant Hill, California, 94523-3967 is
the distributor for the shares of the Funds pursuant to a Distribution Agreement
(the "Agreement"), among the Trust, Advisor and Distributor dated ___________,
2001. The Agreement was approved by the Board of Trustees, on __________, 2001.
The Distributor is a registered broker-dealer and member of the National
Association of Securities Dealers, Inc. Shares of each Fund are offered on a
continuous basis. The Agreement provides that the Distributor, as agent in
connection with the distribution of Fund shares, will use its best efforts to
distribute the Funds' shares.

DISTRIBUTION PLAN

The Funds have adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the 1940 Act approved by the Board of Trustees on __________, 2001. The
Plan authorizes payments by the Funds in connection with the distribution of
Fund shares at an annual rate of 0.25% of each of the Fund's average daily net
asset value ("NAV"). Payments may be made by a Fund under the Plan for the
purpose of financing any activity primarily intended to result in the sale of
shares of a Fund, as determined by the Board of Trustees. Such activities
typically include: advertising; compensation for sales and sales marketing
activities of financial service agents and others, such as dealers or
distributors; shareholder account servicing; production and dissemination of
prospectuses and sales and marketing materials; and capital or other expenses of
associated equipment, rent, salaries, bonuses, interest and other overhead. To
the extent any activity is one which a Fund may finance without the Plan, that
Fund may also make payments to finance such activity outside of the Plan and not
subject to its limitations. Payments under the Plan are based upon a percentage
of average daily net assets attributable to the Funds regardless of the amounts
actually paid or expenses actually incurred by the Distributor; however, in no
event, may such payments exceed the maximum allowable fee. It is, therefore,
possible that the Distributor may realize a profit in a particular year as a
result of these payments. The Plan increases each Fund's expenses from what they
would otherwise be. A Fund may engage in joint distribution activities with
other AssetMark Funds and to the extent the expenses are not allocated to a
specific Fund, expenses will be allocated based on each Fund's net assets.

Administration of the Plan is regulated by Rule 12b-1 under the 1940 Act, which
requires that the Board of Trustees receive and review at least quarterly
reports concerning the nature and qualification of expenses which are made, that
the Board of Trustees, including a majority of the disinterested Trustees,
approve all agreements implementing the Plan and that the Plan may be continued
from year-to-year only if the Board of Trustees, including a majority of the
disinterested Trustees, concludes at least annually that continuation of the
Plan is likely to benefit shareholders.

The Board of Trustees considered various factors in connection with its decision
to approve the Plan, including: (a) the nature and causes of the circumstances
which make implementation of the Plan necessary and appropriate; (b) the way in
which the Plan would address those circumstances, including the nature and
potential amount of expenditures; (c) the nature of the anticipated benefits;
(d) the merits of possible alternative plans or pricing structures; (e) the
relationship of the Plan to other distribution efforts of a Fund; and (f) the
possible benefits of the Plan to any person relative to those of the Funds.

Based upon its review of the foregoing factors an the material presented to it,
and in light of its fiduciary activities under relevant state law and the 1940
Act, the Board of Trustees has determined, in the exercise of its business
judgment, that the Plan was reasonably likely to benefit the Funds and their
shareholders in at least one or several potential ways. Specifically, the Board
of Trustees determined that the payment of distribution fees to these persons
should motivate them to provide an enhanced level of service to shareholders,
which would, of course, benefit such shareholders. In addition, the adoption of
the Plan would help to increase assets under the management in a short amount of
time, given the marketing efforts on the part of the Distributor and recipients
to sell Fund shares which could result in certain economies of scale.

While there is no assurance that the expenditure of Fund assets to finance
distribution of shares of the Funds will have the anticipated results, the Board
of Trustees believe there is a reasonable likelihood that one or more of such
benefits will result, and since the Board of Trustees will be in a position to
monitor the distribution expenses of the Funds, it will be able to determine the
benefit of such expenditures in deciding whether to continue the Plan.

With the exception of the Adviser, in its capacity as the Funds' investment
adviser, no "interested person" of the Funds, as defined in the 1940 Act, and no
trustee of the Trust who is not an "interested person" has or had a direct or
indirect financial interest in the Plan or any related agreement.

SHAREHOLDER SERVICING AGENTS

Each Fund may enter into agreements with certain organizations that provide
various services to Fund shareholders. Pursuant to such agreements,
organizations that provide shareholder services may be entitled to receive fees
from a Fund at an annual rate of up to 0.10% of the average daily NAV of the
shares covered by their respective agreements for shareholder support. Such
support may include, among other things, assisting investors in processing their
purchase, exchange, or redemption requests, or processing dividend and
distribution payments.

SERVICE PROVIDERS
--------------------------------------------------------------------------------

The Trust entered into a series of agreements whereby certain parties will
provide various services to the Funds.

Firstar Mutual Fund Services, LLC ("Firstar") will provide accounting and
administrative services and shareholder servicing to the Fund as transfer agent
and dividend disbursing agent. Firstar's address is 615 E. Michigan Street,
Milwaukee, Wisconsin 53202. The services to be provided under the Transfer Agent
Servicing Agreement include processing purchase and redemption transactions,
establishing and maintaining shareholder accounts and records, disbursing
dividends declared by the Fund, day-to-day administration of matters related to
the corporate existence of the Fund (other than rendering investment advice),
maintenance of its records and preparation, mailing and filing of reports,
assistance in monitoring the total number of Shares sold in each State for "Blue
Sky" purposes and assistance in the preparation of the Fund's registration
statement under federal and state securities laws.

Pursuant to the Fulfillment Servicing Agreement between Firstar and the Fund,
Firstar will also provide fulfillment services to the Fund, including
shareholder and prospective shareholder customer service.

Firstar Bank, N.A., an affiliate of Firstar, is the custodian of the assets of
the Fund (the "Custodian") pursuant to a custody agreement between the Custodian
and the Trust dated as of __________, 2001 ("Custody Agreement"), whereby the
Custodian provides for fees on a transactional basis plus out-of-pocket
expenses. The Custodian's address is 425 Walnut Street, Cincinnati, Ohio 45202.

Pursuant to a Fund Administration Servicing Agreement and a Fund Accounting
Servicing Agreement, each between Firstar and the Trust, Firstar also performs
certain administrative, accounting and tax reporting functions for the Funds,
including preparation and filing federal and state tax returns, preparing and
filing securities registration compliance filings with various states compiling
data for and preparing notices to the Commission, preparing financial statements
for the Annual and Semi-Annual Reports to the Commission and current investors,
monitoring the Funds' expense accruals and performing securities valuations and,
from time to time, monitoring the Funds' compliance with their investment
objectives and restrictions. Pursuant to the Funds' Administration Servicing
Agreement, Firstar is entitled to receive from each of the Funds a fee, computed
daily and payable monthly, based on the Fund's average net assets at an annual
rate of ___________________.

CODE OF ETHICS
--------------------------------------------------------------------------------

The Trust, the Advisor, the Distributor and the sub-advisors have adopted Codes
of Ethics that govern the conduct of employees of the Trust, Advisor,
Distributor and sub-advisors who may have access to information about the Funds'
securities transactions. The Codes recognize that such persons owe a fiduciary
duty to the Funds' shareholders and must place the interests of shareholders
ahead of their own interests. Among other things, the Codes require
pre-clearance of certain personal securities transactions; certain blackout
periods for personal trading of securities which may be considered for purchase
or sale by a Fund or other clients of the manager; 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 Trustees and could result in severe penalties.

VALUATION OF SHARES
--------------------------------------------------------------------------------

Shares of the Funds are sold on a continual basis at the NAV per share next
computed following acceptance of an order by the Funds. The Funds' NAV per share
for the purpose of pricing purchase and redemption orders is determined at the
close of normal trading (currently 4:00 p.m. Eastern Time) on each day the New
York Stock Exchange ("NYSE") is open for trading. The NYSE is closed on the
following holidays: New Year's Day, Martin Luther King, Jr.'s Day, President's
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day.

Fund securities listed on a securities exchange for which market quotations are
available are valued at the last quoted sale price on each Business Day (defined
as days on which the NYSE is open for business ("Business Day")) or, if there is
no such reported sale, at the most recently quoted bid price. Unlisted
securities for which market quotations are readily available are valued at the
most recently quoted bid price.

Information about the market value of each portfolio security may be obtained by
the Advisor from an independent pricing service. The pricing service relies
primarily on prices of actual market transactions as well as trader quotations.
However, the pricing service may use a matrix system to determine valuations of
fixed income securities. This system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures used by the pricing service
and its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

Securities with remaining maturities of 60 days or less will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which value, as determined by this method, is higher or lower than the
price the Trust would receive if it sold the instrument. During periods of
declining interest rates, the daily yield of a Fund may tend to be higher than a
like computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all of
its portfolio securities. Thus, if the use of amortized cost by a Fund resulted
in a lower aggregate portfolio value on a particular day, a prospective investor
in a Fund would be able to obtain a somewhat higher yield that would result from
investment in a company utilizing solely market values, and existing
shareholders in the Fund would experience a lower yield. The converse would
apply during a period of rising interest rates.

The Funds' investment securities that are listed on a U.S. securities exchange
or NASDAQ for which market quotations are readily available are valued at the
last quoted sale price on the day the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded. Options, futures, unlisted U.S. securities and listed U.S. securities
not traded on the valuation date for which market quotations are readily
available are valued at the mean of the most recent quoted bid and asked price.

Fixed-income securities (other than obligations having a maturity of 60 days or
less) are normally valued on the basis of quotes obtained from pricing services,
which take into account appropriate factors such as institutional sized trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. Fixed-income securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost if it reflects fair value. In the event that amortized cost does not
reflect market, market prices as determined above will be used. Other assets and
securities for which no quotations are readily available (including restricted
securities) will be valued in good faith at fair value using methods determined
by the Board of Trustees.

PURCHASE AND REDEMPTION OF SHARES
-------------------------------------------------------------------------------

The purchase and redemption price of shares is the NAV next calcuated after
receipt of an order in proper form. As described in the Funds' prospectus,
financial institutions and intermediaries may purchase or redeem Fund shares on
any day that the NYSE is open for business by placing orders with the Funds'
Transfer Agent (or their authorized agent). Institutions and intermediaries that
use certain proprietary systems of the Advisor may place orders electronically
through those systems. Each Fund reserves the right to refuse any purchase
requests, particularly those that would not be in the best interests of the
Funds or their shareholders and could adversely affect the Fund or its
operations.

It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in kind of readily marketable securities held
by a Fund in lieu of cash. Shareholders may incur brokerage charges on the sale
of any such securities so received in payment of redemptions. A gain or loss for
federal income tax purposes may be realized by a taxable shareholder upon an
in-kind redemption depending upon the shareholder's basis in the shares of the
Trust redeemed.

Purchases and redemptions of Fund shares may be made on any day the NYSE is open
for business. The Trust reserves the right to suspend the right of redemption
and/or to postpone the date of payment upon redemption for any period during
which trading on the NYSE is restricted, or during the existence of an emergency
(as determined by the SEC by rule or regulation) as a result of which disposal
or evaluation of the portfolio securities is not reasonably practicable, or for
such other periods as the SEC may by order permit. The Trust also reserves the
right to suspend sales of shares of the Funds for any period during which the
NYSE, the Distributor, and/or the Custodian are not open for business.

PORTFOLIO TRANSACTIONS
--------------------------------------------------------------------------------

The Trust has no obligation to deal with any broker-dealer or group of brokers
or dealers in the execution of transactions in portfolio securities. Subject to
policies established by the Board of Trustees, the Advisor and/or the
sub-advisors are responsible for placing orders to execute Fund transactions.
When placing orders, it is the Trust's policy to seek to obtain the best net
results taking into account such factors as price (including applicable dealer
spread), size, type and difficulty of the transaction involved, the firm's
general execution and operational facilities, and the firm's risk in positioning
the securities involved. While the sub-advisors generally seek reasonably
competitive spreads or brokerage commissions, the Trust will not necessarily be
paying the lowest spread or commission available. The Trust will not purchase
portfolio securities from any affiliated person acting as principal except in
conformity with the regulations of the SEC.

Consistent with their duty to obtain best execution, the Trust's Advisor and
sub-advisors may allocate brokerage or principal business to certain
broker-dealers in recognition of the sale of Fund shares.

Assets of a Fund are invested by Advisor and the sub-advisor(s) in a manner
consistent with its investment objective, strategies, policies and restrictions
and with any instructions the Board of Trustees may issue from time to time.
Within this framework, the Advisor and sub-advisors are responsible for making
all determinations as to the purchase and sale of portfolio securities and for
taking all steps necessary to implement securities transactions on behalf of a
Fund. In placing orders for the purchase and sale of portfolio securities for
each of the Funds, the Advisor and sub-advisors seek to obtain the best price
and execution, taking into account such factors as price, size of order,
difficulty and risk of execution and operational facilities of the firm
involved. For securities traded in the over-the-counter markets, the Advisor or
sub-advisor(s) deals directly with the dealers who make markets in these
securities unless better prices and execution are available elsewhere. The
Advisor or sub-advisor(s) negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Advisor or sub-advisor(s) generally seeks reasonably
competitive commission rates, the Portfolio does not necessarily pay the lowest
commissions available. The Board of Trustees periodically reviews the commission
rates and allocation of orders.

When consistent with the objectives of best price and execution, business may be
placed with broker-dealers who furnish investment research or services to the
Advisor. Such research or services include advice, both orally and in writing,
as to the value of securities; the advisability of investing in, purchasing or
selling securities; allocation of assets among sub-advisors; suitability of
sub-advisors; and the availability of securities, or purchasers or sellers of
securities; as well as analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. To the extent portfolio transactions are effected with
broker-dealers who furnish research and/or other services to the Advisor, the
Advisor receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Fund from these transactions.

The Trust may also enter into arrangements, commonly referred to as
"brokerage/service arrangements" with broker-dealers pursuant to which a
broker-dealer agrees to pay the cost of certain products or services provided to
the Funds in exchange for fund brokerage. Under a typical brokerage/service
arrangement, a broker agrees to pay a portion a Fund's custodian, administrative
or transfer agency fees, etc., and, in exchange, the Fund agrees to direct a
minimum amount of brokerage to the broker. The sub-advisor, on behalf of the
Trust, usually negotiates the terms of the contract with the service provider,
which is paid directly by the broker.

The same security may be suitable for a Fund, another portfolio series of the
Trust or other private accounts managed by the Advisor. If and when a Fund and
two or more accounts simultaneously purchase or sell the same security, the
transactions will be allocated as to price and amount in accordance with
arrangements equitable to the Fund and the accounts. The simultaneous purchase
or sale of the same securities by a Fund and other accounts may have a
detrimental effect on the Fund, as this may affect the price paid or received by
the Fund or the size of the position obtainable or able to be sold by the Fund.

TAXES
-------------------------------------------------------------------------------

Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Funds, by paying out substantially all of their investment income
and realized capital gains, have been and intend to continue to be relieved of
federal income tax on the amounts distributed to shareholders. To qualify as a
"regulated investment company" or "RIC" under Sub-Chapter M, the Funds (which is
treated separately from each other series of the Company for these purposes),
must distribute to their shareholders for each taxable year at least 90% of the
Funds' taxable income (consisting generally of net investment income and net
short-term capital gain) and must meet several additional requirements. Among
these requirements are the following:

(a) each Fund must derive at least 90% of its gross income each taxable
year from dividends, interest, payments with respect to securities
loans, gains from the disposition of foreign currencies, interest
and gains from securities transactions or other income;

(b) the Fund must derive less than 30% of its gross income each taxable
year from the sale or other disposition of securities that were held
for less than three months; and

(c) at the close of each quarter, (i) at least 50% of the value of the
Funds' total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs and other securities
limited in respect of any one issuer, to an amount that does not exceed
5% of the value of the Funds' total assets and that does not represent
more than 10% of the issuer's outstanding voting securities, and (ii)
not more than 25% of the value of its total assets may be invested in
securities (other than U.S. government securities) of any one issuer.
Each Fund (as an investor in the corresponding Portfolio) will be
deemed to own a proportionate share of the Portfolio's assets and to
earn a proportionate share of the Portfolio's income, for purposes of
determining whether the Fund satisfies all the requirements described
above to qualify as a RIC.

Each Fund will be subject to a nondeductible 4% excise tax to the extent that it
fails to distribute by the end of the calendar year substantially all of its
ordinary income for that year and capital gain net income for the one year
period ending on October 31 of that year, plus certain other amounts.

Distribution of any net long-term capital gains realized by the Funds will be
taxable to the shareholder as long-term capital gains, regardless of the length
of time Fund shares have been held by the investor. All net investment income
distributed by the Funds, including short-term capital gains, will be taxable to
the shareholder as ordinary income. Dividends from net income will be made
annually or more frequently at the discretion of the Trust's Board of Trustees.
Dividends received shortly after purchase of shares by an investor will have the
effect of reducing the NAV of his shares by the amount of such dividends or
distributions and, although in effect a return of capital, are subject to
federal income taxes.

Each Fund is required by federal law to withhold 31% of reportable payments
(that may include dividends, capital gains, distributions, and redemptions) paid
to shareholders who have not complied with IRS regulations. In order to avoid
this withholding requirement, you must certify on a W-9 tax form supplied by the
Funds that your Social Security or Taxpayer Identification Number provided is
correct and that you are not currently subject to back-up withholding, or that
you are exempt from back-up withholding.

PERFORMANCE INFORMATION
--------------------------------------------------------------------------------

TOTAL RETURN

Average annual total return quotations used in the Funds' advertising and
promotional materials are calculated according to the following formula:

P(1+T)^n = ERV

where P equals a hypothetical initial payment of $1,000; T equals average annual
total return; n equals the number of years; and ERV equals the ending redeemable
value at the end of the period of a hypothetical $1,000 payment made at the
beginning of the period.

Under the foregoing formula, the time periods used in advertising will be based
on rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication. Average annual total
return, or "T" in the above formula, is computed by finding the average annual
compounded rates of return over the period that would equate the initial amount
invested to the ending redeemable value. Average annual total return assumes the
reinvestment of all dividends and distributions.

CUMULATIVE TOTAL RETURN

Cumulative total return represents the simple change in value of an investment
over a stated period and may be quoted as a percentage or as a dollar amount.
Total returns may be broken down into their components of income and capital
(including capital gains and changes in share price) in order to illustrate the
relationship between these factors and their contributions to total return.

YIELD

Annualized yield quotations used in a Fund's advertising and promotional
materials are calculated by dividing the Fund's interest income for a specified
thirty-day period, net of expenses, by the average number of shares outstanding
during the period, and expressing the result as an annualized percentage
(assuming semi-annual compounding) of the NAV per share at the end of the
period. Yield quotations are calculated according to the following formula:

YIELD = 2[(a-b + 1)^6 - 1]
---
c-d

where "a" equals dividends and interest earned during the period; "b" equals
expenses accrued for the period, net of reimbursements; "c" equals the average
daily number of shares outstanding during the period that are entitled to
receive dividends; and "d" equals the maximum offering price per share on the
last day of the period.

For purposes of these calculations, the maturity of an obligation with one or
more call provisions is assumed to be the next date on which the obligation
reasonably can be expected to be called or, if none, the maturity date.

OTHER INFORMATION

The Funds' performance data quoted in advertising and other promotional
materials represents past performance and is not intended to predict or indicate
future results. The return and principal value of an investment in the Fund will
fluctuate, and an investor's redemption proceeds may be more or less than the
original investment amount.

If permitted by applicable law, the Funds may advertise the performance of
registered investment companies or private accounts that have investment
objectives, policies and strategies substantially similar to those of the Funds.

COMPARISON OF FUND PERFORMANCE

The performance of the Funds may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc., Morningstar, Inc.,
the Donoghue Organization, Inc. or other independent services which monitor the
performance of investment companies, and may be quoted in advertising in terms
of its ranking in each applicable universe. In addition, the Fund may use
performance data reported in financial and industry publications, including
Barron's, Business Week, Forbes, Fortune, Investor's Daily, IBC/Donoghue's Money
Fund Report, Money Magazine, The Wall Street Journal and USA Today.

The Funds may from time to time use the following unmanaged indices for
performance comparison purposes:

o S&P 500 - The S&P 500 is an index of 500 stocks designed to mimic the
overall equity market's industry weightings. Most, but not all, large
capitalization stocks are in the index. There are also some small
capitalization names in the index. The list is maintained by Standard &
Poor's Corporation. It is market capitalization weighted. There are
always 500 issuers in the S&P 500. Changes are made by Standard &
Poor's as needed.

o S&P MidCap 400 - The Standard & Poor's MidCap 400 Index is a widely
recognized, unmanaged index of 400 medium-capitalization stocks.

o Russell Midcap Value - The Russell Midcap Value is a market
capitalization-weighted index of medium-capitalization value-oriented
stocks of U.S. corporations.

o MS EAFE - The MSCI EAFE is an unmanaged index of over 1000 foreign
common stock prices and includes the reinvestment of dividends.

o Lehman Brothers Aggregate Bond - the Lehman Brothers Aggregate Bond
Index is a market-capitalization weighted index of investment-grade
fixed-rate debt issues, including government, corporate, asset-backed,
and mortgage-backed securities, with maturities of at least one year.

INDEPENDENT AUDITORS
--------------------------------------------------------------------------------

PricewaterhouseCoopers LLP, 333 Market Street, San Francisco, California,
94105-2119, serves as the Funds' independent auditors, whose services include
examination of the Funds' financial statements and the performance of other
related audit and tax services.

FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

Audited financial statements will be filed by a pre-effective amendment.

APPENDIX
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STANDARD & POOR'S ("S&P") CORPORATE BOND RATING DEFINITIONS

AAA-Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA-Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher-rated issues only in small degree.

A-Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB-Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

BB, B, CCC, CC-Debt rated "BB", "B", "CCC", and "CC" is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties of major risk exposures to adverse
conditions.

CI-The rating "CI" is reversed for income bonds on which no interest is being
paid.

D-Debt rated "D" is in default, and payment of interest and/or repayment of
principal is in arrears.

MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATING DEFINITIONS

AAA-Bonds which are rated "Aaa" are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or 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 that
make the long-term risks appear somewhat larger than in Aaa securities.

A-Bonds which are rated "A" possess many favorable investment attributes 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 near 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 "Ba" are judged to have speculative elements; their future
cannot be considered 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 of
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 "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.

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.

FITCH INVESTORS SERVICE, INC. BOND RATING DEFINITIONS

AAA-Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA-Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and
"AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."

A-Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered strong, but
may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB-Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings.

BB-Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes. However,
business and financial alternatives can be identified which could assist the
obligor in satisfying its debt service requirements.

B-Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issue.

CCC-Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.

CC-Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C-Bonds are in imminent default in payment of interest or principal.

DDD, DD, AND D-Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.

ASSETMARK FUNDS
PART C

OTHER INFORMATION

Item 23. EXHIBITS.

(a) Declaration of Trust
(i) Certificate of Trust--Filed Herewith.
(ii) Form of Agreement and Declaration of Trust--Filed Herewith.

(b) Form of Bylaws - Filed Herewith.

(c) Instruments Defining Rights of Security Holders-- Incorporated by
reference to the Agreement and Declaration of Trust.

(d) Investment Advisory Agreement-- To be filed by amendment.

(e) Underwriting Agreement-- To be filed by amendment.

(f) Bonus or Profit Sharing Contracts - Not applicable.

(g) Custody Agreement-- To be filed by amendment.

(h) Other Material Contracts

(i) Fund Administration Servicing Agreement-- To be filed by
amendment.
(ii) Fund Transfer Agent Servicing Agreement-- To be filed by
amendment.
(iii) Fund Accounting Servicing Agreement-- To be filed by
amendment.
(iv) Fund Fulfillment Servicing Agreement-- To be filed by
amendment.
(v) Power of Attorney

(i) Opinion and Consent of Counsel-- To be filed by amendment.

(j) Consent of Independent Public Accountants-- To be filed by amendment.

(k) Omitted Financial Statements - Not applicable.

(l) Agreement Relating to Initial Capital-- To be filed by amendment.

(m) Rule 12b-1 Plan - To be filed by amendment.

(n) Rule 18f-3 Plan - Not applicable.

(o) Reserved.

(p) Code of Ethics
(i) Adviser - To be filed by amendment.
(ii) Registrant - To be filed by amendment.
(iii)Distributor - To be filed by amendment.

Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.

No person is directly or indirectly controlled by or under common
control with the Registrant.

Item 25. INDEMNIFICATION.

Reference is made to Article III Section 7 of the Registrant's
Agreement and Declaration of Trust.

Pursuant to Rule 484 under the Securities Act of 1933, as amended, the
Registrant furnishes the following undertaking: "Insofar as indemnification for
liability arising under the Securities Act of 1933 (the "Act") may be permitted
to trustees, officers and controlling persons of the Registrant pursuant to the
foregoing provisions, or otherwise, the Registrant has been advised that, in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a trustee,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such trustee, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue."

Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.

AssetMark Investment Services, Inc. serves as the investment adviser
for the Registrant. The business and other connections of AssetMark Investment
Services, Inc. are set forth in the Uniform Application for Investment Adviser
Registration ("Form ADV") of AssetMark Investment Services, Inc. as filed with
the SEC and incorporated by reference herein.

Item 27. PRINCIPAL UNDERWRITER.

(a) AssetMark Capital Corporation, 2300 Contra Costa Boulevard,
Suite 425, Pleasant Hill, CA 94523-3967, the Distributor for
shares of the Registrant, does not act as principal
underwriter for any other fund.

(b) To the best of Registrant's knowledge, the directors and
executive officers of AssetMark Capital Corporation are as
follows:

NAME AND PRINCIPAL POSITION AND OFFICES WITH POSITIONS AND OFFICES WITH
BUSINESS ADDRESS ASSETMARK CAPITAL CORPORATION REGISTRANT
--------------------- ------------------------------ ---------------------------

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The address of each of the foregoing is 2300 Contra Costa Boulevard, Suite 425,
Pleasant Hill, CA 94523-3967.

Item 28. LOCATION OF ACCOUNTS AND RECORDS.

The books and records required to be maintained by Section 31(a) of
the Investment Company Act of 1940 are maintained in the following locations:

RECORDS RELATING TO: ARE LOCATED AT:
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Registrant's Fund Accountant, Firstar Mutual Fund Services, LLC
Administrator, Fulfillment Servicing 615 East Michigan Street
Agent and Transfer Agent Milwaukee, WI 53202

Registrant's Investment Adviser AssetMark Investment Services, Inc.
2300 Contra Costa Boulevard, Suite 425
Pleasant Hill, CA 94523-3967

Registrant's Custodian Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 54202

Registrant's Distributor AssetMark Capital Corporation
2300 Contra Costa Boulevard, Suite 425
Pleasant Hill, CA 94523-3967

Item 29. MANAGEMENT SERVICES NOT DISCUSSED IN PARTS A AND B.

Not applicable.

Item 30. UNDERTAKINGS.

The Registrant hereby undertakes to furnish each person to whom a
Prospectus for one or more of the series of the Registrant is delivered with a
copy of the relevant latest annual report to shareholders, upon request and
without charge.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this Registration Statement to be signed below on its behalf by the undersigned,
duly authorized, in the City of Pleasant Hill and the State of California on the
9th day of January, 2001.

ASSETMARK FUNDS

BY: /S/Ron Cordes
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Ron Cordes
President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on January 9th, 2001 by the
following persons in the capacities indicated.

SIGNATURE TITLE

/S/Ron Cordes President, Trustee and Chairperson
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Ron Cordes

XHIBIT INDEX

EXHIBIT STATUS

Registrant's Certificate of Trust Filed
Herewith

Registrant's Form of Agreement and Declaration of Trust Filed
Herewith

Registrant's Form of Bylaws Filed
Herewith

Investment Management Agreement between AssetMark Investment
Services, Inc. and the Registrant *

Distribution Agreement between AssetMark Capital Corporation
and the Registrant *

Custodian Agreement between Registrant and Firstar Bank, N.A. *

Fund Administration Servicing Agreement between Registrant
and Firstar Mutual Funds Services, LLC *

Fund Transfer Agent Servicing Agreement between Registrant
and Firstar Mutual Funds Services, LLC *

Fund Accounting Servicing Agreement between Registrant and
Firstar Mutual Fund Services, LLC *

Opinion and Consent of Counsel *

Consent of Independent Auditors *

Power of Attorney *

Registrant's Distribution Plan pursuant to Rule 12b-1 *

Code of Ethics for AssetMark Investment Services, Inc. *

Code of Ethics for Registrant *

Code of Ethics for AssetMark Capital Corporation *

* To be filed by subsequent amendment.