FIRST MUTUAL FUNDS, 485APOS, 1996-07-17

FIRST MUTUAL FUNDS
485APOS, 1996-07-17

Previous: EASTERN CO, SC 13D/A, 1996-07-17

Next: FIRST UNION CORP, 424B5, 1996-07-17

<PAGE>

FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FILE NO. 2-15037
JULY 17, 1996. 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. 54
---

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No 54
---

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
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):

immediately upon filing pursuant to Paragraph (b);

on ___________________________ (date) pursuant to Paragraph (b);

60 days after filing pursuant to Paragraph (a)(1);

X on September 30, 1996 (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 will be
filed on or before August 28, 1996.
<PAGE>

CROSS REFERENCE SHEET
---------------------
PURSUANT TO RULE 481(A)

<TABLE>
<CAPTION>
PART A
ITEM NO. PROSPECTUS CAPTION
-------- ------------------
<S> <C> <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

5. Management of the Trust Management of the Trust;
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; Shareholder Services

8. Redemption or Repurchase Redemption of Shares

9. Pending Legal Proceedings *
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
PART B
ITEM NO. SAI CAPTION
-------- -----------
<S> <C> <C>
10. Cover Page Not Titled

11. Table of Contents Table of Contents

12. General Information and History Statement of Additional Information;
Investment Objectives and Policies;
Investment Restrictions; Other Invest-
ment 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 Share Ownership of Management and
Securities 5% Owners

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

17. Brokerage Allocation Brokerage

18. Capital Stock and Other Securities Brokerage

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

20. Tax Status Covered in Part A

21. Underwriters Investment Advisor; Distribution Plan

22. Calculation of Performance Data Performance Calculations; Total Re
turn Calculation

23. Financial Statements Annual Reports to Shareholders -
Letter to Shareholders; Portfolio High-
lights; Financial Statements: Report
of Independent Certified Public Ac-
countants; Schedule of Investments;
Statement of Assets and Liabilities;
Statement of Operations; Statement of
Changes in Net Assets; Financial
Highlights; Notes to Financial State-
ments
</TABLE>

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

TRAINER, WORTHAM FIRST MUTUAL FUNDS

FIRST MUTUAL FUND

845 THIRD AVENUE, 6TH FLOOR
NEW YORK, NY 10022
(800) 257-4414

PROSPECTUS

SEPTEMBER 30, 1996

TRAINER, WORTHAM FIRST MUTUAL FUNDS (the "Trust") is a no-load, open-end,
diversified 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.

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.

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

________________________________________________________________________________
First Mutual Fund - Propectus
Last Edit - July 15, 1996 Page 1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
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......................................................................
</TABLE>

UNDERWRITER: ADVISOR:
Fund/Plan Broker Services, Inc. Trainer, Wortham & Co., Inc.,
2 West Elm Street 845 Third Avenue
Conshohocken, PA 19428 New York, NY 10022

(800) 257-4414 (800) 775-0604

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

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.

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

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 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, 1995 6

<TABLE>
<S> <C>
Management Fees......................................................................0.75%
12b-1 Fees...........................................................................0.25%
Other Expenses...........................................................................%
Total Fund Operating Expenses............................................................%
</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
</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 table 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 TRUST," and "DISTRIBUTION PLAN."

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 3
<PAGE>

FINANCIAL HIGHLIGHTS

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 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. Because of 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 Trainer, Wortham & Co., Inc. (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 United States 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
United States Government obligations, money market instruments (such as United
States 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

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 5
<PAGE>

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
United States 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 United States 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 United States 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 United States 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 United States banks and domestic
issuers.

For many foreign securities, United States 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

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 6
<PAGE>

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.

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 connection with its purchases of convertible securities (which include debt
securities with warrants), the Fund from time to time may hold common stock
received upon the conversion of the security or the exercise of the warrant.
The Fund does not intend to retain the common stock in its portfolio and will
sell it as promptly as it can and in a manner which it believes will reduce the
risk of loss in connection with the sale.

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 inters 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.

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 7
<PAGE>

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 of 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.

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 quarterly, 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 $____________ which is
higher than the advisory fees paid by most other funds; however, this fee is
comparable with 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 Trust's portfolio since 1982. Mr. Como
has been

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 8
<PAGE>

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 "Agreement") with Fund/Plan Services, Inc. ("FPS"), 2 W. Elm
Street, Conshohocken, PA 19428-0874, 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 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 Agreement or interested persons (as
defined in the Investment Company Act of 1940) 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 Agreement at
any time without penalty upon giving the other party 120 days written notice.
The 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.

DISTRIBUTOR

Fund/Plan Broker Services, Inc. ("FPBS") serves as the Fund's Distributor on a
best efforts basis. FPBS 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
Fund/Plan Services, Inc.

CUSTODIAN

United Missouri Bank, 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 FPBS for actual distribution and
shareholder servicing expenses incurred by FPBS not

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 9
<PAGE>

exceeding, on an annual basis, 0.25% of the Fund's average daily net assets.
Amounts expended by FPBS, 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 FPBS only for actual expenditures, FPBS 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 FPBS. 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 Investment Company Act of 1940.

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 objectives 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 ________ %, 198%, and 178%, respectively. High
portfolio turnover involves correspondingly greater brokerage commissions and
other costs, which are borne directly by the Fund.

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.
(NOTE: There are no minimum investment amounts applied to retirement plans.)

Purchases of the Fund are made at the net asset value per share next determined
after receipt by Fund/Plan Services, Inc. of a subscription 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
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,

________________________________________________________________________________
First Mutual Fund - Prospectus
Last edit - July 15, 1996 Page 10
<PAGE>

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
Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874, Conshohocken, PA 19428-
0874. 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:

UNITED MISSOURI BANK KC NA
ABA # 10-10-00695
FOR: FUND/PLAN 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 Fund/Plan 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."

REDEMPTION OF SHARES

BY WRITTEN REQUEST

Shareholders may redeem shares by mail only, by writing directly to the Transfer
Agent at Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874, Conshohocken,
PA 19428-0874, 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.

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 11
<PAGE>

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. Signatures 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 Trust may make payment on 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 Trust's portfolio securities at the
time of redemption.

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" above. 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.

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.

________________________________________________________________________________
Funds Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 12
<PAGE>

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
above 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 .

NET ASSET VALUE

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 13
<PAGE>

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 values as determined in good faith by the Board of Trustees.
Once the aggregate value of all securities have 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

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 14
<PAGE>

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.

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.

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.

________________________________________________________________________________
First Mutual Fund - Prospectus
Last edit - July 15, 1996 Page 15
<PAGE>

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 that of other mutual funds with
similar investment objectives; other relevant indices, rankings prepared by
independent services or other financial or industry publications and/or other
publications or services that monitor the performance of mutual funds, such as
the services of Lipper Analytical, CDA/Weisenberger, the Investment Company
Institute, Morningstar, Inc., the Dow Jones Composite Average or its component
indices and Standard & Poors 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 & Poors 500 Index and a discussion of
performance is included in the Fund's Annual Report dated June 30,
1996 .

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 ______________, 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

_______________________________________________________________________________
First Mutual Fund - Prospectus
Last edit - July 15, 1996 Page 16
<PAGE>

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 SEC, 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 examined 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 Fund/Plan Services, Inc., 2 W. Elm Street, Conshohocken, PA
19428-0874, or by calling (800) 257-4414.

________________________________________________________________________________
First Mutual Fund - Prospectus
Last Edit - July 15, 1996 Page 17
<PAGE>

TRAINER, WORTHAM FIRST MUTUAL FUNDS

TRAINER, WORTHAM EMERGING GROWTH FUND

845 THIRD AVENUE, 6TH FLOOR
NEW YORK, NY 10022
(800) 257-4414

PROSPECTUS
SEPTEMBER 30, 1996

TRAINER, WORTHAM FIRST MUTUAL FUNDS (the "Trust") is a no-load, open-end,
diversified 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 equity
market capitalizations of between $50 million and $2.5 billion.

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

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

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
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 ............................................................
</TABLE>

UNDERWRITER: ADVISOR:
Fund/Plan Broker Services, Inc. Trainer, Wortham & Co., Inc.,
2 West Elm Street 845 Third Avenue
Conshohocken, PA 19428 New York, NY 10022
(800) 257-4414 (800) 775-0604

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

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 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>
<S> <C>
ANNUAL FUND OPERATING EXPENSES/(1)/
(as a percentage of average net assets):

Management Fees (after fee waiver)/(2)/ ................................ 0.00%
12b-1 Fees ............................................................. 0.50%
Other Expenses (after expense
reimbursement)/(2)/ .................................................... 0.75%

Total Fund Operating Expenses (after fee
waiver and expense 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 $ $
</TABLE>

/(1)/ TRAINER, WORTHAM EMERGING GROWTH FUND commenced investment
operations on September 30, 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, Trainer,
Wortham & Co., Inc. (the "Advisor"), has undertaken to waive its
investment advisory fee and assume certain expenses of the Fund
other than brokerage fees, extraordinary items and taxes to the
extent Total Fund Operating Expenses exceed 2.50%. 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 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."

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 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 which are defined
as companies achieving or about to achieve rapid earnings growth with equity
market capitalizations of between $50 million and $2.5 billion. The Fund seeks
to outperform equity returns generated by relevant benchmark indices such as the
Russell 2500 Index and the NASDAQ Composite Index, as well as funds with
comparable investment objectives (other small company growth funds), by
employing proprietary fundamental, technical and valuation analysis in the
selection of smaller-capitalization, publicly-traded U.S. companies. Investments
will have a minimum equity market capitalization of $50 million, and a maximum
of a $2.5 billion at the time of purchase. Investments that violate these market
capitalization restrictions may be sold from the portfolio. Due to the risks
inherent in any investment program, the Fund can not ensure that its investment
objective will be realized. The value of a Fund share will fluctuate as the
value of the securities in the Fund's portfolio fluctuates.

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
focusing on companies in solid financial condition. 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 United
States Government obligations, money market instruments (such as United States
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 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

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

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 4
<PAGE>

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
United States 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 United States 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 United States 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 United States 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 United States banks and domestic
issuers.

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.

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 5
<PAGE>

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 of its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, such as, 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.

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 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 quarterly, of
1.25% of the Fund's average, daily net assets. 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 fore the
expenses it has assumed.

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 6
<PAGE>

Subject to the general supervision of the Board of Trustees, and in accordance
with the Fund's investment objective, 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. David P.
Como is the President of the Trust. Robert R. Douglass, Jr. is the Vice-
President and Portfolio Manager of TRAINER, WORTHAM EMERGING GROWTH FUND. Mr.
Douglass has been a Managing Director of the Advisor, since August, 1994. Prior
to August, 1994, Mr. Douglass served as Assistant Vice President at Warburg,
Pincus Counsellors, Inc.

ADMINISTRATOR
The Trust, on behalf of the Fund, has entered into an administrative services
agreement (the "Agreement") with Fund/Plan Services, Inc. ("FPS"), 2 W. Elm
Street, Conshohocken, PA 19428-0874, 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 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 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 Agreement at any time without penalty upon giving
the other party 120 days written notice. The Agreement shall automatically
terminate in the event of its assignment.

DISTRIBUTOR
Fund/Plan Broker Services, Inc. ("FPBS") serves as the Fund's Distributor on a
best efforts basis. FPBS 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
Fund/Plan Services, Inc.

CUSTODIAN
United Missouri Bank, 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 September 30, 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 FPBS for actual distribution and
shareholder servicing expenses incurred by FPBS not exceeding, on an annual
basis, 0.50% of the Fund's average daily net assets. Amounts expended by FPBS,
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 FPBS only for
actual expenditures, FPBS 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.

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 7
<PAGE>

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

Purchases of the Fund are made at the net asset value per share next determined
after receipt by Fund/Plan Services, Inc. of a subscription 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 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 Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874,
Conshohocken, PA 19428-0874. Except as noted below, purchases without full
payment will not be processed until payment is received.

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 8
<PAGE>

UNITED MISSOURI BANK KC NA
ABA # 10-10-00695
FOR: FUND/PLAN SERVICES, INC.
A/C 98-7037-071-9
FBO "TRAINER, WORTHAM EMERGING GROWTH FUND,"
Account of (exact name(s) of account registration)
---------------------------------------
Shareholder Account #____________________________________

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
Fund/Plan 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".

REDEMPTION OF SHARES

BY WRITTEN REQUEST
Shareholders may redeem shares by mail, by writing directly to the Transfer
Agent at Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874, Conshohocken,
PA 19428-0874, 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,

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 9
<PAGE>

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.

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.

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
above under "REDEMPTION OF SHARES - By Written Request."

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 10
<PAGE>

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.

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.

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

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 11
<PAGE>

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.

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

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

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 12
<PAGE>

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 that of 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 __________________ ,
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
Each Series 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 SEC, 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.

SHAREHOLDER REPORTS AND INQUIRIES
Shareholders will receive annual financial statements which are examined 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 Fund/Plan Services, Inc., 2 W. Elm
Street, Conshohocken, PA 19428-0874, or by calling (800) 257-4414.

________________________________________________________________________________
Trainer, Wortham Emerging Growth Fund - Prospectus
Last Edit - July 15, 1996 Page 13
<PAGE>

TRAINER, WORTHAM FIRST MUTUAL FUNDS

TRAINER, WORTHAM TOTAL RETURN BOND FUND

845 THIRD AVENUE, 6TH FLOOR
NEW YORK, NY 10022
(800) 257-4414

PROSPECTUS
SEPTEMBER 30, 1996

TRAINER, WORTHAM FIRST MUTUAL FUNDS (the "Trust") is a no-load, open-end,
diversified 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 TOTAL RETURN BOND FUND (the
"Fund"). The Fund seeks to maximize total return, consistent with preservation
of capital, through investments in U.S. Government and agency securities,
investment grade corporate bonds and other fixed-income securities. 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.

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

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 1
<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
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 ...........................
Brokerage ......................................................................
Purchase of Shares .............................................................
Redemption of Shares ...........................................................
Exchange of Shares .............................................................
Shareholder Services ...........................................................
Net Asset Value ................................................................
Dividends and Taxes ............................................................
Performance Information ........................................................
General Information ............................................................
</TABLE>

UNDERWRITER: ADVISOR:
Fund/Plan Broker Services, Inc. Trainer, Wortham & Co., Inc.,
2 West Elm Street 845 Third Avenue
Conshohocken, PA 19428 New York, NY 10022
(800) 257-4414 (800) 775-0604

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

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 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.

ANNUAL FUND OPERATING EXPENSES/(1)/
(as a percentage of average net assets):

<TABLE>
<S> <C>
Management Fees (after fee waiver)/(2)/.................................. 0.00%
12b-1 Fees............................................................... 0.00%
Other Expenses (after expense
reimbursement)/(2)/...................................................... 0.75%

Total Fund Operating Expenses (after fee
waiver and expense reimbursement)/(2)/................................... 0.75%
</TABLE>

/(1)/ TRAINER, WORTHAM TOTAL RETURN BOND FUND commenced investment
operations on September 30, 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 assume
certain expenses of the Fund other than brokerage fees, extraordinary
items and taxes to the extent Total Fund Operating Expenses exceed
2.50%. Without such waiver and expense reimbursement, Management Fees
stated above would be 0.45%. Other Expenses would remain the same and
Total Fund Operating Expenses would be 1.20%.

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 table 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."

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 3
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The Fund seeks to maximize total return consistent with preservation of capital.
The Fund will invest in U.S. Government and agency securities, investment grade
corporate bonds and other fixed-income securities. The Fund will seek to produce
conservative, risk adjusted returns. Above all, management attempts to preserve
principal, compound interest and produce superior results over the course of a
full business cycle.

The Advisor relies on historical yield relationships as a basis for determining
the Fund's portfolio structure. The Advisor's securities selection process
involves strategic decision making which considers portfolio sector composition,
maturity structure and duration. The Advisor's management analyzes yield ratios
and implements a disciplined process which helps to have the Fund's portfolio
positioned to be compared to the Lehman Aggregate Index. Although the Advisor
actively manages its portfolios, it does not consider itself to be a market
timer. All changes to the portfolio are made after gradual and careful
consideration. The Advisor anticipates a turnover rate of less than 100%.

When the Fund has determined that adverse market and economic conditions
warrant, the Fund may invest all or part of its assets in high-quality money
market securities and repurchase agreements for temporary defensive purposes.

The Fund invests at least 65% of the value of its total assets (except when
maintaining a temporary defensive position) in fixed-income securities (which it
defines as bonds, debentures and other fixed income securities). The Fund is
permitted to invest in a broad range of investment grade, U.S. dollar
denominated fixed-income securities and securities with debt-like
characteristics (e.g., bearing interest or having stated principal) of domestic
and foreign issuers. These debt securities include: bonds, debentures, notes,
money market instruments (including foreign bank obligations, such as time
deposits, certificates of deposit and bankers' acceptances, commercial paper and
other short-term corporate debt obligations, and repurchase agreements),
mortgage-related securities (including interest-only and principal-only stripped
mortgage-backed securities), asset-backed securities, municipal obligations and
convertible debt obligations. The issuers may include domestic and foreign
corporations, partnerships or trusts, and governments or their political
subdivisions, agencies or instrumentalities. Under normal market conditions, the
Fund seeks to provide performance results that equal or exceed the Solomon
Brothers Broad Investment-Grade (BIG) Bond Index, which is market-capitalization
weighted index that includes U.S. Treasury, Government-sponsored, mortgage and
investment grade fixed-rate corporate fixed-income securities with a maturity of
one year or longer and a minimum of $50 million amount outstanding at the time
of inclusion.

At least 75% of the value of the Fund's net assets must consist of securities
which, in the case of bonds and other debt instruments, are rated no lower than
A by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation
("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc.
("Duff"). Up to 25% of the value of the Fund's net assets may consist of
securities which, in the case of bonds and other debt instruments, are rated no
lower than Baa by Moody's and BBB by S&P. The Fund may invest in short-term
fixed-income obligations which are rated in the two highest rating categories by
Moody's, S&P, Fitch or Duff. See "INVESTMENT STRATEGIES AND RISK CONSIDERATIONS-
Fixed-Income Securities."

Although the Fund is professionally managed, the Fund may suffer a loss on
investments resulting in a lower net asset value.

INVESTMENT STRATEGIES AND RISK CONSIDERATIONS

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 4
<PAGE>

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").

FIXED-INCOME SECURITIES
Investors should be aware that even though interest-bearing securities are
investments which promise a stable stream of income, the prices of such
securities typically are inversely affected by changes in interest rates and,
therefore, are subject to the risk of market price fluctuations. Thus, if
interest rates have increased from the time a security was purchased, such
security, if sold, might be sold at a price less than its cost. Similarly, if
interest rates have declined from the time a security was purchased, such
security, if sold, might be sold at a price greater than its cost. In either
instance, if the security was purchased at face value and held to maturity, no
gain or loss would be realized. Certain securities purchased by the Fund, such
as those with interest rates that fluctuate directly or indirectly based on
multiples of a stated index, are designed to be highly sensitive to changes in
interest rates and can subject the holders thereof to extreme reductions of
yield and possibly loss of principal.

The values of fixed-income securities also may be affected by changes in the
credit rating or financial condition of the issuing entities. Once the rating of
a security purchased by the Fund has been adversely changed, the Fund will
consider all circumstances deemed relevant in determining whether to continue to
hold the security. Holding such securities that have been downgraded below
investment grade can subject the Fund to additional risk. Certain securities
purchased by the Fund, such as those rated Baa by Moody's or BBB by S&P, Fitch
or Duff, may be subject to such risk with respect to the issuing entity and to
greater market fluctuations than certain lower yielding, higher rated fixed-
income securities. Debt securities which are rated Baa by Moody's are considered
medium grade obligations; they are neither highly protected nor poorly secured,
and are considered by Moody's to have speculative characteristics. Debt
securities rated BBB by S&P are regarded as having adequate capacity to pay
interest and repay principal, and while such debt securities ordinarily exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt securities in this category than in higher rated
categories. Fitch considers the obligor's ability to pay interest and repay
principal on debt securities rated BBB to be adequate; adverse changes in
economic conditions and circumstances, however, are more likely to have an
adverse impact on these debt securities and, therefore, impair timely payment.
Debt securities rated BBB by Duff are considered to have below average
protection factors but may still be considered sufficient for prudent
investment.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 5
<PAGE>

FORWARD COMMITMENTS
The Fund may purchase securities on a when-issued or forward commitment basis,
which means that the price is fixed at the time of commitment, but delivery and
payment ordinarily take place a number of days after the date of the commitment
to purchase. The Fund will make commitments to purchase such securities only
with the intention of actually acquiring the securities, but the Fund may sell
these securities before the settlement date if it is deemed advisable. The Fund
will not accrue income in respect of a security purchased on a when-issued or
forward commitment basis prior to its stated delivery date.

Securities purchased on a when-issued or forward commitment basis and certain
other securities held by the Fund are subject to changes in value (both
generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Such securities may expose the Fund
to risk because they may experience fluctuations in value prior to their actual
delivery. Purchasing debt securities on a when-issued or forward commitment
basis can involve the additional risk that the yield available in the market
when the delivery takes place actually may be higher than that obtained in the
transaction itself. A segregated account of the Fund consisting of cash, cash
equivalents or U.S. Government securities or other high quality liquid debt
securities of the type in which the Fund invests at least equal at all times to
the amount of the when-issued or forward commitments will be established and
maintained at the Fund's custodian bank.

MORTGAGE-RELATED SECURITIES
Mortgage-related securities are securities collateralized by pools of mortgage
loans assembled for sale to investors by various governmental agencies, such as
the Government National Mortgage Association and government-related
organizations such as the Federal National Mortgage Association and the Federal
Home Loan Mortgage Corporation, as well as by private issuers such as commercial
banks, savings and loan institutions, mortgage banks and private mortgage
insurance companies, and similar foreign entities. The mortgage-related
securities in which the Fund may invest include those with fixed, floating and
variable interest rates, those with interest rates that change based on
multiples of changes in interest rates and those with interest rates that change
inversely to changes in interest rates, as well as stripped mortgage-backed
securities which are derivative multiclass mortgage securities. Stripped
mortgage-backed securities usually are structured with two classes that receive
different proportions of interest and principal distributions on a pool of
mortgage-backed securities or whole loans. A common type of stripped mortgage-
backed security will have one class receiving some of the interest and most of
the principal from the mortgage collateral, while the other class will receive
most of the interest and the remainder of the principal. In the most extreme
case, one class will receive all of the interest (the interest-only or "IO"
class), while the other class will receive all of the principal (the principal-
only or "PO" class). Although certain mortgage-related securities are guaranteed
by a third party or otherwise similarly secured, the market value of the
security, which may fluctuate, is not so secured. If the Fund purchases a
mortgage-related security at a premium, all or part of the premium may be lost
if there is a decline in the market value of the security, whether resulting
from changes in interest rates or prepayments in the underlying mortgage
collateral. As with other interest-bearing securities, the prices of certain of
these securities are inversely affected by changes in interest rates. However,
though the value of a mortgage-related security may decline when interest rates
rise, the converse is not necessarily true, since in periods of declining
interest rates the mortgages underlying the security are more likely to prepay.
For this and other reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages, and therefore,
it is not possible to predict accurately the security's return to the Fund.
Moreover, with respect to stripped mortgage-backed securities, if the underlying
mortgage securities experience greater than anticipated prepayments of
principal, the Fund may fail to fully recoup its initial investment in these
securities even if the securities are rated in the highest rating category by a
nationally recognized statistical rating organization. In addition, regular
payments received in respect of mortgage-related securities include both
interest and principal. No assurance can be given as to the return the Fund will
receive when these amounts are reinvested.

No assurance can be given as to the liquidity of the market for certain
mortgage-backed securities, such as collateralized mortgage obligations and
stripped mortgage-backed securities. Determination as to the liquidity of
interest-only and

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 6
<PAGE>

principal-only fixed mortgage-backed securities issued by the U.S. Government or
its agencies and instrumentalities will be made in accordance with guidelines
established by the Fund's Board of Trustees. In accordance with such guidelines,
the Advisor will monitor investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. The Fund intends to treat other stripped mortgage-backed
securities as illiquid securities.

ASSET-BACKED SECURITIES
The Fund may invest in asset-backed securities. The securitization techniques
used for asset-backed securities are similar to those used for mortgage-related
securities. These securities include debt securities and securities with debt-
like characteristics. The collateral for these securities has included home
equity loans, automobile and credit card receivables, boat loans, computer
leases, airplane leases, mobile home loans, recreational vehicle loans and
hospital account receivables.

Asset-backed securities present certain risks that are not presented by
mortgage-backed securities. Primarily, these securities do not have the benefit
of the same security interest in the related collateral. Credit card receivables
generally are unsecured and the debtors are entitled to the protection of a
number of state and federal consumer credit laws, many of which give such
debtors the right to set of certain amounts owed on the credit cards, thereby
reducing the balance due. Most issuers of asset-backed securities backed by
automobile receivables permit the services of such receivables to retain
possession of the underlying obligations. If the servicer were to sell these
obligations to another party, there is a risk that the purchaser would acquire
an interest superior to that of the holders of the related asset-backed
securities. In addition, because of the large number of vehicles involved in a
typical issuance and technical requirements under state laws, the trustee for
the holders of asset-backed securities backed by automobile receivables may not
have a proper security interest in all of the obligations backing such
receivables. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities.

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.

In connection with its purchases of convertible securities (which include debt
securities with warrants), the Fund from time to time may hold common stock
received upon the conversion of the security or the exercise of the warrant. The
Fund does not intend to retain the common stock in its portfolio and will sell
it as promptly as it can and in a manner which it believes will reduce the risk
of loss in connection with the sale.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 7
<PAGE>

MUNICIPAL OBLIGATIONS
Municipal obligations are debt obligations issued by states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities, or multistate agencies
or authorities. While in general, municipal obligations are tax exempt
securities having relatively low yields as compared to taxable, non-municipal
obligations of similar quality, certain issues of municipal obligations, both
taxable and non-taxable, offer yields comparable and in some cases greater than
the yields available on other permissible investments. Municipal obligations
generally include debt obligations issued to obtain funds for various public
purposes as well as certain industrial development bonds issued by or on behalf
of public authorities.

Municipal obligations are classified as general obligation bonds, revenue bonds
and notes. General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest.
Revenue bonds are payable from the revenue derived from a particular facility or
class of facilities or, in some cases, from the proceeds of a special excise or
other specific revenue source, but not from the general taxing power. Tax exempt
industrial development bonds, in most cases, are revenue bonds and generally do
not carry the pledge of the credit of the issuing municipality, but generally
are guaranteed by the corporate entity on whose behalf they are issued.

Dividends received by shareholders which are attributable to interest income
received by it from municipal obligations generally will be subject to federal
income tax. Municipal obligations bear fixed, floating or variable rates of
interest, which are determined in some instances by formulas under which the
municipal obligation's interest rate will change directly or inversely to
changes in interest rates or an index, or multiples thereof, in many cases
subject to a maximum and minimum. The Fund currently intends to invest no more
than 25% of its assets in municipal obligations. However, this percentage may be
varied from time to time without shareholder approval.

ZERO COUPON AND STRIPPED SECURITIES
The Fund may invest in zero coupon U.S. Treasury securities, which are Treasury
Notes and Bonds that have been stripped of their unmatured interest coupons, the
coupons themselves and receipts or certificates representing interests in such
stripped debt obligations and coupons. The Fund also may invest in zero coupon
securities issued by corporations and financial institutions which constitute a
proportionate ownership of the issuer's pool of underlying U.S. Treasury
securities. A zero coupon security pays no interest to its holder during its
life and is sold at a discount to its face value at maturity. The amount of the
discount fluctuates with the market price of the security. The market prices of
zero coupon securities generally are more volatile than the market prices of
securities that pay interest periodically and are likely to respond to a greater
degree to changes in interest rates than non-zero coupon securities having
similar maturities and credit qualities.

Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to accrue income with respect to these securities
prior to the receipt of cash payments. If the Fund invests in such securities it
may be required, to maintain its qualification as a regulated investment company
and avoid liability for Federal income taxes, to distribute the income accrued
with respect to these securities and may have to dispose of portfolio securities
under disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES
The Fund may invest in U.S. dollar denominated obligations issued or guaranteed
by one or more foreign governments or any of their political subdivisions,
agencies or instrumentalities that are determined by the Advisor to be of
comparable quality to the other obligations in which the Fund may invest. Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Fund's assets invested in securities issued by foreign governments will vary
depending on the relative yields of such securities, the economic and financial
markets of the countries in which the investments are made and the interest rate
climate of such countries.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 8
<PAGE>

FOREIGN SECURITIES
The Fund may invest in U.S. dollar denominated obligations of foreign
corporations. Investing in securities issued by foreign corporations involves
considerations and possible risks not typically associated with investing in
obligations issued by domestic corporations. Less information may be available
about foreign companies than about domestic companies, and foreign companies
generally are not subject to the same uniform accounting, auditing and financial
reporting standards or to other regulatory practices and requirements comparable
to those applicable to domestic companies.

The risks associated with investing in foreign securities are often heightened
by investments in developing or emerging markets. Investments in emerging or
developing markets involve exposure to economic structures that are generally
less diverse and mature and to political systems which can be expected to have
less stability, than those of more developed countries. Moreover, the economies
of individual emerging market countries may differ favorably or unfavorably from
the U.S. economy in such respects as the rate of growth in gross domestic
product, the rate of inflation, capital reinvestment, resource self-sufficiency
and balance of payments position.

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 of 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.

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.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 9
<PAGE>

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
stock ownership of 45% of the Advisor, 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 quarterly, of
0.45% of the Funds' average, daily net assets. 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
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
it has assumed.

Subject to the general supervision of the Board of Trustees, and in accordance
with the Fund's investment objective, 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. David P.
Como is the President of the Trust. John D. Knox is the Vice-President and
Portfolio Manager of the Fund. Mr. Knox joined Trainer Wortham in December, 1995
as the Managing Director of Fixed Income. Prior to joining Trainer Wortham, Mr.
Knox served as Director of Global Fixed Income and Managing Director from 1994-
1995 for Bear Stearns Asset Management and Bear Stearns, respectively. For more
than 11 years prior thereto, Mr. Knox was a Principal and Senior Portfolio
Manager at Morgan Stanley Asset Management where he managed fixed income
portfolios for a variety of domestic and international clients.

The term of the 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 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 Agreement at any time without penalty upon giving
the other party 120 days written notice. The Agreement shall automatically
terminate in the event of its assignment.

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

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 10
<PAGE>

TRANSFER AGENT AND ACCOUNTING SERVICES AGENT
FPS 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 Fund/Plan Services,
Inc.

CUSTODIAN
United Missouri Bank, Kansas City, MO is Custodian for the securities and cash
of the Fund.

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, 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

Purchases of the Fund are made at the net asset value per share next determined
after receipt by Fund/Plan Services, Inc. of a subscription 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 determined on the
business day following receipt of the order.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 11
<PAGE>

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 TOTAL RETURN
BOND FUND c/o Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874,
Conshohocken, PA 19428-0874. Except as noted below, purchases without full
payment will not be processed until payment is received.

UNITED MISSOURI BANK KC NA
ABA # 10-10-00695
FOR: FUND/PLAN SERVICES, INC.
A/C 98-7037-071-9
FBO "TRAINER, WORTHAM TOTAL RETURN BOND FUND,"
Account of (exact name(s) of account registration)
---------------------------------------
Shareholder Account #____________________________________

SUBSEQUENT INVESTMENTS
Once a shareholder's account has been established, additional purchases may be
made by sending a check payable to "TRAINER, WORTHAM TOTAL RETURN BOND FUND" c/o
Fund/Plan 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."

REDEMPTION OF SHARES

BY WRITTEN REQUEST
Shareholders may redeem shares by mail only, by writing directly to the Transfer
Agent at Fund/Plan Services, Inc., 2 W. Elm Street, P.O. Box 874, Conshohocken,
PA 19428-0874, 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

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 12
<PAGE>

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.

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" above. Such requests must be signed by the
shareowner, with signatures guaranteed (see "By Written Request" for details
regarding signature guarantees). Further documentation may be requested from
corporations, executors, administrators, trustees, or guardians.

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 shareowner 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.

EXCHANGE OF SHARES

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 13
<PAGE>

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 Fund 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
above 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.

NET ASSET VALUE

DIVIDENDS AND TAXES

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 14
<PAGE>

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.

The Fund's investment in certain bonds, such as zero coupon bonds, may cause the
Fund to recognize income and make distributions to you prior to the receipt of
cash payments. These bonds are subject to special tax rules concerning the
amount, character and timing of income required to be reported by the Fund and
distributed to you.

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

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 15
<PAGE>

PERFORMANCE INFORMATION

Total return of the Fund may be compared to that of other mutual funds with
similar investment objectives; other relevant indices, rankings prepared by
independent services or other financial or industry publications and/or other
publications or services that monitor the performance of mutual funds, such as
the services of Lipper Analytical, CDA/Weisenberger, the Investment Company
Institute, Morningstar, Inc., the Dow Jones Composite Average or its component
indices and Solomon Brothers Broad Investment Grade Bond Index, Standard & Poors
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.

GENERAL INFORMATION
ORGANIZATION
TRAINER, WORTHAM TOTAL RETURN BOND 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 ________________ ,
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.

CERTAIN PROVISIONS OF FUND INSTRUMENT
Under Delaware law, the shareholders of the Trust 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 examined 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 TOTAL RETURN BOND FUND, c/o Fund/Plan Services, Inc., 2 W. Elm
Street, Conshohocken, PA 19428-0874, or by calling (800) 257-4414.

________________________________________________________________________________
Trainer, Wortham Total Return Bond Fund - Prospectus
Last Edit - July 15, 1996 Page 16
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

SEPTEMBER 30, 1996

________________________________________________________________________________

TRAINER, WORTHAM FIRST MUTUAL FUNDS

FIRST MUTUAL FUND

TRAINER, WORTHAM EMERGING GROWTH FUND

TRAINER, WORTHAM TOTAL RETURN BOND FUND

________________________________________________________________________________

TRAINER, WORTHAM FIRST MUTUAL FUNDS (the "Trust") currently offers shares of the
following three series representing separte portfolios of investments: FIRST
MUTUAL FUND; TRAINER, WORTHAM EMERGING GROWTH FUND; and TRAINER, WORTHAM TOTAL
RETURN BOND FUND (individually and collectively, the "Series"). Information
concerning each Series is provided in separate Prospectuses, each dated
September 30, 1996. This Statement of Additional Information is not a
Prospectus, but should be read in conjunction with the current Prospectuses of
the Trust. Much of the information contained herein expands upon subjects
discussed in the Prospectuses. No investment in shares should be made without
first reading the applicable Prospectus. A copy of each Series' Prospectus may
be obtained without charge by writing to the Trust, at 845 Third Avenue, 6th
Floor, New York, NY 10022 or by calling (800) 257-4414.

UNDERWRITER: ADVISOR:
Fund/Plan Broker Services, Inc. Trainer, Wortham & Co., Inc.
2 W. Elm Street 845 Third Avenue, 6th Floor
Conshohocken, PA 19428 New York, NY 10022
(800) 257-4414 (212) 759-7755

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR IN
THE PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE TRUST OR ITS DISTRIBUTOR. THE PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING BY THE TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Trainer, Wortham First Mutual Funds....................................

Investment Objectives and Policies.....................................

Investment Restrictions................................................

Other Investment Restrictions..........................................

Trustees and Officers..................................................

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

Investment Advisor.....................................................

Administrator..........................................................

Distributor............................................................

Transfer Agent and Accounting Services Agent.........................

Custodian..............................................................

Legal Counsel..........................................................

Auditors...............................................................

Distribution Plan......................................................

Brokerage..............................................................

Individual Retirement Account..........................................

Performance Calculations...............................................

General Information....................................................

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

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 2
<PAGE>

TRAINER, WORTHAM FIRST MUTUAL FUNDS

Trainer, Wortham First Mutual Funds (the "Trust"), 845 Third Avenue, 6th Floor,
New York, NY 10022, is a no-load, open-end management investment company, which
currently offers shares of the following three diversified Series, each with its
own investment objectives and policies: FIRST MUTUAL FUND; TRAINER, WORTHAM
EMERGING GROWTH FUND; and TRAINER, WORTHAM TOTAL RETURN BOND FUND (collectively
referred to as "Funds" or individually as a "Fund").

INVESTMENT OBJECTIVES AND POLICIES

INVESTMENT OBJECTIVES

FIRST MUTUAL 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 EMERGING GROWTH FUND

The Fund seeks to achieve 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 equity market capitalizations of
between $50 million and $2.5 billion. The Fund seeks to outperform equity
returns generated by relevant benchmark indices and funds with comparable
objectives by employing proprietary fundamental, technical and valuation
analysis in the selection of smaller-capitalization, publicly-traded U.S.
companies.

TRAINER, WORTHAM TOTAL RETURN BOND FUND

The Fund seeks to maximize total return, consistent with preservation of
capital.

INVESTMENT POLICIES

The following discussion of investment techniques and instruments should be read
in conjunction with the "INVESTMENT OBJECTIVE AND POLICIES" and "INVESTMENT
STRATEGIES AND RISK CONSIDERATIONS" sections of the Prospectus of each Fund.

The Board of Trustees may, in the future, authorize a Fund to invest in
securities other than those listed herein and in the Prospectuses, provided such
investment would be consistent with that Fund's investment objective and that it
would not violate any fundamental investment policies or restrictions applicable
to that Fund.

The following discussion applies to all of the Funds.

The Funds will not, as to 75% of their total assets, purchase the securities of
any one issuer (other than cash, cash items, and obligations of the United
States Government) if immediately thereafter, and as a result of the purchase,
the Funds would (a) have more than 5% of the value of their total assets
invested in the securities of such issuer, or (b) hold more than 10% of any or
all classes of the securities of any one issuer. The Funds will not invest in
the securities of other investment companies. Although permitted under the
Trust's Declaration of Trust and By-laws , the following types of transactions
are not anticipated:

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 3
<PAGE>

1. Investment in restricted securities (including non-marketable
securities);

2. Engaging in short selling; and

3. Arbitrage activities.

Although it is not the current intention of the Funds to borrow, each Fund may
borrow for the purpose of investing in portfolio securities. To the extent that
the Funds borrow money, they will incur interest expense. Any investment gains
made with the additional funds in excess of interest paid will cause the net
asset value of the Funds' shares to rise faster than would otherwise be the
case. Conversely, any investment losses from such monies will cause the net
asset value of the Funds' shares to fall faster than would otherwise be the
case. The most recent borrowing by the Trust was during 1978. The foregoing
investment policies may be changed without shareholder approval except to the
extent they are reflected in the Funds' fundamental policies. (See "INVESTMENT
RESTRICTIONS" below.)

INVESTMENT RESTRICTIONS

The Funds have adopted the following restrictions with respect to their
investment policies. These restrictions are fundamental policies, and may not be
changed as to a Fund unless authorized by the vote of a majority of the
outstanding shares of the Fund, as that term is defined herein under the section
entitled "GENERAL INFORMATION" below.

(a) UNDERWRITING OF SECURITIES: The Funds will not engage in the
underwriting of securities of other issuers.

(b) DIVERSIFICATION: The Funds have adopted the policy prohibiting it
from, as to 75% of each Funds' total assets, investing more than 5% of
its total assets in the securities of any one issuer (other than
securities issued by the United States Government or it's agencies or
instrumentalities).

(c) INDUSTRY CONCENTRATIONS: The Funds may not purchase the
securities of issuers conducting their principal business activities
in the same industry, other than obligations issued or guaranteed by
the United States Government, its agencies or instrumentalities if
immediately after such purchase the value of a Fund's investments in
such industry would exceed 25% of the value of the total assets of the
Fund.

(d) PURCHASE AND SALE OF REAL ESTATE: The Funds will not engage in the
purchase and sale of interests in real estate except that the Funds
may engage in the purchase and sale of marketable securities which may
represent indirect interests in real estate.

(e) PURCHASE AND SALE OF COMMODITIES OR COMMODITY CONTRACTS: The Funds
will not engage in the purchase and sale of commodities or commodity
contracts.

(f) MAKING OF LOANS TO OTHER PERSONS: The Funds will not make loans to any
person or company, except that the Funds may purchase a portion of an
issue of publicly distributed bonds, debentures or other debt
securities and except further that the Funds may enter into repurchase
agreements.

(g) BORROWING OF MONEY: From time to time, the Funds may borrow money. All
such borrowings shall be exclusively from banks. The purpose of such
borrowings shall be both for temporary use and to provide funds for
the purchase of additional investments whenever the Board of Trustees
of the Trust shall deem it desirable. In connection with any such
borrowing, the Funds shall issue promissory notes or other evidences
of indebtedness and shall, when required, pledge, assign or otherwise
encumber its assets, provided, however, (i) that immediately after
such borrowing it shall

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 4
<PAGE>

have an asset coverage of at least 300% for all its borrowing and (ii)
that in the event such asset coverage shall at any time fall below
300% it shall, within three days thereafter (not including Sundays and
holidays) or such longer periods as the U.S. Securities and Exchange
Commission (the "SEC") may prescribe by rules and regulations, reduce
the amount of its borrowings to an extent that the asset coverage of
the borrowings shall be at least 300%.

(i) SECURITIES OF OTHER INVESTMENT COMPANIES: The Funds will not invest in
the securities of other investment companies.

(j) ISSUANCE OF SENIOR SECURITIES: The Funds are not authorized to issue
securities senior to the shares offered by this Prospectus, except in
connection with borrowings under the terms described above under
"BORROWING OF MONEY."

OTHER INVESTMENT RESTRICTIONS

(a) The Funds may not invest in oil, gas or mineral leases;

(b) The Funds may invest up to 5% of their total assets at the time of
purchase in warrants. Included within this amount, but not to exceed
2% of the Fund's total assets are warrants which are not listed on the
New York Stock Exchange or the American Stock Exchange. This
restriction does not apply to warrants initially attached to
securities purchased by the Funds;

(d) The Funds will not purchase securities on margin, but the Funds may
obtain such short-term credits as may be necessary for the purchase
and sale of securities.

TRUSTEES AND OFFICERS

The trustees and executive officers of the Trust, their addresses, affiliations,
if any, with Trainer, Wortham & Co., Inc. (the "Advisor") and principal
occupations during the past five years, are as follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
NAME, AGE POSITION(S) AGGREGATE TOTAL PRINCIPAL OCCUPATION(S) DURING THE PAST
& ADDRESS HELD WITH COMPENSATION COMPENSATION FIVE YEARS
TRUST FROM TRUST FROM TRUST
FOR FISCAL AND FUND
YEAR ENDED COMPLEX PAID
6/30/96 TO TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
James F. Twaddell (57) Chairman of Investment Banker at Schneider Securities, Inc.
c/o Schneider Securities, Inc. the Board; since June 1995; Chairman of the Board,
2 Charles Street Trustee since Director and Registered Representative of
Providence, RI 02904 1979 Barclay Investment, Inc. until June 1995.
- ------------------------------------------------------------------------------------------------------------------------------------

Robert H. Breslin, Jr. (68) Trustee since Partner in the law firm of Breslin & Sweeney,
107 Forge Road 1979. Warwick, RI. since _______________.
E. Greenwich, RI 02818
- ------------------------------------------------------------------------------------------------------------------------------------

David P. Como/1/ (50) President; Managing Director, Trainer, Wortham & Co.,
845 Third Avenue Trustee since Inc. since September, 1990.
Sixth Floor 1984.
New York, NY 10022
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 5
<PAGE>

<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
Raymond Eisenberg (73) Chairman of President of Raymond Eisenberg & Associates,
414 County Street the Audit PC Accountants and Auditors, New Bedford,
New Bedford, MA 02740 Committee; MA since ___________________.
Trustee since
1960.
- ------------------------------------------------------------------------------------------------------------------------------------

David Elias/1/ (51) Trustee since President and Chief Investment Officer of Elias
500 Essjay Road 1991. Asset Management, Inc., Buffalo, NY since
Suite 220 ______________.
Williamsville, NY 14221
- ------------------------------------------------------------------------------------------------------------------------------------

Robert S. Lazar (52) Member of Retired in ___________; formerly an
P.O. Box 4158 the Audit Engineer, Newport, RI; Director, Newport
Middletown, RI 02842-0011 Committee; Federal Savings Bank, Newport, RI.
Trustee since
1976
- ------------------------------------------------------------------------------------------------------------------------------------

H. Williamson Ghriskey, Jr. Vice-President, Managing Director, Trainer, Wortham & Co.,
(52) and Treasurer Inc. from October, 1990 to present.
845 Third Avenue
Sixth Floor
New York, NY 10022
- ------------------------------------------------------------------------------------------------------------------------------------

Martin S. Levine (43) Member of Controller and Chief Financial Officer of John
c/o John P. Picone, Inc. the Audit P. Picone, Inc. Contractors and Engineers,
31 Garden Lane Committee; Lawrence, NY, since 1984.
Lawrence, N.Y. 11559 Trustee
- ------------------------------------------------------------------------------------------------------------------------------------

Terri Thibadeau/1/(49) Trustee since Private Investor; Member of the Board of St.
167 Seabreeze Avenue 1995 Edwards Church in Palm Beach, FL since
Palm Beach, FL 33480 _____________.
- ------------------------------------------------------------------------------------------------------------------------------------

Debra L. Clark (37) Secretary Mutual Fund and Marketing Distribution
845 Third Avenue Agent for Trainer, Wortham First Mutual
Sixth Floor Funds from 1993 to present; Vice-President &
New York, NY 10022 Director of Fund/Plan Broker Services 1987 to
1993.
- ------------------------------------------------------------------------------------------------------------------------------------

Charles H.G. Honey (25) Vice- Sr. Research Analyst Trainer, Wortham & Co.,
President Inc. since May 1994; Equity Analyst,
Woodward and Associates from June, 1993 to
May, 1994.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

/1/ "Interested person" within the meaning of Section 2(a)(19) of the
Investment Company Act of 1940 , as amended (the "Act"). Mr. Como
is an "interested person" by reason of his affiliation with the
Advisor and as a result of being an officer of the Trust. Mr.
Elias may be regarded as an "interested person" by reason of a
material business relationship with the Advisor. Ms. Thibadeau is
an "interested person" by reason of her immediate family
relationship with Mr. Como.

The Audit Committee of the Board of Trustees of the Trust was established to
consider such matters as the selection of the independent certified public
accountant for the Trust, review of the auditor's report on accounting
procedures and internal controls, review of the quarterly reports on brokerage
commissions paid by the Trust, and other issues referred to the Committee by the
full Board. The Audit Committee is comprised of three disinterested trustees;
under the Trust's By-laws, the President also serves as an Ex-Officio member of
the Audit Committee.

As of June 30, 1996, the trustees of the Trust received a fee of $200 per
meeting of the Board of Trustees attended. In addition, the trustees were
reimbursed expenses incurred with connection to their attendance at meetings of
the Board of Trustees. Effective with the commencement of TRAINER, WORTHAM
EMERGING GROWTH FUND and TRAINER, WORTHAM TOTAL RETURN BOND FUND, the trustees
will receive a $3,000 per calendar year retainer and a $500 per meeting fee.
Members of the Audit Committee also receive fees for meetings attended. However,
no officer of the Trust receives any compensation directly from the Trust for
performing the duties of their offices. The Advisor, of which Messrs. Como and
Ghriskey are officers and/or trustees, receives fees from the Trust for acting
as its investment advisor. (See the section entitled "INVESTMENT ADVISOR".)

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 6
<PAGE>

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of September 9, 1996 the trustees and officers as a group owned xxxxxxxx
(xxxxx%) shares of FIRST MUTUAL FUND.

As of September 9, 1996, the following persons owned of
record or beneficially more than 5% of the outstanding voting shares of FIRST
MUTUAL FUND:

NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES HELD PERCENTAGE

INVESTMENT ADVISOR

In December 1990, Trainer, Wortham & Co., Inc. ("the Advisor") became the
investment advisor of the Trust. The Advisor has offices at 845 Third Avenue,
6th Floor, New York, N.Y. 10022. The Advisor, organized in 1990, continues an
investment counseling business which began in 1924 as Trainer & Associates. The
Advisor is registered as an investment advisor under the Investment Advisers Act
of 1940, and supervises approximately $1.7 billion in investment accounts. The
Advisor is owned entirely by the officers active in the day-to-day management of
portfolios. By reason of his stock ownership of 45% of the Advisor, Charles V.
Moore, President may be said to be a "controlling person" of that firm.

The Directors of the Advisor are: A. Alexander Arnold III, David P. Como, H.
Williamson Ghriskey, Jr., and Charles V. Moore. Mr. Como, managing director of
the Advisor, is the President and a Trustee of the Trust. Since 1982, Mr. Como
has been primarily responsible for the day-to-day investment management of the
Trust's portfolio. Mr. Ghriskey, Jr., managing director of the Advisor is Vice-
President and Treasurer of the Trust.

Each Fund's Investment Advisory Agreement provides that, subject to the general
supervision of the Fund's Board of Trustees and in accordance with the Fund's
investment objectives, policies, and restrictions, the Advisor will manage the
Fund's investment portfolio, make decisions with respect to and place orders for
all purchases and sales of the portfolio securities. Pursuant to the Investment
Advisory Agreements, the Advisor is not liable for any mistake of judgment,
mistake of law, or other loss to a Fund in connection with its performance under
the Investment Advisory Agreements except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for its services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Advise or in the performance of its duties, or by reason of its
reckless disregard of its obligations under the Investment Advisory
Agreements.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 7
<PAGE>

Under the Investment Advisory Agreement , with respect to FIRST MUTUAL FUND, the
Advisor receives an annual investment advisory fee, accrued daily and paid
quarterly, of 0.75% of the Fund's average daily net assets; with respect to
TRAINER, WORTHAM EMERGING GROWTH FUND, the Advisor receives an annual fee,
accrued daily and paid quarterly, of 1.25% of the Fund's average daily net
assets, and with respect to TRAINER, WORTHAM TOTAL RETURN BOND FUND, the Advisor
receives an annual fee, accrued daily and paid quarterly, of 0.45% of the Fund's
average daily net assets. 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 a Fund's expense ratio and increasing yield to investors at
the time such amounts are waived or assumed, as the case may be. No Fund will
reimburse the Advisor at a later time for the expenses it has assumed.

Under the Investment Advisory Agreements, if the total expenses borne by a Fund
in any fiscal year exceed expense limitations imposed by applicable state
securities regulations, the Advisor will reimburse the Fund for such excess. In
connection with the registration of the Funds' shares for sale in certain
states, the Advisor has agreed with the regulatory commissions of such states
that if the operating expenses in any year (excluding taxes, brokerage
commissions and interest) exceed 2 1/2% of the first $30 million of a Fund's
average net assets, 2% of the next $70 million and 1 1/2% of the remaining
average net assets the Advisor shall reimburse the Funds for such excess.
Expenses incurred pursuant to such Fund's Distribution Plan is excluded from
this limitation.

For the fiscal years ended June 30, 1996, June 30, 1995 and June 30, 1994,
with respect to FIRST MUTUAL FUND, the Fund paid the Advisor, fees aggregating
$xxxxxxx, $139,966 and $173,869 respectively.

ADMINISTRATOR

Fund/Plan Services, Inc., ("FPS"), 2 W. Elm Street, Conshohocken, Pennsylvania,
19428-0628, serves as the Trust's Administrator pursuant to an Administration
Agreement (the "Agreement"). FPS is an affiliate of the Trust's Distributor,
Fund/Plan Broker Services, Inc. Pursuant to the Agreement, FPS receives an
annual fee, accrued daily and paid monthly, of 0.15% on the first $50 million of
the average daily net assets of the Trust, 0.10% on the next $50 million of the
average daily net assets of the Trust; and 0.05% on average daily net assets of
the Trust over $100 million, subject to a minimum fee of $72,000 for the Trust.
Minimum fees are $48,000 per year for the existing series FIRST MUTUAL FUND and
$12,000 for each additional series or class. Such fee shall not be less than
$42,000. The Trust pays the fees and out-of-pocket costs of FPS.

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

With respect to FIRST MUTUAL FUND, FPS received administration fees of $xxxxxx,
$42,007 and $42,125 for the fiscal years ended June 30, 1996, June 30, 1995, and
June 30, 1994, respectively.

DISTRIBUTOR

Fund/Plan Broker Services, Inc. ("FPBS") serves as the Trust's Distributor
pursuant to an Underwriting Agreement (the "Agreement"). FPBS is an affiliated
company of the Administrator, FPS, inasmuch as both FPBS and FPS are under
common ownership.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 8
<PAGE>

The Agreement will terminate in the event of assignment and may be renewed for
successive one year periods provided that each continuance is specifically
approved by: (1) the vote of a majority of the Trust's outstanding voting shares
or by the Board of Trustees and (2) the vote of a majority of the Board of
Trustees who are not "interested persons" of the Trust and who have no direct or
indirect financial interest in the Agreement.

TRANSFER AGENT AND ACCOUNTING SERVICES AGENT

FPS serves as the Trust's Transfer Agent, Dividend Disbursing Agent and
Redemption Agent pursuant to a Shareholder Services Agreement and also serves as
the Trust's Accounting Services Agent pursuant to an Accounting Services
Agreement (the "Agreements"). The Agreements will continue in effect from year
to year, provided such continuance is specifically approved at least annually by
the Board of Trustees or by a vote of a majority of the outstanding shares of
the Trust (as defined under the section entitled "GENERAL INFORMATION" in each
Fund's Prospectus), and a majority of the Board of Trustees who are not
interested persons (as defined in the Act) of any party to the
respective Agreements, by votes cast in person at a meeting called for such
purpose.

The Agreements provide generally that FPS shall be indemnified against
liabilities to the Trust in connection with matters relating to the agreements
except those arising out of willful misfeasance, bad faith or gross negligence
on the part of FPS in the performance of its duties or from reckless disregard
of its obligations and duties thereunder.

The Trust pays FPS an annual fee of $9.60 per shareholder account (subject to a
minimum monthly fee of $2,000) for its services as Transfer Agent, Dividend
Disbursing Agent and Redemption Agent and an annual fee of $24,000 (subject to
increase if Trust assets should exceed $25 million) for its services as
Accounting Services Agent.

CUSTODIAN

United Missouri Bank, KC, NA, P.O. Box 412797, Kansas City, MO is Custodian for
the securities and cash of each Fund.

LEGAL COUNSEL

Stradley, Ronon, Stevens & Young, LLP, Philadelphia, PA serves as counsel to the
Trust.

AUDITORS

Tait, Weller & Baker, 2 Penn Center Plaza, Suite 700, Philadelphia, PA 19102-
1707 have been selected as the independent accountants for the Funds and will
provide audit and tax services. The books of the Funds will be audited at least
once each year by Tait, Weller & Baker.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 9
<PAGE>

DISTRIBUTION PLAN

FIRST MUTUAL FUND and TRAINER, WORTHAM EMERGING GROWTH FUND have adopted a Plan
of Distribution (the "Plan"), pursuant to Rule 12b-1 under the Act. The Plan
permits the respective Fund to pay certain expenses associated with the
distribution of its shares. The Plan provides that FIRST MUTUAL FUND and
TRAINER, WORTHAM EMERGING GROWTH FUND will reimburse FPBS for actual
distribution and shareholder servicing expenses incurred by FPBS not exceeding,
on an annual basis, 0.25% and 0.50%, respectively, of the respective Fund's
average daily net assets.

In adopting the Plan, the Board of Trustees considered the likelihood that the
Plan is designed to benefit each Fund and its shareholders by strengthening the
system for distributing the Fund's shares and thereby increasing sales and
reducing redemptions. Potential benefits from increased sales and reduced
redemptions include: (i) additional funds being available for investment,
thereby giving the Fund's portfolio manager greater flexibility in pursuing the
Fund's investment objectives; (ii) reducing the likelihood that an unusually
large demand for redemption would require disadvantageous liquidations of
portfolio investments; and (iii) increasing net assets, thereby reducing on a
per share basis those expenses which do not rise proportionately with net
assets. The Board of Trustees concluded that there was a reasonable likelihood
that the Fund and its shareholders would benefit from the adoption of the
Plan.

The Plan will terminate in the event of assignment and may be renewed for
successive one year periods provided that each continuance is specifically
approved by: (1) the vote of a majority of the Fund's outstanding voting shares
or by the Board of Trustees; and (2) the vote of a majority of the Board of
Trustees who are not "interested persons" of the Fund and who have no direct or
indirect financial interest in the Plan.

Any change in the Plan that would materially increase the amount of distribution
expense borne by the Fund requires shareholder approval; any other material
change requires approval by the Board of Trustees, including a majority of the
disinterested trustees as described above. While the Plan is in effect, the
selection and nomination of the Fund's disinterested Trustees is committed to
the disinterested Trustees.

The Plan authorizes the Fund to pay service organizations, which may include but
are not limited to: (1) Compensation to securities brokers and dealers for
selling shares; (2) Compensation to securities brokers and dealers, accountants,
attorneys, investment advisors and pension actuaries for services rendered to
their clients relating to the distribution of shares of the Fund; (3)
Compensation to such parties for marketing research and promotional services
specifically relating to the distribution of Fund shares; (4) The costs of
advertising in newspapers, magazines or other periodicals, or on radio or
television; (5) The costs of telephone (including "WATS" and "800" services),
mail (including postage and other delivery costs) or other direct solicitation
of prospective investors; (6) The costs of preparing and printing prospectuses
and other sales material for prospective investors, and the cost of distributing
these materials; (7) The fees of public relations consultants; and (8) Any other
distribution expenses that the Board of Trustees may from time to time approve
before such expenses are incurred.

All such payments made pursuant to the Plan shall be made for the purpose of
selling shares issued by the Fund. Payments of compensation pursuant to (3)
above may be based in whole or in part on a percentage of the regular salary
expense for those employees of such parties engaged in marketing research and
promotional services specifically relating to the distribution of Fund shares
based on the amount of time devoted by such employees to such activities, and
any out-of-pocket expenses associated with the distribution of Fund shares.

The Plan provides that FPBS will be reimbursed on a monthly basis for expenses
incurred in connection with the distribution of Fund shares. During the fiscal
year ended June 30, 1996, distribution expenses for FIRST MUTUAL FUND were
reimbursed as follows:

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 10
<PAGE>

<TABLE>
<CAPTION>
EXPENSE ITEM AMOUNT
<S> <C>
Advertising and Printing................................................$xxxxxx
Marketing Support Personnel
and Salaries...........................................................$xxxxxx
Travel/Marketing Meetings...............................................$xxxxxx

TOTAL 12B-1 EXPENSES....................................................$xxxxxx
</TABLE>

BROKERAGE

It is the policy of each Fund to secure the execution of orders on its portfolio
transactions in an effective manner at the most favorable price. Pursuant to its
agreement with the Fund, the Advisor determines, subject to the general
supervision of the Board of Trustees and in accordance with the Fund's
investment objectives, policies and restrictions, which securities are to be
purchased and sold and which brokers are to be eligible to execute its portfolio
transactions. It is not the policy of the Funds to deal solely with one broker,
but it is the Fund's intention to place portfolio transactions with those
brokers which provide the most favorable combination of price, execution and
services to the Trust. Research services are a factor in selection of brokers,
but payment in excess of brokerage commissions charged by other brokers is not
made in recognition of research services. The reasonableness of brokerage
commissions is evaluated by comparison to fees charged by other brokers where
the execution and services are comparable.

During the year ended June 30, 1996, FIRST MUTUAL FUND paid a total of $xxxxxx
in brokerage commissions; $132,302.77 for the fiscal year 1995; and $154,935 for
the fiscal year 1994. The Board of Trustees including a majority of the
disinterested Trustees, have adopted certain procedures pursuant to Rule 17e-1
governing brokerage transactions between the Trust and affiliated brokers. The
Trust has, in the past, paid brokerage commissions to brokers which are
affiliated with Officers and Trustees of the Trust. During the fiscal years
ended June 30, 1996, 1995 and 1994 the Trust paid no such brokerage
commissions.

FIRST MUTUAL FUND'S portfolio turnover rate of xxx% in the year ended June 30,
1996 was xxxxxx than the 198% rate for the prior year. The rate of portfolio
turnover will not be a limiting factor in making portfolio decisions. A high
rate or portfolio turnover may result in the realization of substantial capital
gains and involves correspondingly greater transaction costs.
INDIVIDUAL RETIREMENT ACCOUNT

Each Fund offers a plan (the "IRA") for use by any individual with compensation
for services rendered (including earned income from self-employment) who wishes
to use shares of the Fund as a funding medium for individual retirement saving.
The only exception is an individual who has attained, or will attain, age 70 1/2
before the end of the taxable year. Such an individual may only contribute to an
IRA for his or her nonworking spouse under age 70 1/2.

Subject to the restriction set forth below, an individual may make annual
deductible contributions to the IRA up to the lesser of 100% of gross income or
$2,000 ($2,250 total for the individual and individual's non-income earning
spouse with two separate accounts). For purposes of tax year 1996 these
contributions may be made at any time on or before April 15, 1997.

The Code provides that the $2,000 ($2,250) deduction discussed above will be
phased-out for certain individuals who are active participants in an employer-
sponsored retirement plan and whose adjusted gross income ("AGI") equals or
exceeds certain dollar limits. If such an individual is a married person with
AGI on his or her joint return in excess of

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 11
<PAGE>

$40,000 but less than $50,000, or a single person with AGI in excess of $25,000
but less than $35,000, the individual's $2,000 ($2,250) deduction will be
ratably reduced. A married individual with AGI on his or her joint return of
$50,000 or more, or a single individual with AGI of $35,000 or more, may not
deduct his or her IRA contribution.

Under the Code, even if the individual is not a participant in an employer-
sponsored retirement plan, if his or her spouse is a participant in such a plan
and if their AGI, filing jointly, is more than $40,000, the individual and his
or her spouse will both be subject to the phase-out discussed above. If neither
the individual nor his or her spouse is a participant in an employer-sponsored
retirement plan, or if the individual's AGI is less than the $40,000 or $25,000
amounts discussed above, the individual may continue to make deductible
contributions of $2,000 ($2,250).

Non-deductible contributions to an IRA may be made under the Code to the extent
an individual is unable to make a deductible contribution under the phase-out
rules discussed above.

An individual's IRA contributions (and earnings thereon) generally may not be
withdrawn (without the individual's incurring a 10% additional income tax) until
age 59 1/2, except in the event of death or disability. In addition,
distributions before age 59 1/2 are not subject to the 10% additional income tax
if they are in the form of substantially equal periodic payments over the life
or life expectancy of the individual, or over the joint lives or joint life
expectancy of the individual and his or her beneficiary. Earnings on amounts
contributed (both deductible and nondeductible) to the IRA are not taxed until
distributed.

IN GENERAL
- ----------

In the IRA, distributions of net investment income and capital gains will be
automatically reinvested in the Fund. Retirement plan participants will be
billed for all maintenance fees which are to be paid to United Missouri Bank,
MO. Payment may be made through liquidation of shares of the Fund.

United Missouri Bank, furnishes custodial services for the IRA for a service fee
chargeable as follows: (a) annual maintenance fee - $10 (per participant's
account); (b) lump sum distribution or termination fee - $7 (per participant's
account); and (c) periodic cash distributions - $1 (each payment).

The foregoing brief description is not a complete or definitive explanation of
the IRA available for investment in the Fund. Any person who wishes to establish
a retirement plan account may do so by contacting the Fund. The complete IRA
documents and applications will be provided to existing or prospective
shareholders upon request, without obligation. Since this IRA involves a
commitment covering future years, it is important that the investor consider his
or her needs and whether the investment objective of the Trust as described in
each Fund's Prospectus and this Statement of Additional Information is most
likely to fulfill them. The Funds recommends that investors consult their
attorneys or tax advisors if they are uncertain that the retirement programs
described herein are appropriate for their needs.

PERFORMANCE CALCULATIONS

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 12
<PAGE>

The Funds compute their average annual total return by determining the average
annual compounded rate of return during specified periods that equate the
initial amount invested to the ending redeemable value of such investment. This
is done by dividing the ending redeemable value of a hypothetical $1,000 initial
payment by $1,000 and raising the quotient to a power equal to one divided by
the number of years (or fractional portion thereof) covered by the computation
and subtracting one from the result. This calculation can be expressed as
follows:

ERV = P(1 + T)/n/

Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.

P = hypothetical initial payment of $1,000.

n = period covered by the computation, expressed in terms of
years.

T = average annual total return.

The Funds compute their aggregate total return by determining the aggregate
compounded rate of return during specified period that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

Aggregate Total Return = [ (ERV) - 1 ]
---
P

Where: ERV = ending redeemable value at the end of the period covered by
the computation of a hypothetical $1,000 payment made at the
beginning of the period.

P = hypothetical initial payment of $1,000.

The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period. The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 13
<PAGE>

Based on the foregoing calculations, the average annual total returns for the
FIRST MUTUAL FUND for the one year, five year and ten year periods ended June
30, 1996 were xxxx%, xxxx% and xxxx%, respectively. The aggregate total returns
for the same five and ten year periods were xxxx% and xxxx%, respectively.

Since performance will fluctuate, performance data for the Funds should not be
used to compare an investment in the Funds' shares with bank deposits, savings
accounts and similar investment alternatives which often provide an agreed-upon
or guaranteed fixed yield for a stated period of time. Shareholders should
remember that performance is generally a function of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses and
market conditions.

GENERAL INFORMATION

As used in each Fund's Prospectus and the this Statement of Additional
Information, the holders of "a majority of the outstanding shares" of the Fund
means the vote of the lesser of: (a) 67% or more of the shares present at any
annual or special meeting of shareholders, if the holders of more than 50% of
the outstanding shares are present or represented by proxy at the meeting; or
(b) more than 50% of the outstanding shares of the Fund.

Shareholder inquiries should be directed to the Fund at the address or telephone
number listed on the front cover of this Statement of Additional Information.
Shareholders are urged to put significant inquiries or complaints in
writing.

The Trust is registered with the Securities and Exchange Commission as a
management investment company. Such registration does not involve supervision by
the Commission of the management or policies of the Trust.

Each Fund's Prospectus and this Statement of Additional Information are not an
offering of the securities herein described in any state in which such offering
may not lawfully be made. No salesman, dealer or other person is authorized to
give any information or make any representation other than those contained in
this each Fund's Prospectus and this Statement of Additional Information.

FEDERAL TAXES

The funds have elected to be treated as regulated investment companies under
subchapter M of the code and each intends to qualify as such for each future
fiscal year. The trustees reserve the right not to maintain the qualification
of the fund as a regulated investment company if they determine such course of
action to be beneficial to you. In such case, the fund will be subject to
federal, and possibly state, corporate taxes on its taxable income and gains,
and distributions to shareholders will be taxable as ordinary dividend income to
the extent of the fund's available earnings and profits. Shareholders will be
advised annually as to the federal income tax consequences of distributions made
during the year.

FINANCIAL STATEMENTS

FIRST MUTUAL FUNDS Financial Statements, including the notes thereto, for the
fiscal year ended June 30, 1996, which have been audited by Tait, Weller &
Baker, are incorporated by reference from the Funds' Annual Report to
shareholders.

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 14
<PAGE>

________________________________________________________________________________
Trainer, Wortham First Mutual Funds -- SAI
Last Draft - July 15, 1996 Page 15
<PAGE>

REGISTRATION STATEMENT
OF

TRAINER WORTHAM FIRST MUTUAL FUNDS
ON
FORM N-1A

PART C: OTHER INFORMATION
-----------------

Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:

(1) The following Financial Statements are included in Part
B of this Registration Statement on Form N-1A for the
fiscal year ended June 30, 1996:

* Report of Independent Certified Public
Accountants
* Schedule of Investments at June 30, 1996
* Statement of Assets and Liabilities at June
30, 1996
* Statement of Operations for the Year ended
June 30, 1996
* Statement of Changes in Net Assets for the
years ended June 30, 1996 and June 30, 1995
* Financial Highlights
* Notes to Financial Statements

(2) All required financial statements are included or
incorporated by reference in Parts A and B hereof. All
other financial statements and schedules are
inapplicable.

(b) Exhibits:

(1) (a) Articles of Association of Registrant as
amended through October 29, 1982 are
incorporated herein by reference to
Exhibit No. 1 of Post-Effective
Amendment No. 36 to Registrant's
Registration Statement on Form N-1A
filed on October 29, 1982.

(b) Amendment to Articles of Association of
Registrant filed October 26, 1983 is
incorporated herein by reference to
Exhibit No. 1 of Post-Effective
Amendment No. 36 to Registrant's
Registration Statement on Form N-1A
filed on October 29, 1983.

(c) Amendment to Articles of Association of
Registrant filed October 9, 1984 is
incorporated herein by reference to
Exhibit No. 1(a) of Post-Effective
Amendment No. 39 to Registrant's
Registration Statement on Form N-1A
filed on March 18, 1985.

(d) Amendment to Articles of Association of
Registrant filed on December 8, 1986 is
incorporated herein by reference to
Exhibit No. 1(d) of Post-Effective
Amendment No. 44 to Registrant's
Registration Statement on Form N-1A
filed on October 27, 1987.

(e) Amendment to Articles of Association of
Registrant filed on January 25, 1991 is
incorporated herein by reference to
Exhibit 1(e) of Post-Effective Amendment
No. 48 to Registrant's Registration
Statement on Form N1-A filed on August
31, 1991.

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 1
<PAGE>

(f) Agreement and Declaration of Trust and
Certificate of Trust of First Mutual
Funds, filed February 23, 1995 are inc
orporated herein by reference to Exhibit
1(f) of Post-Effective Amendment No. 52
to Registrant's Registration Statement
on Form N-1A filed on November 30, 1994.

(2) (a) By-Laws, as amended, on July 29, 1992
are incorporated herein by reference to
Exhibit 2(a) of Post-Effective Amendment
No. 49 to Registrant's Registration
Statement on Form N-1A filed on October
30, 1992.

(b) By-Laws, filed February 23, 1995, for
First Mutual Funds are incorporated
herein by reference to Exhibit 2(b) of
Post-Effective Amendment No. 52 to
Registrant's Registration Statement on
Form N-1A filed on November 30, 1994.

(3) None.

(4) Specimen stock certificate incorporated
herein by reference to Exhibit No. 4 to Post-
Effective Amendment No. 41 to Registrant's
Registration Statement on Form N-1A filed on
October 31, 1985.

(5) (a) Form of Investment Advisory Agreement
between Registrant and Trainer, Wortham
& Co., Inc. is incorporated herein by
reference to Exhibit No. 5(a) of Post-
Effective Amendment No. 48 to
Registrant's Registration Statement on
Form N-1A filed on August 31, 1991.

(b) Form of Investment Advisory Agreement
between Registrant and Trainer, Wortham
& Co., Inc. is incorporated herein by
reference to Exhibit No. 5(b) of Post-
Effective Amendment No. 52 to
Registrant's Registration Statement on
Form N-1A filed on November 30, 1994.

(6) Underwriting Agreement dated October 1, 1994,
between Registrant and Fund/Plan Broker
Services, Inc. is incorporated by reference
to Exhibit No. (6) of Post-Effective
Amendment No. 53 to Registrant's Registration
Statement on Form N-1A filed on October 28,
1995.

(7) None.

(8) Custodian Agreement between Registrant and
United Missouri Bank dated October 18, 1994,
is incorporated by reference to Exhibit No.
(6) of Post-Effective Amendment No. 53 to
Registrant's Registration Statement on Form
N-1A filed on October 28, 1995.

(9) (a) Administration Agreement between
Registrant and First Pennsylvania Bank,
N.A. dated November 1, 1985 is
incorporated herein by reference to
Exhibit No. 9(a) of Post-Effective
Amendment No. 42 to Registrant's
Registration Statement on Form N-1A
filed on August 29, 1986.

(b) Amendment to Administration Agreement
dated December 12, 1985 among
Registrant, Fund/Plan Services, Inc.,
and First Pennsylvania Bank, N.A. is
incorporated herein by reference to
Exhibit No. 9(b) of Post-Effective
Amendment No. 42 to

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 2
<PAGE>

Registrant's Registration Statement on
Form N-1A filed on August 29, 1986.

(d) Accounting Services Agreement between
Registrant and First Pennsylvania Bank,
N.A. dated November l, 1985 is
incorporated herein by reference to
Exhibit No. 9(c) of Post-Effective
Amendment No. 42 to Registrant's
Registration Statement on Form N-1A
filed on August 29, 1986.

(e) Amendment to Accounting Services
Agreement dated December 12, 1985 among
Registrant, Fund/Plan Services, Inc.,
and First Pennsylvania Bank, N.A. is
incorporated herein by reference to
Exhibit No. 9(d) of Post-Effective
Amendment No. 42 to Registrant's
Registration Statement on Form N-1A
filed on August 29, 1986.

(10) Opinion and consent of counsel is
incorporated herein by reference to
Registrant's Rule 24f-2 Notice which is to be
filed on or before August 28, 1995.

(11) (a) None.

(b) Consent of Tait, Weller & Baker is
incorporated by reference to Exhibit No.
(6) of Post-Effective Amendment No. 53
to Registrant's Registration Statement
on N-1A filed on October 28, 1995.

(12) None.

(13) None.

(14) (a) First Mutual Fund, Inc. Individual
Retirement Custodial Account, Disclosure
Statement and Application is
incorporated herein by reference to
Exhibit 14(a) of Post-Effective
Amendment No. 40 to Registrant's
Registration Statement on Form N-1A
filed on August 30, 1985.

(b) First Mutual Fund, Inc. Keogh and
Corporate Defined Contribution Master
Plan and Custodial Agreement is
incorporated herein by reference to
Exhibit 14(b) of Post-Effective
Amendment No. 40 to Registrant's
Registration Statement on Form N-1A
filed on August 30, 1985.

(15) Form of Distribution (i.e., 12b-1 plan)
Agreement between Registrant and Fund/Plan
Broker Services, Inc. is incorporated herein
by reference to Exhibit No. (15) of Post-
Effective Amendment No. 49 to Registrant's
Registration Statement on Form N-1A filed on
August 31, 1991.

(16) Not applicable.

(17) Powers-of-Attorney incorporated by
refererence to Exhibit No. (6) of Post-
Effective Amendment No. 53 to Registrant's
Registration Statement on Form N-1A filed on
October 28, 1995

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 3
<PAGE>

Item 25. Persons Controlled by or Under Common Control with
--------------------------------------------------
Registrant
----------
Not applicable.

Item 26. Number of Holders of Securities
-------------------------------

As of September 9, 1996:

Title of Class Number of Record Holders
-------------- ------------------------

Common Stock,
$0.01 Par Value

Item 27. Indemnification
---------------

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

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

Article Sixth of the By-Laws of the Trust provide that any
trustee and officer shall be indemnified against reasonable
costs and expenses incurred in connection with any
proceeding to which he or she is made a party by reason of
his being or having been a trustee or officer of the Trust,
except in relation to any action, suit or proceeding in
which he or she is adjudged liable because of willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his
office. In the absence of an adjudication which expressly
absolves a trustee or officer of liability for such willful
misfeasance, etc., a written opinion of independent counsel
is required prior to payment of indemnification.

Indemnification of the Trust's investment advisor,
distributor, custodian, administrator, transfer agent,
dividend disbursing and redemption agent and accounting
services agent is provided for, respectively, in Section 8
of the Investment Advisory Agreement (Exhibit 5(a)); Section
8 of the Underwriting Agreement (Exhibit 6(a)), Section 18
of the Custodian Agreement (Exhibit 8), Section 25 of the
Administration Agreement (Exhibit 9(a)) Section 8(d) of the
Administration Agreement (Exhibit 9(c)), and Section 23 of
the Accounting Services Agreement (Exhibit 9(c).

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

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 4
<PAGE>

proceeding) is asserted by such trustee, officer, or
controlling person in connection with the securities which
have been registered, the Trust will, unless in the opinion
of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.

Item 28. Business and Other Connections of Investment Advisor
----------------------------------------------------

Trainer, Wortham & Co., Inc. is engaged in investment
advising and counseling, and continues an investment
counseling business which began in 1924 as Trainer &
Associates. The company is registered as an investment
advisor under the Investment Advisors Act of 1940 and, as
of, September, 1996, supervised approximately $1.7 billion
in investment accounts.

The Investment Advisor holds administrative records prepared
prior to May 1, 1991 required to be maintained pursuant to
Section 31(a) under the Investment Company Act of 1940, and
the rules promulgated thereunder.

To the knowledge of the Registrant, none of the directors or
officers of Trainer, Wortham & Co., Inc. is or has been at
any time during the past two fiscal years engaged in any
other business, profession, vocation or employment of a
substantial nature for his own account or in the capacity of
director, officer, employee, partner or trustee.

Item 29. Principal Underwriters
----------------------
(a) Fund/Plan Broker Services, Inc. ("FPBS"), the principal
underwriter for the Registrant's securities, currently acts
as principal underwriter for the following entities:

The Brinson Funds McM Funds

Chicago Trust Funds

Smith Breeden Series
Fund
Fairport Funds Smith Breeden Short
Duration U.S. Government
Fund

The Japan Alpha Fund
First Mutual Funds Smith Breeden Trust
Focus Trust, Inc. The Stratton Funds, Inc.

Stratton Growth Fund,
Inc.
IAA Trust Mutual Funds Stratton Monthly Dividend
Shares, Inc.
Matthews International Funds The Timothy Plan

(b) The table below sets forth certain information as to the
Underwriter's Trustees, Officers and Control Persons:

<TABLE>
<CAPTION>
Position Position
Name and Principal and Offices and Offices
Business Address with Underwriter with Registrant
---------------- ------------------- ---------------
<S> <C> <C>
Kenneth J. Kempf Director and President None
2 W. Elm Street
Conshohocken, PA 19428-0874

Lynne M. Cannon Vice-President and None
2 West Elm Street Principal
Conshohocken, PA 19428-0874

Rocco J. Cavalieri Director and None
2 West Elm Street Vice-President
Conshohocken, PA 19428-0874
</TABLE>

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 5
<PAGE>

<TABLE>
<S> <C> <C>
Gerald J. Holland Director, Vice- None
2 W. Elm Street President and
Conshohocken, PA 19428-0874 Principal

Joseph M. O'Donnell, Esq. Director and None
2 West Elm Street Vice-President
Conshohocken, PA 19428-0874

Sandra L. Adams Assitant Vice- None
2 W. Elm Street President and
Conshohocken, PA 19428-0874 Principal

Mary P. Efstration Secretary None
2 W. Elm Street
Conshohocken, PA 19428-0874

John H. Leven Treasurer None
2 W. Elm Streer
Conshohocken, PA 19428-0874
</TABLE>

James W. Stratton, may be considered a control person of the
Underwriter due to his direct or indirect ownership of
Fund/Plan Services, Inc., the parent of the Underwriter.

Item 30. Location of Accounts and Records
--------------------------------
(1) Trainer, Wortham & Co., Inc., 845 Third Avenue, New
York, NY 10022 (records relating to its functions as
investment advisor).

(2) United Missouri Bank, KC, NA, P.O. Box 412797, Kansas
City, MO 64141-2797 (records prepared after February
29, 1988 relating to its functions as Custodian).

(3) Fund/Plan Services, Inc., 2 W. Elm Street,
Conshohocken, PA 19428 (records prepared after March
15, 1985 relating to its functions as Transfer Agent,
dividend disbursing and redemption agent, and
Accounting Services Agent); and since April 16, 1991
for its administrative records.

(4) Stradley, Ronon, Stevens & Young, 2600 One Commerce
Square, Philadelphia, PA 19103-7098 (Articles of
Association, By-Laws and Minute Books).

(5) Fund/Plan Broker Services, Inc., 2 W. Elm Street,
Conshohocken, PA 19428 (Administrative records and
those records relating to its function as Distributor
prepared after May 1, 1991 which are required to be
maintained pursuant to Section 31(a) under the
Investment Company Act of 1940, as the rules
promulgated thereunder).

Item 31. Management Services
-------------------
Not applicable

Item 32. Undertakings
------------
(1) The Registrant hereby undertakes to promptly call a
meeting of shareholders for the purpose of voting upon
the question of removal of any trustee or trustees when
requested in writing to do so by the record holders of
not less than 10 percent of the Registrant's
outstanding shares and to assist its shareholders in
accordance with the requirements of Section 16(c) of
the Investment Company Act of 1940 relating to
shareholder communications.

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 6
<PAGE>

(2) Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report for the fiscal year
ended June 30, 1995, upon request and without charge.

================================================================================
Trainer, Wortham First Mutual Funds - Part C
Last Draft - July 3, 1996 Page 7