PROFESSIONALLY MANAGED PORTFOLIOS, 497, 2000-11-02

PROFESSIONALLY MANAGED PORTFOLIOS
497, 2000-11-02

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LEONETTI & ASSOCIATES, INC.
PRIVATE FINANCIAL ADVISORS

LEONETTI FUNDS

LEONETTI GROWTH FUND

LEONETTI BALANCED FUND

PROSPECTUS

October 27, 2000
[LOGO]
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LEONETTI GROWTH FUND
LEONETTI BALANCED FUND
SERIES OF PROFESSIONALLY MANAGED PORTFOLIOS

Leonetti Growth Fund is a no-load mutual fund
that seeks to provide investors with long-term growth of capital.

Leonetti Balanced Fund is a no-load mutual fund
that seeks total return through a combination of income and
capital growth, consistent with preservation of capital.

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the accuracy or adequacy of this prospectus.
Any representation to the contrary is a criminal offense.

The date of this Prospectus is October 27, 2000
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TABLE OF CONTENTS

An Overview of the Funds ................................................... 2
Understanding Performance Information ...................................... 5
Performance ................................................................ 5
Fees and Expenses .......................................................... 7
Investment Objectives and Principal Investment Strategies .................. 9
Principal Risks of Investing in the Funds .................................. 11
Investment Advisor ......................................................... 12
Shareholder Information .................................................... 13
Pricing of Fund Shares ..................................................... 17
Dividends and Distributions ................................................ 18
Tax Consequences ........................................................... 18
Financial Highlights ....................................................... 18

1
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LEONETTI GROWTH FUND

AN OVERVIEW OF THE FUNDS

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund seeks long-term growth of capital.

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Fund invests in equity securities of domestic companies of any size. In
selecting investments, the Advisor primarily invests in:

* Growth stocks that exhibit a rising trend in earnings and revenue

* Out-of-favor blue chip stocks

* Small companies with rapidly rising revenues and earnings

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

There is the risk that you could lose money on your investment in the Fund. The
following risks could affect the value of your investment:

* The stock market goes down

* Interest rates rise which can result in a decline in the stock market

* Growth stocks fall out of favor with the stock market

* Stocks in the Fund's portfolio may not increase their earnings at the rate
anticipated

* Securities of smaller-capitalization companies involve greater risk than
investing in larger-capitalization companies

* Securities of undervalued companies may remain undervalued during a given
period

WHO MAY WANT TO INVEST IN THE FUND

The Fund may be appropriate for investors who:

* Are pursuing a long-term goal such as retirement

* Want to add an investment with growth potential to diversify their
investment portfolio

* Are willing to accept higher short-term risk along with higher potential
for long-term growth

The Fund may not be appropriate for investors who:

* Need regular income or stability of principal

* Are pursuing a short-term goal

2
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LEONETTI BALANCED FUND

AN OVERVIEW OF THE FUNDS, Continued

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The Fund seeks total return through a combination of income and capital growth,
consistent with preservation of capital.

WHAT ARE THE FUND'S PRINCIPAL INVESTMENT STRATEGIES?

The Fund invests in a combination of equity and high-quality fixed-income
securities. Although the percentage of assets allocated between equity and
fixed-income securities is flexible, under normal market conditions, the Advisor
expects that between 25% and 75% of the Fund's assets will be invested in either
equity securities or fixed-income securities. Because the Fund seeks to produce
the maximum total return, a significant portion of the Fund's assets has
historically been allocated to common stocks. In selecting equity securities for
the Fund, the Advisor emphasizes three types of investments:

* Growth stocks that exhibit a rising trend in earnings and revenue

* Out-of-favor blue chip stocks

* Small companies with rapidly rising revenues and earnings

In selecting fixed-income securities, the Advisor seeks a reliable and constant
stream of income for the Fund, while preserving its capital.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

There is the risk that you could lose money on your investment in the Fund. The
following risks could affect the value of your investment:

* The stock market goes down

* Interest rates rise which can result in a decline in both the equity and
fixed-income markets

* Growth stocks fall out of favor with the stock market

* Stocks in the Fund's portfolio may not increase their earnings at the rate
anticipated

* Securities of smaller-capitalization companies involve greater risk than
investing in larger-capitalization companies

* Securities of undervalued companies may remain undervalued during a given
period

3
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LEONETTI BALANCED FUND

AN OVERVIEW OF THE FUNDS, Continued

WHO MAY WANT TO INVEST IN THE FUND

The Fund may be appropriate for investors who:

* Are pursuing a long-term goal such as retirement

* Are seeking total return from both capital gains and income

* Are willing to accept a moderate degree of market volatility

The Fund may not be appropriate for investors who:

* Are pursuing a short-term goal

* Are seeking a steady level of income

4
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LEONETTI FUNDS

UNDERSTANDING PERFORMANCE INFORMATION

TOTAL RETURN. Describes how much an investment in a Fund has changed in
value over any given time frame. It reflects any net increase or decrease in the
Fund share price and assumes all dividends and capital gains (if any) paid
during the time frame were reinvested in additional Fund shares. Total return
performance results include the effect of compounding.

AVERAGE ANNUAL TOTAL RETURN. Gives an understanding of an investment's
annual contribution to your portfolio, provided it was held for the entire time
frame. It smooths out all differences in annual performance results to describe
the year-by-year return which would have produced the investment's actual
cumulative total return. It is a hypothetical figure and should not be confused
with actual yearly results.

PERFORMANCE

The following performance information indicates some of the risks of
investing in the Leonetti Balanced Fund. The bar chart shows how the Fund's
total return has varied from year to year. The table shows the Fund's average
annual total return over time compared with a blended index and an index that
measures the performance of funds that have a similar investment objective as
the Fund. This past performance will not necessarily continue in the future.

LEONETTI BALANCED FUND
CALENDAR YEAR TOTAL RETURNS

1996 1997 1998 1999
---- ---- ---- ----
6.83% 20.85% 27.52% 26.02%

The Fund's year-to-date return as of 9/30/00 was 2.80%.

During the period shown in the bar chart, the Fund's highest quarterly
return was 21.36% for the quarter ended December 31, 1998 and the lowest
quarterly return was -6.99% for the quarter ended September 30, 1998.

5
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LEONETTI FUNDS

PERFORMANCE, Continued

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999

SINCE INCEPTION
1 YEAR (8/1/95)
------ --------
Leonetti Balanced Fund 26.02% 19.53%
Wilshire 5000 Equity Index/
Salomon Brothers Investment Grade
Bond Index/90-day U.S. Government
Treasury Bill* 15.07% 18.24%
Lipper Balanced Index** 8.98% 14.86%

* These figures represent a blend of the performance of the Wilshire 5000
Equity Index (65%), the Salomon Brothers Investment Grade Bond Index (25%)
and the 90-day U.S. Government Treasury Bill (10%).

** The Lipper Balanced Fund Index measures the performance of those mutual
funds that Lipper Analytical Services, Inc. has classified as "balanced."
Balanced funds maintain a portfolio of both stocks and bonds.

THE LEONETTI GROWTH FUND HAS BEEN IN OPERATION FOR LESS THAN A FULL
CALENDAR YEAR. THEREFORE, THE TOTAL RETURN BAR CHART AND PERFORMANCE TABLE HAVE
BEEN OMITTED.

6
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LEONETTI FUNDS

FEES AND EXPENSES

The Funds are no load. There are no fees or charges to purchase, sell or
exchange Fund shares. In addition, there are no 12b-1 fees.

This table describes the fees and expenses that you may pay if you buy and
hold shares of the Funds.

GROWTH BALANCED
FUND FUND
---- ----
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum sales charge (load)
imposed on purchases ................................... None None
Maximum deferred sales charge (load) ................... None None

ANNUAL FUND OPERATING EXPENSES*
(expenses that are deducted from Fund assets)
Management Fees ........................................ 1.00% 1.00%
Other Expenses ......................................... 3.09% 0.61%
----- -----
Total Annual Fund Operating Expenses ..................... 4.09% 1.61%
Fee Reduction and/or Expense Reimbursement ............... (2.09)% None
----- -----
Net Expenses ............................................. 2.00% 1.61%
===== =====

----------
* The Advisor has contractually agreed to reduce its fees and/or pay expenses
of the Growth Fund for an indefinite period to ensure that Total Fund
Operating Expenses will not exceed the net expense amount shown. The
Advisor reserves the right to be reimbursed for any waiver of its fees or
expenses paid on behalf of the Fund if the Fund's expenses are less than
the limit agreed to by the Fund. The Trustees may terminate this expense
reimbursement arrangement at any time.

7
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LEONETTI FUNDS

FEES AND EXPENSES, Continued

EXAMPLE

This Example is intended to help you compare the costs of investing in
shares of the Funds with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Funds for the time
period indicated and then redeem all of your shares at the end of those periods.
The Example also assumes that your investment has a 5% return each year, that
dividends and distributions are reinvested and that the Funds' operating
expenses remain the same. Although your actual costs may be higher or lower,
under the assumptions, your costs would be:

GROWTH BALANCED
FUND FUND
------ ------
One Year ................................... $ 203 $ 164
Three Years ................................ $ 627 $ 508
Five Years ................................. $1,078 $ 876
Ten Years .................................. $2,327 $1,911

8
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LEONETTI GROWTH FUND

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES

The Fund's investment objective is long-term growth of capital.

The Fund invests in equity securities of domestic companies of any size.
Equity securities include common and preferred stock. Under normal market
conditions, the Fund will invest at least 65% of its total assets in equity
securities that have the potential for long-term growth of capital. In selecting
equity investments for the Fund the Advisor emphasizes the following three types
of investments.

The Advisor seeks growth stocks that have shown a rising trend in earnings
and revenues over a period of years. Companies with low or declining debt
levels, rising gross profit margins, expanding product lines and significant
stock ownership by management are viewed by the Advisor as attractive. Many of
such companies may be components of the Standard & Poor's 500 Index. The Advisor
does not limit its investment selections to companies within this Index and will
invest in any company that the Advisor believes has similar characteristics.

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

The small companies selected for the Fund's portfolio will have experienced
rapidly rising revenues and earnings. The Advisor looks for companies that have
little or no debt, a following in the investment community, an expanding product
line or products that involve a change or improvement in their industry and
control or significant involvement by company founders in day-to-day management.

The Fund will typically sell a stock when the Advisor determines that the
attributes which led to its purchase no longer exist. Securities may also be
sold when the Advisor believes a stock has reached its appreciation potential or
when a company's fundamentals and corresponding stock price have deteriorated.

Under normal market conditions, the Fund will stay fully invested in
stocks. However, the Fund may temporarily depart from its principal investment
strategies by making short-term investments in cash equivalents in response to
adverse market, economic or political conditions. This may result in the Fund
not achieving its investment objective.

The Fund generally intends to purchase securities for long-term investment
although, when circumstances warrant, securities may be purchased and sold
without regard to the length of time held. The Fund anticipates that its
portfolio turnover rate will be 150%. A high portfolio turnover rate (100% or
more) has the potential to result in the realization and distribution to
shareholders of higher capital gains. This may mean that you would be likely to
have a higher tax liability. A high portfolio turnover rate also leads to higher
transaction costs, which could negatively affect the Fund's performance.

9
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LEONETTI BALANCED FUND

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES, Continued

The Fund's investment objective is to seek total return through a
combination of income and capital growth, consistent with preservation of
capital.

The Advisor has the flexibility to select among different types of
investments for growth and income and to alter the composition of the Fund's
portfolio as economic and market trends change. Under normal market conditions,
the Fund expects that between 25% and 75% of the Fund's assets will be invested
in either equity securities or fixed-income securities.

The Fund will primarily invest in equity securities of domestic companies
of any size. Equity securities include common and preferred stock.

In selecting equity investments for the Fund the Advisor emphasizes the
following three types of investments.

The small companies selected for the Fund's portfolio will have experienced
rapidly rising revenues and earnings. The Advisor looks for companies that have
little or no debt, a following in the investment community, an expanding product
line or products that involve a change or improvement in their industry, and
control or significant involvement by company founders in day-to-day management.

The Fund will typically sell a stock when the fundamental reason that the
stock was purchased no longer exists. Securities may also be sold when the
Advisor believes a stock has reached its appreciation potential, or when a
company's fundamentals and corresponding stock price have deteriorated.

Fixed-income securities held by the Fund are expected to include U.S.
Treasury and agency obligations and investment grade corporate debt securities.
Investment grade debt securities are generally considered to be those rated BBB
or better by Standard & Poor's Ratings Group ("S&P"), Duff & Phelps Credit
Rating Co. ("Duff") or Fitch Investors Service, Inc. ("Fitch"), or Baa or better

10
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LEONETTI BALANCED FUND

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES, Continued

by Moody's Investors Service, Inc. ("Moody's"), or if unrated, determined by the
Advisor to be of equal quality. Securities rated BBB by S&P, Duff and Fitch or
Baa by Moody's, the lowest tier of investment grade, are generally regarded as
having adequate capacity to pay interest and repay principal, but may have some
speculative characteristics. It is expected that at least 25% of the Fund's
assets will be invested in fixed-income securities.

In selecting fixed-income securities, the Advisor uses a combined approach
of technical and fundamental analysis. The Advisor focuses on the anticipated
direction of interest rates and the yield curve. Corporate bond analysis
encompasses the same research approach that is used in purchasing common stocks
for the Fund.

Fixed-income securities will ordinarily be sold if the Advisor believes
that the interest rate environment is changing, to adjust the length of
maturities and to maintain a desired level of allocation to the entire
portfolio.

Under normal market conditions, the Fund will stay fully invested in stocks
and/or fixed-income securities. However, the Fund may temporarily depart from
its principal investment strategies by making short-term investments in cash
equivalents in response to adverse market, economic or political conditions.
This may result in the Fund not achieving its investment objective.

PRINCIPAL RISKS OF INVESTING IN THE FUNDS

The principal risks of investing in the Funds that may adversely affect the
Funds' net asset value or total return have previously been summarized under "An
Overview of the Funds." These risks are discussed in more detail below.

MARKET RISK. The risk that the market value of a security may move up and
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than it
was worth at an earlier time. Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole.

SMALLER AND NEWER COMPANY RISK. Investing in securities of smaller and
newer companies may involve greater risk than investing in larger companies
because they can be subject to more abrupt or erratic share price changes than
larger companies. Small companies may have limited product lines, markets or
financial resources and their management may be dependent on a limited number of
key individuals. Securities of these companies may have limited market liquidity
and their prices may be more volatile.

FIXED-INCOME SECURITIES RISK. The Balanced Fund invests in fixed-income
securities. The market value of fixed-income securities is sensitive to
prevailing interest rates. In general, when interest rates rise, the
fixed-income security's value declines and when interest rates decline, its
market value rises. Normally, the longer the remaining maturity of a security,

11
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LEONETTI FUNDS

PRINCIPAL RISKS OF INVESTING IN THE FUNDS, Continued

the greater the effect of interest rate changes on the market value of the
security. In addition, changes in the ability of an issuer to make payments of
interest and principal and in the market's perception of an issuer's
cred-itworthiness affect the market value of fixed-income securities of that
issuer.

INVESTMENT ADVISOR

Leonetti & Associates, Inc. is the investment advisor to the Funds. The
Advisor's address is 1130 Lake Cook Road, Suite 300, Buffalo Grove, IL 60089.
The Advisor, which manages assets of approximately $500 million, was established
in 1982 and provides investment advisory services to individuals and
institutional investors. The Advisor provides the Funds with advice on buying
and selling securities. The Advisor also furnishes the Funds with office space
and certain administrative services, and provides most of the personnel needed
by the Funds. For its services, the Growth Fund pays the Advisor a monthly
management fee based upon its average daily net assets at the annual rate of
1.00%. For the fiscal year ended June 30, 2000, the Advisor received advisory
fees of 1.00% of the Balanced Fund's average daily net assets.

Craig T. Johnson, Portfolio Manager, is responsible for the day-to-day
management of the Funds. He received his Bachelor's Degree in Business from
Drake University. Craig has been with the Advisor since 1983.

FUND EXPENSES

Each Fund is responsible for its own operating expenses. The Advisor has
contractually agreed to reduce its fees and/or pay expenses of the Growth Fund
to ensure that the Fund's aggregate annual operating expenses (excluding
interest and tax expenses) will not exceed 2.00% of the Fund's average daily net
assets. At times, the Advisor may reduce its fees and/or pay expenses of either
Fund in order to reduce the Fund's aggregate annual operating expenses. Any
reduction in advisory fees or payment of expenses made by the Advisor are
subject to reimbursement by the Fund if requested by the Advisor in subsequent
fiscal years. This reimbursement may be requested by the Advisor if the
aggregate amount actually paid by the Fund toward operating expenses for such
fiscal year (taking into account the reimbursement) does not exceed the
applicable limitation on Fund expenses. The Advisor is permitted to be
reimbursed for fee reductions and/or expense payments made in the prior three
fiscal years. (At startup, the Growth Fund is permitted to look for longer
periods of four and five years.) Any such reimbursement will be reviewed by the
Trustees. Each Fund must pay its current ordinary operating expenses before the
Advisor is entitled to any reimbursement of fees and/or expenses.

12
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LEONETTI FUNDS

SHAREHOLDER INFORMATION

HOW TO BUY SHARES

You may open a Fund account with $100 and add to your account at any time
with $25 or more. After you have opened a Fund account, you also may make
automatic subsequent monthly investments with $25 or more through the Automatic
Investment Plan. The minimum investment requirements may be waived from time to
time by the Funds.

You may purchase shares of the Funds by check or wire. All purchases by
check must be in U.S. dollars. Third party checks and cash will not be accepted.
A charge may be imposed if your check does not clear. The Funds are not required
to issue share certificates. The Funds reserve the right to reject any purchase
in whole or in part.

BY CHECK

If you are making an initial investment in a Fund, simply complete the
Account Application included with this Prospectus and mail it with a check (made
payable to "Leonetti Growth Fund" or "Leonetti Balanced Fund") to:

Leonetti Growth Fund or Leonetti Balanced Fund
P.O. Box 640856
Cincinnati, OH 45264-0856

If you wish to send your Application Form and check via an overnight
delivery service (such as FedEx), you should call the Transfer Agent at (800)
282-2340 for instructions.

If you are making a subsequent purchase, a stub is attached to the account
statement you will receive after each transaction. Detach the stub from the
statement and mail it together with a check made payable to "Leonetti Growth
Fund" or "Leonetti Balanced Fund" to the Fund in the envelope provided with your
statement or to the address noted above. Your account number should be written
on the check.

BY WIRE

If you are making an initial investment in a Fund, before you wire funds
you should call the Transfer Agent at (800) 282-2340 between 9:00 a.m. and 4:00
p.m., Eastern time, on a day when the New York Stock Exchange ("NYSE") is open
for trading to advise them that you are making an investment by wire. The
Transfer Agent will ask for your name and the dollar amount you are investing.
You will then receive your account number and an order confirmation number. You
should then complete the Account Application included with this Prospectus.
Include the date and the order confirmation number on the Account Application

13
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LEONETTI FUNDS

SHAREHOLDER INFORMATION, Continued

and mail it to the address at the top of the Account Application. Your bank
should transmit immediately available funds by wire in your name to:

Firstar Bank, N.A. Cinti/Trust
ABA Routing #0420-0001-3
Leonetti Growth Fund or Leonetti Balanced Fund
DDA #821602307 DDA #483897963
Account name (shareholder name)
Shareholder account number

If you are making a subsequent purchase, your bank should wire funds as
indicated above. Before each wire purchase, you should be sure to notify the
Transfer Agent. IT IS ESSENTIAL THAT YOUR BANK INCLUDE COMPLETE INFORMATION
ABOUT YOUR ACCOUNT IN ALL WIRE INSTRUCTIONS. If you have questions about how to
invest by wire, you may call the Transfer Agent. Your bank may charge you a fee
for sending a wire to the Funds.

You may buy, sell and exchange shares of the Funds through certain brokers
(and their agents) that have made arrangements with the Funds to sell their
shares. When you place your order with such a broker or its authorized agent,
your order is treated as if you had placed it directly with the Funds' Transfer
Agent, and you will pay or receive the next price calculated by the Funds. The
broker (or agent) holds your shares in an omnibus account in the broker's (or
agent's) name, and the broker (or agent) maintains your individual ownership
records. The Advisor may pay the broker (or its agent) for maintaining these
records as well as providing other shareholder services. The broker (or its
agent) may charge you a fee for handling your order. The broker (or agent) is
responsible for processing your order correctly and promptly, keeping you
advised regarding the status of your individual account, confirming your
transactions and ensuring that you receive copies of the Funds' prospectus.

AUTOMATIC INVESTMENT PLAN

For your convenience, the Funds offer an Automatic Investment Plan. Under
this Plan, after your initial investment, you authorize the Funds to withdraw
from your personal checking account each month an amount that you wish to
invest, which must be at least $25. If you wish to enroll in this Plan, complete
the appropriate section in the Account Application. The Funds may terminate or
modify this privilege at any time. You may terminate your participation in the
Plan at any time by notifying the Transfer Agent in writing.

RETIREMENT PLANS

The Funds offer an Individual Retirement Account ("IRA") plan. You may
obtain information about opening an IRA account by calling (800) 282-2340. If
you wish to open a Keogh, Section 403(b) or other retirement plan, please
contact your securities dealer.

14
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LEONETTI FUNDS

SHAREHOLDER INFORMATION, Continued

HOW TO EXCHANGE SHARES

You may exchange shares of one Fund for shares of the other Fund on any day
the Funds and the NYSE are open for business.

BY MAIL

You may exchange your shares by simply sending a written request to the
Funds' Transfer Agent. You should give your account number and the number of
shares or dollar amount to be exchanged. The letter should be signed by all of
the shareholders whose names appear in the account registration.

BY TELEPHONE

If your account has telephone privileges, you may also exchange Fund shares
by calling the Transfer Agent at (800) 282-2340 between the hours of 9:00 a.m.
and 4:00 p.m., Eastern time, on any day the NYSE is open for trading. If you are
exchanging shares by telephone, you will be subject to certain identification
procedures which are listed below under "How to Sell Shares."

Excessive exchanges can disrupt management of the Funds and raise their
expenses. The Funds have established a policy which limits excessive exchanges.
You are permitted to make four exchanges during any one twelve-month period. The
Funds reserve the right to reject any exchange order. The Funds may modify the
exchange privilege by giving 60 days' written notice to its shareholders.

HOW TO SELL SHARES

You may sell (redeem) your Fund shares on any day the Funds and the NYSE
are open for business either directly to the Funds or through your investment
representative.

You may redeem your shares by simply sending a written request to the
Transfer Agent. You should give your account number and state whether you want
all or some of your shares redeemed. The letter should be signed by all of the
shareholders whose names appear in the account registration. You should send
your redemption request to:

Leonetti Growth Fund or Leonetti Balanced Fund
P.O. Box 5536
Hauppauge, NY 11788-0132

To protect the Funds and their shareholders, a signature guarantee is
required for all written redemption requests over $5,000. Signature(s) on the
redemption request must be guaranteed by an "eligible guarantor institution."
These include banks, broker-dealers, credit unions and savings institutions. A
broker-dealer guaranteeing signatures must be a member of a clearing corporation
or maintain net capital of at least $100,000. Credit unions must be authorized
to issue signature guarantees. Signature guarantees will be accepted from any
eligible guarantor institution which participates in a signature guarantee
program. A notary public is not an acceptable guarantor.

15
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LEONETTI FUNDS

SHAREHOLDER INFORMATION, Continued

BY TELEPHONE

If you complete the Redemption by Telephone portion of the Account
Application, you may redeem all or some of your shares by calling the Transfer
Agent at (800) 282-2340 between the hours of 9:00 a.m. and 4:00 p.m., Eastern
time, on any day the NYSE is open for trading. Redemption proceeds will be
mailed on the next business day to the address that appears on the Transfer
Agent's records. If you request, redemption proceeds will be wired on the next
business day to the bank account you designated on the Account Application. The
minimum amount that may be wired is $1,000. Wire charges, if any, will be
deducted from your redemption proceeds. Telephone redemptions cannot be made if
you notify the Transfer Agent of a change of address within 30 days before the
redemption request. If you have a retirement account, you may not redeem shares
by telephone.

When you establish telephone privileges, you are authorizing the Funds and
their Transfer Agent to act upon the telephone instructions of the person or
persons you have designated on your Account Application. Redemption proceeds
will be transferred to the bank account you have designated on your Account
Application.

Before executing an instruction received by telephone, the Funds and the
Transfer Agent will use reasonable procedures to confirm that the telephone
instructions are genuine. These procedures may include recording the telephone
call and asking the caller for a form of personal identification. If the Funds
and the Transfer Agent follow these reasonable procedures, they will not be
liable for any loss, expense or cost arising out of any telephone redemption
request that is reasonably believed to be genuine. This includes any fraudulent
or unauthorized request. The Funds may change, modify or terminate these
privileges at any time upon at least 60 days' notice to shareholders.

You may request telephone redemption privileges after your account is
opened by calling the Transfer Agent at (800) 282-2340 for instructions.

You may have difficulties in making a telephone redemption during periods
of abnormal market activity. If this occurs, you may make your redemption
request in writing.

Payment of your redemption proceeds will be made promptly, but not later
than seven days after the receipt of your written request in proper form as
discussed in this Prospectus. If you made your initial investment by wire,
payment of your redemption proceeds for those shares will not be made until one
business day after your completed Account Application is received by the Funds.
If you did not purchase your shares with a certified check or wire, the Funds
may delay payment of your redemption proceeds for up to 15 days from date of
purchase or until your check has cleared, whichever occurs first.

16
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LEONETTI FUNDS

SHAREHOLDER INFORMATION, Continued

The Funds may redeem the shares in your account if the value of your
account is less than $100 as a result of redemptions you have made. This does
not apply to retirement plan or Uniform Gifts or Transfers to Minors Act
accounts. You will be notified that the value of your account is less than $100
before the Funds make an involuntary redemption. You will then have 30 days in
which to make an additional investment to bring the value of your account to at
least $100 before the Funds take any action.

Each Fund has the right to pay redemption proceeds to you in whole or in
part by a distribution of securities from the Fund's portfolio. It is not
expected that the Funds would do so except in unusual circumstances. If either
Fund pays your redemption proceeds by a distribution of securities, you could
incur brokerage or other charges in converting the securities to cash.

SYSTEMATIC WITHDRAWAL PROGRAM

As another convenience, you may redeem your Fund shares through the
Systematic Withdrawal Program. If you elect this method of redemption, the Fund
will send you a check in the minimum amount of $100. You may choose to receive a
check each month or calendar quarter. Your Fund account must have a value of at
least $10,000 in order to participate in this Program. This Program may be
terminated at any time by the Funds. You may also elect to terminate your
participation in this Program at any time by writing to the Transfer Agent.

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

PRICING OF FUND SHARES

The price of each Fund's shares is based on the Fund's net asset value.
This is calculated by dividing each Fund's assets, minus its liabilities, by the
number of shares outstanding. Each Fund's assets are the market value of
securities held in its portfolio, plus any cash and other assets. Each Fund's
liabilities are fees and expenses owed by the Fund. The number of Fund shares
outstanding is the amount of shares which have been issued to shareholders. The
price you will pay to buy Fund shares or the amount you will receive when you
sell your Fund shares is based on the net asset value next calculated after your
order is received by the Transfer Agent with complete information and meeting
all the requirements discussed in this Prospectus.

The net asset value of each Fund's shares is determined as of the close of
regular trading on the NYSE. This is normally 4:00 p.m., Eastern time. Fund
shares will not be priced on days that the NYSE is closed for trading (including
certain U.S. holidays).

17
<PAGE>
LEONETTI FUNDS

DIVIDENDS AND DISTRIBUTIONS

Each Fund will make distributions of dividends and capital gains, if any,
annually, usually on or about December 31 of each year. Each Fund will make
another distribution of any additional undistributed capital gains earned during
the 12-month period ended October 31 on or about December 31.

All distributions will be reinvested in shares of the distributing Fund
unless you choose one of the following options: (1) receive dividends in cash
while reinvesting capital gain distributions in additional Fund shares; or (2)
receive all distributions in cash. If you wish to change your distribution
option, write to the Transfer Agent in advance of the payment date of the
distribution.

TAX CONSEQUENCES

The Funds intend to make distributions of dividends and capital gains.
Dividends are taxable to you as ordinary income. The rate you pay on capital
gain distributions will depend on how long the Fund held the securities that
generated the gains, not on how long you owned your Fund shares. You will be
taxed in the same manner whether you receive your dividends and capital gain
distributions in cash or reinvest them in additional Fund shares.

If you exchange or sell your Fund shares, it is considered a taxable event
for you. Depending on the purchase price and the sale price of the shares you
exchange or sell, you may have a gain or a loss on the transaction. You are
responsible for any tax liabilities generated by your transaction.

FINANCIAL HIGHLIGHTS

These tables show each Fund's financial performance for up to the past five
years. Certain information reflects financial results for a single Fund share.
"Total return" shows how much your investment in a Fund would have increased or
decreased during each period, assuming you had reinvested all dividends and
distributions. This information has been audited by Ernst & Young LLP,
Independent Auditors. Their report and the Funds' financial statements are
included in the Annual Report, which is available upon request.

18
<PAGE>
LEONETTI GROWTH FUND

FINANCIAL HIGHLIGHTS
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT THE PERIOD

SEPTEMBER 1, 1999*
THROUGH
JUNE 30, 2000
-------------
Net asset value, beginning of period $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss (0.07)
Net realized and unrealized gain on investments 2.12
-------
Total from investment operations 2.05
-------
Net asset value, end of period $ 12.05
=======
Total return 20.50%++

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 6.5

RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed 4.09%+
After fees waived and expenses absorbed 2.00%+

RATIO OF NET INVESTMENT LOSS TO AVERAGE NET ASSETS:
Before fees waived and expenses absorbed (3.28)%+
After fees waived and expenses absorbed (1.19)%+
Portfolio turnover rate 193.89%++

* Commencement of operations.
+ Annualized.
++ Not annualized.

19
<PAGE>
LEONETTI BALANCED FUND

FINANCIAL HIGHLIGHTS, Continued
FOR A CAPITAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, AUGUST 1, 1995*
---------------------------------------- THROUGH
2000 1999 1998 1997 JUNE 30, 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 16.34 $ 14.02 $ 12.31 $ 10.80 $ 10.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.07 0.05 0.05 0.06 0.09
Net realized and unrealized gain on
investments 1.86 3.18 2.75 1.54 0.76
------- ------- ------- ------- -------
Total from investment operations 1.93 3.23 2.80 1.60 0.85
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
From net investment income (0.05) (0.05) (0.03) (0.09) (0.05)
From net realized gain (0.44) (0.86) (1.06) -- --
------- ------- ------- ------- -------
Total distributions (0.49) (0.91) (1.09) (0.09) (0.05)
------- ------- ------- ------- -------
Net asset value, end of period $ 17.78 $ 16.34 $ 14.02 $ 12.31 $ 10.80
======= ======= ======= ======= =======
Total return 11.81% 24.28% 24.10% 14.91% 8.46%++

RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) $ 30.4 $ 24.1 $ 15.5 $ 11.3 $ 10.1
Ratio of expenses to average net assets 1.61% 1.77% 1.99% 2.29% 2.26%+
Ratio of net investment income to
average net assets 0.43% 0.35% 0.40% 0.47% 1.02%+
Portfolio turnover rate 88.76% 81.16% 89.51% 119.75 42.16%++
</TABLE>

* Commencement of operations.
+ Annualized.
++ Not annualized.

20
<PAGE>
ADVISOR
LEONETTI & ASSOCIATES, INC.
1130 Lake Cook Road, Suite 300
Buffalo Grove, Illinois 60089
(847) 520-0999

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

CUSTODIAN
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, Ohio 45202

TRANSFER AGENT
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, New York 11788-0132
(800) 282-2340

AUDITORS
ERNST & YOUNG LLP
725 South Figueroa Street
Los Angeles, California 90017

LEGAL COUNSEL
PAUL, HASTINGS, JANOFSKY & WALKER, LLP
345 California Street, 29th Floor
San Francisco, California 94104
<PAGE>
LEONETTI GROWTH FUND
LEONETTI BALANCED FUND
SERIES OF PROFESSIONALLY MANAGED PORTFOLIOS
(THE "TRUST")

For investors who want more information about the Funds, the following documents
are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS: Additional information about the Funds' investments
is available in the Funds' annual and semi-annual reports to shareholders. In
the Funds' annual report, you will find a discussion of market conditions and
investment strategies that significantly affected each Fund's performance during
its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds and is incorporated by reference into this
Prospectus.

You can get free copies of reports and the SAI, request other information and
discuss your questions about the Funds by contacting the Funds at:

American Data Services, Inc.
P.O. Box 5536
Hauppauge, NY 11788-0132
Telephone: 1-800-282-2340

You can review and copy information including the Funds' reports and SAI at the
Public Reference Room of the Securities and Exchange Commission in Washington,
D.C. You can obtain information on the operation of the Public Reference Room by
calling 1-202-942-8090. Reports and other information about the Fund are also
available:

* Free of charge from the Commission's EDGAR database on the Commission's
Internet website at http://www.sec.gov, or

* For a fee, by writing to the Public Reference Room of the Commission,
Washington, DC 20549-0102, or

* For a fee, by electronic request at the following e-mail address:
[email protected].

(The Trust's SEC Investment Company Act file number is 811-5037)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 27, 2000

LEONETTI BALANCED FUND
LEONETTI GROWTH FUND
SERIES OF
PROFESSIONALLY MANAGED PORTFOLIOS
1130 LAKE COOK ROAD, SUITE 300
BUFFALO GROVE, IL 60089
(847) 520-0999

This Statement of Additional Information ("SAI") is not a prospectus and it
should be read in conjunction with the prospectus dated October 27, 2000, as may
be revised, of the Leonetti Balanced Fund ("Balanced Fund") and the Leonetti
Growth Fund ("Growth Fund"). The Balanced Fund and the Growth Fund are referred
to herein collectively as "the Funds." Leonetti & Associates, Inc. (the
"Advisor") is the investment advisor to the Funds. Copies of the Funds'
Prospectus are available by calling the number above or (212) 633-9700.

TABLE OF CONTENTS

The Trust ................................................................ B-2
Investment Objectives and Policies ....................................... B-2
Investment Restrictions .................................................. B-7
Distributions and Tax Information ........................................ B-10
Trustees and Executive Officers .......................................... B-12
The Funds' Investment Advisor ............................................ B-14
The Funds' Administrator ................................................. B-14
The Funds' Distributor ................................................... B-15
Execution of Portfolio Transactions ...................................... B-15
Portfolio Turnover ....................................................... B-16
Additional Purchase and Redemption Information ........................... B-17
Determination of Share Price ............................................. B-20
Performance Information .................................................. B-20
General Information ...................................................... B-22
Financial Statements ..................................................... B-23
Appendix A ............................................................... B-23
Appendix B ............................................................... B-25

B-1
<PAGE>
THE TRUST

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

The Trust is registered with the SEC as a management investment company.
Such registration does not involve supervision by the SEC of the management or
policies of the Funds. The Prospectus of the Funds and this SAI 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, or may be accessed via the world wide web at http://www.sec.gov.

INVESTMENT OBJECTIVES AND POLICIES

The Leonetti Balanced Fund is a mutual fund with the investment objective
of seeking total return through a combination of income and capital growth,
consistent with preservation of capital.

The Leonetti Growth Fund is a mutual fund with the investment objective of
seeking long-term growth of capital.

Each Fund is diversified, which under applicable federal law means that as
to 75% of its total assets, no more than 5% may be invested in the securities of
a single issuer and that it may hold no more than 10% of the voting securities
of a single issuer. The following discussion supplements the discussion of the
Funds' investment objectives and policies as set forth in the Prospectus. There
can be no assurance the objective of either Fund will be attained.

PREFERRED STOCK. A preferred stock is a blend of the characteristics of a
bond and common stock. It can offer the higher yield of a bond and has priority
over common stock in equity ownership, but does not have the seniority of a bond
and, unlike common stock, its participation in the issuer's growth may be
limited. Preferred stock has preference over common stock in the receipt of
dividends and in any residual assets after payment to creditors should the
issuer by dissolved. Although the dividend is set at a fixed annual rate, in
some circumstances it can be changed or omitted by the issuer.

REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
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 a 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 a 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

B-2
<PAGE>
Reserve Board and registered as broker-dealers with the Securities and Exchange
Commission ("SEC") or exempt from such registration. Each Fund will generally
enter into repurchase agreements of short durations, from overnight to one week,
although the underlying securities generally have longer maturities. Each 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 its net 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 a 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 a 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, a 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
a 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, a 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 a Fund,
the Advisor seeks to minimize the risk of loss through repurchase agreements by
analyzing the creditworthiness of the other party, 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, a 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), a 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 a Fund will be
unsuccessful in seeking to impose on the seller a contractual obligation to
deliver additional securities.

ILLIQUID SECURITIES. Each Fund may not invest more than 15% of the value of
its net assets in securities that at the time of purchase have legal or
contractual restrictions on resale or are otherwise illiquid. The Advisor will
monitor the amount of illiquid securities in each Fund's portfolio, under the
supervision of the Trust's Board of Trustees, to ensure compliance with the
Funds' investment restrictions.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933 (the "Securities Act"), securities

B-3
<PAGE>
which are otherwise not readily marketable and repurchase agreements having a
maturity of longer than seven days. Securities which have not been registered
under the Securities Act are referred to as private placement or restricted
securities and are purchased directly from the issuer or in the secondary
market. Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a Fund might be unable
to dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemption requests
within seven days. A Fund might also have to register such restricted securities
in order to dispose of them, resulting in additional expense and delay. Adverse
market conditions could impede such a public offering of securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the Securities Act, including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments. These securities might be adversely affected if qualified
institutional buyers were unwilling to purchase such securities. If such
securities are subject to purchase by institutional buyers in accordance with
Rule 144A promulgated by the SEC under the Securities Act, the Trust's Board of
Trustees may determine that such securities are not illiquid securities
notwithstanding their legal or contractual restrictions on resale. In all other
cases, however, securities subject to restrictions on resale will be deemed
illiquid.

WHEN-ISSUED SECURITIES. Each Fund is authorized to 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 a Fund to the
issuer and no interest accrues to the Fund. To the extent that assets of a Fund
are held in cash pending the settlement of a purchase of securities, the Fund
would earn no income; however, it is each 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, any purchase of
such securities would be made with the purpose of actually acquiring them unless
a sale appears desirable for investment reasons. At the time a 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. Each 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. Each 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.

B-4
<PAGE>
INVESTMENT COMPANIES. Each Fund may under certain circumstances invest a
portion of its assets in other investment companies, including money market
funds. An investment in a mutual fund will involve payment by the Fund of its
pro rata share of advisory and administrative fees charged by such fund.

CORPORATE DEBT SECURITIES. The Balanced Fund may invest in investment-grade
corporate debt securities. Investment-grade securities are generally considered
to be those rated BBB or better by Standard & Poor's Ratings Group ("S&P"), Duff
& Phelps Credit Rating Co. ("Duff") or Fitch Investors Service, Inc. ("Fitch")
or Baa or better by Moody's Investor's Service, Inc. ("Moody's") or, if unrated,
deemed to be of comparable quality by the Advisor. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make interest and principal payments in securities with these ratings than is
the case with higher grade bonds.

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
held by the Fund, the Advisor will consider whether the Fund should continue to
hold the security but is not required to dispose of it. Credit ratings attempt
to evaluate the safety of principal and interest payments and do not evaluate
the risks of fluctuations in market value. Also, rating agencies may fail to
make timely changes in credit ratings in response to subsequent events, so that
an issuer's current financial conditions may be better or worse than the rating
indicates. The ratings for corporate debt securities are described in Appendix
A.

SHORT-TERM INVESTMENTS

Each Fund may invest in any of the following securities and instruments:

U. S. GOVERNMENT SECURITIES. U.S. Government securities in which a Fund may
invest include direct obligations issued by the U.S. Treasury, such as Treasury
bills, certificates of indebtedness, notes and bonds. U.S. Government agencies
and instrumentalities that issue or guarantee securities include, but are not
limited to, the Federal Housing Administration, Federal National Mortgage
Association, Federal Home Loan Banks, Government National Mortgage Association,
International Bank for Reconstruction and Development and Student Loan Marketing
Association.

All Treasury securities are backed by the full faith and credit of the
United States. Obligations of U.S. Government agencies and instrumentalities may
or may not be supported by the full faith and credit of the United States. Some,
such as the Federal Home Loan Banks, are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal National Mortgage Association, are supported only by the credit
of the instrumentality and not by the Treasury. If the securities are not backed
by the full faith and credit of the United States, the owner of the securities
must look principally to the agency issuing the obligation for repayment and may
not be able to assert a claim against United States in the event that the agency
or instrumentality does not meet its commitment.

B-5
<PAGE>

Among the U.S. Government securities that may be purchased by a Fund are
"mortgage-backed securities" of the Government National Mortgage Association
("Ginnie Mae"), the Federal Home Loan Mortgage Association ("Freddie Mac") and
the Federal National Mortgage Association ("Fannie Mae"). These mortgage-backed
securities include "pass-through" securities and "participation certificates,"
both of which represent pools of mortgages that are assembled, with interests
sold in the pool. Payments of principal (including prepayments) and interest by
individual mortgagors are "passed through" to the holders of interests in the
pool; thus each payment to holders may contain varying amounts of principal and
interest. Prepayments of the mortgages underlying these securities may result in
a Fund's inability to reinvest the principal at comparable yields.
Mortgage-backed securities also include "collateralized mortgage obligations,"
which are similar to conventional bonds in that they have fixed maturities and
interest rates and are secured by groups of individual mortgages. Timely payment
of principal and interest on Ginnie Mae pass-throughs is guaranteed by the full
faith and credit of the United States. Freddie Mac and Fannie Mae are both
instrumentalities of the U.S. Government, but their obligations are not backed
by the full faith and credit of the United States.

Collateralized mortgage obligations ("CMO's") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, interest and prepaid principal on a CMO are paid,
in most cases, semi-annually. CMO's may be collateralized by whole mortgage
loans but are more typically collateralized by portfolios of mortgage
pass-through securities guaranteed by GNMA, FHLMC, or FNMA. CMO's are structured
into multiple classes, with each class bearing a different stated maturity.
Monthly payments of principal, including prepayments, are first returned to
investors holding the shortest maturity class. Investors holding the longer
maturity classes receive principal only after the first class has been retired.
Other mortgage-related securities include those that directly or indirectly
represent a participation in or are secured by and payable from mortgage loans
on real property, such as CMO residuals or stripped mortgage-backed securities,
and may be structured in classes with rights to receive varying proportions of
principal and interest.

CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND TIME DEPOSITS. Each Fund
may hold certificates of deposit, bankers' acceptances and time deposits.
Certificates of deposit are negotiable certificates issued against funds
deposited in a commercial bank for a definite period of time and earning a
specified return. Bankers' acceptances are negotiable drafts or bills of
exchange, normally drawn by an importer or exporter to pay for specific
merchandise, which are "accepted" by a bank, meaning in effect that the bank
unconditionally agrees to pay the face value of the instrument on maturity.
Certificates of deposit and bankers' acceptances acquired by a Fund will be
dollar-denominated obligations of domestic banks, savings and loan associations
or financial institutions which, at the time of purchase, have capital, surplus
and undivided profits in excess of $100 million (including assets of both
domestic and foreign branches), based on latest published reports, or less than
$100 million if the principal amount of such bank obligations are fully insured
by the U.S. Government.

B-6
<PAGE>
In addition to buying certificates of deposit and bankers' acceptances, the
Funds also may make interest-bearing time or other interest-bearing deposits in
commercial or savings banks. Time deposits are non-negotiable deposits
maintained at a banking institution for a specified period of time at a
specified interest rate.

COMMERCIAL PAPER AND SHORT-TERM NOTES. Each Fund may invest a portion of
its assets in commercial paper and short-term notes. Commercial paper consists
of unsecured promissory notes issued by corporations. Commercial paper and
short-term notes will normally have maturities of less than nine months and
fixed rates of return, although such instruments may have maturities of up to
one year.

Commercial paper and short-term notes will consist of issues rated at the
time of purchase "A-2" or higher by S&P, "Prime-1" or "Prime-2" by Moody's, or
similarly rated by another nationally recognized statistical rating organization
or, if unrated, will be determined by the Advisor to be of comparable quality.
These rating symbols are described in Appendix B.

INVESTMENT RESTRICTIONS

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

The Balanced Fund may not:

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

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

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

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

4. Purchase or sell real estate, commodities or commodity contracts. (As a
matter of operating policy, the Board of Trustees may authorize the Fund to
engage in certain activities regarding futures contracts for bona fide hedging

B-7
<PAGE>
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 making any permitted
borrowings, mortgages or pledges.

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

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

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

9. 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.

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

11. With respect to fundamental investment restriction 2(a) above, the Fund
will not purchase portfolio securities while outstanding borrowings exceed 5% of
its assets.

The Growth Fund may not:

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

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

B-8
<PAGE>
(b) Mortgage, pledge or hypothecate any of its assets except in
connection with any such borrowings.

3. Purchase securities on margin, participate in 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 real estate, commodities or commodity contracts. (As a matter
of operating policy, the Board of Trustees may authorize the Fund in the future
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 total assets in the
securities of companies engaged in any one industry. (Does not apply to
investment in the securities of the U.S. Government, its agencies or
instrumentalities.)

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

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 any issuer for purposes of exercising control or management

9. Invest in securities of other investment companies except as permitted
under the Investment Company Act of 1940.

11. With respect to fundamental investment restriction 2(a) above, the Fund
will not purchase portfolio securities while outstanding borrowings exceed 5% of
its assets.

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<PAGE>
Except with respect to borrowing, if a percentage restriction set forth in
the prospectus or in this SAI 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.

DISTRIBUTIONS AND TAX INFORMATION

DISTRIBUTIONS

Dividends from net investment income and distributions from net profits
from the sale of securities are generally made annually. Also, the Funds expect
to distribute any undistributed net investment income on or about December 31 of
each year. Any net capital gains realized through the period ended October 31 of
each year will also be distributed by December 31 of each year.

Each distribution by a Fund is accompanied by a brief explanation of the
form and character of the distribution. In January of each year each 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. Each Fund intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986 (the
"Code"), provided it complies with all applicable requirements regarding the
source of its income, diversification of its assets and timing of distributions.
Each Fund's policy is to distribute to 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 each Fund will not be subject to any federal income or excise
taxes. To comply with the requirements, each Fund must also distribute (or be
deemed to have distributed) by December 31 of each calendar year (I) at least
98% of ordinary income for such year, (ii) at least 98% of the excess of
realized capital gains over 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 each 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 a 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 a Fund
for its taxable year. In view of each Fund's investment policies, it is expected
that dividends from domestic corporations may be part of a Fund's gross income
and that, accordingly, part of the distributions by the Funds may be eligible

B-10
<PAGE>
for the dividends-received deduction for corporate shareholders. However, the
portion of a 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 Fund shares held by a corporate investor are treated as
debt-financed or are held for less than 46 days.

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

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

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.

Under the Code, each 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 a 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 a Fund with their

B-11
<PAGE>
taxpayer identification numbers or certify their exempt status in order to avoid
possible erroneous application of backup withholding. Each Fund reserves the
right to refuse to open an account for any person failing to provide a certified
taxpayer identification number.

Each 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 Funds. Shareholders are advised to
consult with their own tax advisers concerning the application of federal, state
and local taxes to an investment in the Funds.

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 Funds, 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 the Funds' management, and counsel to the Funds 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 Funds. The Trustees, in turn, elect the officers of the Trust, who are
responsible for administering the day-to-day operations of the Trust and its
separate series. The current Trustees and officers, their affiliations, dates of
birth and principal occupations for the past five years are set forth below.
Unless noted otherwise, each person has held the position listed for a minimum
of five years.

Steven J. Paggioli,* 04/03/50 President and Trustee
915 Broadway, New York, New York 10010. Executive Vice President, The Wadsworth
Group (consultants); Executive Vice President of Investment Company
Administration LLC ("ICA") (mutual fund administrator and the Trust's
administrator), and Vice President and Secretary of First Fund Distributors,
Inc. ("FFD") (a registered broker-dealer and the Funds' Distributor).

Dorothy A. Berry, 08/12/43 Chairman and Trustee
14 Five Roses East, Ancram, NY 12502. President, Talon Industries (venture
capital and business consulting); formerly Chief Operating Officer, Integrated
Asset Management (investment adviser and manager) and formerly President, Value
Line, Inc., (investment advisory and financial publishing firm).

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<PAGE>
Wallace L. Cook 09/10/39 Trustee
One Peabody Lane, Darien, CT 06820. Retired. Formerly Senior Vice President,
Rockefeller Trust Co. Financial Counselor, Rockefeller & Co.

Carl A. Froebel 05/23/38 Trustee
2 Crown Cove Lane, Savannah, GA 31411. Private Investor. Formerly Managing
Director, Premier Solutions, Ltd. (computer software); formerly President and
Founder, National Investor Data Services, Inc. (investment related computer
software).

Rowley W.P. Redington 06/01/44 Trustee
202 North Mountain Avenue, Montclair, NJ 07042. 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).

Robert M. Slotky* 6/17/47 Treasurer
2020 E. Financial Way, Suite 100, Glendora, California 91741. Senior Vice
President, ICA since May 1997; former instructor of accounting at California
State University-Northridge (1997); Chief Financial Officer, Wanger Asset
Management L.P. and Treasurer of Acorn Investment Trust (1992-1996).

Robin Berger* 11/17/56 Secretary
915 Broadway, New York, New York 10010. Vice President, The Wadsworth Group.

Robert H. Wadsworth* 01/25/40 Vice President
4455 E. Camelback Road, Suite 261E, Phoenix, Arizona 85018. President of The
Wadsworth Group, ICA and FFD.

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

Set forth below is the rate of compensation received by the following
Trustees from all other portfolios of the Trust. This total amount is allocated
among the portfolios. Disinterested Trustees receive an annual retainer of
$10,000 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 $5,000.
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 from the portfolios of the Trust.

Name of Trustee Total Annual Compensation
--------------- -------------------------

Dorothy A. Berry $25,000
Wallace L. Cook $20,000
Carl A. Froebel $20,000
Rowley W.P. Redington $20,000

During the fiscal year ended June 30, 2000, trustees' fees and expenses in
the amounts of $6,841 and $2,803 were allocated to the Balanced Fund and Growth
Fund, respectively. As of the date of this SAI, the Trustees and officers of the
Trust as a group did not own more than 1% of the outstanding shares of either
Fund.

B-13
<PAGE>
THE FUNDS INVESTMENT ADVISOR

As stated in the Prospectus, investment advisory services are provided to
the Funds by Leonetti & Associates, Inc., the Advisor, pursuant to Investment
Advisory Agreements. The Advisor is controlled by Mr. Michael Leonetti. Under
the Investment Advisory Agreements, the Advisor receives a monthly fee at the
annual rate of 1.00% of each Fund's average daily net assets.

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

Each 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.

During the Balanced Fund's fiscal years ended June 30, 2,000, 1999 and
1998, the Advisor received fees of $274,935, $184,956 and $130,603,
respectively, under the Agreement.

During the period September 1, 1999 (commencement of operations) through
June 30, 2000, the Growth Fund accrued $30,560 in advisory fees, all of which
were waived by the Advisor. For the same period, the Advisor reimbursed the Fund
an additional $33,684 in expenses.

THE FUNDS ADMINISTRATOR

The Funds have Administration Agreements with Investment Company
Administration LLP (the "Administrator"), a corporation partly owned and
controlled by Messrs. Paggioli and Wadsworth with offices at 4455 E. Camelback
Rd., Ste. 261-E, Phoenix, AZ 85018. The Administration Agreements provide 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 Funds; prepare all
required filings necessary to maintain the Funds' qualification and/or
registration to sell shares in all states where the Funds currently do, or
intend 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 Funds' servicing agents (i.e., transfer agent, custodian, fund
accountants, etc.); review and adjust as necessary the Funds' daily expense
accruals; and perform such additional services as may be agreed upon by the
Funds and the Administrator. For its services, the Administrator receives a
monthly fee from each Fund 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 fiscal years ending June 30, 2000, 1999 and 1998, the
Administrator received fees of $59,580, $36,278 and $30,000, respectively, from
the Balanced Fund.

During the period September 1, 1999 through June 30, 2000, the
Administrator received fees of $24,904 from the Growth Fund.

B-14
<PAGE>
THE FUNDS DISTRIBUTOR

First Fund Distributors, Inc. (the "Distributor"), a corporation partly
owned by Messrs. Paggioli and Wadsworth, acts as the Funds' principal
underwriter in a continuous public offering of the Funds' shares. The
Distribution Agreements between the Funds and the Distributor continue 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 to which the Agreement applies (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. Each Distribution Agreement may be terminated without penalty by the
parties thereto upon sixty days' written notice, and is automatically terminated
in the event of its assignment as defined in the 1940 Act.

EXECUTION OF PORTFOLIO TRANSACTIONS

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

Purchases of portfolio securities for the Funds 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 Funds will be holding, unless better
executions are available elsewhere. Dealers and underwriters usually act as
principal for their own accounts. Purchases from underwriters will include a
concession paid by the issuer to the underwriter and purchases from dealers will
include the spread between the bid and the asked price. If the execution and
price offered by more than one dealer or underwriter are comparable, the order
may be allocated to a dealer or underwriter that has provided research or other
services as discussed below.

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

While it is the Funds' general policy to seek first to obtain the most
favorable price and execution available in selecting a broker-dealer to execute
portfolio transactions, weight is also given to the ability of a broker-dealer
to furnish brokerage and research services to the Funds or to the Advisor, even
if the specific services are not directly useful to the Funds 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 Funds 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

B-15
<PAGE>
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 Funds.

Investment decisions for the Funds are made independently from those of
other client accounts or mutual funds managed or advised by the Advisor.
Nevertheless, it is possible that at times identical securities will be
acceptable for both a Fund and one or more of such client accounts or mutual
funds. In such event, the position of a Fund and such client account(s) or
mutual 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 mutual funds seeks to acquire the
same security as a Fund at the same time, a 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, a 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 mutual funds simultaneously purchases or sells the same security
that a Fund is purchasing or selling, each day's transactions in such security
will be allocated between that Fund and all such client accounts or mutual funds
in a manner deemed equitable by the Advisor, taking into account the respective
sizes of the accounts and the amount being purchased or sold. It is recognized
that in some cases this system could have a detrimental effect on the price or
value of the security insofar as a Fund is concerned. In other cases, however,
it is believed that the ability of a Fund to participate in volume transactions
may produce better executions for that Fund.

The Funds do not effect securities transactions through brokers in
accordance with any formula, nor do they effect securities transactions through
brokers solely for selling shares of the Funds, although the Funds may consider
the sale of shares as a factor in allocating brokerage. However, as stated
above, broker-dealers who execute brokerage transactions may effect purchase of
shares of the Funds for their customers. The Funds do not use the Distributor to
execute their portfolio transactions.

During the fiscal years ended June 30, 2000, 1999 and 1998, the Balanced
Fund paid brokerage commissions of $22,191, $14,888 and $20,118, respectively.

During the period September 1, 1999 through June 30, 2000, the Growth Fund
paid $8,892 in brokerage commissions.

PORTFOLIO TURNOVER

Although the Funds generally will not invest for short-term trading
purposes, portfolio securities may be sold without regard to the length of time
they have been held when, in the opinion of the Advisor, investment
considerations warrant such action. Portfolio turnover rate is calculated by
dividing (1) the lesser of purchases or sales of portfolio securities for the
fiscal year by (2) the monthly average of the value of portfolio securities
owned during the fiscal year. A 100% turnover rate would occur if all the

B-16
<PAGE>
securities in a Fund's portfolio, with the exception of securities whose
maturities at the time of acquisition were one year or less, were sold and
either repurchased or replaced within one year. A high rate of portfolio
turnover (100% or more) generally leads to higher transaction costs and may
result in a greater number of taxable transactions. See "Execution of Portfolio
Transactions." For the fiscal years ended June 30, 2000 and 1999, the Balanced
Fund had a portfolio turnover rate of 88.76% and 81.16%, respectively. During
the period September 1, 1999 through June 30, 2000, the Growth Fund had a
portfolio turnover rate of 193.89%.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

The information provided below supplements the information contained in the
Funds' Prospectus regarding the purchase and redemption of Fund shares.

HOW TO BUY SHARES

You may purchase shares of the Funds from selected securities brokers,
dealers or financial intermediaries. Investors should contact these agents
directly for appropriate instructions, as well as information pertaining to
accounts and any service or transaction fees that may be charged by those
agents. Purchase orders through securities brokers, dealers and other financial
intermediaries are effected at the next-determined net asset value after receipt
of the order by such agent before the Funds' daily cutoff time. Orders received
after that time will be purchased at the next-determined net asset value.

The public offering price of Fund shares is the net asset value. Each Fund
receives the net asset value. Shares are purchased at the public offering price
next determined after the Transfer Agent receives your order in proper form as
discussed in the Funds' Prospectus. In most cases, in order to receive that
day's public offering price, the Transfer Agent must receive your order in
proper form before the close of regular trading on the New York Stock Exchange
("NYSE"). If you buy shares through your investment representative, the
representative must receive your order before the close of regular trading on
the NYSE to receive that day's public offering price. Orders are in proper form
only after funds are converted to U.S. funds.

If you are considering redeeming, exchanging or transferring shares to
another person shortly after purchase, you should pay for those shares with a
certified check to avoid any delay in redemption, exchange or transfer.
Otherwise a Fund may delay payment until the purchase price of those shares has
been collected or, if you redeem or exchange by telephone, until 15 calendar
days after the purchase date. To eliminate the need for safekeeping, the Funds
will not issue certificates for your shares unless you request them.

The Trust reserves the right in its sole discretion (i) to suspend the
continued offering of the Funds' shares, (ii) to reject purchase orders in whole
or in part when in the judgment of the Adviser or the Distributor such rejection
is in the best interest of either Fund, and (iii) to reduce or waive the minimum

B-17
<PAGE>
for initial and subsequent investments for certain fiduciary accounts or under
circumstances where certain economies can be achieved in sales of a Fund's
shares.

HOW TO SELL SHARES

You can sell your Fund shares any day the NYSE is open for regular trading,
either directly to the Funds or through your investment representative. The
Funds will forward redemption proceeds or redeem shares for which it has
collected payment of the purchase price.

Payments to shareholders for Fund shares redeemed directly from the Funds
will be made as promptly as possible but no later than seven days after receipt
by the Funds' Transfer Agent of the written request with complete information
and meeting all the requirements discussed in the Funds' Prospectus, except that
the Funds may suspend the right of redemption or postpone the date of payment
during any period when (a) trading on the NYSE is restricted as determined by
the SEC or the NYSE 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 a Fund not reasonably practicable; or
(c) for such other period as the SEC may permit for the protection of a Fund's
shareholders. At various times, the Funds may be requested to redeem shares for
which it has not yet received confirmation of good payment. In this
circumstance, a Fund may delay the redemption until payment for the purchase of
such shares has been collected and confirmed to the Fund.

SELLING SHARES DIRECTLY TO THE FUNDS

Send a signed letter of instruction to the Transfer Agent. The price you
will receive is the next net asset value calculated after your order is received
by the Transfer Agent with complete information and meeting all the requirements
discussed in the Funds' Prospectus. In order to receive that day's net asset
value, the Transfer Agent must receive your request before the close of regular
trading on the NYSE.

SELLING SHARES THROUGH YOUR INVESTMENT REPRESENTATIVE

Your investment representative must receive your request before the close
of regular trading on the NYSE to receive that day's net asset value. Your
investment representative will be responsible for furnishing all necessary
documentation to the Transfer Agent, and may charge you for its services.

If you want your redemption proceeds sent to an address other than your
address as it appears on the Transfer Agent's records, a signature guarantee is
required. The Funds may require additional documentation for the sale of shares
by a corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Transfer Agent for details.

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<PAGE>
Signature guarantees may be obtained from a bank, broker-dealer, credit
union (if authorized under state law), securities exchange or association,
clearing agency or savings institution. A notary public cannot provide a
signature guarantee.

DELIVERY OF PROCEEDS

The Funds generally send you payment for your shares the business day after
your request is received in proper form, assuming the Fund has collected payment
of the purchase price of your shares. Under unusual circumstances, the Funds may
suspend redemptions, or postpone payment for more than seven days, but only as
authorized by SEC rules, as stated above under "How to Sell Shares."

TELEPHONE REDEMPTIONS

Upon receipt of any instructions or inquiries by telephone from a
shareholder or, if held in a joint account, from either party, or from any
person claiming to be the shareholder, each Fund or its agent is authorized,
without notifying the shareholder or joint account parties, to carry out the
instructions or to respond to the inquiries, consistent with the service options
chosen by the shareholder or joint shareholders in his or their latest Account
Application or other written request for services, including purchasing,
exchanging or redeeming shares of a Fund and depositing and withdrawing monies
from the bank account specified in the shareholder's latest Account Application
or as otherwise properly specified to a Fund in writing.

The Transfer Agent will employ these and other reasonable procedures to
confirm that instructions communicated by telephone are genuine; if it fails to
employ reasonable procedures, the Funds may be liable for any losses due to
unauthorized or fraudulent instructions. An investor agrees, however, that to
the extent permitted by applicable law, neither the Funds nor their agents will
be liable for any loss, liability, cost or expense arising out of any redemption
request, including any fraudulent or unauthorized request. For information,
consult the Transfer Agent.

During periods of unusual market changes and shareholder activity, you may
experience delays in contacting the Transfer Agent by telephone. In this event,
you may wish to submit a written redemption request, as described in the
Prospectus, or contact your investment representative. The Telephone Redemption
Privilege is not available if you were issued certificates for shares that
remain outstanding. The Telephone Redemption Privilege may be modified or
terminated without notice.

REDEMPTIONS-IN-KIND

The Trust has filed an election under SEC Rule 18f-1 committing to pay in
cash all redemptions by a shareholder of record up to amounts specified by the
rule (in excess of the lesser of (i) $250,000 or (ii) 1% of a Fund's assets).
Each Fund has reserved the right to pay the redemption price of its shares in
excess of the amounts specified by the rule, either totally or partially, by a

B-19
<PAGE>
distribution in kind of portfolio securities (instead of cash). The securities
so distributed would be valued at the same amount as that assigned to them in
calculating the net asset value for the shares being sold. If a shareholder
receives a distribution in kind, the shareholder could incur brokerage or other
charges in converting the securities to 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 a Fund's portfolio
securities at the time of redemption or repurchase.

DETERMINATION OF SHARE PRICE

As noted in the Prospectus, the net asset value and offering price of
shares of the Funds will be determined once daily as of the close of public
trading on the NYSE (normally 4:00 p.m., Eastern time) on each day that the NYSE
is open for trading. It is expected that the NYSE 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 Day. The Funds do not expect to determine the net asset value of their
shares on any day when the NYSE is not open for trading even if there is
sufficient trading in their portfolio securities on such days to materially
affect the net asset value per share. However, the net asset value of Fund
shares may be determined on days the NYSE is closed or at times other than 4:00
p.m. if the NYSE closes at a different time or the Board of Trustees decides it
is necessary.

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

The net asset value per share of each 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 that 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, each Funds 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 Funds' average annual
compounded rate of return over the most recent four calendar quarters and the

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

Each 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 Funds will
fluctuate over time, and any presentation of a 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.

Each 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:

n
P(1+T) = 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.

The Balanced Fund's average annual total return for the period from
inception of operations (August 1, 1995) through the fiscal year ending June 30,
2000 was 19.53%. The Balanced Fund's total return for the fiscal year ended June
30, 2000 was 26.02%.

The Growth Fund's total return for the period from inception of operations
(September 1, 1999) through the fiscal year ended June 30, 2000 was 20.50%.
Certain fees and expenses of the Fund have been reimbursed during this period.
Accordingly, the total return figure is higher than it would have been had such
fees and expenses not been reimbursed.

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GENERAL INFORMATION

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

Firstar Institutional Custody Services, 425 Walnut St., Cincinnati, OH
45202 acts as Custodian of the securities and other assets of the Funds. The
Custodian does not participate in decisions relating to the purchase and sale of
securities by the Funds. American Data Services, P.O. Box 5536, Hauppauge, NY
11788-0132 acts as the Funds' transfer and shareholder service agent.

Ernst & Young, LLP, 725 South Figueroa St., Los Angeles, CA 90017 are the
independent auditors for the Funds.

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

On September 29, 2000, the following persons owned of record or
beneficially more that 5% of the Balanced Fund's outstanding voting securities:

Frank G. Valerio IRA, Niles, IL, 60648; 11.68%

Charles Schwab & Co., Special Custody Account, San Francisco, CA 94104;
13.59%

On September 29, 2000, the following persons owned of record or
beneficially more that 5% of the Growth Fund's outstanding voting securities:

Charles Schwab & Co., Special Custody Account, San Francisco, CA 94014;
5.13%

Valerio Investment, Niles, IL 60714; 10.42%

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

Shares issued by the Funds have no preemptive, conversion, or subscription
rights. Shareholders have equal and exclusive rights as to dividends and
distributions as declared by the Funds and to the net assets of the Funds upon
liquidation or dissolution. Each Fund, as a separate series of the Trust, votes
separately on matters affecting only that Fund (e.g., approval of the Advisory
Agreement); all series of the Trust vote as a single class on matters affecting
all series jointly or the Trust as a whole (e.g., election or removal of
Trustees). Voting rights are not cumulative, so that the holders of more than

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<PAGE>
50% of the shares voting in any election of Trustees can, if they so choose,
elect all of the Trustees. While the Trust is not required and does not intend
to hold annual meetings of shareholders, such meetings may be called by the
Trustees in their discretion, or upon demand by the holders of 10% or more of
the outstanding shares of the Trust, for the purpose of electing or removing
Trustees.

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 a Fund's assets for any shareholder held
personally liable for obligations of a 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 a
Fund or Trust and satisfy any judgment thereon. All such rights are limited to
the assets of a 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 a Fund itself is unable to meet its obligations.

The Boards of the Trust, the Adviser and the Distributor have adopted Codes
of Ethics under Rule 17j-1 of the 1940 Act. These Codes permit, subject to
certain conditions, personnel of the Adviser and Distributor to invest in
securities that may be purchased or held by the Funds.

FINANCIAL STATEMENTS

The Funds' annual report to shareholders for their fiscal year ended June
30, 2000 is a separate document supplied with this SAI and the financial
statements, accompanying notes and report of independent auditors appearing
therein are incorporated by reference in this SAI.

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APPENDIX A
CORPORATE BOND RATINGS*

MOODY'S INVESTORS SERVICE, INC.

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.

STANDARD & POOR'S RATINGS GROUP

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.

*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.

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APPENDIX B
COMMERCIAL PAPER RATINGS

MOODY'S INVESTORS SERVICE, INC.

Prime-1--Issuers (or related supporting institutions) rated "Prime-1" have
a superior ability for repayment of senior short-term debt obligations.
"Prime-1" repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries, high
rates of return on funds employed, conservative capitalization structures with
moderate reliance on debt and ample asset protection, broad margins in earnings
coverage of fixed financial charges and high internal cash generation, and
well-established access to a range of financial markets and assured sources of
alternate liquidity.

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

STANDARD & POOR'S RATINGS GROUP

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

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

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