MONTEREY MUTUAL FUND, 485BPOS, 1997-09-30

MONTEREY MUTUAL FUND
485BPOS, 1997-09-30

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Investment Company Act Registration No. 811-4010
Securities Act Registration No. 2-90810

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. __ [_]

Post-Effective Amendment No. 26 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 27

(Check appropriate box or boxes)

MONTEREY MUTUAL FUND
(Exact name of registrant as specified in charter)

1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401 90401
(Address of Principal (Zip Code)
Executive Offices)

Registrant's Telephone Number, including Area Code (310)393-1424

Joseph Lloyd McAdams, Jr., Chairman
Monterey Mutual Fund
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
(Name and address of Agent for Service)

Approximate date of proposed public offering: As soon as practicable
after the effective date of the registration statement.

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

[_] immediately upon filing pursuant to paragraph (b)

[X] on September 30, 1997 pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[_] on (date) pursuant to paragraph (a)(2) of rule 485
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of rule 485

If appropriate, check the following box:

[_] this post-effective amendment designates a new effective date
for a previously filed post-effective amendment

Registrant has previously registered an indefinite number of its
shares of beneficial interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940. Registrant filed its Rule 24f-2 Notice for the
fiscal year ended November 30, 1996 on March 12, 1997.

<PAGE>

MONTEREY MUTUAL FUND

CROSS REFERENCE SHEET

(Pursuant to Rule 481 showing the location in the Prospectus and
the Statement of Additional Information of the responses to the Items of
Parts A and of Form N-1A.)

Caption or Subheading in Prospectus
Item No. on Form N-1A or Statement of Additional Information

Part A - INFORMATION REQUIRED IN PROSPECTUS

1. Cover Page Cover Page

2. Synopsis Fee Table; Summary

3. Condensed Financial Financial Highlights;
Total Return Information

4. General Description Summary; Investment Objectives
of Registrant and Policies of the Monterey Mutual
Funds; Investment Practices and Risks;
Principal Investment Restrictions

5. Management of the Management; Per Share Income and
Fund Capital Changes; General Information

5A. Management's Discussion Included in Annual Report to
of Fund Performance Shareholders

6. Capital Stock and Dividends and Tax Status; General
Other Securities Information

7. Purchase of Securities How to Purchase Shares
Being Offered

8. Redemption or How to Redeem Shares
Repurchase

9. Legal Proceedings *

PART B - INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION

10. Cover Page Cover Page

11. Table of Contents Table of Contents

12. General Information and Investment Objectives and Policies
History

13. Investment Objectives Investment Objectives and Policies;
and Policies Appendix

14. Management of the Fund Management

15. Control Persons and Management
Principal Holders
of Securities

16. Investment Advisory and Management; General
Other Services

17. Brokerage Allocation and Management
Other Practices

18. Capital Stock and Included in Prospectus under
Other Securities "General Information"; General

19. Purchase, Redemption Included in Prospectus under
and Pricing of Securities "How to Purchase Shares"; and
Being Offered "How to Redeem Shares"; Net
Asset Value; Shareholder Services

20. Tax Status Included in Prospectus under "Dividends

and Tax Status"; Shareholder Services

21. Underwriters General

22. Calculations of Per- Calculation of Performance Data
formance Data

23. Financial Statements Financial Statements

___________
* Answer negative or inapplicable

<PAGE>

(MONTEREY MUTUAL FUND Logo)
PROSPECTUS
SEPTEMBER 30, 1997

PROSPECTUS
(MONTEREY MUTUAL FUND Logo)

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.

This Prospectus provides you with the basic information you should know before
investing in any Fund. You should read it and keep it for future reference. A
Statement of Additional Information dated September 30, 1997 containing
additional information about the Trust and the Funds has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
Prospectus in its entirety. You may obtain a copy of the Statement of Additional
Information without charge by calling the Trust's Distributor at (800) 251-1970
or by writing to the Distributor at 1299 Ocean Avenue, Suite 210, Santa Monica,
CA 90401.

Monterey Mutual Fund (the "Trust") is an open-end investment company having
eight separate portfolios (the "Funds"), each of which is a separate mutual fund
having its own objective or objectives, assets, liabilities and net asset value
per share. The eight Funds are: (1) the Monterey PIA Short-Term Government
Securities Fund (the "SHORT-TERM GOVERNMENT FUND") whose objective is to provide
investors a high level of current income, consistent with low volatility of
principal through investing in short term, adjustable rate and floating rate
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities; (2) the Monterey Camborne Government Income Fund (the
GOVERNMENT INCOME FUND" or "GOVERNMENT FUND"), whose objectives are growth of
capital, whether over the short or long-term, income and preservation of
capital; (3) the Monterey OCM Gold Fund (the "GOLD FUND"), whose objective is
long-term growth of capital through investing primarily in equity securities of
domestic and foreign companies engaged in activities related to gold and
precious metals; (4) the Monterey PIA Equity Fund (the "EQUITY FUND"), whose
objective is long-term growth of capital; (5) the Monterey Murphy New World
Biotechnology Fund (the "BIOTECHNOLOGY FUND"), whose objective is long-term
growth of capital through investing primarily in equity securities of companies
that its investment adviser believes can produce products or services that
provide or benefit from advances in biotechnology; (6) the Monterey Murphy New
World Technology Fund (the "TECHNOLOGY FUND"), whose objective is long-term
growth of capital through investing primarily in equity securities of companies
that its investment adviser believes can produce products or services that
provide or benefit from advances in technology; (7) the Monterey Murphy New
World Technology Convertibles Fund (the "CONVERTIBLES FUND"), whose objective is
to maximize total return through a combination of capital appreciation and
income; and (8) the Monterey PIAGlobal Bond Fund (the "GLOBAL BOND FUND"), whose
objective is to provide a high level of current income through investing in
bonds denominated in U.S. dollars and other currencies. There is no assurance
that any Fund will attain its objective or objectives.

The Convertibles Fund may invest without limitation in lower quality, high risk,
high yielding debt securities, commonly referred to as "junk bonds." Junk bonds
are more risky than higher rated debt securities. Junk bonds have a greater risk
of default, greater sensitivity to general economic conditions and changes in
interest rates, as well as a thin secondary market, making them subject to
greater price volatility. See "Murphy New World Technology Convertibles Fund" on
page 18 for further information.

Not all portfolios of the Trust may be available in your state.

The date of this Prospectus is September 30, 1997.

<TABLE>
<CAPTION>
FEE TABLE

SHORT-TERM GLOBAL
GOVERNMENT GOVERNMENT GOLD EQUITY BIOTECHNOLOGY TECHNOLOGY CONVERTIBLES BOND
FUND FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ------ ------ ------------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price) None 4.50% 4.50% 4.50% None None None None
Maximum Sales Load Imposed
on Reinvested Dividends None None None None None None None None
Deferred Sales Load None None None None None None None None
Redemption Fees None None None None None None None None
Exchange Fee None None None None None None None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fees 0.20% 0.40% 1.00% 1.00% 1.00% 1.00% 0.63% 0.40%

12b-1 Fees 0.05% 0.10% 0.99% 0.25% 0.25% 0.25% 0.25% None

Other Expenses (after expense
reimbursement) 0.05% 0.60% 0.45% 1.19% 1.19% 1.19% 1.56% 0.11%
------ ------ ------ ------ ------ ------ ------ ------

Total Fund Operating Expenses
(after expense reimbursement) 0.30% 1.10% 2.44% 2.44% 2.44% 2.44% 2.44% 0.51%

</TABLE>

EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment, assuming
(1) 5% annual return and (2)
redemption at the end of each
time period:
Short-Term Government Fund $3 $10 $17 $38
Equity Fund or Gold Fund $69 $118 $169 $310
Convertibles Fund, Technology
Fund or Biotechnology Fund $25 $76 $130 $278
Government Fund $56 $78 $103 $173
Global Bond Fund $5 $16 $29 $64

The purpose of the table above is to assist the investor in understanding the
various costs and expenses that an investor in any of the Funds will bear
directly or indirectly. For a more complete description of the various costs and
expenses, see "Management" and "How to Purchase Shares." The Annual Fund
Operating Expenses for each of the Funds (other than the Global Bond Fund) have
been restated to reflect their current fees and expense reimbursement
commitments. The Annual Fund Operating Expenses for the Global Bond Fund are
estimated. If each Fund (other than the Global Bond Fund) had not been
reimbursed for excess operating expenses, the Total Fund Operating Expenses
during the last fiscal year of the Convertibles Fund, the Government Fund, the
Gold Fund, the Equity Fund, the Technology Fund, the Biotechnology Fund and the
Short-Term Government Fund would have been 5.11%, 5.68%, 6.15%, 11.73%, 10.44%,
15.28% and 1.19%, respectively, and Other Expenses during the last fiscal year
of the Convertibles Fund, the Government Fund, the Gold Fund, the Equity Fund,
the Technology Fund, the Biotechnology Fund and the Short-Term Government Fund
would have been 3.66%, 5.20%, 4.23%, 9.42%, 8.55%, 13.28% and 0.80%,
respectively. Absent reimbursement, the Total Fund Operating Expenses for the
fiscal year ending November 30, 1997 of the Global Bond Fund are estimated to be
2.00%. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Long-term
investors (other than investors in the Global Bond Fund) may pay more than the
economic equivalent of the maximum front-end sales charges permitted by the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.

SUMMARY

What are the Funds? SHORT-TERM GOVERNMENT FUND -- The Short-Term Government Fund
seeks to provide investors with a high level of current income, consistent with
low volatility of principal through investing in short term, adjustable rate and
floating rate U.S. Government securities. Under normal circumstances at least
65% of the Short-Term Government Fund's total assets will consist of short-term
U.S. government securities and adjustable rate and floating rate U.S. government
securities having a duration of less than three years. The Short-Term Government
Fund will maintain a maximum duration of three years and a target duration in a
range of six-months to two-years. The Short-Term Government Fund will maintain a
dollar-weighted maturity of not more than three years determined in accordance
with Securities and Exchange Commission guidelines. See "Investment Objectives
and Policies of the Monterey Mutual Funds."

GOVERNMENT INCOME FUND -- The Government Income Fund invests at least 65% of
its total assets in securities of any maturity which are issued or guaranteed by
the U.S. Government or by any of its agencies or instrumentalities, including
U.S. Government-sponsored corporations ("U.S. Government securities"). The
average portfolio maturity of the Government Income Fund will depend on the
analysis of Pacific Income Advisers, Inc. ("PIA"), the Government Income Fund's
investment adviser, as to the shape of the yield curve and the relationship
between expected and actual yield curves of government and non-government
securities. See "Investment Objectives and Policies of the Monterey Mutual
Funds."

GOLD FUND -- The Gold Fund seeks to achieve long-term growth of capital by
investing primarily in equity securities of domestic and foreign companies
engaged in exploration, refinement, development, manufacture, production or
marketing of gold and other precious metals products. Under normal
circumstances, the Gold Fund's assets will be invested primarily in equity
securities of such companies whose activities are related to gold. Securities of
these companies have been subject to substantial price fluctuations and are
affected by various economic factors that normally do not affect other
investments, which in turn may subject the value of the Gold Fund's shares to
greater fluctuation. See "Investment Objectives and Policies of the Monterey
Mutual Funds."

EQUITY FUND -- The Equity Fund seeks to achieve long-term growth of capital
principally by investing in common stocks of issuers that PIA, the Equity Fund's
investment adviser, anticipates will have both sales and earnings which grow at
a higher than average rate per year. Typically the companies in which the Equity
Fund invests will be well-financed issuers with proven records of profitability,
although such companies may not be the largest and best known companies in their
industry groups. Investing for capital growth involves possible risks as well as
possible rewards. Since the major portion of the Equity Fund's portfolio will
normally consist of common stocks, its net asset value may be subject to greater
fluctuations than a portfolio containing a substantial amount of fixed income
securities. See "Investment Objectives and Policies of the Monterey Mutual
Funds."

BIOTECHNOLOGY FUND -- The Biotechnology Fund seeks to achieve long-term
growth of capital through investing primarily in equity securities of companies
that its investment adviser, Murphy Asset Management, Inc. ("Murphy"), believes
can produce products or services that provide or benefit from advances in
biotechnology. The term "biotechnology" includes drug development, production
and distribution; agricultural and industrial biotechnology; genetic sequencing
and mapping; drug delivery; biotechnology-based services and other advances
resulting from research and development programs in the medical, animal and life
sciences. Securities of companies in the Biotechnology sector may be considered
speculative, in particular, because of their unpredictable earnings. As a
consequence, securities of companies in the Biotechnology sector generally
exhibit greater volatility than the overall market. See "Investment Objectives
and Policies of the Monterey Mutual Funds."

TECHNOLOGY FUND -- The Technology Fund seeks to achieve long-term growth of
capital through investing primarily in equity securities of companies that
Murphy believes can produce products or services that provide or benefit from
advances in technology. Murphy interprets the term "technology" broadly to
include semiconductors and electronic components, computers, computer services,
computer peripherals and software, communications, multimedia, instruments,
office automation, factory automation, robotics, consumer electronics,
electronic games, cable television, pharmaceuticals, biotechnology, medical
devices, superconductivity, specialty materials, alternative energy and other
advances resulting from research and development programs. Competitive
pressures may have a significant effect on the financial condition of companies
in the technology sectors. See "Investment Objectives and Policies of the
Monterey Mutual Funds."

CONVERTIBLES FUND -- The Convertibles Fund seeks to maximize total return
through a combination of capital appreciation and income. The Convertibles Fund
under normal circumstances invests at least 65% of its assets in convertible
securities of issuers which Murphy believes can produce products or services
that provide or benefit from advances in technology. The Convertibles Fund may
invest without limitation in lower quality, high risk, high yielding debt
securities, commonly referred to as "junk bonds." These securities are more
risky than higher rated debt securities. Junk bonds have a greater risk of
default, greater sensitivity to general economic conditions and changes in
interest rates as well as a thin secondary market, making them subject to
greater price volatility. See "Investment Objectives and Policies of the
Monterey Mutual Funds."

GLOBAL BOND FUND -- The Global Bond Fund seeks to provide a high level of
current income through investing in bonds denominated in U.S. dollars and other
currencies. (The Global Bond Fund considers a "bond" to mean any debt instrument
other than a money market debt instrument.) The Global Bond Fund provides an
investment vehicle in which investors may participate in the international bond
markets. Because the Global Bond Fund will invest in securities denominated in
foreign currencies, exchange rates may have a significant impact on the
performance of the Global Bond Fund. See "Investment Objectives and Policies of
the Monterey Mutual Funds."

Are there investment risks? Investing in the Funds involves certain risks.
Certain of the Funds invest in foreign securities. See "Investment Practices and
Risks -- Foreign Securities." Each of the Funds may invest in derivatives. See
"Investment Practices and Risks -- Hedging Instruments." The Convertibles Fund
may invest in junk bonds. See "Investment Objectives and Policies of the
Monterey Mutual Funds." The Gold Fund, the Equity Fund, the Biotechnology Fund,
the Technology Fund, the Convertibles Fund and the Global Bond Fund are non-
diversified. See "Principal Investment Restrictions." Certain of the Funds
invest in Mortgage-Backed Securities. See "Investment Practices and Risks --
Principal Investment Risks." The Gold Fund and the Biotechnology Fund
concentrate their investments. See "Principal Investment Restrictions." The
Short-Term Government Fund, Biotechnology Fund, Technology Fund, Convertibles
Fund and Global Bond Fund may engage in leverage. See "Investment Practices and
Risks -- Borrowing." See also "Investment Practices and Risks -- Principal
Investment Risks."

Who provides professional management? The assets of the Government Fund, the
Equity Fund, the Short-Term Government Fund and the Global Bond Fund are managed
by Pacific Income Advisers, Inc. ("PIA"). PIA is assisted in the management of
the Government Fund by Camborne Advisors, Inc. ("Camborne"), which serves as
Sub-Adviser to the Government Fund. The assets of the Technology Fund, the
Biotechnology Fund and the Convertibles Fund are managed by Murphy Investment
Management, Inc. ("Murphy"). The assets of the Gold Fund are managed by Orrell
Capital Management, a division of Orrell & Company, Inc. ("Orrell"). The Short-
Term Government Fund pays PIA a monthly fee at the annual rate of 0.20% of its
daily net assets. The Government Fund pays PIA a monthly fee at the annual rate
of 0.40% of its daily net assets. PIA pays Camborne a monthly fee at the annual
rate of 0.20% of the Government Fund's daily net assets. The Global Bond Fund
pays PIA a monthly fee at the annual rate of 0.40% of its daily net assets. The
Equity Fund pays PIA a monthly fee at the annual rate of 1.0% of its daily net
assets. The Biotechnology Fund pays Murphy a monthly fee at the annual rate of
1.00% of its daily net assets. The Technology Fund pays the Adviser a monthly
fee at the annual rate of 1.0% of its daily net assets. The Convertibles Fund
pays Murphy a monthly fee at the annual rate of 0.625% of its daily net assets.
The Gold Fund pays Orrell a monthly fee at the annual rate of l% of its daily
net assets. With the exception of the Government Fund, the Biotechnology Fund,
the Technology Fund, the Short-Term Government Fund and the Global Bond Fund,
the fees payable by the Funds are reduced at various asset levels for each Fund.
American Data Services, Inc. provides each Fund with administrative and fund
accounting services, for a monthly fee at the annual rate of 0.10% of each
Fund's daily net assets, subject to a minimum monthly fee of approximately
$1,072 per Fund. See "Management."

How can you invest in a Fund? You can buy a Fund's shares through the
Distributor, Syndicated Capital, Inc. or dealers who have sales agreements with
the Distributor at their net asset value plus, in the case of the Gold Fund, the
Government Fund and the Equity Fund, a sales charge. The maximum sales charge
for the Gold Fund, the Government Fund and the Equity Fund is 4.50% of the
offering price; this is equal to about 4.71% of the amount invested. The minimum
initial order is $1,000, except for qualified retirement plans and accounts
which establish pre-authorized check plans, for which the minimum initial order
is $100. The Distributor can change these minimums at any time. Each Fund (other
than the Global Bond Fund) also reimburses the Distributor for distribution
expenses and for fees paid to certain other organizations, pursuant to the
Distribution Plan, of up to 0.99% of the daily net assets of the Gold Fund, of
up to 0.25% of the daily net assets of the Biotechnology Fund, the Technology
Fund, the Equity Fund and the Convertibles Fund, of up to 0.10% of the daily net
assets of the Government Fund and 0.05% of the daily net assets of the Short-
Term Government Fund. See "How to Purchase Shares."

How can you redeem your shares? You can sell back (redeem) your shares at
their net asset value. This will change with the changing value of the portfolio
securities of the Fund whose shares are being redeemed.

If the balance in your account (unless it is a qualified retirement plan)
falls below $500, the Trust may redeem the remaining shares and close the
account in certain circumstances. See "How to Redeem Shares."

What is the value of a share? The value of one of a Fund's shares is its net
asset value. This is simply that Fund's net assets divided by the number of its
shares outstanding. Net assets is the value of securities and other assets less
that Fund's liabilities. See "Net Asset Value."

What is the tax status of the Funds? The Trust intends for each Fund to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. See "Dividends and Tax Status."

FINANCIAL HIGHLIGHTS (for a share outstanding throughout the period)

The financial highlights for each of the Funds should be read in conjunction
with the Funds' audited financial statements and the notes thereto which appear
in the Funds' Annual Report to Shareholders. Further information about the
performance of the Funds also is contained in the Funds' Annual Report to
Shareholders, copies of which may be obtained without charge upon request.
(Prior to February 1, 1995, the Monitrend Investment Management, Inc. was the
investment adviser to the Convertibles Fund and the investment objective of the
Convertibles Fund was long-term total return from dividends and realized and
unrealized capital gains from stocks and options which exceeds that of the
Standard & Poor's 100 Index ("Index") through investing in a portfolio of common
stocks which approximately parallels the composition of the Index and by
engaging in various portfolio strategies involving the liquidation of the
portfolio or the use of options and futures contracts to hedge protectively
against adverse changes in stock market values. Between February 1, 1995 and
December 31, 1996, MidCap Associates, Inc. was the investment adviser to the
Convertibles Fund and invested primarily in common stocks included in the S&P
500 Index. Prior to November 1, 1992, Monitrend Investment Management, Inc. was
the investment adviser to the Government Fund. Prior to December 13, 1996,
Monitrend Investment Management, Inc. was investment adviser to the Gold Fund
except during the period between February 1, 1991 and August 17, 1994 when the
investment adviser to the Gold Fund was Kensington Capital Management, Inc.
Prior to December 13, 1996, Monitrend Investment Management, Inc. was investment
adviser to the Technology Fund and the Equity Fund and prior to December 20,
1996, Monitrend Investment Management, Inc. was investment adviser to the
Biotechnology Fund. Prior to March 31, 1997 the investment objective of the
Biotechnology Fund was long-term growth of capital through investing primarily
in equity securities of companies engaged in activities relating to the gaming
and leisure industry. The Global Bond Fund commenced operations on March 31,
1997.

<TABLE>
<CAPTION>
YEARS ENDED
FOR THE SIX NOVEMBER 30, APRIL 22, 1994*<F1>
MONTHS ENDED -------------------------- THROUGH
MAY 31, 1997 1996 1995 NOVEMBER 30, 1994
------------ ------- ------- -------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
SHORT-TERM GOVERNMENT FUND
(FORMERLY ADJUSTABLE RATE SERIES):

Net asset value,
beginning of period $ 10.21 $ 10.12 $ 9.98 $ 10.00
------- ------- ------- -------

Income from investment operations
- ---------------------------------
Net investment income 0.30 0.56 0.57 0.27
Net realized and unrealized gain (loss) on investments (0.02) 0.19 0.14 (0.02)
------- ------- ------- -------
Total from investment operations 0.28 0.75 0.71 0.25
------- ------- ------- -------

Less distributions
- ------------------
Dividends from net investment income (0.30) (0.56) (0.57) (0.27)
Dividends to shareholders from capital gains (0.01) (0.10) 0.00 0.00
------- ------- ------- -------

Total distributions (0.31) (0.66) (0.57) (0.27)
------- ------- ------- -------
Net asset value, end of period $ 10.18 $ 10.21 $ 10.12 $ 9.98
======= ======= ======= =======

Total return+<F3> 2.74% 7.68% 7.50% 2.50%#
<F2>
- ------------

Ratios/supplemental data
- ------------------------

Net assets, end of period (000 omitted) 26,408 20,464 3,405 2,041
Ratio of expenses to average net assets +<F4> 0.30%#<F2> 0.44% 0.46% 0.44%#
<F2>
Ratio of net investment income (loss) to average net assets +<F4> 5.83%#<F2> 5.51% 5.71% 4.68%#
<F2>
Portfolio turnover rate ***<F5> 43.77% 21.54% 164% 210%

</TABLE>

FOR THE SIX
MONTHS
ENDED YEARS ENDED NOVEMBER 30,
MAY 31, --------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
----------- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOVERNMENT INCOME FUND:

Net asset value,
beginning of period $ 13.59 $ 13.88 $ 12.76 $ 14.16 $ 13.13 $ 13.90 $13.53 $ 14.35 $ 13.95 $ 14.66 $ 15.02
------- ------- ------- ------- ------- -------------- ------- ------- ------- -------

Income from investment operations
- ---------------------------------
Net investment income 0.42 0.73 0.81 0.87 0.72 0.56 0.77 0.81 1.00 0.76 0.82
Net realized and unrealized gain
(loss) on investments (0.09) (0.28) 1.12 (1.39) 1.08 (0.68) 0.32 (0.59) 0.22 (0.55) (0.63)
------- ------- ------- ------- ------- -------------- ------- ------- ------- -------

Total from investment operations 0.33 0.45 1.93 (0.52) 1.80 (0.12) 1.09 0.22 1.22 0.21 0.19
------- ------- ------- ------- ------- -------------- ------- ------- ------- -------

Less distributions
- ------------------
Dividends to shareholders from net
investment income (0.41) (0.74) (0.81) (0.88) (0.77) (0.65) (0.72) (1.04) (0.82) (0.92) (0.55)
------- ------- ------- ------- ------- -------------- ------- ------- ------- -------
Net asset value, end of period $ 13.51 $ 13.59 $ 13.88 $ 12.76 $ 14.16 $ 13.13$ 13.90 $ 13.53 $ 14.35 $ 13.95 $ 14.66
======= ======= ======= ======= ======= ============== ======= ======= ======= =======

Total return 2.48% 3.42% 15.56% (3.75%) 13.96% (0.93%) 8.28% 1.76% 9.06% 1.52% 1.27%
- ------------

Ratios/supplemental data
- ------------------------
Net assets, end of
period (000 omitted) 949 1,293 947 882 1,280 1,893 3,050 3,641 2,806 3,830 2,969
Ratio of expenses to
average net assets +<F4> 1.10%#<F2>1.07% 1.10% 1.10% 1.10% 2.17% 2.50% 2.50% 2.50% 2.50% 2.17%
Ratio of net investment income to
average net assets +<F4> 6.22%#<F2>5.35% 6.04% 6.47% 5.14% 4.32% 5.60% 5.97% 7.02% 5.31% 5.78%
Portfolio turnover rate ***<F5> 55.85% 129.17% 91% 66% 118% 159% 0% 543% 237% 242% 145%

</TABLE>

FOR THE SIX FEBRUARY 5,
MONTHS 1988*<F1>
ENDED YEARS ENDED NOVEMBER 30, THROUGH
MAY 31, ------------------------------------------------------------------------ NOVEMBER 30,
1997 1996**<F7>1995**<F7> 1994 1993 1992 1991 1990 1989 1988
----------- ------- ------- ------- ------- ------- ------- ------- ------- ------------
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GOLD FUND:

Net asset value,
beginning of period $ 8.29 $ 5.91 $ 5.87 $ 11.94 $ 9.84 $ 14.49 $ 15.65 $ 19.22 $ 16.60 $ 18.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------

Income from investment operations
- ---------------------------------
Net investment income (loss) (0.07) (0.15) (0.09) (0.15) (0.09) 0.01 0.00 0.29 0.48 0.10
Net realized and unrealized gain
(loss) on investments (0.78) 2.53 0.13 (5.92) 2.20 (4.66) (0.76) (3.46) 2.28 (1.50)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from investment operations (0.85) 2.38 0.04 (6.07) 2.11 (4.65) (0.76) (3.17) 2.76 (1.40)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------

Less distributions
- ------------------
Dividends to shareholders from
net investment income 0.00 0.00 0.00 0.00 (0.01) 0.00 (0.40) (0.40) (0.14) 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $ 7.44 $ 8.29 $ 5.91 $ 5.87 $ 11.94 $ 9.84 $ 14.49 $ 15.65 $ 19.22 $ 16.60
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (10.25%) 40.27% 0.68% (50.84%) 21.47%(32.09%) (5.00%) (16.79%) 16.78% (7.78%)
- ------------

Ratios/supplemental data
- ------------------------
Net assets, end of period
(000 omitted) 1,673 1,531 421 1,274 3,147 2,493 1,938 1,939 2,482 1,708
Ratio of expenses to average net
assets +<F4> 2.44%#<F2> 2.37% 2.44% 2.45% 2.43% 2.45% 2.50% 2.50% 2.50% 2.50%#
Ratio of net investment income <F2>
(loss) to average net assets + (1.73%)# (1.72%) (1.57%) (1.26%) (0.84%) 0.06% (0.03%) 1.61% 3.37% 1.16%#
<F4> <F2> <F2>
Portfolio turnover rate ***<F5> 13.08% 35.70% 16% 229% 969% 626% 131% 256% 7% 163%
Average commission rate
per share $.02841 $.05482

</TABLE>

FOR THE SIX YEARS ENDED NOVEMBER 30, APRIL 1, 1992*<F1>
MONTHS ENDED ------------------------------------- THROUGH
MAY 31, 1997 1996**<F7>1995**<F7> 1994 1993 NOVEMBER 30, 1992
------------ ------- ------- ------- ------- -----------------
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C>
EQUITY FUND (FORMERLY
GROWTH SERIES):

Net asset value, beginning of period $ 19.63 $ 15.36 $ 11.12 $ 13.35 $ 13.59 $ 12.00
------- ------- ------- ------- ------- -------

Income from investment operations
- ---------------------------------
Net investment loss (0.14) (0.37) (0.24) (0.52) (0.20) (0.04)
Net realized and unrealized gain
(loss) on investments (1.13) 4.64 4.48 (1.71) (0.04) 1.63
------- ------- ------- ------- ------- -------
Total from investment operations (1.27) 4.27 4.24 (2.23) (0.24) 1.59
------- ------- ------- ------- ------- -------

Less distributions
- ------------------
Dividends to shareholders from
capital gains (0.68) 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- -------
Net asset value, end of period $ 17.68 $ 19.63 $ 15.36 $ 11.12 $ 13.35 $ 13.59
======= ======= ======= ======= ======= =======

Total return (6.49%) 27.80% 38.13% (16.70%) (1.77%) 13.25%
- ------------

Ratios/supplemental data
- ------------------------
Net assets, end of period
(000 omitted) 1,005 715 526 610 1,261 557
Ratio of expenses to average
net assets +<F4> 2.44%#<F2> 2.25% 2.44% 2.44% 2.44% 2.44%#
Ratio of net investment income <F2>
(loss) to average net assets +<F4> (1.63%)#<F2> (2.07%) (2.21%) (2.22%) (2.02%) (1.31%)#
<F2>
Portfolio turnover rate ***<F5> 22.92% 41.22% 24% 27% 26% 3%
Average commission rate per share $.06000 $.10548

</TABLE>

FOR THE SIX YEARS ENDED NOVEMBER 30, OCTOBER 21, 1993*<F1>
MONTHS ENDED ------------------------------- THROUGH
MAY 31, 1997 1996**<F7> 1995**<F7> 1994 NOVEMBER 30, 1993
------------ ------ ------ ------ ---------------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BIOTECHNOLOGY FUND (FORMERLY GAMING
& LEISURE SERIES):

Net asset value, beginning of period $ 7.19 $ 6.74 $ 6.12 $ 7.99 $ 8.00
------ ------ ------ ------ ------
Income from investment operations
- ---------------------------------
Net investment loss (0.09) (0.17) (0.15) (0.08) (0.01)
Net realized and unrealized gain (loss) on investments 0.22 0.62 0.77 (1.79) 0.00
------ ------ ------ ------ ------
Total from investment operations 0.13 0.45 0.62 (1.87) 0.01
------ ------ ------ ------ ------
Net asset value, end of period $ 7.32 $ 7.19 $ 6.74 $ 6.12 $ 7.99
====== ====== ====== ====== ======
Total return+<F3> 1.81% 6.67% 10.13% (23.40%) (0.13%)
- ------------

Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 1,101 231 400 824 634
Ratio of expenses to average net assets +<F4> 2.64%#<F2> 2.65% 2.89% 2.89% 2.70%#
Ratio of net investment income (loss) <F2>
to average net assets +<F4> (2.43%)#<F2> (2.31%) (2.18%) (1.18%) (2.03%)#
<F2>
Portfolio turnover rate ***<F5> 31.51% 2.79% 37% 27% 0
Average commission rate per share $.06923 $.09613

</TABLE>

FOR THE SIX YEARS ENDED NOVEMBER 30, NOVEMBER 9, 1993*<F1>
MONTHS ENDED ------------------------------- THROUGH
MAY 31, 1997 1996**<F7> 1995**<F7> 1994 NOVEMBER 30, 1993
------------- ------ ------ ------ ---------------------
(UNAUDITED)

<S> <C> <C> <C> <C> <C>
TECHNOLOGY FUND:

Net asset value, beginning of period $ 20.51 $ 17.81 $ 14.35 $ 14.82 $ 15.00
------- ------- ------- ------- -------
Income from investment operations
- ---------------------------------
Net investment loss (0.21) (0.40) (0.32) (0.18) (0.01)
Net realized and unrealized gain (loss) on investments (1.04) 4.86 4.19 (0.29) (0.17)
------- ------- ------- ------- -------
Total from investment operations (1.25) 4.46 3.87 (0.47) (0.18)
------- ------- ------- ------- -------
Less distributions
- ------------------
Dividends to shareholders from capital gains (0.60) (1.76) (0.41) 0.00 0.00
------- ------- ------- ------- -------
Net asset value, end of period $ 18.66 $ 20.51 $ 17.81 $ 14.35 $ 14.82
======= ======= ======= ======= =======
Total return+<F3> (6.30%) 26.32% 26.95% (3.17%) (1.20%)
- -------------

Ratios/supplemental data
- ------------------------
Net assets, end of period (000 omitted) 1,334 886 281 283 38
Ratio of expenses to average net assets +<F4> 2.44%#<F2> 2.34% 2.44% 2.44% 1.70%#
<F2>
Ratio of net investment income to average
net assets+<F4> (2.24%)#<F2> (2.06%) (1.97%) (1.79%) (1.63%)#
<F2>
Portfolio turnover rate ***<F5> 14.83% 17.33% 41% 29% 0
Average commission rate per share $.11082 $.07989

</TABLE>

FOR THE SIX FEBRUARY 5,
MONTHS 1988*<F1>
ENDED YEARS ENDED NOVEMBER 30, THROUGH
MAY 31, ---------------------------------------------------------------------- NOVEMBER 30,
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
----------- ----- ----- ----- ----- ----- ----- ----- ----- ------------
(UNAUDITED)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONVERTIBLES FUND (FORMERLY
GROWTH & INCOME SERIES):

Net asset value, beginning
of period $ 26.64 $ 21.42 $ 16.67 $ 17.20 $ 18.53 $ 19.20 $ 18.46 $ 19.00 $ 16.59 $ 18.00
------- ------- ------- ------- ---- ---- ------- ------- ------- -------

Income from investment operations
- ---------------------------------
Net investment income (0.06) 0.01 0.02 0.09 0.07 0.16 0.14 0.23& 0.04 0.15
<F6>
Net realized and unrealized gain
(loss) on investments 0.26 5.23 4.82 (0.58) (1.22) (0.67) 0.82 (0.68) 2.48 (1.56)
------- ------- ------- ------- ---- ---- ------- ------- ------- -------
Total from investment operations 0.20 5.24 4.84 (0.49) (1.15) (0.51) 0.96 (0.45) 2.52 (1.41)
------- ------- ------- ------- ---- ---- ------- ------- ------- -------

Less distributions
- ------------------
Dividends to shareholders from net
investment income 0.00 (0.02) (0.09) (0.04) (0.18) (0.16) (0.22) (0.09) (0.11) 0.00
------- ------- ------- ------- ---- ---- ------- ------- ------- -------
Net asset value, end of period $ 26.84 $ 26.64 $ 21.42 $ 16.67 $ 17.20 $ 18.53 $ 19.20 $ 18.46 $ 19.00 $ 16.59
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return+<F3> 0.75% 24.49% 29.19% (2.86%) (6.26%) (2.68%) 5.26% (2.38%) 15.28% (7.83%)
- ------------

Ratios/supplemental data
- ------------------------
Net assets, end of period
(000 omitted) 1,542 1,560 1,377 1,573 2,538 6,149 12,667 7,145 2,379 372
Ratio of expenses to average
net assets +<F4> 2.44%#<F2> 2.26% 2.44% 2.44% 2.44% 2.44% 2.50% 2.51%& 2.50% 2.50%#
Ratio of net investment income to <F6> <F2>
average net assets +<F4> (0.45%)#<F2> 0.04% 0.10% 0.46% 0.21% 0.57% 0.90% 2.02% 1.98% 1.54%#
<F2>
Portfolio turnover rate ***<F5> 53.16% 80.93% 152% 0% 1.59% 4.52% 13.30% 110.00% 32.00% 291.00%
Average commission rate
per share $.10950 $.13859

</TABLE>

APRIL 1, 1997
(COMMENCEMENT OF OPERATIONS)
THROUGH AUGUST 31, 1997
----------------------------
(UNAUDITED)
GLOBAL BOND FUND:

Net asset value, beginning of period $ 20.00
-------
Income from investment operations
- ---------------------------------
Net investment income 0.41
Net realized and unrealized gain (loss)
on investments and foreign currencies (0.25)
-------
Total from investment operations 0.16
-------
Less distributions
- ------------------
Dividends from net investment income 0.00
-------
Total distributions 0.00
-------
Net asset value, end of period $ 20.16
=======
Total return+<F3> 0.80%
- -------------

Ratios/supplemental data
- ------------------------
Net assets, end of period (in 000's) 4,862
Ratio of expenses to average net assets +<F4> 0.51%#<F2>
Ratio of net investment income (loss) to average
net assets+<F4> 4.76%#<F2>
Portfolio turnover rate ***<F5> 67.01%

NOTES TO FINANCIAL HIGHLIGHTS
*<F1>Commencement of Operations.
#<F2>Annualized.
+<F3>Total return does not reflect sales loads charged by the Funds and is not
annualized for periods less than one year.
+<F4>Net of expense reimbursement. If the expense reimbursement had not been in
effect, the ratio of expenses to average net assets for the periods illustrated
for each Fund would have been as follows: for the Government Fund, 6.67%,
5.68%, 5.73%, 5.52%, 3.66%, 3.86%, 3.53%, 3.60%, 4.13%, 4.62%, and 4.03%,
respectively; for the Gold Fund, 5.79%, 6.15%, 12.52%, 5.58%, 4.55%, 4.71%,
4.48%, 4.48%, 5.19% and 5.06%, respectively; for the Equity Fund, 10.79%,
11.73%, 11.44%, 8.52%, 6.44% and 12.12%, respectively; for the Technology Fund,
8.46%, 10.44%, 18.74%, 11.19% and 30.48%, respectively; for the Biotechnology
Fund, 15.20%, 15.28%, 9.96%, 6.40% and 5.19%, respectively; for the Convertibles
Fund, 6.12%, 5.11%, 6.08%, 5.46%, 4.39%, 3.46%, 3.85%, 3.94%, 13.72% and 16.13%,
respectively; for the Short-Term Government Fund, 0.60%, 1.19%, 2.01% and 3.46%,
respectively; and for the Global Bond Fund, 1.98%.
***<F5>Annual portfolio turnover rate is, in general, the percentage
computed by taking the lesser of purchases or sales of portfolio securities
(excluding certain short-term securities) for a year and dividing that amount by
the monthly average of the market value of such securities during the year.
&<F6>On a per share basis, includes taxes of $.01 and 0.01% expenses of average
net assets.
**<F7>Based on average shares outstanding.

INVESTMENT OBJECTIVES AND POLICIES OF THE MONTEREY MUTUAL FUNDS

PIA SHORT-TERM GOVERNMENT FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE SHORT-TERM GOVERNMENT FUND (FORMERLY
ADJUSTABLE RATE FUND)

The Short-Term Government Fund's objective is to provide investors with a high
level of current income, consistent with low volatility of principal through
investing in short term, adjustable rate and floating rate U.S. government
securities. Under normal circumstances at least 65% of the Short-Term Government
Fund's portfolio will consist of short-term U.S. government securities and
adjustable rate and floating rate U.S. government securities having a duration
of less than three (3) years.

The Short-Term Government Fund's portfolio will have a maximum duration of
three (3) years. Under normal interest rate conditions, the Short-Term
Government Fund's actual duration is expected to be in a range of six-months to
two-years. The Short-Term Government Fund's duration is a measure of the price
sensitivity of the portfolio, including expected cash flow and mortgage
prepayments for mortgage pass through securities, under a wide range of interest
rate scenarios. Maturity measures only the time until final payment is due on a
bond or other debt security; it does not take into account the pattern of a
security's cash flows over time, including how cash flow is affected by
prepayments and by changes in interest rates. In computing the duration of its
portfolio, the Short-Term Government Fund will have to estimate the duration of
obligations that are subject to prepayment or redemption by the issuer taking
into account the influence of interest rates on prepayments and coupon flows.
This method of computing duration is known as option-adjusted duration. The
Short-Term Government Fund may use various techniques to shorten or lengthen the
option-adjusted duration of its portfolio including the acquisition of debt
obligations at a premium or discount or the purchase or sale of futures
contracts on debt securities or put and call options on debt securities and
futures contracts on debt securities. The Short-Term Government Fund will
maintain a dollar-weighted maturity of not more than three years determined in
accordance with Securities and Exchange Commission guidelines. See "Other
Investments and Practices."

When interest rates decline, the value of a portfolio invested in fixed rate
obligations can be expected to rise. Conversely, when interest rates rise, the
value of a portfolio invested in fixed rate obligations can be expected to
decline. In contrast, as interest rates on adjustable rate mortgage loans are
reset periodically, yields of portfolio securities representing interests in
such loans will gradually align themselves to reflect changes in market interest
rates, causing the value of such a portfolio to fluctuate less dramatically in
response to interest rate fluctuations than would a portfolio of fixed rate
obligations. PIA expects the Short-Term Government Fund's net asset value to be
relatively stable during normal market conditions since the Short-Term
Government Fund's portfolio will consist primarily of short term U.S. government
securities, floating rate U.S. government securities and adjustable rate
Mortgage-Backed Securities (as hereinafter defined below) and since it will
maintain a maximum duration of three (3) years and utilize certain interest rate
hedging techniques. However, a sudden and extreme increase in prevailing
interest rates may cause a significant decline in the Short-Term Government
Fund's net asset value. Conversely, a sudden and extreme decline in interest
rates could result in an increase in the Short-Term Government Fund's net asset
value.

Because the Short-Term Government Fund's investments are interest rate
sensitive, its performance will depend in large part upon the ability of PIA to
anticipate and respond to fluctuations in market interest rates and to utilize
appropriate strategies to maximize returns to the Short-Term Government Fund,
while attempting to minimize the associated risks to its invested capital.
Operating results will also depend upon the availability of opportunities for
the investment of the Short-Term Government Fund's assets, including purchases
and sales of suitable securities.

MORTGAGE-BACKED SECURITIES

Mortgage-Backed Securities are securities that directly or indirectly represent
participations in, or are collateralized by and payable from, mortgage loans
secured by real property.

The investment characteristics of adjustable and fixed rate Mortgage-Backed
Securities differ from those of traditional fixed income securities. The major
differences include the payment of interest and principal on Mortgage-Backed
Securities on a more frequent (usually monthly) schedule, and the possibility
that principal may be prepaid at any time due to prepayments on the underlying
mortgage loans or other assets. These differences can result in significantly
greater price and yield volatility than is the case with traditional fixed
income securities. As a result, if the Short-Term Government Fund purchases
Mortgage-Backed Securities at a premium, a faster than expected prepayment rate
will reduce both the market value and the yield to maturity from those which
were anticipated. A prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity and market value. Conversely, if
the Short-Term Government Fund purchases Mortgage-Backed Securities at a
discount, faster than expected prepayments will increase, while slower than
expected prepayments will reduce, yield to maturity and market value. PIA will
seek to manage these potential risks and benefits by investing in a variety of
Mortgage-Backed Securities and by using certain hedging techniques. See "Other
Investments and Practices."

Prepayments on a pool of mortgage loans are influenced by a variety of
factors, including economic conditions, changes in mortgagors' housing needs,
job transfer, unemployment, mortgagors' net equity in the mortgage properties
and servicing decisions. The timing and level of prepayments cannot be
predicted. Generally, however, prepayments on adjustable rate mortgage loans and
fixed rate mortgage loans will increase during a period of falling mortgage
interest rates and decrease during a period of rising mortgage interest rates.
Accordingly, the amounts of prepayments available for reinvestment by the Short-
Term Government Fund are likely to be greater during a period of declining
mortgage interest rates. If general interest rates also decline, such
prepayments are likely to be reinvested at lower interest rates than the Short-
Term Government Fund was earning on the Mortgage-Backed Securities that were
prepaid.

A significant portion of the mortgage loans underlying the Mortgage-Backed
Securities in which the Short-Term Government Fund invests will be adjustable
rate mortgage loans ("ARMs"). ARMs eligible for inclusion in a mortgage pool
will generally provide for a fixed initial mortgage interest rate for a
specified period of time. Thereafter, the interest rates (the "Mortgage Interest
Rates") may be subject to periodic adjustment based on changes in the applicable
index rate (the "Index Rate"). The adjusted rate would be equal to the Index
Rate plus a gross margin, which is a fixed percentage spread over the Index Rate
established for each ARM at the time of its origination.

Adjustable interest rates can cause payment increases that some mortgagors
may find difficult to make. However, certain ARMs may provide that the Mortgage
Interest Rate may not be adjusted to a rate above an applicable lifetime maximum
rate or below an applicable lifetime minimum rate for such ARMs. Certain ARMs
may also be subject to limitations on the maximum amount by which the Mortgage
Interest Rate may adjust for any single adjustment period (the "Maximum
Adjustment"). Other ARMs ("Negatively Amortizing ARMs") may provide instead or
as well for limitations on changes in the monthly payment on such ARMs.
Limitations on monthly payments can result in monthly payments which are greater
or less than the amount necessary to amortize a Negatively Amortizing ARM by its
maturity at the Mortgage Interest Rate in effect in any particular month. In the
event that a monthly payment is not sufficient to pay the interest accruing on a
Negatively Amortizing ARM, any such excess interest is added to the principal
balance of the loan, causing negative amortization, and is repaid through future
monthly payments. It may take borrowers under Negatively Amortizing ARMs longer
periods of time to achieve equity and may increase the likelihood of default by
such borrowers. In the event that a monthly payment exceeds the sum of the
interest accrued at the applicable Mortgage Interest Rate and the principal
payment which would have been necessary to amortize the outstanding principal
balance over the remaining term of the loan, the excess (or "accelerated
amortization") further reduces the principal balance of the ARM. Negatively
Amortizing ARMs do not provide for the extension of their original maturity to
accommodate changes in their Mortgage Interest Rate. As a result, unless there
is a periodic recalculation of the payment amount (which there generally is),
the final payment may be substantially larger than the other payments. These
limitations on periodic increases in interest rates and on changes in monthly
payments protect borrowers from unlimited interest rate and payment increases.

Mortgage-Backed Securities include Mortgage-Backed securities or other
securities collateralized by U.S. Government securities, including Mortgage-
Backed Securities representing ownership interests in the underlying mortgage
loans and providing for monthly payments that are a "pass-through" of the
monthly interest and principal payments (including any prepayments) made by the
individual borrowers on the pooled mortgage loans, net of any fees paid to the
guarantor of such securities and the servicer of the underlying mortgage loans.
Such Mortgage-Backed Securities will include those issued or guaranteed by the
Government National Mortgage Association ("Ginnie Mae"), the Federal National
Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage
Association ("Freddie Mac"). Additional information regarding Ginnie Mae
certificates, Fannie Mae certificates and Freddie Mac certificates is set forth
in the Statement of Additional Information.

The Short-Term Government Fund may also invest in multiple class U.S.
Government securities, including guaranteed collateralized mortgage obligations
("CMOs") and REMIC pass-through or participation certificates. A REMIC is a CMO
that qualifies for special tax treatment under the Code.

CMOs and REMIC certificates are issued in multiple classes. Each class of
CMOs or REMIC certificates, often referred to as a "tranche," is issued at a
specific adjustable or fixed interest rate and must be fully retired no later
than its final distribution date. Principal prepayments on the mortgage loans or
other assets ("Mortgage Assets") underlying the CMOs or REMIC certificates may
cause some or all of the class of CMOs or REMIC certificates to be retired
substantially earlier than their final distribution dates. Generally, interest
is paid or accrued on all classes of CMOs or REMIC certificates on a monthly
basis.

The principal of and interest on the Mortgage Assets may be allocated among
the several classes of CMOs or REMIC certificates in various ways. In certain
structures (known as "sequential pay" CMOs or REMIC certificates), payments of
principal, including any principal prepayments, on the Mortgage Assets generally
are applied to the classes of CMOs or REMIC certificates in the order of their
respective final distribution dates. Thus no payment of principal will be made
on any class of sequential pay CMOs or REMIC certificates until all other
classes having an earlier final distribution date have been paid in full.

Additional structures of CMOs and REMIC certificates include, among others,
"parallel pay" CMOs and REMIC certificates. Parallel pay CMOs or REMIC
certificates are those which are structured to apply principal payments and
prepayments of the Mortgage Assets to two or more classes concurrently on a
proportionate or disproportionate basis. These simultaneous payments are taken
into account in calculating the final distribution date of each class.

A wide variety of REMIC certificates may be issued in the parallel pay or
sequential pay structures. These securities include accrual certificates (also
known as "Z-Bonds"), which only accrue interest at a specified rate until all
other certificates having an earlier final distribution date have been retired
and are converted thereafter to an interest-payment security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
certificates which generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the certificates. The scheduled principal payments for PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is calculating the final distribution date of each
class of PAC. In order to create PAC tranches, one or more tranches generally
must be created that absorb most of the volatility in the underlying mortgage
assets. These tranches tend to have market prices and yields that are much more
volatile than the PAC classes.

The Short-Term Government Fund may invest in stripped Mortgage-Backed U.S.
government securities ("SMBS"). SMBS are usually structured with two classes
that receive different proportions of the interest and principal distributions
from a pool of Mortgage Assets. A common type of SMBS will have one class
receiving all of the interest from the Mortgage Assets, while the other class
will receive all of the principal. However, in some instances, one class will
receive some of the interest and most of the principal while the other class
will receive most of the interest and the remainder of the principal. If the
underlying Mortgage Assets experience greater than anticipated prepayments of
principal, the Short-Term Government Fund may fail to fully recover its initial
investment in these securities. Certain SMBS may not be readily marketable and
will be considered illiquid for purposes of the Short-Term Government Fund's
limitation on investments in illiquid securities. Whether SMBS are liquid or
illiquid will be determined in accordance with guidelines established by the
Trust's Board of Trustees. The market value of the class consisting entirely of
principal payments generally is unusually volatile in response to changes in
interest rates. The yields on a class of SMBS that receives all or most of the
interest from Mortgage Assets are generally higher than prevailing market yields
on other Mortgage-Backed Securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not be
fully recouped. PIA will seek to manage these risks (and potential benefits) by
investing in a variety of such securities and by using certain hedging
techniques. See "Investment Practices and Risks."

OTHER INVESTMENTS AND PRACTICES

The Short-Term Government Fund may purchase securities on a when-issued basis.
When-issued transactions arise when securities are purchased by the Short-Term
Government Fund with payment and delivery taking place in the future in order to
secure what is considered to be an advantageous price and yield to the Short-
Term Government Fund at the time of entering into the transaction. The Short-
Term Government Fund may also purchase securities on a forward commitment basis.
In a forward commitment transaction, the Short-Term Government Fund contracts to
purchase securities for a fixed price at a future date beyond customary
settlement time. The Short-Term Government Fund is required to hold and maintain
in a segregated account until the settlement date, cash or other liquid assets
in an amount sufficient to meet the purchase price. Alternatively, the Short-
Term Government Fund may enter into offsetting contracts for the forward sale of
other securities that it owns. The purchase of securities on a when-issued or
forward commitment basis involves a risk of loss if the value of the security to
be purchased declines prior to the settlement date. Although the Short-Term
Government Fund would generally purchase securities on a when-issued or forward
commitment basis with the intention of actually acquiring securities for its
portfolio, the Short-Term Government Fund may dispose of a when-issued security
or forward commitment prior to settlement if PIA deems it appropriate to do so.

The Short-Term Government Fund may enter into mortgage "dollar rolls" in
which the Short-Term Government Fund sells Mortgage-Backed Securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type, coupon and maturity) securities on a specified
future date. During the roll period, the Short-Term Government Fund forgoes
principal and interest paid on the Mortgage-Backed Securities. The Short-Term
Government Fund is compensated by the difference between the current sales price
and the lower forward price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the initial
sale. A "covered roll" is a specific type of dollar roll for which there is an
offsetting cash position or a cash equivalent security position which matures on
or before the forward settlement date of the dollar roll transaction. The Short-
Term Government Fund will only enter into covered rolls. Covered rolls are not
treated as a borrowing or other senior security and will be excluded from the
calculation of the Short-Term Government Fund's borrowings and other senior
securities.

The Short-Term Government Fund may invest in U.S. Government securities of
the same types as the Government Fund. See "The Objectives, Basic Portfolio and
Allocation of Assets of the Government Income Fund." The Short-Term Government
Fund will not invest more than 10% of the value of its net assets in illiquid
securities.

In addition, the Short-Term Government Fund may invest up to 35% of its total
assets in Mortgage-Backed Securities, corporate bonds and debentures rated A or
better by Standard &Poor's Corporation ("S&P") or by Moody's Investors Service,
Inc. ("Moody's") and commercial paper master notes rated A-1 or better by S&P or
prime-1 by Moody's. A description of the foregoing ratings is set forth in the
Appendix to this Prospectus and in the Statement of Additional Information.

Finally, the Short-Term Government Fund may leverage its investments and lend
its portfolio securities. See "Borrowing" and "Lending Portfolio Securities"
below.

CAMBORNE GOVERNMENT INCOME FUND

THE OBJECTIVES, BASIC PORTFOLIO AND ALLOCATION OF ASSETS OF THE GOVERNMENT
INCOME FUND

The objectives of the Government Income Fund are growth of capital, whether over
the short- or long-term, income and preservation of capital. PIA will seek to
achieve the Government Income Fund's objectives by investing, as a matter of
fundamental policy, at least 65% of the total assets in securities of any
maturity which are issued or guaranteed by the U.S. Government or by any of its
agencies or instrumentalities, including U.S. Government-sponsored corporations
(which may be subject to repurchase agreements), and in the hedging instruments
discussed below. Up to 35% of the portfolio assets of the Government Income Fund
may be invested in other securities, including foreign securities, which at the
time of purchase are rated A or better by any of S&P, Moody's, Duff &Phelps,
Inc. ("Duff &Phelps") or IBAC, Inc. ("IBAC"). A description of the foregoing
ratings is set forth in the Appendix to this Prospectus and in the Statement of
Additional Information.

Obligations of certain agencies and instrumentalities of the U.S. Government,
such as those of the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration and the Government National Mortgage Association, are supported
by the full faith and credit of the U.S. Treasury; others, such as the Federal
Home Loan Banks, Federal Intermediate Credit Banks and the Tennessee Valley
Authority, are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
While the U.S. Government currently provides financial support to such U.S.
Government- sponsored instrumentalities, including U.S. Government-sponsored
corporations, no assurance can be given that it always will do so. The U.S.
Government, its agencies and instrumentalities, including U.S. Government-
sponsored corporations, do not guarantee the market value of their securities,
and consequently, the value of such securities may fluctuate.

The Government Income Fund may invest in zero coupon Treasury securities
which consist of Treasury Notes and Bonds that have been stripped of their
unmatured interest coupons by the U.S. Department of Treasury. A zero coupon
Treasury security pays no interest to its holders during its life and its value
to an investor consists of the difference between its face value at the time of
maturity and the price for which it was acquired, which is generally an amount
much less than its face value. Zero coupon Treasury securities are generally
subject to greater fluctuations in value in response to changing interest rates
than debt obligations that pay interest currently.

The allocation between U.S. Government securities and other securities is
based on PIA's analysis of the yield differential between these sectors. When
the yield differential between government and non-government sectors is narrow,
PIA will in most situations structure the portfolio so that the proportion of
assets invested in U.S. Government securities is above average. Conversely, when
the differential is high, the proportion invested in U.S. Government securities
will in most situations be below average.

The average portfolio duration of the Government Income Fund, and thus the
allocation of its assets between longer term securities and shorter term
securities will depend on PIA's outlook on the shapes of the yield curves of
Treasury securities and other major classifications of fixed income securities,
and thus on the market values of such securities. PIA maintains a data base of
historical yield curve shapes and has developed a methodology of analyzing such
shapes. PIA believes that periodic deviations from the normal yield curve
provide investors with significant opportunities to achieve above average
portfolio yields on a risk-adjusted basis. PIA will generally seek to invest the
Government Fund's assets in those securities which are most likely to experience
the most significant declines in relative yield as their yield curves "spring
back" to a more normal shape. When the yield curves are relatively steep, the
Government Fund's portfolio will likely consist of securities having longer than
average maturities. When the yield curves are flat or inverted, such Fund's
portfolio will likely consist of securities having shorter than average
maturities. There is no assurance that PIA's portfolio allocation, as described
above, will be correct. Incorrect allocation could result in the Government
Income Fund's having a long dollar-weighted average portfolio maturity when
interest rates are increasing, or the Government Income Fund could have a
substantial portion of its assets hedged in a short hedge when interest rates
are declining.

See "Principal Investment Risks" for possible risks, and the Statement of
Additional Information for a description, of investing in U.S. Government
securities.

OCM GOLD FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE GOLD FUND

The Gold Fund's investment objective is long-term growth of capital. The Gold
Fund will attempt to achieve its objective by investing primarily in equity
securities of domestic and foreign companies engaged in exploration, refining,
development, manufacture, production or marketing of gold and other precious
metals products. Under normal circumstances, at least 65% of the Gold Fund's
assets will be invested in equity securities of such companies whose activities
are related to gold, or in call options where the underlying investments to
which the calls relate are such equity securities.

In addition to gold related investments, the Gold Fund may invest in
securities of companies whose activities are related to other precious metals,
such as silver, platinum and palladium, or in companies engaged in the
manufacture or production of products incorporating precious metals, such as
jewelry, photographic supplies, medical equipment and supplies and companies
engaged in marketing precious metals or precious metals products. The Gold Fund
may also purchase gold, silver, platinum and palladium bullion. The Gold Fund
may also purchase such metals in the form of coins, if there is an actively
quoted market for the coins. Coins will only be purchased for their metallic
value and not for their currency or numismatic value.

The Gold Fund will invest primarily in equity securities -- that is, common
stocks or securities having equity characteristics, such as warrants or in call
options as indicated above. At any time Orrell deems it advisable for temporary
defensive purposes, the Gold Fund may invest all or a portion of its assets in
U.S. Government securities, principally expected to be Treasury Bills, bank
instruments or commercial paper master notes. See "Principal Investment Risks"
for possible risks, and the Statement of Additional Information for a
description, of U.S. Government securities. The Gold Fund may hedge its equity
holdings and write covered call and put options to generate income for liquidity
purposes (see "Hedging Instruments"). The Gold Fund may also lend its securities
as discussed below. (See "Lending Portfolio Securities").

The production and marketing of gold and precious metals may be affected by
the action of certain governments and changes in existing governments. For
example, the mining of gold is highly concentrated in a few countries. In
current order of magnitude of production of gold bullion, the four largest
producers of gold are the Republic of South Africa, the United Sates, Australia
and the former USSR. It is expected that a majority of gold mining companies in
which the Gold Fund will invest will be located within the United States, Canada
and Australia.

The prices of gold and precious metals mining securities have been subject to
substantial price fluctuations over short periods of time and may be affected by
unpredictable international monetary and political developments such as currency
devaluations or revaluations, economic and social conditions within a country,
trade imbalances, or trade or currency restrictions between countries. The use
of gold or Special Drawing Rights (which are used by members of the
International Monetary Fund for international settlements) to settle net
deficits and surpluses in trade and capital movements between nations subjects
the supply and demand, and therefore the price of gold, to a variety of economic
factors that normally do not affect other investments.

Investments in gold, silver, platinum and palladium bullion do not generate
income and will subject the Gold Fund to taxes and insurance, and shipping and
storage costs. The sole source of return to the Gold Fund from such investments
would be gains realized on sales, and a negative return would be realized if
such investments are sold at a loss. The Gold Fund intends to qualify as a
regulated investment company under the Internal Revenue Code of 1986 (the
"Code") so that the Gold Fund will not be subject to Federal income taxes on its
taxable income to the extent distributed to shareholders. The Gold Fund's
investment in gold, silver, platinum and palladium bullion may result in its
failure to meet certain of the income or asset tests prescribed by the Code. To
reduce this risk, Orrell will endeavor to manage the Gold Fund's portfolio so
that (i) less than 10% of the Gold Fund's gross income each year will be derived
from its investments in gold, silver, platinum and palladium bullion and (ii)
less than 50% of the value of the Gold Fund's assets, at the end of each
quarter, will be invested in gold, silver, platinum and palladium bullion.

PIA EQUITY FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE EQUITY FUND
(FORMERLY GROWTH FUND)

The Equity Fund's objective is long-term growth of capital. The Equity Fund will
attempt to achieve its objective by investing primarily in stocks of issuers
that PIA anticipates will grow at a higher than average rate per year in both
sales and earnings. Under normal circumstances, at least 65% of the Equity
Fund's assets will be invested in such stocks.

The issuers of the stocks in which the Equity Fund invests may exhibit some
or all of the following characteristics: (i) a positive cash flow to allow for
self-financing growth; (ii) a return on equity of close to 20%; (iii) a debt to
equity ratio lower than that of the average public company; (iv) the payment of
taxes at normal tax rates; (v) a diversified customer and supplier base; (vi)
accounts receivable having an average maturity of less than 70 days; and (vii)
increasing operating margins and declining sales and administrative expenses.
Such companies may not be the largest and best known companies in their industry
groups. Frequently such companies will be in rapidly growing sectors of the
economy and often bring proprietary skills to a developing niche in a particular
market.

In selecting investments PIA will consider the public filings of issuers with
the Securities and Exchange Commission as well as research reports of broker-
dealers and trade publications. In appropriate situations, PIA may meet with
management. Greater weight will be given to internal factors such as product or
service development than to external factors such as interest rate changes and
general stock market trends.

When PIA deems it advisable for temporary defensive purposes, the Equity Fund
may invest a portion of its assets in U.S. Government securities, principally
expected to be Treasury Bills, bank instruments, commercial paper master notes
or repurchase agreements. See "Principal Investment Risks" for possible risks,
and the Statement of Additional Information for a description of U.S. Government
securities and repurchase agreements. Additionally the Equity Fund may hedge
some or all of its portfolio of common stocks. See "Hedging Instruments."

Since the major portion of the Equity Fund's portfolio will normally be
invested in common stocks, the Equity Fund's net asset value may be subject to
greater fluctuations than a portfolio containing a substantial amount of fixed
income securities. There can be no assurance that the investment objective of
the Equity Fund will be realized. Nor can there be assurance that the Equity
Fund's portfolio will not decline in value.

The Equity Fund may invest in equity securities of smaller companies which
are judged by PIA to possess strong growth characteristics. Such companies may
be new, less well-known or undercapitalized companies. Securities of smaller
growth companies may be subject to more abrupt or erratic market movements than
those of larger, more established companies, in particular, because such
companies typically are subject to greater fluctuation in earnings and
prospects. In addition, securities of smaller companies may be subject to
liquidity risk.

MURPHY NEW WORLD BIOTECHNOLOGY FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE BIOTECHNOLOGY FUND (FORMERLY GAMING &
LEISURE FUND)

The Biotechnology Fund's objective is long-term growth of capital through
investing primarily in equity securities of companies that Murphy believes can
produce products or services that provide or benefit from advances in
biotechnology. The term "biotechnology" includes drug development, production
and distribution; agricultural and industrial biotechnology; genetic sequencing
and mapping; drug delivery; biotechnology-based services and other advances
resulting from research and development programs in the medical, animal and life
sciences.

Under normal circumstances, at least 65%, but at all times 25%, of the
Biotechnology Fund's assets will be invested in equity securities of companies
engaged in the biotechnology sector. The equity securities in which the
Biotechnology Fund may invest will consist of common stocks, preferred stocks
and convertible securities, as well as warrants to purchase such securities. The
Biotechnology Fund does not intend to invest in debt securities of companies
engaged in activities related to the biotechnology sector, other than temporary
investments in money market instruments for defensive purposes as described
below.

Companies in the biotechnology sector have unpredictable earnings. Products
offered by companies in the biotechnology sector are subject to risks of
obsolescence and intense competition. Companies in the biotechnology sector are
subject to extensive government regulation and may be affected by the
enforcement of patent, trademark and other intellectual property laws.
Securities of companies in the biotechnology sector generally exhibit greater
volatility than the overall market. Such companies may be of small or medium
capitalization and as a consequence their securities may be subject to more
abrupt or erratic market movements than those of larger, more established
companies and may be subject to liquidity risk.

When Murphy deems it advisable for temporary defensive purposes, the
Biotechnology Fund may invest a portion of its assets in U.S. Government
securities, principally expected to be Treasury Bills, bank instruments,
commercial paper master notes or repurchase agreements. See "Principal
Investment Risks" for possible risks, and the Statement of Additional
Information for a description of U.S. Government securities and repurchase
agreements. Additionally the Biotechnology Fund may hedge some or all of its
portfolio of common stocks. See "Hedging Instruments." The Biotechnology Fund
also may leverage its investments, lend its portfolio securities and invest in
foreign securities. See "Borrowing", "Lending Portfolio Securities" and "Foreign
Securities" below.

The Biotechnology Fund may effect "short sales" of securities. A "short sale"
is made by selling a security the Fund does not own. Whenever the Biotechnology
Fund effects a short sale, it will put in a segregated account cash or other
liquid securities equal to the difference between (a) the market value of the
securities sold short and (b) any cash or United States government securities
required to be deposited as collateral with the broker in connection with the
short sale (but not including the proceeds of the short sale). Until the
Biotechnology Fund replaces the security it borrowed to make the short sale, it
must maintain daily the segregated account at such a level that the amount
deposited in it plus the amount deposited with the broker as collateral will
equal the current market value of the securities sold short. No more than 25% of
the value of Biotechnology Fund's net assets will be, when added together, (a)
deposited as collateral for the obligation to replace securities borrowed to
effect short sales, and (b) allocated to segregated accounts in connection with
short sales. Until November 30, 1997, the Biotechnology Fund's ability to make
short sales may be limited by a requirement applicable to "regulated investment
companies" under Subchapter M of the Internal Revenue Code that no more than 30%
of a fund's gross income in any year may be the result of gains from the sale of
property held for less than three months. See "Dividends and Tax Policy."

MURPHY NEW WORLD TECHNOLOGY FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE TECHNOLOGY FUND

The Technology Fund's objective is long-term growth of capital through investing
primarily in equity securities of companies that Murphy believes can produce
products or services that provide or benefit from advances in technology. Murphy
interprets the term "technology" broadly to include semiconductors and
electronic components, computers, computer services, computer peripherals and
software, communications, multimedia, instruments, office automation, factory
automation, robotics, consumer electronics, electronic games, cable television,
pharmaceuticals, biotechnology, medical devices, superconductivity, specialty
materials, alternative energy and other advances resulting from research and
development programs.

Under normal circumstances, at least 65% of the Technology Fund's assets will
be invested primarily in equity securities of companies engaged in activities
related to the technology sector. The equity securities in which the Technology
Fund may invest will consist of common stocks, preferred stocks and convertible
securities, as well as warrants to purchase such securities. The Technology Fund
does not intend to invest in debt securities of companies engaged in activities
related to the technology sector, other than temporary investments in money
market instruments for defensive purposes as described below.

Competitive pressures may have a significant effect on the financial
condition of companies in the technology sector. Technology companies may
become increasingly sensitive to short product cycles and aggressive pricing.

When Murphy deems it advisable for temporary defensive purposes, the
Technology Fund may invest a portion of its assets in U.S. Government
securities, principally expected to be Treasury Bills, bank instruments or
commercial paper master notes. See "Principal Investment Risks" for possible
risks, and the Statement of Additional Information for a description of U.S.
Government securities. Additionally the Technology Fund may hedge some or all
of its portfolio of common stocks. See "Hedging Instruments." The Technology
Fund also may leverage its investments and lend its portfolio securities. See
"Borrowing" and "Lending Portfolio Securities" below. The Technology Fund may
effect "short sales" of securities to the same extent as the Biotechnology Fund.
See "The Objective and Basic Portfolio of the Biotechnology Fund."

MURPHY NEW WORLD TECHNOLOGY CONVERTIBLES FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE CONVERTIBLES FUND (FORMERLY GROWTH &
INCOME FUND)

The Convertibles Fund's objective is to maximize total return through a
combination of capital appreciation and income. The Convertibles Fund under
normal circumstances invests at least 65% of its assets in convertible
securities of issuers which Murphy believes can produce products or services
that provide or benefit from advances in technology.

Convertible securities include corporate bonds, debentures, notes or
preferred stocks that can be converted into (that is exchanged for) common stock
or other equity securities of the same or a different issuer, and other
securities, such as warrants, that may also provide an opportunity for equity
participation. These securities are generally convertible at either a stated
price or a stated rate (that is, for a specific number of shares of common stock
or of another entity). Because of this conversion feature, the price of the
convertible security will normally vary in some proportion to changes in the
price of the underlying common stock. A convertible security will normally also
provide a higher yield than the underlying common stock. This higher yield may
tend to cushion the convertible security against declines in the price of the
underlying stock.

In seeking to achieve the Convertibles Fund's investment objective, Murphy
may invest, without limitation, in convertible securities rated as low as C by
S&P or Moody's. Securities rated less than BBB by S&P and Baa by Moody's are
considered to be predominantly speculative and may be in default. Such ratings
reflect the greater possibility of adverse changes in the financial condition of
the issuers, or in general economic conditions, or both, or an unanticipated
rise in interest rates, may impact the ability of the issuer to make payments of
interest and principal. The inability (or perceived inability) of issuers to
make timely payments of interest and principal would likely make the values of
securities held by the Convertibles Fund more volatile and could limit the
Convertibles Fund's ability to sell its securities at prices approximating the
values the Convertibles Fund had placed on such securities. In the absence of a
liquid trading market for securities held by it, the Convertibles Fund at times
may be unable to establish the fair value of such securities. Finally the
rating assigned to a security by Moody's or S&P does not reflect an assessment
of the volatility of the security's market value or of the liquidity of an
investment in the security.

Murphy will seek to minimize the risks of investing in lower-rated securities
through careful investment analysis. When the Convertibles Fund invests in the
lower rating categories, the achievement of its investment objective is more
dependent on Murphy's investment analysis than would be the case if the
Convertibles Fund were investing in securities in the higher rating categories.

When Murphy deems it advisable for temporary defensive purposes, the
Convertibles Fund may invest up to 100% of its net assets in U.S. Government
securities, principally expected to be Treasury Bills, bank instruments,
commercial paper master notes or repurchase agreements. See "Principal
Investment Risks" for possible risks and the Statement of Additional Information
for a description of U.S. Government securities and repurchase agreements.
Additionally the Convertibles Fund may hedge some or all of its portfolio of
securities. See "Hedging Instruments." The Convertibles Fund also may leverage
its investments and lend its portfolio securities. See "Borrowing" and "Lending
Portfolio Securities" below. The Convertibles Fund may effect "short sales" of
securities to the same extent as the Biotechnology Fund. See "The Objective and
Basic Portfolio of the Biotechnology Fund."

PIA GLOBAL FUND

THE OBJECTIVE AND BASIC PORTFOLIO OF THE GLOBAL BOND FUND

The Global Bond Fund's investment objective is to provide a high level of
current income through investing in bonds denominated in U.S. dollars and other
currencies. (The Global Bond Fund considers a "bond" to mean any debt instrument
other than a money market debt instrument.) The Global Bond Fund may invest in a
broad range of fixed-income securities denominated in foreign currencies and
U.S. dollars, including bonds, notes, Mortgage-Backed Securities, asset-backed
securities, preferred stock (including convertible preferred stock), convertible
debt securities, structured notes and debt securities issued or guaranteed by
national, provincial, state or other governments with taxing authority or by
their agencies or by supranational entities. The Global Bond Fund may invest in
securities that pay interest on a fixed, variable, floating (including inverse
floating), contingent, in-kind or deferred basis. Under normal market
conditions, at least 65% of the total value of the Global Bond Fund's assets
will be invested in bonds (as defined above) denominated in foreign currencies
and U.S. dollars. 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 of supranational entities are the
International Bank for Reconstruction and Development (the World Bank), the
European Steel and Coal Community, the Asian Development Bank and the Inter-
American Development Bank.

The Global Bond Fund expects to emphasize foreign government and agency
securities, securities of U.S. companies denominated in foreign currencies, U.S.
Government and agency securities, Mortgage-Backed Securities, asset-backed
securities and securities of companies denominated in U.S. dollars. The Global
Bond Fund intends to spread investments broadly among countries. The Global Bond
Fund will normally include securities of several different countries; however,
while maintaining investments in several countries, the Global Bond Fund may
invest a substantial portion of its assets in one or more of those several
countries. Investors should be aware that investing in Mortgage-Backed
Securities involves risks of fluctuation in yields and market prices and of
early prepayments on the underlying mortgages. See "The Objective and Basic
Portfolio of the Short-Term Government Fund." See "Foreign Securities" for a
description of the risks associated with investments in foreign securities.

When PIA deems it advisable for temporary defensive purposes, the Global Bond
Fund may invest up to 100% of its net assets in U.S. and non-dollar denominated
short-term money market instruments such as Treasury Bills, bank instruments,
commercial paper master notes and repurchase agreements.

The Global Bond Fund will invest in investment grade fixed-income securities,
i.e., securities which, at the date of investment, are rated within the four
highest grades as determined by Moody's (Aaa, Aa, A or Baa) or by S&P, Duff &
Phelps or IBAC (AAA, AA, A or BBB) or their respective equivalent ratings or, if
not rated, judged by PIA to be of equivalent credit quality to securities so
rated. Securities rated Baa by Moody's or BBB by S&P, Duff & Phelps or IBAC and
unrated securities of equivalent credit quality are considered medium grade
obligations with speculative characteristics. Adverse changes in economic
conditions or other circumstances are more likely to weaken the issuer's
capacity to pay interest and repay principal on these securities than is the
case for issuers of higher rated securities.

The Global Bond Fund anticipates that the average dollar-weighted rated
credit quality of the securities in its portfolio will be Aa or AA, according to
Moody's, S&P, Duff & Phelps or IBAC ratings, respectively, or comparable credit
quality as determined by PIA. In the case of a security that is rated
differently by the rating services, the higher rating is used in computing the
Global Bond Fund's average dollar-weighted credit quality. In the event that the
rating on a security held in the Global Bond Fund's portfolio is downgraded by a
rating service, such action will be considered by PIA in its evaluation of the
overall investment merits of that security, but will not necessarily result in
the sale of the security. However the Global Bond Fund will not hold more than
5% of its net assets in securities that are not rated at least Baa by Moody's or
BBB by one of S&P, Duff & Phelps or IBAC. See "The Objective and Basic Portfolio
of the Convertibles Fund (formerly Growth & Income Fund)" for a discussion of
the risks associated with such securities. In determining whether securities are
of equivalent credit quality, PIA may take into account, but will not rely
entirely on, ratings assigned by foreign rating agencies. In the case of unrated
sovereign, subnational and sovereign related debt of foreign countries, PIA may
take into account, but will not rely entirely on, the ratings assigned to the
issuers of such securities.

In pursuing the Global Bond Fund's investment objective, PIA intends to
emphasize intermediate-term economic fundamentals relating to various countries
in the international economy, rather than evaluate day-to-day fluctuations in
particular currency and bond markets. Credit analysis of the issuers of the
particular securities will also be less important than macroeconomic
considerations. PIA will review the economic conditions and prospects relating
to various countries in the international economy and evaluate the available
yield differentials with a view toward maximizing total return.

The Global Bond Fund may purchase securities on a when-issued basis or a
forward commitment basis to the same extent as the Short-Term Government Fund.
See "The Objective and Basic Portfolio of the Short-Term Government Fund." The
Global Bond Fund may hedge some or all of its portfolio securities. See "Hedging
Instruments." The Global Bond Fund also may leverage its investments and lend
its portfolio securities. See "Borrowing" and "Lending Portfolio Securities,"
below.

INVESTMENT PRACTICES AND RISKS

BORROWING

From time to time the Short-Term Government Fund, the Biotechnology Fund, the
Technology Fund, the Convertibles Fund and the Global Bond Fund may increase
their ownership of securities by borrowing on a secured or unsecured basis at
fixed and floating rates of interest and investing the borrowed funds. It is not
anticipated that any of such Funds will use its borrowing power to an extent
greater than 25% of the value of its assets. Borrowings will be made only from
banks and only to the extent that the value of the assets of the Fund in
question, less its liabilities other than borrowings, is equal to at least 300%
of all borrowings, after giving effect to the proposed borrowing. If the value
of the assets of the Fund in question so computed should fail to meet the 300%
asset coverage requirement, the Fund is required within three days to reduce its
bank debt to the extent necessary to meet such 300% coverage. Since
substantially all of the assets of the Short-Term Government Fund, the
Biotechnology Fund, the Technology Fund, the Convertibles Fund and the Global
Bond Fund fluctuate in value, but borrowing obligations are fixed, the net asset
value per share of such Funds will correspondingly tend to increase and decrease
in value more than otherwise would be the case. This speculative factor is known
as "leverage."

LENDING PORTFOLIO SECURITIES

Each of the Short-Term Government Fund, the Gold Fund, the Biotechnology Fund,
the Technology Fund, the Convertibles Fund and the Global Bond Fund may, to
increase its income, lend its securities on a short- or long-term basis to
brokers, dealers and financial institutions if (i) the loan is collateralized in
accordance with applicable regulatory guidelines (the "Guidelines") and (ii)
after any loan, the value of the securities loaned does not exceed 25% of the
value of its total assets. Under the present Guidelines (which are subject to
change) the loan collateral must be, on each business day, at least equal to the
value of the loaned securities and must consist of cash, bank letters of credit
or U.S. Government securities. To be acceptable as collateral, a letter of
credit must obligate a bank to pay amounts demanded by the Fund in question if
the demand meets the terms of the letter. Such terms and the issuing bank would
have to be satisfactory to the Fund in question. Any loan might be secured by
any one or more of the three types of collateral.

The Fund in question receives amounts equal to the interest or other
distributions on loaned securities and also receives one or more of the
negotiated loan fees, interest on securities used as collateral or interest on
the securities purchased with such collateral, either of which type interest may
be shared with the borrower. The Short-Term Government Fund, the Gold Fund, the
Biotechnology Fund, the Technology Fund, the Convertibles Fund and the Global
Bond Fund may also pay reasonable finder's, custodian's and administrative fees
but only to persons not affiliated with the Trust. The terms of the loans will
meet certain tests under the Code and permit the Short-Term Government Fund, the
Gold Fund, the Biotechnology Fund, the Technology Fund, the Convertibles Fund
and the Global Bond Fund to terminate the loan and thus reacquire the loaned
securities on three days notice.

FOREIGN SECURITIES

From time to time a significant portion of the investments of the Gold Fund, the
Biotechnology Fund, the Technology Fund, the Convertibles Fund and the Global
Bond Fund and up to 10% of the total assets of the Equity Fund and up to 35% of
the total assets of the Government Fund may be in the securities of foreign
issuers. There are risks in investing in foreign securities. Foreign economies
may differ from the U.S. economy; individual foreign companies may differ from
domestic companies in the same industry; foreign currencies may be stronger or
weaker than the U.S. dollar.

An investment may be affected by changes in currency rates and in exchange
control regulations, and the Gold Fund, the Equity Fund, the Government Fund,
the Biotechnology Fund, the Technology Fund, the Convertibles Fund and the
Global Bond Fund may incur transaction costs in exchanging currencies. For
example, at times when the assets of a Fund are invested primarily in securities
denominated in foreign currencies, investors can expect that their net asset
values per share will tend to increase when the value of U.S. dollars is
decreasing against such currencies. Conversely a tendency toward a decline in
net asset values per share can be expected when the value of U.S. dollars is
increasing against such currencies.

Foreign companies are frequently not subject to accounting and financial
reporting standards applicable to domestic companies, and there may be less
information available about foreign issuers. Foreign stock markets have
substantially less volume than the New York Stock Exchange, and securities of
foreign issuers are generally less liquid and more volatile than those of
comparable domestic issuers. There is frequently less government regulation of
exchanges, broker-dealers and issuers than in the United States. Brokerage
commissions in foreign countries are generally fixed, and other transactions
costs related to securities exchanges are generally higher than in the United
States. In addition, investments in foreign countries are subject to the
possibility of expropriation, confiscatory taxation, political or social
instability or diplomatic developments that could adversely affect the value of
those investments.

Most foreign securities owned by any of the Funds are held by foreign
subcustodians that satisfy certain eligibility requirements. However, foreign
subcustodian arrangements are significantly more expensive than domestic
custody. In addition, foreign settlement of securities transactions is subject
to local law and custom that is not, generally, as well established or as
reliable as U.S. regulation and custom applicable to settlements of securities
transactions and, accordingly, there is generally perceived to be a greater risk
of loss in connection with securities transactions in many foreign countries.

The Gold Fund, the Biotechnology Fund, the Technology Fund, the Convertibles
Fund and the Global Bond Fund may invest in countries with emerging economies or
securities markets ("Emerging Markets"). Investment in Emerging Markets involves
risks in addition to those generally associated with investments in foreign
securities. Political and economic structures in many Emerging Markets may be
undergoing significant evolution and rapid development, and such countries may
lack the social, political and economic stability characteristics of more
developed countries. As a result, the risks described above relating to
investments in foreign securities, including the risks of nationalization or
expropriation of assets, may be heightened. In addition, unanticipated political
or social developments may affect the values of a Fund's investments and the
availability to a Fund of additional investments in such Emerging Markets. The
small size and inexperience of the securities markets in certain Emerging
Markets and the limited volume of trading in securities in those markets may
make a Fund's investments in such countries less liquid and more volatile than
investments in countries with more developed securities markets (such as the
U.S., Japan and most Western European countries).

HEDGING

Hedging may be used in an attempt to (i) protect against declines or possible
declines in the market values of securities held in a Fund's portfolio ("short
hedging") or (ii) establish a position in the securities markets as a substitute
for purchase of individual securities ("long hedging"). A Fund so authorized may
engage in short hedging in an attempt to protect that Fund's value against
anticipated downward trends in the securities markets or engage in long hedging
as a substitute for the purchase of securities, which may then be purchased in
an orderly fashion. It is expected that when a Fund is engaging in long hedging,
it would, in the normal course, purchase securities and terminate the hedging
position, but under unusual market conditions such a hedging position may be
terminated without the corresponding purchase of securities.

HEDGING INSTRUMENTS

The various hedging instruments which the Funds may use are discussed below.
These instruments may be used only for hedging and not for speculative purposes.
Additionally the Gold Fund may write covered call and put options to generate
income for liquidity purposes. The Statement of Additional Information contains
further information as to the characteristics of, and the risks of transactions
in, each of these instruments.

Stock Index Futures. The Equity Fund, the Biotechnology Fund, the Technology
Fund, the Convertibles Fund and the Global Bond Fund (but not the Government
Fund, the Gold Fund or the Short-Term Government Fund) may buy and sell futures
contracts on stock indices ("Stock Index Futures"). A stock index, which cannot
be purchased or sold directly, assigns relative values to the common stocks
included in the index, and the index fluctuates with the changes in the market
values of these common stocks. When a Fund buys a Stock Index Future it agrees
to take delivery of an amount of cash equal to a specified dollar amount times
the difference between the stock index value at the close of the last trading
day of the Stock Index Future and the price at which the Stock Index Future was
originally struck. No physical delivery of the underlying stocks in the index is
made. When a Fund sells a Stock Index Future, it agrees to deliver such an
amount of cash.

Call Options. All of the Funds may purchase call options ("calls") and write
(i.e., sell) calls but only if (i) the investments to which the call relates
(the "related investments") are (a) common stocks or other securities that have
equity characteristics ("equities") (except that the Government Fund and the
Short-Term Government Fund may not purchase and write calls on equities), (b)
stock indices (except that the Government Fund and the Short-Term Government
Fund may not purchase and write calls on stock indices), (c) Stock Index Futures
(except that the Gold Fund, the Government Fund and the Short-Term Government
Fund may not purchase or write calls on Stock Index Futures), (d) debt
securities (with respect to only the Short-Term Government Fund, the
Convertibles Fund and the Global Bond Fund) or (e) futures contracts on debt
securities (with respect to only the Short-Term Government Fund, the Government
Fund, the Convertibles Fund and the Global Bond Fund); (ii) in the case of calls
written by any of such Funds, such calls are "covered"; and (iii) the calls are
listed on a domestic securities or commodities exchange or quoted on the
automatic quotation system of the National Association of Securities Dealers,
Inc. ("NASDAQ"). For a call to be "covered," either (i) the Fund in question
must own the underlying security or futures contract or have an absolute and
immediate right to acquire that security or futures contract without payment of
additional cash consideration, or for an additional consideration held as set
forth in (ii), upon conversion or exchange of other securities held in its
portfolio; or (ii) that Fund must maintain in a segregated account cash or other
liquid securities adequate to purchase the security or futures contract, in each
case until the Fund enters into a closing purchase transaction as to that call.
Additionally calls written by the Gold Fund are deemed to be covered if it holds
on a share-for-share basis a call on the same related investment as the call
written where the exercise price of the call held is either equal to or less
than the exercise price of the call written or, if greater, the marked-to-market
excess is maintained in a segregated account in cash or other liquid securities.
The above limitations on calls the Funds may write or purchase are fundamental
policies, i.e., rules which may not be changed unless the shareholders of the
Fund in question vote to change them.

Put Options. All of the Funds may purchase put options ("puts") but only if (i)
the investments to which the put relates (the "related investments") are (a)
equities (except that the Government Fund and the Short-Term Government Fund may
not purchase put options on equities), (b) stock indices (except that the
Government Fund and the Short-Term Government Fund may not purchase put options
on stock indices), (c) Stock Index Futures (except that the Gold Fund, the
Government Fund and the Short-Term Government Fund may not purchase puts on
Stock Index Futures), (d) debt securities (with respect to only the Short-Term
Government Fund, the Convertibles Fund and the Global Bond Fund) or (e) futures
contracts on debt securities (with respect to only the Short-Term Government
Fund, the Government Fund, the Convertibles Fund and the Global Bond Fund); and
(ii) the puts are listed on a domestic securities or commodities exchange or
quoted on NASDAQ. The Equity Fund, the Biotechnology Fund, the Government Fund
and the Technology Fund may not write puts. The puts which the Equity Fund and
the Biotechnology Fund purchase on equities must be "protective," i.e., the Fund
in question must own the related investments. The Gold Fund may write covered
puts on (a) equities and (b) stock indices. For a put to be covered the Gold
Fund must (i) maintain in a segregated account cash or other liquid securities
equal to the option price; or (ii) hold on a share-for-share basis a put on the
same security as the put written where the exercise price of the put held is
either equal to or greater than the exercise price of the put written or, if
less, the marked-to-market deficit is maintained in a segregated account in cash
or other liquid securities. Each of the Short-Term Government Fund, the
Convertibles Fund and the Global Bond Fund may write covered puts on (a)
equities (the Convertibles Fund and the Global Bond Fund only), (b) stock
indices (the Convertibles Fund and the Global Bond Fund only), (c) Stock Index
Futures (the Convertibles Fund and the Global Bond Fund only), (d) debt
securities and (e) futures contracts on debt securities. For a put to be
covered, the Fund must maintain in a segregated account cash or other liquid
securities equal to the option price. These limitations on puts are fundamental
policies.

Debt Futures. The Government Fund, the Short-Term Government Fund, the
Convertibles Fund and the Global Bond Fund may buy and sell futures contracts on
debt securities ("Debt Futures"). When a Fund buys a Debt Future, it agrees to
take delivery of a specific type of debt security at a specific future date for
a fixed price; when it sells a Debt Future, it agrees to deliver a specific type
of debt security at a specific future date for a fixed price. Either obligation
may be satisfied by the actual taking, delivering or entering into an offsetting
Debt Future to close out the futures position. The above limitations are
fundamental policies; i.e., rules which may not be changed until the
shareholders of the Fund in question vote to change them.

Foreign Currency Transactions. Each of the Gold Fund, the Government Fund, the
Biotechnology Fund, the Technology Fund, the Convertibles Fund and the Global
Bond Fund may engage in purchasing and selling foreign currency and foreign
currency forward contracts to protect against uncertainty in the level of
futures currency exchange rates. The Global Bond Fund may also engage in foreign
currency options and foreign currency futures contracts for similar purposes.

Generally, the Funds may engage in both "transaction hedging" and "position
hedging." When it engages in transaction hedging, a Fund enters into foreign
currency transactions with respect to specific receivables or payables,
generally arising in connection with the purchase or sale of portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging a Fund will attempt to protect itself against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold, or on which the dividend or
interest payment is earned, and the date on which such payments are made or
received. When it engages in position hedging, a Fund enters into foreign
currency exchange transactions to protect against a decline in the values of the
foreign currencies in which its portfolio securities are denominated (or an
increase in the value of currency for securities which a Fund expects to
purchase).

PORTFOLIO TURNOVER

See the footnotes to the Financial Highlights table above for the definition of
a portfolio turnover rate and the caption "Portfolio turnover rate" in that
table for the turnover rates of the Funds. The Global Bond Fund anticipates that
its portfolio turnover rate generally will not exceed 200%. Murphy anticipates
the portfolio turnover rate for the Biotechnology Fund and the Convertibles Fund
for the fiscal year ending November 30, 1997 will approximate 150% and
thereafter generally not exceed 50%. High portfolio turnover (i.e., over 100%)
may involve correspondingly greater brokerage commissions and other transaction
costs, which are borne directly by the Funds. In addition, high portfolio
turnover may result in increased short-term capital gains which, when
distributed to shareholders, are treated as ordinary income. The portfolio
turnover rate of each of the Funds may vary significantly from year to year as a
result of the presence or absence of the defensive investment positions taken by
a Fund's investment adviser.

PRINCIPAL INVESTMENT RISKS

Puts, Calls and Futures. A Fund's use of puts, calls and futures contracts
involves investment risks and transaction costs to which it would not be subject
absent the use of these hedging instruments. In particular the loss from
investing in futures contracts and writing options is potentially unlimited.
Other risks include the possibility that a liquid secondary market may not exist
at a time when a Fund may wish to close out an option or futures position or can
only do so if it incurs substantial losses. The writing of put and call options
may result in losses to a Fund, force the purchase or sale, respectively, of
portfolio securities at inopportune times or for prices higher than (in the case
of purchases due to the exercise of put options) or lower than (in the case of
sales due to the exercise of call options) current market values, limit the
amount of appreciation a Fund can realize on its investments or cause a Fund to
hold a security it might otherwise sell. The use of currency transactions can
result in a Fund incurring losses as a result of a number of factors including
the imposition of exchange controls, suspension of settlements, or the inability
to deliver or receive a specified currency. The variable degree of correlation
between price movements of futures contracts and price movements in a Fund's
related portfolio position creates the possibility that losses on the hedging
instruments may be greater than gains in the value of a Fund's portfolio
position. Although the use of hedging instruments may minimize losses, they tend
to limit potential gains. The use of hedging instruments may increase the
volatility of a Fund's net asset value.

Repurchase Agreements. Each Fund may enter into repurchase agreements, which
basically involve the purchase by that Fund of debt securities and their resale
at an agreed-upon price. While each Fund intends to be fully "collateralized" as
to such agreements, if the person obligated to repurchase from that Fund
defaults or enters bankruptcy, there may be possible delays and expenses in
liquidating the securities, decline in their value and loss of interest. See the
Statement of Additional Information under "Repurchase Agreements."

U.S. Government Securities. The U.S. Government securities which each of the
Funds may purchase may involve obligations of agencies and instrumentalities
which are not backed by the full faith and credit of the United States; see the
Statement of Additional Information under "U.S. Government Securities." In such
cases, a Fund must look principally to the agency or instrumentality issuing or
guaranteeing the obligation for ultimate repayment and may not be able to assert
a claim against the United States itself in the event the agency or
instrumentality does not meet its commitment.

Mortgage-Backed Securities. A Fund's investment in certain Mortgage-Backed
Securities, such as interest only SMBS, may be extremely sensitive to changes in
prepayments and interest rates. Even though such securities have been guaranteed
by an agency or instrumentality of the U.S. Government, under certain interest
rate or prepayment rate scenarios, the Fund may fail to fully recover its
investment in such securities. See the discussion of Mortgage-Backed Securities
under "The Objective and Basic Portfolio of the Short-Term Government Fund."

In general, changes in both prepayment rates and interest rates will change
the yield on Mortgage-Backed Securities. The rate of principal prepayments with
respect to ARMs has fluctuated in recent years. As is the case with fixed rate
mortgage loans, ARMs may be subject to a greater rate of principal prepayments
in a declining interest rate environment. For example, if prevailing interest
rates fall significantly, ARMs could be subject to higher prepayment rates than
if prevailing interest rates remain constant because the availability of fixed
rate mortgage loans at competitive interest rates may encourage mortgagors to
refinance their ARMs to "lock-in" a lower fixed interest rate. Conversely, if
prevailing interest rates rise significantly, ARMs may prepay at lower rates
than if prevailing rates remain at or below those in effect at the time such
ARMs were originated. As with fixed rate mortgages, there can be no certainty as
to the rate of prepayments on the ARMs in either stable or changing interest
rate environments. In addition, there can be no certainty as to whether
increases in the principal balances of the ARMs due to the addition of deferred
interest may result in a default rate higher than that on ARMs that do not
provide for negative amortization. Other factors affecting prepayment of ARMs
include changes in mortgagors' housing needs, job transfers, unemployment,
mortgagors' net equity in the mortgage properties and servicing decisions.

A Fund's reinvestment of principal payments and prepayments received on a
mortgage pass-through security may be made at rates higher or lower than the
rate payable on such security, thus affecting the return realized by the Fund.
In addition, the receipt of interest payments monthly rather than semi-annually
by a Fund has a compounding effect that may increase the yield to the Fund
relative to debt obligations that pay interest semi-annually. Due to these
factors, Mortgage-Backed Securities may also be less effective than U.S.
Treasury securities of similar maturity at maintaining yields during periods of
changing interest rates. Prepayments may have a disproportionate effect on
certain Mortgage-Backed Securities such as SMBS and certain other multiple class
pass-through securities that purchase Mortgage-Backed Securities at a premium or
at a discount.

The market value of adjustable rate Mortgage-Backed Securities may be
adversely affected if interest rates increase faster than the rates of interest
payable on such securities or by the adjustable rate mortgage loans underlying
such securities. Furthermore, adjustable rate Mortgage-Backed Securities or the
mortgage loans underlying such securities may contain provisions limiting the
amount by which rates may be adjusted upward and downward and may limit the
amount by which monthly payments may be increased or decreased to accommodate
upward and downward adjustments in interest rates.

Certain adjustable rate mortgage loans may provide for periodic adjustments
of scheduled payments in order to fully amortize the mortgage loan by its
stated maturity. Other adjustable rate mortgage loans may permit such stated
maturity to be extended or shortened in accordance with the portion of each
payment that is applied to interest in accordance with the periodic interest
rate adjustments.

Although having less risk of decline during periods of rising interest rates,
adjustable rate Mortgage-Backed Securities have less potential for capital
appreciation than fixed rate Mortgage-Backed Securities because their coupon
rates will decline in response to market interest rate declines. The market
value of fixed rate Mortgage-Backed Securities may be adversely affected as a
result of increases in interest rates and, because of the risk of principal
prepayments, may benefit less than other fixed rate securities of similar
maturity from declining interest rates. Finally, to the extent Mortgage-Backed
Securities are purchased at a premium, mortgage foreclosures and unscheduled
principal prepayments may result in some loss of a Fund's principal investment
to the extent of the premium paid. On the other hand, if the securities are
purchased at a discount, both a scheduled payment of principal and an
unscheduled prepayment of principal will increase current and total returns and
will accelerate the recognition of income.

General Risks. Other risks are that PIA, Murphy or Orrell, as the case may be,
would be incorrect in its expectations as to the extent of various movements in
securities prices or the time within which the movements take place.

PRINCIPAL INVESTMENT RESTRICTIONS

The Trust is subject to certain investment restrictions which are fundamental
policies that cannot be changed without the approval of the holders of a
"majority," as defined in the Investment Company Act of 1940 (the "1940 Act"),
of the shares of the Fund as to which the policy change is being sought. Each
Fund's investment objective is such a policy, as are the policies as to hedging
instruments indicated above as being fundamental policies. Among the Trust's
other restrictions, (i) none of the Funds may purchase more than 10% of the
outstanding voting securities, or of any class of securities, of any one issuer,
(ii) each of the Gold Fund, the Equity Fund, the Biotechnology Fund, the
Convertibles Fund, the Global Bond Fund and the Technology Fund may not, with
respect to 50% of its assets, invest more than 5% of its total assets in the
securities of any one issuer (other than U.S. Government securities), (iii) the
Equity Fund, the Technology Fund, the Short-Term Government Fund, the Government
Fund and the Convertibles Fund may not purchase any security if as a result 25%
or more of its total assets would be invested in securities of issuers in a
single industry, and (iv) the Short-Term Government Fund, the Government Fund
and the Equity Fund may not purchase any security restricted as to disposition
under federal securities laws. The Government Fund and the Short-Term Government
Fund are "diversified" as defined in the 1940 Act due to their policies of
investing primarily in a diversified portfolio of common stocks and U.S.
Government securities, respectively. The Gold Fund, the Equity Fund, the
Biotechnology Fund, the Convertibles Fund, the Global Bond Fund and the
Technology Fund are "non-diversified" under the 1940 Act but each of such Funds
must meet a diversification test as to 50% of its assets under the Code.
Additional information about, and a more detailed statement of, the Trust's
investment restrictions is contained in the Statement of Additional Information.

In addition, due to requirements of the Commodities Futures Trading
Commission, the Funds when using Futures or options on them will purchase or
sell Futures, or options on them, only for hedging purposes (except that
nonhedging positions may be established if the initial margin and premiums
required to establish such positions do not exceed 5% of a Fund's net assets),
and otherwise within the limits of a Rule of that Commission.

As indicated above the Funds will, in a number of situations, maintain in a
segregated account or accounts with its custodian cash or other liquid assets in
the amounts indicated. Maintenance of such segregated accounts reflect
regulatory restrictions on the Trust and are not fundamental policies; that is,
such policies could change if the regulatory requirements change without any
vote of shareholders as to such change.

As discussed in the Statement of Additional Information, each Fund may,
within limits, engage in short sales but, except for the Biotechnology Fund, the
Technology Fund and the Convertibles Fund, only those which are "against the
box."

MANAGEMENT

The Trust's Board of Trustees decides on matters of general policy and reviews
the activities of PIA, Murphy, Orrell and Camborne, the Administrator and the
Distributor, and the Trust's officers conduct and supervise the daily business
operations of the Trust.

Pacific Income Advisers, Inc. ("PIA"), 1299 Ocean Avenue, Suite 210, Santa
Monica, CA 90401, acts as investment adviser to the Government Fund, the Equity
Fund, the Short-Term Government Fund and the Global Bond Fund, subject to the
control of the Trust's Board of Trustees, and supervises and arranges the
purchase and sale of securities held in the portfolio of the Government Fund,
the Equity Fund, the Short-Term Government Fund and the Global Bond Fund, and
their use of hedging instruments. The organizational arrangements of PIA are
such that all investment decisions are made by a committee and no persons are
primarily responsible for making recommendations to that committee. Joseph Lloyd
McAdams, Jr. and Heather U. Baines own all of the outstanding stock of PIA.

Camborne Advisors, Inc. ("Camborne"), 10670 N. Central Expressway, Suite 405,
Dallas, Texas 75231 acts as sub-adviser to the Government Fund. As such Camborne
furnishes regular advice to PIA regarding those economic and market factors
which influence the decision of PIA as to the securities and hedging instruments
to be purchased and sold for the Government Fund. Camborne will also from time
to time provide advice as to transactions in specific securities. Although
Camborne will provide investment advice to PIA, PIA will make the final decision
as to the securities and hedging instruments to be purchased and sold for the
Government Fund. Camborne is a privately held corporation which is wholly-owned
by Camborne Investment Corporation. Camborne is a newly formed investment
advisory firm with no prior experience in managing the investment portfolio of a
registered investment company.

Murphy Investment Management, Inc. ("Murphy"), 2830 North Cabrillo Highway,
Half Moon Bay, CA 94019 acts as investment adviser to the Technology Fund, the
Biotechnology Fund and the Convertibles Fund, subject to the control of the
Trust's Board of Trustees, and supervises and arranges the purchase and sale of
securities held in the portfolio of the Technology Fund, the Biotechnology Fund
and the Convertibles Fund and their use of hedging instruments. John Michael
Murphy, the President of Murphy, is primarily responsible for making these
decisions. Mr. Murphy has been a portfolio manager since 1973 and a securities
analyst since 1970. He has been the president of an investment newsletter
publisher since 1981. John Michael Murphy and Gaye Elizabeth Morgenthaler own
all of the outstanding stock of Murphy.

Orrell Capital Management, a division of Orrell and Company, Inc. ("Orrell"),
120 Montgomery Street, Suite 1230, San Francisco, CA 94104 acts as investment
adviser to the Gold Fund, subject to the control of the Trust's Board of
Trustees, and supervises and arranges the purchase and sale of securities held
in the portfolio of the Gold Fund and its use of hedging instruments. Gregory M.
Orrell, the President of Orrell, is primarily responsible for making these
decisions. Mr. Orrell has been President of Orrell since 1984.

PIA became the investment adviser to the Government Fund on October 31, 1992,
to the Short-Term Government Fund on March 31, 1994, to the Equity Fund on
December 13, 1996 and to the Global Bond Fund on March 31, 1997. Prior to
December 13, 1996, Monitrend Investment Management, Inc. ("MIMI") was investment
adviser to the Equity Fund and Robert L Bender, Inc. was sub-adviser to the
Equity Fund and prior to November 1, 1992 MIMI was investment adviser to the
Government Fund. Camborne became sub-adviser to the Government Fund on December
13, 1996. Murphy became investment adviser to the Technology Fund on December
13, 1996, the Biotechnology Fund on December 20, 1996 and the Convertibles Fund
on December 31, 1996. Prior thereto MIMI was investment adviser to the
Biotechnology Fund and the Technology Fund, MidCap Associates, Inc. was
investment adviser to the Convertibles Fund, Murphy was sub-adviser to the
Technology Fund and MIMI was sub-adviser to the Convertibles Fund. Prior to
December 13, 1996 MIMI was investment adviser to the Gold Fund.

Under the Agreements applicable to the Government Fund, the Trust pays PIA
fees, computed daily and payable monthly, at an annual rate of 0.40% of the
Government Fund's daily net assets; and PIA pays Camborne a fee computed daily
and paid monthly at an annual rate of 0.20% of the Government Fund's daily net
assets.

Under the Investment Advisory Agreement applicable to the Convertibles Fund,
the Trust pays Murphy total fees, computed daily and payable monthly, at the
following annual rates based on daily net assets:

ASSETS FEE RATE
0 to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%

Under the Investment Advisory Agreement applicable to the Gold Fund, the
Trust pays Orrell fees, computed daily and payable monthly, at the following
annual rates based on daily net assets:

ASSETS FEE RATE
0 to $50 million 1%
$50 million to $75 million 0.875%
$75 million to $100 million 0.75%
$100 million to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%

Under the Investment Advisory Agreement applicable to the Equity Fund, the
Trust pays PIA a fee, computed daily and payable monthly, at the following
annual rate based on daily net assets:

ASSETS FEE RATE
0 to $50 million 1%
$50 million to $75 million 0.875%
$75 million to $100 million 0.75%
$100 million to $150 million 0.625%
$150 million to $250 million 0.50%
Over $250 million 0.375%

Under the Investment Advisory Agreement applicable to the Biotechnology Fund,
the Trust pays Murphy a fee, computed daily and payable monthly, at the annual
rate of 1.00% of the Biotechnology Fund's daily net assets. (Prior to December
20, 1996 the investment advisory fee payable to MIMI was computed daily and
payable monthly at the annual rate of 1.25% of daily net assets.) Under the
Investment Advisory Agreement applicable to the Technology Fund, the Trust pays
Murphy a fee, computed daily and payable monthly, at the annual rate of 1% of
the Technology Fund's daily net assets. Under the Investment Advisory Agreement
applicable to the Short-Term Government Fund, the Trust pays PIA a fee, computed
daily and payable monthly, at the annual rate of 0.20% of the Short-Term
Government Fund's daily net assets. (Prior to December 13, 1996, the investment
advisory fee payable to PIA was computed daily and paid monthly at the annual
rate of 0.35% of daily net assets.) Under the Investment Advisory Agreement
applicable to the Global Bond Fund, the Trust pays PIA a fee compounded daily
and paid monthly at the annual rate of 0.40% of the Global Bond Fund's daily net
assets.

In addition to the fees payable to PIA, Murphy and Orrell, the Trust, as to
each Fund, is responsible for each Fund's operating expenses, including: (i)
interest and taxes; (ii) brokerage commissions; (iii) insurance premiums; (iv)
compensation and expenses of Trustees other than those affiliated with PIA or
Murphy; (v) legal and audit expenses; (vi) fees and expenses of the Trust's
Administrator, custodian, shareholder servicing or transfer agent and accounting
services agent; (vii) expenses incident to the issuance of its shares, including
issuance on the payment of, or reinvestment of, dividends; (viii) fees and
expenses incident to the registration under federal or state securities laws of
the Trust or its shares; (ix) expenses of preparing, printing and mailing
reports and notices and proxy material to shareholders of the Trust; (x) all
other expenses incidental to holding meetings of the Trust's shareholders; (xi)
dues or assessments of or contributions to the Investment Company Institute or
any successor; (xii) such non-recurring expenses as may arise, including
litigation affecting the Trust and the legal obligations which the Trust may
have to indemnify its officers and Trustees with respect thereto; and (xiii) all
expenses which the Trust agrees to bear in any distribution agreement or in any
plan adopted by the Trust pursuant to Rule 12b-1 under the 1940 Act. See the
Statement of Additional Information for the expense limitation in the Agreements
and their provisions as to the allocation of portfolio transactions, including
provisions which authorize PIA, Murphy and Orrell to consider sales of shares as
a factor in the selection of brokers and dealers to execute portfolio
transactions and which authorize PIA, Murphy and Orrell to direct the Funds to
pay brokerage commission to Syndicated Capital, Inc., the Distributor of each of
the Funds and an affiliate of PIA.

THE ADMINISTRATOR

American Data Services, Inc., a corporation organized under the laws of the
State of New York, administers the day to day operations of each Fund and serves
as fund accountant to each Fund, subject to the overall supervision of the
Trust's Board of Trustees. The Administrator maintains each Fund's books and
records, other than those records maintained by the Fund's custodian, oversees
the Trust's insurance relationships, participates in the preparation of tax
returns, proxy statements and reports, prepares documents necessary for the
maintenance of the Trust's registration with the various states, responds or
oversees the response to communications from shareholders and broker-dealers,
oversees relationships between the Trust and its custodian, determines each
Fund's net asset value and directs any of the Administrator's directors,
officers or employees who may be elected as officers of the Trust to serve as
such. For its services as administrator and fund accountant, the Administrator
is paid a fee, computed daily and paid monthly, by each Fund at the rate of
0.10% per year of the average daily net assets of that Fund, subject to a
minimum monthly fee of approximately $1,072 per Fund.

See the Statement of Additional Information for more information as to the
Trust's Board of Trustees, officers and principal shareholders, PIA, Murphy,
Orrell, Camborne, and the Administrator.

HOW TO PURCHASE SHARES

Syndicated Capital, Inc., 1299 Ocean Avenue, Suite 210, Santa Monica, CA 90401,
is the Distributor of each Fund's shares. Shares of each Fund may be purchased
through brokers or dealers ("selected dealers") who have a sales agreement with
the Distributor at the offering price next determined after receipt of an order
in proper form; see "Net Asset Value." In certain circumstances, selected
dealers may be deemed "underwriters," in the opinion of the staff of the
Securities and Exchange Commission, for the purposes of the Securities Act of
1933. The offering price is the net asset value per share of the Fund the shares
of which are being purchased, plus a sales charge. The Short-Term Government
Fund, the Technology Convertibles Fund, the Biotechnology Fund, the Technology
Fund and the Global Bond Fund do not impose a sales charge. For these Funds, the
offering price is equal to the net asset value per share.

GOLD FUND, GOVERNMENT FUND AND EQUITY FUND PURCHASES

The following table shows the amount of the sales charge to a "person" (defined
below) together with the dealer discount paid to dealers and agency commissions
paid to brokers (collectively, the "commissions") with respect to purchases of
the Gold Fund, the Government Fund and the Equity Fund:

SALES CHARGE AS COMMISSIONS
PERCENTAGE OF AS
OFFERING AMOUNT PERCENTAGE OF
AMOUNT OF PURCHASE PRICE INVESTED OFFERING PRICE
- ------------------ -------- --------- --------------

Less than $100,000 4.50% 4.71% 4.00%
$100,000 to $249,999 3.00 3.09 2.75
$250,000 to $499,999 2.50 2.56 2.25
$500,000 to $999,999 2.00 2.04 1.75
$1,000,000 or more 0 0 0

In addition to the commissions shown in the table above, the Distributor may
from time to time pay a bonus or other incentive to dealers which employ a sales
representative who sells a minimum dollar amount of shares of a Fund during a
specific time. Such bonus or other incentive may take the form of payment for
travel expenses, including lodging, incurred in connection with trips taken by
qualifying registered representatives and members of their families to places
within or without the United States. In no event will the value of such bonus or
other incentive paid by the Distributor to the dealer exceed the difference
between the sales charges and the concessions to dealers in respect of shares of
the Fund and/or such other funds sold by the qualifying registered
representative of such dealer.

Reduced sales charges apply to purchases of shares of the Gold Fund, the
Government Fund and the Equity Fund made at any one time by a "person," which
means an individual, or an individual, his or her spouse and children under the
age of twenty one, purchasing securities for his, her or their own accounts, or
a trustee or other fiduciary purchasing securities for a single trust estate or
fiduciary account. In addition, purchases of shares of the Gold Fund, the
Government Fund and the Equity Fund made during a thirteen month period pursuant
to a written Statement of Intent are also eligible for a reduced sales charge.
Reduced sales charges are also applicable to subsequent purchases by a "person,"
based on the aggregate of the amount currently being invested and the value at
offering price of shares owned at the time of the subsequent investment.
Information about a Statement of Intent as well as the terms of reduced sales
charges for fiduciaries is available in the Statement of Additional Information
or from the Distributor.

Investors may purchase shares of the Gold Fund, the Government Fund and the
Equity Fund at net asset value to the extent that this investment represents the
proceeds from the redemption, within the previous sixty days, of shares or
interests (the purchase price of which shares included a sales charge) of
another mutual fund or a commodity pool. When making a purchase at net asset
value pursuant to this provision, the investor should forward to the Trust's
transfer agent either (i) the redemption check representing the proceeds of the
shares redeemed, endorsed to the order of the Trust (i.e., Monterey Mutual Fund)
and indicating which Fund's shares are being purchased, or (ii) a copy of the
confirmation from the other fund, showing the redemption transaction.

Former shareholders of the Gold Fund, the Government Fund and the Equity Fund
may purchase shares of the Gold Fund, the Government Fund and the Equity Fund at
net asset value up to an amount not exceeding their prior investment in all of
such Funds. When making a purchase at net asset value pursuant to this
provision, the former shareholder should forward to the Trust's transfer agent a
copy of an account statement showing the prior investment in these Funds.

The Trust also permits its officers and Trustees and members of their
families, and officers, directors, consultants to and employees of PIA and its
affiliates, Murphy, Orrell, Camborne, the Distributor and selected dealers and
members of their families as well as customers of PIA and its affiliates,
Murphy, Orrell, Camborne or the Distributor to invest in the Gold Fund, the
Government Fund and the Equity Fund at net asset value. (Partners of
partnerships for which any of the foregoing or their affiliates is a general
partner are considered to be customers.) In addition, certain publishers of
investment advisory newsletters and their subscribers and certain investment
advisers on behalf of their discretionary accounts, may invest at net asset
value. See the Statement of Additional Information.

ALL FUNDS PURCHASES

The minimum initial investment in each of the Funds is $1,000 except for
qualified retirement plans, for which the minimum initial investment is $100.
Investors who initiate a pre-authorized check plan may also open an account with
a minimum investment of $100. The minimum subsequent investment for all accounts
is $50. The Distributor reserves the right to reject any order.

Purchase orders may either be placed with selected dealers or submitted to
the Trust's custodian, as follows:

PURCHASE PLACED WITH SELECTED DEALERS

Selected dealers may place orders for shares of any Fund on behalf of clients at
the offering price next determined after receipt of the client's order by
calling the Distributor. If the order is placed by a client with a dealer prior
to 4:00 p.m. Eastern time on any day the New York Stock Exchange is open for
trading, and forwarded to the Distributor prior to 6:00 p.m. Eastern time on
that day, it will be confirmed to the selected dealer at the applicable offering
price determined that day. The selected dealer is responsible for placing
purchase orders promptly with the Distributor and for forwarding payment within
three business days.

PURCHASES THROUGH PROCESSING INTERMEDIARIES

Investors may purchase shares of the Funds at net asset value through programs
of services offered or administered by broker-dealers, financial institutions or
other service providers ("Processing Intermediaries") that have entered into
agreements with the Trust. Such Processing Intermediaries may become
shareholders of record and may use procedures and impose restrictions in
addition to or different from those applicable to investors who invest directly
in the Funds or by placing orders with selected dealers. Certain services of the
Funds may not be available or may be modified in connection with the programs
provided by Processing Intermediaries. The Funds may only accept requests to
purchase additional shares into an account in which the Processing Intermediary
is the shareholder of record from the Processing Intermediary. Processing
Intermediaries may charge fees or assess other charges for the services they
provide to their customers. Any such fee or charge paid directly by shareholders
is retained by the Processing Intermediary and is not remitted to the Funds, the
Distributor or any investment adviser. Additionally investment advisers, the
Distributor and/or the Funds may pay fees to Processing Intermediaries to
compensate them for the services they provide. Program materials provided by the
Processing Intermediary should be read in conjunction with the Prospectus before
investing in this manner. Shares of the Funds may be purchased through
Processing Intermediaries without regard to a Fund's minimum purchase
requirement.

The Funds may authorize one or more Processing Intermediaries (and other
Processing Intermediaries properly designated thereby) to accept purchase orders
on the Funds' behalf. In such event, a Fund will be deemed to have received a
purchase order when the Processing Intermediary accepts the customer order, and
the order will be priced at the Fund's net asset value next computed after it is
accepted by the Processing Intermediary.

PURCHASE SENT TO THE CUSTODIAN

Investors may mail an application form indicating the shares of which Fund are
to be purchased, together with a check payable to "Monterey PIA Short-Term
Government Fund," "Monterey Camborne Government Income Fund," "Monterey OCM Gold
Fund," "Monterey PIA Equity Fund," "Monterey Murphy New World Biotechnology
Fund," "Monterey Murphy New World Technology Fund," "Monterey Murphy New World
Technology Convertibles Fund" or "Monterey PIAGlobal Bond Fund" as appropriate,
directly to the Trust's custodian, at the following address:

Monterey Mutual Funds
P.O. Box 640284
Cincinnati, OH 45264-0284

If the purchase being made is a subsequent investment, the shareholder should
send a stub from a confirmation previously sent by the transfer agent in lieu of
the application form. If no such stub is available, a brief letter giving the
registration of the account, the name of the Fund the shares of which are being
purchased and the account number should accompany the check. In addition, the
shareholder's account number should be written on the check. Checks do not need
to be certified but are accepted subject to face value in United States dollars
and must be drawn on United States banks. American Data Services, Inc. will
charge a $15 fee against a shareholder's account for any payment check returned
to the custodian. The shareholder will also be responsible for any losses
suffered by a Fund as a result.

Shares of the Equity Fund, the Government Fund and the Gold Fund will be
purchased for the account of the investor by the transfer agent as agent for the
investor's selected dealer at the offering price next determined after receipt
by the custodian of the check together with the appropriate form or other
identifying information.

EXCHANGE PRIVILEGE AND OTHER SERVICES

Shares of the Short-Term Government Fund, the Global Bond Fund, the
Biotechnology Fund, the Convertibles Fund and the Technology Fund may be
exchanged for shares of any other Fund (except shares of the Equity Fund, the
Gold Fund and the Government Fund), and shares of the Gold Fund, the Equity Fund
and the Government Fund may be exchanged for shares of any Fund based on their
respective net asset values. See "How to Redeem Shares." The Funds have recently
terminated an exchange arrangement with Portico Money Market Fund and Portico
Tax-Exempt Money Market Fund. Shareholders who have used this arrangement and,
as a result, hold shares in the Portico Money Market Fund or Portico Tax-Exempt
Fund may, at their election, make one final exchange of the Portico shares for
shares of any of the Monterey Funds at net asset value. The Trust is currently
seeking to establish exchange privilege arrangements with another money market
fund but had not finalized such an arrangement as of the date of this
Prospectus.

A shareholder who has completed the appropriate section of the application
form may give instructions to make an exchange by calling the transfer agent at
(800) 628-9403 between 9:00 a.m. and 4:00 p.m. Eastern time on days the New York
Stock Exchange is open. Exchanges are subject to the minimum investment
requirements of the fund into which the exchange is being made, and such fund
may reject any exchange for its shares. Furthermore, exchanges will be made only
in those states where they may legally be made. For federal tax purposes, an
exchange is a taxable transaction upon which a gain or loss may be realized.
Shareholders should read the prospectus of the Fund into which an exchange is
being made, which may be obtained from selected dealers or the Distributor.

The Trust offers additional services to investors, including plans for the
systematic investment and withdrawal of money as well as prototype retirement
programs. Information about these services is also available in the Statement of
Additional Information or from the Distributor.

NET ASSET VALUE

Each Fund's net asset value per share is determined on each day that the New
York Stock Exchange is open for trading, as of the close of such trading. The
net asset value per share is the value of that Fund's assets, less its
liabilities, divided by the number of shares outstanding of that Fund. The value
of that Fund's portfolio securities will be the market value of such securities.
See the Statement of Additional Information for further information.

DISTRIBUTION PLAN

The Trust's Board of Trustees has adopted a Distribution Plan and Agreement (the
"Plan") under Section 12(b) of the 1940 Act and Rule 12b-1 thereunder applicable
to each Fund (other than the Global Bond Fund). In approving the Plan, the
Trustees determined, in the exercise of their business judgment and in light of
their fiduciary duties, that there is a reasonable likelihood that the Plan will
benefit that Fund and its shareholders.

Pursuant to the Plan, broker-dealers and others, such as banks ("Qualified
Recipients"), that have rendered distribution assistance (whether direct,
administrative or both) may receive fees at rates determined by the Trust's
Trustees. Currently the Gold Fund may pay broker-dealers fees at a rate not to
exceed 0.99% per annum of the average daily net asset value of the Fund's shares
beneficially owned by the broker-dealer or its clients. Of such fees, 0.25% per
annum constitutes a service fee for purposes of the Rules of Fair Practice of
the NASD and the remaining fees constitute an asset-based sales charge. All
payments by the Equity Fund, Government Fund, Short-Term Government Fund,
Biotechnology Fund, Technology Fund and Convertibles Fund to Qualified
Recipients are service fees. In addition, the Distributor is authorized to
purchase advertising, sales literature and other promotional material and to pay
its own salespeople. Each Fund will reimburse the Distributor for these
expenditures during a fiscal year of the Fund and for fees paid to Qualified
Recipients during a fiscal year of the Fund, up to a limit of 0.99% on an annual
basis of that Fund's daily net assets (0.25% for the Equity Fund, Biotechnology
Fund, Technology Fund and the Convertibles Fund, 0.10% for the Government Fund
and 0.05% for the Short-Term Government Fund); no such reimbursement will be
made for expenditures or fees for fiscal years prior to the fiscal year in
question or in contemplation of future fees or expenditures. In addition, if and
to the extent that the fee the Trust pays the investment adviser pursuant to the
Investment Advisory Agreement applicable to that Fund as well as other payments
it makes are considered as indirectly financing any activity which is primarily
intended to result in the sale of that Fund's shares, such payments are
authorized under the Plan. In addition to payments received pursuant to the
Plan, Qualified Recipients which are selected dealers will receive a portion of
the sales charge on any sale by them of Fund shares (see above), may charge
commissions on redemptions and repurchases of Fund shares (see below) and may
receive commissions on Fund portfolio transactions subject to the provisions of
the Investment Advisory Agreements (see the Statement of Additional
Information).

HOW TO REDEEM SHARES

Each Fund will redeem for cash all of its full and fractional shares at the net
asset value per share next determined after receipt of a repurchase order or
redemption request in proper form, as described below.

REPURCHASES

The Trust has appointed the Distributor as its agent to repurchase shares of
each Fund at net asset value. Selected dealers may place orders for the
repurchase of shares of any Fund on behalf of clients by calling the
Distributor. If the order is placed by a client with a dealer prior to 4:00 p.m.
Eastern time on any day the New York Stock Exchange is open for trading, and
forwarded to the Distributor prior to 6:00 p.m. Eastern time on that day, it
will be confirmed to the selected dealer at the net asset value determined that
day. The selected dealer is responsible for placing repurchase orders promptly
with the Distributor and for forwarding stock certificates, stock powers and
other necessary documents within three business days. The transfer agent will
transmit payment for shares repurchased promptly upon receipt of the required
documents. Payment will be sent to the selected dealer or the shareholder, as
specified by the selected dealer's instructions. Selected dealers may charge a
commission for effecting repurchases, which charge may be avoided by an
investor's redeeming shares directly, as described below.

REDEMPTIONS

A shareholder wishing to redeem shares may do so at any time by writing to the
Trust in care of its transfer agent at American Data Services, Inc., P.O. Box
5536, Hauppauge, NY 11788 or by delivering instructions to the transfer agent at
such address. The instructions should specify the name of the Fund, the number
of shares to be redeemed and be signed by all registered owners exactly as the
account is registered; it will not be accepted unless it includes all required
documents in proper form, as described below.

PROPER FORM

In addition to written instructions, if any shares being redeemed or repurchased
are represented by stock certificates, the certificates must be surrendered. The
certificates must either be endorsed or accompanied by a stock power signed by
the registered owners, exactly as the certificates are registered. Unless a
shareholder has completed the appropriate section of the application form, the
signatures on the certificates or stock powers, as well as the signatures on any
redemption request concerning shares not represented by certificates, must be
guaranteed by a member of a national securities exchange, commercial bank or
other eligible guarantor institution. A signature guarantee is not the same as
notarization, and an acknowledgment by a notary public is not acceptable as a
substitute for a signature guarantee. Additional documents may be required from
corporations or other organizations, fiduciaries or anyone other than the
shareholder of record. Any questions concerning documents needed should be
directed to (800) 628-9403.

TELEPHONE REDEMPTIONS

Shareholders may redeem shares by telephone. To redeem shares by telephone, a
shareholder must check the appropriate box on the application form as the Trust
does not make this feature available to shareholders automatically. Once this
feature has been requested, shares may be redeemed by phoning the transfer agent
at (800) 628-9403 and giving the account name, account number and either the
number of shares or the dollar amount to be redeemed. Proceeds redeemed by
telephone will be mailed to the shareholder's address as shown on the records of
the Trust.

In order to arrange for telephone redemptions after a Fund account has been
opened, a written request must be sent to the transfer agent. The request must
be signed by each registered holder of the account with the signatures
guaranteed by a commercial bank or trust company in the United States, a member
firm of the New York Stock Exchange or other eligible guarantor institution.
Further documentation may be requested from corporations, executors,
administrators, trustees and guardians.

The Trust reserves the right to refuse a telephone redemption if it believes
it is advisable to do so. Procedures for redeeming shares of any Fund by
telephone may be modified or terminated by the Trust at any time. None of the
Trust, the Custodian or the transfer agent will be liable for following
instructions for telephone redemption transactions which they reasonably believe
to be genuine even if such instructions prove to be unauthorized or fraudulent.
They will employ reasonable procedures to confirm that instructions received by
telephone are genuine, including requiring the shareholder to provide the
shareholder's account number to verify ownership, tape recording all
instructions and providing written confirmation of such instructions, and if
they do not, they may be liable for losses due to unauthorized or fraudulent
instructions.

Shareholders should be aware that during periods of substantial economic or
market change, telephone redemptions may be difficult to implement. If an
investor is unable to contact the transfer agent by telephone, shares may also
be redeemed by delivering the redemption request to the transfer agent by mail
as described above.

SHAREHOLDER CHECKING PRIVILEGES

Shareholders of the Short-Term Government Fund may request on the application
form or by later written request that the Short-Term Government Fund provide
Shareholder Checks drawn on their Short-Term Government Fund accounts to effect
a redemption of shares. Shareholder Checks may be made payable to the order of
any person or entity in the amount of $500 or more. Potential fluctuations in
the net asset value of the Short-Term Government Fund's shares should be
considered in determining the amount of the check. Shareholder Checks should not
be used to close a shareholder's account. Shareholder Checks are free, but Star
Bank, N.A. will impose a fee for stopping payment of a Shareholder Check upon a
shareholder's request or if Star Bank, N.A. cannot honor a Shareholder Check due
to insufficient funds or other valid reason. Shares for which certificates have
been issued may not be redeemed by Shareholder Check. Shares held under any
Keogh Plans, IRAs or other retirement plans are not eligible for this privilege.
This privilege is only available to shareholders of the Short-Term Government
Fund and may be modified or terminated at any time by the Short-Term Government
Fund or Star Bank, N.A. upon notice to shareholders.

REDEMPTION THROUGH PROCESSING INTERMEDIARIES

Shares purchased through programs of services offered or administered by
Processing Intermediaries that have entered into agreements with the Trust may
be required to be redeemed through such programs. Such Processing Intermediaries
may use procedures and impose restrictions in addition to or different from
those applicable to shareholders who redeem shares directly with the Trust or
have their shares repurchased through selected dealers. The Funds may accept
redemption requests from an account in which the Processing Intermediary is the
shareholder of record only from the Processing Intermediary.

The Funds may authorize one or more Processing Intermediaries (and other
Processing Intermediaries properly designed thereby) to accept redemption
requests on the Funds' behalf. In such event, a Fund will be deemed to have
received a redemption request when the Processing Intermediary accepts the
customer request, and the redemption price will be the Fund's net asset value
next computed after the customer redemption request is accepted by the
Processing Intermediary.

PAYMENTS

Payment for shares tendered will be made within seven days after receipt by the
transfer agent of instructions, certificates, if any, and other documents, all
in proper form. However, payment may be delayed under unusual circumstances, as
specified in the 1940 Act or as determined by the Securities and Exchange
Commission. Payment may also be delayed for any shares purchased by check for a
reasonable time (not to exceed 15 days from purchase date) necessary to
determine that the purchase check will be honored.

The Short-Term Government Fund will arrange for the proceeds of redemptions
effected by any means to be wired as Federal Funds to the bank account
designated in the shareholder's Account Information Form. Redemption proceeds
will normally be wired on the next Business Day in Federal Funds (for a total
one-day delay) but may be paid up to seven (7) days after receipt of a properly
executed redemption request. Wiring of redemption proceeds may be delayed one
additional Business Day if the Federal Reserve Bank is closed on the day
redemption proceeds would ordinarily be wired. In order to change the bank
designated on the Account Information Form to receive redemption proceeds, a
written request must be received by the Transfer Agent. This request must be
signature guaranteed as set forth above. Further documentation may be required
for executors, trustees or corporations. Once wire transfer instructions have
been given, none of the Short-Term Government Fund, the Custodian or the
Transfer Agent shall assume any further responsibility for the performance of
intermediaries of the shareholder's bank in the transfer process. If a problem
with such performance arises, the shareholder should deal directly with such
intermediaries or bank.

REDEMPTION IN KIND

If the Board of Trustees determines that it would be detrimental to the best
interests of the remaining shareholders of any Fund to make payment wholly or
partly in cash, the Trust may pay the redemption price in whole or in part by a
distribution in kind of securities from the portfolio of that Fund, in lieu of
cash, in conformity with applicable rules of the Securities and Exchange
Commission. The Trust, however, has elected to be governed by Rule 18f-1 under
the 1940 Act pursuant to which the Trust is obligated to redeem shares of any
Fund solely in cash up to the lesser of $250,000 or one percent of the net
assets of that Fund during any 90 day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, the Trust will have the
option of redeeming the excess in cash or in kind. If shares are redeemed in
kind, the distribution would be made in readily marketable securities upon
satisfaction of Rule 18f-1 under the 1940 Act and the redeeming shareholder
would incur brokerage costs in converting the assets into cash.

REDEMPTION OF SMALL ACCOUNTS

The Board of Trustees may, in order to reduce the expenses of a Fund, redeem all
of the shares of any shareholder (other than a qualified retirement plan) whose
account has declined to a net asset value of less than $500, as a result of a
transfer or redemption, at the net asset value determined as of the close of
business on the business day preceding the sending of notice of such redemption.
The Trust would give shareholders whose shares were being redeemed 60 days'
prior written notice in which to purchase sufficient shares to avoid such
redemption.

DIVIDENDS AND TAX STATUS

Each Fund is treated as a separate entity for purposes of determining federal
tax treatment. The Trust intends for each Fund to qualify as a "regulated
investment company'' under Subchapter M of the Code and thus not be subject to
federal income taxes on amounts which it distributes to its shareholders. Each
so qualified during the last fiscal year.

All dividends from net investment income, together with distributions of
short-term capital gains (collectively, "income dividends"), will be taxable as
ordinary income to the shareholders, whether or not paid in additional shares.
The Convertibles Fund, the Gold Fund, the Equity Fund, the Biotechnology Fund
and the Technology Fund expect to pay income dividends annually, and the Global
Bond Fund, the Short-Term Government Fund and the Government Fund expect to pay
income dividends monthly.

The daily net investment income of the Short-Term Government Fund is declared
as a dividend each day to shareholders of record. Shares purchased will begin
earning dividends the first business day following the day the purchase becomes
effective. Redeemed shares will participate in the dividend declared on the day
of redemption. If all shares in an account are redeemed, dividends credited to
the account since the beginning of the dividend period through the date of
redemption will be paid with the redemption proceeds. If less than all such
shares are redeemed, all dividends accrued but unpaid on the redeemed shares
will be distributed on the next payment date. For the purpose of calculating
dividends, net investment income consists of income accrued on portfolio assets,
less accrued expenses. Income earned on weekends, holidays and other days on
which the net asset value is not calculated will be declared as a dividend in
advance on the preceding business day.

Each Fund expects to pay an annual distribution of long-term capital gains
realized, if any. Such capital gains dividends will be taxable to shareholders
as net long-term capital gains, regardless of the length of time a shareholder
has owned his shares. Under current law, long-term capital gains, short-term
capital gains and ordinary income recognized by corporate shareholders are
subject to the same maximum federal income tax rate of 35%. However, for
noncorporate shareholders, long-term capital gains will be taxed in accordance
with the applicable tax rates in effect at the time of distribution. The
Taxpayer Relief Act of 1997 provides for a three-tiered tax rate structure for
long-term capital gains dependent upon the holding period of the underlying
financial instrument or capital asset. Ordinary income recognized by
noncorporate shareholders is subject to a maximum federal income tax rate of
39.6%. In addition, both corporate and noncorporate shareholders are subject to
limitations on the extent to which capital losses may be deducted from ordinary
income. For the convenience of investors, all dividends and distributions are
paid in full and fractional shares of the Fund making the payment based on the
net asset value per share at the close of business on the record date, unless
the shareholder has previously notified the transfer agent that dividends are to
be paid in cash. Dividends and distributions received in January of any calendar
year will be treated for tax purposes as if received in the prior calendar year,
if declared in October, November or December to shareholders of record in such
month. The Trust will notify each shareholder after the close of its fiscal year
both of the dollar amount and the tax status of that year's dividends and
distributions. Dividends and capital gains distributions may also be subject to
state and local or foreign taxes. A state income (and possibly local income
and/or intangible property) tax exemption is generally available to the extent,
if any, a Fund's distributions are derived from interest on (or, in the case of
intangible taxes, the value of its assets is attributable to) certain U.S.
Government obligations, provided in some states that certain thresholds for
holdings of such obligations and/or reporting requirements are satisfied.

The Code provides for a 70% dividends-received deduction (the "deduction") by
corporations owning less than 20% of the value and voting power in the
distributing corporation. Since all or substantially all of the income of the
Government Fund, the Global Bond Fund and the Short-Term Government Fund is
derived from interest payments to it, none of the dividends of these Funds will
qualify for the deduction. The basic test under the Code for determining whether
and the extent to which the dividends paid by the other Funds are eligible for
the deduction is whether the aggregate dividends received by that Fund from
domestic corporations comprise 100% of the net investment company income taxable
distributions made by the Fund. If this percentage test is not met, there is a
proportionate reduction of the eligibility of those payments. Capital gains
distributions are not eligible for the deduction.

The tax treatment of gains realized from the sale of securities and options
on securities will be dependent upon the length of time owned by the Fund.

The tax treatment of any gain or loss realized upon the sale or redemption of
Fund shares will generally be dependent upon the shareholder's holding period
for the shares. Any such loss, however, will be treated as long-term capital
loss to the extent of any capital gains distributions received by the
shareholder on shares held for six months or less. In determining the amount of
any capital gain or loss for federal income tax purposes, a shareholder's basis
in Fund shares which are exchanged within 90 days of purchase pursuant to the
exchange privilege or reinvestment option will not include the sales charge paid
with respect thereto and such sales charge will be added to the basis of the
shares purchased pursuant to the exchange privilege or reinvestment option.

Under the Interest and Dividend Tax Compliance Act of 1983 the Trust may be
required to impose backup withholding at a rate of 31% from income dividends and
capital gains distributions and upon payment of redemption proceeds if
provisions of that law relating to the furnishing and certification of taxpayer
identification numbers and reporting of dividends are not complied with by a
shareholder.

Income received by the Gold Fund, the Equity Fund, the Global Bond Fund and
the Technology Fund from foreign sources may be subject to withholding and other
taxes imposed by such countries. It is impossible to determine in advance the
effective rate of foreign tax to which these Funds may be subject. If more than
50% of the total assets of these Funds are invested in securities of foreign
corporations at the end of any fiscal year in which they qualify as a regulated
investment company, such Fund may elect the application of Section 853 of the
Code, to permit its shareholders to take a credit or a deduction for foreign
taxes paid by the Fund. Tax-exempt shareholders generally will not benefit from
this election. See the Statement of Additional Information for further details.

TOTAL RETURN INFORMATION

From time to time any of the Funds may quote its average annual total return
("standardized return") in advertisements or promotional materials.
Advertisements and promotional materials reflecting standardized return
("performance advertisements") will show percentage rates reflecting the average
annual change in the value of an assumed initial investment in that Fund of
$1,000 at the end of one, five and ten year periods, reduced by the maximum
applicable sales charge. If such periods have not yet elapsed, data will be
given as of the end of a shorter period corresponding to the duration of the
Fund. Standardized return assumes the reinvestment of all dividends and capital
gain distributions, but does not take into account any federal or state income
taxes that may be payable upon redemption.

The Government Fund, the Global Bond Fund and the Short-Term Government Fund
also may refer in advertising and promotional materials to their yield. The
yield of each such Fund shows the rate of income that it earns on its
investments, expressed as a percentage of the net asset value of such Fund's
shares. Each of such Funds calculates yield by determining the interest income
it earned from its portfolio investments for a specified thirty-day period (net
of expenses), dividing such income by the average number of Fund shares
outstanding, and expressing the result as an annualized percentage based on the
net asset value at the end of that thirty day period. Yield accounting methods
differ from the methods used for other accounting purposes; accordingly, the
yields of such Funds may not equal the dividend income actually paid to
investors or the income reported in the financial statements of such Funds.

In addition to standardized return, performance advertisements also may
include other total return performance data ("non-standardized return"). Non-
standardized return may be quoted for the same or different periods as those for
which standardized return is quoted and may consist of aggregate or average
annual percentage rates of return, actual year by year rates or any combination
thereof.

All data included in performance advertisements will reflect past performance
and will not necessarily be indicative of future results. The investment return
and principal value of an investment in a Fund will fluctuate, and an investor's
proceeds upon redeeming Fund shares may be more or less than the original cost
of the shares.

GENERAL INFORMATION

The Trust was organized on January 6, 1984 as a Massachusetts business trust.
Its Declaration of Trust contains an express disclaimer of shareholder liability
for its acts or obligations and requires that notice of such disclaimer be given
in each agreement, obligation or instrument entered into or executed by the
Trust or its Trustees. The Declaration of Trust provides for indemnification and
reimbursement of expenses out of the Trust's property for any shareholder held
personally liable for its obligations. The Declaration of Trust also provides
that the Trust shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Trust and satisfy any judgment
thereon. Thus, while Massachusetts law permits a shareholder of a trust such as
this to be held personally liable as a partner under certain circumstances, the
risk of a shareholder incurring financial loss on account of shareholder
liability is highly unlikely and is limited to the relatively remote
circumstances in which the Trust would be unable to meet its obligations, which
obligations are limited by the 1940 Act.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.

Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares) and may vote in the election of Trustees
and on other matters submitted to meetings of shareholders. It is not
contemplated that regular annual meetings of shareholders will be held. Rule
18f-2 under the 1940 Act provides that matters submitted to shareholders be
approved by a majority of the outstanding securities of each Fund, unless it is
clear that the interest of each Fund in the matter are identical or the matter
does not affect a Fund. However, the rule exempts the ratification of the
selection of accountants and the election of Trustees from the separate voting
requirements. By virtue of its stock ownership and that of its clients, PIA is
deemed to "control", as that term is defined in the 1940 Act, the Short-Term
Government Fund and the Global Bond Fund.

Income, direct liabilities and direct operating expenses of each Fund will be
allocated directly to each Fund, and general liabilities and expenses of the
Trust will be allocated among the Funds in proportion to the total net assets of
each Fund, on a pro rata basis among the Funds or as otherwise determined by the
Board of Trustees.

The By-Laws provide that the Trust's shareholders have the right, upon the
declaration in writing or vote of more than two-thirds of its outstanding
shares, to remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon the written request of the record holders
of ten percent of the Trust's shares. In addition, ten shareholders holding the
lesser of $25,000 worth or one percent of the Trust's shares may advise the
Trustees in writing that they wish to communicate with other shareholders for
the purpose of requesting a meeting to remove a Trustee. The Trustees will then,
if requested by the applicants, mail at the applicants' expense the applicants'
communication to all other shareholders. No amendment may be made to the
Declaration of Trust without the affirmative vote of the holders of more than
50% of its outstanding shares. The holders of shares have no preemptive or
conversion rights. Shares when issued are fully paid and non-assessable, except
as set forth above. The Trust may be terminated upon the sale of its assets to
another issuer, if such sale is approved by the vote of the holders of more than
50% of the outstanding shares of each Fund, or upon liquidation and distribution
of its assets, if so approved. If not so terminated, the Trust will continue
indefinitely.

McGladrey & Pullen, LLP serves as the independent accountants of the Trust.

Star Bank, N.A., Cincinnati, OH, is the custodian of the Trust's assets. The
Administrator acts as accounting and shareholder servicing agent. Shareholder
inquiries should be directed to the Administrator.

APPENDIX

STANDARD & POOR'S CORPORATION RATINGS FOR CORPORATE BONDS

AAA Debt rated AAA has the highest rating assigned by Standard & Poor's
Corporation. Capacity to pay interest and repay principal is extremely
strong.

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

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

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

BB, B, Debt rated "BB", "B", "CCC", "CC" and "C" is regarded as having
CCC, predominantly speculative characteristics with respect to capacity to pay
CC, C interest and repay principal. "BB" indicates the least degree
of speculation and "C" the highest. While such debt will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major exposure to adverse conditions.

BB Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which
could lead to inadequate capacity to meet timely interest and principal
payments. The "BB" rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied "BBB-" rating.

B Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category
is also used for debt subordinated to senior debt that is assigned an
actual or implied "BB" or "BB-" rating.

CCC Debt rated "CCC" has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic
conditions to meet timely payment of interest and repayment of principal.
In the event of adverse business, financial or economic conditions, it is
not likely to have the capacity to pay interest and repay principal. The
"CCC" rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "B" or "B-" rating.

CC The rating "CC" typically is applied to debt subordinated to senior debt
that is assigned an actual or implied "CCC-" rating.

C The rating "C" typically is applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where bankruptcy petition has been
filed, but debt service payments are continued.

STANDARD & POOR'S CORPORATION CHARACTERISTICS OF
SOVEREIGN DEBT OF FOREIGN COUNTRIES

AAA Stable, predictable governments with demonstrated track record of
responding flexibly to changing economic and political circumstances.

Prosperous and resilient economies, high per capita incomes.

Low fiscal deficits and government debt, low inflation.

Low external debt.

AA Stable, predictable governments with demonstrated track record of
responding to changing economic and political circumstances.

Tightly integrated into global trade and financial system.

Differ from AAAs only to a small degree because:

- Economies are smaller, less prosperous and generally more vulnerable to
adverse external influences (e.g., protection and terms of trade
shocks).

- More variable fiscal deficits, government debt and inflation.

- Moderate to high external debt.

A Politics evolving toward more open, predictable forms of governance in
environment of rapid economic and social change.

Established trend of integration into global trade and financial system.

Economies are smaller, less prosperous and generally more vulnerable to
adverse external influences (e.g., protection and terms of trade shocks)

Usually rapid growth in output and per capita incomes.

Manageable through variable fiscal deficits, government debt and
inflation.

Usually low but variable debt.

BBB Political factors a source of significant uncertainty, either because
system is in transition or due to external threats, or both, often in
environment of rapid economic and social change.

Integration into global trade and financial system growing but untested.

Economies less prosperous and often more vulnerable to adverse external
influences.

Variable to high fiscal deficits, government debt and inflation.
High and variable external debt.

BB Political factors a source of major uncertainty, either because system is
in transition or due to external threats, or both, often in environment
of rapid economic and social change.

Integration into global trade and financial system growing but untested.

Low to moderate income developing economies, but variable performance and
quite vulnerable to adverse external influences.

Variable to high fiscal deficits, government debt and inflation.

Very high and variable debt, often graduates of Brady Plan but track
record not well established.

MOODY'S INVESTORS SERVICE, INC. BONDS

Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred
to as "gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities
or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long-term risk appear
somewhat larger than the Aaa securities.

A Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in
the future.

Baa Bonds which are rated Baa are considered as medium grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.

Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.

Ca Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.

DUFF & PHELPS RATINGS FOR CORPORATE BONDS AND FOR SOVEREIGN,
SUBNATIONAL AND SOVEREIGN RELATED ISSUERS

AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA High credit quality. Protection factors are strong. Risk is modest but
may vary slightly from time to time because of economic conditions.

A Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.

BBB Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.

BB Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according
to industry conditions or company fortunes. Overall quality may move up
or down frequently within this category.

IBAC LONG-TERM RATINGS FOR CORPORATE BONDS AND FOR
SOVEREIGN, SUBNATIONAL AND SOVEREIGN RELATED ISSUERS

AAA Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions
are unlikely to increase investment risk substantially.

AA Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business, economic or financial conditions may
increase investment risk, albeit not very significantly.

A Obligations for which there is a low expectation of investment risk.
Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions
may lead to increased investment risk.

BBB Obligations for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial
conditions are more likely to lead to increased investment risk than for
obligations in other categories.

BB Obligations for which there is a possibility of investment risk
developing. Capacity for timely repayment of principal and interest
exists, but is susceptible over time to adverse changes in business,
economic or financial conditions.

In the case of sovereign, subnational and sovereign related issuers, the Funds
use the rating service's foreign currency or domestic (local) currency rating
depending upon how a security in a Fund's portfolio is denominated. In the case
where a Fund holds a security denominated in a domestic (local) currency and the
rating service does not provide a domestic (local) currency rating for the
issuer, a Fund will use the foreign currency rating for the issuer; in the case
where a Fund holds a security denominated in a foreign currency and the rating
service does not provide a foreign currency rating for the issuer, a Fund will
treat the security as being unrated.

(MONTEREY MUTUAL FUND Logo)

INVESTMENT ADVISERS
Pacific Income Advisers, Inc.
1299 Ocean Avenue, #210
Santa Monica, CA 90401

Murphy Investment Management, Inc.
2830 North Cabrillo Highway
Half Moon Bay, CA 94019

Orrell Capital Management,
a division of
Orrell and Company, Inc.
120 Montgomery Street, #1230
San Francisco, CA 94104

Camborne Advisors, Inc.
10670 N. Central Expressway #405
Dallas, TX 75231

DISTRIBUTOR
Syndicated Capital, Inc.
1299 Ocean Avenue, #210
Santa Monica, CA 90401
1-800-251-1970

COUNSEL
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, WI 53202

INDEPENDENT AUDITORS
McGladrey & Pullen, LLP
555 5th Avenue
New York, NY 10017

CUSTODIAN
Star Bank, N.A.
425 Walnut Street
Cincinnati, OH 45201

ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788

TABLE OF CONTENTS

Fee Table.......................... 2
Summary............................ 2
Financial Highlights............... 5
Investment Objectives and Policies
of the Monterey Mutual Funds.....11
Investment Practices and Risks.....21
Principal Investment Restrictions..27
Management ........................27
How to Purchase Shares.............30
How to Redeem Shares...............33
Dividends and Tax Status...........36
Total Return Information...........37
General Information................38
Appendix...........................40

<PAGE>

MONTEREY MUTUAL FUND

Statement of Additional Information dated September 30, 1997

This Statement of Additional Information is not a prospectus,
and it should be read in conjunction with the Prospectus of Monterey
Mutual Fund (the "Trust") relating to the Murphy New World Technology
Convertibles Series (the "Convertibles Fund") (formerly the Growth &
Income Fund), the Camborne Government Income Series (the "Government
Income Fund" or "Government Fund") (formerly the PIA-Monitrend Government
Income Fund), the OCM Gold Series (the "Gold Fund") (formerly the Gold
Fund), the PIA Equity Series (the "Equity Fund") (formerly the Growth
Fund), the Murphy New World Biotechnology Series (the "Biotechnology
Fund") (formerly the Gaming & Leisure Fund), the Murphy New World
Technology Series (the "Technology Fund"), the PIA Short-Term Government
Securities Fund (the "Short-Term Government Fund") (formerly the PIA
Adjustable Rate Government Securities Fund), and the PIA Global Bond
Series (the "Global Bond Fund"), dated September 30, 1997; copies of the
Prospectus may be obtained from the Trust's Distributor, Syndicated
Capital, Inc. (the "Distributor", 1299 Ocean Avenue, Suite 210, Santa
Monica, CA 90401. (In this Statement of Additional Information, the
eight funds may be referred to collectively as "the Funds" or individually
as "a Fund.")

Prior to December 27, 1996, the Trust was known as Monitrend
Mutual Fund.

TABLE OF CONTENTS

Cross-reference to
Page page in Prospectus

Investment Objectives and Policies B-3 11

Investment Restrictions B-3 27

Hedging Instruments B-6 23

Possible Tax and CFTC B-8 27
Limitations on Portfolio
and Hedging Strategies

Repurchase Agreements B-9 25

U.S. Government Securities B-10 26

Portfolio Turnover B-13 25

Management B-14 27

PIA, Murphy, Orrell, Camborne B-20 27
and the Administrator

Portfolio Transactions B-23 29
and Brokerage

Distribution Plan B-26 33

Net Asset Value B-30 33

Shareholder Services B-30 32

Dividends and Tax Status B-33 36

General B-33 38

Calculation of Performance Data B-34 37

Appendix B-36 23

Description of Securities Ratings B-40 40

Financial Statements B-41 5

Investment Objectives and Policies

The investment objective of the Convertibles Fund is to maximize
total return through a combination of capital appreciation and income; the
investment objectives of the Government Income Fund are growth of capital,
whether over the short- or long-term, income and preservation of capital;
the investment objective of the Gold Fund is long-term growth of capital;
the investment objective of the Equity Fund is long-term growth of
capital; the investment objective of the Biotechnology Fund is long-term
growth of capital; the investment objective of the Technology Fund is
long-term growth of capital; the investment objectives of the Short-Term
Government Fund are income with low volatility of principal; and the
investment objective of the Global Bond Fund is income. The portfolio and
strategies with respect to the composition of each Fund's portfolio are
described in the Prospectus. The Convertibles Fund was called the Growth
& Income Fund from December 2, 1994 through December 31, 1996, the
Summation Fund from March 30, 1993 through December 1, 1994, the Summation
Index Fund from July 10, 1989, through March 30, 1993 and the Standard &
Poor's 100 Index Fund prior to July 10, 1989. On May 31, 1991, a ninth
series of the Trust, the Value Allocation Series, was merged with and into
the Convertibles Fund. The Government Fund was called the PIA Monitrend
Government Income Fund prior to December 13, 1996. The OCM Gold Fund was
called the Gold Fund prior to December 13, 1996. The PIA Equity Fund was
called the Growth Fund prior to December 13, 1996. The Biotechnology Fund
was called the Gaming & Leisure Fund prior to December 20, 1996. The
Short-Term Government Fund was called the PIA Adjustable Rate Government
Securities Fund prior to December 13, 1996. The New World Technology Fund
was called the Technology Fund prior to December 13, 1996.

Investment Restrictions

The Trust has adopted the following restrictions applicable to
the various Funds as indicated below (in addition to those indicated in
the Prospectus) as fundamental policies, which may not be changed without
the approval of the holders of a "majority," as defined in the Investment
Company Act of 1940 (the "1940 Act"), of the shares of the Fund as to
which the policy change is being sought. Under the 1940 Act, approval of
the holders of a "majority" of a Fund's outstanding voting securities
means the favorable vote of the holders of the lesser of (i) 67% of its
shares represented at a meeting at which more than 50% of its outstanding
shares are represented or (ii) more than 50% of its outstanding shares.

Each of the Funds may not purchase any security, other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities ("U.S. Government securities"), if as a result more than
5% of such Fund's total assets (taken at current value) would then be
invested in securities of a single issuer; provided, however, that 50% of
the total assets of each of the Gold Fund, the Equity Fund, the
Biotechnology Fund, the Convertibles Fund, the Global Bond Fund and the
Technology Fund may be invested without regard to this restriction and 25%
of the total assets of the Government Fund and the Short-Term Government
Fund may be invested without regard to this restriction.

No Fund may:

1. Purchase any security if as a result the Fund would then
hold more than 10% of any class of securities of an issuer (taking all
common stock issues of an issuer as a single class, all preferred stock
issues as a single class, and all debt issues as a single class) or more
than 10% of the outstanding voting securities of an issuer.

2. Purchase any security if as a result the Fund would then
have more than 5% of its total assets (taken at current value) invested in
securities of companies (including predecessors) less than three years
old.

3. Invest in securities of any issuer if, to the knowledge of
the Trust, any officer or Trustee of the Trust or officer or director of
the Fund's investment adviser owns more than 1/2 of 1% of the outstanding
securities of such issuer, and such officers, directors and Trustees who
own more than 1/2 of 1% own in the aggregate more than 5% of the
outstanding securities of such issuer.

4. Make investments for the purpose of exercising control or
management.

5. Act as underwriter except to the extent that, in connection
with the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws.

6. Purchase warrants if as a result the Fund would then have
more than 5% of its total assets (taken at current value) invested in
warrants.

7. Invest in securities of other registered investment
companies, except by purchases in the open market involving only customary
brokerage commissions and as a result of which not more than 5% of its
total assets (taken at current value) would be invested in such
securities, or except as part of a merger, consolidation or other
acquisition.

8. Invest in interests in oil, gas or other mineral leases or
exploration or development programs, although it may invest in the common
stocks of companies which invest in or sponsor such programs.

9. Purchase securities on margin (but each Fund may obtain
such short-term credits as may be necessary for the clearance of
transactions and may make margin payments in connection with transactions
in futures and options, and the Convertibles Fund, the Biotechnology Fund,
the Technology Fund, the Global Bond Fund and the Short-Term Government
Fund may borrow money as set forth in Investment Restriction No. 11).

10. Make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or
exchangeable for, without payment of any further consideration, securities
of the same issue as, and equal in amount to, the securities sold short
(short sale against-the-box), and unless not more than 25% of that Fund's
net assets (taken at current value) is held as collateral for such sales
at any one time, except that the Technology Fund may effect short sales to
the extent set forth in the Prospectus and the Biotechnology Fund and the
Convertibles Fund may effect short sales to the extent permitted by the
1940 Act.

11. Issue senior securities, borrow money or pledge its assets
except that each Fund may borrow from a bank for temporary or emergency
purposes in amounts not exceeding 5% (taken at the lower of cost or
current value) of its total assets (not including the amount borrowed) and
pledge its assets to secure such borrowings and the Convertibles Fund, the
Biotechnology Fund, the Technology Fund, the Global Bond Fund and the
Short-Term Government Securities Fund may borrow for investment purposes
on a secured or unsecured basis as described in the Prospectus. (For the
purpose of this restriction, collateral arrangements with respect to the
writing of options and with respect to initial and variation margin for
futures contracts are not deemed to be a pledge of assets and neither such
arrangements nor the purchase or sale of futures contracts or purchase of
related options or the sale of options on indices are deemed to be the
issuance of a senior security.)

12. Buy or sell commodities or commodity contracts except
futures and related options as described under "Investment Practices" in
the Prospectus, or real estate or interests in real estate (including
limited partnership interests). For purposes of this restriction,
Mortgage-Backed Securities as described in the Prospectus are not
considered real estate or interests in real estate.

13. Participate on a joint or joint and several basis in any
trading account in securities.

14. Purchase any security restricted as to disposition under
federal securities laws except that subject to Securities and Exchange
Commission ("SEC") limitations on investments in illiquid securities, the
Biotechnology Fund, the Convertibles Fund, the Gold Fund and the Global
Bond Fund may purchase securities restricted as to disposition under
federal securities laws without limitation.

15. Make loans, except through repurchase agreements and the
loaning of portfolio securities by the Convertibles Fund, the Gold Fund,
the Technology Fund, the Biotechnology Fund, the Global Bond Fund and the
Short-Term Government Fund as described in the Prospectus.

16. Purchase foreign securities or currencies; this restriction
does not apply to the Gold Fund, the Equity Fund, the Technology Fund, the
Biotechnology Fund, the Global Bond Fund, the Government Fund or the
Convertibles Fund.

It is the position of the SEC (and an operating although not a
fundamental policy of each Fund) that open-end investment companies such
as the Funds should not make investments in illiquid securities if
thereafter more than 15% of the value of their net assets would be so
invested. The Short-Term Government Fund has limited its investments in
illiquid securities to 10% of the value of its net assets. The
investments included as illiquid securities are (i) those which cannot
freely be sold for legal reasons, although securities eligible to be
resold pursuant to Rule 144A under the Securities Act of 1933 may be
considered liquid; (ii) fixed time deposits subject to withdrawal
penalties, other than overnight deposits (which the Government Fund may
not own); (iii) repurchase agreements having a maturity of more than seven
days; and (iv) investments for which market quotations are not readily
available. The Funds do not expect to own any investments for which market
quotations are not available. However, illiquid securities do not include
obligations which are payable at principal amount plus accrued interest
within seven days after purchase. The Board of Trustees has delegated to
each Fund's investment adviser the day-to-day determination of the
liquidity of a security although it has retained oversight and ultimate
responsibility for such determinations. Although no definite quality
criteria are used, the Board of Trustees has directed the investment
advisers to consider such factors as (i)the nature of the market for a
security (including the institutional private resale markets); (ii) the
terms of these securities or other instruments allowing for the
disposition to a third party or the issuer thereof (e.g., certain
repurchase obligations and demand instruments); (iii) the availability of
market quotations; and (iv) other permissible factors. Investing in Rule
144A securities could have the effect of decreasing the liquidity of a
Fund to the extent that qualified institutional buyers become, for a time,
uninterested in purchasing these securities.

Hedging Instruments

The various hedging instruments which the Funds may use are
discussed in the Prospectus and below. The Appendix to this Statement of
Additional Information contains further information as to the
characteristics of, and the risks of transactions in, each of them.

Call Options. Except for calls written on stock indices, when a
Fund writes a call, it receives a premium and agrees to sell the related
investments to a purchaser of a call during the call period (usually not
more than nine months) at a fixed exercise price (which may differ from
the market price of the related investments) regardless of market price
changes during the call period. If the call is exercised, the Fund
forgoes any gain from an increase in the market price over the exercise
price.

To terminate its obligation on a call which it has written, the
Fund which wrote the call may purchase a call in a "closing purchase
transaction." A profit or loss will be realized depending on the amount
of option transaction costs and whether the premium previously received is
more or less than the price of the call purchased. A profit may also be
realized if the call lapses unexercised, because the Fund which wrote the
call retains the premium received. Any such profits are considered
short-term gains for federal income tax purposes and, when distributed,
are taxable as ordinary income. Except for calls on stock indices, when a
Fund buys a call, it pays a premium and has the right to buy the related
investments from a seller of a call during the call period at a fixed
exercise price. The Fund which bought the call benefits only if the
market price of the related investments is above the call price plus the
premium paid during the call period and the call is either exercised or
sold at a profit. If the call is not exercised or sold (whether or not at
a profit), it will become worthless at its expiration date, and that Fund
will lose its premium payments and the right to purchase the related
investments.

Calls on stock indices are similar to calls on equities except
that all settlements are in cash and gain or loss depends on changes in
the index in question rather than on price movements in individual
equities. When a Fund writes a call on a stock index, it receives a
premium and agrees that, during the call period, a purchaser of a call
upon exercise of the call will receive from the Fund an amount of cash if
the closing level of the stock index upon which the call is based is
greater than the exercise price of the call, which amount of cash is equal
to the difference between the closing price of the index and the exercise
price of the call times a specified multiple (the "multiplier") which
determines the total dollar value for each point of such difference. When
a Fund buys a call on a stock index it pays a premium and has the same
rights as to a writer of such a call as are indicated above as its
obligation when it writes such a call. The multiplier for a call on a
stock index performs a function similar to the unit of trading for a call
on an equity. It determines the total dollar value per contract of each
point in the difference between the exercise price of a call and the
current level of the underlying index. A multiplier of 100 means that a
one-point difference will yield $100. Calls on different indices may have
different multipliers.

Put Options. Except for puts on stock indices, when a Fund buys
a put, it pays a premium and has the right to sell the related investments
to a seller of a put during the put period (usually not more than nine
months) at a fixed exercise price. Buying a protective put permits that
Fund to protect itself during the put period against a decline in the
value of the related equity below the exercise price by having the right
to sell the equity through the exercise of the put. Puts on stock indices
cannot be protective, as it is impossible to buy a stock index.

Puts on stock indices are similar to puts on equities except
that all settlements are in cash and gain or loss depends on changes in
the index in question rather than on price movements in individual
equities. When a Fund buys a put on a stock index, it pays a premium and
has the right during the put period to require a seller of such a put,
upon the Fund's exercise of the put, to deliver to the Fund an amount of
cash if the closing level of the stock index upon which the put is based
is less than the exercise price of the put, which amount of cash is
determined by the multiplier, which performs the same function as
described above for calls. Buying such a put permits the Fund, if cash is
so deliverable to it during the period, either to resell the put or to
require such delivery of cash. If such cash is not so deliverable, and, as
a result the put is not exercised or resold (whether or not at a profit)
the put will become worthless at its expiration date.

When a Fund writes a put option it receives a premium and has
the same obligations as to a purchaser of such a put as are indicated
above as its rights when it purchases such a put. A profit or loss will
be realized depending on the amount of option transaction costs and
whether the premium previously received is more or less than the put
purchased in a closing purchase transaction. A profit may also be realized
if the put lapses unexercised, because the Fund retains the premium
received. Any such profits are considered short-term gains for federal
income tax purposes and, when distributed, are taxable as ordinary income.

Possible Tax and CFTC Limitations on Portfolio and Hedging Strategies

The Trust intends that each Fund qualify as a regulated
investment company under Subchapter M of the Internal Revenue Code for
each taxable year. In order to so qualify, each Fund must, among other
things, derive less than 30% of its gross income from the sale or other
disposition of stock or securities (or options thereon) held less than
three months. Due to this limitation, each Fund will limit the extent to
which it engages in the following activities, but will not be precluded
from them: (i) selling investments, including Futures, held for less than
three months, whether or not they were purchased on the exercise of a
call; (ii) the writing of calls on investments held less than three
months; (iii) the writing or purchasing of calls or the purchasing of puts
which expire in less than three months; (iv) effecting closing
transactions with respect to calls written or purchased or puts purchased
less than three months previously; and (v) exercising certain puts or
calls held for less than three months. Effective for the fiscal year
beginning December 1, 1997 this limitation will no longer apply to the
Funds.

The use of Futures and options thereon to attempt to protect
against the market risk of a decline in the value of portfolio securities
is referred to as having a "short futures position," and the use of such
instruments to attempt to protect against the market risk that portfolio
securities are not fully included in an increase in value is referred to
as having a "long futures position." Each Fund must operate within
certain restrictions as to its long and short positions in Futures and
options thereon under a rule ("CFTC Rule") adopted by the Commodity
Futures Trading Commission ("CFTC") under the Commodity Exchange Act (the
"CEA"), which excludes the Funds and the Trust from registration with the
CFTC as a "commodity pool operator" as defined in the CEA. Under the
restrictions, each Fund must use Futures and options thereon solely for
bona fide hedging purposes within the meaning and intent of the applicable
provisions under the CEA, provided that nonhedging positions may be
established if the initial margin and premiums required to establish such
positions do not exceed 5% of a Fund's net assets, with certain exclusions
as defined in the CFTC Rule.

Repurchase Agreements

Each Fund may enter into repurchase agreements. A repurchase
transaction occurs when, at the time a Fund purchases a security, that
Fund also resells it to the vendor (normally a commercial bank or a
broker-dealer) and must deliver the security (and/or securities
substituted for them under the repurchase agreement) to the vendor on an
agreed upon date in the future. Such securities, including any securities
so substituted, are referred to as the "Resold Securities". The Fund's
investment adviser will consider the creditworthiness of any vendor of
repurchase agreements. The resale price is in excess of the purchase
price in that it reflects an agreed upon market interest rate effective
for the period of time during which the Fund's money is invested in the
Resold Securities. The majority of these transactions run from day to
day, and the delivery pursuant to the resale typically will occur within
one to five days of the purchase. The Fund's risk is limited to the
ability of the vendor to pay the agreed-upon sum upon the delivery date;
in the event of bankruptcy or other default by the vendor, there may be
possible delays and expenses in liquidating the instrument purchased,
decline in its value and loss of interest. These risks are minimized when
the Fund holds a perfected security interest in the Resold Securities and
can therefore resell the instrument promptly. Repurchase agreements can
be considered as loans "collateralized" by the Resold Securities, such
agreements being defined as "loans" in the 1940 Act. The return on such
"collateral" may be more or less than that from the repurchase agreement.
The Resold Securities will be marked to market every business day so that
the value of the "collateral" is at least equal to the value of the loan,
including the accrued interest earned thereon. All Resold Securities will
be held by the Fund's custodian or another bank either directly or through
a securities depository.

U.S. Government Securities

As used in this Statement of Additional Information, the term
"U.S. Government securities" means securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities.

Securities issued or guaranteed by the U.S. Government include a
variety of Treasury securities (i.e., securities issued by the U.S.
Government) that differ only in their interest rates, maturities and dates
of issuance. Treasury Bills have maturities of one year or less.
Treasury Notes have maturities of one to ten years, and Treasury Bonds
generally have maturities of greater than ten years at the date of
issuance. Zero coupon Treasury securities consist of Treasury Notes and
Bonds that have been stripped of their unmatured interest coupons.

U.S. Government agencies or instrumentalities which issue or
guarantee securities include, but are not limited to, the Federal Housing
Administration, Federal National Mortgage Association, Farmers Home
Administration, Export-Import Bank of the United States, Small Business
Administration, Government National Mortgage Association, General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, the Tennessee Valley
Authority, District of Columbia Armory Board, the Inter-American
Development Bank, the Asian Development Bank, the Student Loan Marketing
Association and the International Bank for Reconstruction and Development.

Except for U.S. Treasury securities, obligations of U.S.
Government agencies and instrumentalities may or may not be supported by
the full faith and credit of the United States. Some are backed by the
right of the issuer to borrow from the Treasury; others by discretionary
authority of the U.S. Government to purchase the agencies' obligations;
while still others, such as the Student Loan Marketing Association, are
supported only by the credit of the instrumentality. In the case of
securities not backed by the full faith and credit of the United States,
the investor must look principally to the agency or instrumentality
issuing or guaranteeing the obligation for ultimate repayment, and may not
be able to assert a claim against the United States itself in the event
the agency or instrumentality does not meet its commitment. Each Fund
investing in U.S. Government securities will invest in securities of such
instrumentality only when the Adviser is satisfied that the credit risk
with respect to any instrumentality is acceptable.

Among the U.S. Government securities that each Fund investing in
U.S. Government securities may purchase are "mortgage-backed securities"
of the Government National Mortgage Association ("Ginnie Mae" or "GNMA"),
the Federal Home Loan Mortgage Association ("Freddie Mac") and the Federal
National Mortgage Association ("Fannie Mae"). These mortgage-backed
securities include "pass-through" securities and "participation
certificates"; both are similar, representing pools of mortgages that are
assembled, with interests sold in the pool; the assembly is made by an
"issuer" which assembles the mortgages in the pool and passes through
payments of principal and interest for a fee payable to it. Payments of
principal and interest by individual mortgagors are "passed through" to
the holders of the interest in the pool. Thus, the monthly or other
regular payments on pass-through securities and participation certificates
include payments of principal (including prepayments on mortgages in the
pool) rather than only interest payments. Another type of mortgage-backed
security is the "collateralized mortgage obligation", which is similar to
a conventional bond (in that it makes fixed interest payments and has an
established maturity date) and is secured by groups of individual
mortgages. Timely payment of principal and interest on Ginnie Mae
pass-throughs is guaranteed by the full faith and credit of the United
States, but their yield is not guaranteed. Freddie Mac and Fannie Mae are
both instrumentalities of the U.S. Government, but their obligations are
not backed by the full faith and credit of the United States. It is
possible that the availability and the marketability (i.e., liquidity) of
these securities discussed in this paragraph could be adversely effected
by actions of the U.S. Government to tighten the availability of its
credit or to affect adversely the tax effects of owning them.

The average life of a GNMA certificate is likely to be
substantially less than the original maturity of the mortgage pools
underlying the securities. Prepayments of principal by mortgagors and
mortgage foreclosures will usually result in the return of the greater
part of principal investment long before the maturity of the mortgages in
the pool. Foreclosures impose no risk to principal investment because of
the GNMA guarantee. Because prepayment rates of individual mortgage pools
vary widely, it is not possible to predict accurately the average life of
a particular issue of GNMA certificates. However, statistics published by
the Federal Housing Administration indicate that the average life of
single-family dwelling mortgages with 25- to 30-year maturities, the type
of mortgage backing the vast majority of GNMA certificates, is
approximately 12 years. Therefore, it is customary to treat GNMA
certificates as 30-year mortgage backed securities which prepay fully in
the twelfth year. Prepayments may increase when interest rates decline.

Certain of the mortgage loans underlying the mortgage-backed
securities in which the Funds may invest will be adjustable rate mortgage
loans ("ARMs").

There are two main categories of indices which provide the basis
for rate adjustments on ARMs: those based on U.S. Treasury securities and
those derived from a calculated measure such as a cost of funds index or a
moving average of mortgage rates. Commonly utilized indices include the
one-year, three-year and five-year constant maturity Treasury rates, the
three-month Treasury Bill rate, the 180-day Treasury Bill rate, rates on
longer-term Treasury securities, the 11th District Federal Home Loan Bank
Cost of Funds, the National Median Cost of Funds, the one-month, three-
month, six-month or one year London Interbank Offered Rate ("LIBOR"), the
prime rate of a specific bank, or commercial paper rates. Some indices,
such as the one-year constant maturity Treasury rate, closely mirror
changes in market interest rate levels. Others, such as the 11th District
Federal Home Loan Bank Cost of Funds index, tend to lag behind changes in
market rate levels and tend to be somewhat less volatile. The degree of
volatility in the market value of a Fund's portfolio and therefore in the
net asset value of the Fund's shares will be a function of the length of
the interest rate reset periods and the degree of volatility in the
applicable indices.

The mortgage loans underlying other mortgage-backed securities
in which the Funds may invest will be fixed rate mortgage loans.
Generally, fixed rate mortgage loans eligible for inclusion in a mortgage
pool will bear simple interest at fixed annual rates and have original
terms to maturity ranging from 5 to 40 years. Fixed rate mortgage loans
generally provide for monthly payments of principal and interest in
substantially equal installments for the contractual term of the mortgage
note in sufficient amounts to fully amortize principal by maturity
although certain fixed rate mortgage loans provide for a large final
"balloon" payment upon maturity.

Mortgage loans are subject to a variety of state and federal
regulations designed to protect mortgagors, which may impair the ability
of the mortgage lender to enforce its rights under the mortgage documents.
These regulations include legal restraints on foreclosures, homeowner
rights of redemption after foreclosure, federal and state bankruptcy and
debtor relief laws, restrictions on enforcement of mortgage loan "due on
sale" clauses and state usury laws. Even though the Funds will invest in
Mortgage-Backed Securities which are U.S. Government securities, these
regulations may adversely affect a Fund's investments by delaying the
Fund's receipt of payments derived from principal or interest on mortgage
loans affected by such regulations.

Also included within the term U.S. Government securities are
deposits in banks (represented by certificates of deposit or other
evidence of deposit issued by such banks of varying maturities) to the
extent that the principal of such deposits is insured by the Federal
Deposit Insurance Corporation ("FDIC"); such deposits are referred to as
"Insured Deposits." Such insurance is currently limited to $100,000 per
bank; any interest above that amount is not insured. Insured Deposits may
have limited marketability, and a Fund will invest in them only within the
10% or 15% limit mentioned above under "Investment Restrictions" unless
such obligations are payable at principal amount plus accrued interest on
demand or within seven days after demand.

Portfolio Turnover

See "Financial Highlights" and "Portfolio Turnover" in the
Prospectus for the definition of a portfolio turnover rate and for
information on the past rates of the Funds. As indicated in the
Prospectus the portfolio turnover of each of the Funds may vary
significantly from year to year as a result of the presence or absence of
the defensive investment positions taken by the investment adviser to the
Fund. Such a variance was evidenced during the most recent three fiscal
years where portfolio turnover was substantially higher for the
Convertibles Fund in the fiscal years ended November 30, 1996 and November
30, 1995 than in the fiscal year ended November 30, 1994, substantially
lower for the Gold Fund in the fiscal years ended November 30, 1996 and
November 30, 1995 than in the fiscal year ended November 30, 1994 and
substantially lower for the Short-Term Government Fund in the fiscal year
ended November 30, 1996 than in the fiscal years ended November 30, 1995
and November 30, 1994. With respect to the Convertibles Fund, portfolio
turnover was higher in the fiscal years ended November 30, 1995 and
November 30, 1996 than the fiscal year ended November 30, 1994 because
prior to February 1, 1995 the investment objective of the Convertibles
Fund contemplated that it would hold a portfolio of common stocks
substantially parallel to the Standard & Poor's 100 Index and hedging
instruments, which hedging instruments were excluded for the purpose of
calculating portfolio turnover. With respect to the Gold Fund portfolio,
turnover was lower during 1996 and 1995 than 1994 because the investment
approach of the Gold Fund's investment adviser during 1996 and 1995
involved less trading than that of its predecessor. The Gold Fund changed
investment advisers on August 18, 1995. With respect to the Short-Term
Government Fund portfolio turnover was lower because average net assets
were substantially greater than in the prior fiscal years. The
Biotechnology Fund anticipates that its portfolio turnover rate during the
fiscal year ending November 30, 1997 will approximate 150%. Thereafter
its portfolio turnover rate generally will not exceed 50%. The one year
increase in the portfolio turnover rate will result from the sale of
securities in the gaming and leisure sector and the purchase of securities
in the biotechnology sector. Similarly the Convertibles Fund anticipates
that its portfolio turnover rate during the fiscal year ending November
30, 1997 will approximate 150%. Thereafter its portfolio turnover rate
generally will not exceed 50%. The one year increase in the portfolio
turnover rate will result because of the change in investment advisers.
The portfolio turnover rate for the Global Bond Fund generally will not
exceed 200%.

Management

The Trustees and officers of the Trust are:

Position Principal occupations
Name and Address Age with Fund during past five years

Joseph Lloyd McAdams, 51 Chairman and Chairman of Pacific
Jr.* Trustee Income Advisers, Inc.;
1299 Ocean Avenue Chairman, Chief Executive
Suite 210 Officer and President of
Santa Monica, CA 90401 Syndicated Capital, Inc.

John Michael Murphy* 54 Trustee President of Murphy
2830 North Cabrillo Investment Management,
Highway Inc; President of
Half Moon Bay, CA 94019 Murenove, Inc., a
newsletter publisher.

Ann Louise Marinaccio 57 Trustee Sales associate for Saks
1 Norwood Road Fifth Avenue, Short
Springfield, NJ 07081 Hills, NJ.

Robert I. Weisberg 50 Trustee President of Fremont
612 Ridge Road Medical Financial Services,
Tiburon, CA 94920 Inc. and Executive Vice
President of Fremont
Financial Corporation,
Santa Monica, California
since January 1, 1996;
President of Pro-Care
Financial Group, Inc.,
Larkspur, California from
1994-1995; President of
Towers Financial
Corporation, New York,
New York, 1993-1994;
President of Fleet Credit
Corporation, Providence,
Rhode Island, 1985-1993.

Beatrice P. Felix 37 Trustee Real estate sales agent
1011 4th Street, #218 for Roland Land Realty
Santa Monica, CA 90403 since 1994; real estate
sales agent for
Prudential Realty from
1991-1994.

Heather U. Baines 54 President and President and Chief
1299 Ocean Avenue Treasurer Executive Officer of
Suite 210 Pacific Income Advisers,
Santa Monica, CA 90401 Inc.

Pamela J. Watson 42 Vice President Vice President of Pacific
504 Larsson Street Income Advisers, Inc.
Manhattan Beach, CA since 1997; Chief
90266 Financial Officer,
Kleinwort Benson Capital
Management, Inc. from
1991 to 1996.

Kathie Hilton 49 Secretary Administrative Assistant
1922 Ocean Avenue for Pacific Income
Suite 210 Advisers, Inc. since
Santa Monica, CA 90401 1994; prior thereto owner
of Grizzly Products, a
seafood distributor.

_________________________
* "Interested" trustee, as defined in the 1940 Act.

During the fiscal year ended November 30, 1996, the Trust paid
its Trustees who are not affiliated with any of the investment advisers to
the Funds or the Distributor fees aggregating $8,000. The Trust's
standard method of compensating these trustees who are not "interested
persons" of the Trust, is to pay each such trustee an annual retainer of
$2,000 and a fee of $500 for each meeting of the Board of Trustees
attended. The Trust does not provide pension or retirement benefits to
its trustees and officers.

<TABLE>
<CAPTION>
Pension & Estimated Total
Retirement Annual Compensation
Aggregate Benefits Accrued Benefits from Trust
Compensation as Part of Fund upon Paid to
Name of Person, Position from Trust Expenses Retirement Trustees

<S> <C> <C> <C> <C>
Joseph Lloyd McAdams, Jr., 0 0 0 0
Chairman and Trustee

Phillip R. Verrill,* Trustee 0 0 0 0

Michael A. Licameli,* Trustee 0 0 0 0

Ann Louise Marinaccio,* 0 0 0 0
Trustee

Robert I. Weisberg,* Trustee 0 0 0 0

Stephen E. Cole,* Trustee $4,000 0 0 $4,000

Howard Mann,* Trustee $4,000 0 0 $4,000

Beatrice Felix, Trustee 0 0 0 0

Heather U. Baines, President 0 0 0 0
and Treasurer

Kathy Hilton, Secretary 0 0 0 0
</TABLE>

_________________

* Ms. Marinaccio and Mr. Weisberg did not become trustees until December
13, 1996. Messrs. Verrill, Licameli, Cole and Mann were each trustees
during some or all of the fiscal year ended November 30, 1996. Messrs.
Verrill and Licameli were "interested" trustees, as defined in the 1940
Act.

Set forth below are the names and addresses of all holders of
shares of the Funds who as of September 15, 1997 beneficially owned more
than 5% of a Fund's then outstanding shares.

Government Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

Dora Elena Walker, Trustee
Hortense Daniel Evans Living Trust
dated October 1, 1988
9431 Friendly Woods Lane
Whittier, California 90605 14,332 20.94%

Pacific Income Advisers, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, California 90401 12,650 18.50%

Richard K. Moore and
Dorothy A. Moore
8 Lorraine Avenue
Binghamton, New York 13905 5,904 8.63%

Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 5,888 8.61%

Equity Fund

Name and Address of Number of Percent of
Beneficial Owner Shares Class

Repub & Co.
c/o Imperial Trust Company
201 North Figueroa Street #610
Los Angeles, California 90012 65,050 50.95%

Pershing Securities Division of
Donaldson, Lufkin & Jenrette
Securities Corporation
One Pershing Plaza
Jersey City, New Jersey 07399 27,583 21.60%

Pacific Income Advisers, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, California 90401 8,390 6.57%

Technology Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

Steven H. & Anita H. Kaplan, Trustees
Kaplan Family Trust dated
April 13, 1986
P.O. Box 15
Sea Ranch, California 95497 7,544 11.27%

Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 4,469 6.67%

Biotechnology Fund

Name and Address of Number of Percent of
Beneficial Owner Shares Class

Murenove, Inc.
P. O. Box 308
Half Moon Bay, California 94019 37,432 17.18%

Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 33,252 15.26%

Credito Banca Unione DS
Ref: 1403.849
P.O. Box 5022
CH 8022 Zurich, Switzerland 21,246 9.75%

Short-Term Government Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

United Food & Commercial Workers
Arizona Health and Welfare Trust
c/o Michael Gallaga
Southwest Service Administrators, Inc.
1990 West Camelback, Suite 306
Phoenix, Arizona 85015 1,520,432 34.80%

Repub & Co.
c/o Imperial Trust Company
201 North Figueroa Street, Suite 610
Los Angeles, California 90012 583,591 13.36%

Short-Term Government Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

Patterson & Co.
P.O. Box 7829
Philadelphia, Pennsylvania 19101 292,968 6.71%

Union's 2nd Employer's Health &
Welfare Trust Fund
c/o Michael Gallaga
1990 W. Camelback, Suite 306
Phoenix, Arizona 85015 280,095 6.41%

UFCW Region 8 Superfund
6280 Manchester Boulevard., Suite 305
Buena Park, California 90621 256,325 5.86%

Pacific Income Advisers, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, California 90401 233,956 5.36%

Gold Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

Donaldson, Lufkin & Jenrette
Securities Corporation
P.O. Box 2052
Jersey City, New Jersey 07303 82,386 31.37%

Cyril Fox
240 Greenwich Avenue
Greenwich, Connecticut 06830 31,461 11.98%

Norma Lee
1016 N. La Jolla Avenue
Los Angeles, California 90046 14,836 5.65%

Convertibles Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

James Lear
100 Bush Street #1000
San Francisco, California 94104 2,998 5.45%

Emil Wasil
14761 Indian Creek Drive
Middlebury Heights, Ohio 44130 2,815 5.12%

Global Bond Fund
Name and Address of Number of Percent of
Beneficial Owner Shares Class

San Antonio Fire & Police Pension Fund
311 Roosevelt Avenue
San Antonio, Texas 78210 222,525 91.03%

Repub & Co.
c/o Imperial Trust Company
201 North Figueroa Street #610
Los Angeles, California 90012 16,364 6.69%

No other person owns of record or is known to the Trust to own
beneficially 5% or more of the outstanding securities of any Fund. By
virtue of its stock ownership and that of its clients (including the
United Food & Commercial Workers Arizona Health and Welfare Trust),
Pacific Income Advisers, Inc. is deemed to "control" as that term is
defined in the 1940 Act the Short-Term Government Fund and the Trust.
The shares owned by Donaldson, Lufkin & Jenrette Securities Corporation,
the Pershing Securities Division of Donaldson, Lufkin & Jenrette
Securities Corporation, Repub & Co. and Swiss Bank Corp. are owned of
record only.

All trustees and officers of the Trust as a group beneficially
own the following securities of the Funds as of September 14, 1997:

Name of Fund Number of Shares Percent of Class

Government Fund 12,650* 18.50%

Equity Fund 8,390* 6.57%

Technology Fund 0 0

Short-Term Government Fund 235,104** 5.37%

Gold Fund 0 0

Biotechnology Fund 37,432*** 17.18%***

Convertibles Fund 1,864*** 3.39%

Global Bond Fund 5,068* 2.07%

_________________________
* Consists solely of shares owned by Pacific Income Advisers, Inc.
which is controlled by Joseph Lloyd McAdams, Jr. and Heather U.
Baines.
** Consists solely of shares owned by Pacific Income Advisers, Inc. and
Joseph Lloyd McAdams, Jr.
*** Consists solely of shares owned by Murenove, Inc. which is controlled
by John Michael Murphy.

PIA, Murphy, Orrell, Camborne and the Administrator

Pacific Income Advisers, Inc. ("PIA") is the investment adviser
to the Short-Term Government Fund, the Government Fund, the Equity Fund
and the Global Bond Fund. Joseph Lloyd McAdams, Jr. and Heather U. Baines
own all of the outstanding stock of PIA. Prior to December 13, 1996,
Monitrend Investment Management, Inc. ("MIMI") was investment adviser to
the Equity Fund and manager to the Short-Term Government Fund and
Government Fund. Prior to December 13, 1996, Robert L. Bender, Inc. was
sub-adviser to the Equity Fund.

Murphy Investment Management, Inc. (formerly known as Negative
Beta Associates, Inc.) ("Murphy") is the investment adviser to the
Biotechnology Fund, the Technology Fund and the Convertibles Fund. John
Michael Murphy and Ms. Gaye Elizabeth Morgenthaler own all of the
outstanding stock of Murphy. Prior to December 13, 1996, MIMI was the
investment adviser to the Technology Fund and Murphy was sub-adviser to
the Technology Fund. Prior to December 20, 1996, MIMI was investment
adviser to the Biotechnology Fund. Prior to December 31, 1996, MidCap
Associates, Inc. was the investment adviser to the Convertibles Fund and
MIMI was sub-adviser to the Convertibles Fund.

Orrell Capital Management, a division of Orrell and Company,
Inc. ("Orrell"), is the investment adviser to the Gold Fund. Gregory M.
Orrell is the President and sole shareholder of Orrell. Prior to December
13, 1996, MIMI was the investment adviser to the Gold Fund and from
January 31, 1991 to August 17, 1996 was the sub-adviser to the Gold Fund.
Kensington Capital Management, Inc. was investment adviser to the Gold
Fund from January 31, 1991 to August 17, 1994.

Camborne Advisors, Inc. ("Camborne") is the sub-adviser to the
Government Fund. Camborne is a privately-held corporation which is wholly
owned by Camborne Investment Corporation. Camborne became the sub-adviser
to the Government Fund on December 13, 1996.

Under the investment advisory agreements applicable to the
Funds, the investment adviser thereto is paid a fee computed daily and
payable monthly, at an annual rate expressed as a percentage of the
applicable Fund's average daily net assets. The applicable fee rates are
as follows:

Fund Fee Rate Average Daily Net Assets

Short-Term Government Fund 0.20% All asset levels

Biotechnology Fund 1.00% All asset levels

Convertibles Fund 0.625% 0 to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million

Government Fund 0.40% All asset levels

Gold Fund 1.00% 0 to $50 million
0.875% $50 million to $75 million
0.75% $75 million to $100 million
0.625% $100 million to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million

Technology Fund 1.00% All asset levels

Equity Fund 1.00% 0 to $50 million
0.875% $50 million to $75 million
0.75% $75 million to $100 million
0.625% $100 million to $150 million
0.50% $150 million to $250 million
0.375% Over $250 million

Global Bond Fund 0.40% All asset levels

Pursuant to the sub-advisory agreement applicable to the Government Fund,
PIA pays Camborne a fee computed daily and payable monthly, at an annual
rate of 0.20% of the Government Fund's average daily net assets.

Under the investment advisory agreements applicable to the
Funds, the investment adviser thereto is responsible for reimbursing the
applicable Fund to the extent necessary to permit the Fund to maintain the
expense limitations set forth in the Trust's current prospectus. Expense
reimbursement obligations are calculated daily and paid monthly, at an
annual rate expressed as a percentage of the applicable Fund's average
daily net assets. The applicable expense limitations are as follows:

Fund Expense Limitation

Short-Term Government Fund 0.30%

Biotechnology Fund 2.44%

Convertibles Fund 2.44%

Government Fund 1.10%

Gold Fund 2.44%

Technology Fund 2.44%

Equity Fund 2.44%

Global Bond Fund 0.51%

Pursuant to the sub-advisory agreement applicable to the Government Fund,
Camborne will reimburse PIA if PIA is required to make reimbursement to
the Government Fund.

The Global Bond Fund did not commence operations until March 31,
1997. As a result of expense limitations, all investment advisory, sub-
advisory and management fees otherwise payable by the Funds were waived
and the following reimbursements were made to the Funds:

Reimbursements in
Fiscal Addition to Fee
Fund Year End Fees Waived Waivers

Government Fund 1996 $ 3,924 $41,485
1995 $ 3,724 $39,367
1994 $ 4,348 $43,657

Short-Term Government Fund 1996 $18,898 $21,965
1995 $ 7,978 $26,878
1994 $ 1,226 $ 9,448

$43,620
Equity Fund 1996 $ 5,136 $41,794
1995 $ 5,226 $43,697
1994 $ 8,635

Gold Fund 1996 $12,617 $35,235
1995 $ 4,929 $44,462
1994 $21,634 $46,007

Convertibles Fund 1996 $ 9,258 $33,053
1995 $ 9,067 $43,437
1994 $11,830 $45,254

Biotechnology Fund 1996 $ 4,318 $39,312
1995 $ 8,098 $37,592
1994 $11,828 $21,409

Technology Fund 1996 $ 5,774 $41,127
1995 $ 2,629 $40,101
1994 $ 2,036 $15,861

All reimbursements made with respect to the Short-Term Government Fund
were made by PIA. With respect to the other Funds, all reimbursements
made during the fiscal years ended November 30, 1994 and November 30, 1995
were made by MIMI. During the fiscal year ended November 30, 1996, PIA
reimbursed the Equity Fund and the Short-Term Government Fund for excess
expenses. Murphy reimbursed the Convertibles Fund, the Biotechnology Fund
and the Technology Fund, and Orrell reimbursed the Gold Fund.

Each investment advisory agreement and the sub-advisory
agreement provides that the investment adviser or the sub-adviser, as the
case may be, shall not be liable to the Fund in question for any error of
judgment by the investment adviser or the sub-adviser or for any loss
sustained by that Fund except in the case of wilful misfeasance, bad
faith, gross negligence or reckless disregard of duty.

During the fiscal years ended November 30, 1996, November 30,
1995 and November 30, 1994, the Trust's Administrator, American Data
Services, Inc., received the following fees from the Funds:

Fund 1996 1995 1994

Convertibles Fund $14,407 $18,274 $14,116

Government Fund $15,582 $16,671 $14,076

Gold Fund $16,325 $13,939 $16,621

Equity Fund $15,637 $14,704 $13,431

Biotechnology Fund $15,841 $14,954 $ 3,454

Technology Fund $16,238 $14,026 $ 784

Short-Term Government Fund $15,435 $ 9,773 $ 600

Portfolio Transactions and Brokerage

Under each investment advisory agreement, the investment adviser
thereto is responsible for decisions to buy and sell securities for the
Fund in question, broker-dealer selection, and negotiation of brokerage
commission rates. (These activities of the investment advisers are
subject to the control of the Trust's Board of Trustees, as are all of the
activities of the investment advisers under the investment advisory
agreements. The primary consideration of the investment advisers in
effecting a securities transaction will be execution at the most favorable
securities price. Each agreement also contains the provisions summarized
below. The Trust understands that a substantial amount of the portfolio
transactions of the Fund in question may be transacted with primary market
makers acting as principal on a net basis, with no brokerage commissions
being paid by the Fund. Such principal transactions may, however, result
in a profit to market makers. In certain instances the investment adviser
may make purchases of underwritten issues for the Fund at prices which
include underwriting fees.

In selecting a broker-dealer to execute each particular
transaction, the investment adviser will take the following into
consideration: the best net price available; the reliability, integrity
and financial condition of the broker-dealers; the size of and difficulty
in executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Funds on a continuing
basis. Accordingly, the price to a Fund in any transaction may be less
favorable than that available from another broker-dealer if the difference
is reasonably justified by other aspects of the portfolio execution
services offered. Subject to such policies as the Board of Trustees may
determine, the investment adviser shall not be deemed to have acted
unlawfully or to have breached any duty created by the investment advisory
agreement in question or otherwise solely by reason of its having caused a
Fund to pay a broker or dealer that provides brokerage or research
services to the investment adviser an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction, if the
investment adviser determined in good faith that such amount of commission
was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the investment adviser's overall
responsibilities with respect to the Trust or other accounts for which the
investment adviser has investment discretion. The investment advisers are
further authorized to allocate the orders placed by it on behalf of the
Funds to such brokers or dealers who also provide research or statistical
material, or other services, to the Trust, the investment adviser or any
affiliate of the foregoing. Such allocation shall be in such amounts and
proportions as the investment adviser shall determine and the investment
adviser shall report on such allocations regularly to the Funds,
indicating the broker-dealers to whom such allocations have been made and
the basis therefor. The investment advisers are authorized to consider
sales of shares as a factor in the selection of brokers or dealers to
execute portfolio transactions, subject to the requirements of best
execution, i.e. that such brokers or dealers are able to execute the order
promptly and at the best obtainable securities price.

The investment advisory agreements permit the investment adviser
to direct brokerage to Syndicated Capital, Inc., the Distributor of each
of the Funds, but only if they reasonably believe the commissions and
transaction quality are comparable to that available from other brokers.
Syndicated Capital, Inc. when acting as a broker for the Funds in any of
its portfolio transactions executed on a securities exchange of which it
is a member, will act in accordance with regulations adopted by the
Securities and Exchange Commission under Section 11(a) of the Securities
Exchange Act of 1934 and the rules of such exchanges. The Distributor is
wholly-owned by Joseph Lloyd McAdams, Jr. In the Agreements, the term
"broker" and "broker-dealer" includes futures commission merchants.

Neither the Short-Term Government Fund nor the Government Fund
paid any brokerage commissions during the three fiscal years ended
November 30, 1996. During the fiscal years ended November 30, 1996,
November 30, 1995 and November 30, 1994 the Gold Fund paid brokerage
commissions of $15,150, $6,807 and $22,812, respectively, and the
Convertibles Fund paid brokerage commissions of $9,158, $14,152 and
$2,530, respectively. During the fiscal years ended November 30, 1996,
November 30, 1995 and November 30, 1994, the Equity Fund paid brokerage
commissions of $1,452, $2,145 and $3,271, respectively. During the fiscal
years ended November 30, 1996, November 30, 1995 and November 30, 1994 the
Biotechnology Fund paid brokerage commissions of $1,140, $1,411 and
$4,721, respectively, and the Technology Fund paid brokerage commissions
of $5,204, $1,550 and $2,262, respectively. All of the brokers to whom
commissions were paid provided research services to the Fund's investment
advisers. The research services discussed above may be in written form or
through direct contact with individuals and may include information as to
particular companies and securities as well as market economic or
institutional areas and information assisting the Fund in the valuation of
its investments.

The following table sets forth information concerning brokerage
commissions paid by the Funds to the Distributor during the fiscal years
ended November 30, 1996, November 30, 1995 and November 30, 1994. (No
other Fund paid brokerage commissions to the Distributor during such
fiscal years.)

Gold Fund

Fiscal Year Fiscal Year Fiscal Year
Ended November Ended November Ended November
30, 1996 30, 1995 30, 1994

Commissions Paid to $510 0 0
Distributor

Total Commissions Paid $15,230 0 0

% Paid to Distributor 3.34% N/A N/A

Dollar Amount of $81,313 0 0
Transactions on which
Commissions Were Paid to
Distributor

Total Dollar Amount of $1,703,604 0 0
Transactions on which
Commissions Were Paid

% of Transactions 4.77% N/A N/A
Involving Commission
Payments to Distributor

Convertibles Fund

Fiscal Year Fiscal Year Fiscal Year
Ended November Ended November Ended November
30, 1996 30, 1995 30, 1994

Commissions Paid to $122 0 0
Distributor

Total Commissions Paid $9,158 0 0

% Paid to Distributor 1.33% N/A N/A

Dollar Amount of $48,211 0 0
Transactions on which
Commissions Were Paid to
Distributor

Total Dollar Amount of $2,368,740 0 0
Transactions on which
Commissions Were Paid

% of Transactions 2.04% N/A N/A
Involving Commission
Payments to Distributor

Distribution Plan

The Trust's Distribution Plan and Agreement ("Plan") is the
written plan contemplated by Rule 12b-1 (the "Rule") under the 1940 Act.

The Plan contains the following definitions. "Qualified
Recipient" shall mean any broker-dealer or other "person" (as that term is
defined in the 1940 Act) which (i) has rendered distribution assistance
(whether direct, administrative or both) in the distribution of the
Trust's shares, (ii) furnishes the Distributor (on behalf of the Trust)
with such information as the Distributor shall reasonably request to
answer such questions as may arise and (iii) has been selected by the
Distributor to receive payments under the Plan. "Qualified Holdings"
means all shares of the Trust beneficially owned by (i) a Qualified
Recipient, (ii) the customers (brokerage or other) of a Qualified
Recipient, (iii) the clients (investment advisory or other) of a Qualified
Recipient, (iv) the accounts as to which a Qualified Recipient has a
fiduciary or custodial relationship, and (v) the members of a Qualified
Recipient, if such Qualified Recipient is an association or union;
provided that the Qualified Recipient shall have been instrumental in the
purchase of such shares by, or shall have provided administrative
assistance to, such customers, clients, accounts or members in relation
thereto. The Distributor is authorized to make final and binding
decisions as to all matters relating to Qualified Holdings and Qualified
Recipients, including but not limited to (i) the identity of Qualified
Recipients; (ii) whether or not any Trust shares are to be considered as
Qualified Holdings of any particular Qualified Recipient; and (iii) what
Trust shares, if any, are to be attributed to a particular Qualified
Recipient, to a different Qualified Recipient or to no Qualified
Recipient. "Qualified Trustees" means the Trustees of the Trust who are
not interested persons, as defined in the 1940 Act, of the Trust and who
have no direct or indirect financial interest in the operation of the Plan
or any agreement related to the Plan. While the Plan is in effect, the
selection and nomination of Qualified Trustees is committed to the
discretion of such Qualified Trustees. Nothing in the Plan shall prevent
the involvement of others in such selection and nomination if the final
decision on any such selection and nomination is approved by a majority of
such Qualified Trustees. "Permitted Payments" means payments by the
Distributor to Qualified Recipients as permitted by the Plan.

The Plan authorizes the Distributor to make Permitted Payments
to any Qualified Recipient on either or both of the following bases: (a)
as reimbursement for direct expenses incurred in the course of
distributing Trust shares or providing administrative assistance to the
Trust or its shareholders, including, but not limited to, advertising,
printing and mailing promotional material, telephone calls and lines,
computer terminals, and personnel; and/or (b) at a rate specified by the
Distributor with respect to the Qualified Recipient in question based on
the average value of the Qualified Holdings of such Qualified Recipient.
The Distributor may make Permitted Payments in any amount to any Qualified
Recipient, provided that (i) the total amount of all Permitted Payments
made during a fiscal year to all Qualified Recipients (whether made under
(a) and/or (b) above) do not exceed, in that fiscal year of the Trust, the
aggregate of 0.99% of the daily net assets of the Gold Fund and the Equity
Fund; 0.25% of the daily net assets of the Biotechnology Fund, the
Technology Fund and the Convertibles Fund; 0.10% of the daily net assets
of the Government Fund; and 0.05% of the daily net assets of the Short-
Term Government Fund in that fiscal year; and (ii) a majority of the
Qualified Trustees may at any time decrease or limit the aggregate amount
of all Permitted Payments or decrease or limit the amount payable to any
Qualified Recipient. (The Global Bond Fund will not make any payments
pursuant to the Plan.) The Trust will reimburse the Distributor from the
assets of the Trust for such Permitted Payments within such limit, but
either the Distributor or one or more investment advisers to the Trust
shall bear any Permitted Payments beyond such limits.

The Plan also authorizes the Distributor to purchase advertising
for shares of the Trust, to pay for sales literature and other promotional
material, and to make payments to sales personnel affiliated with it. Any
such advertising and sales material may include references to other
open-end investment companies or other investments and any salesmen so
paid are not required to devote their time solely to the sale of Trust
shares. Any such expenses ("Permitted Expenses") made during a fiscal
year of the Trust shall be reimbursed or paid by the Trust from the assets
of the Trust, except that the combined amount of reimbursement or payment
of Permitted Expenses together with the Permitted Payments made pursuant
to the Plan by the Trust shall not, in the aggregate, in any fiscal year
of the Trust exceed 0.99% of the daily net assets of the Gold Fund and the
Equity Fund; 0.25% of the daily net assets of the Biotechnology Fund, the
Technology Fund and the Convertibles Fund; 0.10% of the daily net assets
of the Government Fund; and 0.05% of the daily net assets of the Short-
Term Government Fund in such year and either the Distributor or one or
more investment advisers to the Trust shall bear any such expenses beyond
such limit. As indicated above, no payments under the Plan will be made
by the Global Bond Fund. No such reimbursement may be made for Permitted
Expenses or Permitted Payments for fiscal years prior to the fiscal year
in question or in contemplation of future Permitted Expenses or Permitted
Payments.

The Plan states that if and to the extent that any of the
payments by the Trust from the assets of the Trust listed below are
considered to be "primarily intended to result in the sale of shares"
issued by the Trust within the meaning of the Rule, such payments by the
Trust are authorized without limit under the Plan and shall not be
included in the limitations contained in the Plan: (i) the costs of the
preparation, printing and mailing of all required reports and notices to
shareholders, irrespective of whether such reports or notices contain or
are accompanied by material intended to result in the sale of shares of
the Trust or other funds or other investments; (ii) the costs of
preparing, printing and mailing of all prospectuses to shareholders; (iii)
the costs of preparing, printing and mailing of any proxy statements and
proxies, irrespective of whether any such proxy statement includes any
item relating to, or directed other funds or other investments; (ii) the
costs of preparing, printing and mailing of all prospectuses to
shareholders; (iii) the costs of preparing, printing and mailing of any
proxy statements and proxies, irrespective of whether any such proxy
statement includes any item relating to, or directed toward, the sale of
the Trust's shares; (iv) all legal and accounting fees relating to the
preparation of any such reports, prospectuses, proxies and proxy
statements; (v) all fees and expenses relating to the qualification of the
Trust and/or its shares under the securities or "Blue-Sky" law of any
jurisdiction; (vi) all fees under the 1940 Act and the Securities Act of
1933, including fees in connection with any application for exemption
relating to or directed toward the sale of the Trust's shares; (vii) all
fees and assessments of the Investment Company Institute or any successor
organization, irrespective of whether some of its activities are designed
to provide sales assistance; (viii) all costs of preparing and mailing
confirmations of shares sold or redeemed or share certificates, and
reports of share balances; and (ix) all costs of responding to telephone
or mail inquiries of shareholders.

The Plan also states that it is recognized that the costs of
distribution of the Trust's shares are expected to exceed the sum of
Permitted Payments, Permitted Expenses and the portions of sales charges
on Trust shares retained by the Distributor ("Excess Distribution Costs")
and that the profits, if any, of the common owners of the Distributor and
any investment adviser are dependent primarily on the advisory fees paid
by the Funds. If and to the extent that any investment advisory fees paid
by the Fund might, in view of any Excess Distribution Costs, be considered
as indirectly financing any activity which is primarily intended to result
in the sale of shares issued by the Fund, the payment of such fees is
authorized under the Plan. The Plan states that in taking any action
contemplated by Section 15 of the 1940 Act as to any investment advisory
contract to which a Fund is a party, the Board of Trustees, including
Trustees who are not "interested persons," as defined in the 1940 Act,
shall, in acting on the terms of any such contract, apply the "fiduciary
duty" standard contained in Sections 36(a) and 36(b) of the 1940 Act.

The Plan requires that while it is in effect, the Distributor
shall report in writing at least quarterly to the Board of Trustees, and
the Board shall review, the following: (i) the amounts of all Permitted
Payments, the identity of the recipients of each such Payment; the basis
on which each such recipient was chosen as a Qualified Recipient and the
basis on which the amount of the Permitted Payment to such Qualified
Recipient was made; (ii) the amounts of Permitted Expenses and the purpose
of each such Expense; and (iii) all costs of the other payments specified
in the Plan (making estimates of such costs where necessary or desirable),
in each case during the preceding calendar or fiscal quarter.

The aggregate Permitted Payments and Permitted Expenses paid or
accrued by the Government Fund, the Gold Fund, the Convertibles Fund, the
Equity Fund, the Biotechnology Fund, the Technology Fund and the Short-
Term Government Fund during the fiscal year ended November 30, 1996 were
$795, $11,658, $11,998, $4,103, $2,576, $5,154 and $2,377, respectively.
Of such amounts $10,678 was paid to Qualified Recipients and the remaining
$27,983 was paid $23,445 to Pallas Financial Corporation, the distributor
of each of the Funds until April 30, 1996 and $4,538 to Syndicated
Capital, Inc., the distributor of the Funds thereafter.

The Plan was approved (i) by a vote of the Board of Trustees and
of the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on the Plan; and (ii) by a vote of holders of a
"majority" (as defined in the 1940 Act) of the outstanding voting
securities of each Fund. The Plan, unless terminated as hereinafter
provided, shall continue in effect from year to year only so long as such
continuance is specifically approved at least annually by the Board of
Trustees and its Qualified Trustees cast in person at a meeting called for
the purpose of voting on such continuance. The Plan may be terminated
with respect to a Fund at any time by a vote of a majority of the
Qualified Trustees or by the vote of the holders of a "majority" (as
defined in the 1940 Act) of the outstanding voting securities of the Fund.
The Plan may not be amended to increase materially the amount of payments
to be made without shareholder approval, as set forth in (ii) above, and
all amendments must be and have been approved in the manner set forth
under (i) above.

Net Asset Value

In determining the net asset value of a Fund's shares, common
stocks that are listed on national securities exchanges or the NASDAQ
Stock Market are valued at the last sale price as of the close of trading,
or, in the absence of recorded sales, at the average of readily available
closing bid and asked prices on such exchanges. Unlisted securities held
by a Fund that are not included in the NASDAQ Stock Market are valued at
the average of the quoted bid and asked prices in the over-the-counter
market. Securities and other assets for which market quotations are not
readily available are valued by appraisal at their fair value as
determined in good faith by the investment adviser under procedures
established by and under the general supervision and responsibility of the
Trust's Board of Trustees. Short-term investments which mature in less
than 60 days are valued at amortized cost (unless the Board of Trustees
determines that this method does not represent fair value), if their
original maturity was 60 days or less, or by amortizing the value as of
the 61st day prior to maturity, if their original term to maturity
exceeded 60 days. Options traded on national securities exchanges are
valued at the average of the closing quoted bid and asked prices on such
exchanges and Futures and options thereon, which are traded on commodities
exchanges, are valued at their last sale price as of the close of such
commodities exchanges.

When a Fund writes a call or a put, an amount equal to the
premium received is included in the Statement of Assets and Liabilities as
an asset, and an equivalent amount is included in the liability section.
This amount is "marked-to-market" to reflect the current market value of
the call or put. If a call a Fund wrote is exercised, the proceeds it
receives on the sale of the related investment by it are increased by the
amount of the premium it received. If a put a Fund wrote is exercised,
the amount it pays to purchase the related investment is decreased by the
amount of the premium received. If a call a Fund purchased is exercised
by it, the amount it pays to purchase the related investment is increased
by the amount of the premium it paid. If a put a Fund purchased is
exercised by it, the amount it receives on its sale of the related
investment is reduced by the amount of the premium it paid. If a call or
put written by a Fund expires, it has a gain in the amount of the premium;
if that Fund enters into a closing transaction, it will have a gain or
loss depending on whether the premium was more or less than the cost of
the closing transaction.

Shareholder Services

Statement of Intent. Reduced sales charges are available to
purchasers who enter into a written Statement of Intent providing for the
purchase, within a thirteen-month period, of shares of the Equity Fund,
the Gold Fund or the Government Fund. All shares of any of the Equity
Fund, the Gold Fund or the Government Fund previously purchased and still
owned are also included in determining the applicable reduction.

A Statement of Intent permits a purchaser to establish a total
investment goal to be achieved by any number of investments in the Equity
Fund, the Gold Fund or the Government Fund over a thirteen-month period.
The investment made during the period will receive the reduced sales
commission applicable to the amount represented by the goal, as if it were
a single investment. Shares totaling 5% of the dollar amount of the
Statement of Intent will be held in escrow by the Transfer Agent in the
name of the purchaser. The effective date of a Statement of Intent may be
back-dated up to 90 days, in order that any investments made during this
90-day period, valued at the purchaser's cost, can be applied to the
fulfillment of the Statement of Intent goal.

The Statement of Intent does not obligate the investor to
purchase, nor a Fund to sell, the indicated amount. In the event the
Statement of Intent goal is not achieved within the thirteen-month period,
the purchaser is required to pay the difference between the sales
commission otherwise applicable to the purchases made during this period
and sales charges actually paid. Such payment may be made directly to the
Distributor or, if not paid, the Distributor will liquidate sufficient
escrowed shares to obtain such difference. If the goal is exceeded in an
amount which qualifies for a lower sales commission, a price adjustment is
made by refunding to the purchaser the amount of excess sales commission,
if any, paid during the thirteen-month period. Investors electing to
purchase shares of a Fund pursuant to a Statement of Intent should
carefully read such Statement of Intent.

Systematic Withdrawal Plan. A Systematic Withdrawal Plan is
available for shareholders having shares of a Fund with a minimum value of
$10,000, based upon the offering price. The Systematic Withdrawal Plan
provides for monthly or quarterly checks in any amount not less than $100
(which amount is not necessarily recommended).

Dividends and capital gains distributions on shares held under
the Systematic Withdrawal Plan are invested in additional full and
fractional shares at net asset value. The Transfer Agent acts as agent
for the shareholder in redeeming sufficient full and fractional shares to
provide the amount of the periodic withdrawal payment. The Systematic
Withdrawal Plan may be terminated at any time, and, while no fee is
currently charged, the Distributor reserves the right to initiate a fee of
up to $5 per withdrawal, upon 30 days' written notice to the shareholder.

Withdrawal payments should not be considered as dividends,
yield, or income. If periodic withdrawals continuously exceed reinvested
dividends and capital gains distributions, the shareholder's original
investment will be correspondingly reduced and ultimately exhausted.

Furthermore, each withdrawal constitutes a redemption of shares,
and any gain or loss realized must be recognized for federal income tax
purposes. Although the shareholder may invest $2,500 or more in a
Systematic Withdrawal Plan, withdrawals made concurrently with purchases
of additional shares of the Gold Fund, the Equity Fund and the Government
Fund are inadvisable because of the sales charges applicable to the
purchase of additional shares.

Pre-authorized Check Investment. A shareholder who wishes to
make additional investments in a Fund on a regular basis may do so by
authorizing the Distributor to deduct a fixed amount each month from the
shareholder's checking account at his or her bank. This amount will
automatically be invested in that Fund on the same day that the
preauthorized check is issued. The shareholder will receive a
confirmation from the Fund, and the checking account statement will show
the amount charged. The form necessary to begin this service is available
from the Distributor.

Tax Sheltered Retirement Plans. Through the Distributor,
retirement plans are either available or expected to be available for use
by the self-employed (Keogh Plans), Individual Retirement Accounts
(including SEP-IRAs) and "tax-sheltered accounts" under Section 403(b)(7)
of the Code. Adoption of such plans should be on advice of legal counsel
or tax advisers.

For further information regarding plan administration, custodial
fees and other details, investors should contact the Distributor.

Investments at Net Asset Value. The Trust permits investors to
purchase shares of the Gold Fund, the Equity Fund and the Government Fund
at net asset value, using the proceeds from certain redemptions of shares
of other mutual funds. (All purchases of the Technology Fund, the
Biotechnology Fund, the Convertibles Fund, the Short-Term Government Fund
and the Global Bond Fund are at net asset value.) The reason for
permitting such sales at net asset value is that the Distributor believes
that these investors have already become informed about the advantages of
investing in mutual funds and accordingly the sales effort is
significantly less. The Distribution Plan is expected to provide adequate
compensation to dealers for assisting these investors in purchasing shares
of the Funds.

As stated in the Prospectus, the Gold Fund, the Government Fund
and the Equity Fund may sell shares at net asset value to officers and
Trustees of the Trust and certain other affiliated persons and members of
their families as well as customers of PIA, Murphy, Orrell, Camborne and
the Distributor, and to certain publishers of investment advisory
newsletters and their subscribers and certain investment advisers on
behalf of their discretionary accounts. The reason for permitting such
investments without a sales charge is that the Distributor incurs no
material sales expense in connection therewith.

Former shareholders of the Gold Fund, the Equity Fund and the
Government Fund may also purchase shares of the Gold Fund, the Equity Fund
and the Government Fund at net asset value up to an amount not exceeding
their prior investment in all of such Funds. When making a purchase at
net asset value pursuant to this provision, the former shareholder should
forward to the Trust's transfer agent a copy of an account statement
showing the prior investment in these Funds.

Dividends and Tax Status

If the Trust's management, in its sole discretion, deems it in
the best interest of the Gold Fund, the Biotechnology Fund, the Global
Bond Fund, the Convertibles Fund or the Technology Fund and their
respective shareholders to do so, such Funds may each invest more than 50%
of its total assets in securities of foreign corporations. In that case,
such Funds will be able to elect to take advantage of the provisions of
Section 853 of the Code. Under the provisions of Section 853, a
shareholder will be treated as receiving an additional distribution from
the Fund in the amount indicated in a notice furnished to him as his pro
rata portion of income taxes withheld by foreign governments from interest
and dividends paid on the Fund's investments. However, the shareholder
may, subject to certain limitations, take the amount of such foreign taxes
withheld as a credit against his federal income tax (including the
alternative minimum tax) or, alternatively, may treat the foreign tax
withheld as a deduction from his gross income in computing his taxable
income if that should be to his advantage. In substance, this policy
enables the shareholder to benefit from the same foreign tax credit or
deduction that he would have received if he had directly owned the foreign
securities and had paid foreign income tax on the income therefrom. Such
foreign tax credit is subject to certain limitations, and each shareholder
is referred to his tax adviser with respect to the availability of the
foreign tax credit to him.

General

The Trust's Declaration of Trust permits its Trustees to issue
an unlimited number of full and fractional shares of beneficial interest
and to divide or combine the shares into a greater or lesser number of
shares without thereby changing the proportionate beneficial interest in a
Fund. Each share represents an interest in a Fund proportionately equal
to the interest of each other share. Upon the Trust's liquidation, all
shareholders of a Fund would share pro rata in its net assets available
for distribution to shareholders. If they deem it advisable and in the
best interests of shareholders, the Board of Trustees may create
additional classes of shares which may differ from each other only as to
dividends or (as is the case with the Funds) each of which has separate
assets and liabilities (in which case any such class would have a
designation including the word "Series"). Shares of each class (including
the Funds) are entitled to vote as a class only to the extent required by
the 1940 Act or as permitted by the Trustees. Income and operating
expenses are allocated fairly among the classes by the Trustees.

The Funds' custodian, Star Bank, N.A., Cincinnati, Ohio, is
responsible for holding the Funds' assets. American Data Services, Inc.,
the Trust's Administrator, maintains the Funds' accounting records and
calculates daily the net asset value of the Funds' shares.

The Trust's independent accountants, McGladrey & Pullen, LLP,
examine the Fund's annual financial statements and assist in the
preparation of certain reports to the Securities and Exchange Commission.

During the three fiscal years ended November 30, 1996, the
aggregate dollar amount of sales charges on the sales of shares of the
Funds and the amount retained by the Fund's distributor were as follows:

<TABLE>
<CAPTION>
Years Ended November 30
1996 1995 1994
Sales Amount Sales Amount Sales Amount
Fund Charge Retained Charge Retained Charge Retained

<S> <C> <C> <C> <C> <C> <C>
Short-Term Government Fund $ 63 $ 39 $ 0 $ 0 $ 0 $ 0

Government Fund $ 0 $ 0 $2,291 $201 $ 4 $ 4

Gold Fund $22,796 $5,788 $ 29 $ 3 $ 290 $ 290

Convertibles Fund $ 103 $ 12 $ 135 $ 15 $ 79 $ 79

Equity Fund $ 1,841 $ 316 $ 502 $ 67 $ 241 $ 241

Biotechnology Fund $ 123 $ 44 $ 445 $ 65 $1,517 $1,517

Technology Fund $ 3,372 $ 414 $ 158 $ 17 $ 196 $ 196

</TABLE>

Calculation of Performance Data

Convertibles Fund

Average annual total return:
for the one-year period ended May 31, 1997: 13.19%
for the five-year period ended May 31, 1997: 6.72%
for the period February 5, 1988 - May 31, 1997: 4.94%

Government Fund

Average annual total return:
for the one-year period ended May 31, 1997: 3.59%
for the five-year period ended May 31, 1997: 4.75%
for the ten-year period ended May 31, 1997: 4.29%

Gold Fund

Average annual total return:
for the one-year period ended May 31, 1997: (31.15)%
for the five-year period ended May 31, 1997: (11.11)%
for the period February 5, 1988 - May 31, 1997: (9.12)%

Equity Fund

Average annual total return:
for the one-year period ended May 31, 1997: (10.50%)
for the five-year period ended May 31, 1997 7.87%
for the period April 1, 1992 - May 31, 1997: 7.61%

Biotechnology Fund

Average annual total return:
for the one-year period ended May 31, 1997: (6.53)%
for the period October 20, 1993 - May 31, 1997: (2.43)%

Technology Fund

Average annual total return:
for the one-year period ended May 31, 1997: (12.16)%
for the period October 20, 1993 - May 31, 1997: 10.75%

Short-Term Government Fund

Average annual total return:
for the one-year period ended May 31, 1997: 7.26%
for the period April 22, 1994 - May 31, 1997: 6.56%

Global Bond Fund

Total return:
for the period April 1, 1997 - August 31, 1997: 0.80%

Average total return is calculated according to the following
formula:

n
P(1+T) =ERV

where P=a hypothetical initial payment of $1,000; T=average annual total
return; n= number of years; and ERV = ending redeemable value of the
hypothetical initial payment of $1,000 made at the beginning of the period
shown. The maximum sales load was deducted from the initial $1,000
investment and all dividends and distributions were assumed to have been
reinvested at the appropriate net asset value per share.

The Government Fund's yield for the one-month period ended May
31, 1997 was 5.74% and the Short-Term Government Fund's yield for the one
month period ended May 31, 1997 was 6.65%. The Global Bond Fund's yield
for the one month period ended August 31, 1997 was 5.43%. Yields will
fluctuate as market conditions change. The yield of the Government Fund,
the Short-Term Government Fund and the Global Bond Fund is calculated
according to the following formula:

a-b 6
YIELD = 2[(--- + 1) - 1]
cd

Where: a = 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.

d = the maximum offering price per share on the
last day of the period.

All of the foregoing information (total return and yield)
reflect expense reimbursements made to the Funds.

Appendix

Options on Securities

An option is a legal contract that gives the buyer (who then
becomes the holder) the right to buy, in the case of a call, or sell, in
the case of a put, a specified amount of the underlying security at the
option price at any time before the option expires. The buyer of a call
obtains, in exchange for a premium that is paid to a seller, or "writer,"
of a call, the right to purchase the underlying security. The buyer of a
put obtains the right to sell the underlying security to a writer of a
put, likewise in exchange for a premium. Options have standardized terms,
including the exercise price and expiration time; listed options are
traded on national securities exchanges that provide a secondary market in
which holders or writers can close out their positions by offsetting sales
and purchases. The premium paid to a writer is not a down payment; it is
a nonrefundable payment from a buyer to a seller for the rights conveyed
by the option. A premium has two components: the intrinsic value and the
time value. The intrinsic value represents the difference between the
current price of the securities and the exercise price at which the
securities will be sold pursuant to the terms of the option. The time
value is the sum of money investors are willing to pay for the option in
the hope that, at some time before expiration, it will increase in value
because of a change in the price of the underlying security.

One risk of any put or call that is held is that the put or call
is a wasting asset. If it is not sold or exercised prior to its
expiration, it becomes worthless. The time value component of the premium
decreases as the option approaches expiration, and the holder may lose all
or a large part of the premium paid. In addition, there can be no
guarantee that a liquid secondary market will exist on a given exchange,
in order for an option position to be closed out. Furthermore, if trading
is halted in an underlying security, the trading of options is usually
halted as well. In the event that an option cannot be traded, the only
alternative to the holder is to exercise the option.

Stock Index Futures and Debt Futures

A futures contract is a commitment to buy or sell a specific
product at a currently determined market price, for delivery at a
predetermined future date. The futures contract is uniform as to
quantity, quality and delivery time for a specified underlying product.
The commitment is executed in a designated contract market -- a futures
exchange -- that maintains facilities for continuous trading. The buyer
and seller of the futures contract are both required to make a deposit of
cash or U.S. Treasury Bills with their brokers equal to a varying
specified percentage of the contract amount; the deposit is known as
initial margin. Since ownership of the underlying product is not being
transferred, the margin deposit is not a down payment; it is a security
deposit to protect against nonperformance of the contract. No credit is
being extended, and no interest expense accrues on the non-margined value
of the contract. The contract is marked to market every day, and the
profits and losses resulting from the daily change are reflected in the
accounts of the buyer and seller of the contract. A profit in excess of
the initial deposit can be withdrawn, but a loss may require an additional
payment, known as variation margin, if the loss causes the equity in the
account to fall below an established maintenance level.

To liquidate a futures position before the contract expiration
date, a buyer simply sells the contract, and the seller of the contract
simply buys the contract, on the futures exchange. Stock Index Futures
are settled at maturity not by delivery of the stocks making up the index,
but by cash settlement. However, the entire value of the contract does
not change hands; only the gains and losses on the contract since the
preceding day are credited and debited to the accounts of the buyers and
sellers, just as on every other preceding trading day, and the positions
are closed out.

One risk in employing Futures to attempt to protect against
declines in the value of the securities held by a Fund is the prospect
that the prices of Futures will correlate imperfectly with the behavior of
the market value of that Fund's securities. The ordinary spreads between
prices in the cash and futures markets, due to differences in the natures
of those markets, are subject to distortions. First, all participants in
the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through off-setting transactions
which could distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or
taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. The liquidity of the Futures being considered for purchase or
sale by a Fund will be a factor in their selection by the investment
adviser. Third, from the point of view of speculators the deposit
requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation
by speculators in the futures market may cause temporary price
distortions.

It is possible that, where a Fund has sold Futures in a short
hedge, the market may advance but the value of the securities held by the
Fund in question may decline. If this occurred, that Fund would lose
money on the Future and also experience a decline in the value of its
securities. Where Futures are purchased in a long hedge, it is possible
that the market may decline; if the Fund in question then concludes not to
invest in securities at that time because of concern as to possible
further market decline or for other reasons, that Fund will realize a loss
on the Future that is not offset by a reduction in the price of any
securities purchased.

Options on Stock Index Futures and Debt Futures

Options on Futures are similar to options on stocks, except that
the related investment is not a stock, but a Future. Thus, the buyer of a
call option obtains the right to purchase a Future at a specified price
during the life of the option, and the buyer of a put option obtains the
right to sell a Future at a specified price during the life of the option.
The options are traded on an expiration cycle based on the expiration
cycle of the underlying Future.

The risks of options on Futures are similar to those of options
on securities and also include the risks inherent in the underlying
Futures.

Stock Index Options

Options on stock indices are based on the same principles as
listed stock options, described above. The main difference is that the
underlying instrument is a stock index, rather than an individual stock.
Furthermore, settlement of the option is made, not in the stocks that make
up the index, but in cash. The amount of cash is the difference between
the closing price of the index on the exercise date and the exercise price
of the option, expressed in dollars, times a specified multiple (the
"multiplier").

A variety of index options are currently available, and
proposals for several more are pending. Some options involve indices that
are not limited to any particular industry or segment of the market, and
such an index is referred to as a "broadly based stock market index."
Others, particularly the newer options, involve stocks in a designated
industry or group of industries, and such an index is referred to as an
"industry index" or "market segment index." In selecting an option to
hedge a Fund's portfolio, the investment adviser may use either an option
based on a broadly based stock market index, or one or more options on
market segment indices, or a combination of both, in order to attempt to
obtain the proper degree of correlation between the indices and the Fund's
portfolio.

In addition to the risks of options generally and the risk of
imperfect correlation, discussed above, buyers and writers of index
options are subject to additional risks unique to index options. Because
exercises of index options are settled in cash, call writers cannot
provide precisely in advance for their potential settlement obligations by
holding the underlying securities. In addition, there is the risk that
the value of the Fund's portfolio may decline between the time that a call
written by that Fund is exercised and the time that it is able to sell
equities. Even if an index call written by it were "covered" by another
index call held by it, because a writer is not notified of exercise until
at least the following business day, the Fund is exposed to the risk of
market changes between the day of exercise and the day that it is notified
of the exercise. If a Fund holds an index option and chooses to exercise
it, the level of the underlying index may change between the time the Fund
exercises the option and the market closing.

Limitations on Options and Futures

Transactions in options by a Fund will be subject to limitations
established by each of the exchanges governing the maximum number of
options which may be written or held by a single investor or group of
investors acting in concert, regardless of whether the options are written
or held on the same or different exchanges or are written or held in one
or more accounts or through one or more brokers. Thus, the number of
options which a Fund may write or hold may be affected by options written
or held by other investment advisory clients of the Adviser and its
affiliates. Position limits also apply to Futures. An exchange may order
the liquidations of positions found to be in excess of these limits, and
it may impose certain sanctions.

Description of Securities Ratings

As set forth in the Prospectus, each of the Funds may invest in
commercial paper and commercial paper master notes rated A-1 or better by
Standard & Poor's Corporation ("Standard & Poor's) or Prime-1 or better by
Moody's Investors Service, Inc. ("Moody's"). A brief description of the
ratings symbols and their meanings follows.

Standard & Poor's Commercial Paper Ratings. A Standard & Poor's
commercial paper rating is a current assessment of the likelihood of
timely payment of debt considered short-term in the relevant market.
Ratings are graded into several categories, ranging from A-1 for the
highest quality obligations to D for the lowest. These categories are as
follows:

A-1. This highest category indicates that the degree of safety
regarding timely payment is strong. Those issuers determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.

A-2. Capacity for timely payment on issues with this
designation is satisfactory. However the relative degree of safety is not
as high as for issuers designed "A-1".

A-3. Issues carrying this designation have adequate capacity
for timely payment. They are, however, more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designation.

Moody's Short-Term Debt Ratings. Moody's short-term debt
ratings are opinions of the ability of issuers to repay punctually senior
debt obligations which have an original maturity not exceeding one year.
Obligations relying upon support mechanisms such as letters-of-credit and
bonds of indemnity are excluded unless explicitly rated.

Moody's employs the following three designations, all judged to
be investment grade, to indicate the relative repayment ability of rated
issuers:

Prime-1. Issuers rated Prime-1 (or supporting institutions)
have a superior ability for repayment of senior short-term debt
obligations. Prime-1 repayment ability will often be evidenced by many of
the following characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.

- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

Prime-2. Issuers rated Prime-2 (or supporting institutions)
have a strong ability for repayment of senior short-term debt obligations.
This will normally be evidenced by many of the characteristics cited above
but to a lesser degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.

Prime-3. Issuers rated Prime-3 (or supporting institutions)
have an acceptable ability for repayment of senior short-term obligations.
The effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.

FINANCIAL STATEMENTS

The following financial statements are incorporated by reference
to the Annual Report, dated November 30, 1996 of the Trust (File
No. 811-4010) as filed with the Securities and Exchange Commission on
February 21, 1997:

- Schedule of Investments for each Fund
- Statement of Assets and Liabilities for each Fund
- Statement of Changes in Net Assets for each Fund
- Statement of Operations for each Fund
- Notes to Financial Statements
- Financial Highlights for each Fund
- Independent Auditor's Report

The following financial statements are incorporated by reference
to the Semi-Annual Report dated May 31, 1997 of the Trust (File No. 811-
4010) as filed with the Securities and Exchange Commission on July 31,
1997:

- Schedule of Investments for each Fund (other than the
Global Bond Fund)
- Statement of Assets and Liabilities for each Fund (other
than the Global Bond Fund)
- Statement of Changes in Net Assets for each Fund (other
than the Global Bond Fund)
- Statement of Operations for each Fund (other than the
Global Bond Fund)
- Notes to Financial Statements
- Financial Highlights for each Fund (other than the Global
Bond Fund)

<PAGE>

MONTEREY MUTUAL FUND
PIA GLOBAL BOND SERIES
Schedule of Investments - August 31, 1997
(Unaudited)

PIA GLOBAL BOND SERIES
Principal
Value Value

LONG TERM INVESTMENT 95.53%
Foreign Government Obligations 45.12%
Canada
1,200,000 Canadian Government Bond, 7.00% due $917,940
09/01/01

Germany
800,000 Bundes Republic Deutschland,
6.00%, due 07/04/07 455,248
1,400,000 Bundes Obligation 114, 6.50%
due 03/15/00 820,405
--------
U.S. Government Agencies 2.07%
1,550,000 FHLMC CMO, 6.50%,due 11/15/23. 100,459
--------
U.S. Government Securities 51.34%
1,550,000 U.S. Treasury Notes 6.125% due
08/15/07 1,526,266
1,000,000 U.S. Treasury Notes 6.375% due
on 08/15/97 970,001
---------
2,496,267
---------
TOTAL INVESTMENTS
(cost $4,915,962) 98.53% 4,790,319
Other assets less liabilities 1.47% 71,607
---------
TOTAL NET ASSETS 100.00% $4,861,926
=========

<PAGE>

MONTEREY MUTUAL FUND
PIA GLOBAL BOND SERIES
Statement of Assets and Liabilities - August 31,1997
(Unaudited)

Assets
Investments in securities, at value (see Note 5) $ 4,790,319
Income receivable 73,390
Due from investment adviser 4,535
Prepaid expenses and other 7,935
---------
Total Assets 4,876,179
---------
Liabilities
Cash Overdraft 2,400
Accrued expenses and other 11,853
---------
Total Liabilities 14,253
---------
Net Assets
Capital Stock, no par value: unlimited shares
authorized: shares outstanding 4,935,000
Undistributed net investment income 66,252
Accumulated net realized loss on investments and
foreign currencies (10,697)
Net unrealized depreciation on investments and
foreign currencies (128,629)
---------
Net Assets $ 4,861,926
=========
Calculation of Maximum Offering Price
Net asset value, offering and redemption price per
share 20.16
Shares Outstanding 241.174

<PAGE>

MONTEREY MUTUAL FUND
PIA GLOBAL BOND SERIES
Statement of Operations - For the period from April 1, 1997*
through August 31, 1997
(Unaudited)
PIA
Global
Bond
Investment Income
Interest $73,149
------

Expenses
Adviser fees (Note 3) 5,407
Transfer agent fees 4,006
Administrative fees (Note 3) 6,410
Custodian fees 874
Audit fees 3,094
Legal fees 2,197
Registration fees 1,827
Trustees' fees 443
Printing expenses 1,764
Amortization of deferred organization expenses 100
Postage expenses 395
Other expenses 996
-------
Total expenses 27,513
-------
Less: Expense reimbursement from adviser (20,618)
-------
Net expenses 6,895
-------
Net investment Income 66,252
-------
Realized and Unrealized Gain (Loss) on Investments

Net realized loss on investments and foreign
currencies (10,697)
Net change in unrealized appreciation on
investments and foreign currencies (128,629)
--------
Net loss on investments (139,326)
--------
Net decrease in net assets resulting from
operations $ (73,074)
========
* Commencement of operations

<PAGE>

MONTEREY MUTUAL FUND
PIA GLOBAL BOND SERIES
For the period April 1, 1997*
through August 31, 1997
(Unaudited)

Operations
Net investment income (loss) $66,252
Net realized gain (loss) on investments and
foreign currencies (10,697)
Net change in unrealized appreciation on
investment and foreign currencies (128,629)
--------
Net increase (decrease) in net assets resulting
from operations (73,074)

Dividends Paid to Shareholders
Dividends from net investment income 0
---------
Dividends from capital gain 0
---------
0

Fund Share Transactions
Net proceeds from shares sold 4,835,000
Dividends reinvested 0
Payment for shares redeemed 0
---------
Net increase in net assets from fund share
transactions 4,835,000
---------
Net increase in net assets 4,761,926
NET ASSETS, Beginning of Period 100,000
---------

NET ASSETS, End of Period $ 4,861,926
=========
Changes in Shares Outstanding
Shares sold 236,174
Shares issued on reinvestment of dividends 0
Shares redeemed 0
---------
Net increase in shares outstanding 236,174
=========

*Commencement of operations

<PAGE>

MONTEREY MUTUAL FUND
PIA GLOBAL BOND SERIES
For the period April 1, 1997*
through August 31, 1997
(Unaudited)

Net asset value, beginning of period $20.00

Income from investment operations
Net investment income 0.41
Net realized and unrealized loss on investments (.25)
-----

Total from investment operations 0.16
-----
Less Distribution
Dividends from net investment income 0
Dividends from capital gains 0
------
Total distributions 0
------

Net asset value, end of period $ 20.16
======
Total return** 0.80%
Ratios/supplemental data
Net assets, end of period (in 000's) 4,862
Ratio of expenses to average net assets# .51% t
Ratio of net investment income (loss) to average net
assets 4.76% t
Portfolio turnover rate 67.01%

t Annualized
**Excluding sales charge. Not annualized for periods less than a year.
# Net of reimbursements. If the expense reimbursement had not been in
effect,
the ratio of expenses to average net assets would have been 1.98%

See notes to financial statements

<PAGE>

Note 1. Organization

Monterey Mutual Fund (the "Fund), formerly Monitrend Mutual Fund, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust was
organized as a Massachusetts business trust on January 6, 1984 and
consists of eight series of shares, each of which has separate assets and
liabilities and differing investment objectives. The investment objective
for the PIA Global Bond Series (the "Global Bond Series") is to provide a
high level of current income through investing in bonds denominated in
U.S. dollars and other currencies. The Global Bond Series commenced
operation on April 1, 1997.

Note 2. Significant Accounting Policies

The following is a summary of significant accounting policies
followed by the Global Bond Series in the preparation of its financial
statements.

Security Valuation - Portfolio securities that are listed on the
national securities exchanges are valued at the last sale price as of the
close of such securities exchanges, eastern time, or, in the absence of
recorded sales, at the average of readily available closing bid and asked
prices on such exchanges. Unlisted securities are valued at the average
of the quoted bid and asked prices in the over-the-counter market.
Securities and other assets for which market quotations are not readily
available are valued at fair market value as determined in good faith by
the adviser under procedures established by and under the general
supervision and responsibility of the Fund's Board of Trustees. Short-
term investments which mature in less than 60 days are valued at amortized
cost (unless the Board of Trustees determined that this method does not
represent fair market value). Short-term investments which mature after
60 days are valued at market.

Foreign currency - Amounts denominated in or expected to settle in
foreign currencies (FC) are translated into United States dollars (US$) at
rates reported by a major New York City bank on the following basis:

a. Market value of investment securities and other asset and
liabilities - at the closing rate of exchange at the balance sheet date.

b. Purchases and sales of investment securities, income and expenses
- at the rate of exchange prevailing on the respective dates of such
transactions.

Options - When a call is written, an amount equal to the premium
received is included in the Statement of Assets and Liabilities as an
equivalent liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option written. If
an option which was written either expires on its stipulated expiration
date, or a closing purchase transaction is entered into, a gain is
realized (or loss if the cost of a closing purchase transaction exceeds
the premium received when the option was sold) without regard to any
unrealized gain or loss on the underlying security, and the liability
related to such option is extinguished. If a written call option is
exercised, a capital gain or loss is realized from the sale of the
underlying security and the proceeds from such sale are increased by the
premium originally received.

The premium paid for the purchase of a call or a put option is
included in the assets section of the Statement of Assets and Liabilities
as an investment and is subsequently adjusted to the current market value
of the option. If a purchased option expires on its stipulated expiration
date, a loss is realized in the amount of the cost of the option. If a
closing sale transaction is entered into, a gain or loss will be realized
depending on whether the sales proceeds from the closing sale transactions
are greater or less than the cost of the option. If a put option is
exercised, a gain or loss will be realized from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. If a call option is exercised, the cost of the security
purchased upon exercise will be increased by the premium originally paid.

Stock Index Futures - The Global Bond Series may from time to time
enter into Stock Index Futures contracts as a hedge to provide protection
against adverse movement in the prices of securities in the portfolio. A
stock index assigns values to the common stocks included in the index, and
fluctuates with changes in the market value of the common stocks so
included. When a Fund enters into a stock index futures contract, it is
required to pledge to the clearing broker an amount of cash and/or
securities equal to approximately 5% of the contract amount. This amount
is known as the "initial margin". Pursuant to the stock index futures
contract, the Global Bank Fund agrees to take or make delivery of an
amount of cash equal to a specified amount times the difference between
the stock index value at the close of the day and the price at which the
futures contract was originally struck. Such payments, known as the
"variation margin", are recorded by the Fund as unrealized gains or
losses. When the futures contract expires or is closed by the Fund, it
realizes a gain or loss.

Financial Instruments with Off Balance Sheet Risk - Futures contracts
involve elements of market risk and credit risk in excess of the amount
reflected in the Statement of Asset and Liabilities. The contract amounts
of these futures contracts reflect the extent of exposure to off balance
sheet risk.

The predominant market risk is that movements in the prices of the
Fund's portfolio securities being hedged may not correlate perfectly with
the movement in the prices of the future contracts. The lack of
correlation could render the Fund's hedging strategy unsuccessful and
could result in a loss to the Fund.

Futures contracts are purchased only on exchanges. The exchange acts
as the counterpart to the Fund's future transactions; therefore the Fund's
credit risk is limited to the failure of the exchange.

Federal Income Taxes - It is the Fund's policy to meet the
requirements of the Internal Revenue Code applicable to regulate
investment companies and to distribute all of its taxable net income to
its shareholders. Therefore the Global Bond Series paid no Federal income
taxes and no Federal income tax provision was required.

Organizational Costs - These costs have been capitalized are being
amortized using the straight-line method over a period of sixty months
beginning on commencement of operations.

Other - Securities transactions are recorded no later than the first
business day after the trade date. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized
gains and losses on sales of securities are calculated on the identified
cost basis. Dividend income is recorded on the ex-dividend date. Interest
income is recorded on accrual basis.

Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect liability and
disclosure of contingent assets and liabilities at the date of the
financial statement and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results
could differ from those estimates.

Note 3. Investment Advisory and Administration Agreements

The Global Bond Series has an investment advisory agreement with
Pacific Income Advisers, Inc. (PIA) and pays PIA a fee, computed daily and
payable monthly, at an annual rate of 0.20% and .40%, of its net assets.

During the period ended August 31, 1997 PIA agreed to reimburse the
Global Bond Series for expenses in excess of 0.51% of average net assets
of the Global Bond Series. As a result, PIA accrued reimbursement to the
Global Bond Series of $15,211 in addition to foregoing its advisory fees.

The Global Bond Series has a fund accounting and administrative
agreement with American Data Services, Inc. ("ADS"). ADS receives a fee,
computed daily and payable monthly, at an annual rate of .1% of average
daily net assets, subject to a monthly minimum.

Note 4. Distribution Agreement Plan

Syndicated Capital, Inc. serves as the distributor of the Global Bond
Series' shares. The President and sole shareholder of the distributor is
also the chairman and minority shareholder of PIA, as well as a trustee of
the Trust.

Note 5. Purchases and Sales of Securities

The cost of purchases and sales of investment securities (other than
short-term investments) for the period ended August 31, 1997, was
$6,979,051 and $2,034,211 respectively. Gross unrealized appreciation and
depreciation on investments at August 31, 1997, based on cost for Federal
income taxes, was $6,442 and $132,084, respectively.

<PAGE>
PART C
OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Financial Statements:

The following financial statements for the Growth & Income Fund (now
the Convertibles Fund) are incorporated by reference into the Statement of
Additional Information constituting Part B of this Registration Statement.

Audited Financial Statements

Schedule of Investments as of November 30, 1996
Statement of Assets and Liabilities as of November 30,
1996
Statement of Changes in Net Assets for the years ended November 30,
1996 and November 30, 1995
Statement of Operations for the year ended November 30,
1996
Notes to Financial Statements
Financial Highlights
Independent Auditor's Report