TRAINER WORTHAM FIRST MUTUAL FUNDS, 497, 1998-11-09

TRAINER WORTHAM FIRST MUTUAL FUNDS
497, 1998-11-09

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Trainer, Wortham Funds Logo

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

FIRST MUTUAL FUND

PROSPECTUS OCTOBER 30, 1998
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TRAINER, WORTHAM FIRST MUTUAL FUNDS (the "Trust") is an open-end management
investment company which currently offers shares of two series: FIRST MUTUAL
FUND and TRAINER, WORTHAM TOTAL RETURN BOND FUND (individually and collectively,
the "Fund(s)"). Each Fund has distinct investment objectives and policies.
Trainer, Wortham & Co., Inc. (the "Advisor") serves as each Fund's Investment
Advisor.

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.

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 dated October 30, 1998, 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. Additionally, the Securities and Exchange Commission maintains
a website (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference into this Prospectus, and other
information regarding the Trust and its Funds which is filed electronically with
the Securities and Exchange Commission.

Shares of the Fund are not deposits or obligations of, or insured, guaranteed or
endorsed by, any bank, the Federal Deposit Insurance Corporation, the Federal
Reserve Board, or any other agency, entity or person. The purchase of Fund
shares involves investment risks including the possible loss of principal.

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.
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
SUBJECT PAGE
------- ----
<S> <C>

Expense Information......................................... 3

Financial Highlights........................................ 4

Investment Objectives and Policies.......................... 5

Investment Strategies and Risk Considerations............... 5

Management of the Trust

Board of Trustees......................................... 8

Investment Advisor........................................ 8

Administrator............................................. 8

Distributor............................................... 9

Transfer Agent/Accounting Services Agent.................. 9

Custodian................................................. 9

Distribution Plan........................................... 9

Brokerage................................................... 9

Purchase of Shares.......................................... 10

Redemption of Shares........................................ 11

Exchange of Shares.......................................... 12

Shareholder Services........................................ 12

Net Asset Value............................................. 13

Dividends and Taxes......................................... 13

Performance Information..................................... 14

General Information......................................... 15
</TABLE>

<TABLE>
<S> <C>
UNDERWRITER: INVESTMENT ADVISOR:
FPS Broker Services, Inc. Trainer, Wortham & Co., Inc.
3200 Horizon Drive 845 Third Avenue
P.O. Box 61503 New York, NY 10022
King of Prussia, PA 19406-0903 (800) 775-0604
(800) 257-4414
</TABLE>

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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 FUNDS AT 845 THIRD AVENUE, 6TH FLOOR, NEW YORK, NY 10022, OR
BY CALLING (800) 257-4414.
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EXPENSE INFORMATION

Below is a summary of the operating expenses for the Fund. A hypothetical
example based on the summary is also shown.
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ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

<TABLE>
<CAPTION>
FIRST MUTUAL
FUND(2)
------------
<S> <C>
Management Fees............................................. 0.75%
12b-1 Fees(1)............................................... 0.25%
Other Expenses.............................................. 0.66%
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Total Fund Operating Expenses............................... 1.66%
=====
</TABLE>

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EXAMPLE:

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>
<S> <C>
1 YEAR...................................................... $ 17
3 YEARS..................................................... $ 52
5 YEARS..................................................... $ 90
10 YEARS.................................................... $197
</TABLE>

(1) The maximum fee allowable under the 12b-1 Plan for the Fund is 0.25%. As a
result of expenses payable in connection with the Fund's Rule 12b-1 Plan, it
is possible that long-term shareholders of the Fund may pay more than the
economic equivalent of the maximum front-end sales charges by the National
Association of Securities Dealers.

(2) Expenses for the Fund reflect those actually incurred for the fiscal year
ended June 30, 1998.
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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 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."

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FINANCIAL HIGHLIGHTS

The following financial highlights for the fiscal year ended June 30, 1998 were
derived from the Funds' financial statements dated June 30, 1998, which were
audited by Briggs, Bunting and Dougherty, LLP, independent auditors, whose
unqualified report thereon is incorporated by reference into the Statement of
Additional Information. Prior to fiscal year ended June 30, 1997, the Funds'
financial statements were audited by the Trust's previous accountants. The
Funds' Statement of Additional Information may be obtained without charge and is
incorporated by reference into this Prospectus.

FIRST MUTUAL FUND

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

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
1998 1997 1996 1995 1994 1993 1992 1991* 1990 1989
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year........................ $ 12.35 $ 13.81 $ 10.03 $ 8.21 $ 9.29 $ 1.58 $ 2.33 $ 2.39 $ 1.12 $ 0.00
Income From Investment
Operations
Net investment income..... (0.07) (0.11) (0.09) (0.09) (0.09) (0.06) 0.01 0.03 0.09 0.02
Net gains (losses) on
securities (both
realized and
unrealized)............. 2.72 0.95 4.79 2.10 (0.13) 1.09 (0.09) 0.31 1.34 1.23
Total from investment
operations.......... 2.65 0.84 4.70 2.01 (0.22) 1.03 (0.08) 0.34 1.43 1.25
Less Distributions
Dividends (from net
investment income)...... -- -- -- -- -- -- (0.02) (0.06) (0.06) (0.13)
Distributions (from
capital gains).......... (2.53) (2.30) (0.92) 0.19 (0.86) (0.23) (0.65) (0.34) (0.10)(1) --
Total distributions... (2.53) (2.30) (0.92) 0.19 (0.86) (0.23) (0.67) (0.40) (0.16) (0.13)
Net Asset Value, End of
Year........................ $ 12.47 $ 12.35 $ 13.81 $ 10.03 $ 8.21 $ 2.38 $ 1.58 $ 2.33 $ 2.39 $ 1.12
Total Return.................. 25.40% 7.67% 49.12% 25.04% 3.91% 12.17% 1.01% 4.35% 17.88% 16.52%
Ratios/Supplemental Data
Net assets, end of year (in
000's).................... $39,211 $33,649 $32,147 $20,281 $21,446 $19,093 $18,143 $16,606 $14,720 $13,250
Ratio of expenses to average
net assets(2)............. 1.66% 1.87% 1.74% 2.16% 1.97% 1.99% 1.87% 2.32% 2.04% 2.15%
Ratio of net investment
income to average net
assets(2)................. (0.56%) 0.96% 0.82% 0.77% 0.97% 0.61% 0.08% 0.36% 1.03% 0.22%
Portfolio turnover rate..... 81% 109% 107% 198% 178% 172% 175% 178% 158% 197%
Average commission rate
paid...................... $0.0644 $0.0601 $0.0683 N/A N/A N/A N/A N/A N/A N/A
</TABLE>

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(1) The distribution for the fiscal year 1990 represents the amount required to
be distributed for tax purposes to avoid imposition of excise taxes on
realized capital gains.

(2) Average net assets have been computed on the basis of the value of the net
assets as determined as of the end of the month.

* The investment adviser to the Fund changed on 12/21/90 (changed to Trainer,
Wortham & Co., Inc. from BIL Trainer, Wortham, Inc.)

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INVESTMENT OBJECTIVES AND POLICIES

FIRST MUTUAL FUND:

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

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

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

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

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

INVESTMENT STRATEGIES AND
RISK CONSIDERATIONS

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

REPURCHASE AGREEMENTS

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

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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 a 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

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

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.

AMERICAN DEPOSITORY RECEIPTS ("ADRS")

Investments in ADRs by the Fund are subject to special investment risks that
differ in some respects from those related to investments in securities of U.S.
domestic issuers. Such risks include potential political, social or economic
instability in the country of the issuer, the difficulty of predicting
international trade patterns, the possibility of the imposition of exchange
controls, expropriation, limits on removal of currency or other assets,
nationalization of assets, foreign withholding and income taxation, and foreign
trading practices (including higher trading commissions, custodial charges and
delayed settlements). Such securities may be subject to greater fluctuations in
price than securities issued by

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United States corporations or issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The markets on which such securities trade may
have less volume and liquidity, and may be more volatile, than securities
markets in the United States. In addition, there may be less publicly available
information about a foreign company than about a U.S. domiciled company. Foreign
companies generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies. There is generally less government regulation of securities
exchanges, brokers and listed companies abroad than in the United States.
Confiscatory taxation or diplomatic developments could also affect investment in
those countries. In addition, foreign branches of U.S. banks, foreign banks and
foreign issuers may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting, and recordkeeping standards than
those applicable to domestic branches of U.S. banks and domestic issuers.

For many foreign securities, U.S. dollar-denominated ADRs, which are traded in
the United States on exchanges or over-the-counter, are issued by domestic
banks. ADRs represent the right to receive securities of foreign issuers
deposited in a domestic bank or a correspondent bank. ADRs do not eliminate the
risk inherent in investing in the securities of foreign issuers. However, by
investing in ADRs rather than directly in stock of foreign issuers, a 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 Funds 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.

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 may from time to time 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.

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creases when interest rates rise. However, the price of a convertible security
also is influenced by the market value of the security's underlying common
stock. Thus, the price of a convertible security generally increases as the
market value of the underlying stock increases, and generally decreases as the
market value of the underlying stock declines. Investments in convertible
securities generally entail less risk than investments in the common stock of
the same issuer.

MANAGEMENT OF THE TRUST

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, six 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.

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 adviser under the Investment Advisers 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 $2.5 billion in investment accounts and is owned primarily by the
officers active in the day-to-day management of portfolios.

Pursuant to an Investment Advisory Agreement with the Trust on behalf of FIRST
MUTUAL FUND, the Advisor receives an annual fee, accrued daily and paid monthly,
of 0.75% of the Fund's average daily net assets.

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 portfolios, 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 First Mutual Fund's portfolio since 1982.
Mr. Como has been a Managing Director of the Advisor since September 1990, and
was Managing Director and Vice President of BIL, Trainer, Wortham & Co., its
predecessor company, from 1988 through September 1990.

The Board of Trustees of the Trust called a Special Meeting of Shareholders to
be held on November 14, 1998 in order to consider certain proposals made
necessary in connection with a proposed change in control of the Advisor. The
Advisor has entered into an agreement to be acquired by First Republic Bank,
subject to certain express conditions contained in the agreement. The completion
of the proposed transaction between the Advisor and First Republic Bank will
cause the current investment advisory agreement between the Advisor and the Fund
to terminate. For this reason, shareholders of record of the Fund as of October
9, 1998 are being asked to approve a new investment advisory agreement between
the Fund and the Advisor to take effect upon the completion of the proposed
transaction. The new investment advisory agreement and the current investment
advisory agreement are substantially similar and the current investment advisory
fee rate payable by the Fund to the Advisor will remain unchanged. There is no
plan to change the investment portfolio manager for the Fund after the
completion of the proposed transaction nor is there any plan to change the
investment objective or policies of the Fund.

First Republic Bank is a commercial bank headquartered at 388 Market Street, San
Francisco, California 94111, which is engaged in a general banking business and
it also provides private banking services. First Republic Bank has offices in
California, Nevada and New York City and has approximately $2.5 billion in total
net assets. First Republic Bank currently owns 19.9% of the Advisor's
outstanding common stock and it would acquire the remaining 80.1% of the
Advisor's common stock that it does not already own in the event its acquisition
of the Advisor is completed. It is currently anticipated that the acquisition
will be completed on or about December 1, 1998 in the event that all of the
conditions set forth in the agreement are satisfied.
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ADMINISTRATOR

First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, which has its principal
business address at 4400 Computer Drive, Westboro, MA 01581, serves as
administrator of the Fund. The services that Investor Services Group 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.

The Trust, on behalf of the Fund, has entered into an administrative services
agreement dated July 25, 1996, (the "Administration Agreement") with First Data
Investor Services Group, Inc., 3200 Horizon Drive, P.O. Box 61503, King of
Prussia, PA 19406-0903, pursuant to which the Administrator receives a fee
accrued daily and paid monthly of 0.15% of the value of the Fund's first $50
million of total average net assets; 0.10% of the value of the Fund's next $50
million of total average net assets; and 0.05% of the value of the Fund's total
average net assets in excess of $100 million, subject to an annual minimum fee
of $72,000 for the Trust.

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

DISTRIBUTOR

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

TRANSFER AGENT AND ACCOUNTING SERVICES AGENT

Investor Services Group also serves as the Fund's Transfer Agent, Dividend
Disbursing Agent, Redemption Agent and Accounting Services Agent. In such
capacities, Investor Services Group 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 First Data Investor Services Group, Inc.

CUSTODIAN

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

DISTRIBUTION PLAN

The shareholders of the Fund have adopted a Plan of Distribution (the "Plan"),
effective October 31, 1991, pursuant to Rule 12b-1 under the Act. The Plan was
last approved by the Board of Trustees on October 21, 1997. The Plan permits the
Fund to pay certain expenses associated with the distribution of its shares. The
Plan provides that the Fund will reimburse FPSB for actual distribution and
shareholder servicing expenses incurred by FPSB not exceeding, on an annual
basis, 0.25% of the Fund's average daily net assets. Amounts expended by FPSB,
but not reimbursed by the Fund, in any year will not be a continuing liability
of the Fund in subsequent years. Because the Fund reimburses FPSB only for
actual expenditures, FPSB realizes no profit from the Plan. The Plan may be
terminated by either party at any time and the Fund shall have no liability for
expenses that were not reimbursed as of the date of termination.

All such payments made pursuant to the Plan shall be made for the purpose of
promoting the sale of shares or other such distribution related expenses,
including any distribution or service fees paid to securities dealers,
investment advisors, financial planners, and others, who have executed a
distribution agreement with FPSB. Distribution expenses which are attributable
to more than one Fund will be allocated among the Funds in proportion to their
relative net assets.
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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
portfolio transactions subject to seeking best price and execution. The Fund may
pay brokerage commissions to brokers which are affiliated with Officers and
Trustees of the Fund, provided that such transactions are in compliance with
Section 17(e)(2) of the Act.

PORTFOLIO TURNOVER

The rate of portfolio turnover will depend on the investment strategy
implemented by the Advisor for the Fund which will vary over any given time
period, but may be influenced by the following: general market conditions;
valuation analysis; market volatility; and technical analysis. It is not the
policy of the Fund to invest with the goal of generating short-term trading
profits, rather the Fund seeks to generate long-term capital appreciation when
possible by holding investments over a full market cycle, normally 2-3 years. It
is anticipated that the Fund's investment objectives and strategies will result
in a portfolio turnover rate which is not expected to exceed 150% over the
course of a fiscal year; however market conditions may cause turnover to exceed
150% in certain years. 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 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 a Fund is $250. Existing shareholders may purchase
additional shares with a minimum purchase of $50 per transaction.

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

INVESTING BY TELEPHONE

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

INVESTING BY MAIL

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

INVESTING BY WIRE

Shares may also be purchased by instructing the bank to wire Federal Funds to
the Transfer Agent. Federal Funds are monies of member banks within the Federal
Reserve
10
<PAGE> 11

System. The bank must include the full name(s) in which the account is
registered and the Fund account number, and should address its wire as follows:

UMB BANK KC NA
ABA # 10-10-00695
FOR: First Data Investor Services Group, 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 respective Fund
with a social security or other tax identification number. A completed
application with signature(s) of registrant(s) must be filed with the Transfer
Agent 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 First Data Investor
Services Group, 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 an Automatic
Investment Plan which provides shareholders a convenient method to make
regularly scheduled subsequent investments. See "SHAREHOLDER SERVICES."

REDEMPTION OF SHARES

IN GENERAL

The Trust will make your redemption proceeds available as promptly as possible
and, in any event, within seven business days after your redemption order, in
proper order, is received. For your redemption order to be in proper order, your
order must include name as it appears on your account, your account number and a
signature guarantee as required as described below. However, your redemption
proceeds may be delayed if you purchased the shares to be redeemed by check
(including certified or cashier checks) until such check has cleared and the
Trust has collected good funds for your purchase. Such collection may take 15
days or more.

REDEMPTIONS BY WRITTEN REQUEST

Shareholders may redeem shares by mail by writing directly to the Transfer Agent
at First Data Investor Services Group, Inc., 3200 Horizon Drive, P.O. Box 61503,
King of Prussia, PA 19406-0903, and requesting liquidation of all or any part of
their shares. The redemption request must be signed exactly as the shareholder's
name appears on the form of registration and must include the Fund's 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 Funds 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

11
<PAGE> 12

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.

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

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

REDEMPTIONS BY TELEPHONE

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

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

The Fund reserve 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 fail to use reasonable
procedures to verify the genuineness of telephone instructions, it and/or its
service contractors may be liable for any such instructions that prove to be
fraudulent or unauthorized.

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

EXCHANGE OF SHARES

You may exchange your shares of any Fund of the Trust for shares of the other
Fund 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 Fund into which you
wish to exchange, and the exchange privilege may be exercised only in those
states where shares of such Fund, 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 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 under "Redemptions -- By
Written Request."

12
<PAGE> 13

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 a 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. Shareholders who purchase or already own $5,000 or more of a Fund's
shares, valued at the current public offering price, and who wish to receive
periodic payments may establish a Systematic Withdrawal Plan. In order to
qualify for this option, dividends and capital gains must be reinvested.

RETIREMENT PLANS

The Fund has available certain Individual Retirement Accounts for use by certain
individuals who qualify (including earned income from self-employment). More
detailed information about how to participate in these IRA Plans, the fees
charged by the Custodian bank, and brochures containing other pertinent
information, may be obtained by contacting the Fund at (800) 257-4414.

Traditional (deductible) IRAs:

Married individuals may make deductible contributions even if spouses are active
participants in an employer-sponsored plan. The 10% early withdrawal tax will
not apply for up to $10,000 for first-time home purchases or education expenses.

Roth IRAs:

The Fund offers the Roth IRA. While contributions to a Roth IRA are not
currently deductible, the amounts within the accounts accumulate tax-free and
qualified distributions will not be included in a shareholder's taxable income.
The contribution limit is $2,000 annually ($4,000 for joint returns) in
aggregate with contributions to Traditional IRAs. Certain income phaseouts
apply.

Education IRAs:

The Fund also offers the Education IRA. Like the Roth IRA, contributions are
non-deductible, but the investment earnings accumulate tax-free, and
distributions used for higher education expenses are not taxable. Contribution
limits are $500 per account and certain income phaseouts apply.

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 each 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

13
<PAGE> 14

aggregate value of all securities has been determined, there will be added to
this total the dollar amount of cash on hand and receivables and the value of
all other assets. From the sum of the foregoing, the aggregate amount of all
liabilities and all accrued expenses will be deducted to produce the total net
asset value of all shares outstanding.

DIVIDENDS AND TAXES

The Fund intends to 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, 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 distributions 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 such Plan will result in a
profit for an investor.

TAXES

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

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 capital gains, whether received in cash or
in additional shares, are taxable to investors as 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 by-product 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 the Fund and received by the shareholder on December 31 of the
calendar year in which they are declared.

A sale or redemption of shares of a Fund is a taxable event and may result in a
capital gain or loss to shareholders subject to tax.

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.

14
<PAGE> 15

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

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

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

Graphs which compare the increase in value of a $10,000 investment in the Fund
with the performance of its relevant Index and a discussion of performance are
included in the Fund's Annual Report dated June 30, 1998.

GENERAL INFORMATION

ORGANIZATION

The Fund is a separate Series of shares of Trainer, Wortham First Mutual Funds,
a Delaware business trust organized pursuant to a Trust Instrument dated January
17, 1995. On October 1, 1996, the name of the Trust was changed from First
Mutual Funds to its present name. The Trust is registered under the Act as an
open-end 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 Fund belong
only to that Fund, and the liabilities of each Fund are borne solely by that
Fund 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 does not intend to hold annual meetings of shareholders of
the Fund. The Board of Trustees has undertaken to the Securities and Exchange
Commission, however, that they will promptly call a meeting for the purpose of
voting upon the question of removal of any Trustee when requested to do so by
holders of not less than 10% of the outstanding shares of the Fund. In addition,
subject to certain conditions, shareholders of the Fund may apply to the Fund to
communicate with other shareholders to request a shareholder's meeting to vote
upon the removal of a Trustee or Trustees.

CERTAIN PROVISIONS OF TRUST INSTRUMENT

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

15
<PAGE> 16

SHAREHOLDER REPORTS AND INQUIRIES

Shareholders will receive annual financial statements which are audited by the
Fund's independent accountants, Briggs, Bunting and Dougherty, LLP as well as
unaudited semi-annual financial statements. Shareholder inquiries should be
addressed to, "FIRST MUTUAL FUND", c/o First Data Investor Services Group, Inc.,
3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA 19406-0903 or by calling
(800) 257-4414.

16
<PAGE> 17

TRAINER, WORTHAM FUNDS

FIRST MUTUAL FUND

THIS IS YOUR

INVESTMENT APPLICATION

Detach and mail to:

FIRST DATA INVESTOR SERVICES GROUP, INC.
3200 HORIZON DRIVE
P.O. BOX 61503
KING OF PRUSSIA, PA 19406-0903
<PAGE> 18

TRAINER, WORTHAM FUNDS INVESTMENT APPLICATION

<TABLE>
<S> <C> <C> <C> <C>
1. INITIAL FUND INVESTMENT
Please indicate the amount you are investing in the fund. The minimum initial investment is $250 for the fund.
First Mutual Fund: $ ____________________
</TABLE>

2. INITIAL INVESTMENT METHOD
[ ] Check (made payable to the fund)
[ ] Wire sent on (date) ____________________ for credit to account no.
____________________ *
*Before making an initial investment by wire, you must be assigned an
account number by calling (800) 441-6580. Have your local bank wire fund
to:

UMB Bank, NA
ABA#10-10-00695
For: First Data Investor Services Group, Inc.
A/C98-7037-071-9
FBO "First Mutual Fund"
Account of "registration name"
Account Number _______________________________

3. REGISTRATION AND SOCIAL SECURITY NUMBER (PLEASE PRINT)
INDIVIDUAL OR JOINT ACCOUNT:

- --------------------------------------------------------------------------------
Owner's First Name Middle Initial Last Name Owner's Social Security #

- --------------------------------------------------------------------------------
Joint Owner's First Name Middle Initial Last Name Joint Owner's Social
Security #

GIFT TO MINOR

- --------------------------------------------------------------------------------
Name of Custodian (one name only)

- --------------------------------------------------------------------------------
Name of Minor Minor's Social Security #

Under the ____________________________________________ Uniform Gift/Transfer to
Minors Act
State

- --------------------------------------------------------------------------------
Name of Trustee(s) Date of Trust Tax Identification No.

4. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)

- --------------------------------------------------------------------------------
Street Address & Apt. No. City State Zip
( )
( )
- ------------------------------------- ---------------------------------------
Day Telephone Evening Telephone

5. DISTRIBUTION OPTIONS (All distributions will be reinvested unless otherwise
indicated below.)
[ ] Reinvest (dividends and capital gains in additional shares)
[ ] Cash Dividends (dividends in cash, capital gains in additional shares)
[ ] All Cash (dividends and capital gains in cash)
<PAGE> 19

6. SYSTEMATIC WITHDRAWAL PLAN (minimum initial investment of $5,000 is required)
I wish to have the following amount(s) systematically withdrawn from:

<TABLE>
<S> <C>
First Mutual Fund $___________________
</TABLE>

Please indicate the frequency of withdrawal, and if other than monthly, the
desired months. Liquidations take place on or about the 25th of the month.
[ ] Monthly
[ ] Quarterly ______________ , ______________ , ______________ and
______________
[ ] Semi annually ______________ and ______________
[ ] Annually
Unless indicated otherwise in Section 8, a check will be sent to your address
of record.

7. TELEPHONE PRIVILEGE
[ ] I (We) authorize First Data Investor Services Group, Inc. And/or Trainer,
Wortham Funds to act upon instructions received by telephone from me (us)
to redeem shares or to exchange for shares of other Trainer, Wortham
Funds. I (We) understand an exchange is made by redeeming shares of one
fund and using the proceeds to buy shares of another fund. Exchanges must
be made into identically registered accounts. Redemption proceeds will be
sent as indicated in this prospectus.

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

8. REDEMPTIONS
(Unless otherwise indicated below, all redemptions will be sent by check.)

[ ] All redemption proceeds should be executed by an ACH transaction unless
First Data Investor Services Group, Inc. is notified in writing. There is
no charge for ACH transactions.
Allow 3 business days.

[ ] All redemptions proceeds should be executed by FED wire transaction unless
First Data Investor Services Group, Inc. is notified in writing. There is
a $9 charge for FED wire transactions.

All FED wire and ACH transactions will be sent as indicated below. Please
allow one month for ACH instructions to become effective. Any changes in these
instructions must be made in writing with signature guarantees as described in
the prospectus.
*Please notify your bank of your intent to establish this option on your
account.
*ATTACH A VOIDED CHECK OR DEPOSIT SLIP.

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

<TABLE>
<S> <C>
Bank Name Branch Office
</TABLE>

- --------------------------------------------------------------------------------
Bank Address

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

<TABLE>
<S> <C>
Bank Wire Routing Number Account Number
</TABLE>

- --------------------------------------------------------------------------------
Name(s) on Bank Account

9. SIGNATURE AND CERTIFICATION
(Required by Federal tax law to avoid backup withholding.)

"By signing below, I certify under penalty of perjury that the social security
or tax payer identification number entered above is correct (or I am waiting
for a number to be issued to me), and that I have not been notified by the
IRS that I am subject to backup withholding unless I have checked the box."
If you have been notified by the IRS that you are subject to backup withhold,
check box. [ ]

"The Internal Revenue Service does not require your consent to any provision
of this document other than the certificates required to avoid backup
withholding.

"I hereby acknowledge receipt of a current prospectus."

- --------------------------------------------------------------------------------
Signature [ ] Owner [ ] Custodian [ ] Trustee Date

- --------------------------------------------------------------------------------
Signature of Joint Owner (if applicable) Date

10. INVESTMENT DEALER INFORMATION

- --------------------------------------------------------------------------------
Name of Firm

- --------------------------------------------------------------------------------
Firm Address

- --------------------------------------------------------------------------------
Rep Name & Number

- --------------------------------------------------------------------------------
Signature
<PAGE> 20

THIS SECTION TO BE COMPLETED BY CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS

RESOLUTIONS

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

- --------------------------------------------------------------------------------
(Name(s) of officers)

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

CERTIFICATE

I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the

________________________________________________________________________________
incorporated or formed under the laws of (Name of Corporation/Organization)

_________________________ and were adopted at a meeting of the Board of Trustees
of the corporation or organization duly called and held on
(State)

__________________________________ at which a quorum was present and acting
throughout, and that the same are now in full force and effect.
(Date)

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

Name Title

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

- --------------------------------------------------------------------------------
Name Title

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

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

- ---------------------------------------------------------
*Secretary-Clerk

- ---------------------------------------------------------
Other Authorized Officer (if required)

*If the secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE> 21

TRAINER, WORTHAM FUNDS
AUTOMATIC INVESTMENT PLAN APPLICATION
First Data Investor Services Group, Inc., P.O. Box 61503, King of Prussia, PA
19406-0903 (610) 239-4500

INSTRUCTIONS

HOW DOES IT WORK?
1. First Data Investor Services Group, Inc., through our bank, United Missouri
Bank KC N.A., draws an Automatic Clearing House (ACH) debit electronically
against your personal checking/savings account each month, according to your
instructions.
2. Choose any amount of $50.00 or more that you would like to invest regularly
and your debit for this amount will be processed by First Data Investor
Services Group, Inc., as if you had written a check yourself.
3. Shares will be purchased and a confirmation sent to you.

HOW DO I SET IT UP?
1. Complete both sides of this form, and the Investment Application form if you
do not have an existing account.
2. Include initial investment check of $250.00 or more if you are establishing a
new account.
3. If you are using a Credit Union, please have your financial institution
verify the bank information.
4. Mark one of your personal checks or deposit slips VOID, attach it to this
form and mail to First Data Investor Services Group, Inc. at the above
address.
5. As soon as your bank accepts your authorization, debits will be generated and
your Automatic Investment Plan started. In order for you to have Automatic
Clearing House (ACH) debits from your account, your bank must be able to
accept ACH transactions and/or be a member of an ACH association. Your bank
manager should be able to tell you your bank's capabilities. We cannot
guarantee acceptance by your bank.
6. Please allow one month for processing before the first debit occurs.
7. Returned items will result in a $20.00 fee being deducted from your account.

MONTHLY WITHDRAWAL AMOUNT AND DATE
Please indicate amount you would like invested monthly. The minimum amount for
monthly investment is $50.

<TABLE>
<S> <C>
[ ] First Mutual Fund $____________________
</TABLE>

Date of Withdrawal: (check only one) [ ] 10th [ ] 15th [ ] 20th

ACCOUNT INFORMATION
Indicate One: [ ] I am in the process of establishing a new account
[ ] I have an established account. My account number is:

- --------------------------------------------------------------------------------
Registered Owner

- --------------------------------------------------------------------------------
Street Address

- --------------------------------------------------------------------------------
City State Zip Code

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

<TABLE>
<S> <C>
Day Time Phone Number Evening Phone Number
</TABLE>

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

<TABLE>
<S> <C>
Bank Account Owner Joint Owner
</TABLE>

- --------------------------------------------------------------------------------
Bank Name

- --------------------------------------------------------------------------------
Bank Branch Street Address

- --------------------------------------------------------------------------------
City State Zip Code

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

<TABLE>
<S> <C>
ABA Number (9 digits) Account Number
</TABLE>

Type of Account: [ ] Checking [ ] Savings

AUTHORIZATION AND SIGNATURE
I understand that my ACH debit will be dated on the day of each month I have
indicated on this form. I agree that if such a debit is not honored upon
presentation, First Data Investor Services Group, Inc. may discontinue this
service and any share purchase made upon deposit on such debit may be canceled.
I further agree that if the net asset value of the shares purchased with such
debit is less when said purchase is canceled than when the purchase was made,
First Data Investor Services Group, Inc. shall be authorized to liquidate other
shares or fractions thereof held in my account to make up the deficiency. This
Automatic Investment Plan may be discontinued by First Data Investor Services
Group, Inc. upon 30 days written notice or at any time by the investor by
written notice to First Data Investor Services Group, Inc. which is received no
later than five (5) business days prior to the above designated investment date.

- --------------------------------------------------------------------------------
SIGNATURE OF BANK ACCOUNT OWNER

- --------------------------------------------------------------------------------
SIGNATURE OF JOINT BANK ACCOUNT OWNER
<PAGE> 22

Trainer, Wortham Funds Logo

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

TRAINER, WORTHAM TOTAL RETURN BOND FUND

PROSPECTUS OCTOBER 30, 1998
- --------------------------------------------------------------------------------

This Prospectus pertains only to the TRAINER, WORTHAM TOTAL RETURN BOND FUND
(the "TOTAL RETURN BOND 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.

The minimum initial investment for the Fund is $250. Subsequent investments will
be accepted in minimum amounts of $50.

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 dated October 30, 1998, 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. Additionally, the Securities and Exchange Commission maintains
a website (http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference into the Prospectus, and other
information regarding the Trust and its Funds which is filed electronically with
the Securities and Exchange Commission.

TABLE OF CONTENTS

Expense Information......................................... 3

Financial Highlights........................................ 4

Investment Objectives and Policies.......................... 5

Investment Strategies and Risk Considerations............... 5

Management of the Trust..................................... 11

Board of Trustees......................................... 11

Investment Advisor........................................ 11

Administrator............................................. 11

Distributor............................................... 12

Transfer Agent and Accounting Services Agent.............. 12

Custodian................................................. 12

Brokerage................................................... 12

Purchase of Shares.......................................... 13

Redemption of Shares........................................ 14

Exchange of Shares.......................................... 15

Shareholder Services........................................ 15

Net Asset Value............................................. 16

Dividends and Taxes......................................... 16

Performance Information..................................... 17

General Information......................................... 18
</TABLE>

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

2
<PAGE> 24

EXPENSE INFORMATION

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

<TABLE>
<CAPTION>
TOTAL RETURN
BOND FUND(2)
------------
<S> <C>
Management Fees (after waivers/reimbursements).............. 0.00%
12b-1 Fees.................................................. n/a
Other Expenses (after waivers/reimbursements)............... 1.20%
----
Total Fund Operating Expenses (after
waivers/reimbursements)................................... 1.20%
====
</TABLE>

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

EXAMPLE:

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>
<S> <C>
1 YEAR...................................................... $ 12
3 YEARS..................................................... $ 38
5 YEARS..................................................... $ 66
10 YEARS.................................................... $145
</TABLE>

(1) Average net assets have been computed on the basis of net assets at
month-end. TRAINER, WORTHAM TOTAL RETURN BOND FUND does not have a
Distribution Plan.

(2) The expenses shown reflect continuation of the Advisor's voluntary waiver of
fees and/or reimbursement of expenses, which limited total fund operating
expenses to 1.20% for the fiscal year ended June 30, 1998. Absent such
waivers and reimbursements, Management Fees, Other Expenses, and Total Fund
Operating Expenses would have been 0.45%, 1.23% and 1.68%, respectively.
- --------------------------------------------------------------------------------

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

3
<PAGE> 25

FINANCIAL HIGHLIGHTS

The following financial highlights for the fiscal year ended June 30, 1998 were
derived from the Funds' financial statements dated June 30, 1998, which were
audited by Briggs, Bunting and Dougherty, LLP, independent auditors, whose
unqualified report thereon is incorporated by reference into the Statement of
Additional Information. The Funds' Statement of Additional Information may be
obtained without charge and is incorporated by reference into this Prospectus.

TOTAL RETURN BOND FUND

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

<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
JUNE 30, 1998 JUNE 30, 1997(1)
------------- ----------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.08 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income..................................... 0.52 0.41
Net gains on securities (both realized and unrealized).... 0.25 0.08
------- -------
Total from investment operations....................... 0.77 0.49
------- -------
LESS DISTRIBUTIONS
Dividends from net investment income...................... (0.53) (0.40)
Distributions from capital gains.......................... (0.07) 0.00
Distributions in excess of capital gains.................. 0.00 (0.01)
------- -------
Total distributions.................................... (0.60) (0.41)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.25 $ 10.08
======= =======
TOTAL RETURN................................................ 7.84% 4.90%+
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's)...................... $11,976 $ 8,479
Ratio of expenses to average net assets**
before reimbursement of expenses by Advisor............ 1.68%* 2.01%*
after reimbursement of expenses by Advisor............. 1.20%* 0.88%*
Ratio of net investment income (loss) to average net asset
before reimbursement of expenses by Advisor............ 4.86%* 4.53%*
after reimbursement of expenses by Advisor............. 5.34%* 5.66%*
Portfolio turnover rate................................... 83% 112%
</TABLE>

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

(1) The Total Return Bond Fund commenced operations on October 1, 1996.

+ Since inception, not annualized.

* Annualized.

** Average net assets have been computed on the basis of the value of the net
assets at the end of the month.

4
<PAGE> 26

INVESTMENT OBJECTIVES AND POLICIES

TRAINER, WORTHAM TOTAL RETURN BOND FUND:

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 Solomon Brothers Broad Investment Grade (BIG)
Bond 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 a
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

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

5
<PAGE> 27

REPURCHASE AGREEMENTS

MONEY MARKET INSTRUMENTS

U.S. TREASURY SECURITIES

U.S. GOVERNMENT SECURITIES

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

6
<PAGE> 28

ILLIQUID SECURITIES

CONVERTIBLE SECURITIES

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

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.

7
<PAGE> 29

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 is considered to have below average protection factors but may
still be considered sufficient for prudent investment.

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 multi-class 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

8
<PAGE> 30

"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 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 off 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.

MUNICIPAL OBLIGATIONS

The Fund may invest in municipal obligations which 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,

9
<PAGE> 31

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, in order 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.

10
<PAGE> 32

OTHER 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.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

INVESTMENT ADVISOR

Pursuant to the Investment Advisory Agreement with the Trust on behalf of TOTAL
RETURN BOND FUND, the Advisor receives an annual fee, accrued daily and paid
monthly, of 0.45% of the Fund's average daily net assets. From time to time, the
Advisor may waive receipt of these fees and/or voluntarily assume certain Fund
expenses, which would have the effect of lowering the Fund's expense ratio and
increasing the yield to investors at the time such amounts are waived or
assumed, as the case may be. The Fund will not reimburse the Advisor at a later
time for the expenses assumed.

David P. Como is the President of the Trust. John D. Knox is the Vice-President
and Portfolio Manager of the TOTAL RETURN BOND 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 Sterns 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.

11
<PAGE> 33

express conditions contained in the agreement. The completion of the proposed
transaction between the Advisor and First Republic Bank will cause the current
investment advisory agreement between the Advisor and the Fund to terminate. For
this reason, shareholders of record of the Fund as of October 9, 1998 are being
asked to approve a new investment advisory agreement between the Fund and the
Advisor to take effect upon the completion of the proposed transaction. The new
investment advisory agreement and the current investment advisory agreement are
substantially similar and the current investment advisory fee rate payable by
the Fund to the Advisor will remain unchanged. There is no plan to change the
investment portfolio manager for the Fund after the completion of the proposed
transaction nor is there any plan to change the investment objective or policies
of the Fund.

ADMINISTRATOR

First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, which has its principal
business address at 4400 Computer Drive, Westboro, MA 01581, services as
administrator of the Fund. The services Investor Services Group 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

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

TRANSFER AGENT AND ACCOUNTING SERVICES AGENT

CUSTODIAN

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

BROKERAGE

PORTFOLIO TURNOVER

PURCHASE OF SHARES

INVESTING BY TELEPHONE

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 First Data Investor Services Group, Inc., 3200 Horizon
Drive, P.O. Box 61503, King of Prussia, PA 19406-0903. Except as noted below,
purchases without full payment will not be processed until payment is received.
The ownership of shares shall be recorded on the books of the Transfer Agent in
an account under the shareholder's name. A confirmation of the purchase will be
issued showing the account number and number of shares owned.

INVESTING BY WIRE

Shares may also be purchased by instructing the bank to wire Federal Funds to
the Transfer Agent. Federal Funds are monies of member banks within the Federal
Reserve System. The bank must include the full name(s) in

13
<PAGE> 35

which the account is registered and the Fund account number, and should address
its wire as follows:

UMB BANK KC NA
ABA # 10-10-00695
FOR: First Data Investor Services Group, 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
First Data Investor Services Group, 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 an Automatic Investment Plan which provides shareholders a
convenient method to make regularly scheduled subsequent investments. See
"SHAREHOLDER SERVICES."

REDEMPTION OF SHARES

IN GENERAL

REDEMPTIONS BY WRITTEN REQUEST

Shareholders may redeem shares by mail by writing directly to the Transfer Agent
at First Data Investor Services Group, Inc., 3200 Horizon Drive, P.O. Box 61503,
King of Prussia, PA 19406-0903, and requesting liquidation of all or any part of
their shares. The redemption request must be signed exactly as the shareholder's
name appears on the form of registration and must include the Fund's 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

14
<PAGE> 36

public. The Transfer Agent may require additional supporting documents for
redemptions made by corporations, executors, administrators, trustees and
guardians.

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

REDEMPTIONS BY TELEPHONE

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

EXCHANGE OF SHARES

15
<PAGE> 37

SHAREHOLDER SERVICES

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

AUTOMATIC INVESTMENT PLAN

SYSTEMATIC CASH WITHDRAWAL PLAN

RETIREMENT PLANS

Traditional (deductible) IRAs:

Roth IRAs:

Education IRAs:

NET ASSET VALUE

16
<PAGE> 38

DIVIDENDS AND TAXES

The Fund intends to distribute substantially all of its net investment income
and net capital gains. Dividends, if any, from net investment income will be
declared and paid quarterly by the Fund. Dividends from net investment income or
net short-term capital gains will be taxable to you, whether received in cash or
in additional shares.

TAXES

The Fund's investment in certain bonds, such as zero coupon bonds, may cause the
Fund to recognize income and make distributions 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.

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.

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

17
<PAGE> 39

PERFORMANCE INFORMATION

The Fund may also advertize its yield. The Fund's yield is calculated by
dividing the net investment income per share earned during a recent 30-day (or
one month) period by the maximum public offering price per share on the last day
of the period.

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

DESCRIPTION OF SHARES

SHAREHOLDER MEETINGS

18
<PAGE> 40

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

SHAREHOLDER REPORTS AND INQUIRIES

Shareholders will receive annual financial statements which are audited by the
Fund's independent accountants, Briggs, Bunting and Dougherty, LLP as well as
unaudited semi-annual financial statements. Shareholder inquiries should be
addressed to, "TRAINER, WORTHAM TOTAL RETURN BOND FUND", c/o First Data Investor
Services Group, Inc., 3200 Horizon Drive, P.O. Box 61503, King of Prussia, PA
19406-0903 or by calling (800) 257-4414.

19
<PAGE> 41

TRAINER, WORTHAM FUNDS

TRAINER, WORTHAM TOTAL RETURN BOND FUND

THIS IS YOUR

INVESTMENT APPLICATION

Detach and mail to:

FIRST DATA INVESTOR SERVICES GROUP, INC.
3200 HORIZON DRIVE
P.O. BOX 61503
KING OF PRUSSIA, PA 19406-0903
<PAGE> 42

TRAINER, WORTHAM FUNDS INVESTMENT APPLICATION

1. INITIAL FUND INVESTMENT
Please indicate the amount you are investing in the fund. The minimum initial
investment is $250 for the fund.

Trainer, Wortham Total Return Bond Fund: $ ____________________

2. INITIAL INVESTMENT METHOD
[ ] Check (made payable to the fund)
[ ] Wire sent on (date) ____________________ for credit to account no.
____________________ *
*Before making an initial investment by wire, you must be assigned an account
number by calling (800) 441-6580. Have your local bank wire fund to:

UMB Bank, NA
ABA#10-10-00695
For: First Data Investor Services Group, Inc.
A/C98-7037-071-9
FBO Trainer, Wortham Total Return Bond Fund
Account of "registration name"
Account Number _______________________________

3. REGISTRATION AND SOCIAL SECURITY NUMBER (PLEASE PRINT)
INDIVIDUAL OR JOINT ACCOUNT:

- -
- --------------------------------------------------------------------------------
Owner's First Name Middle Initial Last Name Owner's Social Security #
- -
- --------------------------------------------------------------------------------
Joint Owner's First Name Middle Initial Last Name Joint Owner's Social
Security #

GIFT TO MINOR
- -
- --------------------------------------------------------------------------------
Name of Custodian (one name only)
- -
- --------------------------------------------------------------------------------
Name of Minor Minor's Social Security #

Under the _________________________________________ Uniform Gift/Transfer to
Minors Act
State

CORPORATIONS, PARTNERSHIPS, TRUSTS AND OTHERS (Complete attached Corporate
Resolution)
- -
- --------------------------------------------------------------------------------
Name of Corporation, Partnership, Trust or Other
- -
- --------------------------------------------------------------------------------
Name of Trustee(s) Date of Trust Tax Identification No.

4. MAILING ADDRESS OF RECORD AND TELEPHONE NUMBER(S)

- -
- --------------------------------------------------------------------------------
Street Address & Apt. No. City State Zip

( ) ( )
- ------------------------------ --------------------------------
Day Telephone Evening Telephone

6. SYSTEMATIC WITHDRAWAL PLAN (minimum initial investment of $5,000 is required)
I wish to have the following amount(s) systematically withdrawn from:

<TABLE>
<S> <C>
Trainer, Wortham Total Return Bond Fund $___________________
</TABLE>

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

8. REDEMPTIONS
(Unless otherwise indicated below, all redemptions will be sent by check.)

[ ] All redemptions proceeds should be executed by FED wire transaction unless
First Data Investor Services Group, Inc. is notified in writing. There is
a $9 charge for FED wire transactions.

- -
- --------------------------------------------------------------------------------
Bank Name Branch Office

- -
- --------------------------------------------------------------------------------
Bank Address
- -
- --------------------------------------------------------------------------------
Bank Wire Routing Number Account Number

- -
- --------------------------------------------------------------------------------
Name(s) on Bank Account

9. SIGNATURE AND CERTIFICATION
(Required by Federal tax law to avoid backup withholding.)

"The Internal Revenue Service does not require your consent to any provision
of this document other than the certificates required to avoid backup
withholding.

"I hereby acknowledge receipt of a current prospectus."

- --------------------------------------------------------------------------------
Signature [ ] Owner [ ] Custodian [ ] Trustee Date

- --------------------------------------------------------------------------------
Signature of Joint Owner (if
applicable) Date

10. INVESTMENT DEALER INFORMATION

- -
- --------------------------------------------------------------------------------
Name of Firm
- -
- --------------------------------------------------------------------------------
Firm Address
- -
- --------------------------------------------------------------------------------
Rep Name & Number

- --------------------------------------------------------------------------------
Signature
<PAGE> 44

THIS SECTION TO BE COMPLETED BY CORPORATIONS, TRUSTS AND OTHER ORGANIZATIONS

RESOLUTIONS

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

- --------------------------------------------------------------------------------
(Name(s) of officers)

CERTIFICATE

I hereby certify that the foregoing resolutions are in conformity with the
Charter and By-Laws or other empowering documents of the

________________________________________________________________________________
incorporated or formed under the laws of
(Name of
Corporation/Organization)

_________________________ and were adopted at a meeting of the Board of Trustees
of the corporation or organization duly called and held on
(State)

__________________________________ at which a quorum was present and acting
throughout, and that the same are now in full force and effect.
(Date)

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

Name Title

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

- ---------------------------------------------------------
Name Title

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

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

- ---------------------------------------------------------
*Secretary-Clerk

- ---------------------------------------------------------
Other Authorized Officer (if required)

*If the secretary or other recording officer is authorized to act by the above
resolutions, this certificate must also be signed by another officer.
<PAGE> 45

TRAINER, WORTHAM FUNDS
AUTOMATIC INVESTMENT PLAN APPLICATION
First Data Investor Services Group, Inc., P.O. Box 61503, King of Prussia, PA
19406-0903 (610) 239-4500

INSTRUCTIONS

MONTHLY WITHDRAWAL AMOUNT AND DATE
Please indicate the amount you would like invested monthly. The minimum amount
for monthly investment is $50.

<TABLE>
<S> <C>
[ ] Trainer, Wortham Total Return Bond Fund $__________________________
</TABLE>

Date of Withdrawal: (check only one) [ ] 10th [ ] 15th [ ] 20th

ACCOUNT INFORMATION
Indicate One: [ ] I am in the process of establishing a new account
[ ] I have an established account. My account number is:
- -
- --------------------------------------------------------------------------------
Registered Owner
- -
- --------------------------------------------------------------------------------
Street Address
- -
- --------------------------------------------------------------------------------
City State Zip Code
- -
- --------------------------------------------------------------------------------
Day Time Phone Number Evening Phone Number

BANK INFORMATION
Complete the following or attach a voided check below. If you are using a Credit
Union account, please complete this section and have your financial institution
verify the information.
- -
- --------------------------------------------------------------------------------
Bank Account Owner Joint Owner

- -
- --------------------------------------------------------------------------------
Bank Name
- -
- --------------------------------------------------------------------------------
Bank Branch Street Address
- -
- --------------------------------------------------------------------------------
City State Zip Code
- -
- --------------------------------------------------------------------------------
ABA Number (9 digits) Account Number

Type of Account: [ ] Checking [ ] Savings

- --------------------------------------------------------------------------------
SIGNATURE OF BANK ACCOUNT OWNER

- --------------------------------------------------------------------------------
SIGNATURE OF JOINT BANK ACCOUNT OWNER
<PAGE> 46

STATEMENT OF ADDITIONAL INFORMATION

OCTOBER 30, 1998

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

TRAINER, WORTHAM FIRST MUTUAL FUNDS
FIRST MUTUAL FUND
TRAINER, WORTHAM TOTAL RETURN BOND FUND

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

Trainer, Wortham First Mutual Funds (the "Trust") currently offers shares of the
following two Series, representing separate portfolios of investments: FIRST
MUTUAL FUND AND TRAINER, WORTHAM TOTAL RETURN BOND FUND (the "Fund(s)").
Information concerning each Fund is provided in separate Prospectuses, each
dated October 30, 1998. This Statement of Additional Information is not a
Prospectus, but should be read in conjunction with the current Prospectus for
each Fund. Much of the information contained herein expands upon subjects
discussed in each Prospectus. 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.

<TABLE>
<S> <C>
UNDERWRITER: INVESTMENT ADVISOR:
FPS Broker Services, Inc. Trainer, Wortham & Co., Inc.
3200 Horizon Drive 845 Third Avenue, 6th Floor
P.O. Box 61503 New York, NY 10022
King of Prussia, PA 19406-0903 (212) 759-7755
(800) 257-4414
</TABLE>

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION OR IN
EACH PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY EACH 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. NEITHER PROSPECTUS
CONSTITUTES AN OFFERING BY THE TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
<PAGE> 47

TABLE OF CONTENTS

Trainer, Wortham First Mutual Funds......................... 3

Investment Objectives and Policies.......................... 3

Investment Restrictions..................................... 3

Other Investment Restrictions............................... 4

Trustees and Officers....................................... 5

Control Persons and Principal Holders of Securities......... 7

Investment Advisor.......................................... 8

Administrator............................................... 8

Distributor................................................. 9

Distribution Plan........................................... 9

Transfer Agent and Accounting Services Agent................ 10

Custodian................................................... 10

Legal Counsel............................................... 10

Auditors.................................................... 10

Brokerage................................................... 10

Performance Calculations.................................... 11

General Information......................................... 12

Financial Statements........................................ 12
</TABLE>

2
<PAGE> 48

TRAINER, WORTHAM FIRST MUTUAL FUNDS

Trainer, Wortham First Mutual Funds (the "Trust"), 845 Third Avenue, 6th Floor,
New York, NY 10022, is an open-end management investment company, which
currently offers shares of the following two Funds, each with its own investment
objectives and policies: First Mutual Fund and Trainer, Wortham Total Return
Bond Fund (Total Return Bond 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.

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 each Funds' Prospectus.

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 each of the Funds.

Each Fund will not, as to 75% of its 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 Fund would (a) have more than 5% of the value of its 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
currently anticipated:

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 Fund's 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 foregoing investment policies may be changed without shareholder approval
except to the extent they are reflected in a Fund's 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 Fund's total assets, investing more than 5% of its
total assets in the securities of any one issuer (other than securities
issued by the Government or its agencies or instrumentalities).

3
<PAGE> 49

issuers conducting their principal business activities in the same
industry, other than obligations issued or guaranteed by the U.S.
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, a
Fund 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 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 each 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.

(e) Purchase or retain the securities of any issuer if, to the knowledge of
a Fund, any Officer or Trustee of the Fund or of its Investment Advisor owns
beneficially more than 1/2 of 1% of the outstanding securities of such issuer,
and such Officers and Trustees of the Fund or of its Investment Advisor who
own more than 1/2 of 1%, own, in aggregate, more than 5% of the outstanding
securities of such issuer.

4
<PAGE> 50

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>
TOTAL
AGGREGATE COMPENSATION
COMPENSATION FROM TRUST AND
FROM TRUST FUND COMPLEX
POSITION(S) FOR FISCAL PAID TO TRUSTEES
NAME, AGE HELD WITH YEAR ENDED FOR FISCAL YEAR PRINCIPAL OCCUPATION(S)
& ADDRESS TRUST 6/30/98 ENDED 6/30/98 DURING THE PAST FIVE YEARS
--------- --------------- ------------ ---------------- ----------------------------
<S> <C> <C> <C> <C>
James F. Twaddell (59) Chairman of the $5,000 $5,000 Investment Banker at
c/o Schneider Securities, Inc. Board; Trustee Schneider Securities, Inc.
2 Charles Street since 1979 since June 1995; Chairman of
Providence, RI 02904 the Board, Director and
Registered Representative of
Barclay Investment, Inc.
until June 1995.
Robert H. Breslin, Jr. (70) Trustee since $5,200 $5,200 Partner in the law firm of
107 Forge Road E. 1979; Member of Breslin & Sweeney, Warwick,
Greenwich, RI 02818 Audit Committee RI. since 1970.
David P. Como(1) (52) Trustee since $ 0 $ 0 Managing Director, Trainer,
388 Market Street 1984; President Wortham & Co., Inc. since
2nd Floor 1969.
San Francisco, CA 94111
Raymond Eisenberg (75) Trustee since $4,700 $4,700 President of Raymond
488 County Street 1960; Chairman Eisenberg & Associates, PC
New Bedford, MA 02740 of the Audit Accountants and Auditors,
Committee New Bedford, MA since 1980.
David Elias(1) (53) Trustee since $ 0 $ 0 President and Chief
500 Essjay Road 1991 Investment Officer of Elias
Suite 220 Asset Management, Inc.,
Williamsville, NY 14221 Buffalo, NY since 1978.
Robert S. Lazar (54) Trustee since $5,200 $5,200 Retired in 1992 ; formerly
P.O. Box 4158 1976; Member of an Engineer, Newport, RI;
Middletown, RI 02842-0011 the Audit Director, Newport Federal
Committee Savings Bank, Newport, RI.
H. Williamson Ghriskey, Jr. (54) Vice-President $ 0 $ 0 Managing Director, Trainer,
845 Third Avenue and Treasurer Wortham & Co., Inc. from
Sixth Floor 1978 to present.
New York, NY 10022
Martin S. Levine (45) Trustee since $5,200 $5,200 Controller and Chief
c/o John P. Picone, Inc. 1994; Member of Financial Officer of John P.
31 Garden Lane the Audit Picone, Inc., Contractors
Lawrence, NY 11559 Committee and Engineers, Lawrence, NY,
since 1984.
</TABLE>

5
<PAGE> 51

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

(1) "Interested person" within the meaning of Section 2(a)(19) of the Investment
Company Act of 1940. 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 Trainer, Wortham.

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 currently comprised of four 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, 1998, the compensation for disinterested Trustees included a fee
of $500 per meeting of the Board of Trustees attended and an annual retainer of
$3,000. In addition, the Trustees were reimbursed for expenses incurred in
connection with their attendance at meetings of the Board of Trustees. 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.")

6
<PAGE> 52

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of October 9, 1998, the Trustees and Officers of the Trust individually and
as a group owned beneficially less than 1.00% of the outstanding shares of any
Fund.

As of October 9, 1998, the following persons owned of record or beneficially
more than 5% of the outstanding voting shares of FIRST MUTUAL FUND:

<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES HELD PERCENTAGE
------------------------------------ --------------------- ----------
<S> <C> <C>
Trainer, Wortham Profit Sharing Trust....................... 331,863.156 10.74%
c/o Trainer, Wortham & Co., Inc.
845 Third Avenue, 6th Floor
New York, NY 10022
Perry R. Como............................................... 232,586.649 7.53%
c/o Trainer, Wortham & Co., Inc.
845 Third Avenue, 6th Floor
New York, NY 10022
Roncom Productions Employees................................ 214,145.992 6.93%
Deferred Profit Sharing Trust
845 Third Avenue, 6th Floor
New York, NY 10022
Semper Trust Co. c/f IRA r/o of............................. 165,724.379 5.36%
Alice Stone Trainer
35 B Heritage Ct.
Southbury, CT 06488
</TABLE>

As of October 9, 1998, the following persons owned of record or beneficially
more than 5% of the outstanding voting shares of TOTAL RETURN BOND FUND:

<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES HELD PERCENTAGE
------------------------------------ --------------------- ----------
<S> <C> <C>
H. Williamson Ghriskey, Jr.................................. 293,510.316 24.05%
TRST Margot Marsh Biodiversity Foundation
c\o Trainer, Wortham & Co., Inc.
845 Third Avenue, 6th Floor
New York, NY 10022
HW Mali Profit Sharing Ret Plan............................. 181,079.139 14.84%
c\o Trainer, Wortham & Co., Inc.
845 Third Avenue, 6th Floor
New York, NY 10022
Daniel U. Escaro............................................ 113,192.991 9.27%
TRST York Labs PSP
DTD N/A
c/o York Hospital
1001 S. George Street
York, PA 17405
</TABLE>

7
<PAGE> 53

INVESTMENT ADVISOR

In 1981, 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,
as amended, and supervises approximately $2.5 billion in investment accounts.
The Advisor is owned primarily by the officers active in the day-to-day
management of portfolios.

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 Trust's Board of Trustees and in accordance with each Fund's
investment objectives, policies, and restrictions, the Advisor will manage the
Funds' 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 Advisor in the performance of its duties, or by reason of its
reckless disregard of its obligations under the Investment Advisory Agreements.

Pursuant to individual Investment Advisory Agreements, with respect to FIRST
MUTUAL FUND, the Advisor receives an annual investment advisory fee, accrued
daily and paid monthly, of 0.75% of the Fund's average daily net assets; and
with respect to TOTAL RETURN BOND FUND, the Advisor receives an annual fee,
accrued daily and paid monthly, 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.

For the fiscal years ended June 30, 1998, 1997 and 1996, with respect to FIRST
MUTUAL FUND, the Fund paid the Advisor fees aggregating $280,113, $235,424 and
$191,340, respectively.

With respect to the TOTAL RETURN BOND FUND, for the fiscal year ended June 30,
1998, the Advisor earned Investment Advisory fees of $45,382, all of which it
voluntarily waived. For the fiscal period October 1, 1996 (commencement of
operations) through June 30, 1997, the Advisor earned Investment Advisory fees
of $22,431, all of which it voluntarily waived.

ADMINISTRATOR

First Data Investor Services Group, Inc., ("Investor Services Group") 3200
Horizon Drive, P.O. Box 61503, King of Prussia, Pennsylvania 19406-0903, serves
as the Trust's Administrator pursuant to an Administration Agreement (the
"Administration Agreement") Investor Services Group is an affiliate of the
Trust's Distributor, FPS Broker Services, Inc. Pursuant to the Administration
Agreement, Investor Services Group 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 first Series, and $12,000 for each additional Series or class. The
Trust pays the fees and out-of-pocket costs of Investor Services Group.

The services Investor Services Group 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
8
<PAGE> 54

meetings, registration statements and other documents; and responding to
shareholder inquiries.

With respect to FIRST MUTUAL FUND, Investor Services Group received
administration fees of $59,915, $55,489 and $45,248, for the fiscal years ended
June 30, 1998, 1997, and 1996, respectively. For the fiscal year ended June 30,
1998 and for the fiscal period ended June 30, 1997, TOTAL RETURN BOND FUND paid
Investor Services Group administration fees of $15,476 and $9,270, respectively.

DISTRIBUTOR

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

The Underwriting Agreement 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 Underwriting Agreement.

DISTRIBUTION PLAN

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

In adopting the Plan, the Board of Trustees considered the likelihood that the
Plan is designed to benefit the 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 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 a 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 a Plan is in effect, the
selection and nomination of a 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 a Plan shall be made for the purpose of
selling shares issued by the Fund. Payments of compensation pursuant to (3)
above

9
<PAGE> 55

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 FPSB 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, 1998, distribution expenses for First Mutual Fund were
reimbursed as follows:

<TABLE>
<CAPTION>
EXPENSE ITEM AMOUNT
------------ -----------
<S> <C> <C>
Advertising and Printing........ $ 21,840.05
Marketing Support Personnel and
Salaries...................... $ 75,168.15
Trail Commissions paid to
Brokers....................... $ 1,904.68
Travel/Marketing Meetings....... $ 1,587.16
TOTAL 12B-1 EXPENSES............ *$100,500.04
</TABLE>

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

* Reimbursement to Plan for the fiscal year ended June 30, 1998 was $9,949.86.

TRANSFER AGENT AND ACCOUNTING
SERVICES AGENT

Investor Services Group serves as the Trust's Transfer Agent, Dividend
Disbursing Agent and Redemption Agent pursuant to a Transfer Agent Services
Agreement and also serves as the Trust's Accounting Services Agent pursuant to
an Accounting Services Agreement (the "Accounting and Transfer Agent Services
Agreements"). The Accounting and Transfer Agent Services 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 the 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 Accounting and Transfer Agent Services Agreements provide generally that
Investor Services Group shall be indemnified against liabilities to the Trust in
connection with matters relating to the Accounting and Transfer Agent Services
Agreements except those arising out of willful misfeasance, bad faith or gross
negligence on the part of Investor Services Group in the performance of its
duties or from reckless disregard of its obligations and duties thereunder.

The Trust pays Investor Services Group an annual fee of $15.00 per shareholder
account (subject to a minimum monthly fee of $ $2,250) for its services as
Transfer Agent, Dividend Disbursing Agent and Redemption Agent. For accounting
services, Investor Services Group receives from the Trust an annual fee, payable
monthly, of $24,000 on the first $10 million of average daily net assets; .0004%
on the next $40 million of average daily net assets; .0003% of the next $50
million of average daily net assets; and .0001% of average daily net assets in
excess of $100 million.

CUSTODIAN

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

LEGAL COUNSEL

Dechert Price & Rhoads, 1775 Eye Street, N.W., Washington, DC 20006 serves as
Counsel to the Trust.

AUDITORS

Briggs, Bunting and Dougherty, LLP, 2121 Two Logan Square, 18th & Arch Streets,
Philadelphia, PA 19103-4901 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 Briggs, Bunting and Dougherty, LLP.

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 each Fund, the Advisor determines, subject to the general
supervision of the Board of Trustees and in accordance with each 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
transaction. It is not the policy of

10
<PAGE> 56

the Funds to deal solely with one broker, but it is each 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 fiscal year ended June 30, 1998, 1997 & 1996, FIRST MUTUAL FUND paid
total brokerage commissions of $77,023.60, $99,150.57 and $73,171.25,
respectively. 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. During the
fiscal years ended June 30, 1998, 1997 and 1996 the Trust paid no such brokerage
commissions.

PERFORMANCE CALCULATIONS

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)'

<TABLE>
<S> <C> <C> <C>
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.
</TABLE>

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:

<TABLE>
<S> <C> <C>
Aggregate Total Return = [( ERV ) -1]
---
P
</TABLE>

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.

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, 1998 were 25.40%, 19.31% and 14.62%, respectively. The aggregate total
returns for the same five and ten year periods were 141.91% and 291.59%,
respectively. The total return for Total Return Bond Fund for the one year
period ended June 30, 1998 was 7.84%. The average annual total Return for the
TOTAL RETURN BOND FUND since its inception on Oct. 1, 1996 through June 30, 1998
was 7.33%.

The TRAINER, WORTHAM TOTAL RETURN BOND FUND may also quote its yield in
advertisements and investor communications. The yield computation is determined
by dividing the net investment income per share earned during a recent 30-day
(or one month) period by the maximum offering price per share on the last day of
that period and annualizing the resulting figure, according to the following
formula:

<TABLE>
<S> <C> <C>
YIELD = 2 [( a-b +1)(6)-1]
---
cd
</TABLE>

11
<PAGE> 57

<TABLE>
<S> <C> <C> <C>
Where: a = dividends and interest earned during
the period;
b = expenses accrued for the period (net
of reimbursements);
c = the average daily number of shares
outstanding during the period that
were entitled to receive dividends;
and
d = the maximum offering price per share
on the last day of the period.
</TABLE>

For the thirty day period ended June 30, 1998, TOTAL RETURN BOND FUND had a
yield of 5.32%. Since performance will fluctuate, performance data for the Funds
should not be used to compare an investment in the Fund's 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 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
each Fund's Prospectus and this Statement of Additional Information.

FINANCIAL STATEMENTS

The audited financial statements and notes thereto for each Fund, contained in
the Annual Report to Shareholders dated June 30, 1998, are incorporated by
reference into this Statement of Additional Information and have been audited by
Briggs, Bunting and Dougherty, LLP., whose report also appears in the Annual
Report and is also incorporated by reference herein. No other parts of the
Annual Report are incorporated by reference herein. Such financial statements
and notes thereto have been incorporated herein in reliance on the report of
Briggs, Bunting and Dougherty, LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.