FIRST MUTUAL FUNDS, 485BPOS, 1996-10-01

FIRST MUTUAL FUNDS
485BPOS, 1996-10-01

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Filed with the Securities and Exchange Commission on September 30, 1996.
FILE NO. 2-15037
FILE NO. 811-879
================================================================================

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Post-Effective Amendment No. 56
------

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No 56
------

TRAINER, WORTHAM FIRST MUTUAL FUNDS
===================================

(Exact name of Registrant as Specified in Charter)

845 Third Avenue, 6th Floor
New York, New York 10022 (212) 759-7755
------------------------ --------------
(Address of Principal Executive Offices) (Registrant's Telephone Number)

Joseph V. DelRaso

Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
---------------------------
(Name and Address of Agent for Service)

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

X 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); or

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

Registrant has registered an indefinite number of Shares of Beneficial
Interest of Trainer, Wortham First Mutual Funds under the Securities Act
of 1933 pursuant to Rule 24f-2 under the Investment Company Act of 1940.
The Rule 24f-2 Notice for Registrant's most recent fiscal year was
filed on August 28, 1996.
1
<PAGE>

CROSS REFERENCE SHEET
---------------------
Pursuant to Rule 481(a)

<TABLE>
<CAPTION>
Part A
Item No. Prospectus Caption
-------- ------------------
<S> <C>
1. Cover Page Not Titled

2. Synopsis Expense Information

3. Condensed Financial Information Financial Highlights

4. General Description of Registrant Investment Objectives and
Policies; Investment Strategies
and Risk Considerations

5. Management of the Trust Management of the
Fund; Brokerage

6. Capital Stock and Other Securities Net Asset Value; Dividends
and Taxes; Purchase of Shares

7. Purchase of Shares Being Offered Net Asset Value; Purchase of
Shares; Exchange of Shares;
Shareholder Services

8. Redemption or Repurchase Redemption of Shares;
Exchange of Shares.

9. Pending Legal Proceedings *
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
Part B
Item No. SAI Caption
-------- ------------------
<S> <C>
10. Cover Page Not Titled

11. Table of Contents Table of Contents

12. General Information and History Trainer, Wortham First Mutual Funds
Investment Objectives and Policies;
Investment Restrictions; Other
Investment Restrictions

13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions; Other Invest-
ment Restrictions; Brokerage

14. Management of the Trust Trustees and Officers

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

16. Investment Advisory and Other Services Investment Advisor; Administrator;
Distributor; Distribution Plan; Trans-
fer Agent, and Accounting Services
Agent; Custodian

17. Brokerage Allocation Brokerage

18. Capital Stock and Other Securities Brokerage

19. Purchase, Redemption and Pricing of Securities Covered in Part A
Being Offered

20. Tax Status Covered in Part A

21. Underwriters Investment Advisor; Distribution Plan

22. Calculation of Performance Data Performance Calculations

23. Financial Statements Annual Reports to Shareholders -
Exhibit "A" to this Statement of
Additional Information
</TABLE>

* The answer to the item is negative or the item is not applicable to this
filing, the registrant, or the securities being registered.

3
<PAGE>

TRAINER, WORTHAM FIRST MUTUAL FUNDS

FIRST MUTUAL FUND

845 Third Avenue, 6th Floor
New York, NY 10022
(800) 257-4414

PROSPECTUS

October 1, 1996

Trainer, Wortham First Mutual Funds (the "Trust") is an open-end management
investment company which currently offers shares of three series: First
Mutual Fund; Trainer, Wortham Emerging Growth Fund; and Trainer, Wortham
Total Return Bond Fund (individually and collectively, the "Series"). Each
Series has distinct investment objectives and policies.

This Prospectus pertains only to First Mutual Fund (the "Fund"). The Fund
seeks to achieve capital appreciation through investment in common stocks
and securities convertible into common stocks. Its secondary objective is
income. Trainer, Wortham & Co., Inc. (the "Advisor") serves as the Fund's
investment advisor.

The minimum initial investment for the Fund is $250. Subsequent investments
will be accepted in minimum amounts of $50.00.

This Prospectus sets forth concisely the information a prospective investor
should know before investing in the Fund. Investors should read this
Prospectus and retain it for future reference. Additional information
about the Fund, contained in a Statement of Additional Information, has
been filed with the Securities and Exchange Commission and is available
upon request without charge by calling or writing to the Fund at the
telephone number or address shown above. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated by
reference in its entirety into this Prospectus.

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

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

================================================================================
- --------------------------------------------------------------------------------
Page 1
<PAGE>

TABLE OF CONTENTS
Page
----

Expense Information........................................................
Financial Highlights.......................................................
Investment Objectives and Policies.........................................
Investment Strategies and Risk Considerations..............................
Management of the Fund.....................................................
The Board of Trustees....................................................
The Investment Advisor...................................................
Administrator............................................................
Distributor..............................................................
Transfer Agent/Accounting Services Agent/Custodian.......................
Distribution Plan..........................................................
Brokerage..................................................................
Purchase of Shares.........................................................
Redemption of Shares.......................................................
Exchange of Shares.........................................................
Shareholder Services.......................................................
Net Asset Value............................................................
Dividends and Taxes........................................................
Performance Information....................................................
General Information........................................................

Underwriter: Advisor:
FPS Broker Services, Inc. Trainer, Wortham & Co., Inc.
3200 Horizon Drive 845 Third Avenue
P.O. Box 61503 New York, NY 10022
King of Prussia, PA 19406-0903 (800) 775-0604
(800) 257-4414

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

FOR MORE DETAILED INFORMATION ABOUT THE ITEMS DISCUSSED IN THIS PROSPECTUS,
A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION MAY BE OBTAINED WITHOUT
CHARGE BY WRITING TO THE FUND AT 845 THIRD AVENUE, 6TH FLOOR, NEW YORK, NY
10022, OR BY CALLING (800) 257-4414.

================================================================================
- --------------------------------------------------------------------------------
Page 2
<PAGE>

EXPENSE INFORMATION

Below is a summary of the operating expenses that the Fund incurred during
its last fiscal year. A hypothetical example based on the summary is also
shown.

Annual Fund Operating Expenses /(1)/
(as a percentage of average net assets) for the year ended June 30, 1996

<TABLE>
<S> <C>
Management Fees................................................ 0.75%
12b-1 Fees..................................................... 0.25%
Other Expenses................................................. 0.74%
Total Fund Operating Expenses.................................. 1.74%
</TABLE>

<TABLE>
<CAPTION>
Example: 1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the
following expenses on a $1,000
investment assuming (1) a 5%
annual return and (2) redemption
at the end of each period $18 $55 $94 $205
</TABLE>

/(1)/ Average net assets have been computed on the basis of net assets at
month end. Other expenses reflect actual expenses for the fiscal year
ended June 30, 1996. The maximum fee allowable under the 12b-1 Plan
==
is 0.25%.

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The purpose of the tables above is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly. The Fund does not impose any sales load, redemption
or exchange fees; however, the transfer agent currently charges investors
who request redemptions by wire transfer a fee of $9 for each transaction.
For more complete descriptions of the various costs and expenses, see the
sections entitled "MANAGEMENT OF THE FUND," and "DISTRIBUTION PLAN."
- --------------------------------------------------------------------------------
Page 3
<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights for the fiscal year ended June 30,
1996 were derived from the Fund's financial statements dated June 30, 1996,
which were audited by Tait, Weller & Baker, independent auditors, whose
unqualified report thereon may be found in the Fund's Statement of
Additional Information. The Fund's Statement of Additional Information may
be obtained without charge and is incorporated by reference into this
Prospectus.

The table below sets forth financial data for a share of capital stock
outstanding throughout each period presented.

FIRST MUTUAL FUNDS

<TABLE>
<CAPTION>
Years ended June 30,
-------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $ 10.03 $ 8.21 $ 9.29 $ 8.49 $ 9.24
------------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net investment income ................ (0.09) (0.09) (0.09) (0.06) 0.01
Net gains (losses) on securities (both
realized and unrealized) ........... 4.79 2.10 (0.13) 1.09 (0.09)
------------- ------------- ------------- ------------- -------------
Total from investment operations.. 4.70 2.01 (0.22) 1.03 (0.08)
------------- ------------- ------------- ------------- -------------

Less Distributions
Dividends (from net investment
income) ............................ -- -- -- -- (0.02)
Distributions (from capital gains) ... (0.92) (0.19) (0.86) (0.23) (0.65)
Distributions (from paid-in capital).. -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Total distributions .............. (0.92) (0.19) (0.86) (0.23) (0.67)
------------- ------------- ------------- ------------- -------------

Net Asset Value, End of Period ................ $ 13.81 $ 10.03 $ 8.21 $ 9.29 $ 8.49
============= ============= ============= ============= =============

Total Return .................................. 49.12% 25.04% 3.91% 12.17% 1.01%

Ratios/Supplemental Data
Net assets, end of period (in 000's).. $ 32,147 $ 20,281 $ 21,446 $ 19,093 $ 18,143
Ratio of expenses to average
net assets(2) ...................... 1.74% 2.16% 1.97% 1.99% 1.87%
Ratio of net investment
income to average net assets(2) .... 0.82% 0.77% 0.97% 0.61% 0.08%
Portfolio turnover rate .............. 107% 198% 178% 172% 175%
Average commission rate paid ......... $ 0.0683 N/A N/A N/A N/A

<CAPTION>
Years ended June 30,
-----------------------------------------------------------------------
1991 1990* 1989 1988 1987
----------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .......... $ 9.30 $ 8.03 $ 6.91 $ 8.94 $ 9.14
----------- ------------- ------------- ------------- -------------
Income From Investment Operations
Net investment income ................ 0.03 0.09 0.02 0.12 0.09
Net gains (losses) on securities (both
realized and unrealized) ........... 0.31 1.34 1.23 (1.24) 0.98
----------- ------------- ------------- ------------- -------------
Total from investment operations.. 0.34 1.43 1.25 (1.12) 1.07
----------- ------------- ------------- ------------- -------------

Less Distributions
Dividends (from net investment
income) ............................ (0.06) (0.06) (0.13) (0.13) (0.03)
Distributions (from capital gains) ... (0.34) (0.10)/1/ -- (0.68) (1.24)
Distributions (from paid-in capital).. -- -- -- (0.10) --
----------- ------------- ------------- ------------- -------------
Total distributions .............. (0.40) (0.16) (0.13) (0.91) (1.27)
----------- ------------- ------------- ------------- -------------
Net Asset Value, End of Period ................ $ 9.24 $ 9.30 $ 8.03 $ 6.91 $ 8.94
=========== ============= ============= ============= =============

Total Return .................................. 4.35% 17.88% 18.52% 14.10% 14.36%

Ratios/Supplemental Data
Net assets, end of period (in 000's).. $ 16,606 $ 14,720 $ 13,250 $ 12,659 $ 16,289
Ratio of expenses to average
net assets(2) ...................... 2.32% 2.04% 2.15% 1.96% 1.94%
Ratio of net investment
income to average net assets(2) .... 0.36% 1.03% 0.22% 1.67% 1.52%
Portfolio turnover rate .............. 178% 158% 197% 203% 212%
Average commission rate paid ......... N/A N/A N/A N/A N/A
</TABLE>

- -------------------------------------------------------------------------------
1 The distribution for the fiscal year 1990 represents the amount required to
be distributed for tax purposes to avoid imposition of excise taxes on
realized capital gains.
2 Average net assets have been computed on the basis of the value of the net
assets as determined as of the end of the month.
* The investment adviser to the Fund changed on the following dates: 1/25/88
(changed from Trainer, Wortham & Co., Inc. to BIL Trainer Wortham, Inc.);
12/21/90 (changed to Trainer, Wortham & Co., Inc.)

Page 4
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The Fund's primary investment objective is to seek capital appreciation
principally through investments in common stock. The Fund may also invest
in securities convertible into common stock such as convertible bonds or
preferred stock. Its secondary investment objective is to seek income from
dividends and interest. Due to the risks inherent in any investment
program, the Fund cannot ensure that its investment objectives will be
realized. The value of a share of the Fund will fluctuate as the values of
the securities in the Fund's portfolio fluctuate.

The Fund will invest primarily in common stock and in securities
convertible into common stock. The Fund's investment strategy will
emphasize companies that, in the opinion of the Advisor, offer prospects
for capital growth and growth of earnings and dividends. The Advisor may
deem it appropriate to invest in other types of securities, consisting of
obligations of the U.S. Government, its agencies or instrumentalities.
There is no limitation as to the proportion of the Fund's assets which may
be invested in any class of securities.

When, in the opinion of the Advisor, a defensive investment posture is
warranted, the Fund is permitted to invest temporarily and without
limitation in U.S.Government obligations, money market instruments
(such as U.S. Treasury bills, commercial paper, certificates of
deposit and banker's acceptances) and repurchase agreements. Assets so
invested will be productive and yet readily available (when markets are
deemed attractive) for reinvestment in accordance with the Fund's principal
investment policies.

The equity securities in which the Fund invests will be traded on a
national securities exchange or traded in the over-the-counter market. Up
to 15% of the Fund's net assets may be invested in foreign securities in
the form of American Depository Receipts ("ADRs"). The Fund does not
expect to invest in unsponsored ADRs. See "INVESTMENT STRATEGIES AND RISK
CONSIDERATIONS."

Although the Fund's portfolio is professionally managed, the Fund may
suffer a loss on investments resulting in a lower net asset value. The
likelihood of loss is greater than that for funds with more conservative
investment policies.

INVESTMENT STRATEGIES AND RISK CONSIDERATIONS

Shareholders should understand that all investments involve risk and there
can be no guarantee against loss resulting from an investment in the Fund,
nor can there be any assurance that the Fund's investment objective will be
attained.

Repurchase Agreements

The Fund may enter into repurchase agreements with respect to permissible
portfolio securities. Under the terms of a repurchase agreement, the Fund
would acquire securities from financial institutions such as banks and
registered broker-dealers which the Advisor deems creditworthy under
guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price would generally equal the price paid by the
Fund plus interest negotiated on the basis of then-current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller under a repurchase agreement will be required to
maintain the value of collateral held pursuant to the agreement at not less
than 102% of the repurchase price (including accrued interest). If the
seller were to default on its repurchase obligation or become insolvent,
the Fund would suffer a loss to the extent that the proceeds from a sale of
the underlying portfolio securities were less than the repurchase price
under the agreement, or to the extent that the disposition of such
securities by the Fund were delayed pending court action. It is the intent
of the Fund to utilize repurchase agreements to invest idle funds for short
periods of time. Securities subject to repurchase agreements will be held
by the Fund's Custodian or in the Federal Reserve/Treasury book-entry
system. Repurchase agreements are considered to be loans by the Fund under
the Investment Company Act of 1940, as amended (the "Act").

American Depository Receipts ("ADRs")

Page 5
<PAGE>

imposition of exchange controls, expropriation, limits on removal of
currency or other assets, nationalization of assets, foreign withholding
and income taxation, and foreign trading practices (including higher
trading commissions, custodial charges and delayed settlements). Such
securities may be subject to greater fluctuations in price than securities
issued by United States corporations or issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The markets on which such
securities trade may have less volume and liquidity, and may be more
volatile, than securities markets in the United States. In addition, there
may be less publicly available information about a foreign company than
about a U.S. domiciled company. Foreign companies generally are not subject
to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic companies. There is generally
less government regulation of securities exchanges, brokers and listed
companies abroad than in the United States. Confiscatory taxation or
diplomatic developments could also affect investment in those countries. In
addition, foreign branches of U.S. banks, foreign banks and foreign issuers
may be subject to less stringent reserve requirements and to different
accounting, auditing, reporting, and recordkeeping standards than those
applicable to domestic branches of U.S. banks and domestic issuers.

For many foreign securities, U.S. dollar-denominated ADRs, which are
traded in the United States on exchanges or over-the-counter, are issued by
domestic banks. ADRs represent the right to receive securities of foreign
issuers deposited in a domestic bank or a correspondent bank. ADRs do not
eliminate the risk inherent in investing in the securities of foreign
issuers. However, by investing in ADRs rather than directly in stock of
foreign issuers, the Fund can avoid currency risks during the settlement
period for either purchases or sales. In general, there is a large, liquid
market in the United States for many ADRs. The information available for
ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded,
whose standards are more uniform and more exacting than those to which many
foreign issuers may be subject. The Fund may also invest in European
Depository Receipts, or EDRs, which are receipts evidencing an arrangement
with a European bank similar to that for ADRs and are designed for use in
the European securities markets.

Certain ADRs and EDRs, typically those denominated as unsponsored, require
the holders thereof to bear most of the costs of such facilities while
issuers of sponsored facilities normally pay more of the costs thereof.
The depository of an unsponsored facility frequently is under no obligation
to distribute shareholder communications received from the issuer of the
deposited securities or to pass through the voting rights to facility
holders in respect to the deposited securities, whereas the depository of a
sponsored facility typically distributes shareholder communications and
passes through the voting rights.

Illiquid Securities

The Fund will not invest more than 10% of the value of its net assets in
securities that are illiquid because of restrictions on transferability or
other reasons. Repurchase agreements with deemed maturities in excess of
seven days and securities that are not registered under the Securities Act
of 1933 (the "1933 Act") but that may be purchased by institutional buyers
pursuant to Rule 144A under the 1933 Act are subject to this 10% limit.
Rule 144A allows for a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public by
establishing a "safe harbor" from the registration requirements of the 1933
Act for resales of certain securities to qualified institutional buyers.

Convertible Securities

The Fund may purchase convertible securities, which are fixed-income
securities, such as bonds or preferred stock, which may be converted at a
stated price within a specified period of time into a specified number of
shares of common stock of the same or a different issuer. Convertible
securities are senior to common stock in a corporation's capital structure,
but usually are subordinated to non-convertible debt securities. While
providing a fixed-income stream (generally higher in yield than the income
derivable from a common stock but lower than that afforded by a non-
convertible debt security), a convertible security also affords an investor
the opportunity, through its conversion feature, to participate in the
capital appreciation of the common stock into which it is convertible.

Page 6
<PAGE>

The Fund also may invest in debt securities with warrants attached or in
units with warrants. A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time.

In general, the market value of a convertible security is the higher of its
"investment value" (i.e., its value as a fixed-income security) or its
"conversion value" (i.e., the value of the underlying shares of common
stock if the security is converted). As a fixed-income security, the market
value of a convertible security generally increases when interest rates
decline and generally decreases when interest rates rise. However, the
price of a convertible security also is influenced by the market value of
the security's underlying common stock. Thus, the price of a convertible
security generally increases as the market value of the underlying stock
increases, and generally decreases as the market value of the underlying
stock declines. Investments in convertible securities generally entail less
risk than investments in the common stock of the same issuer.

Money Market Instruments

The Fund may invest, in the following types of money market instruments,
each of which at the time of purchase must have or be deemed to have under
rules of the Securities and Exchange Commission remaining maturities of 13
months or less. The Fund may invest in money market instruments and debt
securities, including bank obligations and commercial paper, which are at
least comparable in quality to the Fund's other investments. Bank
obligations may include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits earning a specified return, issued
for a definite period of time by a U.S. bank that is a member of the
Federal Reserve System or is insured by the Federal Deposit Insurance
Corporation, or by a savings and loan association or savings bank that is
insured by the Federal Deposit Insurance Corporation. Bank obligations
also include U.S. dollar-denominated obligations of foreign branches of
U.S. banks or of U.S. branches of foreign banks, all of the same type as
domestic bank obligations. 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. Investments by the Fund in non-
negotiable time deposits are limited to no more than 5% of its total assets
at the time of purchase.

U.S. Treasury Securities

U.S. Treasury securities include Treasury bills, Treasury notes and
Treasury bonds that differ in their interest rates, maturities and times of
issuance. Treasury bills have initial maturities of one year or less;
Treasury notes have initial maturities of one to ten years; and Treasury
bonds generally have initial maturities of greater than ten years.

U.S. Government Securities

In addition to U.S. Treasury securities, U.S. Government securities include
securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; others, such
as those issued by the Federal National Mortgage Association, by
discretionary authority of the U.S. Government to purchase certain
obligations of the agency or instrumentality; and others, such as those
issued by the Student Loan Marketing Association, only by the credit of the
agency or instrumentality. These securities bear fixed, floating or
variable rates of interest. Principal and interest may fluctuate based on
generally recognized reference rates or the relationship of rates. While
the U.S. Government provides financial support to such U.S. Government-
sponsored agencies or instrumentalities, no assurance can be given that it
will always do so, since it is not so obligated by law.

Page 7
<PAGE>

MANAGEMENT OF THE FUND

The Board of Trustees

Under Delaware law, the business and affairs of the Trust are managed under
the direction of the Board of Trustees. There are currently eight Trustees,
five of whom are not "interested persons" of the Trust within the meaning
of that term under the Act. The Trustees, in turn, elect the officers of
the Trust to supervise actively its day-to-day operations. The Statement of
Additional Information contains the name and background information
regarding each Trustee.

The Investment Advisor

Trainer, Wortham & Co., Inc. (the "Advisor"), with offices at 845 Third
Avenue, New York, NY 10022 is the Trust's investment advisor and manager
and is registered as an investment advisor under the Investment Advisors
Act of 1940, as amended.

The Advisor, organized in 1990, continues an investment counseling business
which began in 1924 as Trainer & Associates. The Advisor supervises
approximately $1.7 billion in investment accounts and is owned entirely by
the officers active in the day-to-day management of portfolios. By reason
of his ownership of 45% of the Advisor's stock, Charles V. Moore may be
said to be a "controlling person" of that firm.

Pursuant to an investment advisory agreement with the Trust on behalf of
the Fund, the Advisor receives an annual fee, accrued daily and paid
monthly of 0.75% of the Fund's average daily net assets. For the fiscal
year ended June 30, 1996, the Fund paid the Advisor fees aggregating,
$191,340 which is higher than the advisory fees paid by most other funds;
however, this fee is comparable to those of other mutual funds with similar
investment objectives.

Subject to the general supervision of the Board of Trustees, and in
accordance with the Fund's investment objectives, policies, and
restrictions, the Advisor manages the Fund's investment portfolio, makes
decisions with respect to and places orders for all purchases and sales of
the portfolio securities. The President of the Trust, David P. Como, has
been primarily responsible for the day-to-day investment management of the
Fund's portfolio since 1982. Mr. Como has been a Managing Director of the
Advisor since September, 1990, and was Managing Director and Vice President
of BIL, Trainer, Wortham & Co., its predecessor company, from 1988 through
September 1990.

Administrator

The Trust, on behalf of the Fund, has entered into an administrative
services agreement (the "Administration Agreement") with FPS Services, Inc.
("FPS"), 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-
0903, pursuant to which the administrator receives a fee accrued daily
and paid monthly of 0.15% of the value of such Fund's first $50 million of
total average net assets; 0.10% of the value of such Fund's next $50
million of total average net assets; and 0.05% of the value of such Fund's
total average net assets in excess of $100 million, subject to an annual
minimum fee of $72,000 for the Trust.

The term of the Administration Agreement is two years and shall continue in
force each year thereafter, so long as such continuance is approved (i) by
FPS; (ii) by vote, cast in person at a meeting called for the purpose, of a
majority of the Board of Trustees who are not parties to the Administration
Agreement or interested persons (as defined in the Act) of any such party,
and (iii) by vote of a majority of the Board of Trustees or a majority of
the Fund's outstanding voting securities. The Fund and FPS may terminate
the Administration Agreement at any time without penalty upon giving the
other party 120 days written notice. The Administration Agreement shall
automatically terminate in the event of its assignment.

The services FPS provides to the Fund include: coordinating and monitoring
of any third parties furnishing services; providing the necessary office
space, equipment and personnel to perform administrative and clerical
functions; preparing, filing and distributing of proxy materials, periodic
reports to shareholders, registration statements and other documents;
organizing of board meetings; and responding to shareholder inquiries.

Page 8
<PAGE>

Distributor

FPS Broker Services, Inc. ("FPSB") serves as the Fund's Distributor
on a best efforts basis. FPSB is an affiliated company of FPS
inasmuch as both are under common ownership.

Transfer Agent and Accounting Services Agent

FPS also serves as the Fund's Transfer Agent, Dividend Disbursing Agent,
Redemption Agent and Accounting Services Agent. In such capacities, FPS
is responsible for providing record-keeping and administrative services
(including calculation of net asset value) and for processing share
purchases and redemptions. Correspondence relating to purchases and
redemptions of Fund shares, or to dividend payments or reinvestment, should
be addressed to FPS Services, Inc.

Custodian

UMB Bank, n.a., Kansas City, MO is Custodian for the securities and cash of
the Fund.

DISTRIBUTION PLAN

The Shareholders of the Fund adopted a Plan of Distribution (the "Plan"),
effective October 31, 1991, pursuant to Rule 12b-1 under the Act, which was
last approved by the Board of Trustees on October 17, 1995. The Plan
permits the Fund to pay certain expenses associated with the distribution
of its shares. The Plan provides that the Fund will reimburse FPSB for
actual distribution and shareholder servicing expenses incurred by FPSB not
exceeding, on an annual basis, 0.25% of the Fund's average daily net
assets. Amounts expended by FPSB, but not reimbursed by the Fund, in any
year will not be a continuing liability of the Fund in subsequent years.
Because the Fund reimburses FPSB only for actual expenditures, FPSB
realizes no profit from the Plan. The Plan may be terminated by either
party at any time and the Fund shall have no liability for expenses that
were not reimbursed as of the date of termination.

All such payments made pursuant to the Plan shall be made for the purpose
of promoting the sale of shares or other such distribution related
expenses, including any distribution or service fees paid to securities
dealers, investment advisors, financial planners, and others, who have
executed a distribution agreement with FPSB. Distribution expenses
which are attributable to a particular Series will be charged against that
Series' assets. Distribution expenses which are attributable to more than
one Series will be allocated among the Series in proportion to their
relative net assets.

BROKERAGE

The Advisor will attempt to place portfolio transactions for the Fund with
those brokers and dealers who will execute orders in an effective manner at
the most favorable price. When the execution and price offered by two or
more brokers or dealers are comparable, the Advisor may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers who
provide research advice and other services. The Advisor may give
consideration to the sale of shares of the Fund as a factor in the
selection of brokers and dealers to execute Fund portfolio transactions
subject to seeking best price and execution. The Fund may pay brokerage
commissions to brokers which are affiliated with Officers and Trustees of
the Fund, provided that such transactions are in compliance with Section
17(e)(2) of the Act.

Portfolio Turnover

The rate of portfolio turnover will depend on the investment strategy
implemented by the Advisor for the Fund which will vary over any given time
period, but may be influenced by the following: general market conditions;
valuation analysis; market volatility; and technical analysis. It is not
the policy of the Fund to invest with the goal of generating short-term
trading profits, rather the Fund seeks to generate long-term capital
appreciation when possible by holding investments over a full market cycle,
normally 2-3 years. It is anticipated that the Fund's investment objective
and strategy will result in a portfolio turnover rate of less than 150%
over the course of a fiscal year, however market conditions may cause
turnover to exceed 150% in certain years. The portfolio turnover rates of
the Fund for the fiscal years ended June 30, 1996, 1995 and 1994
were 107%, 198%, and 178%, respectively. High portfolio turnover
involves correspondingly greater brokerage commissions and other costs,
which are borne directly by the Fund.

Page 9
<PAGE>

PURCHASE OF SHARES

Shares are offered for sale by the Fund on a continuous basis at the Fund's
net asset value. Purchasers of the Fund's shares pay no "sales load" or
underwriting commission, although broker-dealers effecting purchases or
sales of Fund shares for their customers may charge a service fee in
connection therewith. The minimum initial investment in the Fund is
$250.00. Existing shareholders may purchase additional shares with a
minimum purchase of $50 per transaction.

Purchases of the Fund are made at the net asset value per share next
determined after receipt by FPS as Transfer Agent of a purchase order in
good order. Thus, for orders received in good order before 4:00 p.m.
(Eastern time), the public offering price will be the net asset value
determined as of 4:00 p.m. (Eastern time) that day. Orders for Fund shares
received after 4:00 p.m. (Eastern time) will be purchased at the next
determined net asset value on the business day following receipt of the
order.

Investing By Telephone

The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Trust. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for same to the Fund. Shares of the
Fund may be purchased through broker-dealers, banks and bank trust
departments which may charge the investor a transaction fee or other fee
for their services at the time of purchase. Such fees would not otherwise
be charged if the shares were purchased directly from the Fund.

Investing By Mail

Prospective shareholders may purchase shares of the Fund by completing and
signing the "Investment Application" enclosed with this Prospectus and
sending the application, together with a check payable to First Mutual
Fund, c/o FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503,
King of Prussia, PA 19406-0903. Except as noted below, purchases
without full payment will not be processed until payment is received. The
ownership of shares shall be recorded on the books of the Transfer Agent in
an account under the shareholder's name. A confirmation of the purchase
will be issued showing the account number and number of shares owned.

Investing by Wire

Shares may also be purchased by instructing the bank to wire Federal Funds
to the Transfer Agent. Federal Funds are monies of member banks within the
Federal Reserve System. The bank must include the full name(s) in which
the account is registered and the Fund account number, and should address
its wire as follows:

UMB BANK KC NA
ABA # 10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "First Mutual Fund,"
Account of (exact name(s) of account registration)
---------------------------------------
Shareholder Account #________________

When opening a new account by wire transfer, first telephone the Transfer
Agent at 800-441-6580 to request an account number and furnish the Fund
with a social security or other tax identification number. A completed
application with signature(s) of registrant(s) must be filed with the Fund
immediately subsequent to the initial wire. Federal Funds wires must be
made in amounts of $250 or more. The bank will generally charge a fee for
this wire. The Fund will not be responsible for the consequences of delays,
including delays in the banking or Federal Reserve wire systems.

Subsequent Investments

Once a shareholder's account has been established, additional purchases may
be made by sending a check payable to ""First Mutual Fund" c/o FPS
Services, Inc., P.O. Box 412797, Kansas City, MO 64141-2797. Please enclose
the stub

Page 10
<PAGE>

of the account statement and include the Fund account number on the check
(as well as the attributable year for retirement plan investments, if
applicable). Additional purchases may also be made through the Fund's
Automatic Investment Plan which provides shareholders a convenient method
to make regularly scheduled subsequent investments. See "SHAREHOLDER
SERVICES."

REDEMPTION OF SHARES

Redemptions By Written Request

Shareholders may redeem shares by mail by writing directly to the Transfer
Agent at FPS Services, Inc. ,3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903, and requesting liquidation of all or any part of
their shares. The redemption request must be signed exactly as the
shareholder's name appears on the form of registration and must include the
Fund account number. If shares are owned by more than one person, the
redemption request must be signed by all owners exactly as their names
appear in the registration. Shares registered in the name of corporations,
trusts and fiduciaries can be redeemed only upon instructions of a duly
authorized person. To protect the account, the Transfer Agent and the Fund
from fraud, signature guarantees are required for certain redemptions.
Signature guarantees are required for: (1) all redemptions of $25,000 or
more; (2) any redemptions if the proceeds are to be paid to someone other
than the person(s) or organization in whose name the account is registered;
(3) any redemptions which request that the proceeds be wired to a bank
(unless bank information was received at the time the account was
established); and (4) requests to transfer the registration of shares to
another owner. The Transfer Agent requires that signatures be guaranteed by
an "eligible guarantor institution" as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include
banks, broker-dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program. The Transfer Agent cannot
accept guarantees from notaries public. The Transfer Agent may require
additional supporting documents for redemptions made by corporations,
executors, administrators, trustees and guardians. In addition, the Fund
will not mail redemption proceeds until checks (including certified checks
or cashier's checks) received for the shares purchased have cleared, which
can be as long as 15 days.

Shares will be redeemed at the net asset value, next determined after
receipt of a redemption request in proper form. Moreover, under the Act,
the right of redemption may be suspended when (a) trading on the New York
Stock Exchange is restricted or such Exchange is closed for other than
weekends or holidays, (b) the Securities and Exchange Commission has by
order permitted such suspension, or (c) an emergency exists making disposal
of portfolio securities or valuation of net assets not reasonably
practicable. When in the opinion of the Board of Trustees, conditions
exist which make payments in cash on redemption unwise or undesirable, the
Fund may make payment of redemption in securities.

The value of a shareholder's shares upon redemption may be more or less
than their cost depending upon the value of the Fund's portfolio securities
at the time of redemption.

Redemptions By Telephone

Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the Transfer
Agent by telephone at (800) 441-6580.

In order to arrange for redemption by wire or telephone after an account
has been opened, or to change the bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent
at the address listed under "Investing by Mail". Such requests
must be signed by the shareholder, with signatures guaranteed (see "By
Written Request" for details regarding signature guarantees). Further
documentation may be requested from corporations, executors,
administrators, trustees, or guardians.
Page 11
<PAGE>

The Fund reserves the right to refuse a wire or telephone redemption if it
is believed advisable to do so. Procedures for redeeming Fund shares by
wire or telephone may be modified or terminated at any time by the Fund.
Neither the Fund nor any of their service contractors will be liable for
any loss or expense in acting upon telephone instructions that are
reasonably believed to be genuine. In attempting to confirm that telephone
instructions are genuine, the Fund will use such procedures as are
considered reasonable, including requesting a shareholder to correctly
state his or her Fund account number, the name in which his or her account
is registered, his or her social security number, banking institution, bank
account number, and the name in which his or her bank account is
registered. To the extent that the Fund fails to use reasonable procedures
to verify the genuineness of telephone instructions, it and/or its service
contractors may be liable for any such instructions that prove to be
fraudulent or unauthorized.

Shares of the Fund may be redeemed through certain broker-dealers, banks
and bank trust departments who may charge the investor a transaction fee or
other fee for their services at the time of redemption. Such fees would
not otherwise be charged if the shares were redeemed directly from the
Fund.

EXCHANGE OF SHARES

You may exchange your shares of any Series of the Trust for shares of
either of the other Series at net asset value without the payment of any
fee or charge in writing or by telephone. An exchange is considered a sale
of shares and may result in capital gain or loss for federal income tax
purposes. Before an exchange can be made, you must have received the
current Prospectus for the Series into which you wish to exchange,
and the exchange privilege may be exercised only in those states where
shares of such Series, as the case may be, may legally be sold. If the
Transfer Agent receives exchange instructions from you in writing or by
telephone at (800) 441-6580, in good order by the Valuation Time on any
Business Day, the exchange will be effected that day. For your exchange
request to be in good order, your request must include your name as it
appears on your account, your account number, the amount to be exchanged,
the name of the Funds from which and to which the exchange is to be made
and a signature guarantee as may be required. A written request by you for
an exchange in excess of $25,000 must be accompanied by a signature
guarantee as described under "REDEMPTION OF SHARES - By Written
Request."

SHAREHOLDER SERVICES

The following special services are available to shareholders. An investor
may change or stop these services at any time by written notice to the
Fund.

Automatic Investment Plan

The Fund has an Automatic Investment Plan which provides shareholders with
a convenient method by which investors may have amounts deducted directly
from their checking accounts for investment in the Fund. The minimum
initial and subsequent investments for the Fund also apply when using this
method of investing. To begin participating in this Plan, use the
Automatic Investment Plan Application found in the back of this Prospectus.

Systematic Cash Withdrawal Plan

The Fund has a Systematic Withdrawal Plan, which provides for voluntary
automatic withdrawals of at least $50 monthly, quarterly, semi-annually or
annually. In order to qualify for this option, dividends and capital gains
must be reinvested.

Retirement Plans

The Fund has available an Individual Retirement Account for use by certain
individuals who qualify (including earned income from self-employment).
More detailed information about how to participate in this plan, the fees
charged by the Custodian bank, and the limits on contributions can be found
in the Statement of Additional Information or may be obtained by contacting
the Fund at (800) 257-4414.

Page 12
<PAGE>

NET ASSET VALUE

The net asset value per share of capital stock of the Fund will be
determined each business day on which the New York Stock Exchange is open
for business as of the close of regular trading hours (currently 4:00 p.m.
Eastern time) and for any other day (other than a day on which no shares
are tendered for redemption and no order to purchase or sell any shares is
received) during which there is a sufficient degree of trading in the
Fund's portfolio securities that the Fund's net asset value per share might
be materially affected. Determination of net asset value will be in
accordance with generally accepted accounting principles and will be
computed by dividing the value of the Fund's total net assets by the total
number of shares outstanding. Securities traded on a securities exchange
are valued at the last sale price prior to the time of computation or, if
there have been no sales on that day, at the mean of their closing bid and
asked prices. Securities not traded on a securities exchange but for which
market quotations are readily available will be valued at the mean of their
bid and asked prices, although securities traded over the counter on NASDAQ
will be valued at their last sale price. Securities not traded on a
securities exchange and other securities or assets for which market
quotations are not readily available will be valued at fair value as
determined in good faith by the Board of Trustees. Once the aggregate
value of all securities has been determined, there will be added to this
total the dollar amount of cash on hand and receivables and the value of
all other assets. From the sum of the foregoing, the aggregate amount of
all liabilities and all accrued expenses will be deducted to produce the
total net asset value of all shares outstanding.

DIVIDENDS AND TAXES

The Fund intends to qualify annually to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986,
as amended (the "Code"). As such, the Fund will not be subject to Federal
income tax, or to any excise tax, to the extent its earnings are
distributed as provided in the Code and by satisfying certain other
requirements relating to the sources of its income and diversification of
its assets.

The Fund intends to distribute substantially all of its net investment
income and net capital gains. The Fund intends to distribute its net
investment income at least annually and to distribute its net capital
gains, if any, at least annually. Dividends from net investment income or
net short-term capital gains will be taxable to you as ordinary income,
whether received in cash or in additional shares.

The Fund permits any shareholder located in states where the Fund's shares
are registered (regardless of the number of shares owned) to elect a
Dividend Reinvestment Plan for the automatic reinvestment of all
distributions. If a dividend is declared from net investment income or a
capital gains distribution is declared from net capital gains, investors
electing under the Dividend Reinvestment Plan are required to take such
dividends or distribution in Fund shares rather than in cash. The full
amount of the distribution will be invested and the shareholder will be
credited with any full or fractional shares resulting. The investment
under the Dividend Reinvestment Plan will be made at the current net asset
value on the dividend payable date. Dividends and capital gains
distributions will result in a taxable event for the investor even though
invested in shares.

An investor may elect or terminate participation in the Dividend
Reinvestment Plan at any time. Elections to participate must be made using
the Investment Application. Termination can be made by written notice.
Costs of the Plan will be borne by the Fund. There is no assurance that
the Plan will result in a profit for an investor.

For corporate investors in the Fund, dividends from net investment income
will generally qualify in part for the corporate dividends-received
deduction. However, the portion of the dividends so qualified depends on
the aggregate qualifying dividend income received by the Fund from domestic
(U.S.) sources.

Page 13
<PAGE>

of management activities. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, if purchases of
shares in a Fund are made shortly before the record date for a capital
gains distribution or a dividend, a portion of the investment will be
returned as a taxable distribution.

Dividends which are declared in October, November or December to
shareholders of record in such a month but which, for operational reasons,
may not be paid to the shareholder until the following January, will be
treated for tax purposes as if paid by a Fund and received by the
shareholder on December 31 of the calendar year in which they are declared.

A sale or redemption of shares of a Fund is a taxable event and may result
in a capital gain or loss to shareholders subject to tax. Any loss
incurred on sale or exchange of a Fund's shares held for six months or less
will be treated as a long-term capital loss to the extent of any capital
gain dividends received with respect to such shares.

In addition to Federal taxes, shareholders may be subject to state and
local taxes on distributions. It is recommended that shareholders consult
their tax advisers regarding specific questions as to Federal, state, local
or foreign taxes.

Each year, the Fund will mail information to shareholders on the tax status
of the Fund's dividends and distributions made to shareholders.

The Fund is required to withhold 31% of taxable dividends, capital gains
distributions, and redemptions paid to shareholders who have not complied
with IRS taxpayer identification regulations. You may avoid this
withholding requirement by certifying on your account registration form
your proper taxpayer identification number and by certifying that you are
not subject to backup withholding.

The tax discussion set forth above is included for general information
only. Prospective investors should consult their own tax advisers
concerning the Federal, state, local or foreign tax consequences of an
investment in the Fund.

PERFORMANCE INFORMATION

From time to time, performance information regarding the Fund, such as
total return, may be quoted in advertisements or in communications to
shareholders. These performance quotations represent the Fund's past
performance, and should not be considered as representative of future
results. The Fund's total return may be calculated on an average annual
and/or aggregate basis for various periods (which will be stated in all
advertisements). Average annual total return reflects the average
percentage change per year in the value of an investment in the Fund.
Aggregate total return reflects the total percentage change over the stated
period. In calculating total return, the assumption is made that dividends
and capital gain distributions made by the Fund during the period are
reinvested in additional shares.

Total return of the Fund may be compared to: other mutual funds with
similar investment objectives; other relevant indices; rankings prepared by
independent services; and financial or industry publications and/or other
publications or services that monitor the performance of mutual funds, such
as Lipper Analytical, CDA/Weisenberger, the Investment Company Institute,
Morningstar, Inc., the Dow Jones Composite Average or its component indices
and Standard & Poor's 500 Stock Index or its component indices, among
others.

The principal value of an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.

A graph comparing the increase in value of a $10,000 investment in First
Mutual Fund with the performance of the Standard & Poor's 500 Index and a
discussion of performance is included in the Fund's Annual Report dated
June 30, 1996.

Page 14
<PAGE>

GENERAL INFORMATION

Organization

First Mutual Fund is a separate, diversified, Series of Trainer, Wortham
First Mutual Funds, a Delaware business trust organized pursuant to a Trust
Instrument dated January 17, 1995. On October 1, 1996, the name
of the Trust was changed from First Mutual Funds to its present name. The
Trust is registered under the Act as an open-end diversified management
investment company commonly known as a mutual fund. The Trustees of the
Trust may establish additional series or classes of shares of the Trust
without the approval of shareholders. The assets of each Series belong
only to that Series, and the liabilities of each Series are borne solely by
that Series and no other.

Description of Shares

The Fund is authorized to issue an unlimited number of shares of beneficial
interest with a par value of $0.001 per share. Shares of the Fund represent
equal proportionate interests in the assets of the Fund only and have
identical voting, dividend, redemption, liquidation and other rights. All
shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares.
Currently, there is only one class of shares issued by the Fund.

Shareholder Meetings

The Board of Trustees do not intend to hold annual meetings of
shareholders of the Fund. The Board of Trustees has undertaken to the
Securities and Exchange Commission, however, that they will promptly call a
meeting for the purpose of voting upon the question of removal of any
Trustee when requested to do so by holders of not less than 10% of the
outstanding shares of the Fund. In addition, subject to certain
conditions, shareholders of the Fund may apply to the Fund to communicate
with other shareholders to request a shareholder's meeting to vote upon the
removal of a Trustee or Trustees.

Certain Provisions of Trust Instrument

Under Delaware law, the shareholders of the Fund will not be personally
liable for the obligations of the Trust; a shareholder is entitled to the
same limitation of personal liability extended to shareholders of
corporations.

Shareholder Reports and Inquiries

Shareholders will receive annual financial statements which are audited by
the Fund's independent accountants, Tait, Weller & Baker, as well as
unaudited semi-annual financial statements. Shareholder inquiries should be
addressed to First Mutual Fund, c/o FPS Services, Inc., 3200 Horizon Drive,
P.O. Box 61503, King of Prussia, PA 19406-0903. or by calling (800) 257-
4414.

Page 15
<PAGE>

<TABLE>
<CAPTION>
<C> <S>
INVESTMENT APPLICATION
-----------------------------------------------------------------------------------------------------------------------------
MAIL TO: FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903

1. INITIAL INVESTMENT ($250 minimum)
-----------------------------------------------------------------------------------------------------------------------------
FORM OF PAYMENT
[_] Check for $ ___________ enclosed (payable to "First Mutual Fund")
[_] BY WIRE* An initial purchase of $ ________________ was wired on ____________ by
(Date)
_____________________________________________________ to account # ______________________________
Name of your Bank or Broker Number assigned by FPS

* Before making an initial investment by wire, you must be assigned an account number by calling (800) 441-6580. Then
have your local bank wire your funds to: UMB Bank, N.A., ABA #10-10-00695 for credit to FPS AC #98-7037-071-9 (First
Mutual Fund). Be sure to include your name and account number on the wire.
-----------------------------------------------------------------------------------------------------------------------------
2. REGISTRATION (Please Print)
-----------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL
------------------------------------------------- ------------------------------
First Name Middle Initial Last Name Social Security #
------------------------------------------------- ------------------------------
Jt. Owner First Name* Middle Initial Last Name Social Security #

Citizen of: [_] United States [_] Other (Please indicate) __________________________

* (Joint ownership with rights of survivorship unless otherwise noted).
-----------------------------------------------------------------------------------------------------------------------------
GIFT TO MINORS
_______________________________________________________________________
Name of Custodian (Name one only) As Custodian For (name one only)
Under the _______________ Uniform Gift to Minors Act ________________________
State Minor's Social Security #
-----------------------------------------------------------------------------------------------------------------------------
CORPORATIONS, PARTNERSHIPS, TRUSTS and OTHERS**
________________________________________________________________________
Name of Corporation, Partnership, Trust or Other
________________________________________________________________________ Tax I.D. #
Name of Trustee(s) Date of Trust
**Complete Corporate Resolution attached.
-----------------------------------------------------------------------------------------------------------------------------
3. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)
-----------------------------------------------------------------------------------------------------------------------------
________________________________________________________________________
Street Address and Apt. No. City State Zip
( ) _____________________________ ( ) ____________________________
Residence Telephone Number Business Telephone Number
-----------------------------------------------------------------------------------------------------------------------------
4. DISTRIBUTION OPTIONS (Please indicate one)
-----------------------------------------------------------------------------------------------------------------------------
[_] Reinvest (dividends & capital gains in additional shares).
[_] Cash Dividends (dividend in cash, capital gains in additional shares).
[_] All Cash (dividends & capital gains in cash)
-----------------------------------------------------------------------------------------------------------------------------
5. SYSTEMATIC WITHDRAWAL PLAN (Minimum initial investment $5,000)
-----------------------------------------------------------------------------------------------------------------------------
A check in the amount of $ _________ (minimum $50) will be sent to your address of record unless otherwise noted.
Please select desired frequency:
[_] Monthly, prior to last day
[_] Quarterly, prior to last day of ________________, ________________, ________________ and _______________.
[_] Semi-Annual or Annual, prior to the last day of __________________, _________________, or _______________.
-----------------------------------------------------------------------------------------------------------------------------
6. Telephone Privilege:
Redemptions; Exchanges Between Funds

Check box if you want this service:
I (We) authorize FPS Services, Inc. and/or Trainer, Wortham first Mutual Funds to act upon instructions received by telephone
from me (us) to redeem shares or to exchange for shares of other Trainer, Wortham First Mutual Funds. I (we) understand an
exchange is made by redeeming shares of one fund and using the proceeds to buy shares of another fund. Exchanges must be made
into identically registered accounts. Redemption proceeds will be sent as indicated in this prospectus.

* If not otherwise indicated below, only exchanges will be allowed.
[_] Redemption [_] Exchanges [_] Both

Check one only, if none are checked all redemptions will be sent by check.

[_] All redemptions proceeds will be executed by an ACH transaction unless FPS Services, Inc. is notified otherwise in
writing. There is no charge for ACH transactions. Allow 3 business days.

[_] All redemption proceeds will be executed by a FED Wire transaction unless FPS Services is notified otherwise in writing.
There is a $9 charge for FED Wire transactions.

[_] All redemption proceeds will be sent by check to the mailing address indicated below unless FPS Services is notified
otherwise in writing.

All FED Wire and ACH transactions will be sent as indicated below. There will be no charge for ACH transactions. Any changes in ACH
transactions must be made in writing to FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903.
Please allow one month for ACH instructions to be effective.

(Notify your bank of your intent to establish this option on your bank account.)

- ------------------------------------------------------------------------------------------------------------------------------
Bank Name Branch Office (if applicable)

- ------------------------------------------------------------------------------------------------------------------------------
Bank Address (Do not use P.O. Box) City State Zip Code

- ------------------------------------------------------------------------------------------------------------------------------
Bank Wire Routing Number Name(s) on Your Bank Account Your Bank Account Number

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

Voided Personal Check or Deposit Slip Must Be Attached
-----------------------------------------------------------------------------------------------------------------------------
7. SIGNATURE AND CERTIFICATION
-----------------------------------------------------------------------------------------------------------------------------
The following is required by Federal tax law to avoid 20% backup withholding, "By signing below, I certify under penalties of
perjury that the social security or taxpayer identification number entered above is correct (or I am waiting for a number to be
issued to me), and that I have not been notified by the IRS that I am subject to backup withholding unless I have checked the
box." If you have been notified by the IRS that you are subject to backup withholding, check box [_]. "The Internal Revenue
Service does not require your consent to any provision of this document other than the certifications required to avoid backup
withholding."

Receipt of current prospectus is hereby acknowledged.
________________________________________________________________________
Signature [_] Owner [_] Custodian [_] Trustee Date
________________________________________________________________________
Signature of Joint Owner (if applicable)
-----------------------------------------------------------------------------------------------------------------------------
7. INVESTMENT DEALER INFORMATION
-----------------------------------------------------------------------------------------------------------------------------

____________________________________________________________________________________________________________________
Name of Firm Rep. Name & No. Authorized Signature

--------------------------------------------------------------------------------------------------------------------
Street Address City State Zip
-----------------------------------------------------------------------------------------------------------------------------

</TABLE>

<PAGE>

AUTOMATIC INVESTMENT PLAN APPLICATION

How does it work?

1. FPS Services, Inc. through our bank, UMB Bank, KC NA, draws an automatic
clearing house (ACH) debit electronically against your personal checking
account each month, according to your instructions.

2. Choose any amount ($50 or more) that you would like to invest regularly
and your debit for the amount will be processed by FPS Services Inc. as
if you had written a check yourself.

3. Shares will be purchased and a confirmation sent to you.

How do I set it up?

1. Complete the forms and the Fund Application Form if you do not already
have an existing account.

2. Mark one of your personal checks or deposit slips VOID, attach it to the
forms below and mail to FPS Services, Inc., 3200 Horizon Drive, P.O. Box
61503, King of Prussia, PA 19406-0903.

3. As soon as your bank accepts your authorization, debits will be generated
and your Automatic Investment Plan started. In order for you to have ACH
debits from your account, your bank must be able to accept ACH
transactions and/or be a member of an ACH association. Your branch manager
should be able to tell you your bank's capability. We cannot guarantee
acceptance by your bank.

4. Please allow one month for processing of your Automatic Investment Plan
before the first debit occurs.

- -------------------------------------------------------------------------------
Automatic Investment Plan Application

TO: FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903

Please start an Automatic Investment Plan for me and invest _______________
($50 or more)

on the [_] 10th [_] 15th [_] 20th of each month,
in shares of First Mutual Fund

Check one:
[_] I am in the process of establishing an account.
or
[_] My account number is: ______________________________________________
________________________________________________________________________
Name as account is registered

________________________________________________________________________
Street

________________________________________________________________________
City State Zip

I understand that my ACH debit will be dated on the day of each month as
indicated above or as specified by written request. I agree that if such debit
is not honored upon presentation, FPS Services, Inc. may discontinue this
service and any share purchase made upon deposit of such debit may be canceled.
I further agree that if the net asset value of the shares purchased with such
debit is less when said purchase is canceled than when the purchase was made,
FPS Services Inc. shall be authorized to liquidate other shares or fractions
thereof held in my account to make up the deficiency. This Automatic Investment
Plan may be discontinued by FPS Services, Inc. upon 30-days written notice or at
any time by the investor by written notice to FPS Services, Inc. which is
received not later than 5 business days prior to the above designated investment
date.

Signature(s): _________________________

_________________________

<PAGE>
AUTOMATIC INVESTMENT PLAN APPLICATION

Bank Request and Authorization

TO: _________________________ ________________________________
Name of Your Bank Bank Checking Account Number

______________________________________________________________
Address of Bank or Branch Where Account is Maintained

As a convenience to me, please honor ACH debits on my account drawn by
FPS Services, Inc., UMB Bank, KC NA and payable to "FIRST MUTUAL FUND."

I agree that your rights with respect to such debit shall be the same as
if it were a check drawn upon you and signed personally by me. This
authority shall remain in effect until you receive written notice from
me changing its terms or revoking it, and until you actually receive
such notice, I agree that you shall be fully protected in honoring such
debt.

I further agree that if any debit is dishonored, whether with or without
cause or whether intentionally or inadvertently, you shall be under no
liability whatsoever.

DEPOSITOR'S ___________________________________________
Signature of Bank Depositor(s) as shown on bank records.

NOTE: Your bank must be able to accept ACH transactions and/or be a
member of an ACH association in order for you to use this service.

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

Indemnification Agreement

TO: The Bank Named Above

So that you may comply with your Depositor's request and authorization,
TRAINER, WORTHAM FIRST MUTUAL FUNDS agrees as follows:

1. To indemnify and hold you harmless from any loss you may suffer
arising from or in connection with the payment by you of a debit
drawn by FPS Services, Inc. to the order of FIRST MUTUAL FUND
designated on the account of your depositor(s) executing the
authorization including any costs or expenses reasonably incurred in
connection with such loss. TRAINER, WORTHAM FIRST MUTUAL FUNDS will
not, however, indemnify you against any loss due to your payment of
any debit generated against insufficient funds.

2. To refund to you any amount erroneously paid to you to FPS Services,
Inc. on any such debit if claim for the amount of such erroneous
payment is made by you within 3 months of the date of such debit on
which erroneous payment was made.

<PAGE>

This is your

INVESTMENT APPLICATION

Detach and Mail to:

FPS Services, Inc.
3200 Horizon Drive
P.O. Box 61503
King of Prussia, PA 19406-0903

<PAGE>

RESOLUTIONS

(This Section to be Completed by Corporations, Trusts, and Other Organizations).

RESOLVED: That this corporation or organization become a shareholder of First
Mutual Fund of Trainer, Wortham First Mutual Funds (the "Trust") and that

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

is (are) aware hereby authorized to complete and execute the Application of
behalf of the corporation or organization and take any action for it as may be
necessary or appropriate with respect to its shareholders account(s) with the
Trust, and it is FURTHER RESOLVED: That any one of the above-noted officers is
authorized to sign any documents necessary or appropriate to appoint FPS
Services, Inc. as redemption agent of the corporation or organization for shares
of the Trust, to establish or acknowledge terms and conditions governing the
redemption of said shares or to otherwise implement the privileges elected on
the application.

CERTIFICATE

I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws

or other empowering documents of the

- ----------------------------------------------------------
(Name of Corporation)

incorporated or formed under the laws of

- ---------------------------------------------------
(State)

and were adopted at a meeting of the Board or Trustees of the organization or
corporation duly called and held on ________________ at which a quorum was
present and acting throughout, and that the same are now in full force and
effect.

I further certify that the following is (are) the duly elected officer(s) of the
corporation or organization, authorized to act in accordance with the foregoing
resolutions.

Name Title Name Title

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

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

Witness my hand and the seal of the corporation or organization this _____ day
of ________, 19__.

________________________________

____________________________________
*Secretary-Clerk Other Authorized Officer (if required)

*If the Secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.

<PAGE>

TRAINER, WORTHAM FIRST MUTUAL FUNDS

TRAINER, WORTHAM EMERGING GROWTH FUND

845 Third Avenue, 6th Floor
New York, NY 10022
(800) 257-4414

PROSPECTUS
October 1, 1996

Trainer, Wortham First Mutual Funds (the "Trust") is an open-end,
management investment company which currently offers shares of three
series: First Mutual Fund; Trainer, Wortham Emerging Growth Fund; and
Trainer, Wortham Total Return Bond Fund (individually and collectively, the
"Series"). Each Series has distinct investment objectives and policies.

This prospectus pertains only to Trainer, Wortham Emerging Growth Fund (the
"Fund"). The Fund's investment objective is to seek capital appreciation
through investments in the common stock of emerging growth companies which
are defined as companies achieving or about to achieve rapid earnings
growth with weighted average market capitalizations of approximately
$1 billion. Trainer, Wortham & Co., Inc. (the "Advisor") serves as the
Fund's investment advisor.

The minimum initial investment for the Fund is $250. Subsequent
investments will be accepted in minimum amounts of $50.00

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

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

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

Page 1
<PAGE>

TABLE OF CONTENTS
Page
----

Expense Information
Investment Objective and Policies..................................
Investment Strategies and Risk Considerations......................
Management of the Fund.............................................
The Board of Trustees............................................
The Investment Advisor...........................................
Administrator....................................................
Distributor......................................................
Transfer Agent/Accounting Services Agent/Custodian...............
Distribution Plan..................................................
Brokerage..........................................................
Purchase of Shares.................................................
Redemption of Shares...............................................
Exchange of Shares.................................................
Shareholder Services...............................................
Net Asset Value....................................................
Dividends and Taxes................................................
Performance Information............................................
General Information................................................

================================================================================
FOR MORE DETAILED INFORMATION ABOUT THE ITEMS DISCUSSED IN THIS PROSPECTUS,
A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION MAY BE OBTAINED WITHOUT
CHARGE BY WRITING TO THE FUND AT 845 THIRD AVENUE, 6TH FLOOR, NEW YORK, NY
10022, OR BY CALLING (800) 257-4414.
================================================================================

Page 2

<PAGE>

EXPENSE INFORMATION

Below is a summary of the Fund's estimated operating expenses. A
hypothetical example based on the summary is also shown.

<TABLE>
<CAPTION>
Annual Fund Operating Expenses/(1)/
(as a percentage of average net assets):
<S> <C>
Management Fees (after fee waiver)/(2)/...................... 0.00%
12b-1 Fees................................................... 0.50%
Other Expenses (after any expense
reimbursement)/(2)/.......................................... 0.75%

Total Fund Operating Expenses (after fee
waiver and any reimbursement)/(2)/........................... 1.25%
</TABLE>

<TABLE>
<CAPTION>
Example: 1 year 3 years
------ -------

<S> <C> <C>
An investor would pay the
following expenses on a $1,000
investment assuming (1) a 5%
annual return and (2) redemption
at the end of each period $13 $40
</TABLE>

/(1)/ Trainer, Wortham Emerging Growth Fund will commence investment
operations on or about October 1, 1996. The expenses
shown are those expected to be incurred for the Fund's first fiscal
period.

/(2)/ Based on estimated expenses for the current fiscal year, the Advisor
has undertaken to waive its investment advisory fee and/or assume
certain expenses of the Fund other than brokerage fees, extraordinary
items and taxes to the extent Total Fund Operating Expenses exceed
2.5%. Without such waiver and expense reimbursement, Management
Fees stated above would be 1.25%. Other Expenses would remain the
same and Total Fund Operating Expenses would be 2.50%.

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

The purpose of the tables above is to assist an investor in understanding
the various costs and expenses that an investor in the Fund will bear
directly or indirectly. The Fund does not impose any sales load,
redemption or exchange fees; however, the transfer agent currently charges
investors who request redemptions by wire transfer a fee of $9 for each
transaction. For more complete descriptions of the various costs and
expenses, see the sections entitled "MANAGEMENT OF THE FUND," and
"DISTRIBUTION PLAN."

Page 3
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund's investment objective is to seek capital appreciation through
investments in the common stock of emerging growth companies. Emerging
growth companies are defined as companies that are achieving, or about to
achieve, rapid earnings growth due to a new product, a new industry,
technological innovation, new management, or a novel strategic corporate
positioning, among other factors. The weighted average market
capitalization of holdings in the Fund will be approximately $1 billion.
The Fund seeks to outperform equity returns generated by relevant benchmark
indices such as the Russell 2500 index and S & P 600 Small-cap Index, as
well as, mutual fund indices for funds with comparable investment
objectives. The Fund seeks to meet this objective by employing proprietary,
fundamental, technical and valuation analysis in the selection of small
capitalization, publicly traded U.S. companies. Due to the inherent risk in
any investment program, the Fund cannot ensure that its investment
objectives will be realized. The value of a Fund share will fluctuate as
the value of the securities in the Fund's portfolio fluctuate.

The Fund will normally invest at least 95% of the value of its total assets
(except when maintaining a temporary defensive position) in the common
stock of emerging growth companies as defined above. The Fund will invest
in companies that are achieving rapid earnings growth either as the result
of new products, a new corporate operating strategy, technological
innovation, financial recapitalization or new management among other
factors. In general, companies achieving strong earnings growth have higher
near-term appreciation potential than companies that are growing more
slowly, out-of-favor "value" stocks, or cyclical stocks. The Fund will seek
to limit risk by investing only in companies that can be accumulated at
what the Advisor deems reasonable valuations, and by avoiding situations in
which financial distress is apparent or imminent. The Fund will also
contain risk through diversification; no single investment will constitute
more than 5% of the Fund at cost.

When in the opinion of the Advisor, a defensive investment posture is
warranted, the Fund is permitted to invest temporarily and without
limitation in U.S. Government obligations, money market instruments
(such as U.S. Treasury bills, commercial paper, certificates of
deposit and banker's acceptances) and repurchase agreements. Assets so
invested will be productive and yet readily available (when markets are
deemed attractive) for reinvestment in accordance with the Fund's principal
investment policies.

Although the Fund's portfolio is professionally managed, the Fund
may suffer a loss on investments resulting in a lower net asset value. The
likelihood of loss is greater than that for funds with more conservative
investment objectives.

INVESTMENT STRATEGIES AND RISK CONSIDERATIONS

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Page 4
<PAGE>

Repurchase Agreements
The Fund may enter into repurchase agreements with respect to permissible
portfolio securities. Under the terms of a repurchase agreement, the Fund
would acquire securities from financial institutions such as banks and
registered broker-dealers which the Advisor deems creditworthy under
guidelines approved by the Board of Trustees, subject to the seller's
agreement to repurchase such securities at a mutually agreed-upon date and
price. The repurchase price would generally equal the price paid by the
Fund plus interest negotiated on the basis of then-current short-term
rates, which may be more or less than the rate on the underlying portfolio
securities. The seller under a repurchase agreement will be required to
maintain the value of collateral held pursuant to the agreement at not less
than 102% of the repurchase price (including accrued interest). If the
seller were to default on its repurchase obligation or become insolvent,
the Fund would suffer a loss to the extent that the proceeds from a sale of
the underlying portfolio securities were less than the repurchase price
under the agreement, or to the extent that the disposition of such
securities by the Fund were delayed pending court action. It is the intent
of the Fund to utilize repurchase agreements to invest idle funds for short
periods of time. Securities subject to repurchase agreements will be held
by the Fund's Custodian or in the Federal Reserve/Treasury book-entry
system. Repurchase agreements are considered to be loans by the Fund under
the Investment Company Act of 1940, as amended (the "Act").

American Depository Receipts ("ADRs")

Investments in foreign securities are subject to special investment risks
that differ in some respects from those related to investments in
securities of U.S. domestic issuers. Such risks include potential
political, social or economic instability in the country of the issuer, the
difficulty of predicting international trade patterns, the possibility of
the imposition of exchange controls, expropriation, limits on removal of
currency or other assets, nationalization of assets, foreign withholding
and income taxation, and foreign trading practices (including higher
trading commissions, custodial charges and delayed settlements). Such
securities may be subject to greater fluctuations in price than securities
issued by United States corporations or issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. The markets on which such
securities trade may have less volume and liquidity, and may be more
volatile, than securities markets in the United States. In addition, there
may be less publicly available information about a foreign company than
about a United States domiciled company. Foreign companies generally are
not subject to uniform accounting, auditing and financial reporting
standards comparable to those applicable to domestic companies. There is
generally less government regulation of securities exchanges, brokers and
listed companies abroad than in the U.S. Confiscatory taxation or
diplomatic developments could also affect investment in those countries. In
addition, foreign branches of U.S. banks, foreign banks and foreign issuers
may be subject to less stringent reserve requirements and to different
accounting, auditing, reporting, and recordkeeping standards than those
applicable to domestic branches of U.S. banks and domestic issuers.

For many foreign securities, dollar-denominated ADRs, which are traded in
the United States on exchanges or over-the-counter, are issued by domestic
banks. ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a correspondent bank. ADRs do not
eliminate the risk inherent in investing in the securities of foreign
issuers. However, by investing in ADRs rather than directly in stock of
foreign issuers, the Fund can avoid currency risks during the settlement
period for either purchases or sales. In general, there is a large, liquid
market in the United States for many ADRs. The information available for
ADRs is subject to the accounting, auditing and financial reporting
standards of the domestic market or exchange on which they are traded,
whose standards are more uniform and more exacting than those to which many
foreign issuers may be subject. The Fund may also invest in European
Depository Receipts, or EDRs, which are receipts evidencing an arrangement
with a European bank similar to that for ADRs and are designed for use in
the European securities markets.

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Page 5
<PAGE>

securities, whereas the depository of a sponsored facility typically
distributes shareholder communications and passes through the voting
rights.

Illiquid Securities
The Fund will not invest more than 10% of the value of its net assets in
securities that are illiquid because of restrictions on transferability or
other reasons. Repurchase agreements with deemed maturities in excess of
seven days and securities that are not registered under the Securities Act
of 1933 (the "1933 Act") but that may be purchased by institutional buyers
pursuant to Rule 144A under the 1933 Act are subject to this 10% limit.
Rule 144A allows for a broader institutional trading market for securities
otherwise subject to restriction on resale to the general public by
establishing a "safe harbor" from the registration requirements of the 1933
Act for resales of certain securities to qualified institutional buyers.

Money Market Instruments
The Fund may invest, in the following types of money market instruments,
each of which at the time of purchase must have or be deemed to have under
rules of the Securities and Exchange Commission remaining maturities of 13
months or less. The Fund may invest in money market instruments and debt
securities, including bank obligations and commercial paper, which are at
least comparable in quality to the Fund's other investments. Bank
obligations may include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits earning a specified return, issued
for a definite period of time by a U.S. bank that is a member of the
Federal Reserve System or is insured by the Federal Deposit Insurance
Corporation, or by a savings and loan association or savings bank that is
insured by the Federal Deposit Insurance Corporation. Bank obligations
also include U.S. dollar-denominated obligations of foreign branches of
U.S. banks or of U.S. branches of foreign banks, all of the same type as
domestic bank obligations. 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. Investments by the Fund in non-
negotiable time deposits are limited to no more than 5% of its total assets
at the time of purchase.

U.S. Treasury Securities
U.S. Treasury securities include Treasury bills, Treasury notes and
Treasury bonds that differ in their interest rates, maturities and times of
issuance. Treasury bills have initial maturities of one year or less;
Treasury notes have initial maturities of one to ten years; and Treasury
bonds generally have initial maturities of greater than ten years.

U.S. Government Securities

MANAGEMENT OF THE FUND

The Board of Trustees
Under Delaware law, the business and affairs of the Trust are managed under
the direction of the Board of Trustees. There are currently eight Trustees,
five of whom are not "interested persons" of the Trust within the meaning
of that term under the Act. The Trustees, in turn, elect the officers of
the Trust to supervise actively its day-to-day operations. The Statement of
Additional Information contains the name and background information
regarding each Trustee.

---------------------------------------------------------------------------
Page 6
<PAGE>

The Investment Advisor
Trainer, Wortham & Co., Inc. (the "Advisor"), with offices at 845 Third
Avenue, New York, NY 10022 is the Trust's investment advisor and manager
and is registered as an investment advisor under the Investment Advisors
Act of 1940, as amended.

Pursuant to an investment advisory agreement with the Trust on behalf of
the Fund, the Advisor receives an annual fee, accrued daily and paid
monthly, of 1.25% of the Fund's average daily net assets. This fee is
higher than the advisory fee paid by most other funds; however, this fee is
comparable to those of other mutual funds with similar investment
objectives. From time to time, the Advisor may waive receipt of its fees
and/or voluntarily assume certain Fund expenses, which would have the
effect of lowering the Fund's expense ratio and increasing the yield to
investors at the time such amounts are waived or assumed, as the case may
be. The Fund will not reimburse the Advisor at a later time for the
expenses assumed.

Administrator

The Trust, on behalf of the Fund, has entered into an administrative
services agreement (the "Administration Agreement") with FPS Services, Inc.
("FPS"), 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-
0903, pursuant to which the administrator receives a fee accrued daily and
paid monthly of 0.15% of the value of such Fund's first $50 million of
total average net assets; 0.10% of the value of such Fund's next $50
million of total average net assets; and 0.05% of the value of such Fund's
total average net assets in excess of $100 million, subject to an annual
minimum fee of $72,000 for the Trust.

Distributor

FPS Broker Services, Inc. ("FPSB") serves as the Fund's
Distributor on a best efforts basis. FPSB is an affiliated company
of FPS inasmuch as both are under common ownership.

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Page 7
<PAGE>

Transfer Agent and Accounting Services Agent
FPS also serves as the Fund's Transfer Agent, Dividend Disbursing Agent,
Redemption Agent and Accounting Services Agent. In such capacities, FPS is
responsible for providing record-keeping and administrative services
(including calculation of net asset value) and for processing share
purchases and redemptions. Correspondence relating to purchases and
redemptions of Fund shares, or to dividend payments or reinvestment, should
be addressed to FPS Services, Inc.

Custodian

UMB Bank, n.a., Kansas City, MO is Custodian for the securities and cash of
the Fund.

DISTRIBUTION PLAN

The Shareholders of the Fund adopted a Plan of Distribution (the "Plan"),
effective October 1, 1996, pursuant to Rule 12b-1 under the Act, which
was approved by the Board of Trustees on July 25, 1996. The Plan permits
the Fund to pay certain expenses associated with the distribution of its
shares. The Plan provides that the Fund will reimburse FPSB for actual
distribution and shareholder servicing expenses incurred by FPSB not
exceeding, on an annual basis, 0.50% of the Fund's average daily net
assets. Amounts expended by FPSB, but not reimbursed by the Fund, in any
year will not be a continuing liability of the Fund in subsequent years.
Because the Fund reimburses FPSB only for actual expenditures, FPSB
realizes no profit from the Plan. The Plan may be terminated by either
party at any time and the Fund shall have no liability for expenses that
were not reimbursed as of the date of termination.

All such payments made pursuant to the Plan shall be made for the purpose
of promoting the sale of shares or other such distribution related
expenses, including any distribution or service fees paid to securities
dealers, investment advisors, financial planners, and others, who have
executed a selling or services agreement with FPSB. Distribution expenses
which are attributable to a particular Series will be charged against that
Series' assets. Distribution expenses which are attributable to more than
one Series will be allocated among the Series in proportion to their
relative net assets.

BROKERAGE

The Advisor will attempt to place portfolio transactions for the Fund with
those brokers and dealers who will execute orders in an effective manner at
the most favorable price. When the execution and price offered by two or
more brokers or dealers are comparable, the Advisor may, in its discretion,
purchase and sell portfolio securities to and from brokers and dealers who
provide research advice and other services. The Advisor may give
consideration to sale of shares of the Fund as a factor in the selection of
brokers and dealers to execute Fund portfolio transactions subject to
seeking best price and execution. The Fund may pay brokerage commissions
to brokers which are affiliated with Officers and Trustees of the Fund,
provided that such transactions are in compliance with Section 17(e)(2) of
the Act.

Portfolio Turnover
The rate of portfolio turnover will depend on the investment strategy
implemented by the Advisor for the Fund which will vary over any given time
period, but may be influenced by the following: general market conditions;
valuation analysis; market volatility; and technical analysis. It is not
the policy of the Fund to invest with the goal of generating short-term
trading profits, rather the Fund seeks to generate long-term capital
appreciation when possible by holding investments over a full market cycle,
which in the opinion of the Advisor is normally 2-3 years. It is
anticipated that the Fund's investment objectives and strategy will result
in a portfolio turnover rate of less than 100% over the course of a fiscal
year, however market conditions may cause turnover to exceed 100% in
certain years.

PURCHASE OF SHARES

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Page 8
<PAGE>

Fund is $250.00. Existing shareholders may purchase additional shares with
a minimum purchase of $50 per transaction.

Purchases of the Fund are made at the net asset value per share next
determined after receipt by FPS as Transfer Agent of a purchase order in
good order. Thus, for orders received in good order before 4:00 p.m.
(Eastern time), the public offering price will be the net asset value as of
4:00 p.m. (Eastern time) that day. Orders for Fund shares received after
4:00 p.m. (Eastern time) will be purchased at the next-determined net asset
value determined on the business day following receipt of the order.

Investing By Telephone
The Fund may accept telephone orders from broker-dealers or service
organizations which have been previously approved by the Trust. It is the
responsibility of such broker-dealers or service organizations to promptly
forward purchase orders and payments for same to the Fund. Shares of the
Fund may be purchased through broker-dealers, banks and bank trust
departments which may charge the investor a transaction fee or other fee
for their services at the time of purchase. Such fees would not otherwise
be charged if the shares were purchased directly from the Fund.

Investing By Mail

Prospective shareholders may purchase shares of the Fund by completing and
signing the "Investment Application" enclosed with this Prospectus and
sending the application, together with a check payable to Trainer, Wortham
Emerging Growth Fund, c/o FPS Services, Inc., 3200 Horizon Drive, P.O. Box
61503, King of Prussia, PA 19406-0903. Except as noted below, purchases
without full payment will not be processed until payment is received. The
ownership of shares shall be recorded on the books of the Transfer Agent in
an account under the shareholder's name. A confirmation of the purchase
will be issued showing the account number and number of shares owned.

Investing by Wire
Shares may also be purchased by instructing the bank to wire Federal Funds
to the Transfer Agent. Federal Funds are monies of member banks within the
Federal Reserve System. The bank must include the full name(s) in which
the account is registered and the Fund account number, and should address
its wire as follows:

UMB BANK KC NA
ABA # 10-10-00695
FOR: FPS SERVICES, INC.
A/C 98-7037-071-9
FBO "Trainer, Wortham Emerging Growth Fund,"
Account of (exact name(s) of account registration)
---------------------------------------
Shareholder Account #____________________________________

When opening a new account by wire transfer, first telephone the Transfer
Agent at 800-441-6580 to request an account number and furnish the Fund
with a social security or other tax identification number. A completed
application with signature(s) of registrant(s) must be filed with the Fund
immediately subsequent to the initial wire. Federal Funds wires must be
made in amounts of $250 or more. The bank will generally charge a fee for
this wire. The Fund will not be responsible for the consequences of
delays, including delays in the banking or Federal Reserve wire systems.

Subsequent Investments

Once a shareholder's account has been established, additional purchases may
be made by sending a check payable to "Trainer, Wortham Emerging Growth
Fund" c/o FPS Services, Inc., P.O. Box 412797, Kansas City, MO 64141-2797.
Please enclose the stub of the account statement and include the Fund
account number on the check (as well as the attributable year for
retirement plan investments, if applicable). Additional purchases may also
be made through the Fund's Automatic Investment Plan which provides
shareholders a convenient method to make regularly scheduled subsequent
investments. See "SHAREHOLDER SERVICES".

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Page 9
<PAGE>

REDEMPTION OF SHARES

Redemptions By Written Request

Shareholders may redeem shares by mail, by writing directly to the Transfer
Agent at FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903, and requesting liquidation of all or any part of
their shares. The redemption request must be signed exactly as the
shareholder's name appears on the form of registration and must include the
Fund account number. If shares are owned by more than one person, the
redemption request must be signed by all owners exactly as their names
appear in the registration. Shares registered in the name of corporations,
trusts and fiduciaries can be redeemed only upon instructions of a duly
authorized person. To protect the account, the Transfer Agent and the Fund
from fraud, signature guarantees are required for certain redemptions.
Signature guarantees are required for: (1) all redemptions of $25,000 or
more; (2) any redemptions if the proceeds are to be paid to someone other
than the person(s) or organization in whose name the account is registered;
(3) any redemptions which request that the proceeds be wired to a bank
(unless bank information was received at the time the account was
established); and (4) requests to transfer the registration of shares to
another owner. The Transfer Agent requires that signatures be guaranteed by
an "eligible guarantor institution" as defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934. Eligible guarantor institutions include
banks, broker-dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings
associations. Broker-dealers guaranteeing signatures must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit
unions must be authorized to issue signature guarantees. Signature
guarantees will be accepted from any eligible guarantor institution which
participates in a signature guarantee program. The Transfer Agent cannot
accept guarantees from notaries public. The Transfer Agent may require
additional supporting documents for redemptions made by corporations,
executors, administrators, trustees and guardians. In addition, the Fund
will not mail redemption proceeds until checks (including certified checks
or cashier's checks) received for the shares purchased have cleared, which
can be as long as 15 days.

The value of a shareholder's shares upon redemption may be more or less
than their cost depending upon the value of the Fund's portfolio securities
at the time of redemption.

Redemptions By Telephone
Shareholders who have so indicated on the application, or have subsequently
arranged in writing to do so, may redeem shares by instructing the Transfer
Agent by telephone at (800) 441-6580.

In order to arrange for redemption by wire or telephone after an account
has been opened, or to change the bank or account designated to receive
redemption proceeds, a written request must be sent to the Transfer Agent
at the address listed under "Investing by Mail." Such requests must be
signed by the shareholder, with signatures guaranteed (see "By Written
Request" for details regarding signature guarantees). Further
documentation may be requested from corporations, executors,
administrators, trustees, or guardians.

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<PAGE>

institution, bank account number, and the name in which his or her bank
account is registered. To the extent that the Fund fails to use reasonable
procedures to verify the genuineness of telephone instructions, it and/or
its service contractors may be liable for any such instructions that prove
to be fraudulent or unauthorized.

EXCHANGE OF SHARES

You may exchange your shares of any Series of the Trust for shares of
either of the other Series at net asset value without the payment of any
fee or charge in writing or by telephone. An exchange is considered a sale
of shares and may result in capital gain or loss for federal income tax
purposes. Before an exchange can be made, you must have received the
current Prospectus for the Series into which you wish to exchange, and the
exchange privilege may be exercised only in those states where shares of
such Series, as the case may be, may legally be sold. If the Transfer
Agent receives exchange instructions from you in writing or by telephone at
(800) 441-6580, in good order by the Valuation Time on any Business Day,
the exchange will be effected that day. For your exchange request to be in
good order, your request must include your name as it appears on your
account, your account number, the amount to be exchanged, the name of the
Funds from which and to which the exchange is to be made and a signature
guarantee as may be required. A written request by you for an exchange in
excess of $25,000 must be accompanied by a signature guarantee as described
under "REDEMPTION OF SHARES - By Written Request."

SHAREHOLDER SERVICES

The following special services are available to shareholders. An investor
may change or stop these services at any time by written notice to the
Fund.

Automatic Investment Plan

Systematic Cash Withdrawal Plan

Retirement Plans

NET ASSET VALUE

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generally accepted accounting principles and will be computed by dividing
the value of the Fund's total net assets by the total number of shares
outstanding. Securities traded on a securities exchange are valued at the
last sale price prior to the time of computation or, if there have been no
sales on that day, at the mean of their closing bid and asked prices.
Securities not traded on a securities exchange but for which market
quotations are readily available will be valued at the mean of their bid
and asked prices, although securities traded over the counter on NASDAQ
will be valued at their last sale price. Securities not traded on a
securities exchange and other securities or assets for which market
quotations are not readily available will be valued at fair value as
determined in good faith by the Board of Trustees. Once the aggregate
value of all securities has been determined, there will be added to this
total the dollar amount of cash on hand and receivables and the value of
all other assets. From the sum of the foregoing, the aggregate amount of
all liabilities and all accrued expenses will be deducted to produce the
total net asset value of all shares outstanding.

DIVIDENDS AND TAXES

The Fund permits any shareholder located in states where the Fund's shares
are registered (regardless of the number of shares owned) to elect a
Dividend Reinvestment Plan for the automatic reinvestment of all
distributions. If a dividend is declared from net investment income or a
capital gains distribution is declared from net capital gains, investors
electing under the Dividend Reinvestment Plan are required to take such
Dividends or distribution in Fund shares rather than in cash. The full
amount of the distribution will be invested and the shareholder will be
credited with any full or fractional shares resulting. The investment
under the Dividend Reinvestment Plan will be made at the current net asset
value on the dividend payable date. Dividends and capital gains
distributions will result in a taxable event for the investor even though
invested in shares.

Distributions paid by the Fund from long-term capital gains, whether
received in cash or in additional shares, are taxable to investors as long-
term capital gains, regardless of the length of time an investor has owned
shares in the Fund. The Fund does not seek to realize any particular
amount of capital gains during a year; rather, realized gains are a
byproduct of management activities. Consequently, capital gains
distributions may be expected to vary considerably from year to year.
Also, if purchases of shares in a Fund are made shortly before the record
date for a capital gains distribution or a dividend, a portion of the
investment will be returned as a taxable distribution.

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Each year, the Fund will mail information to shareholders on the tax status
of the Fund's dividends and distributions made to shareholders.

PERFORMANCE INFORMATION

From time to time, performance information regarding the Fund, such as
total return, may be quoted in advertisements or in communications to
shareholders. These performance quotations will represent the Fund's past
performance, and should not be considered as representative of future
results. The Fund's total return may be calculated on an average annual
and/or aggregate basis for various periods (which will be stated in all
advertisements). Average annual total return reflects the average
percentage change per year in the value of an investment in the Fund.
Aggregate total return reflects the total percentage change over the stated
period. In calculating total return, the assumption is made that dividends
and capital gain distributions made by the Fund during the period are
reinvested in additional shares.

Total return of the Fund may be compared to: other mutual funds with
similar investment objectives; other relevant indices such as the Russell
2500 Index and the NASDAQ Composite Index; rankings prepared by independent
services; financial or industry publications and/or other publications or
services that monitor the performance of mutual funds such as Lipper
Analytical, CDA/Weisenberger, the Investment Company Institute and
Morningstar, Inc., among others.

The principal value of an investment in the Fund will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost.

GENERAL INFORMATION

Organization

Trainer, Wortham Emerging Growth Fund is a separate, diversified, Series of
Trainer, Wortham First Mutual Funds, a Delaware business trust organized
pursuant to a Trust Instrument dated January 17, 1995. On October 1,
1996, the name of the Trust was changed from First Mutual Funds to its
present name. The Trust is registered under the Act as an open-end
diversified management investment company commonly known as a mutual fund.
The Trustees of the Trust may establish additional series or classes of
shares of the Trust without the approval of shareholders. The assets of
each Series belong only to that Series, and the liabilities of each Series
are borne solely by that Series and no other.

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Description of Shares
The Fund is authorized to issue an unlimited number of shares of beneficial
interest with a par value of $0.001 per share. Shares of the Fund represent
equal proportionate interests in the assets of the Fund only and have
identical voting, dividend, redemption, liquidation and other rights. All
shares issued are fully paid and non-assessable, and shareholders have no
preemptive or other right to subscribe to any additional shares. Currently,
there is only one class of shares issued by the Fund.

Shareholder Meetings
The Board of Trustees do not intend to hold annual meetings of shareholders
of the Fund. The Board of Trustees has undertaken to the Securities and
Exchange Commission, however, that they will promptly call a meeting for
the purpose of voting upon the question of removal of any Trustee when
requested to do so by holders of not less than 10% of the outstanding
shares of the Fund. In addition, subject to certain conditions,
shareholders of the Fund may apply to the Fund to communicate with other
shareholders to request a shareholder's meeting to vote upon the removal of
a Trustee or Trustees.

Certain Provisions of Trust Instrument
Under Delaware law, the shareholders of the Fund will not be personally
liable for the obligations of the Trust; a shareholder is entitled to the
same limitation of personal liability extended to shareholders of
corporations.

Shareholder Reports and Inquiries

Shareholders will receive annual financial statements which are audited by
the Fund's independent accountants, Tait, Weller & Baker, as well as
unaudited semi-annual financial statements. Shareholder inquiries should be
addressed to Trainer, Wortham Emerging Growth Fund, c/o FPS Services, Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903, or by
calling (800) 257-4414.

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<TABLE>
<CAPTION>
<S> <C>
INVESTMENT APPLICATION
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MAIL TO: FPS Services, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903

1. INITIAL INVESTMENT ($250 minimum)
-----------------------------------------------------------------------------------------------------------------------------
FORM OF PAYMENT
[_] Check for $ ___________ enclosed (payable to "Trainer, Wortham Emerging Growth Fund")
[_] BY WIRE* An initial purchase of $ ________________ was wired on ____________ by
(Date)
_____________________________________________________ to account # ______________________________
Name of your Bank or Broker Number assigned by FPS

* Before making an initial investment by wire, you must be assigned an account number by calling (800) 441-6580. Then
have your local bank wire your funds to: UMB Bank, N.A., ABA #10-10-00695 for credit to FPS AC #98-7037-071-9
(Trainer, Wortham Emerging Growth Fund). Be sure to include your name and account number on the wire.
-----------------------------------------------------------------------------------------------------------------------------
2. REGISTRATION (Please Print)
-----------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL
------------------------------------------------- ------------------------------
First Name Middle Initial Last Name Social Security #
------------------------------------------------- ------------------------------
Jt. Owner First Name* Middle Initial Last Name Social Security #