PROFESSIONALLY MANAGED PORTFOLIOS
497, 1996-11-08
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                                  Prospectus

                                October 31, 1996

                           BOSTON MANAGED GROWTH FUND
                                 40 Court Street
                                Boston, MA 02108
                                 (617) 726-7250

      BOSTON  MANAGED GROWTH FUND (the "Fund") is a no-load mutual fund with the
investment  objective of seeking income and long-term  capital growth through an
actively managed portfolio of stocks, bonds and money market instruments. United
States  Trust  Company of Boston,  a  Massachusetts-chartered  banking and trust
company (the "Advisor"),  acts as investment advisor to the Fund. The Advisor is
not affiliated with United States Trust Company of New York.


      This  Prospectus  sets  forth  basic   information  about  the  Fund  that
prospective  investors  should  know  before  investing.  It  should be read and
retained for future  reference.  A Statement  of  Additional  Information  dated
October 31, 1996,  as may be amended from time to time,  has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.  The
Statement of Additional  Information  is available  without  charge upon written
request to the Fund at the address or telephone number given above.


<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

<S>                                                                                                    <C>
            Expense Table........................................................................      2
            Financial Highlights.................................................................      3
            Objective and Investment Approach of the Fund; Risk Factors..........................      4
            Management of the Fund...............................................................      5
            How To Invest in the Fund............................................................      6
            How To Redeem an Investment in the Fund..............................................      7
            Retirement Plans.....................................................................      9
            How the Fund's Per Share Value is Determined.........................................      9
            Distributions and Taxes..............................................................      9
            General Information..................................................................     10

</TABLE>

SHARES OF THE FUND ARE NOT DEPOSITS OR  OBLIGATIONS OF OR GUARANTEED OR ENDORSED
BY UNITED STATES TRUST COMPANY OF BOSTON OR ANY BANK. SHARES OF THE FUND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION  ("FDIC"),  FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY.

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.



                        Prospectus dated October 31, 1996

<PAGE>
                                  EXPENSE TABLE

      Expenses  are one of several  factors to consider  when  investing  in the
Fund. The purpose of the following fee table is to provide an  understanding  of
the various costs and expenses  which may be borne  directly or indirectly by an
investment in the Fund.
Actual  expenses may be more or less than those shown.  Other expenses are based
on estimates.
<TABLE>
<CAPTION>

      Shareholder Transaction Expenses
<S>                                                                                              <C>      
      Maximum Sales Load Imposed on Purchases..............................................      None
      Maximum Sales Load Imposed on Reinvested Dividends...................................      None
      Deferred Sales Load..................................................................      None
      Redemption Fees......................................................................      None
      Exchange Fee.........................................................................      None

      Annual Fund Operating Expenses
         (As a percentage of average net assets)
      Investment Advisory Fee..............................................................      0.75%
      Other expenses (after waiver)........................................................      0.25%*
- ------------------------------------------------------------------------------------------------------------------------------------
      Total Fund Operating Expenses (after waiver).........................................      1.00%*
====================================================================================================================================
<FN>

     *The Advisor has voluntarily  undertaken to limit the operating expenses of
the Fund to no more than 1.00% of average net assets annually.

Example

       This table  illustrates the net  transaction and operating  expenses that
       would be  incurred  by an  investment  in the Fund  over  different  time
       periods, assuming a $1,000 investment, a 5% annual return, and redemption
       at the end of each time  period.  Amounts in the table could  increase if
       the Advisor's limitation of expenses were terminated.

      One year.............................................................................      $   10
      Three years..........................................................................      $   32
      Five years...........................................................................      $   55
      Ten years............................................................................      $  122

      The Example shown above should not be considered a representation  of past
or future  expenses and actual expenses may be greater or less than those shown.
In  addition,  federal  regulations  require  the  Example to assume a 5% annual
return,  but the Fund's actual return may be higher or lower. See "Management of
the Fund."
</FN>
</TABLE>


The  BOSTON  MANAGED  GROWTH  FUND  (the  "Fund")  is a  diversified  series  of
Professionally   Managed  Portfolios  (the  "Trust"),   an  open-end  management
investment company offering redeemable shares of beneficial interest. Shares may
be purchased  and  redeemed  without a sales or  redemption  charge at their net
asset  value.  The  minimum  initial  investment  is  $100,000  with  subsequent
investments  of $1,000 or more.  Because  the prices of stocks,  bonds and money
market instruments  fluctuate,  the value of an investment in the Fund will vary
as the market value of its  investment  portfolio  changes,  and when shares are
redeemed,  they may be worth more or less than their  original cost. The Fund is
diversified,  which  under  applicable  federal  law means that as to 75% of its
total  assets,  no more than 5% may be  invested in the  securities  of a single
issuer and in no more than 10% of the voting securities of a single issuer, with
the exception of U.S. Treasury and agency securities.


                               Page 2
<PAGE>

                              FINANCIAL HIGHLIGHTS
     For a share outstanding throughout the period.

     The  following  information  has  been  audited  by  Ernst & Young  L.L.P.,
independent  accountants,  whose  unqualified  report covering the fiscal period
ended June 30,  1996 is  incorporated  by  reference  herein and  appears in the
annual report to  shareholders.  This  information  shoud be read in conjunction
with the financial statements and accompanying notes thereto which appear in the
annual report and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be included in
its annual  report,  which may be obtained  without charge by writing or calling
the   address   or   telephone    number   on   the   Prospectus   cover   page.
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                       December        1,        1995*
                                                                                                 through 
                                                                                          June       30,        1996
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                    <C>   
Net asset value, beginning of period ...................................................               $73.62
                                                                                                       ------
Income from investment operations:
      Net investment income ............................................................                 1.00
      Net realized and unrealized gain on investments ..................................                 2.78
                                                                                                         ----
Total from investment operations........................................................                 3.78
                                                                                                         ----
Less distributions:
      Dividends from net investment income..............................................                (0.15)
                                                                                                        ----- 
Net asset value, end of period .........................................................               $77.25
                                                                                                       ======
Total return ...........................................................................                 5.14%++
Ratios/supplemental data:
Net assets, end of period (millions)....................................................               $61.8
Ratio of expenses to average net assets:
      Before expense reimbursement .....................................................                 1.00%+
      After expense reimbursement.......................................................                 1.00%+
Ratio of net investment income to average net assets:
      Before expense reimbursement .....................................................                 2.43%+
      After expense reimbursement ......................................................                 2.43%+
Portfolio turnover rate ................................................................                17.69%
Average commission rate paid per share..................................................              $  0.05

<FN>

*Commencement of operations.

+Annualized.

++Not Annualized.
</FN>
</TABLE>


                                     Page 3
<PAGE>
           OBJECTIVE AND INVESTMENT APPROACH OF THE FUND; RISK FACTORS

      The Fund's  investment  objective is to seek income and long-term  capital
growth through an actively managed  portfolio of stocks,  bonds and money market
instruments.  It is  not  the  policy  of the  Fund  to  take  risks  to  obtain
speculatively or aggressively high returns. There is no predetermined percentage
of assets to be allocated to either stocks, bonds or money market instruments.

      The expected returns and risks of different asset classes - stocks,  bonds
and money  market  instruments  - change over time.  The ability to evaluate and
determine the relative  attractiveness of these asset categories is advantageous
in controlling risk and achieving  attractive  returns. In determining the asset
allocation of the Fund, the Advisor  considers various  macroeconomic  variables
such as interest rates, inflation,  corporate profits, unemployment, the dollar,
as well as the relative  prices of stocks,  bonds and money market  instruments.
The Fund is not limited in its investment  selection to companies located in the
Boston area or any other specific  region.  The Fund may invest in both domestic
and foreign securities. See "Foreign Securities" on page 4.

      The Fund may purchase both common and preferred  stocks.  Within different
industries,  individual  stock selection is based upon analysis of the company's
fundamental  characteristics including financial strength,  response to industry
and  economy-wide  changes and price and cost trends.  Although  companies  with
varying fundamental characteristics may be purchased to achieve diversification,
emphasis is given to companies with  above-average  earnings  growth,  sustained
profitability and above-average return on invested capital.

      Bond  investments  made by the Fund are those which are  considered by the
Advisor to be  investment  grade,  including  bonds which are direct or indirect
obligations of the U.S. Government, or which at the date of investment are rated
Baa or better  by  Moody's  Investor  Services  ("Moody's")  or BBB or better by
Standard & Poor's  ("S&P") or of  comparable  quality as determined by the Fund.
Bonds  rated  Baa  or BBB  are  considered  medium  grade  obligations,  possess
speculative   characteristics  and  are  more  susceptible  to  changing  market
conditions. The Fund may purchase lower-rated obligations (those rated below BBB
or Baa, which are considered non-investment grade securities),  but no more than
20% of its net assets may be so invested  and the Fund will not purchase or hold
obligations rated lower than B.

      Bonds rated below  investment  grade  typically  carry higher coupon rates
than  investment  grade bonds,  but also are  described as  speculative  by both
Moody's and S&P and may be subject to greater  market price  fluctuations,  less
liquidity,  and  greater  risk of  income  or  principal,  including  a  greater
possibility of default or bankruptcy of the issuer of such securities, than more
highly  rated bonds.  Lower rated bonds also are likely to be more  sensitive to
adverse economic or company developments.  The Advisor seeks to reduce the risks
associated  with investing in such securities by limiting the Fund's holdings in
such  securities.  See the Statement of Additional  Information  concerning bond
ratings.

      Money  market  instruments  selected  for  investment  include high grade,
short-term obligations, including those of the U.S. government, its agencies and
instrumentalities,   U.S.  dollar-denominated   certificates  of  deposit,  time
deposits and bankers' acceptances of U.S. banks,  generally banks with assets in
excess of $1 billion,  repurchase  agreements with recognized  dealers and banks
and commercial  paper  (including  participation  interests in loans extended by
banks to issuers of  commercial  paper) that at the date of  investment is rated
A-1 by S&P or  P-1  by  Moody's,  or,  if  unrated,  of  comparable  quality  as
determined by the Advisor.

      Repurchase  Agreements.  A repurchase agreement is a short-term investment
in which the purchaser acquires ownership of a U.S.  Government  security (which
may be of any maturity) and the seller agrees to repurchase  the obligation at a
future time at a set price, thereby determining the yield during the purchaser's
holding period (usually not more than seven days from the date of purchase). Any
repurchase  transaction  in which the Fund  engages as a purchaser  will require
full

                                     Page 4
<PAGE>
      collateralization of the seller's obligation during the entire term of the
repurchase  agreement.  In the event of a  bankruptcy  or other  default  of the
seller,  the Fund could  experience  both delays in  liquidating  the underlying
security and losses in value. However, the Fund intends to enter into repurchase
agreements  only  with the most  creditworthy  banks and  registered  securities
dealers  pursuant to procedures  adopted and  regularly  reviewed by the Trust's
Board of Trustees.  The Advisor monitors the  creditworthiness  of the banks and
securities dealers with whom the Fund engages in repurchase transactions.

      Illiquid and Restricted  Securities.  The Fund may not invest more than 5%
of its net assets in illiquid  securities,  including (i)  securities  for which
there is no readily available  market;  (ii) securities the disposition of which
would be subject to legal restrictions (so-called "restricted securities");  and
(iii)  repurchase  agreements  having  more  than  seven  days  to  maturity.  A
considerable period of time may elapse between the Fund's decision to dispose of
such  securities  and the time when the Fund is able to dispose of them,  during
which time the value of the securities could decline.  Securities which meet the
requirements of Securities Act Rule 144A are  restricted,  but may be determined
to be liquid by the Trustees,  based on an evaluation of the applicable  trading
markets.

      Foreign  Securities.  The  Fund  may  invest  up to 15% of its  assets  in
securities of foreign issuers.  There may be less publicly available information
about these  issuers than is available  about  companies in the U.S. and foreign
auditing  requirements  may not be  comparable to those in the U.S. In addition,
the value of foreign  securities  may be adversely  affected by movements in the
exchange rates between foreign  currencies and the U.S. dollar, as well as other
political and economic developments, including the possibility of expropriation,
confiscatory   taxation,   exchange  controls  or  other  foreign   governmental
restrictions.  The Fund may  invest  without  regard to this 15%  limitation  in
securities of foreign issuers which are listed and traded on a domestic national
securities exchange.

      Other  Investment  Techniques.  The Fund may purchase put and call options
and engage in the  writing of covered  call  options  and secured put options on
securities,  and employ a variety of other investment techniques,  including the
purchase and sale of market index futures contracts, financial futures contracts
and options on such futures. These policies and techniques may involve a greater
degree of risk than those inherent in more conservative  investment  approaches.
The Fund will engage in futures  contracts and related  options only for hedging
purposes.  It will not engage in such  transactions for speculation or leverage.
The Fund  maintains  an  operating  policy that it may not invest in options and
futures contracts if as a result more than 5% of its assets would be at risk.

      Portfolio Turnover.  The annual rate of portfolio turnover is not expected
to exceed 100%. In general,  the Advisor will not consider the rate of portfolio
turnover to be a limiting  factor in determining  when or whether to purchase or
sell securities in order to achieve the Fund's objective.

The Fund has adopted certain investment restrictions,  which are described fully
in  the  Statement  of  Additional  Information.   Like  the  Fund's  investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.

                             MANAGEMENT OF THE FUND

      The Board of Trustees of the Trust  establishes  the Fund's  policies  and
supervises and reviews the  management of the Fund.  United States Trust Company
of Boston is the Advisor to the Fund.  The Advisor is a  Massachusetts-chartered
banking  and trust  company and is a  wholly-owned  subsidiary  of UST Corp.,  a
Massachusetts bank holding company. It is located at 40 Court Street,  Boston MA
02108.  The Trust  Department  of the Advisor  has managed  funds as a fiduciary
since 1895. Mr. Domenic Colasacco,  Executive Vice President of UST Corp., and a
member  of UST  Corp.'s  Executive  Policy  Committee  is the  Fund's  portfolio
manager.  He is the  President of United  States Trust  Company and has been its
Chief  Investment  Officer since 1980.  Mr.  Colasacco is a Chartered  Financial
Analyst  and a member of the Boston  Security  Analysts'  Society.  Neither  the
Advisor nor UST Corp.  is  affiliated  with United  States Trust  Company of New
York.

                                     Page 5
<PAGE>
      The  Advisor   provides  the  Fund  with  advice  on  buying  and  selling
securities,  manages the investments of the Fund, furnishes the Fund with office
space and certain  administrative  services,  and provides most of the personnel
needed  by the  Fund.  As  compensation,  the Fund  pays the  Advisor  a monthly
investment  advisory fee (accrued daily) based upon the average daily net assets
of the Fund at the rate of 0.75% annually.

      Investment Company  Administration  Corporation (the "Administrator") acts
as the  Fund's  Administrator  under  a  Administration  Agreement.  Under  that
agreement,  the  Administrator  prepares  various  federal and state  regulatory
filings,  reports and returns for the Fund, prepares reports and materials to be
supplied to the  Trustees,  monitors  the  activities  of the Fund's  custodian,
transfer agent and  accountants,  and coordinates the preparation and payment of
Fund expenses and reviews the Fund's  expense  accruals.  For its services,  the
Administrator  receives a monthly  fee at an annual rate equal to the greater of
0.10 of 1% of the Fund's average daily net assets or $30,000.

      The Fund is responsible  for its own operating  expenses.  The Advisor has
voluntarily  undertaken to limit the Fund's  operating  expenses to 1.00% of the
Fund's  average  net  assets  annually.  This  undertaking  may be  modified  or
withdrawn  by the Advisor  upon  notice to  shareholders.  The Advisor  also may
reimburse  additional  amounts  to the Fund at any time in order to  reduce  the
Fund's  expenses,  or to the extent required by applicable  securities laws. Any
such reductions made by the Advisor in its fees or payments or reimbursements of
expenses which are the Fund's  obligation may be subject to reimbursement by the
Fund.

      The Advisor  considers a number of factors in determining which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional  Information,  the factors include, but
are not limited to, the  reasonableness of commissions,  quality of services and
execution,  and the  availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive  prices,  the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.

                            HOW TO INVEST IN THE FUND

      The  minimum  initial  investment  in the  Fund  is  $100,000.  Subsequent
investments  must  be  at  least  $1000.  First  Fund  Distributors,  Inc.  (the
"Distributor"),  an affiliate of the  Administrator,  acts as Distributor of the
Fund's  shares.  The  Distributor  may,  at its  discretion,  waive the  minimum
investment  requirements  for  purchases in  conjunction  with certain  group or
periodic  plans.  In  addition to cash  purchases,  shares may be  purchased  by
tendering  payment  in kind in the  form of  shares  of  stock,  bonds  or other
securities,  provided that any such security has a readily  ascertainable market
value,  its acquisition is consistent with the Fund's  investment  objective and
the  tendered  security is  otherwise  acceptable  to the Fund's  Advisor and is
acquired for investment and not resale.

      Shares of the Fund are  offered  continuously  for  purchase  at their net
asset value per share next determined after a purchase order is received.

      Investors may purchase shares of the Fund by check or wire:

      By Check: For initial investments,  an investor should complete the Fund's
Account Application (included with this Prospectus).  The completed application,
together with a check payable to "Boston  Managed Growth Fund," should be mailed
to: Boston Managed  Growth Fund,  c/o United States Trust Company of Boston,  40
Court Street, Boston, MA 02108.

      Subsequent  investments should be made by check payable to "Boston Managed
Growth  Fund,"  and  mailed  to the  address  indicated  above  in the  envelope
provided. The investor's account number should be written on the check.

                                     Page 6
<PAGE>
      By Wire: For initial investments,  before wiring funds, an investor should
call  1-800-626-7788,  ext.  4050, or  1-617-695-4050  to advise that an initial
investment  will  be  made  by  wire  and to  receive  an  account  number.  The
Shareholder Service Agent will request the investor's name and the dollar amount
to be invested and provide an order  confirmation  number.  The investor  should
then complete the Fund's Account  Application  (included with this  Prospectus),
including the date and the order  confirmation  number on the  application.  The
completed  Application  should be mailed to the address  shown at the top of the
Account Application.  The investor's bank should transmit immediately  available
funds by wire for  purchase  of shares,  in the  investor's  name to the Fund as
follows:

      United States Trust Company of Boston
      ABA Routing Number:  0110-0133-1
      for further credit to Boston Managed Growth Fund
      Account Number [Name of Shareholder]

      For  subsequent  investments,  the  investor's  bank  should wire funds as
indicated  above. It is not necessary to contact the  Shareholder  Service Agent
prior to  making  subsequent  investments  by  wire,  but it is  essential  that
complete  information  regarding the investor's  account be included in all wire
instructions in order to facilitate prompt and accurate handling of investments.
Investors may obtain  further  information  from the  Shareholder  Service Agent
about  remitting  funds in this  manner and from their own banks  about any fees
that may be imposed.

      General.  Payment of redemption  proceeds from shares that were  purchased
with an initial  investment  made by wire may be delayed  until one business day
after the completed Account Application is received by the Fund. All investments
must be made in U.S. dollars;  to avoid fees and delays,  checks should be drawn
only on U.S.  banks and should not be made by third party check. A charge may be
imposed  if any  check  used for  investment  does not  clear.  The Fund and the
Distributor reserve the right to reject any purchase order in whole or in part.

      If an order,  together  with  payment in proper  form,  is received by the
Transfer Agent by the close of trading on the New York Stock Exchange (currently
4:00 p.m.,  Eastern  time),  Fund shares will be purchased at the offering price
determined as of the close of trading on that day.  Otherwise,  Fund shares will
be purchased at the offering price  determined as of the close of trading on the
New York Stock Exchange on the next business day.

      Federal tax law  requires  that  investors  provide a  certified  Taxpayer
Identification Number and certain other required  certifications upon opening or
reopening an account in order to avoid backup  withholding  of taxes at the rate
of 31% on taxable  distributions  and  proceeds of  redemptions.  See the Fund's
Account Application for further information concerning this requirement.

      The Fund is not  required  to issue  share  certificates.  All  shares are
normally held in  non-certificated  form registered on the books of the Fund and
the Fund's Transfer Agent for the account of the shareholder.

                     HOW TO REDEEM AN INVESTMENT IN THE FUND

      A shareholder  has the right to have the Fund redeem all or any portion of
outstanding  shares in the account at their  current net asset value on each day
the New York Stock Exchange is open for trading. The redemption price is the net
asset value per share next determined  after the shares are validly tendered for
redemption.

      Direct  Redemption.  A written  request for redemption must be received by
the Fund's  Shareholder  Service Agent in order to constitute a valid tender for
redemption.  To protect the Fund and its shareholders,  a signature guarantee is
required for certain transactions,  including  redemptions.  Signature(s) on the
redemption request must be guaranteed by an "eligible

                                     Page 7
<PAGE>
      guarantor  institution" as defined in the federal  securities  laws. These
institutions   include   banks,   broker-dealers,   credit  unions  and  savings
institutions.  A  broker-dealer  guaranteeing  signatures  must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit unions
must be authorized to issue signature  guarantees.  Signature guarantees will be
accepted  from  any  eligible  guarantor  institution  which  participates  in a
signature guarantee program. A notary public is not an acceptable guarantor.

      Telephone   Redemption.   Shareholders  who  complete  the  Redemption  by
Telephone  portion of the Fund's  Account  Application  may redeem shares on any
business  day the New  York  Stock  Exchange  is open  by  calling  the  Fund at
1-800-626-7788,  ext.  4050 or  1-617-695-4050  before 1:00 p.m.  Eastern  time.
Redemption  proceeds will be mailed or wired at the shareholder's  direction the
next business day to the predesignated  account.  The minimum amount that may be
wired  is  $1,000  (wire  charges,  if any,  will be  deducted  from  redemption
proceeds).

      By establishing telephone redemption privileges,  a shareholder authorizes
the Fund and its agents to act upon the  instruction  of any person by telephone
to redeem  from the  account  for which such  service  has been  authorized  and
transfer the proceeds to the bank account designated in the  authorization.  The
Fund and its agents will use procedures to confirm that redemption  instructions
received by telephone are genuine, including recording of telephone instructions
and  requiring  a  form  of  personal   identification  before  acting  on  such
instructions.  If these identification  procedures are not followed, the Fund or
its agents  could be liable for any loss,  expense,  or cost which  results from
acting upon  instructions of a person believed to be a shareholder  with respect
to the telephone redemption privilege. The Fund may change, modify, or terminate
these privileges at any time upon at least 60 days' notice to shareholders.

      Shareholders may request telephone redemption  privileges after an account
is opened;  however,  the authorization  form will require a separate  signature
guarantee. Shareholders may experience delays in exercising telephone redemption
privileges during periods of abnormal market activity.

      General.  Payment of redemption  proceeds will be made  promptly,  but not
later  than  seven  days after the  receipt  of all  documents  in proper  form,
including a written  redemption  order with appropriate  signature  guarantee in
cases where telephone redemption privileges are not being utilized. The Fund may
suspend the right of redemption  under certain  extraordinary  circumstances  in
accordance with applicable rules of the Securities and Exchange  Commission.  In
the case of shares purchased by check and redeemed  shortly after purchase,  the
Fund will not mail redemption proceeds until it has been notified that the check
used for the purchase has been collected,  which may take up to 15 days from the
purchase date. To minimize or avoid such delay, investors may purchase shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for federal income tax purposes.  Investors  should consult their
own tax advisor as to the effect of any redemption.

      Due to the relatively high cost of maintaining smaller accounts,  the Fund
reserves the right to redeem shares in any account,  other than  retirement plan
or  Uniform  Gifts/Transfers  to Minors  Act  accounts,  if at any time,  due to
redemptions by the shareholder,  the total value of a shareholder's account does
not equal at least $25,000.  If the Fund  determines to make such an involuntary
redemption, the shareholder will first be notified that the value of his account
is less  than  $25,000  and  will  be  allowed  30  days  to make an  additional
investment to bring the value of the account to at least $25,000 before the Fund
takes any action.

                                     Page 8
<PAGE>
                                RETIREMENT PLANS

      The Fund offers an Individual  Retirement  Account plan and information is
available  from the Fund and the  Distributor  with  respect  to Keogh,  Section
403(b) and other  retirement  plans offered.  Investors should consult their own
tax advisor before establishing any retirement plan.

                  HOW THE FUND'S PER SHARE VALUE IS DETERMINED

      The net asset  value of a Fund  share is  determined  once daily as of the
close of public  trading on the New York  Stock  Exchange  (currently  4:00 p.m.
Eastern time) on each day the New York Stock  Exchange is open for trading.  Net
asset value per share is  calculated  by dividing  the value of the Fund's total
assets, less its liabilities, by the number of Fund shares outstanding.

      Portfolio securities are valued using current market values, if available.
Securities for which market  quotations are not readily  available are valued at
fair  values as  determined  in good  faith by or under the  supervision  of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.

                             DISTRIBUTIONS AND TAXES

      Dividends and  Distributions.  Dividends  from net  investment  income are
declared and paid at least  annually,  typically at the end of the Fund's fiscal
year (June 30). Any  undistributed  net capital gains realized during the Fund's
fiscal year will also be distributed to shareholders  after the end of the year,
with a supplemental  distribution  on or about December 31 of any  undistributed
net investment  income earned during the calendar year as well as any additional
undistributed capital gains earned during the 12-month period ended each October
31.

      Dividends  and  capital  gains  distributions  (net  of any  required  tax
withholding) are  automatically  reinvested in additional  shares of the Fund at
the net asset value per share on the  reinvestment  date unless the  shareholder
has  previously  requested in writing to the Transfer Agent that payment be made
in cash.

      Any dividend or  distribution  paid by the Fund has the effect of reducing
the net  asset  value per share on the  reinvestment  date by the  amount of the
dividend or distribution.  Investors should note that a dividend or distribution
paid on shares  purchased  shortly  before  such  dividend or  distribution  was
declared  will be subject to income  taxes as  discussed  below even  though the
dividend or distribution  represents,  in substance, a partial return of capital
to the shareholder.

      Taxes.  The Fund has  qualified  and  elected to be treated as a regulated
investment  company under  Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").  As long as the Fund continues to qualify,  and as long as
the Fund distributes all of its income each year to the  shareholders,  the Fund
will not be  subject to any  federal  income  tax or excise  taxes  based on net
income.  Distributions made by the Fund will be taxable to shareholders  whether
received in shares (through  dividend  reinvestment ) or in cash.  Distributions
derived from net investment income,  including net short-term capital gains, are
taxable to shareholders as ordinary income. A portion of these distributions may
qualify  for  the  intercorporate  dividends-received  deduction.  Distributions
designated as capital gains distributions are taxable as long-term capital gains
regardless  of the length of time  shares of the Fund have been  held.  Although
distributions are generally taxable when received, certain distributions made in
January are taxable as if received in the prior December.  Shareholders  will be
informed annually of the amount and nature of the Fund's distributions.
Additional information about taxes is set forth in the

                                     Page 9
<PAGE>
     Statement of Additional Information.  Shareholders should consult their own
advisers concerning  federal,  state and local tax consequences of investment in
the Fund.

                               GENERAL INFORMATION

      The Trust.  The Trust was organized as a  Massachusetts  business trust on
February 17, 1987.  The Agreement and  Declaration of Trust permits the Board of
Trustees  to  issue  an  unlimited  number  of full  and  fractional  shares  of
beneficial  interest,  without  par value,  which may be issued in any number of
series.  The Board of  Trustees  may from time to time issue other  series,  the
assets and  liabilities  of which will be separate and  distinct  from any other
series. The fiscal year of the Fund ends on June 30.

      Shareholder  Rights.  Shares  issued  by  the  Fund  have  no  preemptive,
conversion, or subscription rights. Shareholders have equal and exclusive rights
as to dividends and  distributions as declared by the Fund and to the net assets
of the Fund upon  liquidation or dissolution.  The Fund, as a separate series of
the Trust,  votes separately on matters affecting only the Fund (e.g.,  approval
of a change in the Fund's investment objective); all series of the Trust vote as
a single class on matters  affecting all series  jointly or the Trust as a whole
(e.g.,  election or removal of Trustees).  Voting rights are not cumulative,  so
that the  holders  of more  than 50% of the  shares  voting in any  election  of
Trustees can, if they so choose,  elect all of the Trustees.  While the Trust is
not required and does not intend to hold annual meetings of  shareholders,  such
meetings  may be called by the Trustees in their  discretion,  or upon demand by
the  holders  of 10% or more of the  outstanding  shares  of the  Trust  for the
purpose of electing or removing Trustees.

      Performance Information. From time to time, the Fund may publish its total
return  in  advertisements  and   communications  to  investors.   Total  return
information  will include the Fund's  average annual  compounded  rate of return
over the most  recent  year and over the  period  from the Fund's  inception  of
operations,  through  the  most  recent  calendar  quarter.  The  Fund  may also
advertise  aggregate and average total return information over different periods
of time.  The  Fund's  total  return  will be based upon the value of the shares
acquired  through a  hypothetical  $1,000  investment  at the  beginning  of the
specified  period  and the net  asset  value  of such  shares  at the end of the
period,  assuming  reinvestment of all distributions.  Total return figures will
reflect all recurring  charges against Fund income.  Investors  should note that
the  investment   results  of  the  Fund  will  fluctuate  over  time,  and  any
presentation  of the  Fund's  total  return for any prior  period  should not be
considered as a representation  of what an investor's total return may be in any
future period.

     Shareholder Inquiries. Shareholder inquiries should be directed to the Fund
at the address and telephone number shown on the cover of this prospectus.

                                    Page 10
<PAGE>
                      Advisor and Shareholder Service Agent

                      United States Trust Company of Boston
                                 40 Court Street
                                Boston, MA 02108
                                 (617) 726-7250

                                        o

                                   Distributor

                          First Fund Distributors, Inc.
                        4455 E. Camelback Rd., Ste. 261E
                                Phoenix, AZ 85018

                                        o

                          Custodian and Transfer Agent

                               The Provident Bank
                                 P.O. Box 14967
                           Cincinnati, Ohio 45250-0967

                                        o

                                    Auditors

                              Ernst & Young, L.L.P.
                             515 South Flower Street
                              Los Angeles, CA 90071


                                        o

                                  Legal Counsel

                        Heller, Ehrman, White & McAuliffe
                                 333 Bush Street
                             San Francisco, CA 94104
<PAGE>
                             Leonetti Balanced Fund
                                   Prospectus

                                October 31, 1996

                             LEONETTI BALANCED FUND
                          1130 Lake Cook Road, Ste. 105
                             Buffalo Grove, IL 60089
                                 (800) 454-0999


     The LEONETTI  BALANCED FUND (the "Fund") is a no-load  mutual fund with the
investment objective of seeking total return through a combination of income and
capital  growth,  consistent  with  preservation  of capital.  The Fund seeks to
achieve its objective by investing  primarily in equity  securities  (common and
preferred  stocks)  and higher  quality  fixed-income  obligations.  The balance
between  equity and  fixed-income  securities  will be  adjusted  based upon the
market  interpretation of the Advisor to the Fund,  Leonetti & Associates,  Inc.
(the "Advisor").


     This  Prospectus  sets  forth  basic   information   about  the  Fund  that
prospective  investors  should  know  before  investing.  It  should be read and
retained for future  reference.  A Statement  of  Additional  Information  dated
October 31, 1996,  as may be amended from time to time,  has been filed with the
Securities and Exchange Commission and is incorporated herein by reference.  The
Statement of Additional  Information  is available  without  charge upon written
request to the Fund at the address given above.


<TABLE>
<CAPTION>


                                TABLE OF CONTENTS

<S>                                                                                                    <C>
            Expense Table........................................................................      2
            Financial Highlights.................................................................      3
            Objective and Investment Approach of the Fund; Risk Factors..........................      4
            Management of the Fund...............................................................      5
            How To Invest in the Fund............................................................      6
            How To Redeem an Investment in the Fund..............................................      8
            Services Available to the Fund's Shareholders........................................      9
            How the Fund's Per Share Value Is Determined.........................................      9
            Distributions and Taxes..............................................................     10
            General Information..................................................................     10
</TABLE>


     SHARES OF THE FUND ARE NOT  DEPOSITS OR  OBLIGATIONS  OF OR  GUARANTEED  OR
ENDORSED BY LEONETTI &  ASSOCIATES,  INC.  SHARES OF THE FUND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION ("FDIC"), FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY.


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.


                        Prospectus dated October 31, 1996

<PAGE>
                                  EXPENSE TABLE

     Expenses are one of several factors to consider when investing in the Fund.
The purpose of the  following  fee table is to provide an  understanding  of the
various  costs and  expenses  which may be borne  directly or  indirectly  by an
investment in the Fund. Actual expenses may be more or less than those shown.
<TABLE>

<S>                                                                                              <C>    
     Shareholder Transaction Expenses
     Maximum Sales Load Imposed on Purchases...............................................      None
     Maximum Sales Load Imposed on Reinvested Dividends....................................      None
     Deferred Sales Load...................................................................      None
     Redemption Fees.......................................................................      None


     Annual Fund Operating Expenses
       (As a percentage of average net assets)
     Advisory Fees.........................................................................      1.00%
     Fee to Administrator* ................................................................      0.20%
     Other Expenses........................................................................      1.06%
                                                                                                 ---- 
     Total Fund Operating Expenses.........................................................      2.26%
                                                                                                 ==== 
<FN>


* The Administrator's fee is the greater of $30,000 or 0.20% of average net assets annually.
</FN>
</TABLE>




<TABLE>
<CAPTION>

Example

     This table  illustrates  the net  transaction  and operating  expenses that
would be incurred  by an  investment  in the Fund over  different  time  periods
assuming a $1,000  investment,  a 5% annual return, and redemption at the end of
each time period.
<S>                                                                                              <C>   
     One year..............................................................................      $   23
     Three years...........................................................................      $   71
     Five years............................................................................      $ 121
     Ten years.............................................................................      $ 260


</TABLE>

The Example  shown above should not be  considered a  representation  of past or
future  expenses and actual expenses may be greater or less than those shown. In
addition,  federal regulations require the Example to assume a 5% annual return,
but the Fund's  actual  return may be higher or lower.  See  "Management  of the
Fund."

The  LEONETTI   BALANCED   FUND  (the  "Fund")  is  a   diversified   series  of
Professionally   Managed  Portfolios  (the  "Trust"),   an  open-end  management
investment company offering redeemable shares of beneficial interest.  Shares of
the Fund may be  purchased  at their net  asset  value per  share.  The  minimum
initial  investment is $100 with subsequent  investments of $100 or more. Shares
will be redeemed at net asset value per share.

                                     Page 2
<PAGE>

                              FINANCIAL HIGHLIGHTS
     For a share outstanding throughout the period.

     The  following  information  has  been  audited  by  Ernst & Young  L.L.P.,
independent  accountants,  whose  unqualified  report covering the fiscal period
ended June 30,  1996 is  incorporated  by  reference  herein and  appears in the
annual report to  shareholders.  This  information  shoud be read in conjunction
with the financial statements and accompanying notes thereto which appear in the
annual report and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be included in
its annual  report,  which may be obtained  without charge by writing or calling
the address or telephone number on the Prospectus cover page.
<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                August 1, 1995*
                                                                                                    through
                                                                                                 June 30, 1996
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                                                                                 <C>   
Net asset value, beginning of period ......................................................         $10.00
Income from investment operations:
      Net investment income ...............................................................            .09
      Net realized and unrealized gain on investments .....................................            .76
                                                                                                       ---
Total from investment operations...........................................................            .85
                                                                                                       ---
Less distributions:
      Dividends from net investment income.................................................           (.05)
                                                                                                      ---- 
Net asset value, end of period ............................................................         $10.80
                                                                                                    ======


Total return ..............................................................................           8.46%++


Ratios/supplemental data:
Net assets, end of period (millions).......................................................        $  10.1
Ratio of expenses to average net assets:
      Before expense reimbursement ........................................................           2.26%+
      After expense reimbursement..........................................................           2.26%+
Ratio of net investment income to average net assets:
      Before expense reimbursement ........................................................           1.02%+
      After expense reimbursement .........................................................           1.02%+

Portfolio turnover rate ...................................................................          42.16%

Average commission rate paid per share of stock purchased by the Fund .....................        $  0.06
<FN>

*Commencement of operations.

+Annualized.

++Not Annualized.
</FN>
</TABLE>


                                     Page 3
<PAGE>
           OBJECTIVE AND INVESTMENT APPROACH OF THE FUND; RISK FACTORS

The  investment  objective  of the Fund is to provide  total  return,  through a
combination  of income and  capital  growth,  consistent  with  preservation  of
capital.  The Fund seeks to achieve its  objective by investing in a combination
of equity securities (common and preferred stocks) and fixed-income obligations.
There is, of course,  no assurance  that the Fund's  objective will be achieved.
There is no fixed  percentage  of the Fund's  assets  that will be  invested  in
either equity securities or fixed-income  securities.  It is expected that under
normal  circumstances  the Fund's  investment  in either  equity  securities  or
fixed-income securities will range between 30% and 70% of net assets.

Because prices of common stocks and fixed-income securities fluctuate, the value
of an  investment  in the Fund will vary as the market  value of its  investment
portfolio  changes,  and when shares are redeemed they may be worth more or less
than their  original  cost.  The Fund is  diversified,  which  under  applicable
federal  law means  that as to 75% of its total  assets,  no more than 5% may be
invested in the  securities  of a single issuer and that no more than 10% of its
total assets may be invested in the voting securities of such issuer.

Investment  Approach-Equity  Securities.  In selecting equity securities for the
Fund the Advisor  emphasizes three types of investments:  out-of-favor blue chip
stocks,  growth stocks that pay dividends and exhibit a rising trend in earnings
and revenue, and small companies with rapidly rising revenues and earnings.

In evaluating  out-of-favor  companies,  the Advisor's fundamental focus is on a
company's  business.  The  Advisor  looks for  companies  that have  experienced
problems due to debt, management, excessive expenses or cyclical forces, but are
still leaders in their industries.  This group of companies includes, but is not
limited to, the largest  corporations,  principally those that are components of
the Dow Jones Industrial,  Transportation and Utility averages. In the Advisor's
view, such companies frequently undergo restructuring,  management changes, debt
reduction and other  corporate  events that can have a positive effect on prices
of such  stocks,  while still  providing a cash flow  through  regular  dividend
payments.

The Advisor also seeks growth  stocks for the Fund that pay  dividends  and that
have shown a rising trend in earnings and  revenues  over a period of years.  In
looking at such companies,  the Advisor views positively such characteristics as
low or declining debt levels,  rising gross profit  margins,  expanding  product
lines and significant management stock ownership.  Many of such companies may be
components  of the Standard & Poor's 500 Index ("S&P  500"),  but the Advisor is
not  limited to  companies  within  this index and the Fund may invest in other,
non-S&P 500 companies that the Advisor believes have these characteristics.

The small  companies  selected for the Fund's  portfolio  will have  experienced
rapidly rising revenues and earnings.  The Advisor looks for such companies that
have  characteristics  such as little or no debt, a following in the  investment
community,  an  expanding  product  line or  products  that  involve a change or
improvement in their industry, and control or significant involvement by company
founders  in  day-to-day   management.   Smaller   companies   present   greater
opportunities for capital growth, but may also involve greater risks than larger
companies.  Although  smaller  companies can benefit from the development of new
products and  services,  they also may have limited  product  lines,  markets or
financial resources,  and their securities may trade less frequently and in more
limited  volume  than the  securities  of larger,  more mature  companies.  As a
result,  the prices of the securities of such smaller companies may fluctuate to
a greater degree than the prices of the securities of other issuers.

     Investment   Approach-Fixed-Income    Obligations.   Through   fixed-income
investments, the Advisor seeks a reliable and recurring stream of income for the
Fund, while preserving its capital.

The Advisor's  approach is to focus the Fund's  fixed-income  holdings in bills,
notes and bonds issued or  guaranteed by the U.S.  Government,  its agencies and
instrumentalities. Corporate bonds and notes held by the Fund must be investment

                                     Page 4
<PAGE>
grade, i.e., rated BBB or better by Standard & Poor's Corporation ("S&P"),  Duff
& Phelps Credit Rating Co. ("Duff"), or Fitch Investors Service, Inc. ("Fitch,")
or Baa or better by Moody's Investors Service  ("Moody's").  Under normal market
conditions,  it is  expected  that at least 25% of the Fund's net assets will be
held in fixed-income senior securities.

     Securities  rated  BBB by  S&P,  Duff,  and  Fitch  or Baa by  Moody's  are
investment grade, but Moody's considers securities rated Baa to have speculative
characteristics.  Changes in economic conditions or other circumstances are more
likely to lead to a weakened  capacity for such securities to make principal and
interest payments than is the case for higher-rated debt securities.

In selecting  fixed-income  securities  for the Fund the Advisor uses a combined
approach of  technical  and  fundamental  analysis,  focusing  on interest  rate
anticipation and the yield curve.  Corporate bond analysis  encompasses the same
research  approach that is used in purchasing  common stocks for the Fund. Lower
quality and "junk" bonds are avoided.

Risk  Factors.  Securities  in which the Fund  invests,  and its share price and
returns, are subject to fluctuation. Investments in equity securities in general
are subject to market risks that may cause their prices to fluctuate  over time.
Generally,  the value of  fixed-income  securities will change as interest rates
fluctuate.  During periods of falling  interest rates, the values of outstanding
long-term debt obligations generally rise. Conversely,  during periods of rising
interest rates, the value of such securities  generally declines.  The magnitude
of these  fluctuations  generally  will be greater  for  securities  with longer
maturities.  Debt  securities  are also  subject to credit risk  relative to the
ability of the issuer to make timely  interest  payments and repay  principal on
maturity.  To the  extent  the  Fund  invests  in  undervalued  or  out-of-favor
companies,  there may be a substantial time period before the securities of such
companies return to price levels believed by the Advisor to represent their true
value.  An  investment  in the Fund  therefore is more  suitable  for  long-term
investors who can bear the risk of short-term  fluctuations in principal and net
asset value.

When-Issued Securities. The Fund may purchase securities on a when-issued basis,
for payment and delivery at a later date,  generally within one month. The price
and yield are generally  fixed on the date of  commitment  to purchase,  and the
value of the  security is  thereafter  reflected  in the Fund's net asset value.
During the period  between  purchase and  settlement,  no payment is made by the
Fund and no interest accrues to the Fund. At the time of settlement,  the market
value of the  security  may be more or less than the  purchase  price.  The Fund
limits its  investments in  when-issued  securities to less than 5% of its total
assets. When the Fund purchases  securities on a when-issued basis, it maintains
liquid  assets in a segregated  account with its Custodian in an amount equal to
the purchase price as long as the obligation to purchase continues.

Portfolio  Turnover.  The annual rate of portfolio turnover is anticipated to be
approximately  60%.  In  general,  the  Advisor  will not  consider  the rate of
portfolio  turnover to be a limiting  factor in  determining  when or whether to
purchase or sell securities in order to achieve the Fund's objective.

The Fund has adopted certain investment restrictions,  which are described fully
in  the  Statement  of  Additional  Information.   Like  the  Fund's  investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.

                             MANAGEMENT OF THE FUND

The  Board  of  Trustees  of the  Trust  establishes  the  Fund's  policies  and
supervises and reviews the management of the Fund. Leonetti & Associates,  Inc.,
1130 Lake Cook  Road,  Suite 105,  Buffalo  Grove,  IL 60089 acts as  investment
advisor to the Fund.  The Advisor was founded in 1982 and is  controlled  by Mr.
Michael E.  Leonetti.  The  Advisor  provides  investment  advisory  services to
individual  and  institutional  investors,  and manages assets in excess of $200
million.  Mr.  Craig T.  Johnson is  responsible  for  management  of the Fund's
portfolio.

                                     Page 5
<PAGE>
The Advisor  provides  the Fund with  advice on buying and  selling  securities,
manages the  investments  of the Fund,  furnishes the Fund with office space and
certain  administrative  services,  and provides most of the personnel needed by
the Fund. As  compensation,  the Fund pays the Advisor a monthly  management fee
(accrued  daily) based upon the average daily net assets of the Fund at the rate
of  1.00%  annually.  This  fee is  higher  than  that  paid by most  investment
companies.

Investment Company Administration  Corporation (the "Administrator") acts as the
Fund's  Administrator under an Administration  Agreement.  Under that agreement,
the Administrator prepares various federal and state regulatory filings, reports
and returns for the Fund,  prepares  reports and materials to be supplied to the
trustees,  monitors the activities of the Fund's  custodian,  transfer agent and
accountants,  and  coordinates  the preparation and payment of Fund expenses and
reviews  the  Fund's  expense  accruals.  For its  services,  the  Administrator
receives a monthly fee at the following annual rate:

         Average net assets of each Fund          Fee or fee rate
         Under $15 million                        $30,000
         $15 to $50 million                       0.20% of average net assets
         $50 to $100 million                      0.15% of average net assets
         $100 million to $150 million             0.10% of average net assets
         Over $150 million                        0.05% of average net assets

   
     The Fund is  responsible  for its own operating  expenses.  The Advisor may
reduce its fees or make reimbursements to the Fund at any time in order to
reduce the Fund's expenses.  Any such reductions made by the Advisor in its fees
or payments or reimbursement of expenses which are the Fund's  obligation may be
subject to  reimbursement by the Fund.
    

The  Advisor  considers  a number of factors  in  determining  which  brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional  Information,  the factors include, but
are not limited to, the  reasonableness of commissions,  quality of services and
execution,  and the  availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive  prices,  the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.

                            HOW TO INVEST IN THE FUND

The minimum initial investment in the Fund is $100. Subsequent  investments must
be at  least  $100.  First  Fund  Distributors,  Inc.  (the  "Distributor"),  an
affiliate of the  Administrator,  acts as Distributor of the Fund's shares.  The
Distributor may, at its discretion,  waive the minimum  investment  requirements
for  purchases  in  conjunction  with certain  individuals  or group or periodic
plans.  In addition to cash  purchases,  shares may be  purchased  by  tendering
payment  in kind in the form of  shares  of  stock,  bonds or other  securities,
provided that any such tendered security is readily marketable,  its acquisition
is consistent  with the Fund's  objective and it is otherwise  acceptable to the
Fund's Advisor.

Shares of the Fund are  offered  continuously  for  purchase  at their net asset
value per share next determined  after a purchase order is received.  The public
offering price is effective for orders received by the Fund prior to the time of
the next determination of the Fund's net asset value.  Orders received after the
time of the next determination of the applicable

                                     Page 6
<PAGE>
Fund's net asset value will be entered at the next  calculated  public  offering
price.  Investors  may be  charged a fee if they  effect a  transaction  in fund
shares through a broker or agent.

Investors may purchase shares of the Fund by check or wire:

By Check:  For initial  investments,  an  investor  should  complete  the Fund's
Account Application (included with this Prospectus).  The completed application,
together with a check payable to "Leonetti  Balanced  Fund," should be mailed to
Leonetti Balanced Fund, P.O.
Box 856, Cincinnati, OH 45264-0856.

For subsequent investments,  a stub is attached to the account statement sent to
shareholders  after  each  transaction.  The stub  should be  detached  from the
statement and, together with a check payable to "Leonetti Balanced Fund," mailed
to the Leonetti  Balanced Fund in the envelope provided at the address indicated
above. The investor's account number should be written on the check.

By Wire: For initial  investments,  before wiring funds, an investor should call
the Fund's Transfer Agent at (800) 385-7003 to advise the Transfer Agent that an
initial  investment will be made by wire and to receive an account  number.  The
Transfer  Agent will  request the  investor's  name and the dollar  amount to be
invested and provide an order  confirmation  number.  The  investor  should then
complete the Fund's Account  Application  (included with this Prospectus),  also
including the date and the order  confirmation  number on the  application.  The
completed Account  Application  should be mailed to the address shown at the top
of the Account  Application.  The investor's  bank should  transmit  immediately
available  funds by wire for purchase of shares,  in the investor's  name to the
Fund's Custodian, as follows:
         Star Bank, N.A. Cinti/Trust
         ABA #0420-0001-3
         Attn: Leonetti Balanced Fund
         DDA #483897963
         Account name (shareholder name)
         Shareholder account number

For subsequent investments,  the investor should first notify the Transfer Agent
and then the  investor's  bank  should  wire  funds as  indicated  above.  It is
essential that complete information regarding the investor's account be included
in all wire  instructions in order to facilitate prompt and accurate handling of
investments.  Investors may obtain further  information  from the Transfer Agent
about  remitting  funds in this  manner and from their own banks  about any fees
that may be imposed.

General.  Payment of  redemption  proceeds  may be delayed  with  respect to any
shares purchased with an initial  investment made by wire until one business day
after the completed Account Application is received by the Fund. All investments
must be made in U.S.  dollars  and, to avoid fees and delays,  checks  should be
drawn only on U.S.  banks and should not be made by third party check.  A charge
may be imposed if any check used for investment does not clear. The Fund and the
Distributor reserve the right to reject any purchase order in whole or in part.

If an order,  together  with payment in proper form, is received by the Transfer
Agent by the close of  trading on the New York Stock  Exchange  (currently  4:00
p.m.,  New York City time),  Fund shares will be purchased at the offering price
determined as of the close of trading on that day.  Otherwise,  Fund shares will
be purchased at the offering price  determined as of the close of trading on the
New York Stock Exchange on the next business day.  Federal tax law requires that
investors provide a certified Taxpayer  Identification  Number and certain other
required  certifications  upon opening or reopening an account in order to avoid
backup  withholding  of taxes at the rate of 31% on  taxable  distributions  and
proceeds  of  redemptions.  See  the  Fund's  Account  Application  for  further
information concerning this requirement.

                                     Page 7
<PAGE>
The Fund is not  required to issue share  certificates.  All shares are normally
held in non-certificated form registered on the books of the Fund and the Fund's
Transfer Agent for the account of the shareholder.

                     HOW TO REDEEM AN INVESTMENT IN THE FUND

A  shareholder  has the right to have the Fund  redeem all or any portion of his
outstanding  shares at their  current  net asset  value on each day the New York
Stock Exchange is open for trading.  The redemption price is the net asset value
per share next determined after the shares are validly tendered for redemption.

Direct  Redemption.  A written  request for  redemption  must be received by the
Fund's  Transfer  Agent in order to  constitute a valid  tender for  redemption.
Requests for  redemption  of fund shares  should be mailed to Leonetti  Balanced
Fund, 24 West Carver Street,  2nd Floor,  Huntington,  NY 11743.  To protect the
Fund and its  shareholders,  a  signature  guarantee  is  required  for  certain
transactions,  including  redemptions.  Signature guarantees are not required on
redemptions  of amounts under $5,000 sent to the  shareholder  at the address of
record  on the  account.  Signature  guarantees  must be  made  by an  "eligible
guarantor  institution"  as  defined  in  the  federal  securities  laws.  These
institutions   include   banks,   broker-dealers,   credit  unions  and  savings
institutions.  A  broker-dealer  guaranteeing  signatures  must be a member of a
clearing corporation or maintain net capital of at least $100,000. Credit unions
must be authorized to issue signature  guarantees.  Signature guarantees will be
accepted  from  any  eligible  guarantor  institution  which  participates  in a
signature guarantee program. A notary public is not an acceptable guarantor.

Telephone  Redemption.  Shareholders  who complete the  Redemption  by Telephone
portion of the Fund's Account  Application may redeem shares on any business day
the New York Stock  Exchange  is open by calling  the Fund's  Transfer  Agent at
(800) 385-7003 before 4:00 p.m. Eastern time. Redemption proceeds will be mailed
to the  address  of  record  or wired at the  shareholder's  direction  the next
business day to the predesignated  account. The minimum amount that may be wired
is $1,000 (wire  charges,  if any, will be deducted from  redemption  proceeds).
Telephone redemption is not available for IRA accounts.

By establishing  telephone redemption  privileges,  a shareholder authorizes the
Fund  and its  Transfer  Agent  to act upon the  instruction  of any  person  by
telephone to redeem from the account for which such service has been  authorized
and send the  proceeds to the  address of record on the account or transfer  the
proceeds to the bank account designated in the  Authorization.  The Fund and the
Transfer  Agent will use  procedures  to confirm  that  redemption  instructions
received by telephone are genuine, including recording of telephone instructions
and  requiring  a  form  of  personal   identification  before  acting  on  such
instructions.  If these identification  procedures are not followed, the Fund or
its agents could be liable for any loss,  liability  or cost which  results from
acting upon  instructions of a person believed to be a shareholder  with respect
to the telephone redemption privilege. The Fund may change, modify, or terminate
these privileges at any time upon at least 60 days' notice to shareholders.

Shareholders  may request  telephone  redemption  privileges after an account is
opened;  however,  the  authorization  form may  require  a  separate  signature
guarantee. Shareholders may experience delays in exercising telephone redemption
privileges during periods of abnormal market activity.

General.  Payment of redemption  proceeds will be made  promptly,  but not later
than seven days after the receipt of all  documents in proper form,  including a
written  redemption  order with appropriate  signature  guarantee in cases where
telephone redemption privileges are not being utilized. The Fund may suspend the
right of redemption under certain extraordinary circumstances in accordance with
the  Rules of the  Securities  and  Exchange  Commission.  In the case of shares
purchased by check and redeemed  shortly after purchase,  the Fund will not mail
redemption proceeds until it has

                                     Page 8
<PAGE>
been notified that the check used for the purchase has been collected, which may
take up to 15 days from the  purchase  date.  To  minimize  or avoid such delay,
investors  may  purchase  shares by  certified  check or federal  funds wire.  A
redemption  may result in  recognition  of a gain or loss for federal income tax
purposes.

Due to the  relatively  high  cost of  maintaining  smaller  accounts,  the Fund
reserves the right to redeem shares in any account,  other than  retirement plan
or Uniform Gift to Minors Act accounts,  if at any time,  due to  redemptions by
the  shareholder,  the total value of a shareholder's  account does not equal at
least $1,000. If the Fund determines to make such an involuntary redemption, the
shareholder  will first be  notified  that the value of his account is less than
$1,000 and will be allowed 30 days to make an additional investment to bring the
value of his account to at least $1,000 before the Fund takes any action.

                  SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS

Retirement  Plans.  The Fund offers a prototype  Individual  Retirement  Account
("IRA") plan and information is available from the Advisor,  Distributor or from
your  securities  dealer  with  respect  to  Keogh,  Section  403(b)  and  other
retirement plans offered.
Investors should consult a tax adviser before establishing any retirement plan.

Check-A-Matic  Plan.  For the  convenience  of  shareholders,  the Fund offers a
preauthorized  check service under which a check is  automatically  drawn on the
shareholder's  personal  checking account each month for a predetermined  amount
(but not less than $100),  as if the  shareholder  had written it himself.  Upon
receipt of the  withdrawn  funds,  the Fund  automatically  invests the money in
additional  shares of the Fund at the current  offering price.  Applications for
this service are available  from the Transfer  Agent.  There is no charge by the
Fund for this service. The Distributor may terminate or modify this privilege at
any time, and  shareholders  may terminate their  participation by notifying the
Transfer  Agent in  writing,  sufficiently  in  advance  of the  next  scheduled
withdrawal.

Systematic  Withdrawal  Program.  As  another  convenience,  the  Fund  offers a
Systematic  Withdrawal  Program  whereby  shareholders  may request that a check
drawn in a predetermined  amount be sent to them each month or calendar quarter.
A  shareholder's  account must have Fund shares with a value of at least $10,000
in order to start the Systematic Withdrawal Program, and the minimum amount that
may be withdrawn each month or quarter under the Systematic  Withdrawal  Program
is $100. This Program may be terminated or modified by a shareholder or the Fund
at any time without charge or penalty.

A withdrawal  under the Systematic  Withdrawal  Program involves a redemption of
shares,  and may result in a gain or loss for federal  income tax  purposes.  In
addition,  if  the  amount  withdrawn  exceeds  the  dividends  credited  to the
shareholder's account, the account ultimately may be depleted.

                  HOW THE FUND'S PER SHARE VALUE IS DETERMINED

The net asset value of a Fund share is determined  once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated  by dividing the value of the Fund's total assets,  less its
liabilities, by the number of Fund shares outstanding.

Portfolio  securities  are valued using  current  market  values,  if available.
Securities for which market  quotations are not readily  available are valued at
fair  values as  determined  in good  faith by or under the  supervision  of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees.  Short-term  obligations with remaining  maturities of 60
days or less are valued at amortized cost as reflecting fair value.

                                    Page 9
<PAGE>
                             DISTRIBUTIONS AND TAXES

Dividends  and  Distributions.  Any  dividends  from net  investment  income are
declared and paid at least  annually,  typically at the end of the Fund's fiscal
year (June 30). Any undistributed net capital gains realized during the 12-month
period ended each October 31, as well as any  additional  undistributed  capital
gains  realized  during the Fund's  fiscal  year,  will also be  distributed  to
shareholders on or about December 31 of each year.

Dividends and capital gain  distributions  (net of any required tax withholding)
are  automatically  reinvested in additional shares of the Fund at the net asset
value per share on the  reinvestment  date unless the shareholder has previously
requested in writing to the Transfer Agent that payment be made in cash.

Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the reinvestment  date by the amount of the dividend or
distribution  (apart from any other change in the value of the Fund's  shares on
that date.) Investors should note that a dividend or distribution paid on shares
purchased  shortly  before such  dividend or  distribution  was declared will be
subject  to  income  taxes as  discussed  below  even  though  the  dividend  or
distribution  represents,  in  substance,  a partial  return of  capital  to the
shareholder.

Taxes.  The  Fund  has  qualified  and  elected  to be  treated  as a  regulated
investment  company under  Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").  As long as the fund continues to qualify,  and as long as
the Fund distributes all of its income each year to the  shareholders,  the Fund
will not be  subject to any  federal  income  tax or excise  taxes  based on net
income.  Distributions made by the Fund will be taxable to shareholders  whether
received in shares (through  dividend  reinvestment)  or in cash.  Distributions
derived from net investment income,  including net short-term capital gains, are
taxable to shareholders as ordinary income. A portion of these distributions may
qualify  for  the  intercorporate  dividends-received  deduction.  Distributions
designated  as capital gains  dividends  are taxable as long-term  capital gains
regardless  of the length of time  shares of the Fund have been  held.  Although
distributions are generally taxable when received, certain distributions made in
January are  taxable as if received  the prior  December.  Shareholders  will be
informed  annually  of  the  amount  and  nature  of the  Fund's  distributions.
Additional  information  about taxes is set forth in the Statement of Additional
Information.  Shareholders should consult their own advisers concerning federal,
state and local tax consequences of investments in the Fund.

                               GENERAL INFORMATION

The Trust. The Trust was organized as a Massachusetts business trust on February
17, 1987.  The Agreement and  Declaration of Trust permits the Board of Trustees
to  issue an  unlimited  number  of full and  fractional  shares  of  beneficial
interest,  without par value,  which may be issued in any number of series.  The
Board of  Trustees  may from time to time  issue  other  series,  the assets and
liabilities of which will be separate and distinct from any other series.

Shareholder Rights. Shares issued by the Fund have no preemptive, conversion, or
subscription  rights.  Shareholders  have  equal  and  exclusive  rights  as  to
dividends and distributions as declared by the Fund and to the net assets of the
Fund upon  liquidation  or  dissolution.  The Fund, as a separate  series of the
Trust, votes separately on matters affecting only the Fund (e.g.,  approval of a
change in the Fund's  investment  objective);  all series of the Trust vote as a
single  class on matters  affecting  all series  jointly or the Trust as a whole
(e.g.,  election or removal of Trustees).  Voting rights are not cumulative,  so
that the  holders  of more  than 50% of the  shares  voting in any  election  of
Trustees can, if they so choose,  elect all of the Trustees.  While the Trust is
not required and does not intend to hold annual meetings of  shareholders,  such
meetings  may be called by the Trustees in their  discretion,  or upon demand by
the  holders  of 10% or more of the  outstanding  shares  of the  Trust  for the
purpose of electing or removing Trustees.

                                    Page 10
<PAGE>
Performance  Information.  From  time to time,  the Fund may  publish  its total
return  in  advertisements  and   communications  to  investors.   Total  return
information  will include the Fund's  average annual  compounded  rate of return
over the most  recent  year and over the  period  from the Fund's  inception  of
operations,  through  the  most  recent  calendar  quarter.  The  Fund  may also
advertise  aggregate and average total return information over different periods
of time.  The  Fund's  total  return  will be based upon the value of the shares
acquired  through a  hypothetical  $1,000  investment  at the  beginning  of the
specified  period  and the net  asset  value  of such  shares  at the end of the
period,  assuming  reinvestment of all distributions.  Total return figures will
reflect all recurring  charges against Fund income.  Investors  should note that
the  investment   results  of  the  Fund  will  fluctuate  over  time,  and  any
presentation  of the  Fund's  total  return for any prior  period  should not be
considered as a representation  of what an investor's total return may be in any
future period.

     Shareholder  Inquiries.  Shareholder  inquiries  should be  directed to the
Transfer Agent at (800) 385-7003.

                                    Page 11
<PAGE>
                                     Advisor
                           Leonetti & Associates, Inc.
                          1130 Lake Cook Road, Ste. 105
                             Buffalo Grove, IL 60089
                                 (800) 454-0999

                                   Distributor
                          First Fund Distributors, Inc.
                        4455 E. Camelback Rd., Ste. 261E
                                Phoenix, AZ 85018

                                    Custodian
                                 Star Bank, N.A.
                                425 Walnut Street
                              Cincinnati, OH 45202

                                 Transfer Agent
                          American Data Services, Inc.
                        24 West Carver Street, 2nd Floor
                              Huntington, NY 11743
                                 (800) 385-7003

                                    Auditors
                              Ernst & Young L.L.P.
                             515 South Flower Street
                              Los Angeles, CA 90071

                                  Legal Counsel
                        Heller, Ehrman, White & McAuliffe
                                 333 Bush Street
                             San Francisco, CA 94104
<PAGE>
                             LIGHTHOUSE GROWTH FUND
                         10000 MEMORIAL DRIVE, SUITE 660
                                HOUSTON, TX 77024
                                 (713) 688-6881
                                 (800) 282-2340


     The  LIGHTHOUSE  GROWTH  FUND  (the  "Fund")  is a  mutual  fund  with  the
investment objective of seeking growth of capital. The Fund seeks to achieve its
objective by  investing  primarily in equity  securities  (common and  preferred
stocks).   Lighthouse  Capital  Management,   Inc.  (the  "Advisor")  serves  as
investment advisor to the Fund.


     This  Prospectus  sets  forth  basic   information   about  the  Fund  that
prospective  investors  should  know  before  investing.  It  should be read and
retained for future  reference.  A Statement  of  Additional  Information  dated
October 31, 1996,  as may be amended from time to time,  has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. This
Statement of Additional  Information  is available  without  charge upon written
request to the Fund at the address given above.



                                TABLE OF CONTENTS


  Expense Table..................................................  2
  Financial Highlights...........................................  3
  Advisor Investment Returns.....................................  4
  Objective and Investment Approach of the Fund; Risk Factors....  5
  Management of the Fund.........................................  7
  Distribution Plan..............................................  8
  How To Invest in the Fund......................................  9
  How To Redeem an Investment in the Fund........................ 10
  Services Available to the Fund's Shareholders.................. 11
  How the Fund's Per Share Value Is Determined................... 12
  Distributions and Taxes........................................ 12
  General Information............................................ 13



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.


                        Prospectus dated October 31, 1996




<PAGE>   2
                                  EXPENSE TABLE

     Expenses are one of several factors to consider when investing in the Fund.
The purpose of the  following  fee table is to provide an  understanding  of the
various  costs and  expenses  which may be borne  directly or  indirectly  by an
investment  in the Fund.  Actual  expenses may be more or less than those shown.
The Fund has  adopted a plan of  distribution  under which the Fund will pay the
Advisor as  Distribution  Coordinator  a fee at an annual rate of up to 0.25% of
the Fund's net  assets.  A  long-term  shareholder  may pay more,  directly  and
indirectly,  in sales  charges  and such  fees  than the  maximum  sales  charge
permitted under the rules of the National Association of Securities Dealers.
Shares will be redeemed at net asset value per share.

      SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<S>                                                                      <C>
      Maximum Sales Load Imposed on Purchases........................     None
      Maximum Sales Load Imposed on Reinvested Dividends.............     None
      Deferred Sales Load............................................     None
      Redemption Fees................................................     None
      Exchange Fee...................................................     None

      ANNUAL FUND OPERATING EXPENSES
       (AS A PERCENTAGE OF AVERAGE NET ASSETS)

      Advisory Fees..................................................     1.25%
      12b-1 Expenses.................................................     0.25%
      Other Expenses.................................................     0.50%**
                                                                          -----
      Total Fund Operating Expenses..................................     2.00%**
                                                                          =====
</TABLE>



     **The Advisor is currently undertaking to limit the Fund's expense ratio to
2.00% annually. In the absence of this limitation,  the Fund's ratio of expenses
to average net assets would have been 2.95% for the fiscal year ended August 31,
1996.



EXAMPLE
        This table  illustrates the net transaction and operating  expenses that
     would be incurred by an investment in the Fund over  different time periods
     assuming a $1,000  investment,a 5% annual return, and redemption at the end
     of each time period.

<TABLE>
<CAPTION>
           1 YEAR     3 YEARS      5 YEARS    10 YEARS
           ------     -------      -------    --------
           <S>          <C>        <C>         <C>

            $20         $63        $108        $233
</TABLE>

      THE EXAMPLE SHOWN ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST
OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN SHOWN. IN,
ADDITION, FEDERAL REGULATIONS REQUIRE THE EXAMPLE TO ASSUME A 5% ANNUAL RETURN,
BUT THE FUND'S ACTUAL RETURN MAY BE HIGHER OR LOWER. SEE "MANAGEMENT OF THE
FUND."

     The  LIGHTHOUSE  GROWTH  FUND  (the  "Fund")  is a  diversified  series  of
Professionally   Managed  Portfolios  (the  "Trust"),   an  open-end  management
investment company offering redeemable shares of beneficial interest.  Shares of
the Fund may be  purchased  at their net  asset  value per  share.  The  minimum
initial investment is $2,000 with subsequent investments of $100 or more. Shares
will be redeemed at net asset value per share.





2
<PAGE>   3

                              FINANCIAL HIGHLIGHTS

              FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

         The following  information  has been audited by Ernst & Young,  L.L.P.,
independent  accountants,  whose  unqualified  report covering the fiscal period
ended August 31, 1996 is  incorporated  by  reference  herein and appears in the
annual report to  shareholders.  This  information  shoud be read in conjunction
with the financial statements and accompanying notes thereto which appear in the
annual report and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be included in
its annual  report,  which may be obtained  without charge by writing or calling
the address or telephone number on the Prospectus cover page.

<TABLE>
<CAPTION>
                                                                                             September 29, 1995*
                                                                                                   through
                                                                                                August 31, 1996
- ---------------------------------------------------------------------------------------------------------------
<S>                                                                                                    <C>

Net Asset Value, Beginning of Period..........................................................         $12.00
Income from Investment Operations:
      Net investment loss.....................................................................           (.09)
      Net realized and unrealized gain on investments.........................................           1.72
                                                                                                       ------
Total from investment operations..............................................................           1.63
                                                                                                       ------
Less Distributions:
      Dividends (from net investment income)..................................................            -0-
      Distributions (from capital gains)......................................................           (.06)
                                                                                                       ------
Total Distributions...........................................................................           (.06)
                                                                                                       ------
Net Asset Value, End of Period................................................................         $13.57
                                                                                                       ======

Total Return..................................................................................          13.67%++

Ratios/Supplemental Data:

Net assets, end of period (thousands).........................................................        $13,964

Ratio of expenses to average net assets:
      Before expense reimbursement............................................................           2.95%+
      After expense reimbursement.............................................................           2.00%+

Ratio of net investment loss to average net assets:
      Before expense reimbursement............................................................          (2.14)%+
      After expense reimbursement.............................................................          (1.19)%+

Portfolio turnover............................................................................          20.56%

Average commision rate per share..............................................................           0.06
</TABLE>

*Commencement of operations.

+Annualized.

++Not annualized.



                                                                               3
<PAGE>   4
                           ADVISOR INVESTMENT RETURNS

     Set forth in the table below are certain  performance  data provided by the
Advisor relating to its individually managed Equity accounts. These accounts had
substantially  the same  investment  objective as the Fund and have been managed
using substantially  similar investment  strategies and techniques as those used
by the Fund.  See "Objective  and  Investment  Approach of the Fund" above.  The
Portfolio  Manager  for these  accounts is the same  individual  who manages the
Fund. The results presented are not intended to predict or suggest the return to
be  experienced by the Fund or the return an investor might achieve by investing
in the Fund.  Results may differ because of, among other things,  differences in
brokerage  commissions paid,  account expenses,  including  investment  advisory
fees,  (which  expenses  and  fees  may be  higher  for the  Fund  than  for the
accounts),   the  size  of  positions   taken  in  relation  to  account   size,
diversification  of  securities,  timing of purchases and sales,  timing of cash
additions  and  withdrawals,  the private  character of the  composite  accounts
compared with the public  character of the Fund,  and the  tax-exempt  status of
some of the  accounts  compared  with the Fund and its  shareholders.  Investors
should be aware that the use of  different  methods of  determining  performance
could result in different performance results.  Investors should not rely on the
performance data on the following page as an indication of future performance of
the Advisor or the Fund.

<TABLE>
<CAPTION>
                                                    Average Annual Total Returns (%)
                                                    (for periods ended June 30, 1996)

                                            Lighthouse Capital            Standard & Poor's
                                              Equity Accounts                 500 Index
                                            ------------------            -----------------
              <S>                                <C>                          <C>

              One year                            +24.30%                      +25.92%

              Three years                         +27.09%                      +17.20%

              Five years                          +28.76%                      +15.69%
</TABLE>



     1. Results account for both income and capital appreciation or depreciation
(Total Return).  Returns are time-weighted and calculated in compliance with the
Association  for  Investment   Management  and  Research  ("AIMR")   performance
presentation standards, reduced for investment advisory fees.

     2.  Investors  should note that the Fund computes and discloses its average
annual  compounded  rate of return using the  standard  formula set forth in SEC
rules,  which differs in certain respects from returns calculated under the AIMR
standards noted above. Unlike the AIMR performance  presentation  standards that
link quarterly rates of return,  the SEC total return  calculation  method calls
for  computation  and disclosure of an average annual  compounded rate of return
for one,  five and ten year  periods  or shorter  periods  from  inception.  The
calculation  provides  a rate of  return  that  equates a  hypothetical  initial
investment of $1,000 to an ending redeemable value.  While the returns shown for
the Advisor are net of advisory fees, the SEC calculation  formula requires that
returns be shown for the  Portfolios net of advisory fees as well as any maximum
applicable  sales  charges  and all  other  Portfolio  operating  expenses.  See
"Performance Information" at page 13.

     4. The  Lighthouse  Capital  Equity  Account  Composite  shown includes all
accounts  managed by the Advisor  that meet the  criteria  for  inclusion in the
composite for each period presented.

     5. The  Standard & Poor's 500 Index is an unmanaged  index  composed of 500
industrial, utility, transportation and financial companies of the U.S. markets.
The  index  represents  about 75% of New York  Stock  Exchange  ("NYSE")  market
capitalization  and 30% of NYSE issues.  It is a  capitalization-weighted  index
calculated on a total return basis with dividends reinvested.


4
<PAGE>   5
           OBJECTIVE AND INVESTMENT APPROACH OF THE FUND; RISK FACTORS

     The investment objective of the Fund is to seek growth of capital. The Fund
seeks to achieve its  objective  by investing  primarily  in equity  securities.
Equity securities in which the Fund invests include common stocks and securities
having the  characteristics  of common  stocks,  such as  convertible  preferred
stocks,  convertible  debt  securities  and  warrants.  There is, of course,  no
assurance that the Fund's objective will be achieved.

     Because prices of securities  held by the Fund  fluctuate,  the value of an
investment  in the  Fund  will  vary,  as the  market  value  of its  investment
portfolio  changes and when shares are redeemed,  they may be worth more or less
than their  original  cost.  The Fund is  diversified,  which  under  applicable
federal  law means  that as to 75% of its total  assets,  no more than 5% may be
invested in the  securities  of a single issuer and that no more than 10% of its
total assets may be invested in the voting securities of such issuer.

     INVESTMENT APPROACH. The Advisor uses a contrarian strategy to seek what it
believes to be the best  investments.  Since stocks do not become  bargains when
they are popular, the Advisor tends to look for sound,  undervalued companies in
out-of-favor  industries.  The Advisor seeks companies that are  technologically
aggressive,  fiscally conservative and globally  competitive.  Companies seeking
government  protection  from what they  believe to be "unfair  competition"  are
avoided.

     The Advisor uses a long-term  approach to  valuation.  It is the  Advisor's
view that most investors are infatuated with short-term  earnings.  As a result,
companies with margins that are temporarily low are often discarded. The Advisor
seeks  companies  that are not afraid to forego  short-term  profits in order to
invest in  research,  marketing  and service -- all areas  which  should lead to
higher  earnings in the future.  Conversely,  the Advisor avoids  companies that
neglect these areas because it appears  likely that long-term  profitability  of
such companies will suffer.

     Although equity  securities are the primary focus for the Fund, the Advisor
may also purchase fixed income securities where it believes that such securities
offer the potential for capital growth.  The Fund is permitted to hold up to 25%
of its net assets in fixed-income securities,  but it is not expected that under
normal  circumstances more than 10% of the Fund's portfolio would be invested in
such  securities.  Fixed-income  securities  eligible  for  purchase by the Fund
include those rated  investment  grade,  i.e., rated BBB or better by Standard &
Poor's Corporation ("S&P"),  Duff & Phelps Credit Rating Co. ("Duff"),  or Fitch
Investors Service, Inc. ("Fitch"), or Baa or better by Moody's Investors Service
("Moody's").  Securities rated BBB by S&P, Duff, and Fitch or Baa by Moody's are
investment grade, but Moody's considers securities rated Baa to have speculative
characteristics.  Changes in economic conditions or other circumstances are more
likely to lead to a weakened  capacity for such securities to make principal and
interest payments than is the case for higher-rated debt securities.

     Within the overall limit on investment in fixed-income securities, the Fund
also may invest in corporate  debt  securities  that are rated below  investment
grade or which are unrated.  Such securities typically carry higher coupon rates
than investment  grade  securities but also are described as speculative by both
Moody's and S&P and may be subject to greater  market price  fluctuations,  less
liquidity,  and  greater  risk of  income  or  principal,  including  a  greater
possibility of default or bankruptcy of the issuer of such securities,  than are
more  highly  rated  debt  securities.  Lower  rated  or  unrated  fixed  income
securities  also are likely to be more sensitive to adverse  economic or company
developments. The Advisor seeks to reduce the risks associated with investing in
such  securities by limiting the Fund's  holdings in such  securities and by the
depth  of  its  own  credit  analysis.   In  selecting  below  investment  grade
securities,  the Advisor seeks securities in companies with improving cash flows
and balance sheet prospects, whose credit ratings the Advisor views as likely to
be upgraded.  The Advisor  believes  that such  securities  can produce  returns
similar to equities.


                                                                               5
<PAGE>   6
     SHORT SALES.  The Fund may engage in short sales of securities.  In a short
sale,  the  Fund  sells  stock  which  it does not  own,  making  delivery  with
securities  "borrowed" from a broker.  The Fund is then obligated to replace the
security  borrowed  by  purchasing  it at  the  market  price  at  the  time  of
replacement.  This  price  may or may not be less  than the  price at which  the
security  was sold by the Fund.  Until the  security  is  replaced,  the Fund is
required to pay to the lender any dividends or interest  which accrue during the
period of the loan. In order to borrow the  security,  the Fund may also have to
pay a premium which would  increase the cost of the security  sold. The proceeds
of the short sale will be  retained by the broker,  to the extent  necessary  to
meet margin requirements, until the short position is closed out.


     The Fund also must  deposit  in a  segregated  account  an amount of liquid
assets equal to the  difference  between (a) the market value of the  securities
sold short at the time they were sold short and (b) the value of the  collateral
deposited  with the broker in connection  with the short sale (not including the
proceeds from the short sale).  While the short  position is open, the Fund must
maintain  daily  the  segregated  account  at such a level  that (1) the  amount
deposited in it plus the amount  deposited with the broker as collateral  equals
the  current  market  value of the  securities  sold  short  and (2) the  amount
deposited in it plus the amount  deposited  with the broker as collateral is not
less than the market value of the securities at the time they were sold short.


     The Fund will  incur a loss as a result  of the short  sale if the price of
the security  increases between the date of the short sale and date on which the
Fund  replaces  the  borrowed  security.  The Fund  will  realize  a gain if the
security  declines in price between those dates.  The amount of any gain will be
decreased  and the  amount of any loss will be  increased  by any  dividends  or
interest the Fund may be required to pay in connection  with the short sale. The
dollar  amount  of short  sales  at any one  time  (not  including  short  sales
against-the-box) may not exceed 25% of the net assets of the Fund.

     A short sale is  "against-the-box"  if at all times when the short position
is  open  the  Fund  owns  an  equal  amount  of the  securities  or  securities
convertible into, or exchangeable without further  consideration for, securities
of the same issue as the  securities  sold short.  Such a transaction  serves to
defer a gain or loss for Federal income tax purposes.


     SMALLER  COMPANIES.  Some of the companies  held by the Fund may be smaller
and younger than  companies  whose  shares  trade on the major stock  exchanges.
Accordingly,  shares of these companies, which typically trade over-the-counter,
may be more  volatile  than those of larger  exchange-listed  companies.  New or
improved products or methods of development may have a substantial impact on the
earnings  and revenues of such  companies,  and such  developments  could have a
positive or negative  impact on their  shares.  Some of these  companies  may be
thinly  traded.  From time to time,  the Fund and other  client  accounts of the
Advisor, on a collective basis, may hold a significant amount of such companies'
outstanding  shares or trading volume.  During such times, the Fund's ability to
dispose of such securities without affecting market price could be limited.  The
Fund will  monitor  the level of  investment  in such  securities  to  determine
whether they may be  considered  illiquid  and subject to the Fund's  limitation
that no more than 15% of its total  assets  may in  invested  in  restricted  or
illiquid securities.


     REPURCHASE  AGREEMENTS.  The Fund may enter into  repurchase  agreements in
order to earn additional income on available cash, or as a defensive  investment
in periods  when the Fund is primarily in  short-term  maturities.  A repurchase
agreement is a short-term  investment  in which the purchaser  (i.e.,  the Fund)
acquires ownership of a U.S.  Government security (which may be of any maturity)
and the seller  agrees to  repurchase  the  obligation at a future time at a set
price,  thereby  determining  the yield during the  purchaser's  holding  period
(usually  not more than seven days from the date of  purchase).  Any  repurchase
transaction in which the Fund engages will require full collateralization of the
seller's obligation during the entire term of the repurchase  agreement.  In the
event of a bankruptcy or other default of the seller,  the Fund could experience
both delays in liquidating the underlying security and losses in value. However,
the Fund intends to enter into repurchase agreements only with banks with assets
of $500 million or more that are insured by the Federal Deposit


6
<PAGE>   7
Insurance  Corporation and the most creditworthy  registered  securities dealers
pursuant to procedures  adopted and  regularly  reviewed by the Trust's Board of
Trustees. The Advisor monitors the creditworthiness of the banks (other than the
custodian bank) and securities  dealers with whom the Fund engages in repurchase
transactions.

     WHEN-ISSUED  SECURITIES.  The Fund may purchase securities on a when-issued
basis, for payment and delivery at a later date, generally within one month. The
price and yield are generally  fixed on the date of commitment to purchase,  and
the value of the security is thereafter reflected in the Fund's net asset value.
During the period  between  purchase and  settlement,  no payment is made by the
Fund and no interest accrues to the Fund. At the time of settlement,  the market
value of the  security  may be more or less than the  purchase  price.  The Fund
limits its  investments in  when-issued  securities to less than 5% of its total
assets. When the Fund purchases  securities on a when-issued basis, it maintains
liquid  assets in a segregated  account with its Custodian in an amount equal to
the purchase price as long as the obligation to purchase continues.

     PORTFOLIO TURNOVER. The annual rate of portfolio turnover is anticipated to
be  approximately  25%. In general,  the Advisor  will not  consider the rate of
portfolio  turnover to be a limiting  factor in  determining  when or whether to
purchase or sell securities in order to achieve the Fund's objective.

     OTHER PERMITTED  INVESTMENTS AND RISKS. The Fund is authorized to invest in
foreign  securities,  engage in options  transactions  on equity  securities and
indexes, to borrow money and to lend portfolio securities. However, the Fund may
not engage in any of such  activities  to an extent  greater  than 5% of its net
assets.  For more  information  on such  securities  and practices and the risks
associated with them, see the Fund's Statement of Additional Information.

     The Fund has adopted certain investment  restrictions,  which are described
fully in the Statement of  Additional  Information.  Like the Fund's  investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.


                             MANAGEMENT OF THE FUND

     The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. The Advisor is located at
10000 Memorial Drive, Suite 660, Houston, TX 77024. The Advisor was founded in
1988 and is controlled by Mr. Paul G. Horton, President and Managing Director
and Mr. Kevin P. Duffy, Research Director and Portfolio Manager. The Advisor
provides investment advisory services to individual and institutional investors
with assets of approximately $250 million. Mr. Duffy is responsible for
management of the Fund's portfolio.

     The Advisor provides the Fund with advice on buying and selling securities,
manages the  investments  of the Fund,  furnishes the Fund with office space and
certain  administrative  services,  and provides most of the personnel needed by
the Fund. As  compensation,  the Fund pays the Advisor a monthly  management fee
(accrued  daily) based upon the average daily net assets of the Fund at the rate
of  1.25%  annually.  This  fee is  higher  than  that  paid by most  investment
companies.

     Investment Company Administration Corporation (the "Administrator") acts as
the  Fund's  Administrator  under  an  Administration   Agreement.   Under  that
agreement,  the  Administrative  Manager  prepares  various  federal  and  state
regulatory  filings,  reports  and returns  for the Fund,  prepares  reports and
materials to be supplied to the trustees,  monitors the activities of the Fund's
custodian,  transfer agent and accountants,  and coordinates the preparation and
payment of Fund  expenses  and  reviews  the Fund's  expense  accruals.  For its
services,  the Administrative  Manager receives a monthly fee at the annual rate
specified on the following page.

                                                                               7
<PAGE>   8
<TABLE>
<CAPTION>
         Average net assets of the Fund         Fee or fee rate
- ---------------------------------------------------------------
        <S>                                    <C>
         Under $15 million                      $30,000
         $15 to $50 million                     0.20% of average net assets
         $50 to $100 million                    0.15% of average net assets
         $100 to $150 million                   0.10% of average net assets
         Over $150 million                      0.05% of average net assets
</TABLE>


     The Fund is  responsible  for its own  operating  expenses.  The Advisor is
currently  undertaking to limit the Fund's expense ratio to 2.00% annually.  Any
reductions  made by the  Advisor in its fees or payments  or  reimbursements  of
expenses which are the Fund's  obligation may be subject to reimbursement by the
Fund.


     The Advisor  considers a number of factors in determining  which brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional  Information,  the factors include, but
are not limited to, the  reasonableness of commissions,  quality of services and
execution,  and the  availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive  prices,  the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.

                                DISTRIBUTION PLAN

     The Fund has adopted a  distribution  plan pursuant to Rule 12b-1 under the
Investment Company Act. The Plan provides that the Fund may pay for distribution
and related  expenses of up to an annual rate of 0.25% of the Fund's average net
assets to the Advisor as distribution coordinator. Expenses permitted to be paid
by the Fund  under  its Plan  include:  preparation,  printing  and  mailing  of
prospectuses;  shareholder  reports  such  as  semiannual  and  annual  reports,
performance  reports and  newsletters;  sales  literature and other  promotional
material to prospective investors; direct mail solicitation; advertising; public
relations;  compensation of sales personnel, advisors or other third parties for
their assistance with respect to the distribution of the Fund's shares; payments
to  financial   intermediaries  for  shareholder  support;   administrative  and
accounting services with respect to the shareholders of the Fund; and such other
expenses as may be approved from time to time by the Board of Trustees.

     The Rule 12b-1 Distribution Plan allows excess distribution  expenses to be
carried forward by the Advisor, as Distribution Coordinator,  and resubmitted in
a subsequent  fiscal year  provided  that (i)  distribution  expenses  cannot be
carried forward for more than three years following initial submission; (ii) the
Board of Trustees  has made a  determination  at the time of initial  submission
that the distribution  expenses are appropriate to be carried forward; and (iii)
the  Board  of  Trustees  makes  a  further  determination,   at  the  time  any
distribution  expenses  which have been  carried  forward  are  resubmitted  for
payment, to the effect that payment at the time is appropriate,  consistent with
the objectives of the Plan and in the current best interests of shareholders.

     The Advisor,  out of its own funds, also may compensate  broker-dealers who
have signed dealer  agreements for the distribution of the Fund's shares as well
as other service providers who provide shareholder and administrative services.

8
<PAGE>   9
                            HOW TO INVEST IN THE FUND

     The minimum initial investment is $2,000. Subsequent investments must be at
least  $100.  First  Fund  Distributors,  Inc.  (the  "Distributor"),   acts  as
Distributor of the Fund's shares. The Distributor may, at its discretion,  waive
the minimum  investment  requirements  for purchases in conjunction with certain
group or periodic plans. In addition to cash purchases,  shares may be purchased
by  tendering  payment  in kind in the form of shares  of stock,  bonds or other
securities,  provided that any such tendered security is readily marketable, its
acquisition  is  consistent  with  the  Fund's  objective  and  it is  otherwise
acceptable to the Fund's Advisor.

     Shares of the Fund are offered continuously for purchase at their net asset
value per share next determined  after a purchase order is received.  The public
offering price is effective for orders received by the Fund prior to the time of
the next determination of the Fund's net asset value.  Orders received after the
time of the next  determination of the Fund's net asset value will be entered at
the next calculated  public  offering  price.  Investors may be charged a fee if
they effect a transaction in fund shares through a broker or agent. Such brokers
or agents may also impose different minimum transaction amounts.

INVESTORS MAY PURCHASE SHARES OF THE FUND BY CHECK OR WIRE:

     BY CHECK: For initial  investments,  an investor should complete the Fund's
Account Application (included with this Prospectus).  The completed application,
together with a check payable to  "Lighthouse  Growth Fund," should be mailed to
the Fund's Transfer Agent: Lighthouse Growth Fund, P.O. Box 856, Cincinnati,  OH
45264-0856. A purchase order sent by overnight mail should be sent to Lighthouse
Growth Fund, 425 Walnut Street, M.L. 6118, Cincinnati, OH 45202.

     For  subsequent  investments,  a stub is attached to the account  statement
sent to shareholders  after each  transaction.  The stub should be detached from
the statement and,  together with a check payable to  "Lighthouse  Growth Fund,"
mailed to the Transfer Agent in the envelope  provided at the address  indicated
above. The investor's account number should be written on the check.

     BY WIRE: For initial  investments,  before wiring funds, an investor should
call the  Transfer  Agent at (800)  282-2340  between the hours of 9:00 a.m. and
4:00 p.m.  Eastern time,  on a day when the New York Stock  Exchange is open for
trading in order to receive an account  number.  The Transfer Agent will request
the investor's name, address, tax identification  number, amount being wired and
wiring bank. The investor should then instruct the wiring bank to transfer funds
by wire to: Star Bank, N.A.  Cinti/Trust,  ABA  #0420-0001-3,  Attn:  Lighthouse
Growth Fund, DDA #483897971,  for credit to Lighthouse  Growth Fund, for further
credit to [investor's name and account number].  The investor should also ensure
that the wiring bank  includes the name of the Fund and the account  number with
the wire. If the funds are received by the Transfer Agent prior to the time that
the Fund's net asset  value is  calculated,  the funds will be  invested on that
day;  otherwise  they will be invested on the next  business day.  Finally,  the
investor  should write the account number  provided by the Transfer Agent on the
Application Form and mail the Form promptly to the Transfer Agent.

     For subsequent  investments,  an investor should call the Transfer Agent at
(800) 282-2340 before the wire is sent. Failure to do so will cause the purchase
to be credited the next day,  when the  Transfer  Agent  receives  notice of the
wire. The investor's bank should wire funds as indicated  above. It is essential
that complete  information  regarding the investor's  account be included in all
wire  instructions  in order to  facilitate  prompt  and  accurate  handling  of
investments.  Investors may obtain further  information  from the Transfer Agent
about  remitting  funds in this  manner and from their own banks  about any fees
that may be imposed.

     Payment of proceeds  from  redemption of shares  purchased  with an initial
investment  made by wire  may be  delayed  until  one  business  day  after  the
completed  Account  Application is received by the Fund. All investments must be
made in U.S. dollars and, to avoid fees and delays,  checks should be drawn only
on U.S. banks and should not be made by

                                                                               9
<PAGE>   10
third party check. A charge may be imposed if any check used for investment does
not clear. The Fund and the Distributor reserve the right to reject any purchase
order in whole or in part.

     If an order,  together  with  payment in proper  form,  is  received by the
Transfer Agent by the close of trading on the New York Stock Exchange (currently
4:00 p.m.,  New York City time),  Fund shares will be  purchased at the offering
price determined as of the close of trading on that day. Otherwise,  Fund shares
will be purchased at the offering price determined as of the close of trading on
the New York Stock Exchange on the next business day.

     Federal tax regulations require that investors provide a certified Taxpayer
Identification Number and certain other required  certifications upon opening or
reopening an account in order to avoid backup  withholding  of taxes at the rate
of 31% on taxable  distributions  and  proceeds of  redemptions.  See the Fund's
Account Application for further information concerning this requirement.

     The Fund is not  required  to issue  share  certificates.  All  shares  are
normally held in  non-certificated  form registered on the books of the Fund and
the Fund's Transfer Agent for the account of the shareholder.

                     HOW TO REDEEM AN INVESTMENT IN THE FUND

     Shareholders  have  the  right  to  redeem  all or  any  portion  of  their
outstanding shares at the current net asset value on each day the New York Stock
Exchange is open for trading.  The  redemption  price is the net asset value per
share next determined after the shares are validly tendered for redemption.

     DIRECT REDEMPTION. A written request for redemption must be received by the
Fund's  Transfer  Agent in order to  constitute a valid  tender for  redemption.
Redemption  requests  should (a) state the number of shares to be redeemed,  (b)
identify the  shareholder's  account number and (c) be signed by each registered
owner exactly as recorded on the account  registration.  To protect the Fund and
its shareholders,  a signature  guarantee is required for certain  transactions,
including redemptions. Signature(s) on the redemption request must be guaranteed
by an  "eligible  guarantor  institution"  as defined in the federal  securities
laws.  These  institutions  include  banks,  broker-dealers,  credit  unions and
savings institutions.  A broker-dealer  guaranteeing signatures must be a member
of a clearing  corporation or maintain net capital of at least $100,000.  Credit
unions must be authorized to issue signature  guarantees.  Signature  guarantees
will be accepted from any eligible guarantor institution which participates in a
signature guarantee program. A notary public is not an acceptable guarantor.

     TELEPHONE REDEMPTION. Shareholders who complete the Redemption by Telephone
portion of the Fund's Account  Application may redeem shares on any business day
the New York Stock  Exchange  is open by calling  the Fund's  Transfer  Agent at
(800)  282-2340  between  the hours of 9:00 a.m.  and 4:00  p.m.  Eastern  time.
Redemption  proceeds  will be  mailed to the  address  of record or wired at the
shareholder's  direction the next business day to the predesignated account. The
minimum  amount  that may be wired is  $1,000  (wire  charges,  if any,  will be
deducted from redemption proceeds).

     By establishing telephone redemption  privileges,  a shareholder authorizes
the Fund and its  Transfer  Agent to act upon the  instruction  of any person by
telephone to redeem from the account for which such service has been  authorized
and send the  proceeds to the  address of record on the account or transfer  the
proceeds to the bank account designated in the  Authorization.  The Fund and the
Transfer  Agent will use  procedures  to confirm  that  redemption  instructions
received by telephone are genuine, including recording of telephone instructions
and  requiring  a  form  of  personal   identification  before  acting  on  such
instructions.  As long as these identification procedures are followed,  neither
the Fund nor its  agents  will be liable for any loss,  liability  or cost which
results from acting upon  instructions  of a person believed to be a shareholder
with respect to the telephone redemption privilege. The Fund may change, modify,
or  terminate  these  privileges  at any time  upon at least 60 days'  notice to
shareholders.

10
<PAGE>   11
     Shareholders may request  telephone  redemption after an account is opened;
however,  the authorization  form will require a separate  signature  guarantee.
Shareholders may experience delays in exercising telephone redemption privileges
during periods of abnormal market activity.

     GENERAL.  Payment of the redemption proceeds will be made promptly, but not
later  than  seven  days after the  receipt  of all  documents  in proper  form,
including a written  redemption  order with appropriate  signature  guarantee in
cases where telephone redemption privileges are not being utilized. The Fund may
suspend the right of redemption  under certain  extraordinary  circumstances  in
accordance with the Rules of the Securities and Exchange Commission. In the case
of shares purchased by check and redeemed shortly after purchase,  the Fund will
not mail redemption  proceeds until it has been notified that the check used for
the purchase has been collected,  which may take up to 15 days from the purchase
date.  To  minimize  or avoid  such  delay,  investors  may  purchase  shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for Federal income tax purposes.

     Due to the relatively high cost of maintaining  smaller accounts,  the Fund
reserves the right to redeem shares in any account,  other than  retirement plan
or Uniform Gift to Minors Act accounts,  if at any time,  due to  redemptions by
the  shareholder,  the total value of a shareholder's  account does not equal at
least $2,000. If the Fund determines to make such an involuntary redemption, the
shareholder  will first be  notified  that the value of his account is less than
$2,000 and will be allowed 30 days to make an additional investment to bring the
value of the account to at least $2,000 before the Fund takes any action.

                  SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS

     RETIREMENT PLANS. The Fund offers a prototype Individual Retirement Account
("IRA") plan and  information  is available  from the  Distributor  or from your
securities  dealer with respect to Keogh,  Section  403(b) and other  retirement
plans offered.  Investors  should consult a tax adviser before  establishing any
retirement plan.

     AUTOMATIC  INVESTMENT PLAN. For the convenience of  shareholders,  the Fund
offers a preauthorized  check service under which a check is automatically drawn
on the  shareholder's  personal  checking account each month for a predetermined
amount (but not less than $100),  as if the  shareholder had written it himself.
Upon receipt of the withdrawn funds, the Fund automatically invests the money in
additional shares of the Fund at the current offering price.  Purchases are made
at Net  Asset  Value  at the  close of  regular  trading  on the New York  Stock
Exchange (the  "Exchange")  (currently  4:00 P.M.  Eastern time) on or about the
20th day of the month.  Applications  for this  service are  available  from the
Distributor.  There is no charge by the Fund for this service.  The  Distributor
may  terminate  or modify  this  privilege  at any time,  and  shareholders  may
terminate  their  participation  by  notifying  the  Transfer  Agent in writing,
sufficiently in advance of the next scheduled withdrawal.

     AUTOMATIC WITHDRAWALS. As another convenience, the Fund offers an Automatic
Withdrawal  Program  whereby  shareholders  may request  that a check drawn in a
predetermined  amount  be  sent  to them  each  month  or  calendar  quarter.  A
shareholder's  account must have Fund shares with a value of at least $10,000 in
order to start an Automatic  Withdrawal Program, and the minimum amount that may
be withdrawn  each month or quarter  under the Automatic  Withdrawal  Program is
$100. Redemptions are made at net asset value as of the close of regular trading
on the Exchange on the 25th day of each month (or the next business  day).  This
Program may be terminated  or modified by a shareholder  or the Fund at any time
without charge or penalty.

                                                                              11
<PAGE>   12
     A withdrawal under the Automatic  Withdrawal  Program involves a redemption
of shares, and may result in a gain or loss for federal income tax purposes.  In
addition,  if  the  amount  withdrawn  exceeds  the  dividends  credited  to the
shareholder's account, the account ultimately may be depleted.


                  HOW THE FUND'S PER SHARE VALUE IS DETERMINED

     The net asset  value of a Fund  share is  determined  once  daily as of the
close of public trading on the Exchange  (currently  4:00 p.m.  Eastern time) on
each  day the  Exchange  is open for  trading.  Net  asset  value  per  share is
calculated  by  dividing  the  value  of  the  Fund's  total  assets,  less  its
liabilities, by the number of Fund shares outstanding.

     Portfolio  securities are valued using current market values, if available.
Securities for which market  quotations are not readily  available are valued at
fair  values as  determined  in good  faith by or under the  supervision  of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.

                             DISTRIBUTIONS AND TAXES

     DIVIDENDS  AND  DISTRIBUTIONS.  Dividends  from net  investment  income are
declared and paid at least  annually,  typically at the end of the Fund's fiscal
year (August 31). Any undistributed net capital gains realized during the Fund's
fiscal year will also be distributed to shareholders  after the end of the year,
with a supplemental  distribution  on or about December 31 of any  undistributed
net  investment  income  for  the  calendar  year  as  well  as  any  additional
undistributed capital gains earned during the 12-month period ended each October
31.

     Dividends  and  capital  gain   distributions  (net  of  any  required  tax
withholding) are  automatically  reinvested in additional  shares of the Fund at
the net asset value per share on the  reinvestment  date unless the  shareholder
has previously  requested in writing to the Transfer Agent that distributions be
made in cash.

     Any  dividend or  distribution  paid by the Fund has the effect of reducing
the net  asset  value per share on the  reinvestment  date by the  amount of the
dividend or distribution.  Investors should note that a dividend or distribution
paid on shares  purchased  shortly  before  such  dividend or  distribution  was
declared  will be subject to income  taxes as  discussed  below even  though the
dividend or distribution  represents,  in substance, a partial return of capital
to the shareholder.

     TAXES.  The Fund has  qualified  and  elected to be treated as a  regulated
investment  company under  Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").  As long as the fund continues to qualify,  and as long as
the Fund distributes all of its income each year to the  shareholders,  the Fund
will not be subject to any federal  income or excise  taxes.  The  Distributions
made by the Fund will be  taxable to  shareholders  whether  received  in shares
(through  dividend  reinvestment)  or in cash.  Distributions  derived  from net
investment  income,  including  net  short-term  capital  gains,  are taxable to
shareholders as ordinary  income. A portion of these  distributions  may qualify
for the intercorporate dividends-received deduction. Distributions designated as
capital gains dividends are taxable as long-term capital gains regardless of the
length of time  shares of the Fund have been held.  Although  distributions  are
generally  taxable  when  received,  certain  distributions  made in January are
taxable  as if  received  the  prior  December.  Shareholders  will be  informed
annually  of the  amount  and  nature of the  Fund's  distributions.  Additional
information about taxes is set forth in the Statement of Additional Information.
Shareholders  should consult their own advisers  concerning  federal,  state and
local tax consequences of investments in the Fund.


12
<PAGE>   13
                               GENERAL INFORMATION

     THE TRUST.  The Trust was organized as a  Massachusetts  business  trust on
February 17, 1987.  The Agreement and  Declaration of Trust permits the Board of
Trustees  to  issue  an  unlimited  number  of full  and  fractional  shares  of
beneficial  interest,  without  par value,  which may be issued in any number of
series.  The Board of  Trustees  may from time to time issue other  series,  the
assets and  liabilities  of which will be separate and  distinct  from any other
series.

     SHAREHOLDER  RIGHTS.   Shares  issued  by  the  Fund  have  no  preemptive,
conversion, or subscription rights. Shareholders have equal and exclusive rights
as to dividends and  distributions as declared by the Fund and to the net assets
of the Fund upon  liquidation or dissolution.  The Fund, as a separate series of
the Trust,  votes separately on matters affecting only the Fund (e.g.,  approval
of a change in the Fund's investment objective); all series of the Trust vote as
a single class on matters  affecting all series  jointly or the Trust as a whole
(e.g.,  election or removal of Trustees).  Voting rights are not cumulative,  so
that the  holders  of more  than 50% of the  shares  voting in any  election  of
Trustees can, if they so choose,  elect all of the Trustees.  While the Trust is
not required and does not intend to hold annual meetings of  shareholders,  such
meetings  may be called by the Trustees in their  discretion,  or upon demand by
the  holders  of 10% or more of the  outstanding  shares  of the  Trust  for the
purpose of electing or removing Trustees.

     PERFORMANCE INFORMATION.  From time to time, the Fund may publish its total
return  in  advertisements  and   communications  to  investors.   Total  return
information  will include the Fund's  average annual  compounded  rate of return
over the most  recent  year and over the  period  from the Fund's  inception  of
operations,  through  the  most  recent  calendar  quarter.  The  Fund  may also
advertise  aggregate and average total return information over different periods
of time.  The  Fund's  total  return  will be based upon the value of the shares
acquired  through a  hypothetical  $1,000  investment  at the  beginning  of the
specified  period  and the net  asset  value  of such  shares  at the end of the
period,  assuming  reinvestment of all distributions.  Total return figures will
reflect all recurring  charges against Fund income.  Investors  should note that
the  investment   results  of  the  Fund  will  fluctuate  over  time,  and  any
presentation  of the  Fund's  total  return for any prior  period  should not be
considered as a representation  of what an investor's total return may be in any
future period.

     CUSTODIAN AND TRANSFER AGENT; SHAREHOLDER INQUIRIES.  Star Bank, 425 Walnut
St.,  Cincinnati,  OH 45202, serves as custodian of the Fund's assets.  American
Data Services,  24 West Carver Street,  2nd Floor,  Huntington,  NY 11743 is the
Fund's Transfer Agent.  Shareholder inquiries should be directed to the Transfer
Agent at (800) 282-2340.


                                                                              13
<PAGE>   14

                                     [LOGO]
                             LIGHTHOUSE GROWTH FUND

                                     Advisor
                       LIGHTHOUSE CAPITAL MANAGEMENT, INC.
                         10000 Memorial Drive, Suite 660
                              Houston, Texas 77024
                                 (713) 688-6881
                        Account Inquiries (800) 282-2340

                                   Distributor
                          FIRST FUND DISTRIBUTORS, INC.
                      4455 East Camelback Road, Suite 261E
                             Phoenix, Arizona 85018

                                    Custodian
                                 STAR BANK, N.A.
                                425 Walnut Street
                             Cincinnati, Ohio 45202

                                 Transfer Agent
                          AMERICAN DATA SERVICES, INC.
                        24 West Carver Street, 2nd Floor
                              Huntington, NY 11743

                                    Auditors
                              ERNST & YOUNG, L.L.P.
                             515 South Flower Street
                          Los Angeles, California 90071

                                  Legal Counsel
                        HELLER, EHRMAN, WHITE & McAULIFFE
                                 333 Bush Street
                         San Francisco, California 94104

<PAGE>
                         U.S. GLOBAL LEADERS GROWTH FUND
================================================================================
                                   PROSPECTUS


- --------------------------------------------------------------------------------
                                OCTOBER 31, 1996
- --------------------------------------------------------------------------------

                                TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Expense Table                                                           2
Financial Highlights                                                    4
Objective and Investment Approach of the Fund                           5
Management of the Fund                                                  8
How To Invest in the Fund                                               9
How To Redeem an Investment in the Fund                                11
Services Available to the Fund's Shareholders                          13
How the Fund's Per Share Value Is Determined                           13
Distributions and Taxes                                                14
General Information                                                    15
<PAGE>
                         U.S. GLOBAL LEADERS GROWTH FUND
                                  P.O. Box 856
                           Cincinnati, Ohio 45264-0856
                                 (800) 282-2340
     U.S.  GLOBAL  LEADERS  GROWTH  FUND (the  "Fund") is a mutual fund with the
investment objective of seeking growth of capital. The Fund seeks to achieve its
objective by investing  primarily in common  stocks of United  States  companies
that have substantial international activities ("U.S. Global Leaders"). The Fund
does not have a policy of investment in any specific number of countries outside
the U.S.,  although it may invest in securities of foreign  companies  that meet
the  Advisor's   criteria  of  global  leadership.   Yeager,   Wood  &  Marshall
Incorporated (the "Advisor") serves as investment advisor to the Fund.

     This  Prospectus  sets  forth  basic   information   about  the  Fund  that
prospective  investors  should  know  before  investing.  It  should be read and
retained for future  reference.  A Statement  of  Additional  Information  dated
October 31, 1996,  as may be amended from time to time,  has been filed with the
Securities and Exchange Commission and is incorporated herein by reference. This
Statement of Additional  Information  is available  without  charge upon written
request to the Fund at the address given above.


     SHARES OF THE FUND ARE NOT  DEPOSITS OR  OBLIGATIONS  OF OR  GUARANTEED  OR
ENDORSED BY ANY BANK.  SHARES OF THE FUND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION ("FDIC"),  FEDERAL RESERVE BOARD OR ANY OTHER AGENCY THESE
SECURITIES  HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION  OR ANY  STATE  SECURITIES  COMMISSION  NOR  HAS THE  SECURITIES  AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES  COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.


                                     Page 1

<PAGE>
                                  EXPENSE TABLE
Expenses are one of several  factors to consider when investing in the Fund. The
purpose of the following fee table is to provide an understanding of the various
costs and expenses which may be borne directly or indirectly by an investment in
the Fund. Actual expenses may be more or less than those shown.

<TABLE>
<CAPTION>

SHAREHOLDER TRANSACTION EXPENSES

- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>
Maximum Sales Load Imposed on Purchases                                 None

- ------------------------------------------------------------------------------------------------------------------------------------
Maximum Sales Load Imposed on Reinvested Dividends                      None

- ------------------------------------------------------------------------------------------------------------------------------------
Deferred Sales Load                                                     None

- ------------------------------------------------------------------------------------------------------------------------------------
Redemption Fees                                                         None

- ------------------------------------------------------------------------------------------------------------------------------------
Exchange Fee                                                            None



ANNUAL FUND OPERATING EXPENSES
 (AS A PERCENTAGE OF AVERAGE NET ASSETS)

- ------------------------------------------------------------------------------------------------------------------------------------
Advisory Fees                                                            1.00%


- ------------------------------------------------------------------------------------------------------------------------------------
Other Expenses (after waiver)                                            0.48%*

- ------------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (after waiver)                             1.48%*


<FN>

*The  Advisor has agreed to reduce its fees or make  payments to assure that the
Fund's ratio of operating  expenses to average net assets will not exceed 1.48%.
In the absence of this  limitation,  the Fund's ratio of expenses to average net
assets would have been 2.55% for the fiscal year ended June 30, 1996.
</FN>
</TABLE>


                                     Page 2
<PAGE>
EXAMPLE
- --------------------------------------------------------------------------------


This table illustrates the net transaction and operating  expenses that would be
incurred by an investment  in the Fund over  different  time periods  assuming a
$1,000  investment,  a 5% annual return,  and redemption at the end of each time
period.

<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>   
One year                                                               $   15

- ------------------------------------------------------------------------------------------------------------------------------------
Three years                                                            $   47


- ------------------------------------------------------------------------------------------------------------------------------------
Five years                                                             $   81

- ------------------------------------------------------------------------------------------------------------------------------------
Ten years                                                              $ 177


</TABLE>



The Example  shown above should not be  considered a  representation  of past or
future  expenses and actual expenses may be greater or less than those shown. In
addition,  federal regulations require the Example to assume a 5% annual return,
but the Fund's actual return may be higher or lower.  Amounts in the table could
increase if the  Advisor's  limitation of expenses  were to be  terminated.  See
"Management of the Fund."



U.S.  GLOBAL  LEADERS  GROWTH FUND (the "Fund") is a  non-diversified  series of
Professionally   Managed  Portfolios  (the  "Trust"),   an  open-end  management
investment  company  offering  redeemable  shares of  beneficial  interest.  See
"Non-Diversification"  on page 7. Shares of the Fund may be  purchased  at their
net asset  value per  share.  The  minimum  initial  investment  is $2,500  with
subsequent  investments of $1,000 or more.  Shares will be redeemed at net asset
value per share.


                                     Page 3
<PAGE>

                              FINANCIAL HIGHLIGHTS
                             For a share outstanding
                             throughout the period.

         The  following  information  has been audited by Ernst & Young  L.L.P.,
independent  accountants,  whose  unqualified  report covering the fiscal period
ended June 30,  1996 is  incorporated  by  reference  herein and  appears in the
annual report to  shareholders.  This  information  shoud be read in conjunction
with the financial statements and accompanying notes thereto which appear in the
annual report and are incorporated by reference into the Statement of Additional
Information. Further information about the Fund's performance may be included in
its annual  report,  which may be obtained  without charge by writing or calling
the address or telephone number on the Prospectus  cover page.  
<TABLE>
<CAPTION>

                                                        October 1, 1995*
                                                            through
                                                         June 30, 1996

<S>                                                           <C>   
Net asset value, beginning of period ...................      $10.00
                                                              ------
Income from investment operations:
   Net investment income ...............................        0.01
   Net realized and unrealized gain on investments .....        2.08
                                                                ----
Total from investment operations........................        2.09
                                                                ----
Less distributions:
   Dividends from net investment income.................       (0.01)
                                                               ----- 
Net asset value, end of period .........................      $12.08
                                                              ======
Total return ...........................................       20.83%++
Ratios/supplemental data:
Net assets, end of period (000's).......................      $9,022
Ratio of expenses to average net assets:
   Before expense reimbursement ........................        2.55%+
   After expense reimbursement..........................        1.48%+
Ratio of net investment loss to average net assets:
   Before expense reimbursement ........................       (1.08)%+
   After expense reimbursement .........................       (0.01)%+
Portfolio turnover rate ................................        4.91%
Average commission rate paid per share..................     $  0.07


<FN>
*Commencement of operations.

+Annualized.

++Not Annualized.
</FN>
</TABLE>


                                     Page 4
<PAGE>
                        OBJECTIVE AND INVESTMENT APPROACH
                                   OF THE FUND
The  investment  objective  of the Fund is to seek growth of  capital.  The Fund
seeks to achieve its objective by investing primarily in common stocks of United
States companies that have substantial  international  activities ("U.S.  Global
Leaders").  Under  normal  market  conditions,  at least 65% of the Fund's total
assets  will be  invested in stocks of  companies  the  Advisor  regards as U.S.
Global Leaders as set forth below.  Unlike most mutual funds that are classified
as "global" funds, the Fund does not have a policy of investment in any specific
number of countries  outside the U.S.,  although it may invest in  securities of
foreign companies that meet the Advisor's criteria of global  leadership.  There
is, of course, no assurance that the Fund's objective will be achieved. The Fund
is not designed for investors seeking income rather than growth of capital.

Because  prices  of  securities  held by the  Fund  fluctuate,  the  value of an
investment  in the  Fund  will  vary,  as the  market  value  of its  investment
portfolio  changes and when shares are redeemed,  they may be worth more or less
than their original cost.

INVESTMENT APPROACH: U.S. GLOBAL LEADERS

In selecting  common  stocks for the Fund,  the Advisor  focuses on companies it
views as "U.S. Global Leaders": Companies that have leading positions in growing
markets in the  developed  countries  and also derive a  substantial  portion of
their profits in fast-growing emerging markets.  Under normal market conditions,
the Fund will invest at least 65% of the value of its total assets in securities
of such companies.

U.S. Global Leaders portfolio companies typically:

 -Hold leading market shares of their relevant growth markets, and hence possess
the pricing  flexibility that results in high profit margins and high investment
returns.

 -Supply  consumable  products  or services  so that their  revenue  streams are
recurring rather than derived from infrequent or postponable sales of big-ticket
items.

 -Maintain strong balance sheets with relatively low debt to equity ratios.

The Advisor  believes  that  companies  with these  characteristics  should have
relatively  low business risk and  relatively  high  sustainability  of earnings
growth.

                                     Page 5
<PAGE>
     The Advisor believes that leading  multinational  companies traded publicly
in U.S. securities markets have a number of advantages that make them attractive
investments. U.S. capital markets are large and liquid. Accounting practices are
consistent and well regulated.  Currency and political risks are minimized,  and
the costs associated with investing abroad are reduced.

Companies that have leading  positions in growing  markets in the U.S. and other
developed  countries and also derive a  significant  portion of their profits in
fast-growing  emerging  markets are  relatively  limited in number at this time.
Because of the difficulty and expense in building  broad-based  distribution  in
newer global  markets,  it appears likely that the number of such companies will
not expand rapidly. Thus, the Advisor's view is that the stocks of multinational
companies  that can sustain  superior  global  earnings  growth are likely to be
accorded premium relative valuations.

The Advisor's  investment  policy is to identify U.S.  Global Leaders  companies
with superior  long-term  earnings prospects and to continue to own them as long
as their  managements  are  fulfilling  their  mission.  As long as the  Advisor
believes that shares of such companies continue to enjoy favorable prospects for
capital growth and that they are not overvalued in the marketplace,  such shares
are  ordinarily  retained.  Thus it is expected  that the Fund's  annual rate of
portfolio  turnover will be relatively low compared to that of most common stock
mutual funds, normally not more than 25%.

FOREIGN INVESTMENTS

There are foreign  companies  that fit the profile of Global  Leaders  companies
developed by the Advisor,  and the Advisor may invest in such  companies.  While
the Advisor is permitted to invest up to 25% of the Fund's net assets in foreign
companies,  under  normal  circumstances,  the level of such  investment  is not
expected to exceed 15%. Investment in foreign companies generally will be in the
form of American Depository Receipts ("ADRs"). These are certificates evidencing
ownership of shares of a foreign-based issuer held in trust by a bank or similar
financial institution. Designed for use in U.S. securities markets, and ADRs are
alternatives  to the purchase of the  underlying  securities  in their  national
market and currencies.

The  Advisor  intends  to limit its  investment  in foreign  companies  to large
capitalization,  well-established  issuers, the securities of which are publicly
traded in the U.S and which provide  their  financial  data in  accordance  with
generally accepted accounting  principles in the United States. Thus the Advisor
expects to minimize the risks associated with investing in foreign

                                     Page 6
<PAGE>
companies generally. For further information on foreign investing, including the
risks  associated  with  such  investments,  see  the  Statement  of  Additional
Information.

NON-DIVERSIFICATION

The Fund is a non-diversified investment company portfolio, which means that the
Fund is  required to comply only with the  diversification  requirements  of the
Internal  Revenue Code so that the Fund will not be subject to U.S. taxes on its
net investment income. These provisions,  among others,  require that at the end
of each calendar quarter, (1) not more than 25% of the value of the Fund's total
assets  can be  invested  in the  securities  of a single  issuer,  and (2) with
respect to 50% of the value of the Fund's total  assets,  no more than 5% of the
value of its total assets can be invested in the  securities  of a single issuer
and the Fund may not own more than 10% of the outstanding voting securities of a
single issuer.

 Since the Fund, as a non-diversified  investment company portfolio could invest
in a smaller number of individual issuers than a diversified investment company,
the value of the Fund's investments could be more affected by any single adverse
occurrence than would the value of the  investments of a diversified  investment
company.  However, it is the policy of the Fund to attempt to reduce its overall
exposure  to risk from  declines  in  individual  securities  by  spreading  its
investments over a number of different companies and a variety of industries.

OTHER PERMITTED INVESTMENTS AND RISKS

Under  normal  market  conditions,   it  is  expected  that  the  Fund  will  be
substantially  fully invested,  and cash and cash equivalent  investment  should
account for less than 5% of Fund assets. However, if the Advisor believes market
conditions  to  warrant a  temporary  defensive  position,  the Fund may  invest
without limit in cash,  certificates of deposit,  bankers  acceptances and other
short-term  bank  deposit  accounts,  short-term  U.S.  Government,  agency  and
instrumentality   obligations,   repurchase  agreements  with  respect  to  such
obligations and in other domestic debt rated in one of the two highest grades by
one or more of the nationally recognized statistical ratings  organizations,  or
if unrated, believed by the Advisor to be of comparable quality.

The Fund has adopted certain investment restrictions,  which are described fully
in  the  Statement  of  Additional  Information.   Like  the  Fund's  investment
objective, certain of these restrictions are fundamental and may be changed only
by a majority vote of the Fund's outstanding shares.

                                     Page 7
<PAGE>
                             MANAGEMENT OF THE FUND
The  Board  of  Trustees  of the  Trust  establishes  the  Fund's  policies  and
supervises and reviews the management of the Fund. The Advisor is located at 630
Fifth  Avenue,  New York,  NY 10111.  The  Advisor  was  founded  in 1968 and is
controlled by George M. Yeager,  President.  Mr. Yeager is  responsible  for the
management of the Fund's  portfolio.  The Advisor provides  investment  advisory
services to  individual  and  institutional  investors  with assets in excess of
$250,000,000.

The Advisor  provides  the Fund with  advice on buying and  selling  securities,
manages the  investments  of the Fund,  furnishes the Fund with office space and
certain  administrative  services,  and provides most of the personnel needed by
the Fund. As  compensation,  the Fund pays the Advisor a monthly  management fee
(accrued  daily) based upon the average daily net assets of the Fund at the rate
of  1.00%  annually.  This  fee is  higher  than  that  paid by most  investment
companies.

Investment Company Administration  Corporation (the "Administrator") acts as the
Fund's  Administrator  under  an  Administration  Agreement.  The  Administrator
prepares various federal and state regulatory  filings,  reports and returns for
the Fund;  prepares  reports  and  materials  to be  supplied  to the  trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates  the preparation and payment of Fund expenses and reviews the Fund's
expense accruals.  For its services, the Administrator receives a monthly fee at
the  following  annual rate:  Under $15 million - $30,000,  $15 to $50 million -
0.20% of average net assets,  $50 to $100 million - 0.15% of average net assets,
$100 to $150 million - 0.10% of average net assets, over $150 million - 0.05% of
average net assets.

The Fund is responsible for its own operating  expenses.  The Advisor has agreed
to limit the  Fund's  operating  expenses  to assure  that the  Fund's  ratio of
operating  expenses to average  net assets will not exceed the limit  imposed by
the most restrictive applicable state regulation, currently 2.50% In addition to
this limitation, the Advisor may reimburse additional amounts to the Fund at any
time in order to reduce  the  Fund's  expenses,  or to the  extent  required  by
applicable  securities  laws. The Advisor is currently  undertaking to limit the
Fund's  annual  operating  expenses to no more than 1.48% of average net assets.
Any such reductions made by the Advisor in its fees or payments or reimbursement
of expenses which are the Fund's  obligation may be subject to  reimbursement by
the Fund.

                                     Page 8
<PAGE>
The  Advisor  considers  a number of factors  in  determining  which  brokers or
dealers to use for the Fund's portfolio transactions. While these are more fully
discussed in the Statement of Additional  Information,  the factors include, but
are not limited to, the  reasonableness of commissions,  quality of services and
execution,  and the  availability of research which the Advisor may lawfully and
appropriately use in its investment management and advisory capacities. Provided
the Fund receives prompt execution at competitive  prices,  the Advisor may also
consider the sale of Fund shares as a factor in selecting broker-dealers for the
Fund's portfolio transactions.

The  Advisor may in its  discretion  and out of its own funds  compensate  third
parties for the sale and  marketing of shares of the Fund for services  provided
to Fund shareholders.


                           HOW TO INVEST IN THE FUND

The minimum  initial  investment is $2,500.  Subsequent  investments  must be at
least  $1,000.  First  Fund  Distributors,  Inc.  (the  "Distributor"),  acts as
Distributor  of the Fund's shares.  Shares of the Fund may be purchased  without
regard to these minimums by employees,  officers and Trustees of the Trust,  the
Advisor or firms  providing  contractual  services  to the Fund,  and members of
their immediate  families and by retirement  plans and trusts for their benefit.
The  Distributor   may,  at  its  discretion,   waive  the  minimum   investment
requirements for charitable  organizations,  employee benefit plans,  clients of
the  Advisor,  and others  with whom the  Advisor  has an  established  business
relationship.  Brokers or other financial institutions may charge a fee to their
customers  who purchase  shares of the Fund through them as  intermediaries.  In
addition to cash purchases, shares may be purchased by tendering payment in kind
in the form of shares of stock,  bonds or other  securities,  provided  that any
such security is readily  marketable,  its  acquisition  is consistent  with the
Fund's  investment  objective  and it is  otherwise  acceptable  to  the  Fund's
Advisor.


Shares of the Fund are  offered  continuously  for  purchase  at their net asset
value per share next determined  after a purchase order is received.  The public
offering price is effective for orders received by the Fund prior to the time of
the next determination of the Fund's net asset value.  Orders received after the
time of the next  determination of the applicable Fund's net asset value will be
entered at the next calculated public offering price.

Investors may purchase shares of the Fund by check or wire:

     BY CHECK: For initial  investments,  an investor should complete the Fund's
Account Application (included with this Prospectus). The com-

                                     Page 9
<PAGE>
pleted  application,  together with a check payable to "U.S. Global Leaders
Growth Fund," should be mailed to: U.S.  Global  Leaders  Growth Fund,  P.O. Box
856, Cincinnati, OH 45264-0856.  Investments sent by overnight delivery services
should be sent to: U.S.  Global Leaders  Growth Fund,  c/o Star Bank,  N.A., 425
Walnut Street, M.L. 6118, Cincinnati, OH 45202

For subsequent investments,  a stub is attached to the account statement sent to
shareholders  after  each  transaction.  The stub  should be  detached  from the
statement  and,  together with a check payable to "U. S. Global  Leaders  Growth
Fund,"  mailed in the  envelope  provided to the address  indicated  above.  The
investor's account number should be written on the check.


BY WIRE: For initial  investments,  before wiring funds, an investor should call
the Fund's  Transfer Agent at (800) 282-2340  between the hours of 9:00 a.m. and
4:00 p.m.  Eastern time,  on a day when the New York Stock  Exchange is open for
trading in order to receive an account  number.  The Transfer Agent will request
the investor's name, address, tax identification  number, amount being wired and
wiring bank. The investor should then instruct the wiring bank to transfer funds
by wire to : Star Bank, N.A.  Cinti/Trust,  ABA  #0420-0001-3,  DDA # 483898029,
U.S. Global Leaders Growth Fund, [Account name and number].  The investor should
also ensure that the wiring bank  includes  the name of the Fund and the account
number with the wire.  If the funds are received by the Transfer  Agent prior to
the time  that the  Fund's  net asset  value is  calculated,  the funds  will be
invested on that day;  otherwise they will be invested on the next business day.
Finally,  the investor  should write the account number provided by the Transfer
Agent on the Application Form and mail the Form promptly to the Transfer Agent.


For subsequent  investments,  the investor should first notify the Fund and then
have the investor's  financial  institution wire funds as indicated above. It is
essential  that complete  information  regarding your account be included in all
wire  instructions  in order to  facilitate  prompt  and  accurate  handling  of
investments.  Investors may obtain  information  about  remitting  funds in this
manner  from  the  Transfer  Agent  and  should  obtain  from  their  own  banks
information about any fees that may be imposed.

     GENERAL.  Payment of redemption  proceeds  from shares that were  purchased
with an initial  investment  made by wire may be delayed  until one business day
after the completed Account Application is received by the Fund. All investments
must be made in U.S.  dollars  and, to avoid fees and delays,  checks  should be
drawn only on U.S.  banks and should not be made by third party check.  A charge
may be imposed if any check used

                                    Page 10
<PAGE>
for investment  does not clear.  The Fund and the  Distributor  reserve the
right to reject any purchase order in whole or in part.

If an order,  together  with payment in proper form, is received by the Transfer
Agent by the close of  trading on the New York Stock  Exchange  (currently  4:00
p.m.,  New York City time),  Fund shares will be purchased at the offering price
determined as of the close of trading on that day.  Otherwise,  Fund shares will
be purchased at the offering price  determined as of the close of trading on the
New York Stock Exchange on the next business day.

Federal tax  regulations  require that  investors  provide a certified  Taxpayer
Identification Number and certain other required  certifications upon opening or
reopening an account in order to avoid backup  withholding  of taxes at the rate
of 31% on taxable  distributions  and  proceeds of  redemptions.  See the Fund's
Account Application for further information concerning this requirement.

The Fund is not  required to issue share  certificates.  All shares are normally
held in non-certificated form registered on the books of the Fund and the Fund's
Transfer Agent for the account of the shareholder.

                    HOW TO REDEEM AN INVESTMENT IN THE FUND

A  shareholder  has the right to have the Fund  redeem all or any portion of his
outstanding  shares at their  current  net asset  value on each day the New York
Stock Exchange is open for trading.  The redemption price is the net asset value
per share next determined after the shares are validly tendered for redemption.

DIRECT  REDEMPTION.  A written  request for  redemption  must be received by the
Fund's  Transfer  Agent in order to  constitute a valid  tender for  redemption.
Redemption  requests  should (a) state the number of shares to be redeemed,  (b)
identify the  shareholder's  account number and (c) be signed by each registered
owner exactly as recorded on the account registration.  Additional documentation
may be required from corporate,  trust, or partnership shareholders.  To protect
the Fund and its  shareholders,  a signature  guarantee  is required for certain
transactions, including redemptions. Signature(s) on the redemption request must
be guaranteed by an "eligible  guarantor  institution" as defined in the federal
securities laws. These institutions include banks, broker-dealers, credit unions
and savings  institutions.  A  broker-dealer  guaranteeing  signatures must be a
member of a clearing  corporation or maintain net capital of at least  $100,000.
Credit unions must be authorized to issue signature guarantees.

                                    Page 11
<PAGE>
Signature  guarantees will be accepted from any eligible  guarantor  institution
which  participates in a signature  guarantee program. A notary public is not an
acceptable guarantor.

TELEPHONE  REDEMPTION.  Shareholders  who complete the  Redemption  by Telephone
portion of the Fund's Account  Application may redeem shares on any business day
the New York Stock  Exchange  is open by calling  the Fund's  Transfer  Agent at
(800) 282-2340 before 4:00 p.m. Eastern time. Redemption proceeds will be mailed
to the  address  of  record  or wired at the  shareholder's  direction  the next
business day to the predesignated  account. The minimum amount that may be wired
is $1,000 (wire charges, if any, will be deducted from redemption proceeds).

By establishing  telephone redemption  privileges,  a shareholder authorizes the
Fund  and its  Transfer  Agent  to act upon the  instruction  of any  person  by
telephone to redeem from the account for which such service has been  authorized
and send the  proceeds to the  address of record on the account or transfer  the
proceeds to the bank account designated in the  Authorization.  The Fund and the
Transfer  Agent will use  procedures  to confirm  that  redemption  instructions
received by telephone are genuine, including recording of telephone instructions
and  requiring  a  form  of  personal   identification  before  acting  on  such
instructions.  If these identification  procedures are not followed, the Fund or
its agents could be liable for any loss,  liability  or cost which  results from
acting upon  instructions of a person believed to be a shareholder  with respect
to the telephone redemption privilege. The Fund may change, modify, or terminate
these privileges at any time upon at least 60 days notice to shareholders.

Shareholders  may  request  telephone  redemption  after an  account  is opened;
however,  the authorization  form will require a separate  signature  guarantee.
Shareholders may experience  delays in exercising  telephone  redemption  during
periods of abnormal market activity.

GENERAL. Payment of the redemption proceeds will be made promptly, but not later
than seven days after the receipt of all  documents in proper form,  including a
written  redemption  order with appropriate  signature  guarantee in cases where
telephone redemption privileges are not being utilized. The Fund may suspend the
right of redemption under certain extraordinary circumstances in accordance with
the  Rules of the  Securities  and  Exchange  Commission.  In the case of shares
purchased by check and redeemed  shortly after purchase,  the Fund will not mail
redemption  proceeds  until it has been  notified  that the  check  used for the
purchase  has been  collected,  which may take up to 15 days  from the  purchase
date.  To  minimize  or avoid  such  delay,  investors  may  purchase  shares by
certified check or federal funds wire. A redemption may result in recognition of
a gain or loss for Federal income tax purposes.

                                    Page 12
<PAGE>
Due to the  relatively  high  cost of  maintaining  smaller  accounts,  the Fund
reserves the right to redeem shares in any account,  other than  retirement plan
or Uniform Gift to Minors Act accounts,  if at any time,  due to  redemptions by
the  shareholder,  the total value of a shareholder's  account does not equal at
least $1,000. If the Fund determines to make such an involuntary redemption, the
shareholder  will first be  notified  that the value of his account is less than
$1,000 and will be allowed 30 days to make an additional investment to bring the
value of his account to at least $1,000 before the Fund takes any action.

                 SERVICES AVAILABLE TO THE FUND'S SHAREHOLDERS

     RETIREMENT PLANS. The Fund offers a prototype Individual Retirement Account
("IRA") plan and  information  is available  from the  Distributor  or from your
securities  dealer with respect to Keogh,  Section  403(b) and other  retirement
plans offered.  Investors  should consult a tax adviser before  establishing any
retirement plan.


AUTOMATIC INVESTMENT PLAN. For the convenience of shareholders,  the Fund offers
a preauthorized  check service under which a check is automatically drawn on the
shareholder's  personal  checking account each month for a predetermined  amount
(but not less than $250), as if the  shareholder  had written it directly.  Upon
receipt of the  withdrawn  funds,  the Fund  automatically  invests the money in
additional  shares of the Fund at the current  offering price as of the close of
regular  trading on the New York Stock Exchange.  Applications  for this service
are  available  from the  Distributor.  There is no  charge by the Fund for this
service. The Distributor may terminate or modify this privilege at any time, and
shareholders  may terminate their  participation by notifying the Transfer Agent
in writing, sufficiently in advance of the next scheduled withdrawal.


The net asset value of a Fund share is determined  once daily as of the close of
public trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time)
on each day the New York Stock Exchange is open for trading. Net asset value per
share is calculated  by dividing the value of the Fund's total assets,  less its
liabilities, by the number of Fund shares outstanding.

                                    Page 13
<PAGE>
Portfolio  securities  are valued using  current  market  values,  if available.
Securities for which market  quotations are not readily  available are valued at
fair  values as  determined  in good  faith by or under the  supervision  of the
Trust's officers in accordance with methods which are specifically authorized by
the Board of Trustees. Short-term obligations with remaining maturities of sixty
days or less are valued at amortized cost as reflecting fair value.




DIVIDENDS AND  DISTRIBUTIONS.  Dividends from net investment income are declared
and paid at least annually, typically at the end of the Fund's fiscal year (June
30). Any  undistributed net capital gains realized during the Fund's fiscal year
will also be  distributed  to  shareholders  after  the end of the year,  with a
supplemental  distribution  on or about  December  31 of any  undistributed  net
investment income as well as any additional  undistributed  capital gains earned
during the 12-month period ended each October 31.


Dividends and capital gain  distributions  (net of any required tax withholding)
are  automatically  reinvested in additional shares of the Fund at the net asset
value per share on the  reinvestment  date unless the shareholder has previously
requested in writing to the Transfer Agent that payment be made in cash.

Any dividend or distribution paid by the Fund has the effect of reducing the net
asset value per share on the reinvestment  date by the amount of the dividend or
distribution.  Investors  should  note that a dividend or  distribution  paid on
shares purchased  shortly before such dividend or distribution was declared will
be subject  to income  taxes as  discussed  below even  though the  dividend  or
distribution  represents,  in  substance,  a partial  return of  capital  to the
shareholder.

TAXES.  The  Fund  has  qualified  and  elected  to be  treated  as a  regulated
investment  company under  Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").  As long as the Fund continues to qualify,  and as long as
the Fund distributes all of its income each year to the  shareholders,  the Fund
will not be subject to any federal  income or excise  taxes.  The  distributions
made by the Fund will be  taxable to  shareholders  whether  received  in shares
(through  dividend  reinvestment  ) or in cash.  Distributions  derived from net
investment  income,  including  net  short-term  capital  gains,  are taxable to
shareholders as ordinary  income. A portion of these  distributions  may qualify
for the intercorporate dividends-received deduction. Distributions designated as
capital gains dividends are

                                    Page 14
<PAGE>
taxable as long-term  capital  gains  regardless of the length of time shares of
the Fund have been held.  Although  distributions  are  generally  taxable  when
received,  certain  distributions made in January are taxable as if received the
prior December.  Shareholders will be informed annually of the amount and nature
of the Fund's distributions.  Additional information about taxes is set forth in
the Statement of Additional  Information.  Shareholders should consult their own
advisers concerning federal,  state and local tax consequences of investments in
the Fund.




THE TRUST. The Trust was organized as a Massachusetts business trust on February
17, 1987.  The Agreement and  Declaration of Trust permits the Board of Trustees
to  issue an  unlimited  number  of full and  fractional  shares  of  beneficial
interest,  without par value,  which may be issued in any number of series.  The
Board of  Trustees  may from time to time  issue  other  series,  the assets and
liabilities of which will be separate and distinct from any other series.

SHAREHOLDER RIGHTS. Shares issued by the Fund have no preemptive, conversion, or
subscription  rights.  Shareholders  have  equal  and  exclusive  rights  as  to
dividends and distributions as declared by the Fund and to the net assets of the
Fund upon  liquidation  or  dissolution.  The Fund, as a separate  series of the
Trust,  votes separately on matters affecting only the Fund (e.g., any change in
the Fund's investment objective); all series of the Trust vote as a single class
on matters affecting all series jointly or the Trust as a whole (e.g.,  election
or removal of Trustees).  Voting rights are not cumulative,  so that the holders
of more than 50% of the shares  voting in any election of Trustees  can, if they
so choose,  elect all of the Trustees.  While the Trust is not required and does
not intend to hold annual meetings of shareholders,  such meetings may be called
by the  Trustees  in their  discretion,  or upon demand by the holders of 10% or
more of the  outstanding  shares of the Trust for the  purpose  of  electing  or
removing Trustees.

PERFORMANCE INFORMATION.
From time to time, the Fund may publish its total return in  advertisements  and
communications  to investors.  Total return  information will include the Fund's
average annual  compounded rate of return over the most recent one year and over
the period  from the Fund's  inception  of  operations,  through the most recent
calendar quarter. The Fund may also advertise aggregate and average total return
information  over  different  periods of time.  The Fund's  total return will be
based  upon the  value of the  shares  acquired  through a  hypothetical  $1,000
investment at the beginning of the specified

                                    Page 15
<PAGE>
period and the net asset value of such shares at the end of the period, assuming
reinvestment  of all  distributions.  Total  return  figures  will  reflect  all
recurring charges against Fund income. Investors should note that the investment
results of the Fund will fluctuate over time, and any presentation of the Fund's
total return for any prior period should not be  considered as a  representation
of what an investor's total return may be in any future period.


CUSTODIAN AND TRANSFER AGENT;
SHAREHOLDER INQUIRIES.
Star Bank, N.A., 425 Walnut Street, Cincinnati, OH 45202, serves as custodian of
the Fund's  assets.  American Data Services,  Inc., 24 West Carver  Street,  2nd
Floor,  Huntington,  NY 11743 is the Fund's  Transfer  and  Dividend  Disbursing
Agent.  Shareholder  inquiries should be directed to the Transfer Agent at (800)
282-2340.


                                    Page 16
<PAGE>
                                     ADVISOR

                      Yeager, Wood & Marshall, Incorporated
                                630 Fifth Avenue
                            New York, New York 10111
                                 (212) 765-5350



                                   DISTRIBUTOR

                          First Fund Distributors, Inc.
                       4455 E. Camelback Road, Suite 261E
                             Phoenix, Arizona 85018



                                    CUSTODIAN


                                 Star Bank, N.A.
                                425 Walnut Street
                             Cincinnati, Ohio 45202




                                  TRANSFER AND
                                    DIVIDEND
                                DISBURSING AGENT


                          American Data Services, Inc.
                        24 West Carver Street, 2nd Floor
                           Huntington, New York 11743




                                    AUDITORS

                              Ernst & Young, L.L.P.
                             515 South Flower Street
                          Los Angeles, California 90071


                                  LEGAL COUNSEL

                        Heller, Ehrman, White & McAuliffe
                                 333 Bush Street
                         San Francisco, California 94104
<PAGE>

                         U.S. GLOBAL LEADERS GROWTH FUND

                                  P.O. Box 856
                           Cincinnati, Ohio 45264-0856
                                 (800) 282-2340
<PAGE>

                       STATEMENT OF ADDITIONAL INFORMATION


                                October 31, 1996


                           BOSTON MANAGED GROWTH FUND
                                   a series of
                        PROFESSIONALLY MANAGED PORTFOLIOS
                                  40 Court St.
                                Boston, MA 02108
                                 (617) 726-7250




         This Statement of Additional Information is not a prospectus. It should
be read in conjunction  with the prospectus of the Boston Managed Growth Fund. A
copy of the prospectus dated October 31, 1996 is available by calling the number
listed above or (212) 633-9700.







                                                 TABLE OF CONTENTS



                                                                            Page

The Trust . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . .    B-2
Investment Objective and Policies . . . . . . .   . . . . . . . . . . . .   B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . .   B-6
Distributions and Tax Information . . . . . . . . . . . . . . . . . . . .   B-8
Management . . . . .  . . . . . . . . . . . . . .. . . . . . . . . . . . . B-11
Execution of Portfolio Transactions . . . . . . .. . . . . . . . . . .  B-14
Additional Purchase and Redemption Information  .. . . . . . . . . . . .   B-16
Determination of Share Price  . . . . . . . . . . . . . . . . . . . . . .   B-17
Performance Information . . . . . . . . . . . . . . . . . . . . . . . . .  B-17
General Information . . . . . . . . . . . . . . .. . . . . . . . . . . . .  B-18
Finanial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .  B-19
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    B-20

                                                        B-1

<PAGE>



                                                     THE TRUST

         Professionally   Managed   Portfolios  (the  "Trust")  is  an  open-end
management  investment company organized as a Massachusetts  business trust. The
Trust  consists  of a number  of  series  which  represent  separate  investment
portfolios.  This Statement of Additional Information relates only to the Boston
Managed Growth Fund series (the "Fund").


                                         INVESTMENT OBJECTIVE AND POLICIES

         The Fund is a mutual  fund with the  investment  objective  of  seeking
income and long-term  capital  growth through an actively  managed  portfolio of
stocks, bonds and money market instruments. The following discussion supplements
the discussion of the Fund's  investment  objective and policies as set forth in
the  Prospectus.  There can be no  assurance  the  objective of the Fund will be
attained.

Repurchase Agreements

         The Fund may enter  into  repurchase  agreements  as  discussed  in the
Prospectus. Under such agreements, the seller of the U.S. Government security to
the Fund  agrees to  repurchase  it at a mutually  agreed  time and  price.  The
repurchase  price may be higher than the purchase  price,  the difference  being
income to the Fund, or the purchase and repurchase  prices may be the same, with
interest at a stated rate due to the Fund together with the repurchase  price on
repurchase.  In either case, the income to the Fund is unrelated to the interest
rate  on  the  underlying  U.S.  Government  security  itself.  Such  repurchase
agreements  will be made only with banks with  deposits of $500  million or more
that are insured by the Federal Deposit Insurance Corporation or with Government
securities  dealers  recognized by the Federal  Reserve Board and  registered as
broker-dealers  with the  Securities and Exchange  Commission  ("SEC") or exempt
from such registration. The Fund will generally enter into repurchase agreements
of  short  durations,  from  overnight  to one  week,  although  the  underlying
securities  generally  have  longer  maturities.  The Fund may not enter  into a
repurchase agreement with more than seven days to maturity if, as a result, more
than 5% of the value of the Fund's  total  assets  would be invested in illiquid
securities including such repurchase agreements.

         For purposes of the Investment  Company Act of 1940 (the "1940 Act"), a
repurchase  agreement  is deemed to be a loan from the Fund to the seller of the
U.S. Government security subject to the repurchase  agreement.  It is not clear,
however, whether a court would consider the U.S. Government security acquired by
the Fund  subject to a  repurchase  agreement  as being  owned by the Fund or as
being  collateral  for a loan by the  Fund to the  seller.  In the  event of the
commencement of bankruptcy or insolvency  proceedings with respect to the seller
of the  U.S.  Government  security  before  its  repurchase  under a  repurchase
agreement,  the Fund may  encounter  delays and incur costs before being able to
sell the security.  Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and the  Fund has not  perfected  a  security  interest  in the U.S.  Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller. As an unsecured

                                                        B-2

<PAGE>



creditor,  the Fund would be at risk of losing some or all of the  principal and
income  involved  in the  transaction.  As with any  unsecured  debt  instrument
purchased  for the Fund,  the  investment  manager seeks to minimize the risk of
loss through  repurchase  agreements  by analyzing the  creditworthiness  of the
obligor, in this case the seller of the U.S. Government security.

         Apart from the risk of bankruptcy or insolvency  proceedings,  there is
also the risk that the seller may fail to repurchase the security.  However, the
Fund will always receive as collateral for any repurchase  agreement to which it
is a party  securities  acceptable  to it, the market value of which at the time
the transaction is entered into is equal to at least 100% of the amount invested
by the Fund plus accrued  interest,  and the Fund will make payment against such
securities only upon physical delivery or evidence of book entry transfer to the
account of its Custodian.  If the market value of the U.S.  Government  security
subject to the  repurchase  agreement  becomes  less than the  repurchase  price
(including  interest),  the Fund will  direct the seller of the U.S.  Government
security  to  deliver  additional  securities  so that the  market  value of all
securities  subject  to the  repurchase  agreement  will  equal  or  exceed  the
repurchase  price.  It is possible that the Fund will be unsuccessful in seeking
to  impose  on  the  seller  a  contractual  obligation  to  deliver  additional
securities.

When-Issued Securities

         The Fund may from time to time purchase  securities on a  "when-issued"
basis. The price of such  securities,  which may be expressed in yield terms, is
fixed at the time the  commitment to purchase is made,  but delivery and payment
for the  when-issued  securities  take  place  at a later  date.  Normally,  the
settlement  date  occurs  within  one month of the  purchase;  during the period
between  purchase and  settlement,  no payment is made by the Fund to the issuer
and no interest  accrues to the Fund.  To the extent that assets of the Fund are
held in cash pending the settlement of a purchase of securities,  the Fund would
earn no income;  however, it is the Fund's intention to be fully invested to the
extent  practicable and subject to the policies stated above.  While when-issued
securities  may be sold  prior  to the  settlement  date,  the Fund  intends  to
purchase such  securities  with the purpose of actually  acquiring them unless a
sale appears  desirable for investment  reasons.  At the time the Fund makes the
commitment  to purchase a security on a  when-issued  basis,  it will record the
transaction  and reflect the value of the security in determining  its net asset
value.  The market value of the when-issued  securities may be more or less than
the purchase price. The Fund does not believe that its net asset value or income
will be adversely affected by its purchase of securities on a when-issued basis.
The Fund will establish a segregated account with its Custodian in which it will
maintain  cash and  marketable  securities  equal in  value to  commitments  for
when-issued  securities.  Such segregated  securities  either will mature or, if
necessary, be sold on or before the settlement date.

Foreign Securities

         The Fund may  invest  up to 15% of its  assets in  foreign  securities.
Foreign  investments  can  involve  significant  risks in  addition to the risks
inherent in U.S. investments.  The value of securities denominated in or indexed
to foreign currencies,  and of dividends and interest from such securities,  can
change  significantly when foreign  currencies  strengthen or weaken relative to
the U.S. dollar.  Foreign  securities markets generally have less trading volume
and less liquidity than U.S. markets,

                                                        B-3

<PAGE>



and  prices  on some  foreign  markets  can be  highly  volatile.  Many  foreign
countries lack uniform accounting and disclosure  standards  comparable to those
applicable to U.S.  companies,  and it may be more difficult to obtain  reliable
information  regarding  an  issuer's  financial  condition  and  operations.  In
addition, the costs of foreign investing, including withholding taxes, brokerage
commissions,   and  custodial   costs,   generally  are  higher  than  for  U.S.
investments.

         Foreign  markets  may offer  less  protection  to  investors  than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government  supervision.  Foreign securities trading practices,  including those
involving  the  release of assets in advance of payment,  may involve  increased
risks in the event of a failed trade or the insolvency of a  broker-dealer,  and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.

         Investing abroad also involves different  political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S.  investors,  including the possibility of expropriation or
nationalization  of  assets,   confiscatory   taxation,   restrictions  on  U.S.
investment or on the ability to repatriate  assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign  governments  or  foreign  government-sponsored  enterprises.
Investments  in  foreign  countries  also  involve  a risk of  local  political,
economic,  or  social  instability,   military  action  or  unrest,  or  adverse
diplomatic developments. There can be no assurance that the Advisor will be able
to anticipate or counter these potential  events and their impacts on the Fund's
share price.

         Securities  of foreign  issuers  may be held by the Fund in the form of
American  Depositary  Receipts  and  European  Depositary  Receipts  ("ADRs" and
"EDRs").   These  are   certificates   evidencing   ownership  of  shares  of  a
foreign-based  issuer held in trust by a bank or similar financial  institution.
Designed for use in U.S. and European securities markets, respectively, ADRs and
EDRs are  alternatives  to the purchase of the  underlying  securities  in their
national market and currencies.

         The Fund may invest  without regard to the 15% limitation in securities
of foreign issuers which are listed and traded on a domestic national securities
exchange.

Debt Securities and Ratings

         Ratings of debt  securities  represent  the rating  agencies'  opinions
regarding their quality, are not a guarantee of quality and may be reduced after
the Fund has acquired the security.  If a security's  rating is reduced while it
is held by the Fund, the Advisor will consider  whether the Fund should continue
to hold the  security  but the Fund is not  required  to dispose  of it.  Credit
ratings attempt to evaluate the safety of principal and interest payments and do
not evaluate the risks of  fluctuations in market value.  Also,  rating agencies
may fail to make timely  changes in credit  ratings in  response  to  subsequent
events, so that an issuer's current financial  conditions may be better or worse
than the rating indicates.

         The Fund  reserves  the  right to  invest  up to 20% of its  assets  in
securities  rated lower than BBB by S & P or lower than Baa by Moody's but rated
at least B by S & P or Moody's (or, in either

                                                        B-4

<PAGE>



case,  if  unrated,  deemed  by  the  Advisor  to  be  of  comparable  quality).
Lower-rated  securities  generally  offer  a  higher  current  yield  than  that
available  for higher grade  issues.  However,  lower-rated  securities  involve
higher risks, in that they are especially  subject to adverse changes in general
economic  conditions and in the industries in which the issuers are engaged,  to
changes in the financial  condition of the issuers and to price  fluctuations in
response to changes in interest  rates.  During periods of economic  downturn or
rising interest rates, highly leveraged issuers may experience  financial stress
which could  adversely  affect  their  ability to make  payments of interest and
principal and increase the possibility of default.  In addition,  the market for
lower-rated debt securities has expanded rapidly in recent years, and its growth
paralleled a long economic  expansion.  At times in recent years,  the prices of
many  lower-rated  debt  securities   declined   substantially,   reflecting  an
expectation  that many issuers of such  securities  might  experience  financial
difficulties.  As a result,  the  yields on  lower-rated  debt  securities  rose
dramatically,  but such  higher  yields did not  reflect the value of the income
stream that  holders of such  securities  expected,  but  rather,  the risk that
holders of such securities could lose a substantial  portion of their value as a
result of the  issuers'  financial  restructuring  or  default.  There can be no
assurance  that such declines will not recur.  The market for  lower-rated  debt
issues  generally  is  smaller  and less  active  than that for  higher  quality
securities,  which may limit the Fund's ability to sell such  securities at fair
value in  response  to changes  in the  economy or  financial  markets.  Adverse
publicity  and  investor  perceptions,  whether  or  not  based  on  fundamental
analysis, may also decrease the values and liquidity of lower-rated  securities,
especially in a smaller and less actively traded market.

         Lower-rated  debt  obligations  also  present  risks  based on  payment
expectations.  If an issuer calls the  obligation for  redemption,  the Fund may
have to replace the  security  with a  lower-yielding  security,  resulting in a
decreased return to investors.  Also, because the principal value of bonds moves
inversely  with  movements in interest  rates,  in the event of rising  interest
rates the value of the securities  held by the Fund may decline  proportionately
more  than  the  Fund  consisting  of  higher-rated  securities.   If  the  Fund
experiences   unexpected  net  redemptions,   it  may  be  forced  to  sell  its
higher-rated bonds,  resulting in a decline in the overall credit quality of the
securities held by the Fund and increasing the exposure of the Fund to the risks
of  lower-rated  securities.  Investments  in  zero-coupon  bonds  may  be  more
speculative  and  subject  to  greater  fluctuations  in value due to changes in
interest rates than bonds that pay interest currently.

 Options and Futures Contracts

         As  indicated  in the  Prospectus,  to the extent  consistent  with its
investment objectives and policies, the Fund may purchase and write call and put
options on securities,  securities  indexes and on foreign  currencies and enter
into futures contracts and use options on futures contracts, to the extent of up
to 5% of its assets.

         Transactions  in options on securities and on indexes  involve  certain
risks. For example, there are significant differences between the securities and
options  markets  that could result in an imperfect  correlation  between  these
markets,  causing a given transaction not to achieve its objectives.  A decision
as to whether,  when and how to use options  involves  the exercise of skill and
judgment,  and even a  well-conceived  transaction  may be  unsuccessful to some
degree because of market behavior

                                                        B-5

<PAGE>



or unexpected events.

         There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option  position.  If the Fund were unable to close out an
option that it had purchased on a security, it would have to exercise the option
in order to realize any profit or the option may expire  worthless.  If the Fund
were  unable  to close  out a  covered  call  option  that it had  written  on a
security, it would not be able to sell the underlying security unless the option
expired  without  exercise.  As the writer of a covered  call  option,  the Fund
forgoes,  during the option's life, the  opportunity to profit from increases in
the market value of the  security  covering the call option above the sum of the
premium and the exercise price of the call.

         If trading were suspended in an option  purchased by the Fund, the Fund
would not be able to close out the option.  If  restrictions  on  exercise  were
imposed, the Fund might be unable to exercise an option it has purchased. Except
to the extent that a call  option on an index  written by the Fund is covered by
an option on the same index  purchased  by the Fund,  movements in the index may
result in a loss to the Fund;  such losses may be  mitigated or  exacerbated  by
changes in the value of the Fund's  securities  during the period the option was
outstanding.

   
         Use of futures  contracts  and options  thereon also  involves  certain
risks.  The variable  degree of correlation  between price  movements of futures
contracts  and price  movements in the related  portfolio  positions of the Fund
creates the  possibility  that losses on the hedging  instrument  may be greater
than  gains in the value of the  Fund's  position.  Also,  futures  and  options
markets  may not be liquid in all  circumstances  and  certain  over the counter
options may have no markets. As a result, in certain markets, the Fund might not
be able to close out a transaction at all or without incurring losses.  Although
the use of options and futures transactions for hedging should minimize the risk
of loss due to a decline in the value of the hedged  position,  at the same time
they tend to limit any potential gain which might result from an increase in the
value  of  such  position.  If  losses  were  to  result  from  the  use of such
transactions,  they could reduce net asset value and possibly  income.  The Fund
may use  these  techniques  to  hedge  against  changes  in  interest  rates  or
securities prices or as part of its overall investment  strategy.  The Fund will
maintain segregated accounts consisting of liquid assets  (or, as permitted by
applicable  regulation, enter into certain offsetting  positions) to cover its
obligations under options and futures contracts to avoid leveraging of the Fund.
    

                                              INVESTMENT RESTRICTIONS

         The following policies and investment restrictions have been adopted by
the Fund and  (unless  otherwise  noted) are  fundamental  and cannot be changed
without  the  affirmative  vote of a majority of the Fund's  outstanding  voting
securities as defined in the 1940 Act. The Fund may not:

         1. Make  loans to others,  except  (a)  through  the  purchase  of debt
securities in accordance with its investment objectives and policies, (b) to the
extent the entry into a repurchase agreement is deemed to be a loan.

                                                        B-6

<PAGE>



     2. (a) Borrow money, except from banks for temporary or emergency purposes.
Any such borrowing will be made only if immediately thereafter there is an asset
coverage of at least 300% of all borrowings.

     (b) Mortgage,  pledge or hypothecate any of its assets except in connection
with any such borrowings.

         3. Purchase  securities on margin,  participate on a joint or joint and
several basis in any securities trading account, or underwrite securities.  (The
Fund is not precluded from obtaining such short-term  credit as may be necessary
for the clearance of purchases and sales of its portfolio securities.)

         4.  Purchase or sell real estate,  commodities  or commodity  contracts
(other than  futures  transactions  for the  purposes  and under the  conditions
described in the prospectus and in this Statement of Additional Information).

     5. Invest more than 25% of the market value of its assets in the securities
of companies  engaged in any one industry.  (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)

         6. Issue  senior  securities,  as defined in the 1940 Act,  except that
this  restriction  shall not be deemed to prohibit  the Fund from (a) making any
permitted  borrowings,  mortgages  or pledges,  or (b)  entering  into  options,
futures, forward or repurchase transactions.

         7. Purchase the  securities of any issuer,  if as a result more than 5%
of the total  assets of the Fund would be  invested  in the  securities  of that
issuer,  other  than  obligations  of  the  U.S.  Government,  its  agencies  or
instrumentalities, provided that up to 25% of the value of the Fund's assets may
be invested without regard to this limitation.

         The  Fund  observes  the  following  policies,  which  are  not  deemed
fundamental and which may be changed without shareholder vote. The Fund may not:


         8.  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 a single issuer.

     9. Invest in any issuer for purposes of exercising control or management.

         10.  Invest in  securities of other  investment  companies  which would
result in the Fund owning more than 3% of the outstanding  voting  securities of
any  one  such  investment  company,  the  Fund  owning  securities  of  another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets,  or the Fund owning  securities of investment  companies in
the aggregate which would exceed 10% of the value of the Fund's total assets.

                                                        B-7

<PAGE>



         11.  Invest,  in the  aggregate,  more than 5% of its  total  assets in
securities with legal or contractual  restrictions on resale,  securities  which
are not readily  marketable and repurchase  agreements with more than seven days
to maturity.

         12. Invest more than 15% of its assets in securities of foreign issuers
(including  American  Depositary  Receipts with respect to foreign issuers,  but
excluding securities of foreign issuers listed and traded on a domestic national
securities exchange).

     13. Invest in securities  issued by UST Corp.  (parent  corporation  of the
Advisor).
         If a percentage restriction is adhered to at the time of investment,  a
subsequent  increase or decrease in a percentage  resulting from a change in the
values of assets will not constitute a violation of that restriction,  except as
otherwise noted.


                                         DISTRIBUTIONS AND TAX INFORMATION

Distributions

         Dividends from net investment income and distributions from net profits
from the sale of  securities,  if any, are  generally  made annually by the Fund
after the  conclusion of its fiscal year.  Also,  the Fund expects to distribute
any  undistributed  net investment  income on or about December 31 of each year.
Any net capital gains realized  through the twelve month period ended October 31
of each year will also be distributed by December 31 of each year.

         Each  distribution by the Fund is accompanied by a brief explanation of
the form and  character  of the  distribution.  In January of each year the Fund
will issue to each  shareholder a statement of the federal  income tax status of
all distributions.

Tax Information

         The Fund is  treated  as a  separate  entity  for  federal  income  tax
purposes.  The Fund  intends to qualify  and elect to be treated as a  regulated
investment  company under Subchapter M of the Internal Revenue Code of 1986 (the
"Code").  In order  to  qualify,  the  Fund  must  comply  with  all  applicable
requirements  regarding the source of its income,  diversification of its assets
and timing of its  distributions.  The  Fund's  policy is to  distribute  to its
shareholders  all of its investment  company taxable income and any net realized
long-term  capital gains for each fiscal year in a manner that complies with the
distribution  requirements  of the Code, so that the Fund will not be subject to
any  federal  income  tax or excise  taxes  based on net  income.  The Fund will
generally be subject to federal income tax on its  undistributed  net investment
income and capital gains. To avoid federal excise taxes based on its net income,
the Fund must  distribute (or be deemed to have  distributed)  by December 31 of
each calendar year (i) at least 98% of its ordinary  income for such year,  (ii)
at least 98% of the  excess of its  realized  capital  gains  over its  realized
capital losses for the 12-month period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not

                                                        B-8

<PAGE>



distributed.

         Net  investment  income  consists of interest and  dividend  income and
foreign  currency gain, less expenses.  Net realized  capital gains for a fiscal
period are computed by taking into account any capital loss  carryforward of the
Fund.

         Distributions of net investment income and the excess of net short-term
capital  gain over net  long-term  capital loss are taxable to  shareholders  as
ordinary  income.  In the  case of  corporate  shareholders,  a  portion  of the
distributions may qualify for the intercorporate dividends-received deduction to
the extent the Fund designates the amount distributed as a qualifying  dividend.
The aggregate amount so designated cannot,  however, exceed the aggregate amount
of  qualifying  dividends  received by the Fund for its taxable year. In view of
the Fund's  investment  policy,  it is expected  that  dividends  from  domestic
corporations will be part of the Fund's gross income and that, accordingly, part
of the  distributions  by the Fund may be  eligible  for the  dividends-received
deduction for corporate  shareholders.  However, the portion of the Fund's gross
income  attributable to qualifying  dividends is largely dependent on the Fund's
investment  activities for a particular  year and therefore  cannot be predicted
with any  certainty.  The  deduction  may be reduced or  eliminated  if the Fund
shares held by a corporate investor are treated as debt-financed or are held for
less than 46 days.

         Distributions  of the excess of net  long-term  capital  gains over net
short-term  capital  losses are taxable to  shareholders  as  long-term  capital
gains, regardless of the length of time the shareholders have held their shares.
Capital  gains  distributions  are  not  eligible  for  the   dividends-received
deduction  referred  to in the  previous  paragraph.  Distributions  of any  net
investment  income and net realized  capital  gains will be taxable as described
above, whether received in shares or in cash.  Shareholders  electing to receive
distributions  in the form of  additional  shares  will  have a cost  basis  for
federal  income tax  purposes in each share so  received  equal to the net asset
value of a share on the reinvestment  date.  Distributions are generally taxable
when received. However,  distributions declared in October, November or December
to  shareholders  of  record  on a date in such a month  and paid the  following
January are taxable as if received on December 31.  Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

         The Fund may write,  purchase  or sell  certain  option,  futures,  and
foreign currency  contracts.  Such transactions are subject to special tax rules
that  may  affect  the  amount,   timing  and  character  of   distributions  to
shareholders.  Unless the Fund is eligible to make and makes a special election,
such contracts that are "Section 1256 contracts" will be "marked-to-market"  for
federal income tax purposes at the end of each taxable year, i.e., each contract
will be treated as sold for its fair market value on the last day of the taxable
year.  In general,  unless the  special  election  referred  to in the  previous
sentence is made,  gain or loss from  transactions in such contracts will be 60%
long-term  and 40%  short-term  capital gain or loss.  Section 1092 of the Code,
which  applies to certain  "straddles",  may affect the  taxation  of the Fund's
transactions in option,  futures and foreign currency  contracts.  Under Section
1092 of the Code,  the Fund may be  required  to  postpone  recognition  for tax
purposes of losses incurred in certain closing transactions.


                                                        B-9

<PAGE>



         Section  988 of the Code  contains  special  tax  rules  applicable  to
certain foreign currency  transactions that may affect the amount,  timing,  and
character of income,  gain or loss  recognized  by the Fund.  Under these rules,
foreign   exchange   gain   or   loss   realized   with   respect   to   foreign
currency-denominated  debt  instruments,  foreign  currency  forward  contracts,
foreign  currency-denominated  payables  and  receivables  and foreign  currency
options and futures contracts (other than options, futures, and foreign currency
contracts that are governed by the  mark-to-market  and 60%-40% rules of Section
1256 of the Code and for  which no  election  is made) is  treated  as  ordinary
income or loss.

         One of the  requirements for  qualification  as a regulated  investment
company is that less than 30% of the Fund's  gross  income must be derived  from
gains from the sale or other  disposition of securities held for less than three
months.   Accordingly,   the  Fund  may  be  restricted  in  effecting   closing
transactions within three months after entering into an option contract.

         A redemption of Fund shares may result in recognition of a taxable gain
or loss.  Any loss  realized  upon a redemption of shares within six months from
the date of their  purchase  will be treated as a long-term  capital loss to the
extent of any amounts treated as distributions of long-term capital gains during
such six-month period. Any loss realized upon a redemption of Fund shares may be
disallowed  under  certain wash sale rules to the extent  shares of the Fund are
purchased  (through  reinvestment of distributions or otherwise)  within 30 days
before or after the redemption.

         Under the Code,  the Fund will be  required  to report to the  Internal
Revenue Service all distributions of taxable income and capital gains as well as
gross  proceeds from the  redemption  or exchange of Fund shares,  except in the
case of exempt shareholders,  which includes most corporations.  Pursuant to the
backup withholding  provisions of the Code,  distributions of any taxable income
and capital gains and proceeds from the redemption of Fund shares may be subject
to  withholding  of federal  income tax at the rate of 31 percent in the case of
non-exempt  shareholders  who fail to  furnish  the  Fund  with  their  taxpayer
identification numbers and with required  certifications  regarding their status
under  the  Code.  If  the  withholding  provisions  are  applicable,  any  such
distributions  and  proceeds,  whether taken in cash or reinvested in additional
shares,  will be reduced by the amounts  required to be withheld.  Corporate and
other  exempt   shareholders   should  provide  the  Fund  with  their  taxpayer
identification numbers or certify their exempt status in order to avoid possible
erroneous  application  of backup  withholding.  The Fund  reserves the right to
refuse to open an account for any person failing to provide a certified taxpayer
identification number.

         The  Fund  will  not  be  subject  to  tax  in  The   Commonwealth   of
Massachusetts  as long as it  qualifies  as a regulated  investment  company for
federal income tax purposes.  Distributions and the transactions  referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax  treatment  thereof  may  differ  from the  federal  income  tax  treatment.
Moreover,  the above  discussion is not intended to be a complete  discussion of
all applicable tax  consequences of an investment in the Fund.  Shareholders are
advised to consult with their own tax advisers  concerning  the  application  of
federal, state and local taxes to an investment in the Fund.

     The foregoing  discussion of the Code relates solely to the  application of
that  law  to  U.S.  citizens  or  residents  and  U.S.  domestic  corporations,
partnerships, trusts and estates. Each

                                                       B-10

<PAGE>



     shareholder  who is not a U.S.  person should consider the U.S. and foreign
tax  consequences of ownership of shares of the Fund,  including the possibility
that such a shareholder may be subject to a U.S. withholding tax at a rate of 30
percent  (or at a lower rate under an  applicable  income tax treaty) on amounts
constituting ordinary income.

         This discussion and the related  discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion in
respect thereof.


                                                    MANAGEMENT

Trustees

         The Trustees of the Trust,  who were elected for an indefinite  term by
the  initial  shareholders  of  the  Trust,  are  responsible  for  the  overall
management  of the  Trust,  including  general  supervision  and  review  of the
investment  activities of the Fund. The Trustees, in turn, elect the officers of
the Trust, who are responsible for  administering  the day-to-day  operations of
the Trust and its separate  series.  The current Trustees and officers and their
affiliations  and  principal  occupations  for the past five years are set forth
below.



Steven J. Paggioli,* 46  President and Trustee


     479 West 22nd Street,  New York, New York 10011.  Executive Vice President,
Robert H. Wadsworth & Associates,  Inc. (consultants) since 1986; Executive Vice
President of Investment Company Administration  Corporation ("ICAC"; mutual fund
administration and the Fund's  Administrator),  and Vice President of First Fund
Distributors,  Inc. ("FFD"; registered broker-dealer and the Fund's Distributor)
since 1990.


Dorothy A. Berry, 52 Trustee and Chairman

40 Maple Lane, Copake, NY 12516.  President,  Talon Industries  (venture capital
and business  consulting);  formerly Chief Operating  Officer,  Integrated Asset
Management (investment advisor and manager) and formerly President,  Value Line,
Inc., (investment advisory and financial publishing firm).

Wallace L. Cook, 56 Trustee


     30  Rockefeller  Plaza,  New York, New York 10112.  Senior Vice  President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.





                                                       B-11

<PAGE>



Carl A. Froebel, 57 Trustee


     333  Technology  Dr.,  Malvern,  PA  19355.   Managing  Director,   Premier
Solutions,  Ltd.  Formerly  President,  National  Investor Data  Services,  Inc.
(investment related computer software).


Rowley W.P. Redington, 51 Trustee

     260 Washington Street, Newark, New Jersey 07102. Vice President, PRS of New
Jersey,  Inc.   (management   consulting);   Chief  Financial  Officer,   Jersey
Electronics,  Inc.  (formerly  ESI,  Inc.)  (consumer  electronics  service  and
marketing);  formerly  President,  Aveco Inc.  (consumer  electronic service and
marketing)   and   formerly   Chief   Executive   Officer,   Rowley   Associates
(consultants).

   
Eric M. Banhazl*, 39 Treasurer

     2025 E. Financial Way, Suite 101, Glendora,  California 91741.  Senior Vice
President, Robert H. Wadsworth & Associates, Inc., Senior Vice President of ICAC
and Vice  President  of FFD since  1990.
    

Robin Berger*, 39 Secretary

     479 West 22nd St.,  New York,  New York 10011.  Vice  President,  Robert H.
Wadsworth  &  Associates,   Inc.  since  June,  1993;  formerly  Regulatory  and
Compliance Coordinator,  Equitable Capital Management, Inc. (1991-93), and Legal
Product Manager, Mitchell Hutchins Asset Management (1988-91).

Robert H. Wadsworth*, 56 Vice President

     4455 E. Camelback Road, Suite 261E,  Phoenix,  Arizona 85018.  President of
Robert H.  Wadsworth & Associates,  Inc.  since 1982,  President of ICAC and FFD
since 1990.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.



         Set forth below is the rate of  compensation  received by the following
Trustees from the Fund and all other portfolios of the Trust.  This total amount
is allocated  among the  portfolios.  Disinterested  trustees  receive an annual
retainer  of $7,500 and a fee of $2,500 for each  regularly  scheduled  meeting.
These  trustees also receive a fee of $1,000 for any special  meeting  attended.
The Chairman of the Board of Trustees  receives an additional annual retainer of
$4,500.  The  disinterested   trustees  are  also  reimbursed  for  expenses  in
connection with each Board meeting attended. No other compensation or retirement
benefits  are  received  by any  Trustee or  officer  from the Fund or any other
portfolios of the Trust.  During the Fund's initial fiscal period ended June 30,
1996, trustees fees and expenses of $1,751 were allocated to the Fund.



                                                       B-12

<PAGE>
Name of Trustee                          Total Compensation

Dorothy A. Berry                         $22,000
Wallace L. Cook                          $17,500
Carl A. Froebel                          $17,500
Rowley W. P. Redington                   $17,500




         The Fund receives  investment  advisory services pursuant to agreements
with the Advisor and the Trust.  Each such  agreement,  after its initial  term,
continues in effect for successive  annual periods so long as such  continuation
is  approved  at least  annually by the vote of (1) the Board of Trustees of the
Trust  (or a  majority  of the  outstanding  shares  of the  Fund to  which  the
agreement  applies),  and (2) a majority of the Trustees who are not  interested
persons of any party to the Agreement,  in each case cast in person at a meeting
called for the purpose of voting on such  approval.  Any such  agreement  may be
terminated at any time,  without penalty,  by either party to the agreement upon
sixty days' written notice and is  automatically  terminated in the event of its
"assignment," as defined in the 1940 Act.

Investment Advisor

         The Board of Trustees of the Trust  establishes the Fund's policies and
supervises and reviews the  management of the Fund.  United States Trust Company
of Boston is the Advisor to the Fund.  The Advisor is a  Massachusetts-chartered
banking  and trust  company and is a  wholly-owned  subsidiary  of UST Corp.,  a
Massachusetts bank holding company. It is located at 40 Court Street,  Boston MA
02108.  The Trust  Department  of the Advisor  has managed  funds as a fiduciary
since 1895. Mr. Domenic Colasacco,  Executive Vice President of UST Corp., and a
member  of UST  Corp.'s  Executive  Policy  Committee  is the  Fund's  portfolio
manager.  He is the  President of United  States Trust  Company and has been its
Chief  Investment  Officer since 1980.  Mr.  Colasacco is a Chartered  Financial
Analyst  and a member of the Boston  Security  Analysts'  Society.  Neither  the
Advisor nor UST Corp.  is  affiliated  with United  States Trust  Company of New
York.


         Under the  Investment  Advisory  Agreement  with the Fund,  the Advisor
provides  the Fund with  advice on buying and  selling  securities,  manages the
investments  of the Fund,  furnishes  the Fund  with  office  space and  certain
administrative  services, and provides most of the personnel needed by the Fund.
As  compensation,  the Fund pays the Advisor a monthly  management  fee (accrued
daily) based upon the average  daily net assets of the Fund at the rate of 0.75%
annually.  During the Fund's  initial  fiscal  period ended June 30,  1996,  the
Advisor received advisory fees of $241,607.


     The Investment  Advisory Agreement continues in effect from year to year so
long as such  continuation  is  approved  at least  annually by (1) the Board of
Trustees of the Trust or the vote of a majority of the outstanding shares of the
Fund, and (2) a majority of the Trustees who are not  interested  persons of any
party to the Agreement,  in each case cast in person at a meeting called for the
purpose of voting on such approval. The Agreement may be terminated at any time,
without

                                                       B-13

<PAGE>



penalty,  by either the Fund or the Advisor upon sixty days' written  notice and
is  automatically  terminated  in the event of its  assignment as defined in the
1940 Act.

Administrator


         The Fund has entered into an  Administration  Agreement with Investment
Company  Administration  Corporation  ("ICAC"),  a corporation owned in part and
controlled by Messrs.  Banhazl,  Paggioli and Wadsworth.  The Agreement provides
that ICAC will prepare and coordinate  reports and other  materials  supplied to
the  Trustees;  prepare  and/or  supervise  the  preparation  and  filing of all
securities  filings,  periodic  financial reports,  prospectuses,  statements of
additional information,  marketing materials,  tax returns,  shareholder reports
and other  regulatory  reports  or filings  required  of the Fund;  prepare  all
required  filings  necessary  to  maintain  the  Fund's   qualification   and/or
registration  to sell shares in all states  where the Fund  currently  does,  or
intends to do business; coordinate the preparation,  printing and mailing of all
materials (e.g., Annual Reports) required to be sent to shareholders; coordinate
the  preparation and payment of Fund related  expenses;  monitor and oversee the
activities of the Fund's servicing agents (i.e., transfer agent, custodian, fund
accountants,  etc.);  review and adjust as necessary  the Fund's  daily  expense
accruals; and perform such additional services as may be agreed upon by the Fund
and ICAC. For its services,  ICAC receives an annual fee equal to the greater of
0.10% of the  Fund's  average  daily net  assets or  $30,000.  During the Fund's
initial  fiscal  period ended June 30, 1996 the  Administrator  received fees of
$32,214


Distributor

         First Fund  Distributors,  (the  "Distributor") a corporation  owned by
Messrs.  Banhazl,  Paggioli and Wadsworth,  acts as the Fund's  distributor  and
principal  underwriter in a continuous public offering of the Fund's shares. The
Distribution  Agreement between the Fund and the Distributor continues in effect
from year to year if approved at least  annually by (I) the Board of Trustees or
the vote of a majority of the outstanding  shares of the Fund (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested  persons of
any such party,  in each case cast in person at a meeting called for the purpose
of voting on such approval. The Distribution Agreement may be terminated without
penalty  by  the  parties  thereto  upon  sixty  days'  written  notice,  and is
automatically  terminated in the event of its  assignment as defined in the 1940
Act.


                                        EXECUTION OF PORTFOLIO TRANSACTIONS

         Pursuant to the Investment Advisory  Agreement,  the Advisor determines
which   securities  are  to  be  purchased  and  sold  by  the  Fund  and  which
broker-dealers  are  eligible  to  execute  the Fund's  portfolio  transactions.
Purchases and sales of securities in the over-the-counter  market will generally
be  executed  directly  with a  "market-maker"  unless,  in the  opinion  of the
Advisor,  a better  price and  execution  can  otherwise  be obtained by using a
broker for the transaction.


     Purchases of portfolio  securities  for the Fund also may be made  directly
from issuers or from
                                                       B-14

<PAGE>



underwriters.  Where possible,  purchase and sale  transactions will be effected
through dealers  (including  banks) which  specialize in the types of securities
which  the  Fund  will  be  holding,  unless  better  executions  are  available
elsewhere.  Dealers  and  underwriters  usually act as  principal  for their own
account.  Purchases  from  underwriters  will include a  concession  paid by the
issuer to the  underwriter  and  purchases  from dealers will include the spread
between the bid and the asked price.  If the execution and price offered by more
than one dealer or underwriter are  comparable,  the order may be allocated to a
dealer or underwriter that has provided  research or other services as discussed
below.

         In placing portfolio transactions,  the Advisor will use its reasonable
efforts to choose broker-dealers  capable of providing the services necessary to
obtain the most  favorable  price and  execution  available.  The full range and
quality of services available will be considered in making these determinations,
such as the size of the order,  the  difficulty  of execution,  the  operational
facilities  of the firm  involved,  the firm's  risk in  positioning  a block of
securities,  and  other  factors.  In those  instances  where  it is  reasonably
determined  that more than one  broker-dealer  can offer the services  needed to
obtain the most favorable price and execution  available,  consideration  may be
given to those  broker-dealers  which furnish or supply research and statistical
information  to the Advisor that it may lawfully  and  appropriately  use in its
investment advisory capacities, as well as provide other services in addition to
execution services. The Advisor considers such information, which is in addition
to and not in lieu of the  services  required  to be  performed  by it under its
Agreement with the Fund, to be useful in varying degrees,  but of indeterminable
value.  Portfolio transactions may be placed with broker-dealers who sell shares
of the  Fund  is  subject  to  rules  adopted  by the  National  Association  of
Securities Dealers, Inc.

         While it is the Fund's  general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio  transactions  for the Fund,  weight is also given to the ability of a
broker-dealer to furnish  brokerage and research  services to the Fund or to the
Advisor,  even if the specific  services are not directly useful to the Fund and
may be  useful  to  the  Advisor  in  advising  other  clients.  In  negotiating
commissions  with a broker or evaluating the spread to be paid to a dealer,  the
Fund may therefore  pay a higher  commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services,  provided
that the amount of such  commission or spread has been  determined in good faith
by the Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be  measured in light of the  Advisor's  overall  responsibilities  to the
Fund.

         Investment  decisions for the Fund are made independently from those of
other  client  accounts  or mutual  funds  ("Funds")  managed  or advised by the
Advisor. Nevertheless, it is possible that at times identical securities will be
acceptable  for both the Fund and one or more of such client  accounts or Funds.
In such event,  the position of the Fund and such client  account(s) or Funds in
the same issuer may vary and the length of time that each may choose to hold its
investment in the same issuer may likewise vary.  However,  to the extent any of
these client accounts or Funds seeks to acquire the same security as the Fund at
the same  time,  the Fund may not be able to  acquire as large a portion of such
security as it desires,  or it may have to pay a higher  price or obtain a lower
yield for such

                                                       B-15

<PAGE>



security.  Similarly, the Fund may not be able to obtain as high a price for, or
as large an execution of, an order to sell any  particular  security at the same
time. If one or more of such client accounts or Funds  simultaneously  purchases
or sells the same security  that the Fund is  purchasing or selling,  each day's
transactions  in such security  will be allocated  between the Fund and all such
client  accounts or Funds in a manner  deemed  equitable by the Advisor,  taking
into account the respective sizes of the accounts and the amount being purchased
or  sold.  It is  recognized  that  in  some  cases  this  system  could  have a
detrimental  effect on the price or value of the security insofar as the Fund is
concerned.  In other cases, however, it is believed that the ability of the Fund
to participate  in volume  transactions  may produce  better  executions for the
Fund.


         The Fund does not effect  securities  transactions  through  brokers in
accordance with any formula, nor does it effect securities  transactions through
brokers  solely for selling  shares of the Fund,  although the Fund may consider
the sale of shares  as a factor  in  allocating  brokerage.  However,  as stated
above,  broker-dealers who execute brokerage transactions may effect purchase of
shares of the Fund for their customers. The Fund does not use the Distributor to
execute its  portfolio  transactions.  During the Fund's  initial  fiscal period
ended June 30, 1996 brokerage commissions totalled $19,693.



                                  ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

         The Trust reserves the right in its sole  discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Advisor or the Distributor such rejection
is in the best  interest  of the Fund,  and (iii) to reduce or waive the minimum
for initial and subsequent  investments for certain fiduciary  accounts or under
circumstances  where  certain  economies  can be achieved in sales of the Fund's
shares.

         Payments to shareholders for shares of the Fund redeemed  directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the Fund's Transfer Agent of the written request in proper form, with
the appropriate documentation as stated in the Prospectus,  except that the Fund
may suspend the right of redemption  or postpone the date of payment  during any
period  when (a)  trading  on the New  York  Stock  Exchange  is  restricted  as
determined  by the SEC or such  Exchange is closed for other than  weekends  and
holidays;  (b) an emergency  exists as determined by the SEC making  disposal of
portfolio  securities  or  valuation  of net  assets of the Fund not  reasonably
practicable;  or (c)  for  such  other  period  as the SEC  may  permit  for the
protection  of the  Fund's  shareholders.  At  various  times,  the  Fund may be
requested  to redeem  shares for which it has not yet received  confirmation  of
good payment;  in this  circumstance,  the Fund may delay the  redemption  until
payment for the purchase of such shares has been  collected and confirmed to the
Fund.

         The Fund intends to pay cash (U.S.  dollars)  for all shares  redeemed,
but, under abnormal  conditions which make payment in cash unwise,  the Fund may
make  payment  partly in  securities  with a current  market  value equal to the
redemption  price.  Although the Fund does not anticipate  that it will make any
part of a  redemption  payment in  securities,  if such  payment  were made,  an
investor

                                                       B-16

<PAGE>



may incur  brokerage  costs in converting  such securities to cash. The Fund has
elected to be governed by the provisions of Rule 18f-1 under the 1940 Act, which
contains a formula for determining the minimum  redemption  amounts that must be
paid in cash.

         The value of shares on  redemption  or  repurchase  may be more or less
than the  investor's  cost,  depending  upon  the  market  value  of the  Fund's
portfolio securities at the time of redemption or repurchase.


                                           DETERMINATION OF SHARE PRICE

         As noted in the  Prospectus,  the net asset value and offering price of
shares of the Fund will be determined  once daily as of 4:00 p.m., New York City
time,  on each day the New  York  Stock  Exchange  is open  for  trading.  It is
expected  that the Exchange  will be closed on Saturdays  and Sundays and on New
Year's Day, Presidents' Day, Good Friday,  Memorial Day, Independence Day, Labor
Day,  Thanksgiving Day and Christmas.  The Fund does not expect to determine the
net  asset  value of its  shares  on any day when the  Exchange  is not open for
trading even if there is sufficient trading in its portfolio  securities on such
days to materially affect the net asset value per share.

         In valuing the Fund's assets for calculating  net asset value,  readily
marketable  portfolio  securities listed on a national securities exchange or on
the National  Association  of Securities  Dealers'  National  Market System (the
"NASDAQ  National  Market  System")  are  valued at the last  sale  price on the
business  day as of which such value is being  determined.  If there has been no
sale on such  exchange or the NASDAQ  National  Market  System on such day,  the
security  is valued at the  closing  bid price on such day.  Readily  marketable
securities  traded  only in the  over-the-counter  market  and not on the NASDAQ
National Market System are valued at the current or last bid price. If no bid is
quoted  on such day,  the  security  is  valued  by such  method as the Board of
Trustees of the Trust shall  determine  in good faith to reflect the  security's
fair value.  All other assets of the Fund are valued in such manner as the Board
of Trustees in good faith deems appropriate to reflect their fair value.

         `The net asset  value per share of the Fund is  calculated  as follows:
all  liabilities  incurred or accrued are deducted  from the  valuation of total
assets which includes accrued but undistributed income; the resulting net assets
are divided by the number of shares of the Fund  outstanding  at the time of the
valuation  and the result  (adjusted to the nearest cent) is the net asset value
per share.


                                              PERFORMANCE INFORMATION

         From  time  to  time,   the  Fund  may   state  its  total   return  in
advertisements and investor  communications.  Total return may be stated for any
relevant  period  as  specified  in  the  advertisement  or  communication.  Any
statements  of total return will be  accompanied  by  information  on the Fund's
average  annual  compounded  rate of return  over the most  recent  year and the
period from the Fund's inception of operations  through the most recent calendar
quarter.  The  Fund  may also  advertise  aggregate  and  average  total  return
information over different periods of time.

                                                       B-17

<PAGE>



         The Fund's  average annual  compounded  rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:

                                                  P(1+T)n  =  ERV

     Where: P = a hypothetical  initial  purchase order of $1,000 from which the
maximum sales load is deducted

            T   =  average annual total return

            n   =  number of years

     ERV = ending  redeemable value of the  hypothetical  $1,000 purchase at the
end of the period


         Aggregate total return is calculated in a similar  manner,  except that
the results are not annualized.  Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives  effect to the maximum  applicable  sales  charge.  For the
Fund's initial fiscal period ended June 30, 1996 the Fund's average annual total
return was 10.59%. Its aggregate total return for the period was 8.75%.


         The Fund's total return may be compared to relevant indices,  including
Standard & Poor's 500  Composite  Stock  Index and indices  published  by Lipper
Analytical  Services,  Inc.  From  time  to  time,  evaluations  of  the  Fund's
performance by  independent  sources may also be used in  advertisements  and in
information furnished to present or prospective investors in the Funds.

         Investors  should  note that the  investment  results  of the Fund will
fluctuate  over time,  and any  presentation  of the Fund's total return for any
period should not be considered as a  representation  of what an investment  may
earn or what an investor's total return may be in any future period.

                                                GENERAL INFORMATION

         Investors in the Fund will be informed of the Fund's  progress  through
periodic  reports.   Financial   statements   certified  by  independent  public
accountants will be submitted to shareholders at least annually.

     The Provident  Bank, One East Fourth Street,  Cincinnati,  OH 45202 acts as
Custodian  of the  securities  and other  assets  of the Fund and as the  Fund's
transfer agent. The Custodian does not participate in decisions  relating to the
purchase and sale of securities by the Fund.

         Ernst & Young,  LLP, 515 S. Flower St.,  Los Angeles,  CA 90071 are the
independent auditors for the Fund.


                                                       B-18

<PAGE>



         Heller,  Ehrman,  White & McAuliffe,  333 Bush Street,  San  Francisco,
California 94104, are legal counsel to the Fund.

         The holders of beneficial  interest of a  Massachusetts  business trust
could,  under certain  circumstances,  be held personally liable as partners for
its  obligations.  However,  the  Trust's  Agreement  and  Declaration  of Trust
contains an express disclaimer of beneficial  interest holder liability for acts
or  obligations  of the  Trust.  The  Agreement  and  Declaration  of Trust also
provides for  indemnification  and  reimbursement  of expenses out of the Fund's
assets for any beneficial interest holder held personally liable for obligations
of the Fund or Trust.  The Agreement and  Declaration of Trust provides that the
Trust  shall,  upon  request,  assume the defense of any claim made  against any
beneficial  interest  holder for any act or  obligation of the Fund or Trust and
satisfy any judgment  thereon.  All such rights are limited to the assets of the
Fund. The Agreement and Declaration of Trust further provides that the Trust may
maintain  appropriate  insurance (for example,  fidelity  bonding and errors and
omissions  insurance)  for  the  protection  of  the  Trust,  its  shareholders,
trustees,  officers,  employees  and  agents  to cover  possible  tort and other
liabilities.  Furthermore,  the activities of the Trust as an investment company
would not likely give rise to liabilities in excess of the Trust's total assets.
Thus,  the risk of a beneficial  interest  holder  incurring  financial  loss on
account of  shareholder  liability  is limited  to  circumstances  in which both
inadequate  insurance  exists  and  the  Fund  itself  is  unable  to  meet  its
obligations.

         The  Trust  is  registered  with  the  SEC as a  management  investment
company.  Such a registration does not involve  supervision of the management or
policies  of the  Fund.  The  Prospectus  of the  Fund  and  this  Statement  of
Additional  Information  omit  certain  of  the  information  contained  in  the
Registration  Statement  filed with the SEC.  Copies of such  information may be
obtained from the SEC upon payment of the prescribed fee.


                                               FINANCIAL STATEMENTS

         The annual  report to  shareholders  for the Fund for the fiscal period
ended June 30,  1996 is a separate  document  supplied  with this  Statement  of
Additional  Information  and the  financial  statements,  acompanying  notes and
report  of  independent   acocuntants  appearing  therein  are  incorporated  by
reference in this Statement of Additional Information.


                                                       B-19

<PAGE>



                                                      APPENDIX

                                           Description of Bond Ratings*

Moody's Investors Service

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
edge." 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 fluctuations or protective  elements
may be of greater  amplitude or there may be other  elements  present which make
long-term risks appear somewhat larger than in Aaa securities.

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



                                                       B-20

<PAGE>


Standard & Poor's Corporation

     AAA:  Bonds  rated AAA are  highest  grade debt  obligations.  This  rating
indicates an extremely strong capacity to pay principal and interest.

AA: Bonds rated AA also qualify as high-quality  debt  obligations.  Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.

A: Bonds rated A have a strong capacity to pay principal and interest,  although
they are more susceptible to the adverse effects of changes in circumstances and
economic conditions.

BBB: Bonds rated BBB are regarded as having an adequate
capacity to pay principal and interest.  Whereas they normally  exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened  capacity to pay  principal  and  interest for
bonds in this category than for bonds in the A category.

BB,  B:  Bonds  rated  BB  and B are  regarded,  on  balance,  as  predominantly
speculative  with  respect to the  issuer's  capacity to pay  interest and repay
principal in accordance with the terms of the obligation.  While such bonds will
likely have some quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse conditions.

Ratings may be modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.

*Ratings are generally  given to  securities at the time of issuance.  While the
rating  agencies may from time to time revise such  ratings,  they  undertake no
obligation to do so.



                                                       B-21

<PAGE>



                     STATEMENT OF ADDITIONAL INFORMATION
                                      

                              October 31, 1996

                           LEONETTI BALANCED FUND
                                 a series of
                      PROFESSIONALLY MANAGED PORTFOLIOS
                        1130 Lake Cook Road. Ste. 105
                           Buffalo Grove, IL 60089
                               (708) 520-0999
                                      

        

        This Statement of Additional Information is not a prospectus  and it
should be read in conjunction with the prospectus of the Leonetti Balanced Fund
(the "Fund").  A copy of the prospectus of the Fund dated October 31, 1996 is
available by calling the number above or (212) 633-9700.

                              TABLE OF CONTENTS
                                                                              
                                                                     Page

The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . B-3
Distributions and Tax Information . . . . . . . . . . . . . . . . . . B-5
Management . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . B-7
The Fund's Investment Advisor . . . . . . . . . . . . . . . . . . . . B-9
The Fund's Administrator. . . . . . . . . . . . . . . . . . . . . . . B-9
The Fund's Distributor. . . . . . . . . . . . . . . . . . . . . . . . B-10
Additional Purchase and Redemption Information  . . . . . . . . . . . B-12
Determination of Share Price  . . . . . . . . . . . . . . . . . . . . B-14
General Information . . . . . . . . . . . . . . . . . . . . . . . . . B-15
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . .  B-16

<PAGE>

                                 THE TRUST

        Professionally Managed Portfolios (the "Trust") is an  open-end
management investment company organized as a Massachusetts business trust.  The
Trust consists of various series which represent separate investment portfolios.

This Statement of Additional Information relates only to the Leonetti Balanced
Fund series (the "Fund").


                      INVESTMENT OBJECTIVE AND POLICIES

        The Leonetti Balanced Fund (the "Fund") is a mutual fund with the
investment objective of seeking total return through a combination of income and
capital growth, consistent with preservation of capital. The following
discussion supplements the discussion of the Fund's investment objective and
policies as set forth in the Prospectus.  There can be no assurance the
objective of the Fund will be attained.

Repurchase Agreements


     The Fund has reserved the right to enter into repurchase agreements,
although it has no present intention to do so.  The Fund might enter into such
agreements in order to earn additional income on available cash, or as a
defensive investment in periods when the Fund is primarily in short-term
maturities.  A repurchase agreement is a short-term investment in which the
purchaser (i.e., the Fund) acquires ownership of a U.S. Government security
(which may be of any maturity) and the seller agrees to repurchase the
obligation at a future time at a set price, thereby determining the yield during
the purchaser's holding period (usually not more than seven days from the date
of purchase).  Any repurchase transaction in which the Fund engages will require
full collateralization of the seller's obligation during the entire term of the
repurchase agreement.  In the event of a bankruptcy or other default of the
seller, the Fund could experience both delays in liquidating the underlying
security and losses in value.  However, the Fund intends to enter into
repurchase agreements only with banks with assets of $500 million or more that
are insured by the Federal Deposit Insurance Corporation and the most
creditworthy registered securities dealers pursuant to procedures adopted and
regularly reviewed by the Trust's Board of Trustees.  The Advisor monitors the
creditworthiness of the banks and securities dealers with whom the Fund engages
in repurchase transaction.  The Fund may not enter into a repurchase agreement
with more than seven days to maturity if, as a result, more than 15% of the
value of the Fund's total assets would be invested in illiquid securities
including such repurchase agreements.


        For purposes of the Investment Company Act of 1940 (the "1940 Act"), a
repurchase agreement is deemed to be a loan from  the Fund to the seller of the
U.S. Government security subject to the repurchase agreement.  It is not clear
whether a court would consider the U.S. Government security acquired by the Fund
subject to a repurchase agreement as being owned by the Fund or as being
collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able to
sell the security.  Delays may involve loss of interest or a decline in price
of the U.S. Government security. If a court characterizes the transaction as a
loan and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller.  As an unsecured
creditor, the Fund would be at the risk of losing some or all of the principal
and income involved in the transaction.  As with any unsecured debt instrument
purchased for the Fund, the investment manager seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the U.S. Government security.

        Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security.  However, the
Fund will always receive as collateral for any repurchase agreement to which it
is a party securities acceptable to it, the market value of which is equal to
at least 100% of the amount invested by the Fund plus accrued interest, and the
Fund will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian.  If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the U.S. Government security to deliver additional
securities so that the  market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price.  It is possible that the
Fund will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.

When-Issued Securities


        The Fund may from time to time purchase securities on a  "when-issued"
basis.  The price of such securities, which may be  expressed in yield terms,
is fixed at the time the commitment to  purchase is made, but delivery and
payment for the when-issued  securities take place at a later date. Normally,
the settlement  date occurs within one month of the purchase; during the period 
between purchase and settlement, no payment is made by the Fund  to the issuer
and no interest accrues to the Fund.  To the  extent that assets of the Fund are
held in cash pending the  settlement of a purchase of securities, the Fund would
earn no  income; however, it is the Fund's intention to be fully invested  to
the extent practicable and subject to the policies stated  above.  While when-
issued securities may be sold prior to the  settlement date, the Fund intends
to purchase such securities  with the purpose of actually acquiring them unless
a sale appears desirable for investment reasons.  At the time the Fund  makes
the commitment to purchase a security on a when-issued basis, it will record the
transaction and reflect the value of the security in determining its net asset
value.  The market value of the when-issued securities may be more or less than
the purchase price.  The Fund does not believe that its net asset value or
income will be adversely affected by its purchase of securities on a when-issued
basis.  The Fund will establish a segregated account with its Custodian in which
it will maintain liquid assets equal in value to commitments for when-issued
securities.  Such segregated securities either will  mature or, if necessary,
be sold on or before the settlement date.

                                      
            INVESTMENT RESTRICTIONS

        The following policies and investment restrictions have  been adopted
by the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote  of a majority of the Fund's outstanding voting
securities as  defined in the 1940 Act.  The Fund may not:

        1.      Make loans to others, except (a) through the purchase of debt
securities in accordance with its investment objectives and policies, (b)
through the lending of its portfolio securities as described above and in its
Prospectus, or (c) to the extent the entry into a repurchase agreement is 
deemed to be a loan.

        2.      (a)  Borrow money, except from banks for temporary or emergency
purposes. Any such borrowing will be made only if immediately thereafter there
is an asset coverage of at least  300% of all borrowings.

                (b)  Mortgage, pledge or hypothecate any of its  assets except
in connection with any such borrowings.

        3.      Purchase securities on margin, participate on a joint or joint
and several basis in any  securities trading account, or underwrite securities. 
(Does not preclude the Fund from obtaining such short-term credit as may be
necessary for the clearance of purchases and sales of its portfolio securities.)

        4.      Purchase or sell commodities or commodity contracts. (As a
matter of operating policy, the Board of Trustees may authorize the Fund to
engage in certain activities regarding futures contracts for bona fide hedging
purposes; any such authorization will be accompanied by appropriate notification
to shareholders).
     
        5.      Invest more than 25% of the market value of its assets in the
securities of companies engaged in any one industry.  (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)

        6.      Issue senior securities, as defined in the 1940 Act, except
that this restriction shall not be deemed to prohibit the Fund from (a) making
any permitted borrowings, mortgages or pledges.

        7.      Invest in any issuer for purposes of exercising control or
management.  

        The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote.  The Fund may
not:



        8.      Invest in securities of other investment companies  which would
result in the Fund owning more than 3% of the outstanding voting securities of
any one such investment company, the Fund owning securities of another
investment company having an aggregate value in excess of 5% of the value of the
Fund's total assets, or the Fund owning securities of investment companies in
the aggregate which would exceed 10% of the value of the Fund's total assets. 



        9.      Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity (other than securities that meet the requirements of Securities Act
Rule 144A which the Trustees have determined to be liquid based on applicable
trading markets).


        If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except as
otherwise noted.


                      DISTRIBUTIONS AND TAX INFORMATION

Distributions

        Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually, as described in the
Prospectus after the conclusion of the Fund's fiscal year (June 30).  Also, the
Fund expects to distribute any undistributed net investment income on or about
December 31 of each year. Any net capital gains realized through the period
ended October 31 of each year will also be distributed by December 31 of each
year.

        Each distribution by the Fund is accompanied by a brief  explanation of
the form and character of the distribution.  In  January of each year the Fund
will issue to each shareholder a  statement of the federal income tax status of
all distributions.

Tax Information

        Each series of the Trust is treated as a separate entity for federal
income tax purposes.  The Fund intends to qualify and elect to be treated as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). The Fund's policy is to distribute to its
shareholders all of its investment company taxable income and any net realized
long-term capital gains for  each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not  be subject to
any federal income or excise taxes.  To comply with the requirements, the Fund
must also distribute (or be deemed to have distributed) by December 31 of each
calendar year (I) at least 98% of its ordinary income for such year, (ii) at
least 98% of the excess of its realized capital gains over its realized capital
losses for the 12-month period ending on October 31 during such year and (iii)
any amounts from the prior calendar year that were not distributed and on which
the Fund paid no federal income tax.

        Net investment income consists of interest and dividend  income, less
expenses. Net realized capital gains for a fiscal  period are computed by taking
into account any capital loss  carryforward of the Fund.

        Distributions of net investment income and net short-term capital gains
are taxable to shareholders as ordinary income.  In the case of corporate
shareholders, a portion of the distributions may qualify for the intercorporate
dividends-received deduction to  the extent the Fund designates the amount
distributed as a  qualifying dividend.  The aggregate amount so designated
cannot,  however, exceed the aggregate amount of qualifying dividends  received
by the Fund for its taxable year.  In view of the Fund's investment policy, it
is expected that dividends from domestic corporations will be part of the Fund's
gross income and that, accordingly, part of the distributions by the Fund may
be eligible for the dividends-received deduction for corporate shareholders.
However, the portion of the Fund's gross income attributable to qualifying
dividends is largely dependent on that Fund's investment activities for a
particular year and therefore cannot be predicted with any certainty.  The
deduction may be reduced or eliminated if the Fund shares held by a corporate
investor are treated as debt-financed or are held for less than 46 days.

        Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time they have held their shares. Capital
gains distributions are not eligible for the dividends-received deduction
referred to in the previous paragraph.  Distributions of any net investment
income and net realized capital gains will be taxable as described above,
whether received in shares or in cash.  Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date.  Distributions are generally taxable
when received.  However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31.  Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

        A redemption or exchange of Fund shares may result in  recognition of
a taxable gain or loss.  Any loss realized upon a  redemption or exchange of
shares within six months from the date  of their purchase will be treated as a
long-term capital loss to  the extent of any amounts treated as distributions
of long-term  capital gains during such six-month period.  In determining gain 
or loss from an exchange of Fund shares for shares of another  mutual fund, the
sales charge incurred in purchasing the shares  that are surrendered will be
excluded from their tax basis to  the extent that a sales charge that would
otherwise be imposed  in the purchase of the shares received in the exchange is
reduced.  Any portion of a sales charge excluded from the basis  of the shares
surrendered will be added to the basis of the  shares received.  Any loss
realized upon a redemption or exchange may be disallowed under certain wash sale
rules to the  extent shares of the same Fund are purchased (through reinvestment
of distributions or otherwise) within 30 days  before or after the redemption
or exchange.

        Under the Code, the Fund will be required to report to the Internal
Revenue Service ("IRS") all distributions of taxable income and capital gains
as well as gross proceeds from the redemption or exchange of Fund shares, except
in the case of exempt shareholders, which includes most corporations.  Pursuant
to the backup withholding provisions of the Internal Revenue Code, distributions
of any taxable income and capital gains and proceeds from the redemption of Fund
shares may be subject to withholding of federal income tax at the rate of 31
percent in the case of non-exempt shareholders who fail to furnish the Fund with
their taxpayer identification numbers and with required certifications regarding
their status under the federal income tax law.  If the withholding provisions
are applicable, any such distributions and proceeds, whether taken in cash or
reinvested in additional shares, will be reduced by the amounts required to be
withheld.  Corporate and other exempt shareholders should provide the Fund with
their taxpayer identification numbers or certify their exempt status in order 
to avoid possible erroneous application of backup withholding.   The Fund
reserves the right to refuse to open an account for any person failing to
provide a certified taxpayer identification number.

        The Fund will not be subject to tax in the Commonwealth  of
Massachusetts as long as it qualifies as a regulated investment company for
federal income tax purposes.  Distributions and the transactions referred to in
the preceding paragraphs may be subject to state and local income taxes, and the
tax treatment thereof may differ from the federal income tax treatment. 
Moreover, the above discussion is not intended to be a complete discussion of
all applicable federal tax consequences of an investment in the Fund. 
Shareholders are advised to consult with their own tax advisers concerning the
application of federal, state and local taxes to an investment in the Fund.

        The foregoing discussion of U.S. federal income tax law  relates solely
to the application of that law to U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts and estates.  Each shareholder who is not a
U.S. person should consider the U.S. and foreign tax consequences of ownership
of shares of the Fund, including the possibility that such a shareholder may be
subject to a U.S. withholding tax at a rate of 31 percent (or at a lower rate
under an applicable income tax treaty) on amounts constituting ordinary income.

     This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion
in respect thereof.
       

                  MANAGEMENT

Trustees

        The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of each of the Funds. The Trustees, in turn, elect the
officers of the Trust, who are responsible for administering the day-to-day
operations of the Trust and the Funds. The current Trustees and officers and
their affiliations and principal occupations for the past five years are set
forth below.



Steven J. Paggioli,* 46  President and Trustee 


479 West 22nd Street, New York, New York 10011. Executive Vice President, Robert
H. Wadsworth & Associates, Inc. (consultants); Executive Vice President of
Investment Company Administration Corporation ("ICAC" mutual fund administration
and the Fund's Administrator); Vice President of First Fund Distributors, Inc.
("FFD"), (registered broker-dealer).


Dorothy A. Berry, 52 Trustee and Chairman

40 Maple Lane, Copake, New York 12516. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment advisor and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).



Wallace L. Cook, 56 Trustee


30 Rockefeller Plaza, New York, New York 10112. Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.


Carl A. Froebel, 57 Trustee

333 Technology Dr., Malvern, PA 19355.   Managing Director, Premier Solutions,
Ltd;  formerly President, National Investor Data Services, Inc. (investment
related computer software).


Rowley W.P. Redington, 51 Trustee

260 Washington Street, Newark, New Jersey 07102. Vice President, PRS of New
Jersey, Inc. (management consulting); Chief Financial Officer, Jersey
Electronics, Inc. (formerly ESI, Inc.) (consumer electronics service and
marketing); formerly President, Aveco Inc. (consumer electronic service and
marketing) and formerly Chief Executive Officer, Rowley Associates
(consultants).

Eric M. Banhazl*, 38 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91740. Senior Vice
President, Robert H. Wadsworth & Associates, Inc; Senior Vice President of ICAC
and Vice President of FFD since 1990. 

Robin Berger*, 39 Secretary

479 West 22nd St., New York, New York 10011. Vice President, Robert H. Wadsworth
& Associates, Inc. since June, 1993; formerly Regulatory and Compliance
Coordinator, Equitable Capital Management, Inc. (1991-93), and Legal Product
Manager, Mitchell Hutchins Asset Management (1988-91).

Robert H. Wadsworth*, 56 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of Robert
H. Wadsworth & Associates, Inc., ICAC and FFD.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.



        Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust.  This total amount
is allocated among the portfolios.  Disinterested trustees receive an annual
retainer of $7,500 and a fee of $2,500 for each regularly scheduled meeting. 
These trustees also receive a fee of $1,000 for any special meeting attended. 
The Chairman of the Board of Trustees receives an additional annual retainer of
$4,500.  The disinterested trustees are also reimbursed for expenses in
connection with each Board meeting attended.  No other compensation or
retirement benefits are received by any Trustee or officer from the Fund or any
other portfolios of the Trust.  During the Fund's initial fiscal period ended
June 30, 1996, trustees fees and expenses of $2,754 were allocated to the Fund.


Name of Trustee                          Total Compensation

Dorothy A. Berry                         $22,000
Wallace L. Cook                          $17,500
Carl A. Froebel                          $17,500
Rowley W. P. Redington                   $17,500


         THE FUND'S INVESTMENT ADVISOR


        As stated in the Prospectus, investment advisory services are provided
to the Fund by Leonetti & Associates, Inc., the Advisor, pursuant to an
Investment Advisory Agreement. The Advisor is controlled by Mr. Michael
Leonetti. The Investment Advisory Agreement continues in effect from year to
year so long as such continuation is approved at least annually by (1) the Board
of Trustees of the Trust or the vote of a majority of the outstanding shares of
the Fund, and (2) a majority of the Trustees who are not interested persons of
any party to the Agreement, in each case cast in person at a meeting called for
the purpose of voting on such approval.  The Agreement may be terminated at any
time, without penalty, by  either the Fund or the Advisor upon sixty days'
written notice and is automatically terminated in the event of its assignment
as defined in the 1940 Act.  Under the Investment Advisory Agreement, the
Adviser receives monthly a fee at the annual rate of 1.00% of the Fund's average
daily net assets.  During the Fund's initial fiscal period ended June 30, 1996,
the Adviser received fees of $83,530 under the Agreement.


        The use of the name "Leonetti" by the Fund is pursuant to a license
granted by the Advisor, and in the event the Investment Advisory Agreement with
the Fund is terminated, the Advisor has reserved the right to require the Fund
to remove any references to the name "Leonetti."


                          THE FUND'S ADMINISTRATOR

        The Fund has entered into an Administration Agreement with Investment
Company Administration Corporation (the "ICAC"), a corporation owned in part and
controlled by Messrs. Banhazl, Paggioli and Wadsworth.  The Agreement provides
that ICAC will prepare and coordinate reports and other materials supplied to
the Trustees; prepare and/or supervise the preparation and filing of all
securities filings, periodic financial reports, prospectuses, statements of
additional information, marketing materials, tax returns, shareholder reports
and other regulatory reports or filings required of the Fund; prepare all
required filings necessary to maintain the Fund's qualification and/or
registration to sell shares in all states where the Fund currently does, or
intends to do business; coordinate the preparation, printing and mailing of all
materials (e.g., Annual Reports) required to be sent to shareholders; coordinate
the preparation and payment of Fund related expenses; monitor and oversee the
activities of the Fund's servicing agents (i.e., transfer agent, custodian, fund
accountants, etc.); review and adjust as necessary the Fund's daily expense
accruals; and perform such additional services as may be agreed upon by the Fund
and ICAC.  For its services, ICAC receives a monthly fee at the following annual
rate:

Average net assets                        Fee or fee rate

Under $15 million                        $30,000
$15 to $50 million                       0.20% of average net assets
$50 to $100 million                      0.15% of average net assets
$100 million to $150 million             0.10% of average net assets
Over $150 million                        0.05% of average net assets 

During the Fund's initial fiscal period ended June 30, 1996, the Administrator
received fees of $27,534.  


                           THE FUND'S DISTRIBUTOR

        First Fund Distributors, Inc. (the "Distributor"), a corporation owned
by Messrs. Banhazl, Paggioli and Wadsworth, acts as the Fund's principal
underwriter in a continuous public offering of the Fund's shares.  The
Distribution Agreement between the Fund and the Distributor continues in effect
from year to year if approved at least annually by (I) the Board of Trustees or
the vote of a majority of the outstanding shares of the Fund (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested persons of
any such party, in each case cast in person at a meeting called for the purpose
of voting on such approval.  The Distribution Agreement may be terminated
without penalty by the parties thereto upon sixty days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act. 


                     EXECUTION OF PORTFOLIO TRANSACTIONS


        Pursuant to the Investment Management  Agreement, the Advisor determines
which securities are to be  purchased and sold by the Fund and which broker-
dealers are  eligible to execute the Fund's portfolio transactions.  Purchases
and sales of securities in the over-the-counter market will generally be
executed directly with a "market-maker" unless, in the opinion of the Advisor,
a better price and execution can otherwise be obtained by using a broker for the
transaction.


        Purchases of portfolio securities for the Fund also may be made directly
from issuers or from underwriters.  Where possible, purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding, unless better
executions are available elsewhere.  Dealers and underwriters usually act as
principal for their own account.  Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price.  If the execution and
price offered by more than one dealer or underwriter are comparable, the order
may be allocated to a dealer or underwriter that has provided research or other
services as discussed below.

        In placing portfolio transactions, the Advisor will use its best efforts
to choose a broker-dealer capable of providing the services necessary to obtain
the most favorable price and  execution available.  The full range and quality
of services  available will be considered in making these determinations, such
as the size of the order, the difficulty of execution, the  operational
facilities of the firm involved, the firm's risk in  positioning a block of
securities, and other factors.  In those  instances where it is reasonably
determined that more than one  broker-dealer can offer the services needed to
obtain the most  favorable price and execution available, consideration may be 
given to those broker-dealers which furnish or supply research and statistical
information to the Advisor that it may lawfully and appropriately use in its
investment advisory capacities, as well as provide other services in addition
to execution services.  The Advisor considers such information, which is in
addition to and not in lieu of the services required to be performed by it under
its Agreement with the Fund, to be useful in varying degrees, but of
indeterminable value.  Portfolio transactions may be placed with broker-dealers
who sell shares of the Fund subject to rules adopted by the National Association
of Securities Dealers, Inc. 

        While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Advisor, even if the specific services are not directly useful to the Fund and
may be useful to the Advisor in advising other clients.  In negotiating
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer.  The standard of
reasonableness is  to be measured in light of the Advisor's overall
responsibilities to the Fund.

        Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds ("Funds") managed or advised by the
Advisor.  Nevertheless, it is possible that at times identical securities will
be acceptable for both the Fund and one or more of such client accounts or
Funds.  In such event, the position of the Fund and such client account(s) or
Funds in the same issuer may vary and the length of time that each may choose
to hold its investment in the same issuer may likewise vary.  However, to the
extent any of these client accounts or Funds seeks to acquire the same security
as the Fund at the same time, the Fund may not be able to acquire as large a
portion of such security as it desires, or it may have to pay a  higher price
or obtain a lower yield for such security.  Similarly, the Fund may not be able
to obtain as high a price for, or as large an execution of, an order to sell any
particular security at the same time.  If one or more of such  client accounts
or Funds simultaneously purchases or sells the same security that the Fund is
purchasing or selling, each day's  transactions in such security will be
allocated between the Fund  and all such client accounts or Funds in a manner
deemed equitable by the Advisor, taking into account the respective sizes of the
accounts and the amount being purchased or sold.  It is recognized that in some
cases this system could have a detrimental effect on the price or value of the
security insofar as the Fund is concerned.  In other cases, however, it is
believed that the ability of the Fund to participate in volume transactions may
produce better executions for the Fund.
        

        The Fund does not effect securities transactions through brokers in
accordance with any formula, nor does it effect securities transactions through
such brokers solely for selling shares of the Fund, although the Fund may
consider the sale of shares as a factor in allocating brokerage. However, as
stated above, broker-dealers who execute brokerage transactions may effect
purchase of shares of the Fund for their customers.  The Fund does not use the
Distributor to execute its portfolio transactions.  During the Fund's initial
fiscal period ended June 30, 1996, the Fund paid brokerage commissions of
$26,457.

 

               ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

        The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Advisor or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund's
shares.

        Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the  Fund's Transfer Agent of the written request in proper form, 
with the appropriate documentation as stated in the Prospectus, except that the
Fund may suspend the right of redemption or  postpone the date of payment during
any period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or for such other period as the SEC may permit for the protection
of the Fund's shareholders.  At various times, the Fund may be requested to
redeem shares for which it has not yet received confirmation of good payment;
in this circumstance, the Fund may delay the redemption until payment for the
purchase of such shares has been collected and confirmed to the Fund.

        The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price.  Although the Fund does not anticipate that it will make  any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash.  The
Fund has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act, which contains a formula for determining the minimum redemption amounts
that must be paid in cash.

        The value of shares on redemption or repurchase may be more or less than
the investor's cost, depending upon the market value of the Fund's portfolio
securities at the time of redemption or repurchase.

        As discussed in the Prospectus, the Fund provides a Check-A-Matic Plan
for the convenience of investors who wish to purchase shares of the Fund on a
regular basis.  All record keeping and custodial costs of the Check-A-Matic Plan
are paid by the Fund.  The market value of the Fund's shares is subject to
fluctuation, so before undertaking any plan for systematic investment, the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.


                        DETERMINATION OF SHARE PRICE

        As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of 4:00 p.m., New York City
time, on each day the New York Stock Exchange is open for trading.  It is
expected that the Exchange will be closed on Saturdays and Sundays and on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas.  The Fund does not expect to determine the
net asset value of its shares on any day when the Exchange is not open for
trading even if there is sufficient trading in its portfolio securities on such
days to materially affect the net asset value per share.

     In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined.  If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.

Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price.  If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value.  All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.

     The net asset value per share of the Fund is calculated  as follows:  all
liabilities incurred or accrued are deducted from the valuation of total assets
which includes accrued but  undistributed income; the resulting net assets are
divided by the number of shares of the Fund outstanding at the time of the 
valuation and the result (adjusted to the nearest cent) is the net asset value
per share.



                           PERFORMANCE INFORMATION

        From time to time, the Fund may state its total return in advertisements
and investor communications.  Total return may be stated for any relevant period
as specified in the advertisement or communication.  Any statements of total
return will be accompanied by information on the Fund's average annual
compounded rate of return over the most recent year and the period from the
Fund's inception of operations through the most recent calendar quarter.  The
Fund may also advertise aggregate and average total return information over
different periods of time.

        The Fund's average annual compounded rate of return is  determined by
reference to a hypothetical $1,000 investment that  includes capital
appreciation and depreciation for the stated  period, according to the following
formula:


                               P(1+T)n  =  ERV

Where:  P   =  a hypothetical initial purchase order of $1,000 from which the
maximum sales load is deducted

           T   =  average annual total return

           n   =  number of years

           ERV =  ending redeemable value of the hypothetical $1,000 purchase
at the end of the period


        Aggregate total return is calculated in a similar manner, except that
the results are not annualized.  Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum applicable sales charge.  The Fund's
average annual total returns for the one-year period and from inception on
August 1, 1995 through September 30, 1996 were 20.20% and 7.29% respectively.


        The Fund's total return may be compared to relevant indices, including
Standard & Poor's 500 Composite Stock Index and indices published by Lipper
Analytical Services, Inc.  From time to time, evaluations of a Fund's
performance by independent sources may also be used in advertisements and in
information furnished to present or prospective investors in the Funds.

        Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's total return may be in any future period.


                             GENERAL INFORMATION

        Investors in the Fund will be informed of the Fund's progress through
periodic reports.  Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.
        
        Star Bank, 425 Walnut St., Cincinnati, OH 45202 acts as Custodian of the
securities and other assets of the Fund.  The Custodian does not participate in
decisions relating to the purchase and sale of securities by the Fund.  American
Data Services, 24 West Carver St., Huntington, NY, 11743 acts as the Fund's
transfer and shareholder service agent.

        Ernst & Young, LLP, 515 S. Flower St.,  Los Angeles, CA 90071 are the
independent auditors for the Fund.

        Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco,
California 94104, are legal counsel to the Fund.



        On October 7, 1996, the following persons owned of record more that 5%
of the Fund's outstanding voting securities:


        Star Bank, NA, Custodian for Frank G. Valeria IRA Account, Niles, IL,
60714; 14.06%

        Charles Schwab & Co., Special Custody Account, San Francisco, CA 94104;
13.67%

        Aetna Screw Products Co., Retirement Plan #1, Niles, IL, 60714; 5.93%


        The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations. 
However, the Trust's Agreement and Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust.  The
Agreement and Declaration of Trust also provides for indemnification and
reimbursement of expenses out of the Fund's assets for any shareholder held
personally liable for obligations of the Fund or Trust.  The Agreement and
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund or Trust and satisfy any judgment thereon.  All such rights are limited
to the assets of the Fund.  The Agreement and Declaration of Trust further
provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, trustees, officers, employees and agents to cover
possible tort and other liabilities.  Furthermore, the activities of the Trust
as an investment company would not likely give rise to liabilities in excess of
the Trust's total assets. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
both inadequate insurance exists and the Fund itself is unable to meet its
obligations.


        The Trust is registered with the SEC as a management investment company.

Such a registration does not involve supervision of the management or policies
of the Fund.  The Prospectus of the Fund and this Statement of Additional
Information omit certain of the information contained in the Registration
Statement filed with the SEC.  Copies of such information may be obtained from
the SEC upon payment of the prescribed fee.



             FINANCIAL STATEMENTS


        The annual report to shareholders for the Fund for the fiscal period
ended June 30, 1996 is a separate document supplied with this Statement of
Additional Information and the financial statements, accompanying notes and
report of independent accountants appearing therein are incorporated by
reference in this Statement of Additional Information.


<PAGE>

                    STATEMENT OF ADDITIONAL INFORMATION
                                     

                             October 31, 1996

                                     
                          LIGHTHOUSE GROWTH FUND
                                a series of
                     PROFESSIONALLY MANAGED PORTFOLIOS
                      10000 Memorial Drive, Suite 660
                             Houston, TX 77024
                              (713) 688-6881
                                     

        

This Statement of Additional Information is not a prospectus  and it should be
read in conjunction with the prospectus of the Lighthouse Growth Fund (the
"Fund").  A copy of the prospectus of the Fund dated October 31, 1996 is
available by calling the number listed above or (212) 633-9700.


                                     

                             TABLE OF CONTENTS

                                                                        Page

The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . B-6
Distributions and Tax Information . . . . . . . . . . . . . . . . . . B-7
Management . . . . .  . . . . . . . . . . . . .. . . . . . . . . . . .B-14 
Additional Purchase and Redemption Information  . . . . . . . . . . . B-16
 Determination of Share Price  . . . . . . . . . . . . . . . . . . . .B-17 
General Information     . . . . . . . . . . . . . . . . . . . . . . . B-18
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . B-19
<PAGE>

THE TRUST

Professionally Managed Portfolios (the "Trust") is an  open-end management
investment company organized as a Massachusetts business trust.  The Trust
consists of various series which represent separate investment portfolios.  This
Statement of Additional Information relates only to the Lighthouse Growth Fund
series (the "Fund").


INVESTMENT OBJECTIVE AND POLICIES 

        The Lighthouse Growth Fund (the "Fund") is a mutual fund with the
investment objective of seeking growth of capital. The following discussion
supplements the discussion of the Fund's investment objective and policies as
set forth in the Prospectus.  There can be no assurance the objective of the
Fund will be attained.


Repurchase Agreements


        The Fund may enter into repurchase agreements as discussed in the
Prospectus.  Under such agreements, the seller of the security agrees to
repurchase it at a mutually agreed upon time and price.  The repurchase price
may be higher than the purchase price, the difference being income to the Fund,
or the purchase and repurchase prices may be the same, with interest at a stated
rate due to the Fund together with the repurchase price on repurchase.  In
either case, the income to the Fund is unrelated to the interest rate on the
U.S. Government security itself.  Such repurchase agreements will be made only
with banks with assets of $500 million or more that are insured by the Federal
Deposit Insurance Corporation or with Government securities dealers recognized
by the Federal Reserve Board and registered as broker-dealers with the
Securities and Exchange Commission ("SEC") or exempt from such registration. 
The Fund will generally enter into repurchase agreements of short durations,
from overnight to one week, although the underlying securities generally have
longer maturities.  The Fund may not enter into a repurchase agreement with more
than seven days to maturity if, as a result, more than 15% of the value of the
Fund's total assets would be invested in illiquid securities including such
repurchase agreements.


        For purposes of the Investment Company Act of 1940 (the  "1940 Act"),
a repurchase agreement is deemed to be a loan from  the Fund to the seller of
the U.S. Government security subject to the repurchase agreement.  It is not
clear whether a court would consider the U.S. Government security acquired by
the Fund subject to a repurchase agreement as being owned by the Fund or as
being collateral for a loan by the Fund to the seller. In the event of the
commencement of bankruptcy or insolvency proceedings with respect to the seller
of the U.S. Government security before its repurchase under a repurchase
agreement, the Fund may encounter delays and incur costs before being able to
sell the security.  Delays may involve loss of interest or a decline in price
of the U.S. Government security. If a court characterizes the transaction as a
loan and the Fund has not perfected a security interest in the U.S. Government
security, the Fund may be required to return the security to the seller's estate
and be treated as an unsecured creditor of the seller.  As an unsecured
creditor, the Fund would be at the risk of losing some or all of the principal
and income involved in the transaction.  As with any unsecured debt instrument
purchased for the Fund, the investment manager seeks to minimize the risk of
loss through repurchase agreements by analyzing the creditworthiness of the
obligor, in this case the seller of the U.S. Government security.

        Apart from the risk of bankruptcy or insolvency proceedings, there is
also the risk that the seller may fail to repurchase the security.  However, the
Fund will always receive as collateral for any repurchase agreement to which it
is a party securities acceptable to it, the market value of which is equal to
at least 100% of the amount invested by the Fund plus accrued interest, and the
Fund will make payment against such securities only upon physical delivery or
evidence of book entry transfer to the account of its Custodian.  If the market
value of the U.S. Government security subject to the repurchase agreement
becomes less than the repurchase price (including interest), the Fund will
direct the seller of the U.S. Government security to deliver additional
securities so that the  market value of all securities subject to the repurchase
agreement will equal or exceed the repurchase price.  It is possible that the
Fund will be unsuccessful in seeking to impose on the seller a contractual
obligation to deliver additional securities.


Other Investment Practices

        The Fund is authorized to make use of the following investment
practices, but only to the extent of up to 5% of its net assets with respect to
any given practice. 


Securities Lending

        Although the Fund's objective is growth of capital, the Fund reserves
the right to lend its portfolio securities in order to generate income from time
to time.  Securities may be loaned to broker-dealers, major banks or other
recognized domestic institutional borrowers of securities who are not affiliated
with the Advisor or Distributor and whose creditworthiness is acceptable to the
Advisor.  The borrower must deliver to the Fund cash or cash equivalent
collateral, or provide to the Fund an irrevocable letter of credit equal in
value to at least 100% of the value of the loaned securities at all times during
the loan,  marked to market daily. During the time the portfolio securities are
on loan, the borrower pays the Fund any interest paid on such securities.  The
Fund may invest the cash collateral and earn additional income, or it may
receive an agreed-upon amount of interest income if the borrower has delivered
equivalent collateral or a letter of credit.  The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the income earned on the cash to the  borrower or placing
broker.  Loans are subject to termination at the option of the Fund or the
borrower at any time.  It is not anticipated that more than 5% of the value of
the Fund's portfolio securities will  be subject to lending.


Foreign Investments

The Fund may invest in foreign securities. Foreign investments can involve
significant risks in addition to the risks inherent in U.S. investments. The
value of securities denominated in or indexed to foreign currencies, and of
dividends and interest from such securities, can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices on some foreign markets can be highly volatile. Many
foreign countries lack uniform accounting and disclosure standards comparable
to those applicable to U.S. companies, and it may be more difficult to obtain
reliable information regarding an issuer's financial condition and operations.
In addition, the costs of foreign investing, including withholding taxes,
brokerage commissions, and custodial costs, generally are higher than for U.S.
investments.

        Foreign markets may offer less protection to investors than U.S.
markets. Foreign issuers, brokers, and securities markets may be subject to less
government supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may invoke increased
risks in the event of a failed trade or the insolvency of a broker-dealer, and
may involve substantial delays. It also may be difficult to enforce legal rights
in foreign countries.

        Investing abroad also involves different political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse
to the interests of U.S. investors, including the possibility of expropriation
or nationalization of assets, confiscatory taxation, restrictions on U.S.
investment or on the ability to repatriate assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility
of default by foreign governments or foreign government-sponsored enterprises.
Investments in foreign countries also involve a risk of local political,
economic, or social instability, military action or unrest, or adverse
diplomatic developments. There is no assurance that an Adviser will be able to
anticipate or counter these potential events and their impacts on the Fund's
share price.

        American Depositary Receipts and European Depositary Receipts ("ADRs"
and "EDRs") are certificates evidencing ownership of shares of a foreign-based
issuer held in trust by a bank or similar financial institution. Designed for
use in U.S. and European securities markets, respectively, ADRs and EDRs are
alternatives to the purchase of the underlying securities in their national
market and currencies.

        ADR's and closed-end investment companies traded in U.S. markets are not
considered foreign securities for purposes of the 5% limitation on investments
in foreign issuers noted above.


Options Transactions  

        The Fund may purchase and write call and put options on securities and
securities indexes.  Transactions in options on securities and on indexes
involve certain risks.  For example, there are significant differences between
the securities and options markets that could result in an imperfect correlation
between these markets, causing a given transaction not to achieve its
objectives. A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.


        There can be no assurance that a liquid market will exist when the Fund
seeks to close out an option position. If the Fund were unable to close out an
option that it had purchased on a security, it would have to exercise the option
in order to realize any profit or the option may expire worthless. If the Fund
were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security unless the option
expired without exercise.  As the writer of a covered call option, the Fund
forgoes, during the option's life, the opportunity to profit from increases in
the market value of the security covering the call option above the sum of the
premium and the exercise price of the call.

        If trading were suspended in an option purchased by the Fund, the Fund
would not be able to close out the option. If restrictions on exercise were
imposed, the Fund might be unable to exercise an option it has purchased. Except
to the extent that a call option on an index written by the Fund is covered by
an option on the same index purchased by the Fund, movements in the index may
result in a loss to the Fund; such losses may be mitigated or exacerbated by
changes in the value of the Fund's securities during the period the option was
outstanding.

        Options markets may not be liquid in all circumstances and certain over
the counter options may have no markets.  As a result, in certain markets, the
Fund might not be able to close out a transaction at all or without incurring
losses.  Although the use of options for hedging should minimize the risk of
loss due to a decline in the value of the hedged position, at the same time they
tend to limit any potential gain which might result from an increase in the
value of such position.  If losses were to result from the use of such
transactions, they could reduce net asset value and possibly income. 


Leverage Through Borrowing

        The Fund may borrow money for leveraging purposes.  Leveraging creates
an opportunity for increased net income but, at the same time, creates special
risk considerations. For example, leveraging may exaggerate changes in the net
asset value of Fund shares and in the yield on the Fund's portfolio. Although
the principal of such borrowings will be fixed, the Fund's assets may change in
value during the time the borrowing is outstanding.  Leveraging will create
interest expenses for the Fund which can exceed the income from the assets
retained. To the extent the income derived from securities purchased with
borrowed funds exceeds the interest the Fund will have to pay, the Fund's net
income will be greater than if leveraging were not used. Conversely, if the
income from the assets retained with borrowed funds is not sufficient to cover
the cost of leveraging, the net income of the Fund will be less than if
leveraging were not used, and therefore the amount available for distribution
to stockholders as dividends will be reduced. 


INVESTMENT RESTRICTIONS

        The following policies and investment restrictions have  been adopted
by the Fund and (unless otherwise noted) are fundamental and cannot be changed
without the affirmative vote  of a majority of the Fund's outstanding voting
securities as  defined in the 1940 Act.  The Fund may not:

1.      Make loans to others, except (a) through the purchase of debt securities
in accordance with its investment objectives and policies, (b) through the
lending of its portfolio securities 
as described above and in its Prospectus, or (c) to the extent the entry into
a repurchase agreement is  deemed to be a loan.

2.      (a)  Borrow money, except as stated in the Prospectus and this Statement
of Additional Information. Any such borrowing will be made only if immediately
thereafter there is an asset coverage of at least  300% of all borrowings.

        (b)  Mortgage, pledge or hypothecate any of its  assets except in
connection with any such borrowings.

3.      Purchase securities on margin, participate on a joint or joint and
several basis in any  securities trading account, or underwrite securities. 
(Does not preclude the Fund from obtaining such short-term credit as may be
necessary for the clearance of purchases and sales of its portfolio securities.)

4.      Purchase or sell commodities or commodity contracts (the Board of
Trustees may in the future authorize the Fund to engage in certain activities
regarding futures contracts for bona fide hedging purposes; any such
authorization will be accompanied by appropriate notification to shareholders).

5.      Invest 25% or more of the market value of its assets in the securities
of companies engaged in any one industry.  (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)

6.      Issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from (a) making any
permitted borrowings,  mortgages or pledges, or (b) entering into options,
futures or repurchase transactions.

7.      Invest in any issuer for purposes of exercising control or management. 


        The Fund observes the following policies, which are not deemed
fundamental and which may be changed without shareholder vote.  The Fund may
not:

8.      Invest in securities of other investment companies which would result
in the Fund owning more than 3% of the outstanding voting securities of any one
such investment company, the Fund owning securities of another investment
company having an aggregate value in excess of 5% of the value of the Fund's
total assets, or the Fund owning securities of investment companies in the
aggregate which would exceed 10% of the value of the Fund's total assets.



9.      Invest, in the aggregate, more than 15% of its total assets in
securities with legal or contractual restrictions on resale, securities which
are not readily marketable and repurchase agreements with more than seven days
to maturity.

        If a percentage restriction is adhered to at the time of investment, a
subsequent increase or decrease in a percentage resulting from a change in the
values of assets will not constitute a violation of that restriction, except
with respect to policies on borrowing or as otherwise noted.


DISTRIBUTIONS AND TAX INFORMATION

Distributions


        Dividends from net investment income and distributions from net profits
from the sale of securities, if any, are generally made annually by the Fund
after the conclusion of its fiscal year (August 31). Also, the Fund expects to
distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the twelve month period ended
October 31 of each year will also be distributed by December 31 of each year.


        Each distribution by the Fund is accompanied by a brief explanation of
the form and character of the distribution. In January of each year the Fund
will issue to each shareholder a statement of the federal income tax status of
all distributions.


Tax Information

        The Fund is treated as a separate entity for federal income tax
purposes.  The Fund intends to qualify and elect to be treated as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"). In order to qualify, the Fund must comply with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of its distributions. The Fund's policy is to distribute to its
shareholders all of its investment company taxable income and any net realized
long-term capital gains for each fiscal year in a manner that complies with the
distribution requirements of the Code, so that the Fund will not be subject to
any federal income tax or excise taxes based on net income. The Fund will
generally be subject to federal income tax on its undistributed net investment
income and capital gains.  To avoid federal excise taxes based on its net
income, the Fund must distribute (or be deemed to have distributed) by December
31 of each calendar year (i) at least 98% of its ordinary income for such year,
(ii) at least 98% of the excess of its realized capital gains over its realized
capital losses for the 12-month period ending on October 31 during such year and
(iii) any amounts from the prior calendar year that were not distributed.

        Net investment income consists of interest and dividend income and
foreign currency gain, less expenses. Net realized capital gains for a fiscal
period are computed by taking into account any capital loss carryforward of the
Fund.


        Distributions of net investment income and the excess of net short-term
capital gain over net long-term capital loss are taxable to shareholders as
ordinary income. In the case of corporate shareholders, a portion of the
distributions may qualify for the intercorporate dividends-received deduction
to the extent the Fund designates the amount distributed as a qualifying
dividend. The aggregate amount so designated cannot, however, exceed the
aggregate amount of qualifying dividends received by the Fund for its taxable
year. In view of the Fund's investment policy, it is expected that dividends
from domestic corporations will be part of the Fund's gross income and that,
accordingly, part of the distributions by the Fund may be eligible for the
dividends-received deduction for corporate shareholders. However, the portion
of the Fund's gross income attributable to qualifying dividends is largely
dependent on the Fund's investment activities for a particular year and
therefore cannot be predicted with any certainty. The deduction may be reduced
or eliminated if the Fund shares held by a corporate investor are treated as
debt-financed or are held for less than 46 days.

        Distributions of the excess of net long-term capital gains over net
short-term capital losses are taxable to shareholders as long-term capital
gains, regardless of the length of time the shareholders have held their shares.
Capital gains distributions are not eligible for the dividends-received
deduction referred to in the previous paragraph. Distributions of any net
investment income and net realized capital gains will be taxable as described
above, whether received in shares or in cash. Shareholders electing to receive
distributions in the form of additional shares will have a cost basis for
federal income tax purposes in each share so received equal to the net asset
value of a share on the reinvestment date. Distributions are generally taxable
when received. However, distributions declared in October, November or December
to shareholders of record on a date in such a month and paid the following
January are taxable as if received on December 31. Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

        The Fund may write, purchase or sell certain option, futures, and
foreign currency contracts.  Such transactions are subject to special tax rules
that may affect the amount, timing and character of distributions to
shareholders.  Unless the Fund is eligible to make and makes a special election,
such contracts that are "Section 1256 contracts" will be "marked-to-market" for
federal income tax purposes at the end of each taxable year, i.e.,  each
contract will be treated as sold for its fair market value on the last day of
the taxable year.  In general, unless the special election referred to in the
previous sentence is made, gain or loss from transactions in such contracts will
be 60% long-term and 40% short-term capital gain or loss.  Section 1092 of the
Code, which applies to certain "straddles", may affect the taxation of the
Fund's transactions in option, futures and foreign currency contracts.  Under
Section 1092 of the Code, the Fund may be required to postpone recognition for
tax purposes of losses incurred in certain closing transactions.

        One of the requirements for qualification as a regulated investment
company is that less than 30% of the Fund's gross income must be derived from
gains from the sale or other disposition of securities held for less than three
months. Accordingly, the Fund may be restricted in effecting closing
transactions within three months after entering into an option contract.


        A redemption of Fund shares may result in recognition of a taxable gain
or loss. Any loss realized upon a redemption of shares within six months from
the date of their purchase will be treated as a long-term capital loss to the
extent of any amounts treated as distributions of long-term capital gains during
such six-month period.  Any loss realized upon a redemption of Fund shares may
be disallowed under certain wash sale rules to the extent shares of the Fund are
purchased (through reinvestment of distributions or otherwise) within 30 days
before or after the redemption.

        Under the Code, the Fund will be required to report to the Internal
Revenue Service all distributions of taxable income and capital gains as well
as gross proceeds from the redemption or exchange of Fund shares, except in the
case of exempt shareholders, which includes most corporations. Pursuant to the
backup withholding provisions of the Code, distributions of any taxable income
and capital gains and proceeds from the redemption of Fund shares may be subject
to withholding of federal income tax at the rate of 31 percent in the case of
non-exempt shareholders who fail to furnish the Fund with their taxpayer
identification numbers and with required certifications regarding their status
under the Code. If the withholding provisions are applicable, any such
distributions and proceeds, whether taken in cash or reinvested in additional
shares, will be reduced by the amounts required to be withheld. Corporate and
other exempt shareholders should provide the Fund with their taxpayer
identification numbers or certify their exempt status in order to avoid possible
erroneous application of backup withholding. The Fund reserves the right to
refuse to open an account for any person failing to provide a certified taxpayer
identification number.

        The Fund will not be subject to tax in The Commonwealth of Massachusetts
as long as it qualifies as a regulated investment company for federal income tax
purposes. Distributions and the transactions referred to in the preceding
paragraphs may be subject to state and local income taxes, and the tax treatment
thereof may differ from the federal income tax treatment. Moreover, the above
discussion is not intended to be a complete discussion of all applicable tax
consequences of an investment in the Fund. Shareholders are advised to consult
with their own tax advisers concerning the application of federal, state and
local taxes to an investment in the Fund.

        The foregoing discussion of the Code relates solely to the application
of that law to U.S. citizens or residents and U.S. domestic corporations,
partnerships, trusts and estates. Each shareholder who is not a U.S. person
should consider the U.S. and foreign tax consequences of ownership of shares of
the Fund, including the possibility that such a shareholder may be subject to
a U.S. withholding tax at a rate of 30 percent (or at a lower rate under an
applicable income tax treaty) on amounts constituting ordinary income.

        This discussion and the related discussion in the prospectus have been
prepared by Fund management, and counsel to the Fund has expressed no opinion
in respect thereof.


MANAGEMENT

Trustees

        The Trustees of the Trust, who were elected for an indefinite term by
the initial shareholders of the Trust, are responsible for the overall
management of the Trust, including general supervision and review of the
investment activities of the Fund. The Trustees, in turn, elect the officers of
the Trust, who are responsible for administering the day-to-day operations of
the Trust and its separate series. The current Trustees and officers and their
affiliations and principal occupations for the past five years are set forth
below.


Steven J. Paggioli,* 46  President and Trustee 


479 West 22nd Street, New York, New York 10011. Executive Vice President, Robert
H. Wadsworth & Associates, Inc. (consultants) since 1986; Executive Vice
President of Investment Company Administration Corporation ("ICAC"; mutual fund
administrator and the Fund's Administrator), and Vice President of First Fund
Distributors, Inc. ("FFD"; registered broker-dealer and the Fund's Distributor)
since 1990.


Dorothy A. Berry, 52 Trustee

40 Maple Lane, Copake, New York 12516. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment advisor and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).

Wallace L. Cook, 56 Trustee


30 Rockefeller Plaza, New York, New York 10112. Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.



Carl A. Froebel, 57 Trustee

333 Technology Dr., Malvern, PA 19355.  Managing Director, Premier Solutions,
Ltd.  Formerly  Founder and President, National Investor Data Services, Inc.
(investment related computer software).


Rowley W.P. Redington, 51 Trustee

260 Washington Street, Newark, New Jersey 07102. Vice President, PRS of New
Jersey, Inc. (management consulting); Chief Financial Officer, Jersey
Electronics, Inc. (formerly ESI, Inc.) (consumer electronics service and
marketing); formerly President, Aveco Inc. (consumer electronic service and
marketing) and formerly Chief Executive Officer, Rowley Associates
(consultants).

   
Eric M. Banhazl*, 39 Treasurer
    

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, Robert H. Wadsworth & Associates, Inc., Senior Vice President of ICAC
and Vice President of FFD since 1990. 


Robin Berger*, 39 Secretary

479 West 22nd St., New York, New York 10011. Vice President, Robert H. Wadsworth
& Associates, Inc. since June, 1993; formerly Regulatory and Compliance
Coordinator, Equitable Capital Management, Inc. (1991-93), and Legal Product
Manager, Mitchell Hutchins Asset Management (1988-91).


Robert H. Wadsworth*, 56 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of Robert
H. Wadsworth & Associates, Inc. since 1982, President of ICAC and FFD since
1990.


*Indicates an "interested person" of the Trust as defined in the 1940 Act.




        Set forth below is the rate of compensation received by the following
Trustees from the Fund and all other portfolios of the Trust. This total amount
is allocated among the portfolios.  Disinterested trustees receive an annual
retainer of $7,500 and a fee of $2,500 for each regularly scheduled meeting. 
These trustees also receive a fee of $1,000 for any special meeting attended. 
The Chairman of the Board of Trustees receives an additional annual retainer or
$4,500.  Disinterested trustees are also reimbursed for expenses in connection
with each Board meeting attended.  No other compensation or retirement benefits
were received by any Trustee or officer from the Fund or  any other portfolios
of the Trust.  During the Fund's initial fiscal period ended August 31, 1996
Trustees' fees and expenses in the amount of $2,038 were allocated to the Fund.

Name of Trustee                 Total Compensation

Dorothy A. Berry                        $22,000
Wallace L. Cook                         $17,500
Carl A. Froebel                         $17,500
Rowley W.P. Redington                   $17,500



        The officers of the Trust receive no compensation directly from it for
performing the duties of their offices. However, those officers and Trustees of
the Trust who are officers and/or stockholders of those companies that render
administrative services to the Trust as noted below may receive remuneration
indirectly because of fees that these companies receive from the Trust. As of
the date of this Statement of Additional Information, the Trustees and officers
of the Trust as a group did not own more than 1% of the outstanding shares of
any Fund. Trustees receive no retirement benefits or deferred compensation from
the Trust.

        The Fund receives investment advisory services pursuant to agreements
with the Advisor and the Trust. Each such agreement, after its initial term,
continues in effect for successive annual periods so long as such continuation
is approved at least annually by the vote of (1) the Board of Trustees of the
Trust (or a majority of the outstanding shares of the Fund to which the
agreement applies), and (2) a majority of the Trustees who are not interested
persons of any party to the Agreement, in each case cast in person at a meeting
called for the purpose of voting on such approval. Any such agreement may be
terminated at any time, without penalty, by either party to the agreement upon
sixty days' written notice and is automatically terminated in the event of its
"assignment," as defined in the 1940 Act.


Investment Advisor

        The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund.  The Advisor is located at
10000 Memorial Drive, Suite 660, Houston, TX 77024. The Advisor was founded in
1988 and is controlled by Mr. Paul G. Horton, President and Managing Director
and Mr. Kevin P. Duffy, Research Director and Portfolio Manager.  While the
Advisor has not previously advised a registered investment company, it provides
investment advisory services to individual and institutional investors with
assets of approximately $200 million.  Mr. Duffy is responsible for management
of the Fund's portfolio.        


        Under the Investment Advisory Agreement with the Fund, the Advisor
provides the Fund with advice on buying and selling securities, manages the
investments of the Fund, furnishes the Fund with office space and certain
administrative services, and provides most of the personnel needed by the Fund. 
As compensation, the Fund pays the Advisor a monthly management fee (accrued
daily) based upon the average daily net assets of the Fund at the rate of 1.25%
annually.   During the Fund's initial fiscal period ended August 31, 1996
advisory fees totaled $92,926, of which $71,298 was waived by the advisor in
order to limit the Fund's operating expenses to no more than 2.00% of average
net assets.  


        The Investment Advisory Agreement continues in effect from year to year
so long as such continuation is approved at least annually by (1) the Board of
Trustees of the Trust or the vote of a majority of the outstanding shares of the
Fund, and (2) a majority of the Trustees who are not interested persons of any
party to the Agreement, in each case cast in person at a meeting called for the
purpose of voting on such approval.  The Agreement may be terminated at any
time, without penalty, by  either the Fund or the Advisor upon sixty days'
written notice and is automatically terminated in the event of its assignment
as defined in the 1940 Act.


Administrator

        The Fund has entered into an Administrative Agreement with Investment
Company Administration Corporation ('ICAC'), a corporation owned in part and
controlled by Messrs. Banhazl, Paggioli and Wadsworth.  The Agreement provides
that ICAC will prepare and coordinate reports and other materials supplied to
the Trustees; prepare and/or supervise the preparation and filing of all
securities filings, periodic financial reports, prospectuses, statements of
additional information, marketing materials, tax returns, shareholder reports
and other regulatory reports or filings required of the Fund; prepare all
required filings necessary to maintain the Fund's ability to sell shares in all
states where the Fund currently does, or intends to do business; coordinate the
preparation, printing and mailing of all materials (e.g., Annual Reports)
required to be sent to shareholders; coordinate the preparation and payment of
Fund related expenses; monitor and oversee the activities of the Fund's
servicing agents (i.e., transfer agent, custodian, fund accountants, etc.);
review and adjust as necessary the Fund's daily expense accruals; and perform
such additional services as may be agreed upon by the Fund and ICAC.  For its
services, ICAC receives a monthly fee at the following annual rate:

Average net assets of the Fund                  Fee or fee rate

Under $15 million                               $30,000
$15 to $50 million                              0.20% of average net assets
$50 to $100 million                             0.15% of average net assets
$100 to $150 million                            0.10% of average net assets
Over $150 million                               0.05% of average net assets


        During the Fund's initial fiscal period ended August 31, 1996, the
Administrator received fees of $24,698.



Distributor

        First Fund Distributors, (the "Distributor") a corporation owned by
Messrs. Banhazl, Paggioli and Wadsworth, acts as the Fund's distributor and
principal underwriter in a continuous public offering of the Fund's shares.  The
Distribution Agreement between the Fund and the Distributor continues in effect
from year to year if approved at least annually by (i) the Board of Trustees or
the vote of a majority of the outstanding shares of the Fund (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested persons of
any such party, in each case cast in person at a meeting called for the purpose
of voting on such approval.  The Distribution Agreement may be terminated
without penalty by the parties thereto upon sixty days' written notice, and is
automatically terminated in the event of its assignment as defined in the 1940
Act. 


        The Fund has adopted a Distribution Plan in accordance with Rule 12b-1
under the 1940 Act.  The Plan provides that the Fund will pay a fee to the
Distributor at an annual rate of up to 0.25% of the average daily net assets of
the Fund.  The fee is paid to the Distributor as reimbursement of, or in
anticipation of, expenses incurred for distribution related activity.  During
the Fund's initial fiscal period ended August 31, 1996, the Fund paid fees of
$18,585 to the Distributor,  which consisted of $13,794 in  marketing and
mailing expenses, $3,915 in printing expenses and $876 in travel and
enteratainment expenses relating to the distribution of the Fund's shares. 



EXECUTION OF PORTFOLIO TRANSACTIONS

        Pursuant to the Investment Management  Agreement, the Advisor determines
which securities are to be  purchased and sold by the Fund and which broker-
dealers are eligible to execute the Fund's portfolio transactions.  Purchases
and sales of securities in the over-the-counter market will be executed directly
with a "market-maker" unless, in the opinion of the Advisor, a better price and
execution can otherwise be obtained by using a broker for the transaction.  

        Purchases of portfolio securities for the Fund also may be made directly
from issuers or from underwriters.  Where possible purchase and sale
transactions will be effected through dealers (including banks) which specialize
in the types of securities which the Fund will be holding. Dealers and
underwriters usually act as principal for their own account.  Purchases from
underwriters will include a concession paid by the issuer to the underwriter and
purchases from dealers will include the spread between the bid and the asked
price.  If the execution and price offered by more than one dealer or
underwriter are comparable, the order may be allocated to a dealer or
underwriter that has provided research or other services as discussed below.

        In placing portfolio transactions, the Advisor will use its best efforts
to choose a broker-dealer capable of providing the services necessary to obtain
the most favorable price and  execution available.  The full range and quality
of services  available will be considered in making these determinations, such
as the size of the order, the difficulty of execution, the  operational
facilities of the firm involved, the firm's risk in  positioning a block of
securities, and other factors.  In those  instances where it is reasonably
determined that more than one  broker-dealer can offer the services needed to
obtain the most  favorable price and execution available, consideration may be 
given to those broker-dealers which furnish or supply research and statistical
information to the Advisor that it may lawfully and appropriately use in its
investment advisory capacities, as well as provide other services in addition
to execution services.  The Advisor considers such information, which is in
addition to and not in lieu of the services required to be performed by it under
its Agreement with the Fund, to be useful in varying degrees, but of
indeterminable value.  Portfolio may be placed with broker-dealers who sell
shares of the Fund is subject to rules adopted by the National Association of
Securities Dealers, Inc. 

        While it is the Fund's general policy to seek first to obtain the most
favorable price and execution available, in selecting a broker-dealer to execute
portfolio transactions for the Fund, weight is also given to the ability of a
broker-dealer to furnish brokerage and research services to the Fund or to the
Advisor, even if the specific services were not imputed just to the Fund and may
be useful to the Advisor in advising other clients.  In negotiating any
commissions with a broker or evaluating the spread to be paid to a dealer, the
Fund may therefore pay a higher commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services, provided
that the amount of such commission or spread has been determined in good faith
by the  Fund and the Advisor to be reasonable in relation to the value of the
brokerage and/or research services provided by such broker-dealer, which
services either produce a direct benefit to the Fund or assist the Advisor in
carrying out its responsibilities to the Fund.  The standard of reasonableness
is  to be measured in light of the Advisor's overall responsibilities to the
Fund.

        Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds ("Funds") managed or advised by the
Advisor.  Nevertheless, it is possible that at times identical securities will
be acceptable for both the Fund and one or more of such client accounts or
Funds.  In such event, the position of the Fund and such client account(s) or
Funds in the same issuer may vary and the length of time that each may choose
to hold its investment in the same issuer may likewise vary.  However, to the
extent any of these client accounts or Funds seeks to acquire the same security
as the Fund at the same time, the Fund may not be able to acquire as large a
portion of such security as it desires, or it may have to pay a  higher price
or obtain a lower yield for such security.  Similarly, the Fund may not be able
to obtain as high a price for, or as large an execution of, an order to sell any
particular security at the same time.  If one or more of such  client accounts
or Funds simultaneously purchases or sells the same security that the Fund is
purchasing or selling, each day's transactions in such security will be
allocated between the Fund and all such client accounts or Funds in a manner
deemed equitable by the Advisor, taking into account the respective sizes of the
accounts and the amount being purchased or sold.  It is recognized that in some
cases this system could have a detrimental effect on the price or value of the
security insofar as the Fund is concerned.  In other cases, however, it is
believed that the ability of the Fund to participate in volume transactions may
produce better executions for the Fund.


        The Fund does not effect securities transactions through brokers in
accordance with any formula, nor does it effect securities transactions through
such brokers solely for selling shares of the Fund, although the Fund may
consider the sale of shares as a factor in allocating brokerage. However, as
stated above, broker-dealers who execute brokerage transactions may effect
purchase of shares of the Fund for their customers.  The Fund does not use the
Distributor to execute its portfolio transactions.  During the Fund's initial
fiscal period ended August 31,1996, brokerage commissions paid by the Fund
totaled $31,341.



ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

        The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Fund's shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Advisor or the Distributor such rejection
is in the best interest of the Fund, and (iii) to reduce or waive the minimum
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of the Fund's
shares.

        Payments to shareholders for shares of the Fund redeemed directly from
the Fund will be made as promptly as possible but no later than seven days after
receipt by the  Fund's Transfer Agent of the written request in proper form, 
with the appropriate documentation as stated in the Prospectus, except that the
Fund may suspend the right of redemption or  postpone the date of payment during
any period when (a) trading on the New York Stock Exchange is restricted as
determined by the SEC or such Exchange is closed for other than weekends and
holidays; (b) an emergency exists as determined by the SEC making disposal of
portfolio securities or valuation of net assets of the Fund not reasonably
practicable; or (c) for such other period as the SEC may permit for the
protection of the Fund's shareholders.  At various times, the Fund may be
requested to redeem shares for which it has not yet received confirmation of
good payment; in this circumstance, the Fund may delay the redemption until
payment for the purchase of such shares has been collected and confirmed to the
Fund.

        The Fund intends to pay cash (U.S. dollars) for all shares redeemed,
but, under abnormal conditions which make payment in cash unwise, the Fund may
make payment partly in securities with a current market value equal to the
redemption price.  Although the Fund does not anticipate that it will make  any
part of a redemption payment in securities, if such payment were made, an
investor may incur brokerage costs in converting such securities to cash.  The
Fund has elected to be governed by the provisions of Rule 18f-1 under the 1940
Act, which contains a formula for determining the minimum redemption amounts
that must be paid in cash.

        The value of shares on redemption or repurchase may be more or less than
the investor's cost, depending upon the market value of the Fund's portfolio
securities at the time of redemption or repurchase.

        As discussed in the Prospectus, the Fund provides an Automatic
Investment Plan for the convenience of investors who wish to purchase shares of
the Fund on a regular basis.  All record keeping and custodial costs of this
Plan are paid by the Fund.  The market value of the Fund's shares is subject to
fluctuation, so before undertaking any plan for systematic investment, the
investor should keep in mind that this plan does not assure a profit nor protect
against depreciation in declining markets.


DETERMINATION OF SHARE PRICE

        As noted in the Prospectus, the net asset value and offering price of
shares of the Fund will be determined once daily as of 4:00 p.m., New York City
time, on each day the New York Stock Exchange is open for trading.  It is
expected that the Exchange will be closed on Saturdays and Sundays and on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas.  The Fund does not expect to determine the
net asset value of its shares on any day when the Exchange is not open for
trading even if there is sufficient trading in its portfolio securities on such
days to materially affect the net asset value per share.

        In valuing the Fund's assets for calculating net asset value, readily
marketable portfolio securities listed on a national securities exchange or on
NASDAQ are valued at the last sale price on the business day as of which such
value is being determined.  If there has been no sale on such exchange or on
NASDAQ on such day, the security is valued at the closing bid price on such day.
Readily marketable securities traded only in the over-the-counter market and not
on NASDAQ are valued at the current or last bid price.  If no bid is quoted on
such day, the security is valued by such method as the Board of Trustees of the
Trust shall determine in good faith to reflect the security's fair value.  All
other assets of each Fund are valued in such manner as the Board of Trustees in
good faith deems appropriate to reflect their fair value.

        The net asset value per share of the Fund is calculated  as follows: 
all liabilities incurred or accrued are deducted from the valuation of total
assets which includes accrued but  undistributed income; the resulting net
assets are divided by the number of shares of the Fund outstanding at the time
of the  valuation and the result (adjusted to the nearest cent) is the net asset
value per share.



PERFORMANCE INFORMATION

        From time to time, the Fund may state its total return in advertisements
and investor communications.  Total return may be stated for any relevant period
as specified in the advertisement or communication.  Any statements of total
return will be accompanied by information on the Fund's average annual
compounded rate of return over the most recent year and the period from the
Fund's inception of operations through the most recent calendar quarter.  The
Fund may also advertise aggregate and average total return information over
different periods of time.

        The Fund's average annual compounded rate of return is determined by
reference to a hypothetical $1,000 investment that includes capital appreciation
and depreciation for the stated period, according to the following formula:

                              P(1+T)n  =  ERV

Where:  P   =  a hypothetical initial purchase order of $1,000 from which the
maximum                         sales load is deducted

                T   =  average annual total return

                n   =  number of years

                ERV =  ending redeemable value of the hypothetical $1,000
purchase at the end of          the period


        Aggregate total return is calculated in a similar manner, except that
the results are not annualized.  Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum applicable sales charge.  The Fund's
average annual total return for the one year period from inception on September
29, 1996 through September 30, 1996 was 12.92%


        The Fund's total return may be compared to relevant indices, including
Standard & Poor's 500 Composite Stock Index and indices published by Lipper
Analytical Services, Inc.  From time to time, evaluations of a Fund's
performance by independent sources may also be used in advertisements and in
information furnished to present or prospective investors in the Funds.

        Investors should note that the investment results of the Fund will
fluctuate over time, and any presentation of the Fund's total return for any
period should not be considered as a representation of what an investment may
earn or what an investor's total return may be in any future period.


GENERAL INFORMATION


        Investors in the Fund will be informed of the Fund's progress through
periodic reports.  Financial statements certified by independent public
accountants will be submitted to shareholders at least annually.

        Star Bank N.A., 425 Walnut St., Cincinnati, OH 45202 acts as Custodian
of the securities and other assets of the Fund. The Custodian does not
participate in decisions relating to the purchase and sale of securities by the
Fund.  American Data Services, Inc. 24 West Carver St., Huntington, NY 11743 is
the Fund's Transfer and Dividend Disbursing Agent.

        Ernst & Young LLP, 515 South Flower St., Los Angeles, CA 90071 are the
independent auditors for the Fund.

        Heller, Ehrman, White & McAuliffe, 333 Bush Street, San Francisco,
California 94104, are legal counsel to the Fund.


        On October 7, 1996, Charles Schwab & Co. Special Custody Account for
Customers, San Francisco, CA owned of record 33.27% of the Fund's outstanding
voting securities.


        The shareholders of a Massachusetts business trust could, under certain
circumstances, be held personally liable as partners for its obligations. 
However, the Trust's Agreement and Declaration of Trust contains an express
disclaimer of shareholder liability for acts or obligations of the Trust.  The
Agreement and Declaration of Trust also provides for indemnification and
reimbursement of expenses out of the Fund's assets for any shareholder held
personally liable for obligations of the Fund or Trust.  The Agreement and
Declaration of Trust provides that the Trust shall, upon request, assume the
defense of any claim made against any shareholder for any act or obligation of
the Fund or Trust and satisfy any judgment thereon.  All such rights are limited
to the assets of the Fund.  The Agreement and Declaration of Trust further
provides that the Trust may maintain appropriate insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Trust, its shareholders, trustees, officers, employees and agents to cover
possible tort and other liabilities.  Furthermore, the activities of the Trust
as an investment company would not likely give rise to liabilities in excess of
the Trust's total assets. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
both inadequate insurance exists and the Fund itself is unable to meet its
obligations.

        The Trust is registered with the SEC as a management investment company.
Such a registration does not involve supervision of the management or policies
of the Fund.  The Prospectus of the Fund and this Statement of Additional
Information omit certain of the information contained in the Registration
Statement filed with the SEC.  Copies of such information may be obtained from
the SEC upon payment of the prescribed fee.



                           FINANCIAL STATEMENTS

        The annual report to shareholders for the Fund for the fiscal year ended
August 31,1996 is a separate document supplied with this Statement of Additional
Information and the financial statements therein are incorporated by reference
in this Statement of Additional Information.

<PAGE>



                       STATEMENT OF ADDITIONAL INFORMATION


                                October 31, 1996


                         U.S. GLOBAL LEADERS GROWTH FUND
                                   a series of
                        PROFESSIONALLY MANAGED PORTFOLIOS
                                630 Fifth Avenue
                               New York, NY 10111
                                 (212) 765-5350



This  Statement of Additional  Information  is not a prospectus and it should be
read in conjunction  with the prospectus of the U.S.  Global Leaders Growth Fund
(the  "Fund").  A copy of the  prospectus  of the Fund dated October 31, 1996 is
available by calling the number listed above or (212) 633- 9700.





                                TABLE OF CONTENTS

                                                                         Page

The Trust . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . .    B-2
Investment Objective and Policies . .  . . . . . . . . . . . . . . . .    B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . .    B-4
Distributions and Tax Information . . . . . . . . . . . . . . . . . . .    B-6
Management . . . . .  . . . . . . . .  . . . . . . . . . . . . . . . . .    B-7
Investment Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . .  B-10
Administrator . . . . . . . . . . . .  . . . . . . . . . . . . . . . .   B-10
Distributor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   B-11
Execution of Portfolio Transactions .  . . . . . . . . . . . . . . . . . . B-11
Additional Purchase and Redemption Information  . . . . . . . . . . . .    B-13
Determination of Share Price  . . . . . . . . . .  . . . . . . . . . . .   B-14
Performance Information . . . . . . . . . . . . .  . . . . . . . . . . .    B-14
General Information . . . . . . . . . . . . . . . . . . . . . . . . . .    B-15
Financial Statements. . . . . . . . . . . . . . .  . . . . . . . . . . .    B-16

                                                        B-1

<PAGE>



                                                     THE TRUST

Professionally  Managed  Portfolios  (the  "Trust")  is an  open-end  management
investment  company  organized  as a  Massachusetts  business  trust.  The Trust
consists of various series which represent separate investment portfolios.  This
Statement of Additional Information relates only to the U.S.
Global Leaders Growth Fund series (the "Fund").


                                         INVESTMENT OBJECTIVE AND POLICIES

The U.S.  Global  Leaders  Growth  Fund (the  "Fund") is a mutual  fund with the
investment  objective of seeking  growth of capital.  The  following  discussion
supplements  the discussion of the Fund's  investment  objective and policies as
set forth in the Prospectus. There can be no assurance the objective of the Fund
will be attained.

Repurchase Agreements

The Fund may enter into  repurchase  agreements as discussed in the  Prospectus.
Under such  agreements,  the seller of the security agrees to repurchase it at a
mutually agreed upon time and price. The repurchase price may be higher than the
purchase  price,  the  difference  being income to the Fund, or the purchase and
repurchase  prices may be the same,  with  interest  at a stated rate due to the
Fund together  with the  repurchase  price on  repurchase.  In either case,  the
income to the Fund is  unrelated  to the  interest  rate on the U.S.  Government
security  itself.  Such repurchase  agreements will be made only with banks with
assets of $500 million or more that are insured by the Federal Deposit Insurance
Corporation  or with  Government  securities  dealers  recognized by the Federal
Reserve Board and registered as broker-dealers  with the Securities and Exchange
Commission ("SEC") or exempt from such registration.

The Fund will generally  enter into  repurchase  agreements of short  durations,
from overnight to one week,  although the underlying  securities  generally have
longer maturities.  The Fund may not enter into a repurchase agreement with more
than seven days to maturity  if, as a result,  more than 15% of the value of the
Fund's  total  assets would be invested in illiquid  securities  including  such
repurchase agreements.

For  purposes  of the  Investment  Company  Act of  1940  (the  "1940  Act"),  a
repurchase  agreement  is deemed to be a loan from the Fund to the seller of the
U.S.  Government security subject to the repurchase  agreement.  It is not clear
whether a court would consider the U.S. Government security acquired by the Fund
subject  to a  repurchase  agreement  as  being  owned  by the  Fund or as being
collateral  for a  loan  by  the  Fund  to  the  seller.  In  the  event  of the
commencement of bankruptcy or insolvency  proceedings with respect to the seller
of the  U.S.  Government  security  before  its  repurchase  under a  repurchase
agreement,  the Fund may  encounter  delays and incur costs before being able to
sell the security.  Delays may involve loss of interest or a decline in price of
the U.S. Government security. If a court characterizes the transaction as a loan
and the Fund has not perfected

                                                        B-2

<PAGE>



a security interest in the U.S. Government security, the Fund may be required to
return the  security  to the  seller's  estate  and be  treated as an  unsecured
creditor of the seller. As an unsecured creditor,  the Fund would be at the risk
of losing some or all of the principal and income  involved in the  transaction.
As with any unsecured  debt  instrument  purchased for the Fund,  the investment
manager  seeks to minimize the risk of loss  through  repurchase  agreements  by
analyzing the  creditworthiness  of the obligor,  in this case the seller of the
U.S. Government security.

Apart from the risk of bankruptcy or insolvency  proceedings,  there is also the
risk that the seller may fail to repurchase the security. However, the Fund will
always receive as collateral for any repurchase agreement to which it is a party
securities acceptable to it, the market value of which is equal to at least 100%
of the amount invested by the Fund plus accrued interest, and the Fund will make
payment against such securities only upon physical  delivery or evidence of book
entry transfer to the account of its Custodian.  If the market value of the U.S.
Government  security subject to the repurchase  agreement  becomes less than the
repurchase  price (including  interest),  the Fund will direct the seller of the
U.S.  Government  security to deliver  additional  securities so that the market
value of all securities subject to the repurchase agreement will equal or exceed
the  repurchase  price.  It is possible  that the Fund will be  unsuccessful  in
seeking to impose on the seller a contractual  obligation to deliver  additional
securities.

Foreign Investments

The Advisor is permitted to invest up to 25% of the Fund's net assets in foreign
companies,  although the level of such  investment is not expected to exceed 15%
under  normal  circumstances.  The  Advisor  intends  to  invest  only in  large
capitalization,  well  established  foreign  issuers the securities of which are
traded in the U.S., and which present their  financial  data in accordance  with
generally  accepted  accounting  principles in the U.S.  Thus,  the Advisor thus
expects  that there  will be little,  if any risk  associated  with its  foreign
investments.

The risks associated with foreign issuers include  political and economic risks.
Foreign investments may be affected by actions of foreign governments adverse to
the interests of U.S.  investors,  including the possibility of expropriation or
nationalization  of  assets,   confiscatory   taxation,   restrictions  on  U.S.
investment or on the ability to repatriate  assets or convert currency into U.S.
dollars, or other government intervention. There may be a greater possibility of
default by foreign  governments  or  foreign  government-sponsored  enterprises.
Investments  in  foreign  countries  also  involve  a risk of  local  political,
economic,  or  social  instability,   military  action  or  unrest,  or  adverse
diplomatic  developments.  While  the  Advisor  believes  it  unlikely  that the
companies  and  countries in which the Advisor  invests would be subject to such
circumstances, there is no assurance that the Advisor will be able to anticipate
or counter these  potential  events in selecting  foreign issuers for the Fund's
portfolio.





                                                        B-3

<PAGE>



                                              INVESTMENT RESTRICTIONS

The following policies and investment restrictions have been adopted by the Fund
and (unless  otherwise  noted) are fundamental and cannot be changed without the
affirmative vote of a majority of the Fund's  outstanding  voting  securities as
defined in the 1940 Act. The Fund may not:

1. Make loans to others,  except (a)  through  the  occasional  purchase of debt
securities in accordance with its investment objectives and policies, (b) to the
extent the entry into a repurchase agreement is deemed to be a loan.

     2. (a) Borrow money,  except as stated in the Prospectus and this Statement
of Additional  Information.  Any such borrowing will be made only if immediately
thereafter there is an asset coverage of at least 300% of all borrowings.

     (b) Mortgage,  pledge or hypothecate any of its assets except in connection
with any such borrowings.

3. Purchase  securities on margin,  participate  on a joint or joint and several
basis in any securities  trading account,  or underwrite  securities.  (Does not
preclude the Fund from obtaining such short-term  credit as may be necessary for
the clearance of purchases and sales of its portfolio securities.)

4. Purchase or sell  commodities  or commodity  contracts (the Board of Trustees
may in the future authorize the Fund to engage in certain  activities  regarding
futures contracts for bona fide hedging purposes; any such authorization will be
accompanied by appropriate notification to shareholders).

     5. Invest 25% or more of the market  value of its assets in the  securities
of companies  engaged in any one industry.  (Does not apply to investment in the
securities of the U.S. Government, its agencies or instrumentalities.)

6.  Issue  senior  securities,  as  defined  in the 1940 Act,  except  that this
restriction  shall not be  deemed  to  prohibit  the Fund  from (a)  making  any
permitted  borrowings,  mortgages or pledges,  or (b) entering  into  repurchase
transactions.

7.       Invest in any issuer for purposes of exercising control or management.

The Fund observes the following  policies,  which are not deemed fundamental and
which may be changed without shareholder vote. The Fund may not:


8. Invest in securities of other investment  companies which would result in the
Fund owning more than 3% of the  outstanding  voting  securities of any one such
investment  company,  the Fund owning securities of another  investment  company
having an  aggregate  value in excess  of 5% of the  value of the  Fund's  total
assets, or the Fund owning securities of investment companies in the

                                                        B-4

<PAGE>



aggregate which would exceed 10% of the value of the Fund's total assets.

9. Invest,  in the  aggregate,  more than 15% of its total assets in  securities
with  legal or  contractual  restrictions  on resale,  securities  which are not
readily  marketable  and  repurchase  agreements  with more than  seven  days to
maturity.


If a  percentage  restriction  is  adhered  to at  the  time  of  investment,  a
subsequent  increase or decrease in a percentage  resulting from a change in the
values of assets will not constitute a violation of that restriction,  except as
otherwise noted.


                                         DISTRIBUTIONS AND TAX INFORMATION

Distributions

Dividends from net investment income and distributions from net profits from the
sale of  securities,  if any, are generally  made annually by the Fund after the
conclusion  of its fiscal year (June 30).  Also,  the Fund expects to distribute
any  undistributed  net investment  income on or about December 31 of each year.
Any net capital gains realized  through the twelve month period ended October 31
of each year will also be distributed by December 31 of each year.

Each  distribution by the Fund is accompanied by a brief explanation of the form
and character of the  distribution.  In January of each year the Fund will issue
to each  shareholder  a  statement  of the  federal  income  tax  status  of all
distributions.

Tax Information

The Fund is treated as a separate  entity for federal  income tax purposes.  The
Fund  intends to  qualify  and elect to be  treated  as a  regulated  investment
company under Subchapter M of the Internal Revenue Code of 1986 (the "Code"). In
order to  qualify,  the  Fund  must  comply  with  all  applicable  requirements
regarding the source of its income,  diversification of its assets and timing of
its distributions. The Fund's policy is to distribute to its shareholders all of
its investment  company  taxable income and any net realized  long-term  capital
gains for each  fiscal  year in a manner  that  complies  with the  distribution
requirements  of the Code,  so that the Fund will not be subject to any  federal
income tax or excise  taxes  based on net  income.  The Fund will  generally  be
subject to federal income tax on its  undistributed  net  investment  income and
capital gains.  To avoid federal excise taxes based on its net income,  the Fund
must  distribute  (or be  deemed to have  distributed)  by  December  31 of each
calendar  year (i) at least 98% of its  ordinary  income for such year,  (ii) at
least 98% of the excess of its realized  capital gains over its realized capital
losses for the 12-month  period  ending on October 31 during such year and (iii)
any amounts from the prior calendar year that were not distributed.


                                                        B-5

<PAGE>



Net  investment  income  consists of interest  and  dividend  income and foreign
currency gain, less expenses. Net realized capital gains for a fiscal period are
computed by taking into account any capital loss carryforward of the Fund.

Distributions of net investment income and the excess of net short-term  capital
gain over net  long-term  capital loss are taxable to  shareholders  as ordinary
income.  In the case of corporate  shareholders,  a portion of the distributions
may qualify for the  intercorporate  dividends-received  deduction to the extent
the Fund  designates  the  amount  distributed  as a  qualifying  dividend.  The
aggregate amount so designated cannot,  however,  exceed the aggregate amount of
qualifying  dividends  received by the Fund for its taxable year. In view of the
Fund's   investment   policy,  it  is  expected  that  dividends  from  domestic
corporations will be part of the Fund's gross income and that, accordingly, part
of the  distributions  by the Fund may be  eligible  for the  dividends-received
deduction for corporate  shareholders.  However, the portion of the Fund's gross
income  attributable to qualifying  dividends is largely dependent on the Fund's
investment  activities for a particular  year and therefore  cannot be predicted
with any  certainty.  The  deduction  may be reduced or  eliminated  if the Fund
shares held by a corporate investor are treated as debt-financed or are held for
less than 46 days.

Distributions  of the excess of net long-term  capital gains over net short-term
capital  losses  are  taxable  to  shareholders  as  long-term   capital  gains,
regardless  of the  length  of time the  shareholders  have held  their  shares.
Capital  gains  distributions  are  not  eligible  for  the   dividends-received
deduction  referred  to in the  previous  paragraph.  Distributions  of any  net
investment  income and net realized  capital  gains will be taxable as described
above, whether received in shares or in cash.  Shareholders  electing to receive
distributions  in the form of  additional  shares  will  have a cost  basis  for
federal  income tax  purposes in each share so  received  equal to the net asset
value of a share on the reinvestment  date.  Distributions are generally taxable
when received. However,  distributions declared in October, November or December
to  shareholders  of  record  on a date in such a month  and paid the  following
January are taxable as if received on December 31.  Distributions are includable
in alternative minimum taxable income in computing a shareholder's liability for
the alternative minimum tax.

One of the requirements for qualification as a regulated  investment  company is
that less than 30% of the Fund's  gross  income must be derived  from gains from
the sale or other  disposition  of  securities  held for less than three months.
Accordingly, the Fund may be restricted in effecting closing transactions within
three months after entering into an option contract.

A redemption of Fund shares may result in recognition of a taxable gain or loss.
Any loss realized upon a redemption of shares within six months from the date of
their purchase will be treated as a long-term  capital loss to the extent of any
amounts  treated  as  distributions  of  long-term  capital  gains  during  such
six-month  period.  Any loss  realized  upon a redemption  of Fund shares may be
disallowed  under  certain wash sale rules to the extent  shares of the Fund are
purchased  (through  reinvestment of distributions or otherwise)  within 30 days
before or after the redemption.

Under the Code,  the Fund will be  required  to report to the  Internal  Revenue
Service all  distributions  of taxable income and capital gains as well as gross
proceeds from the redemption or exchange of

                                                        B-6

<PAGE>



Fund shares,  except in the case of exempt  shareholders,  which  includes  most
corporations.  Pursuant  to the  backup  withholding  provisions  of  the  Code,
distributions  of any taxable  income and capital  gains and  proceeds  from the
redemption of Fund shares may be subject to withholding of federal income tax at
the  rate of 31  percent  in the  case of  non-exempt  shareholders  who fail to
furnish the Fund with their  taxpayer  identification  numbers and with required
certifications  regarding  their  status  under  the  Code.  If the  withholding
provisions are applicable, any such distributions and proceeds, whether taken in
cash or reinvested in additional shares, will be reduced by the amounts required
to be withheld.  Corporate and other exempt shareholders should provide the Fund
with their  taxpayer  identification  numbers or certify  their exempt status in
order to avoid possible erroneous  application of backup  withholding.  The Fund
reserves  the right to refuse  to open an  account  for any  person  failing  to
provide a certified taxpayer identification number.

The Fund will not be subject to tax in The Commonwealth of Massachusetts as long
as it  qualifies  as a  regulated  investment  company  for  federal  income tax
purposes.  Distributions  and  the  transactions  referred  to in the  preceding
paragraphs may be subject to state and local income taxes, and the tax treatment
thereof may differ from the federal  income tax treatment.  Moreover,  the above
discussion  is not intended to be a complete  discussion of all  applicable  tax
consequences of an investment in the Fund.  Shareholders  are advised to consult
with their own tax advisers  concerning the  application  of federal,  state and
local taxes to an investment in the Fund.

Non-U.S.  Shareholders.  Dividends paid by the Fund to a shareholder  who, as to
the  United  States,  is  a  nonresident  alien  individual,  nonresident  alien
fiduciary  of a trust or estate,  foreign  corporation  or  foreign  partnership
("foreign  shareholder")  will be subject to U.S.  withholding tax (at a rate of
30% or lower treaty rate).  Withholding will not apply if a dividend paid by the
Fund to a foreign  shareholder is  "effectively  connected with the conduct of a
U.S.   trade  or  business,"  in  which  case  the  reporting  and   withholding
requirements  applicable to domestic  shareholders will apply.  Distributions of
net capital  gain are not subject to  withholding,  but in the case of a foreign
shareholder  who  is  a  nonresident  alien  individual,   those   distributions
ordinarily  will be subject to U.S. income tax at a rate of 30% (or lower treaty
rate),  if the  individual is  physically  present in the United States for more
than 182 days during the taxable year and the  distributions are attributable to
a fixed place of business maintained by the individual in the United States.

This discussion and the related  discussion in the prospectus have been prepared
by Fund management,  and counsel to the Fund has expressed no opinion in respect
thereof.


                                                    MANAGEMENT

Trustees

The  Trustees  of the Trust,  who were  elected  for an  indefinite  term by the
initial shareholders of the Trust, are responsible for the overall management of
the Trust, including general supervision and review of the investment activities
of the Fund. The Trustees, in turn, elect the officers of the Trust,

                                                        B-7

<PAGE>



who are responsible for administering the day-to-day operations of the Trust and
its separate series.  The current  Trustees and officers and their  affiliations
and principal occupations for the past five years are set forth below.


Steven J. Paggioli,* 46  President and Trustee


     479 West 22nd Street,  New York, New York 10011.  Executive Vice President,
Robert H. Wadsworth & Associates,  Inc. (consultants) since 1986; Executive Vice
President of Investment Company  Administration  Corporation ("ICAC" mutual fund
administrator  and the Fund's  Administrator),  and Vice President of First Fund
Distributors,  Inc. ("FFD"; registered broker-dealer and the Fund's Distributor)
since 1990.


Dorothy A. Berry, 52 Trustee and Chairman

40 Maple Lane,  Copake,  New York 12516.  President,  Talon Industries  (venture
capital and business consulting);  formerly Chief Operating Officer,  Integrated
Asset Management (investment advisor and manager) and formerly President,  Value
Line, Inc., (investment advisory and financial publishing firm).


Wallace L. Cook, 56 Trustee

     30  Rockefeller  Plaza,  New York, New York 10112.  Senior Vice  President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.



Carl A. Froebel, 57 Trustee


     333  Technology  Dr.,  Malvern,  PA  19355.   Managing  Director,   Premier
Solutions,  Ltd.  Formerly  President,  National  Investor Data  Services,  Inc.
(investment related computer software).


Rowley W.P. Redington, 51 Trustee


     260 Washington Street, Newark, New Jersey 07102. Vice President, PRS of New
Jersey,  Inc.   (management   consulting);   Chief  Financial  Officer,   Jersey
Electronics,  Inc.  (formerly  ESI,  Inc.)  (consumer  electronics  service  and
marketing);  formerly  President,  Aveco Inc.  (consumer  electronic service and
marketing)   and   formerly   Chief   Executive   Officer,   Rowley   Associates
(consultants).

   
Eric M. Banhazl*, 39 Treasurer
    

     2025 E. Financial Way, Suite 101, Glendora,  California 91741.  Senior Vice
President, Robert H. Wadsworth & Associates, Inc., Senior Vice President of ICAC
and Vice President of FFD since 1990.


                                                        B-8

<PAGE>



Robin Berger*, 39 Secretary

     479 West 22nd St.,  New York,  New York 10011.  Vice  President,  Robert H.
Wadsworth  &  Associates,   Inc.  since  June,  1993;  formerly  Regulatory  and
Compliance Coordinator,  Equitable Capital Management, Inc. (1991-93), and Legal
Product Manager, Mitchell Hutchins Asset Management (1988-91).

Robert H. Wadsworth*, 56 Vice President

     4455 E. Camelback Road, Suite 261E,  Phoenix,  Arizona 85018.  President of
Robert H.  Wadsworth & Associates,  Inc.  since 1982,  President of ICAC and FFD
since 1990.

*Indicates an "interested person" of the Trust as defined in the 1940 Act.


Set forth below is the rate of compensation  received by the following  Trustees
from the Fund and all  other  portfolios  of the  Trust.  This  total  amount is
allocated  among  the  portfolios.  Disinterested  trustees  receive  an  annual
retainer  of $7,500 and a fee of $2,500 for each  regularly  scheduled  meeting.
These  trustees also receive a fee of $1,000 for any special  meeting  attended.
The Chairman of the Board of Trustees  receives an additional annual retainer of
$4,500.  The  disinterested   trustees  are  also  reimbursed  for  expenses  in
connection with each Board meeting attended. No other compensation or retirement
benefits  are  received  by any  Trustee or  officer  from the Fund or any other
portfolios of the Trust.  During the Fund's initial fiscal period ended June 30,
1996, $1,493 of Trustees' fees and expenses were allocated to the Fund.


Name of Trustee                          Total Compensation

Dorothy A. Berry                         $22,000
Wallace L. Cook                          $17,500
Carl A. Froebel                          $17,500
Rowley W. P. Redington                   $17,500


The Fund receives  investment  advisory services pursuant to agreements with the
Advisor and the Trust. Each such agreement, after its initial term, continues in
effect for successive annual periods so long as such continuation is approved at
least  annually  by the vote of (1) the  Board of  Trustees  of the  Trust (or a
majority of the outstanding shares of the Fund to which the agreement  applies),
and (2) a majority of the Trustees who are not  interested  persons of any party
to the  Agreement,  in each case cast in  person  at a  meeting  called  for the
purpose of voting on such approval.  Any such agreement may be terminated at any
time, without penalty, by either party to the agreement upon sixty days' written
notice and is  automatically  terminated  in the event of its  "assignment,"  as
defined in the 1940 Act.

                                                        B-9

<PAGE>



                                                INVESTMENT ADVISOR

The  Board  of  Trustees  of the  Trust  establishes  the  Fund's  policies  and
supervises and reviews the management of the Fund. The Advisor is located at 630
Fifth  Avenue,  New York,  NY 10111.  The  Advisor  was  founded  in 1968 and is
controlled  by Mr.  George  M.  Yeager,  President.  While the  Advisor  has not
previously  advised a  registered  investment  company,  it provides  investment
advisory services to individual and institutional  investors with assets of over
$250 million. Mr. Yeager is responsible for management of the Fund's portfolio.


Under the Investment  Advisory Agreement with the Fund, the Advisor provides the
Fund with advice on buying and selling  securities,  manages the  investments of
the Fund,  furnishes  the Fund with  office  space  and  certain  administrative
services,   and  provides  most  of  the  personnel   needed  by  the  Fund.  As
compensation, the Fund pays the Advisor a monthly management fee (accrued daily)
based  upon  the  average  daily  net  assets  of the  Fund at the rate of 1.00%
annually.  During the Fund's  initial  fiscal  period ended June 30,  1996,  the
Advisor  reimbursed fees and expenses totaling  $43,575,  including its advisory
fee of $40,684.



The Investment  Advisory Agreement continues in effect from year to year so long
as such  continuation is approved at least annually by (1) the Board of Trustees
of the Trust or the vote of a majority  of the  outstanding  shares of the Fund,
and (2) a majority of the Trustees who are not  interested  persons of any party
to the  Agreement,  in each case cast in  person  at a  meeting  called  for the
purpose of voting on such approval. The Agreement may be terminated at any time,
without  penalty,  by either the Fund or the Advisor  upon sixty  days'  written
notice and is automatically terminated in the event of its assignment as defined
in the 1940 Act.


                                                   ADMINISTRATOR

The Fund has entered into an  Administrative  Agreement with Investment  Company
Administration  Corp.  ("ICAC"),  a corporation  owned in part and controlled by
Messrs. Banhazl,  Paggioli and Wadsworth.  The Agreement provides that ICAC will
prepare and  coordinate  reports and other  materials  supplied to the Trustees;
prepare and/or  supervise the preparation and filing of all securities  filings,
periodic financial reports, prospectuses,  statements of additional information,
marketing  materials,  tax  returns,  shareholder  reports and other  regulatory
reports or filings required of the Fund;  prepare all required filings necessary
to maintain the Fund's  qualification  and/or registration to sell shares in all
states where the Fund currently does, or intends to do business;  coordinate the
preparation,  printing  and  mailing of all  materials  (e.g.,  Annual  Reports)
required to be sent to  shareholders;  coordinate the preparation and payment of
Fund  related  expenses;  monitor  and  oversee  the  activities  of the  Fund's
servicing agents (i.e.,  transfer agent,  custodian,  fund  accountants,  etc.);
review and adjust as necessary  the Fund's daily expense  accruals;  and perform
such  additional  services as may be agreed  upon by the Fund and ICAC.  For its
services, ICAC receives a monthly fee at the following annual rate:

                                                       B-10

<PAGE>



Average net assets                           Fee or fee rate

Under $15 million                           $30,000
$15 to $50 million                          0.20% of average net assets
$50 to $100 million                         0.15% of average net assets
$100 million to $150 million                0.10% of average net assets
Over $150 million                           0.05% of average net assets



During the Fund's initial  fiscal period ended June 30, 1996, the  Administrator
received fees of $20,027.



                                                    DISTRIBUTOR

First Fund  Distributors,  (the  "Distributor")  a corporation  owned by Messrs.
Banhazl,  Paggioli and Wadsworth,  acts as the Fund's  distributor and principal
underwriter  in  a  continuous  public  offering  of  the  Fund's  shares.   The
Distribution  Agreement between the Fund and the Distributor continues in effect
from year to year if approved at least  annually by (i) the Board of Trustees or
the vote of a majority of the outstanding  shares of the Fund (as defined in the
1940 Act) and (ii) a majority of the Trustees who are not interested  persons of
any such party,  in each case cast in person at a meeting called for the purpose
of voting on such approval. The Distribution Agreement may be terminated without
penalty  by  the  parties  thereto  upon  sixty  days'  written  notice,  and is
automatically  terminated in the event of its  assignment as defined in the 1940
Act.


                                        EXECUTION OF PORTFOLIO TRANSACTIONS

Pursuant to the Investment  Management  Agreement,  the Advisor determines which
securities are to be purchased and sold by the Fund and which broker-dealers are
eligible to execute the Fund's  portfolio  transactions.  Purchases and sales of
securities in the  over-the-counter  market will generally be executed  directly
with a "market-maker"  unless, in the opinion of the Advisor, a better price and
execution can otherwise be obtained by using a broker for the transaction.

Purchases of portfolio  securities  for the Fund also may be made  directly from
issuers or from  underwriters.  Where possible,  purchase and sale  transactions
will be effected through dealers (including banks) which specialize in the types
of  securities  which the Fund will be holding,  unless  better  executions  are
available elsewhere. Dealers and underwriters usually act as principal for their
own account.  Purchases from  underwriters will include a concession paid by the
issuer to the  underwriter  and  purchases  from dealers will include the spread
between the bid and the asked price.  If the execution and price offered by more
than one dealer or underwriter are  comparable,  the order may be allocated to a
dealer or underwriter that has provided  research or other services as discussed
below.

                                                       B-11

<PAGE>



In placing  portfolio  transactions,  the Advisor  will use its best  efforts to
choose a broker-dealer capable of providing the services necessary to obtain the
most  favorable  price and  execution  available.  The full range and quality of
services  available will be considered in making these  determinations,  such as
the size of the order, the difficulty of execution,  the operational  facilities
of the firm involved, the firm's risk in positioning a block of securities,  and
other factors.  In those instances  where it is reasonably  determined that more
than one  broker-dealer  can  offer  the  services  needed  to  obtain  the most
favorable  price and execution  available,  consideration  may be given to those
broker-dealers  which furnish or supply research and statistical  information to
the  Advisor  that  it may  lawfully  and  appropriately  use in its  investment
advisory capacities,  as well as provide other services in addition to execution
services.  The Advisor considers such  information,  which is in addition to and
not in lieu of the services  required to be performed by it under its  Agreement
with the Fund, to be useful in varying  degrees,  but of  indeterminable  value.
Portfolio  transactions may be placed with broker-dealers who sell shares of the
Fund subject to rules adopted by the National Association of Securities Dealers,
Inc.

While it is the Fund's general policy to seek first to obtain the most favorable
price and execution available, in selecting a broker-dealer to execute portfolio
transactions  for  the  Fund,   weight  is  also  given  to  the  ability  of  a
broker-dealer to furnish  brokerage and research  services to the Fund or to the
Advisor,  even if the specific  services are not directly useful to the Fund and
may be  useful  to  the  Advisor  in  advising  other  clients.  In  negotiating
commissions  with a broker or evaluating the spread to be paid to a dealer,  the
Fund may therefore  pay a higher  commission or spread than would be the case if
no weight were given to the furnishing of these supplemental services,  provided
that the amount of such  commission or spread has been  determined in good faith
by the Advisor to be reasonable in relation to the value of the brokerage and/or
research services provided by such broker-dealer. The standard of reasonableness
is to be  measured in light of the  Advisor's  overall  responsibilities  to the
Fund.

Investment  decisions  for the Fund are made  independently  from those of other
client  accounts or mutual  funds  ("Funds")  managed or advised by the Advisor.
Nevertheless,  it is  possible  that  at  times  identical  securities  will  be
acceptable  for both the Fund and one or more of such client  accounts or Funds.
In such event,  the position of the Fund and such client  account(s) or Funds in
the same issuer may vary and the length of time that each may choose to hold its
investment in the same issuer may likewise vary.  However,  to the extent any of
these client accounts or Funds seeks to acquire the same security as the Fund at
the same  time,  the Fund may not be able to  acquire as large a portion of such
security as it desires,  or it may have to pay a higher  price or obtain a lower
yield for such security. Similarly, the Fund may not be able to obtain as high a
price for, or as large an execution of, an order to sell any particular security
at the same time. If one or more of such client accounts or Funds simultaneously
purchases or sells the same  security  that the Fund is  purchasing  or selling,
each day's  transactions in such security will be allocated between the Fund and
all such client  accounts or Funds in a manner deemed  equitable by the Advisor,
taking into  account the  respective  sizes of the accounts and the amount being
purchased or sold. It is recognized  that in some cases this system could have a
detrimental  effect on the price or value of the security insofar as the Fund is
concerned.  In other cases, however, it is believed that the ability of the Fund
to participate in volume transactions may

                                                       B-12

<PAGE>



produce better executions for the Fund.


The Fund does not effect securities  transactions  through brokers in accordance
with any  formula,  nor does it  effect  securities  transactions  through  such
brokers  solely for selling  shares of the Fund,  although the Fund may consider
the sale of shares  as a factor  in  allocating  brokerage.  However,  as stated
above, broker-dealers who execute brokerage transactions may effect purchases of
shares of the Fund for their customers. The Fund does not use the Distributor to
execute  its  portfolio  transactions.  Brokerage  commissions  paid by the Fund
during its initial fiscal period ended June 30, 1996 totaled $7,275.



                                  ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The Trust reserves the right in its sole discretion (i) to suspend the continued
offering of the Fund's  shares,  (ii) to reject  purchase  orders in whole or in
part when in the judgment of the Advisor or the Distributor such rejection is in
the best  interest  of the Fund,  and (iii) to reduce or waive the  minimum  for
initial  and  subsequent  investments  for certain  fiduciary  accounts or under
circumstances  where  certain  economies  can be achieved in sales of the Fund's
shares.

Payments to shareholders for shares of the Fund redeemed  directly from the Fund
will be made as promptly as possible but no later than seven days after  receipt
by the Fund's  Transfer  Agent of the written  request in proper form,  with the
appropriate documentation as stated in the Prospectus,  except that the Fund may
suspend  the right of  redemption  or  postpone  the date of payment  during any
period  when (a)  trading  on the New  York  Stock  Exchange  is  restricted  as
determined  by the SEC or such  Exchange is closed for other than  weekends  and
holidays;  (b) an emergency  exists as determined by the SEC making  disposal of
portfolio  securities  or  valuation  of net  assets of the Fund not  reasonably
practicable;  or (c)  for  such  other  period  as the SEC  may  permit  for the
protection  of the  Fund's  shareholders.  At  various  times,  the  Fund may be
requested  to redeem  shares for which it has not yet received  confirmation  of
good payment;  in this  circumstance,  the Fund may delay the  redemption  until
payment for the purchase of such shares has been  collected and confirmed to the
Fund, which may take up to fifteen days after purchase.

The Fund intends to pay cash (U.S. dollars) for all shares redeemed,  but, under
abnormal conditions which make payment in cash unwise, the Fund may make payment
partly in securities with a current market value equal to the redemption  price.
Although the Fund does not anticipate that it will make any part of a redemption
payment  in  securities,  if such  payment  were  made,  an  investor  may incur
brokerage  costs in converting  such securities to cash. The Fund has elected to
be governed by the provisions of Rule 18f-1 under the 1940 Act, which contains a
formula for  determining  the minimum  redemption  amounts  that must be paid in
cash.

The value of shares on  redemption  or  repurchase  may be more or less than the
investor's  cost,  depending  upon  the  market  value of the  Fund's  portfolio
securities at the time of redemption or repurchase.

                                                       B-13

<PAGE>




                                           DETERMINATION OF SHARE PRICE

As noted in the Prospectus,  the net asset value and offering price of shares of
the Fund will be determined  once daily as of 4:00 p.m.,  New York City time, on
each day the New York Stock  Exchange is open for trading.  It is expected  that
the  Exchange  will be closed on  Saturdays  and  Sundays and on New Year's Day,
Presidents'  Day,  Good  Friday,  Memorial  Day,  Independence  Day,  Labor Day,
Thanksgiving  Day and  Christmas.  The Fund does not expect to determine the net
asset  value of its shares on any day when the  Exchange is not open for trading
even if there is sufficient trading in its portfolio  securities on such days to
materially affect the net asset value per share.

In valuing the Fund's assets for calculating net asset value, readily marketable
portfolio  securities listed on a national  securities exchange or on NASDAQ are
valued at the last sale  price on the  business  day as of which  such  value is
being  determined.  If there has been no sale on such  exchange  or on NASDAQ on
such day, the  security is valued at the closing bid price on such day.  Readily
marketable  securities  traded  only in the  over-the-counter  market and not on
NASDAQ are valued at the current or last bid price.  If no bid is quoted on such
day, the security is valued by such method as the Board of Trustees of the Trust
shall  determine in good faith to reflect the security's  fair value.  All other
assets of each Fund are valued in such  manner as the Board of  Trustees in good
faith deems appropriate to reflect their fair value.

The net  asset  value  per  share  of the Fund is  calculated  as  follows:  all
liabilities  incurred or accrued are deducted from the valuation of total assets
which includes accrued but  undistributed  income;  the resulting net assets are
divided  by the  number  of shares  of the Fund  outstanding  at the time of the
valuation  and the result  (adjusted to the nearest cent) is the net asset value
per share.


                                              PERFORMANCE INFORMATION

From time to time,  the Fund may state its total  return in  advertisements  and
investor  communications.  Total return may be stated for any relevant period as
specified in the advertisement or communication.  Any statements of total return
will be accompanied by information on the Fund's average annual  compounded rate
of return over the most recent year and the period from the Fund's  inception of
operations through the most recent calendar quarter. The Fund may also advertise
aggregate and average total return information over different periods of time.

The Fund's average annual  compounded  rate of return is determined by reference
to a hypothetical  $1,000  investment  that includes  capital  appreciation  and
depreciation for the stated period, according to the following formula:





                                                       B-14

<PAGE>



                                                  P(1+T)n  =  ERV

     Where: P = a hypothetical  initial  purchase order of $1,000 from which the
maximum sales load is deducted

            T   =  average annual total return

            n   =  number of years


     ERV = ending  redeemable value of the  hypothetical  $1,000 purchase at the
end of the period


Aggregate  total  return is  calculated  in a similar  manner,  except  that the
results are not  annualized.  Each  calculation  assumes that all  dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period and gives effect to the maximum  applicable sales charge.  The Fund's
total return for the one year period and from  inception  on September  29, 1995
through September 30, 1996 were 30.04% and 29.85%, respectively.

The  Fund's  total  return  may be  compared  to that  of  certain  broad  based
statistical market averages, such as the Dow Jones Industrial Average,  Standard
& Poor's 500 Composite  Stock Index and indices  published by Lipper  Analytical
Services,  Inc.  From  time to  time,  evaluations  of a Fund's  performance  by
independent  sources  may  also  be used in  advertisements  and in  information
furnished to present or prospective investors in the Funds.

Investors  should note that the  investment  results of the Fund will  fluctuate
over time, and any presentation of the Fund's total return for any period should
not be considered as a representation  of what an investment may earn or what an
investor's total return may be in any future period.


                                                GENERAL INFORMATION

Investors in the Fund will be informed of the Fund's progress  through  periodic
reports.  Financial  statements certified by independent public accountants will
be submitted to shareholders at least annually.

Star Bank,  425 Walnut  Street,  Cincinnati,  OH 45202 acts as  Custodian of the
securities and other assets of the Fund.  The Custodian does not  participate in
decisions relating to the purchase and sale of securities by the Fund.  American
Data Services,  24 West Carver St., Huntington,  NY 11743 is the Fund's Transfer
and Dividend Disbursing Agent.

Ernst & Young,  515 S. Flower St.,  Los  Angeles,  CA 90071 are the  independent
auditors for the Fund.

                                                       B-15

<PAGE>


Heller,  Ehrman, White & McAuliffe,  333 Bush Street, San Francisco,  California
94104, are legal counsel to the Fund.


On October 7, 1996, the following  persons owned of record and beneficially more
than 5% of the Fund's outstanding voting securities:

     BHC Securities Inc. Trade Account, Philadelphia, PA 19103; 59.40% record.

         Lazard Freres & Co. LLC, New York, NY 10271; 19.66% record.

         Charlotte D. Nau, Bronxville, NY 10708; 5.75%, record and beneficially



The  shareholders  of  a  Massachusetts  business  trust  could,  under  certain
circumstances,  be held  personally  liable  as  partners  for its  obligations.
However,  the Trust's  Agreement and  Declaration  of Trust  contains an express
disclaimer of shareholder  liability for acts or  obligations of the Trust.  The
Agreement  and  Declaration  of Trust  also  provides  for  indemnification  and
reimbursement  of expenses  out of the Fund's  assets for any  shareholder  held
personally  liable  for  obligations  of the Fund or Trust.  The  Agreement  and
Declaration  of Trust  provides that the Trust shall,  upon request,  assume the
defense of any claim made against any  shareholder  for any act or obligation of
the Fund or Trust and satisfy any judgment thereon.  All such rights are limited
to the  assets of the Fund.  The  Agreement  and  Declaration  of Trust  further
provides  that the  Trust  may  maintain  appropriate  insurance  (for  example,
fidelity  bonding and errors and omissions  insurance) for the protection of the
Trust,  its  shareholders,  trustees,  officers,  employees  and agents to cover
possible tort and other liabilities. Furthermore, the activities of the Trust as
an investment company would not likely give rise to liabilities in excess of the
Trust's total assets.  Thus, the risk of a shareholder  incurring financial loss
on account of shareholder  liability is limited to  circumstances  in which both
inadequate  insurance  exists  and  the  Fund  itself  is  unable  to  meet  its
obligations.

The Trust is registered with the SEC as a management  investment company. Such a
registration  does not involve  supervision of the management or policies of the
Fund. The  Prospectus of the Fund and this  Statement of Additional  Information
omit certain of the information  contained in the  Registration  Statement filed
with the SEC.  Copies  of such  information  may be  obtained  from the SEC upon
payment of the prescribed fee.


                                               FINANCIAL STATEMENTS

The annual report to shareholders  for the Fund for the fiscal period ended June
30, 1996 is a separate  document  supplied  with this  Statement  of  Additional
Information  and the  financial  statements,  accompanying  notes and  report of
independent  accountants appearing therein are incorporated by reference in this
Statement of Additional Information.


                                                       B-16



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