PROFESSIONALLY MANAGED PORTFOLIOS, 497, 1997-09-02

PROFESSIONALLY MANAGED PORTFOLIOS
497, 1997-09-02

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STATEMENT OF ADDITIONAL INFORMATION

August 31, 1997

PZENA FOCUSED VALUE FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
830 Third Ave., 14th floor
New York, NY 10022
(212) 355-1600

This Statement of Additional Information is not a prospectus and it
should be read in conjunction with the prospectus of the Pzena Focused Value
Fund (the "Fund"). A copy of the prospectus dated August 31, 1997 is available
by calling the number listed above or (212) 633-9700.

<TABLE>
TABLE OF CONTENTS
<CAPTION>

<S> <C>
The Trust.......................................................................................................B-2
Investment Objective and Policies...............................................................................B-2
Investment Restrictions.........................................................................................B-7
Distributions and Tax Information...............................................................................B-8
Trustees and Executive Officers................................................................................B-11
The Fund's Administrator.......................................................................................B-14
The Fund's Distributor.........................................................................................B-15
Execution of Portfolio Transactions............................................................................B-15
Additional Purchase and Redemption Information.................................................................B-17
Determination of Share Price...................................................................................B-18
Performance Information........................................................................................B-18
General Information............................................................................................B-19
Financial Statements...........................................................................................B-20
Appendix.......................................................................................................B-21
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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 Fund.

INVESTMENT OBJECTIVE AND POLICIES

The Fund is a mutual fund with the investment objective of long-term
capital growth. 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 10% 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

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some or all of the principal and income involved in the transaction. As with any
unsecured debt instrument purchased for the Fund, the Investment Advisor 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 segregate liquid assets with its Custodian equal in value to
commitments for when-issued securities. Such segregated assets either will
mature or, if necessary, be sold on or before the settlement date.

Foreign Securities

The Fund may invest up to 20% 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

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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 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 20% 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

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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 debt
securities, which may include those 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 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

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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 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 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.

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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.

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 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, forward or repurchase transactions.

7. (a) With respect to 50% of the Fund's assets, purchase the
securities of any issuer if more than 5% of the total assets of the Fund would
be invested in the securities of the issuer, other than obligations of the U.S.
Government, its agencies or instrumentalities.

(b) With respect to the remaining 50% of the Fund's assets,
purchase the securities of any issuer if more than 25% of the total assets of
the Fund would be invested in the securities of the issuer.

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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.

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).

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 restrictions regarding borrowing and investment in illiquid
securities, or as otherwise noted.

DISTRIBUTIONS AND TAX INFORMATION

Distributions

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

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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 continue 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"), provided it complies with all
applicable requirements regarding the source of its income, diversification of
its assets and timing of 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 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.

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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.

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 ("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.

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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 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.

TRUSTEES AND EXECUTIVE OFFICERS

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,* 47 President and Trustee

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

Dorothy A. Berry, 54 Trustee

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).

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Wallace L. Cook, 57 Trustee

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 59 Trustee

2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. Formerly President and Founder, National
Investor Data Services, Inc. (investment related computer software).

Rowley W.P. Redington, 53 Trustee

1191 Valley Road, Clifton, New Jersey 07103. President; Intertech (consumer
electronics and computer service and marketing); formerly Vice President, PRS of
New Jersey, Inc. (management consulting), and Chief Executive Officer, Rowley
Associates (consultants).

Eric M. Banhazl*, 40 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.

Robin Berger*, 40 Secretary

479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth Group
since June, 1993; formerly Regulatory and Compliance Coordinator, Equitable
Capital Management, Inc. (1991-93).

Robert H. Wadsworth*, 57 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of The
Wadsworth Group 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 $1000 for any special meeting attended. The
Chairman of the Board of Trustees receives an additional annual retainer of
$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.

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Name of Trustee Total Annual Compensation

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

During the fiscal year ended April 30, 1997, trustees' fees and
expenses in the amount of $2,548 were allocated to the Fund. 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 the Fund.

Investment Advisor

The Board of Trustees of the Trust establishes the Fund's policies and
supervises and reviews the management of the Fund. Pzena Investment Management
LLC acts as Advisor to the Fund. The Advisor was founded in 1995 and is
controlled by Mr. Richard Pzena, who is principally responsible for the Fund's
portfolio. Mr. Pzena was formerly Director of Research for U.S. equities at an
investment advisory firm with several billion in investment advisory and
investment company assets under management.

The Adviser has undertaken to limit the Fund's operating expenses to an
annual level of 1.75% of the Fund's average net assets. For the fiscal period
ended April 30, 1997, the Advisor waived its fees of $21,340 and reimbursed the
Fund for other operating expenses in the amount of $48,237.

The Investment Advisory Agreement 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.

Pzena SAI B-13

<PAGE>

THE FUND'S ADMINISTRATOR

The Fund has an Administration Agreement with Investment Company
Administration Corporation (the "Administrator"), a corporation owned and
controlled by Messrs. Banhazl, Paggioli and Wadsworth with offices at 4455 E.
Camelback Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreement
provides that the Administrator 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 the Administrator. For its
services, ICAC receives a 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

ICAC received fees of $26,499 from the Fund for the fiscal period ended April
30, 1997.

THE FUND'S DISTRIBUTOR

First Fund Distributors, Inc., (the "Distributor"), a corporation owned
by Mr. Banhazl, Mr. Paggioli and Mr. 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
for periods not exceeding one 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

Pzena SAI B-14

<PAGE>

Pursuant to the Investment Advisory Agreement, the Adviser determines
which securities are to be purchased and sold by the Fund and which
broker-dealers will be used 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 Adviser, 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 broker, dealer or underwriter are comparable, the
order may be allocated to a broker, dealer or underwriter that has provided
research or other services as discussed below.

In placing portfolio transactions, the Adviser 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 most favorable price
and execution available, consideration may be given to those broker-dealers
which furnish or supply research and statistical information to the Adviser that
it may lawfully and appropriately use in its investment advisory capacities, as
well as provide other services in addition to execution services. The Adviser
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
Adviser, even if the specific services are not directly useful to the Fund and
may be useful to the Adviser 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 Adviser 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 Adviser's overall responsibilities to the
Fund.

Pzena SAI B-15

<PAGE>

Investment decisions for the Fund are made independently from those of
other client accounts or mutual funds managed or advised by the Adviser.
Nevertheless, it is possible that at times identical securities will be
acceptable for both the Fund and one or more of such client accounts. In such
event, the position of the Fund and such client account(s) 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 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 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 in a manner deemed equitable by the Adviser, 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 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. For the fiscal period ended April 30, 1997 the aggregate brokerage
commissions paid by the Fund were $9,895.

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 Manager 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

Pzena SAI B-16

<PAGE>

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.

Check-A-Matic

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 the close of public
trading on the New York Stock Exchange (currently 4:00 p.m. Eastern time) on
each day that the Exchange is open for trading. It is expected that the Exchange
will be closed on Saturdays and Sundays and on New Year's Day, Martin Luther
King Jr. 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.

Pzena SAI B-17

<PAGE>

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 four years and the
period from the Fund's inception of operations. The Fund may also advertise
aggregate and average total return information over different periods of time.

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.

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

Pzena SAI B-18

<PAGE>

The Fund's total return since its inception on June 24, 1996 through
the fiscal period ending April 30, 1997 was 15.88%.

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 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, Inc., P.O. Box 5536, Hauppauge, NY 11788-0132 is
the Fund's Transfer and Dividend Disbursing Agent.

Tait, Weller & Baker, 2 Penn Center Plaza, Philadelphia, PA 19102 are
the independent auditors for the Fund.

Lane, Altman & Owens, 101 Federal St., Boston, MA 02110 are legal
counsel to the Advisor.

Paul, Hastings, Janofsky & Walker, 345 California Street, 29th Floor,
San Francisco, California 94104, are legal counsel to the Fund.

The following persons are beneficial owners of more than 5% of the
Fund's outstanding voting securities as of August 14, 1997.

Richard M. Cion, Westport, CT 06880; 6.40%

M & M Value Partners, Jericho, NY 11753; 5.44%

Olga E. Manigan, Rye, NY 10580; 5.76%

Raymond James & Associates, Inc., St. Petersburg, FL 33733; 7.59%

Pzena SAI B-19

<PAGE>

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 April 30, 1997 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.

Pzena SAI B-20

<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.

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

Pzena SAI B-21

<PAGE>

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

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, CCC, CC: Bonds rated BB, B, CCC and CC 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. BB indicates
the lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.

The ratings from AA to CCC 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.

Pzena SAI B-22

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

August 31, 1997

TITAN FINANCIAL SERVICES FUND
a series of
PROFESSIONALLY MANAGED PORTFOLIOS
9672 Pennsylvania Avenue
Upper Marlboro, Maryland 20772

Titan Financial Services Fund (the "Fund"), a diversified,
professionally managed portfolio, is a separate series of Professionally Managed
Portfolios, an open-end management investment company. This Statement of
Additional Information ("SAI") is not a prospectus and should be read only in
conjunction with the Funds' current Prospectus, dated August 31, 1997. A copy of
the Prospectus may be obtained by calling toll-free at 1-800-385-7003. This SAI
is dated August 31, 1997.

<TABLE>
TABLE OF CONTENTS
<CAPTION>

<S> <C>
Investment Policies and Restrictions............................................................................B-2
Trustees and Executive Officers................................................................................B-16
Investment Management, Administration and Distribution
arrangements..........................................................................................B-18
The Fund's Administrator.......................................................................................B-19
Portfolio Transactions.........................................................................................B-21
Valuation of Shares............................................................................................B-22
Performance Information........................................................................................B-23
Taxes..........................................................................................................B-25
General Information............................................................................................B-27
Financial Statements...........................................................................................B-28
Appendix.......................................................................................................B-29
</TABLE>

Titan SAI B-1

<PAGE>

INVESTMENT POLICIES AND RESTRICTIONS

The following supplements the information contained in the Prospectus
concerning the Funds' investment policies and limitations.

Yield Factors and Ratings. Moody's Investors Service, Inc. ("Moody's"),
Standard & Poor's ("S&P") and other nationally recognized statistical rating
organization ("NRSROs") are private services that provide rating of the credit
quality of debt obligations. A description of the ratings assigned to corporate
debt obligations by Moody's and S&P is included in the Appendix to this SAI. The
Fund may use these ratings in determining whether to purchase, sell or hold a
security. It should be emphasized, however, that ratings are general and are not
absolute standards of quality. Consequently, securities with the same maturity,
interest rate and rating may have different market prices.

Special Considerations Concerning the Banking Industry and the Savings
and Loan Industry.

-- The Banking Industry. In the United States, the deposits of
commercial banks are insured by the Federal Deposit Insurance Corporation (the
"FDIC"). Many of these banks are subsidiaries of bank holding companies.
Commercial banks accept deposits, make commercial and other loans, and engage in
a variety of other investments. The Fund normally intends to invest in the
securities of those bank holding companies which receive a substantial portion
of their income from one or more commercial bank subsidiaries, as well as in the
securities of banking institutions.

Despite some measure of deregulation, commercial banks and their
holding companies are also subject to extensive government regulation that
significantly affects their activities, earnings, and competitive environment.
The Office of the Comptroller of the Currency is the primary federal regulator
of national banks. The FDIC is the primary federal regulatory of most
state-chartered commercial banks with FDIC-insured deposits. State-chartered
commercial banks are also subject to primary supervision and regulation by state
banking authorities. The Board of Governors of the Federal Reserve System
("FRB") is the primary federal regulator of bank holding companies and also has
regulatory authority over state-chartered banks which are members of the Federal
Reserve System. Federal regulators receive comprehensive reports on and conduct
examinations of a number of aspects of a federally regulated commercial bank's
operations and financial condition, including capital adequacy, liquidity,
earnings, dividends, investments, management practice and loan loss reserves.
Federal regulators also require that commercial banks maintain minimum levels of
capital and liquidity, require the establishment of loan loss reserves, and may
limit the bank's ability to pay dividends in certain circumstances.

Bank holding companies must file regular reports with the FRB and are
subject to examinations of certain aspects of their own and their subsidiaries'
operations. The activities of a bank holding company are restricted by federal
regulations which, among other things, generally

Titan SAI B-2

<PAGE>

prohibit a bank holding company from controlling banks in more than one state,
except where specifically permitted by state law, and restrict the types of
non-banking activities in which the holding company directly or indirectly may
engage.

Certain economic factors are of particular importance to commercial
banks. The availability and cost of funds to commercial banks and other finance
companies is important to their profitability. This factor has increased in
importance with the deregulation of interest rates. The quality of a bank's
portfolio of loans can be adversely affected by depressed market conditions in
certain industries. Recent examples of such industries that have affected the
loan portfolios of some banks include commercial real estate, international
sovereign credits, energy and agriculture. Smaller banks can be particularly
affected by such conditions if the economic base of the area in which they are
located is closely tied to a depressed industry, such as agriculture.

-- The Savings and Loan Industry. The principal business of
savings and loan institutions traditionally has consisted of attracting deposits
from the general public and originating or purchasing mortgage loans secured by
liens on residential real estate. In addition to long-term, fixed-rate
residential mortgage loans, savings institutions recently have begun to extend a
greater number of loans with shorter terms and/or adjustable interest rates,
including consumer and commercial loans, and construction loans on both
residential and commercial real estate developments. These types of loans may
involve greater risks of default than residential mortgage loans.

Historically, many savings institutions were organized primarily as
mutual companies and as such were owned by their depositors and did not issue
common stock. However, in recent years, the need for equity capital and
deregulation of the industry have encouraged conversion to stock ownership.
Securities of newly converted savings institutions may not be readily
marketable, due to the lack of a public trading market or certain restrictions
on transfer. Some savings institutions are controlled by holding companies. The
Fund normally intends to invest in the securities of those savings institution
holding companies, the savings institution subsidiaries of which comprise a
significant percentage of their total assets and provide a significant
percentage of their income.

Savings institutions and their holding companies are subject to
extensive government regulation. Savings institutions with FDIC-insured deposits
are subject to periodic FDIC examination and to FDIC regulation and supervision
of their operations. A state-chartered savings institution is also regulated by
the laws and bank regulatory authority of the state in which it has its
principal office. Savings institutions with federally insured deposits are
subject to certain minimum net worth or capital requirements and to other
requirements limiting the types of investments they may make. In addition,
holding companies of savings institutions which are federally chartered may be
subject in certain cases to restrictions on the activities in which they may
engage.

Titan SAI B-3

<PAGE>

The results of operations of savings institutions may be materially
affected by general economic conditions, the monetary and fiscal policies of the
federal government and the regulatory policies of governmental authorities.
Although in recent years savings institutions have derived an increased portion
of their income from receipt of fees, the results of operations of savings
institutions continue to depend to a large extent on the level of their "net
interest income" (the difference between the interest earned on loans and
investments and the interest paid on deposits and borrowings). During the period
between the late 1970s and mid-1982, general market interest rates rose to, and
remained at, historically high levels as a result of inflationary pressures and
governmental policies. During the same period, savings institutions generally
experienced a shift in the composition of their deposits form relatively
long-term, low-rate certificate accounts or low-rate passbook accounts to
certificates of deposit and accounts bearing rates determined by market
conditions, often with short maturities. Competition from alternative
investments such as money market mutual funds affected savings flows, causing
reduced inflows to (or actual net outflows from) savings institutions, thus
limiting their ability to make new loans or investments. As a result, the
average cost of funds of most savings institutions increased faster than the
average yield earned on their assets, which consisted principally of long-term
real estate loans at fixed rates of interest. These factors had a severe adverse
impact on the earnings of most of the savings industry, with the large majority
of savings institutions reporting operating losses for 1991 and 1992. Although
interest rates have since declined, there can be no assurance that interest
rates will remain at current levels.

Beginning in the early 1980s a substantial number of savings
institutions significantly expanded the amount of their investments in
construction lending, real estate development projects, and secured and
unsecured commercial and consumer loans. These investments generally entail more
risk than mortgage loans secured by residential real estate and may result in
losses for certain institutions. Many institutions have also initiated asset and
liability management programs designed to minimize vulnerability to interest
rate changes. These programs have included such activities as increasing use of
adjustable rate mortgages, origination of a higher proportion of shorter-term
commercial and consumer loans, and the lengthening of maturities for deposits
and borrowings. By including such investments, the assets of savings
institutions have begun to match the maturities of their liabilities more
closely. In addition, some savings institutions are conducting hedging
transactions to reduce their exposure to interest rate risk. The Fund's
investments in savings institutions will be affected by changes in the levels of
interest rates, national and local cycles in real estate and other economic
factors.

Federal and state regulations do not insure the solvency or
profitability of savings and banking institutions or their holding companies,
nor do they insure against risk any investments in securities issued by such
institutions. The FDIC insure the deposits of member institutions but in no way
protect or insure investments in the securities of these institutions.

--Legislative Concerns. Legislation has been enacted which has altered
the regulatory structure and capital requirements of the banking and savings and
loan institution industries. This legislation was enacted as a response to
financial problems experienced by a

Titan SAI B-4

<PAGE>

number of banks and savings and loan institutions relating to inadequate
capital, adverse economic conditions and alleged fraud and mismanagement. This
legislation also strengthened the civil sanctions and criminal penalties for
defrauding or otherwise damaging depository institutions and their depositors
and curtailed the authority of savings and loan institutions to engage in real
estate investment and certain other activities. In addition, the legislation has
given federal regulators substantial authority to use all of the assets of a
bank or savings and loan institution holding company to satisfy federal claims
against an insolvent savings and loan institution or bank owned by the holding
company and mandated regulatory action against institutions with inadequate
capital levels. Legislative and regulatory actions have also increased the
capital requirements applicable to commercial banks and savings and loan
institutions. These changes have extended the risk to holding company
shareholders in the event of the insolvency of any depository institution owned
by the holding company.

From time to time legislative proposals have been introduced that if
enacted could expose bank holding companies to well-established competitors,
such as securities firms and insurance companies, as well as companies engaged
in other areas of business. Increased competition may also result from the
broadening of interstate banking powers, which has already lead to a reduction
in the number of publicly traded regional banks. Although the costs of insurance
premiums have been reduced, these rates can be increased in the future which may
adversely affect the Fund.

Special Considerations Concerning Other Financial Services Industries.
Many of the investment considerations discussed in connection which banks and
savings associations also apply to financial services companies. These companies
are all subject to extensive regulation, rapid business changes, value
fluctuations due to the concentration of loans in particular industries
significantly affected by economic conditions, volatile performance dependent
upon the availability and cost of capital and prevailing interest rates, and
significant competition. General economic conditions significantly affect these
companies. Credit and other losses resulting from the financial difficulty of
borrowers or other third parties have a potentially adverse effect on companies
in this industry. Investment banking, securities brokerage and investment
advisory companies are particularly subject to government regulation and rate
setting, potential anti-trust and tax law changes, and industry-wide pricing and
competition cycles. Property and casualty insurance companies may be affected by
weather and other catastrophes. Life and health insurance companies may be
affected by mortality and morbidity rates, including the effects of epidemics,
and by possible future changes in the health care industries. Individual
insurance companies may be exposed to reserve inadequacies, problems in
investment portfolios (for example, due to real estate or "junk" bond holdings)
and failures of reinsurance carriers. Proposed or potential anti-trust or tax
law changes also may affect adversely insurance companies' policy sales, tax
obligations and profitability. In addition, several significant companies have
recently reported liquidity or solvency difficulties and credit rating
downgrades.

The financial services industries currently are changing relatively
rapidly as existing distinctions between various financial services industries
become less clear. For example, recent

Titan SAI B-5

<PAGE>

business combinations have included different financial services industries such
as insurance, finance and securities brokerage under single ownership. In
addition, changes in governmental regulation have permitted companies
traditionally active in one area to expand into other areas. The effect of these
changes in particular segments of the financial services industries is difficult
to predict.

Repurchase Agreements. Repurchase agreements are transactions in which
the Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to the
coupon rate or maturity of the purchased securities. The Fund maintains custody
of the underlying securities prior to their repurchase; thus, the obligation of
the bank or dealer to pay the repurchase price on the date agreed to is, in
effect, secured by such securities. If the value of such securities is less than
the repurchase price, plus any agreed-upon additional amount, the other party to
the agreement must provide additional collateral so that at all times the
collateral is at least equal to the repurchase price, plus any agreed-upon
additional amount. The difference between the total amount to be received upon
repurchase of the securities and the price that was paid by the Fund upon their
acquisition is accrued as interest and included in the Fund's net investment
income.

Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible declines in the market value of
the underlying securities and delays and costs to the Fund if the other party to
a repurchase agreement becomes bankrupt. The Fund intends to enter into
repurchase agreements only with banks and dealers in transactions believed by
Titan Investment Advisers, LLC (the "Investment Adviser") to present minimal
credit risks in accordance with guidelines established by the Fund's Board of
Trustees. The Investment Adviser will review and monitor the creditworthiness of
those institutions under the Board's general supervision.

Lending of Fund Securities. Although it has no present intention of
doing so during the coming year, the Fund may lend up to 331/3% of the total
value of its portfolio securities to broker-dealers or institutional investors
that the Investment Adviser deems qualified, but only when the borrower
maintains with the Fund's custodian collateral either in cash or money market
instruments in an amount at least equal to the market value of the securities
loaned, plus accrued interest and dividends, determined on a daily basis and
adjusted accordingly. In determining whether to lend securities to a particular
broker-dealer or institutional investor, the Investment Adviser will consider,
and during the period of the loan will monitor, all relevant facts and
circumstances, including the creditworthiness of the borrower. The Fund will
retain authority to terminate any loans at any time. The Fund may pay reasonable
administrative and custodial fees in connection with a loan and may pay a
negotiated portion of the interest earned on the cash or money market
instruments held as collateral to the borrower or placing broker. The Fund will
receive reasonable interest on the loan or a flat fee from the borrower and
amounts equivalent to any dividends, interest or other distributions on the
securities loaned. The Fund will retain record ownership of loaned securities to
exercise beneficial rights, such as voting and subscription rights

Titan SAI B-6

<PAGE>

and rights to dividends, interest or other distributions, when retaining such
rights is considered to be in the Fund's interest.

Reverse Repurchase Agreements. Although it has no intention of doing so
during the coming year, the Fund may enter into reverse repurchase agreements
with banks up to an aggregate value of not more than 5% of its total assets.
Such agreements involve the sale of securities held by the Fund subject to the
Fund's agreement to repurchase the securities at an agreed-upon date and price
reflecting a market rate of interest. Such agreements are considered to be
borrowings and may be entered into only for temporary or emergency purposes.
While a reverse repurchase agreement is outstanding, the Fund will segregate
liquid assets, marked to market daily, in an amount at least equal to the Fund's
obligations under the reverse repurchase agreement.

Illiquid Securities. As indicated in the Prospectus, the Fund may
invest up to 15% of its net assets in illiquid securities. The term "illiquid
securities" for this purpose means securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities and includes, among other things,
purchased over-the-counter ("OTC") options, repurchase agreements maturing in
more than seven days and restricted securities other than those the Investment
Adviser has determined are liquid pursuant to guidelines established by the
Funds's board of Trustees. The assets used as cover for OTC options written by
the Fund will be considered illiquid unless the OTC options are sold to
qualified dealers who agree that the Fund may repurchase any OTC option it
writes at a maximum price to be calculated by a formula set forth in the option
agreement. The cover for an OTC option written subject to this procedure would
be considered illiquid only to the extent that the maximum repurchase price
under the formula exceeds the intrinsic value of the option. Illiquid restricted
securities may be sold only in privately negotiated transactions or in public
offerings with respect to which a registration statement is in effect under the
Securities Act of 1933 ("1933 Act"). Where registration is required, the Fund
may be obligated to pay all or part of the registration expenses and a
considerable period may elapse between the time of the decision to sell and the
time the Fund may be permitted to sell a security under an effective
registration statement. If, during such a period, adverse market conditions were
to develop, the Fund might obtain a less favorable price than prevailed when it
decided to sell.

Not all restricted securities are illiquid. In recent years a large
institutional market has developed for certain securities that are not
registered under the 1933 Act, including private placements, repurchase
agreements, commercial paper, foreign securities and corporate bonds and notes.
These instruments are often restricted securities because the securities are
sold in transactions not requiring registration. Institutional investors
generally will not seek to sell these instruments to the general public, but
instead will often depend either on an efficient institutional market in which
such unregistered securities can be readily resold or on an issuer's ability to
honor a demand for repayment. Therefore, the fact that there are contractual or
restrictions on resale to the general public or certain institutions is not
dispositive of the liquidity of such investments.

Titan SAI B-7

<PAGE>

Rule 144A under the 1933 Act established a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment to satisfy share redemption orders. Such markets might include
automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored
by the National Association of Securities Dealers, Inc. ("NASD"). An
insufficient number of qualified buyers interested in purchasing Rule
144A-eligible restricted securities held by the Fund, however, could affect
adversely the marketability of such portfolio and the Fund might be unable to
dispose of such securities promptly or at favorable prices.

The Board of Trustees has delegated the function of making day-to-day
determinations of liquidity to the Investment Adviser, pursuant to guidelines
approved by the Board. The Investment Adviser takes into account a number of
factors in reaching liquidity decisions, including (1) the frequency of trades
for the security, (2) the number of dealers that make quotes for the security,
(3) the number of dealers that have undertaken to make a market in the security,
(4) the number of other potential purchasers and (5) the nature of the security
and how trading is effected (e.g., the time needed to sell the security, how
offers are solicited and the mechanics of transfer). The Investment Adviser will
monitor the liquidity of restricted securities in the Fund's portfolio and
report periodically on such decisions to the Board of Trustees.

When-Issued and Delayed Delivery Securities. A security purchased on a
when-issued or delayed delivery basis is recorded as an asset on the commitment
date and is subject to changes in market value, generally based upon changes in
the level of interest rates. Thus, fluctuation in the value of the security from
the time of the commitment date will affect the Fund's net asset value. When the
Fund commits to purchase securities on a when-issued or delayed delivery basis,
its custodian will segregate liquid assets with a market value equal to the
amount of the commitment. If necessary, additional assets will be placed in the
account daily so that the value of the account will equal or exceed the amount
of the Fund's purchase commitment. The Fund purchases when-issued securities
only with the intention of taking delivery, but may sell the right to acquire
the security prior to delivery if the Investment Adviser deems it advantageous
to do so, which may result in capital gain or loss to the Fund.

Special Considerations Relating to Foreign Securities. To the extent
that the Fund invests in U.S. dollar-denominated securities of foreign issuers,
these securities may not be registered with the SEC, nor may the issuers thereof
be subject to its reporting requirements. Accordingly, there may be less
publicly available information concerning foreign issuers of securities held by
the Funds than is available concerning U.S. companies. Foreign companies are not
generally subject to uniform accounting, auditing and financial reporting
standards or other regulatory requirements comparable to those applicable to
U.S. companies.

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<PAGE>

The Funds may invest in foreign securities by purchasing American
Depository Receipts ("ADRs"), which are securities convertible into securities
of corporations based in foreign countries. These securities may not necessarily
be denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are denominated in U.S. dollars
and are designed for use in the U.S. securities markets. ADRs are receipts
typically issued by a U.S. bank or Fund company evidencing ownership of the
underlying securities. For purposes of the Fund's investment policies, ADRs are
deemed to have the same classification as the underlying securities they
represent. Thus, an ADR representing ownership of common stock will be treated
as common stock.

The Fund anticipates that their brokerage transactions involving
securities of companies headquartered in countries other than the United States
will be conducted primarily on the principal exchanges of such countries.
Foreign security trading practices, including those involving securities
settlement where assets of the Fund may be released prior to receipt of payment,
may expose the Fund to increased risk in the event of a failed trade or the
insolvency of a foreign broker-dealer. Transactions on foreign exchanges are
usually subject to fixed commissions that are generally higher than negotiated
commissions on U.S. transactions, although the Fund will endeavor to achieve the
best net results in effecting its portfolio transactions. There is generally
less government supervision and regulation of exchanges and brokers in foreign
countries than in the United States.

The values of foreign investments are affected by changes in currency
rates or exchange control regulations, restrictions or prohibitions on the
repatriation of foreign currencies, application of foreign tax laws, including
withholding taxes, changes in governmental administration or economic or
monetary policy (in the United States or abroad) or changed in dealings between
nations. Costs are also incurred in connection with conversions between various
currencies. In addition, foreign brokerage commissions are generally higher than
those charged in the United States, and foreign securities markets may be less
liquid, more volatile and subject to lessen governmental supervision than in the
United States. Investments in foreign countries could be affected by other
factors not present in the United States, including expropriation, confiscatory
taxation, lack of uniform accounting and auditing standards and potential
difficulties in enforcing contractual obligations, and could be subject to
extended clearance and settlement periods.

Investment income on certain foreign securities in which the Fund may
invest may be subject to foreign withholding or other taxes that could reduce
the return on these securities. Tax treaties between the United States and
foreign countries, however, may reduce or eliminate the amount of foreign taxes
to which the Fund would be subject.

Segregated Assets. When the Fund enters into certain transactions that
involve obligations to make future payments to third parties, including the
purchase of securities on a when-issued or delayed delivery basis or reverse
repurchase agreements, the Fund will maintain with its custodian liquid assets,
marked to market daily, in an amount at least equal to the Fund's

Titan SAI B-9

<PAGE>

obligation or commitment under such transactions. As described below under
"Special Risks of Hedging Strategies," segregation of liquid assets may also be
required in connection with certain transactions involving options.

Special Risks of Hedging Strategies. The use of options involves
special considerations and risks, as described below. Risks pertaining to
particular instruments are described in the sections that follow.

(1) Successful use of options depends upon the Investment Adviser's
ability to predict movements of the overall securities, currency and interest
rate markets, which require different skills than predicting changes in the
prices of individual securities.

(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the investments
being hedged. For example, if the value of a an instrument used in a short hedge
increased by less than the decline in value of the hedged investment, the hedge
would not be fully successful. Such a lack of correlation might occur due to
factors unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which instruments are traded.
The effectiveness of hedges using instruments on indices will depend on the
degree of correlation between price movements in the index and price movements
in the securities being hedged.

(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies can also
reduce opportunity for gain by offsetting the positive effect of favorable price
movements in the hedged investments. For example, if the Fund entered in a short
hedge because the Investment Adviser projected a decline in the price of a
security in the Fund's portfolio, and the price of that security increased
instead, the gain from that increase might be wholly or partially offset by a
decline in the price of the instrument. Moreover, if the price of the instrument
declined by more than the increase in the price of the security, the Fund could
suffer a loss. In either such case, the Fund would have been in a better
position had it not hedged at all.

(4) As described below, the Fund might be required to maintain assets
as "cover," maintain segregated assets or make margin payments when it takes
positions in an instruments involving obligations to third parties (i.e.,
instruments other than purchased options). If the Fund were unable to close out
its positions in such instruments, it might be required to continue to maintain
such assets or make such payments until the position expired or matured. These
requirements might impair the Fund's ability to sell a portfolio security or
make an investment at a time when it would otherwise be favorable to do so, or
require that the Fund sell a portfolio security at a disadvantageous time. The
Fund's ability to close out a position in an instrument prior to expiration or
maturity depends on the existence of a liquid secondary market or, in the
absence of such a market, the ability and willingness of a contra party to enter
into a transaction

Titan SAI B-10

<PAGE>

closing out the position. Therefore, there is no assurance that any hedging
position can be closed out at a time and price that is favorable to the Fund.

Writing Call Options. The Fund may write (sell) call options on
securities and indices. Call options generally will be written on securities
that, in the opinion of the Investment Adviser, are not expected to make any
major price moves in the near future but that, over the long term, are deemed to
be attractive investments for the Fund.

A call option gives the holder (buyer) the right to purchase a security
at a specified price (the exercise price) at any time until a certain date (the
expiration date). So long as the obligation of the writer of a call option
continues, he or she may be assigned an exercise notice, requiring him or her to
deliver the underlying security against payment of the exercise price. This
obligation terminates upon the expiration of the call option, or such earlier
time at which the writer effects a closing purchase transaction by purchasing an
option identical to that previously sold.

Portfolio securities on which call options may be written will be
purchase solely on the basis of investment considerations consistent with the
Fund's investment objective. When writing a call option, the Fund, in return for
the premium, gives up the opportunity for profit from a price increase in the
underlying security above the exercise price, and retains the risk of loss
should the price of the security decline. Unlike one who owns securities not
subject to an option, the Fund has no control over when it may be required to
sell the underlying securities, since most options may be exercised at any time
prior to the option's expiration. If a call option that the Fund has written
expires, the Fund will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security during the option period. If the call option is exercised, the Fund
will realize a gain or loss from the sale of underlying security, which will be
increased or offset by the premium received. The Fund does not consider a
security covered by a call option to be "pledged" as that term is used in the
Fund's policy that limits the pledging or mortgaging of its assets.

Writing call options can serve as a limited short hedge because
declines in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security
appreciates to a price higher than the exercise price of the call option, it can
be expected that the option will be exercised and the Fund will be obligated to
sell the security at less than its market value.

The premium that the Fund receives for writing a call option is deemed
to constitute the market value of an option. The premium the Fund will receive
from writing a call option will reflect, among other things, the current market
price of the underlying investment, the relationship of the exercise price to
such market price, the historical price volatility of the underlying investment,
and the length of the option period. In determining whether a particular call
option should be written, the Investment Adviser will consider the
reasonableness of the anticipated premium and the likelihood that a liquid
secondary market will exist for those options.

Titan SAI B-11

<PAGE>

Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being called,
or to permit the sale of the underlying security. Furthermore, effecting a
closing transaction will permit the Fund to write another call option on the
underlying security with either a different exercise price or expiration date or
both.

The Fund will pay transaction costs in connection with the writing of
options and in entering into closing purchase contracts. Transaction costs
relating to options activity normally are higher than those applicable to
purchases and sales of portfolio securities.

The exercise price of the options may be below, equal to or above the
current market values of the underlying securities at the time the options are
written. From time to time, the Fund may purchase an underlying security for
delivery in accordance with the exercise of an option, rather than delivering
such security from its portfolio. In such cases, additional costs will be
incurred.

The Fund will realize a profit or loss from a closing purchase
transaction is less or more, respectively, than the premium received from
writing the option. Because increases in the market price of a call option
generally will reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by the
Fund.

Writing Put Options. The Fund may write put options on securities and
indices. A put option gives the purchases of the option the right to sell, and
the writer (seller) the obligation to buy, the underlying security at the
exercise price at any time until the expiration date. The operation of put
options in other respects, including their related risks and rewards, is
substantially identical to that of call options.

The Fund generally would write put options in circumstances where
Investment Adviser wishes to purchase the underlying security for the Fund's
portfolio at a price lower than the current market price of the security. In
such event, the Fund would write a put option at an exercise price that, reduced
by the premium received on the option, reflects the lower price it is willing to
pay. Since the Fund also would receive interest on debt securities maintained to
cover the exercise price of the option, this technique could be used to enhance
current return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security would
decline below the exercise price, less the premium received.

Writing put options can serve as a limited long hedge because increases
in the value of the hedged investment would be offset to the extent of the
premium received for writing the option. However, if the security depreciates to
a price lower than the exercise price of the put option, it can be expected that
the put option will be exercised and the Fund will be obligated to purchase the
security at more than its market value.

Titan SAI B-12

<PAGE>

Purchasing Put Options. The Fund may purchase put options on securities
and indices. As the holder of a put option, the Fund would have the right to
sell the underlying security at the exercise price at any time until the
expiration date. The Fund may enter into closing sale transactions with respect
to such options, exercise such options or permit such options to expire.

The Fund may purchase a put option on an underlying security
("protective put") owned by the Fund in order to protect against an anticipated
decline in the value of the security. Such hedge protection is provided only
during the life of the put option when the Fund, as the holder of the put
option, is able to sell the underlying security at the put exercise price
regardless of any decline in the underlying security's market price. For
example, a put option may be purchased in order to protect unrealized
appreciation of a security when the Investment Adviser deems it desirable to
continue to hold the security because of tax considerations. The premium paid
for the put option and any transaction costs would reduce any profit otherwise
available for distribution when the security eventually is sold.

The Fund also may purchase put options at a time when the Fund does not
own the underlying security. By purchasing put options on a security it does not
own, the Fund seeks to benefit from a decline in the market price of the
underlying security. If the put option is not sold when it has remaining value,
and if the market price of the underlying security remains equal to or greater
than the exercise price during the life of the put option, the Fund will lose
its entire investment in the put option. In order for the purchase of a put
option to be profitable, the market price of the underlying security must
decline sufficiently below the exercise price to cover the premium and
transaction costs, unless the put option is sold in a closing sale transaction.

Purchasing Call Options. The Fund may purchase call options on
securities and indices. As the holder of a call option, the Fund would have the
right to purchase the underlying security at the exercise price at any time
until the expiration date. The Fund may enter into closing sale transactions
with respect to such options, exercise such options or permit such options to
expire.

The Fund also may purchase call options on underlying securities it
owns in order to protect unrealized gains on call options previously written by
it. A call option could be purchased for this purpose where tax considerations
make it inadvisable to realize such gains through a closing purchase
transaction. Call options also may be purchased at times to avoid realizing
losses that would result in a reduction of the Fund's current return. For
example, where the Fund has written a call option on an underlying security
having a current market value below the price at which such security was
purchased by the Fund, an increase in the market price could result in the
exercise of the call option written by the Fund and the realization of a loss on
the underlying security. Accordingly, the Fund could purchase a call option on
the same underlying security, which could be exercised to fulfill the Fund's
delivery obligations under its written call (if it is exercised). This strategy
could allow the Fund to avoid selling the Fund security at a time when it has an
unrealized loss; however, the Fund would have to pay a premium to purchase the
call option plus transaction costs.

Titan SAI B-13

<PAGE>

Aggregate premiums paid for put and call options will not exceed 5% of
such Fund's total assets at the time of purchase.

Options may be either listed on an exchange or traded over-the-counter
("OTC"). Listed options are third-party contracts (i.e., performance of the
obligations of the purchase and seller is guaranteed by the exchange or clearing
corporation), and have standardized strike prices and expiration dates. OTC
options are two-party contracts with negotiated strike prices and expiration
dates. OTC options differ from exchange-traded options in that OTC options are
transacted with dealers directly and not through a corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of a quote
provided by the dealer. In the case of OTC options, there can be no assurance
that a liquid secondary market will exist for any particular option at any
specific time.

The staff of the SEC considers purchased OTC options to be illiquid
securities. A Fund may also sell OTC options and, in connection therewith,
segregate assets or cover its obligations with respect to OTC options written by
the Fund. The assets used as cover for OTC options written by the Fund will be
considered illiquid unless the OTC options are sold to qualified dealers who
agree that the Fund may repurchase any OTC option its writes at a maximum price
to be calculated by a formula set forth in the option agreement. The cover for
an OTC option written subject to this procedure would be considered illiquid
only to the extent that the maximum repurchase price under the formula exceeds
the intrinsic value of the option.

The Fund's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. The Fund
intends to purchase or write only those exchange-traded options for which there
appears to be liquid secondary market. However, there can be no assurance that
such a market will exist at any particular time. Closing transactions can be
made for OTC options only be negotiating directly with the contra party, or by a
transaction in the secondary market if any such market exists. Although the Fund
will enter into OTC options only with contra parties that are expected to be
capable of entering into closing transactions with the Fund, there is no
assurance that the Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
contra party, the Fund might be unable to close out an OTC option position at
any time prior to its expiration.

Investment Restrictions

The following investment restrictions are fundamental policies of the
Fund. Under the 1940 Act, a fundamental policy may not be changed without the
vote of a majority of the outstanding voting securities of a Fund, which is
defined in the 1940 Act as the lesser of (1) 67% or more of the shares present
at a Fund meeting, if the holders of more than 50% of the outstanding shares of
the Fund are present or represented by proxy or (2) more than 50% of the
outstanding shares of the Fund.

Titan SAI B-14

<PAGE>

Under the investment restrictions adopted by the Fund:

1. The Fund may not purchase securities of any one issuer, if as a
result, more than 5% of the Fund's total assets would be invested in
securities of that issuer or the Fund would own or hold more than 10%
of the outstanding voting securities of that issuer, except that up to
25% of the Fund's total assets may be invested without regard to this
limitation, and except that this limitation does not apply to
securities issued or guaranteed by the U.S. government, its agencies
and instrumentalities or to securities issued by other investment
companies.

2. The Fund may not issue senior securities or borrow money, except as
permitted under the Investment Company Act of 1940 (the "1940 Act") and
then not in excess of 33-1/3% of the Fund's total assets (including the
amount of the senior securities issued but reduced by any liabilities
not constituting senior securities) at the time of the issuance or
borrowing, except that the Fund may borrow up to an additional 5% of
its total assets (not including the amount borrowed) for temporary or
emergency purposes.

3. The Fund may not purchase or sell physical commodities unless
acquired as a result of owning securities or other instruments, except
that the Fund may purchase, sell or enter into financial options.

4. The Fund may not purchase or sell real estate, except that
investments in securities of issuers that invest in real estate and
investments in mortgage-backed securities, mortgage participations or
other instruments supported by interests in real estate are not subject
to this limitation, and except that the Fund may exercise rights under
agreements relating to such securities, including the right to enforce
security interests and to hold real estate acquired by reason of such
enforcement until that real estate can be liquidated in an orderly
manner.

5. The Fund may not engage in the business of underwriting securities
of other issuers, except to the extent that the Fund might be
considered an underwriter under the federal securities laws in
connection with its disposition of portfolio securities.

6. The Fund may not make loans, except through loans of portfolio
securities, or through repurchase agreements, provided that for
purposes of this restriction, the acquisition of bonds, debentures or
other debt securities and investments in government obligations,
commercial paper, certificates of deposit, bankers' acceptances or
similar instruments will not be considered the making of a loan.

The following investment restrictions may be changed by the Board of
Trustees without shareholder approval:

Titan SAI B-15

<PAGE>

1. The Fund may not purchase any securities of other investment
companies, except to the extent permitted by the 1940 Act and except
that this limitation does not apply to securities received or acquired
as dividends, through offers oF exchange, or as a result of
reorganization, consolidation, or merger.

2. The Fund may not purchase securities on margin, except for
short-term credit necessary for clearance of portfolio transactions and
except that the Fund may make margin deposits in connection with its
use of financial options.

3. The Fund may not make short sales of securities or maintain a short
position, except that a Fund may (a) sell short "against the box" and
(b) maintain short positions in connections with its use of financial
options.

4. The Fund may not mortgage, pledge, or hypothecate any assets except
in connection with permitted borrowings or the issuance or senior
securities.

TRUSTEES AND EXECUTIVE OFFICERS

Steven J. Paggioli,* 47 President and Trustee

Dorothy A. Berry, 54 Trustee

Wallace L. Cook, 57 Trustee

Titan SAI B-16

<PAGE>

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 59 Trustee

Rowley W.P. Redington, 53 Trustee

Eric M. Banhazl*, 40 Treasurer

2025 E. Financial Way, Suite 101, Glendora, California 91741. Senior Vice
President, The Wadsworth Group, Senior Vice President of ICAC and Vice President
of FFD since 1990.

Robin Berger*, 40 Secretary

479 West 22nd St., New York, New York 10011. Vice President, The Wadsworth Group
since June, 1993; formerly Regulatory and Compliance Coordinator, Equitable
Capital Management, Inc. (1991-93).

Robert H. Wadsworth*, 57 Vice President

4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of The
Wadsworth Group since 1982, President of ICAC and FFD since 1990.

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

Titan SAI B-17

<PAGE>

Name of Trustee Total Annual Compensation

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

During the fiscal year ended April 30, 1997, trustees' fees and
expenses in the amount of $3,019 were allocated to the Fund. 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 the Fund.

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
60 days' written notice and is automatically terminated in the event of its
"assignment," as defined in the 1940 Act.

INVESTMENT MANAGEMENT, ADMINISTRATION AND DISTRIBUTION
ARRANGEMENTS

Investment Advisory Arrangements. Titan Investment Advisers, LLC (the
"Investment Adviser") acts as the investment adviser to the Fund pursuant to a
an investment advisory agreement with the Fund ("Advisory Agreement") dated May
20, 1996.

For its services, the Investment Adviser receives, pursuant to the
Advisory Agreement, a fee at an annual rate of 1.00% of the Fund's average daily
net assets. The fee is computed daily and payable monthly.

Under the terms of the Advisory Agreement, the Fund bears all expenses
incurred in its operation that are not specifically assumed by the Fund's
Adviser. General expenses of the Fund not readily identifiable as belonging to
the Fund are allocated among series by or under the direction of the board of
Trustees in such manner as the board deems to be fair and equitable. Expenses
borne by the Fund include the following (or the Fund's share of the following):
(1) the cost (including brokerage commissions) of securities purchased or sold
by the Fund and any losses incurred in connection therewith, (2) fees payable to
and expenses incurred on behalf of the Fund by the Investment Adviser, (3)
organizational expenses, (4) filing fees and expenses relating to the
registration and qualification of the Fund's shares under federal and state
securities laws and

Titan SAI B-18

<PAGE>

maintenance of such registrations and qualifications, (5) fees and salaries
payable to Trustees who are not interested persons (as defined in the 1940 Act)
of the Fund, Investment Adviser, (6) all expenses incurred in connection with
Trustees' services, including travel expenses, (7) taxes (including any income
or franchise taxes) and governmental fees, (8) costs of any liability,
uncollectible items of deposit and other insurance or fidelity bonds, (9) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund for violation of any law, (10) legal,
accounting and auditing expenses, including legal fees of special counsel for
the independent Trustees, (11) charges of custodians, transfer agents and other
agents, (12) costs of preparing share certificates, (13) expenses of setting in
type and printing prospectuses and supplements thereto, statements of additional
information and supplements thereto, reports and proxy materials for existing
shareholders, and costs of mailing such materials to existing shareholders, (14)
any extraordinary expenses (including fees and disbursements of counsel)
incurred by the Fund, (15) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations, (16)
costs of mailing and tabulating proxies and costs of meetings of shareholders,
the board and any committees thereof, (17) the cost of investment company
literature and other publications provided to Trustees and officers and (18)
costs of mailing, stationery and communications equipment.

Under the Advisory Agreement, the Investment Adviser will not be liable
for any error or judgment or mistake of law or for any loss suffered by the Fund
in connection with the performance of the contract, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Investment
Adviser in the performance of its duties or from reckless disregard of its
duties and obligations thereunder. The Advisory Agreement terminates
automatically upon its assignment and is terminable at any time without penalty
by the Fund's board of Trustees or by vote of the holders of a majority of a
Fund's outstanding voting securities, on 60 days' written notice to the
Investment Adviser or by the Investment Adviser on 60 days' written notice to
the Fund.

The Adviser has undertaken to limit the Fund's operating expenses to an
annual level of 2.5% of the Fund's average net assets. For the fiscal period
ended April 30, 1997, the Advisor received advisory fees of $46,576 and
reimbursed the Fund for operating expenses in the amount of $30,832.

THE FUND'S ADMINISTRATOR

Titan SAI B-19

<PAGE>

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 the Administrator. For its
services, ICAC receives a fee at the following annual rate:

Average Net Assets of the Fund Fee or Fee Rate

ICAC received fees of $28,591from the Fund for the fiscal period ended April 30,
1997.

Distribution Arrangements. First Fund Distributors, Inc. acts as the
distributor of the shares of the Fund under a distribution contract with the
Fund dated May 20, 1996 ("Distribution Contract").

Plan of Distribution

The Fund has adopted a Plan of Distribution pursuant to Rule 12b-1
under the Act (the "Plan"), under which, the fund pays the Advisor as
Distribution Coordinator a fee, which is accrued daily and paid monthly, at the
annual rate of 0.25% of the Fund's average daily assets. Among other things, the
Plan provides that (1) the Investment Adviser will submit to the Fund's Board of
Trustees at least quarterly, and the Trustees will review, reports regarding all
amounts expended under the Plan and the purposes for which such expenditures
were made, (2) the Plan will continue in effect only so long as it is approved
at least annually, and any material amendment thereto is approved, by the Fund's
Board of Trustees, including those who are not "interested persons" of the Fund
and who have no direct or indirect financial interest in operation of the plan
or any agreement related to the Plan, acting in person at a meeting called for
that purpose, (3) payments by the Fund under the Plan shall not be materially
increased without the affirmative vote of the holders of a majority of the
outstanding shares of the Fund and (4) while the Plans remains in effect, the
selection and nomination of Trustees who are not "interested persons" of the
Fund shall be committed to the discretion of the Trustees who are not interested
persons of the Fund. During the year ended April 30, 1997, the Fund paid fees of
$11,668 under the Plan, of which $3,802 was paid out as selling compensation to
dealers and $4,913 was for reimbursement of printing, postage and office
expenses, $498 was for reimbursement of travel and entertainment expenses and
$2,455 was for reimbursement of advertising/sales literature expenses.

Titan SAI B-20

<PAGE>

PORTFOLIO TRANSACTIONS

Subject to policy established by the Board of Trustees of the Fund, the
Investment Adviser will arrange for the execution of the Fund's portfolio
transactions and the allocation of brokerage. In executing portfolio
transactions the Investment Adviser will seek to obtain the best net results for
the Fund, taking into account such factors as price (including the applicable
brokerage commission or dealer spread), size of order, difficulty of execution
and operational facilities of the firm involved. The Fund may invest in
securities traded in the over-the-counter markets and deal directly with the
dealers who make markets in the securities involved, unless a better price or
execution could be obtained by using a broker. While the Investment Adviser
generally will sell reasonably competitive commission rates, payment of the
lowest commission or spread is not necessarily consistent with best results in
particular transactions.

In placing orders with brokers and dealers, the Investment Adviser will
attempt to obtain the best net price and the most favorable execution for
orders; however, the Investment Adviser may, in its discretion, purchase and
sell portfolio securities through brokers and dealers who provide the Investment
Adviser or the Fund with research, analysis, advice and similar services. The
Investment Adviser may, in return for research and analysis, pay brokers a
higher commission than may be charged by other brokers, provided that the
Investment Adviser determines in good faith that such commission is reasonable
in terms either of that particular transaction or of the overall responsibility
of the Investment Adviser to the Fund and its other clients and that the total
commission paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long term. Information and research received from such brokers
and dealers will be in addition to, and not in lieu of, the services required to
be performed by the Investment Adviser under its Advisory Agreement with the
Fund. The Fund has no obligation to deal with any broker or group of brokers in
the execution of transactions.

Investment decisions for the Fund and for other investment accounts
managed by the Investment Adviser are made independently of each other in the
light off differing considerations for the various accounts. However, the same
investment decision may occasionally be made for two or more such accounts. In
such cases, simultaneous transactions are inevitable. Purchases or sales are
then averaged as to price and allocated to accounts according to a formula
deemed equitable to each account. While in some cases this practice could have a
detrimental effect upon the price or value of the security as far as the Fund is
concerned, in other cases it is believed to be beneficial to the Fund.

The Fund does not use the Distributor to execute its portfolio
transactions. For the fiscal period ended April 30, 1997 the aggregate brokerage
commissions paid by the Fund were $29,040.

Portfolio Turnover

Because the Fund's primary objective is long-term capital appreciation,
the Fund anticipates that its annual portfolio turnover rate generally will not
exceed 100%. The turnover rate will not be

Titan SAI B-21

<PAGE>

a limiting factor if the Investment Adviser deems portfolio changes appropriate.
The turnover rate may vary greatly form year to year. Portfolio turnover rate is
calculated by dividing the lesser of the Fund's annual sales or purchases of
portfolio securities (exclusive of purchases or sales of all securities the
maturities of which at the time of acquisition were one year or less) by the
monthly average value of securities in the portfolio during the year (exclusive
of portfolio securities the maturities of which at the time of acquisition were
one year or less).

VALUATION OF SHARES

The Fund determines its net asset value per share as of the close of
regular trading (currently 4:00 p.m., eastern time) on the NYSE on each Monday
through Friday when the NYSE is open. Currently, the NYSE is closed on the
observance of the following holidays: New Year's Day, Presidents' Day, Martin
Luther King Jr. Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

Each security will be valued on the basis of the last sales price on
the valuation date on the principal exchange on which the security is traded.
Where securities are traded on one or more exchanges and also over-the-counter,
the securities will generally be valued using the quotations the Board of
Trustees or its delegate believes reflect most closely the value of such
securities. With respect to those securities for which no trades have taken
place that day and unlisted securities for which market quotations are readily
available, the value shall be determined by taking the latest "bid" prices.
Short-term securities which mature in more than 60 days will be valued at
current market quotations. Short-term securities which mature in 60 days or less
will be valued at amortized cost, if their term to maturity from date of
purchase is 60 days or less, or by amortizing their value on the 61st day prior
to maturity, if their term to maturity from date of purchase exceeds 60 days.
Securities for which market quotations are not readily available, including
restricted securities, and other assets will be valued at fair value as
determined in good faith according to a pricing procedure developed by the
Investment Adviser and approved by the Board of Trustees.

In the calculation of the Fund's net asset value; (1) an equity
portfolio security listed or traded on the New York or American Stock Exchange
or other domestic or foreign stock exchange or quoted by NASDAQ is valued at its
latest sale price on that exchange or quotation service prior to the time assets
are valued; if there were no sales that day, the security is valued at the
latest bid price (in cases where a security is traded on more than one exchange,
the security is valued on the exchange designated as the primary market by the
Fund's Board of Trustees); (2) an option is valued at the mean between the
latest bid and asked prices; (3) a futures contract is valued at the latest
sales price on the commodities exchange on which it trades unless the Board
determines that such price does not reflect its market value, in which case it
will be valued at its fair value as determined by the Board of Trustees; (4) all
other portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest bid price; (5) when market quotations
are not readily available, including circumstances under which it is determined
by the Investment Adviser that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value as

Titan SAI B-22

<PAGE>

determined in good faith under procedures established by and under the general
supervision of the Fund's Board of Trustees (valuation of debt securities for
which market quotations are not readily available may be used upon current
market prices of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors); (6) the value of short-term
debt securities which mature at a date less than sixty days subsequent to
valuation date will be determined on an amortized cost or amortized value basis;
and (7) the value of other assets will be determined in good faith at fair value
under procedures established by and under the general supervision of the Fund's
Board. For valuation purposes, quotations of foreign portfolio securities, other
assets and liabilities and forward contracts stated in foreign currency are
translated into U.S. dollar equivalents at the prevailing market ratings prior
to the close of the New York Stock Exchange. Dividends receivable are accrued as
the ex-dividend date or as of the time that the relevant ex-dividend date and
amounts become known. Interest income is accrued daily except when collection is
uncertain. Certain securities in the Fund's portfolio may be valued by an
outside pricing service approved by the Fund's Board of Trustees. The pricing
service may utilize a matrix system incorporating security quality, maturity and
coupon as the evaluation model parameters, and/or research evaluations by its
staff, including review of broker-dealer market price quotations, in determining
what it believes is the fair valuation of the portfolio securities valued by
such pricing service.

PERFORMANCE INFORMATION

The Fund's performance data quoted in advertising and other promotional
materials ("Performance Advertisements") represent past performance and are not
intended to indicate future performance. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.

Total Return Calculations. Average annual total return quotes
("Standardized Return") used in the Fund's Performance Advertisements are
calculated according to the following formula:

P(1 + T)n = ERV
where: P = a hypothetical initial payment of $1,000 to
purchase shares of a Fund
T = average annual total return of shares of that Fund
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the
beginning of that period.

Under the foregoing formula, the time periods used in Performance
Advertisements will be based on rolling calendar quarters, updated to the last
day of the most recent quarter prior to submission of the Performance
Advertisements for publication. Total return, or "T" in the formula above, is
computed by finding the average annual change in the value of an initial $1,000
investment over the period. All dividends and other distributions are assumed to
have been reinvested at net asset value.

Titan SAI B-23

<PAGE>

The Fund also may refer in Performance Advertisements to total return
performance data that are not calculated according to the formula set forth
above ("Non-Standardized Return"). A Fund calculates Non-Standardized Return for
specified periods of time by assuming an investment of $1,000 in Fund shares and
assuming the reinvestment of all dividends and other distributions. The rate of
return is determined by subtracting the initial value of the investment from the
ending value and by dividing the remainder by the initial value.

The Fund's total return since its inception on May 22, 1996 through the
fiscal period ending April 30, 1997 was 26.67%.

Other Information. In Performance Advertisements, the Fund may compare its
Standardized Return and/or their Non-Standardized Return with data published by
Lipper Analytical Services, Inc. ("Lipper"), CDA Investment Technologies, Inc.
("CDA"), Wiesenberger Investment Companies Services ("Wiesenberger"), Investment
Company Data, Inc. ("ICD"), or Morningstar Mutual Funds ("Morningstar") or with
the performance of recognized stock and other indices, including (but not
limited to) the Standard & Poor's 500 Composite Stock Price Index, the Dow Jones
Industrial Average and the Wilshire 5000 Index. The Fund also may refer in such
materials to mutual fund performance rankings and other data, such as
comparative asset, expense and fee levels, published by Lipper, CDA,
Wiesenberger, ICD, Bloomberg Financial Markets Service or Morningstar.
Performance Advertisements also may refer to discussions of the Fund and
comparative mutual fund data and ratings reported in independent periodicals,
including (but not limited to) THE WALL STREET JOURNAL, MONEY Magazine, FORBES,
BUSINESS WEEK, FINANCIAL WORLD, BARRON'S, FORTUNE, THE NEW YORK TIMES, THE
CHICAGO TRIBUNE, THE WASHINGTON POST and THE KIPLINGER LETTERS. Ratings may
include criteria relating to portfolio characteristics in addition to
performance information. In connection with a ranking, a Fund may also provide
additional information with respect to the ranking, such as the particular
category to which it relates, the number of funds in the category, the criteria
on which the ranking is based, and the effect of sales charges, fee waivers
and/or expense reimbursements.

The Fund may include discussions or illustrations of the effects of
compounding in Performance Advertisements. "Compounding" refers to the fact
that, if dividends or other distributions on the Fund investment are reinvested
by being paid in additional Fund shares, any future income or capital
appreciation of the Fund would increase the value, not only of the original Fund
investment, but also of the additional Fund shares received through
reinvestment. As a result, the value of the Fund investment would increase more
quickly than if dividends or other distributions had been paid in cash.

The Fund may also compare its performance with the performance of bank
certificates of deposit (CDS) as measured by the CDA Investment Technologies,
Inc. Certificate of Deposit Index, the Bank Rate Monitor National Index and the
averages of yields of CDS of major banks published by Banxquote (TM) Money
Markets. In comparing the Fund's performance to CD performance, investors should
keep in mind that bank CDS are insured in whole or in part by an agency of the
U.S. government and offer fixed principal and fixed or variable rates of
interest, and that bank CD yields may vary depending on the financial
institution offering the CD and prevailing interest rates. Shares

Titan SAI B-24

<PAGE>

of the Fund are not insured or guaranteed by the U.S. government and returns
thereon and net asset value will fluctuate. The securities held by the Fund
generally have longer maturities than most CDS and may reflect interest rate
fluctuations for longer term securities.

TAXES

Each series of the Trust is treated as a separate entity for federal income
tax purposes. The Fund intends to continue 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"), provided it complies with all applicable
requirements regarding the source of its income, diversification of its assets
and timing of 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 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.

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.

Titan SAI B-25

<PAGE>

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 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 ("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.

Titan SAI B-26

<PAGE>

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.

GENERAL INFORMATION

Star Bank N.A., 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, Inc., P.O. Box 5536, Hauppauge, NY 11788- 0132 is
the Fund's Transfer and Dividend Disbursing Agent.

Tait, Weller & Baker, 2 Penn Center Plaza, Philadelphia, PA 19102 are
the independent auditors for the Fund.

Paul, Hastings, Janofsky & Walker, 345 California Street, 29th Floor, San
Francisco, California 94104, are legal counsel to the Fund. Kirkpatrick &
Lockhart LLP, 1800 M St., NW, Washington, D.C. 20036-5891 is legal counsel to
the Advisor.

The following persons are beneficial owners of more than 5% of the Fund's
outstanding voting securities as of August 14, 1997. An asterisk (*) denotes an
account affiliated with the Fund's investment advisor, officers or trustees:

*Gilbert R. Giordano, Lothian, MD 20711; 8.20%

*Star Bank, custodian for Gilbert R. Giordano, IRA Account, Lothian, MD
20711; 8.37%

*Ernest Michael Zimmerman, Washington, DC; 20037; 6.30%

*Mervin H. Zimmerman, Rockville, MD 20852; 12.61%

FINANCIAL STATEMENTS

The annual report to shareholders for the Fund for the fiscal year ended
April 30, 1997 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.

Titan SAI B-27

<PAGE>

APPENDIX

Description of Bond Ratings*

Moody's Investors Service

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

Titan SAI B-28

<PAGE>

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

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.

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.

The ratings from AA to CCC 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.

Titan SAI B-29

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

October 31, 1996
Revised September 1, 1997

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>
TABLE OF CONTENTS
<CAPTION>

Page

<S> <C>
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Investment Objective and Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
Investment Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-4
Distributions and Tax Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-5

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
</TABLE>

<PAGE>

THE TRUST

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 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.

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<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.

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.

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<PAGE>

Borrowing

The Fund may borrow money from banks in an aggregate amount not to exceed
one-third of the value of the Fund's total assets to meet temporary or
emeregency purposes, and may pledge its assets in conection with such
borrowings. The Fund will not purchase any securities while any such borrowings
exceed 5% of that Fund's total assets.

INVESTMENT RESTRICTIONS

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.

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<PAGE>

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.

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.

Tax Information

The Fund is treated as a separate entity for federal income tax
purposes. The Fund intends to continue 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

B-5

<PAGE>

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.

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<PAGE>

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.

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

B-7

<PAGE>

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,* 47 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

One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel, 57 Trustee

2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. Formerly President, National Investor Data
Services, Inc. (investment related computer software).

Rowley W.P. Redington, 51 Trustee

1191 Valley Road, Clifton, New Jersey 07103. President, Intertech (consumer
electronics and computer service and marketing ); formerly Vice President, PRS
of New Jersey, Inc. (management consulting); Chief Executive Officer, Rowley
Associates (consultants).

Eric M. Banhazl*,40 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*, 40 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*, 57 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 fiscal year ended June 30, 1997,
$6,032 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. The Advisor 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 investment advisory fee
(accrued daily) based upon the average daily net assets of the Fund at the rate
of 1.00% annually. During the fiscal year ended June 30, 1997, the Fund incurred
advisory fees of $148,503, and the Advisor reimbursed expenses in the amount of
$59,209, in accordance with its undertaking to limit the Fund's total expenses
to no more than 1.48% of average net assets 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

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<PAGE>

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 fiscal year ended June 30, 1997 the Administrator received
fees of $27,423. For 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.

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<PAGE>

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

B-12

<PAGE>

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
purchases of shares of the Fund for their customers. The Fund does not use the
Distributor to execute its portfolio transactions. During the fiscal year ended
June 30, 1997, the Fund paid brokerage commissions of $27,828. 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.

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<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, Martin Luther King Jr. 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.

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

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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
total return for the one year period and from inception on September 29, 1995
through June 30, 1997 were 36.29% and 32.91%, 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.

GENERAL INFORMATION

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

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<PAGE>

of securities by the Fund. American Data Services, P.O. Box 5536, Hauppage, 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.

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

On August 28, 1997, the following persons owned of record and/or
beneficially more than 5% of the Fund's outstanding voting securities:

BHC Securities Inc. Trade Account, Philadelphia, PA 19103; 22.38% record.

Lazard Freres & Co. LLC, New York, NY 10271; 16.72% record.

L. B. Dayton, A. D. Buxton Trustees, B. N. Dayton 1978 Family Trust,
Helena, MT 59601; 9.58% record and beneficial.

Brandt Dayton, Trustee, B. N. Dayton Revocable Trust, New York, NY
10024; 7.24% record and beneficial.

Donaldson, Lufkin, Jenrette Securities Corp., Jersey City, NJ 07303;
6.64% record.

Norwest Bank of South Dakota, Trustee, Bruce B. Dayton Trust,
Minneapolis, MN 55479; 5.42% record and beneficial.

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.

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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.

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