FIRSTAR FUNDS INC
497, 1999-06-18
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                             FIRSTAR FUNDS, INC.
                      Statement of Additional Information



Short-Term Bond Market Fund    Balanced Income Fund     Special Growth Fund
Intermediate Bond Market Fund  Balanced Growth Fund  International Equity Fund
  Bond IMMDEX/TM Fund         Growth and Income Fund    Emerging Growth Fund
Tax-Exempt Intermediate         Equity Index Fund          MicroCap Fund
       Bond Fund                   Growth Fund


                                 March 1, 1999


                          (As revised June 18, 1999)


                               TABLE OF CONTENTS
                               -----------------


                                                                        Page

                                                                        ----
Firstar Funds, Inc................................................         2
Description of the Funds and their Investments and Risks..........         2
Investment Strategies and Risks...................................         5
Net Asset Value...................................................        38
Additional Purchase and Redemption Information....................        39
Description of Shares.............................................        44
Additional Information Concerning Taxes...........................        47
Management of the Company.........................................        48
Custodian, Transfer Agent and Accounting Services Agent...........        60
Expenses..........................................................        61
Independent Accountants...........................................        61
Counsel...........................................................        61
Performance Calculations..........................................        61
Performance History...............................................        66
Miscellaneous.....................................................        69
Appendix A........................................................       A-1
Appendix B........................................................       B-1


     This Statement of Additional Information ("SAI"), which is not a
prospectus, supplements and should be read in conjunction with Firstar Funds,
Inc.'s  prospectus ("Prospectus") dated March 1, 1999, for Institutional,
Retail A and Retail B Shares of the Short-Term Bond Market Fund, Intermediate
Bond Market Fund, Tax-Exempt Intermediate Bond Fund, Bond IMMDEX/TM Fund,
Balanced Income Fund, Balanced Growth Fund, Growth and Income Fund, Equity
Index Fund, Growth Fund, Special Growth Fund, Emerging Growth Fund, MicroCap
Fund and International Equity Fund (collectively referred to as the "Funds")
and is incorporated by reference in its entirety into the Prospectus. Copies
of the Prospectus for the Funds may be obtained by writing the Firstar Funds
Center at 615 East Michigan Street, P.O. Box 3011, Milwaukee, WI  53201-3011
or by calling 1-800-228-1024.  The Financial Statements and Independent
Accountants Report theron in this SAI are incorporated by reference from the
Funds' Annual Report, which may be obtained by writing the address above or
calling the toll-free number above.  No other part of the Annual Report is
incorporated herein by reference.



                              FIRSTAR FUNDS, INC.

     Firstar Funds, Inc. (the "Company") is a Wisconsin corporation which was
incorporated on February 15, 1988 as a management investment company. The
Company, formerly known as Portico Funds, Inc., changed its name effective
February 1, 1998. The Company is authorized to issue separate classes of shares
of Common Stock representing interests in separate investment portfolios.  Each
class of the Funds is currently divided into three series, a Retail A, Retail B
and Institutional series.  This SAI pertains to Retail A Shares, Retail B Shares
and Institutional Shares of thirteen diversified portfolios, the Short-Term Bond
Market Fund, Intermediate Bond Market Fund, Tax-Exempt Intermediate Bond Fund,
Bond IMMDEX/TM Fund, Balanced Income Fund, Balanced Growth Fund, Growth and
Income Fund, Equity Index Fund, Growth Fund, Special Growth Fund, Emerging
Growth Fund, MicroCap Fund and International Equity Fund (collectively the
"Funds").  The Short-Term Bond Market Fund changed its name from Short-
Intermediate Fixed Income Fund effective January 1, 1993.  The Growth and
Income Fund changed its name from the Income and Growth Fund effective
August 16, 1993.  The Growth Fund changed its name from the MidCore Growth
Fund effective May 30, 1997.  The Balanced Growth Fund changed its name from
the Balanced Fund effective February 1, 1998 and commenced operations on March
30, 1992. The Growth and Income Fund, Equity Index Fund, Short-Term Bond Market
Fund and Bond IMMDEX/TM Fund commenced operations on December 29, 1989; the
Special Growth Fund commenced operations on December 28, 1989; the Growth Fund
commenced operations on December 29, 1992; the Balanced Income Fund commenced
operations on December 1, 1997; the Intermediate Bond Market Fund commenced
operations on January 5, 1993; the Tax-Exempt Intermediate Bond Fund commenced
operations on February 8, 1993; the International Equity Fund commenced
operations on April 28, 1994; the Emerging Growth Fund commenced operations
on August 15, 1997; and the MicroCap Fund commenced operations on August 1,
1995.  The Company also offers other investment portfolios which are described
in a separate statement of additional information.  For information concerning
these other portfolios, contact the Firstar Mutual Funds Services, LLC at
1-800-982-8909 or write to 615 East Michigan Street, P.O. Box 3011, Milwaukee,
Wisconsin 53201-3011.



            DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS

     The Company is a diversified, open-end management investment company.  The
following policies supplement the Funds' respective investment objectives and
policies as set forth in the Prospectus.

Portfolio Transactions
- ----------------------

     Subject to the general supervision of the Board of Directors, the Adviser
is responsible for, makes decisions with respect to, and places orders for all
purchases and sales of portfolio securities for each Fund except the
International Equity Fund.  Subject to the general supervision of the Board of
Directors, the Adviser is responsible for the portfolio management of the
International Equity Fund.  Pursuant to the terms of the Adviser's Advisory
Agreement with the Fund, the Adviser has delegated certain of its duties to
Hansberger Global Investors, Inc. (the "Sub-Adviser" or "HGI").  Within the
framework of the investment objectives, policies and restrictions of the Fund,
and subject to the supervision of the Adviser, the Sub-Adviser is responsible
for, makes decisions with respect to, and places orders for all purchases and
sales of portfolio securities for the International Equity Fund.

     The portfolio turnover rate for each Fund is calculated by dividing the
lesser of purchases or sales of portfolio securities for the reporting period by
the monthly average value of the portfolio securities owned during the reporting
period. The calculation excludes all securities, including options, whose
maturities or expiration dates at the time of acquisition are one year or less.
Portfolio turnover may vary greatly from year to year as well as within a
particular year, and may be affected by cash requirements for redemption of
shares and by requirements which enable the Funds to receive favorable tax
treatment. Portfolio turnover will not be a limiting factor in making portfolio
decisions, and each Fund may engage in short-term trading to achieve its
investment objective.

     Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions.  On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers.  Unlike transactions on
U.S. stock exchanges which involve the payment of negotiated brokerage
commissions, transactions in foreign securities generally involve the payment of
fixed brokerage commissions which are generally higher than those in the United
States.

     Transactions in the over-the-counter market are generally principal
transactions with dealers and the costs of such transactions involve dealer
spreads rather than brokerage commissions.  With respect to over-the-counter
transactions, the Adviser and Sub-Adviser will normally deal directly with
dealers who make a market in the securities involved except in those
circumstances where better prices and execution are available elsewhere or as
described below.

     Fixed income securities purchased and sold by the Bond and Balanced Funds
are generally traded in the over-the-counter market on a net basis (i.e.,
without commission) through dealers, or otherwise involve transactions directly
with the issuer of an instrument.  The cost of securities purchased from
underwriters includes an underwriting commission or concession, and the prices
at which securities are purchased from and sold to dealers include a dealer's
mark-up or mark-down.

     The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
The Funds will engage in this practice, however, only when the Adviser or Sub-
Adviser, in its sole discretion, believes such practice to be in the Funds'
interests.

     For the fiscal years ended October 31, 1998, 1997 and 1996 the Company paid
brokerage commissions of $521,009, $403,426 and $364,819 with respect to the
Growth and Income Fund; $912,455,$965,454 and $1,128,115 with respect to the
Special Growth Fund; and $100,414, $101,524 and $109,625 with respect to the
Equity Index Fund, respectively.  For the same periods, the Short-Term Bond
Market, Intermediate Bond Market, Tax-Exempt Intermediate Bond, and Bond
IMMDEX/TM Funds paid no brokerage commissions.  For the fiscal years ended
October 31, 1998, 1997 and1996, the Company paid brokerage commissions of
$183,767, $178,114 and $161,362 with respect to the Balanced Growth Fund.
For the fiscal years ended October 31, 1998, 1997 and 1996 the Company paid
brokerage commissions of  $187,935, $263,875 and $224,353, with respect to
the Growth Fund. For the fiscal years ended October 31, 1998,1997 and 1996,
the Company paid brokerage commissions of $183,485, $161,449 and $40,498
with respect to the International Equity Fund. For the fiscal year ended
October 31, 1998 and the fiscal period from August 15, 1997 through October
31, 1997 the Company paid brokerage commissions of $183,895 and $34,150 with
respect to the Emerging Growth Fund.  For the fiscal year ended October 31,
1998, 1997, and fiscal periods July 1, 1996 through October 31, 1996 and
August 1, 1995 through June 30, 1996 the Company paid brokerage commissions
of $151,906, $132,772, $75,526 and $62,266 with respect to the MicroCap Fund.
For the fiscal year ended October 31, 1998 the Company paid brokerage
commissions of $17,012 with respect to the Balanced Income Fund. None of
the brokerage commissions were paid to affiliates of the Company, the
Adviser, Sub-Adviser or the Co-Administrators.


     The Advisory Agreement between the Company and the Adviser and with respect
to the International Equity Fund and the Sub-Advisory Agreement among the
Company, the Adviser and Sub-Adviser, provide that, in executing portfolio
transactions and selecting brokers or dealers, the Adviser and Sub-Adviser will
seek to obtain the best overall terms available.  In assessing the best overall
terms available for any transaction, the Adviser or Sub-Adviser shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commissions, if any, both
for the specific transaction and on a continuing basis.  In addition, the
Agreements authorize the Adviser and Sub-Adviser to cause the Funds to pay a
broker-dealer which furnishes brokerage and research services a higher
commission than that which might be charged by another broker-dealer for
effecting the same transaction, provided that the Adviser or Sub-Adviser
determines in good faith that such commission is reasonable in relation to the
value of the brokerage and research services provided by such broker-dealer,
viewed in terms of either the particular transaction or the overall
responsibilities of the Adviser and Sub-Adviser to the Funds.  Such brokerage
and research services might consist of reports and statistics relating to
specific companies or industries, general summaries of groups of stocks or bonds
and their comparative earnings and yields, or broad overviews of the stock, bond
and government securities markets and the economy.


     Supplementary research information so received is in addition to, and not
in lieu of, services required to be performed by the Adviser or Sub-Adviser and
does not reduce the advisory fees payable to it by the Funds.  The Directors
will periodically review the commissions paid by the Funds to consider whether
the commissions paid over representative periods of time appear to be reasonable
in relation to the benefits inuring to the Funds.  It is possible that certain
of the supplementary research or other services received will primarily benefit
one or more other investment companies or other accounts for which investment
discretion is exercised.  Conversely, a Fund may be the primary beneficiary of
the research or services received as a result of portfolio transactions effected
for such other account or investment company.

     Portfolio securities will not be purchased from or sold to (and savings
deposits will not be made in and repurchase and reverse repurchase agreements
will not be entered into with) the Adviser, the Sub-Adviser, and the Distributor
or an affiliated person of any of them (as such term is defined in the 1940 Act)
acting as principal.  In addition, the Funds will not purchase securities during
the existence of any underwriting or selling group relating thereto of which the
Distributor or their Adviser or Sub-Adviser, or an affiliated person of any of
them, is a member, except to the extent permitted by the Securities and Exchange
Commission ("SEC").

     Investment decisions for the Funds are made independently from those for
other investment companies and accounts advised or managed by their Adviser or
Sub-Adviser.  Such other investment companies and accounts may also invest in
the same securities as the Funds.  When a purchase or sale of the same security
is made at substantially the same time on behalf of a Fund and another
investment company or account, the transaction will be averaged as to price and
available investments allocated as to amount, in a manner which the Adviser or
Sub-Adviser believes to be equitable to the Fund and such other investment
company or account.  In some instances, this investment procedure may adversely
affect the price paid or received by a Fund or the size of the position obtained
or sold by the Fund.  To the extent permitted by law, the Adviser or Sub-Adviser
may aggregate the securities to be sold or purchased for a Fund with those to be
sold or purchased for other investment companies or accounts in executing
transactions.

     As of October 31, 1998, the Company held securities of its regular brokers
or dealers (as defined under the 1940 Act) or their parents as follows: the
Short-Term Bond Market, Intermediate Bond Market, Bond IMMDEX/TM and Balanced
Income Funds held securities of Lehman Brothers totaling $10,451,281 $9,391,482,
$20,975,017 and $309,065, respectively; the Money Market, Institutional Money
Market, Intermediate Bond and Bond IMMDEX/TM Funds held securities of Goldman
Sachs totaling $12,773,554, $86,295,075, $5,064,265, and $10,128,530,
respectively; the Money Market, Institutional Money Market, Short-Term Bond
Market, Balanced Income and Equity Index Funds held securities of Morgan Stanley
totaling $13,289,712, $80,024,562 $466,931 $328,741 and $2,367,649,
respectively; and the Money Market, Institutional Money Market, Short-Term Bond
Market, Intermediate Bond Market and Equity Index Funds held securities of
Merrill Lynch totaling $9,831,946, $79,292,539, $1,443,344, $128,591 and
$1,250,175, respectively.

                        INVESTMENT STRATEGIES AND RISKS

     Ratings. The ratings of Standard & Poor's, Moody's and other nationally
recognized rating agencies represent their opinions as to the quality of debt
securities.  It should be emphasized, however, that ratings are general and are
not absolute standards of quality, and debt securities with the same maturity,
interest rate and rating may have different yields while debt securities of the
same maturity and interest rate with different ratings may have the same yield.

     The payment of principal and interest on most debt securities purchased by
a Fund will depend upon the ability of the issuers to meet their obligations.
An issuer's obligations under its debt securities are subject to the provisions
of bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be
enacted by federal or state legislatures extending the time for payment of
principal or interest, or both, or imposing other constraints upon enforcement
of such obligations.  The power or ability of an issuer to meet its obligations
for the payment of interest on, and principal of, its debt securities may be
materially adversely affected by litigation or other conditions.

     Subsequent to its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund.  The Adviser or Sub-Adviser will consider such an event in
determining whether the Fund involved should continue to hold the security. For
a more detailed description of ratings, see Appendix A.


     Securities Lending.  Each of the Funds may lend its portfolio securities to
unaffiliated domestic broker/dealers and other institutional investors pursuant
to agreements requiring that the loans be secured by collateral equal in value
to at least the market value of the securities loaned in order to increase
return on portfolio securities.  Collateral for such loans may include cash,
securities of the U.S. government, its agencies or instrumentalities, or an
irrevocable letter of credit issued by a bank which meets the investment
standards stated below under "Money Market Instruments," or any combination
thereof. There may be risks of delay in receiving additional collateral or in
recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially.  However, loans will be
made only to borrowers deemed by the Adviser (and Sub-Adviser in the case of the
International Equity Fund) to be of good standing and when, in the Adviser's
(and Sub-Adviser's in the case of the International Equity Fund) judgment, the
income to be earned from the loan justifies the attendant risks.  When a Fund
lends its securities, it continues to receive interest or dividends on the
securities loaned and may simultaneously earn interest on the investment of the
cash collateral which will be invested in readily marketable, high-quality,
short-term obligations.  Although voting rights, or rights to consent, attendant
to securities on loan pass to the borrower, such loans may be called at any time
and will be called so that the securities may be voted by a Fund if a material
event affecting the investment is to occur.


     Securities lending arrangements with broker/dealers require that the loans
be secured by collateral equal in value to at least the market value of the
securities loaned.  During the term of such arrangements, a Fund will maintain
such value by the daily marking-to-market of the collateral.


     Money Market Instruments. The Funds may invest from time to time in "money
market instruments," a term that includes, among other things, U.S. government
obligations, repurchase agreements, cash, bank obligations, commercial paper,
variable amount master demand notes and corporate bonds with remaining
maturities of thirteen months or less.  These investments are used to help meet
anticipated redemption requests or if other suitable securities are unavailable.
The MicroCap Fund's investments in money market instruments under normal market
conditions are expected to represent less than 10% of the Fund's net assets, but
may increase to 30% for temporary defensive purposes during abnormal market
conditions.  The International Equity Fund may reduce its holdings in equity and
other securities and may invest up to 100% of its assets in certain short-term
(less than twelve months to maturity) and medium-term (not greater than five
years to maturity) debt securities and in cash (U.S. dollars, foreign
currencies, or multicurrency units) for temporary defensive purposes, during
periods in which the Adviser (or the Sub-Adviser) believes changes in economic,
financial or political conditions make it advisable.


     Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits, including U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks or
savings institutions.  Although the Funds will invest in money market
obligations of foreign banks or foreign branches of U.S. banks only where the
Adviser (and Sub-Adviser in the case of the International Equity Fund)
determines the instrument to present minimal credit risks, such investments may
nevertheless entail risks that are different from those of investments in
domestic obligations of U.S. banks due to differences in political, regulatory
and economic systems and conditions.  All investments in bank obligations are
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase, and investments by each Fund in the
obligations of foreign banks and foreign branches of U.S. banks will not exceed
25% of such Fund's total assets at the time of purchase.  The Funds may also
make interest-bearing savings deposits in commercial and savings banks in
amounts not in excess of 5% of its net assets.

     Investments by a Fund in commercial paper will consist of issues rated at
the time A-1 and/or P-1 by Standard & Poor's, Moody's or similar rating by
another nationally recognized rating agency.  In addition, the Funds may acquire
unrated commercial paper and corporate bonds that are determined by the Adviser
at the time of purchase to be of comparable quality to rated instruments that
may be acquired by such Fund as previously described.

     The Funds may also purchase variable amount master demand notes which are
unsecured instruments that permit the indebtedness thereunder to vary and
provide for periodic adjustments in the interest rate.  Although the notes are
not normally traded and there may be no secondary market in the notes, a Fund
may demand payment of the principal of the instrument at any time.  The notes
are not typically rated by credit rating agencies, but issuers of variable
amount master demand notes must satisfy the same criteria as set forth above for
issuers of commercial paper.  If an issuer of a variable amount master demand
note defaulted on its payment obligation, a Fund might be unable to dispose of
the note because of the absence of a secondary market and might, for this or
other reasons, suffer a loss to the extent of the default.  The Funds invest in
variable amount master demand  notes only when the Adviser (and Sub-Adviser in
the case of the International Equity Fund) deem the investment to involve
minimal credit risk.

     Repurchase Agreements.  Each Fund may agree to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed upon time and price ("repurchase agreements").  During the term of the
agreement, the Adviser (and Sub-Adviser in the case of the International Equity
Fund) will continue to monitor the creditworthiness of the seller and will
require the seller to maintain the value of the securities subject to the
agreement at not less than 102% of the repurchase price.  Default or bankruptcy
of the seller would, however, expose the Fund to possible loss because of
adverse market action or delay in connection with the disposition of the
underlying securities.  The securities held subject to a repurchase agreement
may have stated maturities exceeding one year, provided the repurchase agreement
itself matures in less than one year.

     The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by a Fund plus interest negotiated on
the basis of current short-term rates (which may be more or less than the rate
on the securities underlying the repurchase agreement). Securities subject to
repurchase agreements will be held by the Funds' custodian (or sub-custodian) or
in the Federal Reserve/Treasury book-entry system or other authorized securities
depository.  Repurchase agreements are considered to be loans under the 1940
Act.

     Investment Companies.  Each Fund currently intends to limit its investments
in securities issued by other investment companies so that, as determined
immediately after a purchase of such securities is made:  (i) not more than 5%
of the value of the Fund's total assets will be invested in the securities of
any one investment company; (ii) not more than 10% of the value of its total
assets will be invested in the aggregate in securities of investment companies
as a group; and (iii) not more than 3% of the outstanding voting stock of any
one investment company will be owned by the Fund or by the Company as a whole.


     The Funds may invest from time to time in securities issued by other
investment companies which invest in high-quality, short-term debt securities.
Securities of other investment companies will be acquired by the Funds within
the limits prescribed by the 1940 Act.  As a shareowner of another investment
company, the Funds would bear, along with other shareowners, its pro rata
portion of the other investment company's expenses, including advisory fees, and
such fees and other expenses will be borne indirectly by the Fund's shareowners.
These expenses would be in addition to the advisory and other expenses that the
Funds bear directly in connection with their own operations.


     U.S. Government Obligations. The Funds may invest in a variety of U.S.
Treasury obligations including bonds, notes and bills which mainly differ only
in their interest rates, maturities and time of issuance.  The Funds may also
invest in other securities issued or guaranteed by the U.S. government, its
agencies and instrumentalities; such as obligations of Federal Home Loan Banks,
Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration, Central
Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Maritime Administration, and Resolution Trust Corp.

     No assurance can be given that the U.S. government will provide financial
support to U.S. government-sponsored agencies or instrumentalities if it is not
obligated to do so by law.


     Bank Obligations.  For purposes of the Fund's investment policies with
respect to bank obligations, the assets of a bank or savings institution will be
deemed to include the assets of its domestic and foreign branches.  A Fund's
investments in the obligations of foreign branches of U.S. banks and of foreign
banks may subject the Fund to investment risks (similar to those discussed below
under "Foreign Securities and American Depository Receipt") that are different
in some respects from those of investments in obligations of U.S. domestic
issuers.  Such risks include future political and economic developments, the
possible imposition of withholding taxes on interest income, possible seizure or
nationalization of foreign deposits, the possible establishment of exchange
controls or the adoption of other foreign governmental restrictions which might
adversely affect the payment of principal and interest of such obligations.  In
addition, foreign branches of U.S. banks and foreign banks may be subject to
less stringent reserve requirements and to different accounting, auditing,
reporting and record keeping standards than those applicable to domestic
branches of U.S. banks.

          Restricted Securities.  The Funds may invest up to 15% of net assets
in securities that are illiquid at the time of purchase.  While these holdings
may offer more potential for growth, they may present a higher degree of
business and financial risk, which can result in substantial losses. The Funds
may have difficulty valuing these holdings and may be unable to sell these
holdings at the time or price desired.  Restricted securities may include Rule
144 Securities.  These securities are restricted securities that are eligible
for resale pursuant to Rule 144A under the Securities Act of 1933.  A Fund may
treat a Rule 144A security as liquid if determined to be so under procedures
adopted by the Board.

     Borrowings and Reverse Repurchase Agreements. Each Fund may borrow money to
the extent allowed (as described in the under "Additional Investment
Limitations" below) to meet shareowner redemption's from banks or through
reverse repurchase agreements. If the securities held by a Fund should decline
in value while borrowings are outstanding, the net asset value of a Fund's
outstanding shares will decline in value by proportionately more than the
decline in value suffered by a Fund's securities.  As a result, a Fund's share
price may be subject to greater fluctuation until the borrowing is paid off.


     Reverse repurchase agreements are considered to be borrowings under the
1940 Act.  At the time a Fund enters into a reverse repurchase agreement (an
agreement under which the Fund sells portfolio securities and agrees to
repurchase them at an agreed-upon date and price), it will place in a segregated
custodial account U.S. government securities or other liquid high-grade debt
securities having a value equal to or greater than the repurchase price
(including accrued interest), and will subsequently monitor the account to
insure that such value is maintained.  Reverse repurchase agreements involve the
risk that the market value of the securities sold by the Fund may decline below
the price of the securities it is obligated to repurchase.

     Preferred Stocks.  The Balanced Income Fund, Balanced Growth Fund, Growth
and Income Fund, Growth Fund, Special Growth Fund, International Equity Fund,
Emerging Growth Fund MicroCap Fund, Short-Term Bond Market Fund, Intermediate
Bond Market Fund and Bond IMMDEX/TM Fund may invest in preferred stocks.
Preferred stocks are securities that represent an ownership interest providing
the holder with claims on the issuer's earnings and assets before common stock
but after bond owners.  Unlike debt securities, the obligations of an issuer of
preferred stock, including dividend and other payment obligations, may not
typically be accelerated by the holders of  such preferred stock on the
occurrence of an event of default (such as a covenant default or filing of a
bankruptcy petition) or other non-compliance by the issuer with the terms of the
preferred stock.  Often, however, on the occurrence of any such event of default
or non-compliance by the issuer, preferred stockholders will be entitled to gain
representation on the issuer's board of directors or increase their existing
board representation. In addition, preferred stockholders may be granted voting
rights with respect to certain issues on the occurrence of any event of default.
Each of the Short-Term Bond Market Fund, Intermediate Bond Market Fund and Bond
IMMDEX/TM Fund will limit its investments in preferred stock to no more than 5%
of its respective net assets.

     When-Issued Purchases, Delayed Delivery and Forward Commitments.  These
Funds may purchase or sell particular securities with payment and delivery
taking place at a later date. The price or yield obtained in a transaction may
be less favorable than the price or yield available in the market when the
securities delivery takes place. Each Fund's forward commitments and when-issued
purchases are not expected to exceed 25% (except the MicroCap Fund which is
limited to 20%) of the value of its total assets absent unusual market
conditions.  When any Fund agrees to purchase securities on a when-issued or
delayed delivery basis or enter into a forward commitment to purchase
securities, its custodian will set aside cash or liquid high grade debt
securities equal to the amount of the commitment in a segregated account.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment, and in such a case the Fund may be required subsequently to
place additional assets in the segregated account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitments.  It
may be expected that the market value of a Fund's net assets will fluctuate to a
greater degree when it sets aside portfolio securities to cover such purchase
commitments than when it sets aside cash.  Because a Fund will set aside cash or
liquid assets to satisfy its purchase commitments in the manner described, the
Fund's liquidity and ability to manage its portfolio might be affected in the
event its commitments ever exceeded 25% of the value of its assets.  In the case
of a forward commitment to sell portfolio securities, the Fund's custodian will
hold the portfolio securities themselves in a segregated account while the
commitment is outstanding.  When-issued and forward commitment transactions
involve the risk that the price or yield obtained in a transaction (and
therefore the value of a security) may be less favorable then the price or yield
(and therefore the value of a security) available in the market when the
securities delivery takes place.

     The Funds will make commitments to purchase securities on a when-issued
basis or to purchase or sell securities on a forward commitment basis only with
the intention of completing the transaction and actually purchasing or selling
the securities. If deemed advisable as a matter of investment strategy, however,
a Fund may dispose of or renegotiate a commitment after it is entered into, and
may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date.  In these cases the Fund may
realize a capital gain or loss.

     When these Funds engage in when-issued, delayed delivery and forward
commitment transactions, they rely on the other party to consummate the trade.
Failure of such party to do so may result in a Fund incurring a loss or missing
an opportunity to obtain a price considered to be advantageous.

     The market value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their market value, are taken into account when determining the net asset value
of a Fund starting on the day the Fund agrees to purchase the securities. The
Fund does not earn interest on the securities it has committed to purchase until
they are paid for and delivered on the settlement date.  When a Fund makes a
forward commitment to sell securities it owns, the proceeds to be received upon
settlement are included in the Fund's assets.  Fluctuations in the market value
of the underlying securities are not reflected in the Fund's net asset value as
long as the commitment remains in effect.

Other Investment Considerations - Emerging Growth Fund and MicroCap Fund  - -
Short Sales.
- ------------------------------------------------------------------------------

     In a short sale transaction, a Fund borrows a security from a broker and
sells it with the expectation that the market price will drop and the Fund will
be able to replace the borrowed security by repurchasing the same security at a
lower price.  These transactions may result in gains if a security's price
declines, but may result in losses if a security's price does not decline.

Other Investment Considerations - Balanced Income Fund, Balanced Growth Fund,
Growth and Income Fund, Growth Fund, Special Growth Fund, Emerging Growth Fund,
MicroCap Fund and International Equity Fund
- -------------------------------------------------------------------------------

     The Balanced Income, Balanced Growth, Growth and Income, Growth, Special
Growth, Emerging Growth, MicroCap and International Equity Funds maintain a
long-term investment horizon with respect to investments in equity securities.
However, when a company's growth in earnings and valuation results in price
appreciation that reaches a level which meets the Fund's established return
objective, the stock is normally sold.  Holdings are also sold if there has been
significant deterioration in the underlying fundamentals of the securities
involved since their acquisition.  Sale proceeds are either re-invested in money
market instruments or in other securities which meet the respective Fund's
investment criteria. Each Fund's investment in equity securities may include
limited partnership interests.

     The increase or decrease of cash equivalents in a Fund is primarily the
residual effect of the research process.  The portion of a Fund invested in cash
equivalents tends to rise when the pool of acceptable securities is limited and
tends to fall when the Fund's valuation screening process identifies a large
number of attractive securities.  Short-term forecasts for the economy and
financial markets are not an important determinant of the level of cash
equivalents in a Fund. Under normal market conditions, not more than 65% of the
value of the Balanced Growth Fund's and at least 50% of the value of the Growth
Fund's, Special Growth Fund's and Emerging Growth Fund's total assets and at
least 65% of the value of the MicroCap Fund's and the International Equity
Fund's total assets will be invested in equity securities.  The Funds do not
attempt to "time" the securities market.

     Certain securities owned by the Special Growth Fund, Emerging Growth Fund
and MicroCap Fund may be traded only in the over-the-counter market or on a
regional securities exchange, may be listed only in the quotation service
commonly known as the "pink sheets" and may not be traded every day or in the
volume typical of trading on a national securities exchange.  As a result, there
may be a greater fluctuation in the value of redemptions or for other reasons,
to sell these securities at a discount from market prices, to sell during
periods when such disposition is not desirable, or to make many small sales over
a lengthy period of time.


Other Investment Considerations - All Funds, Except the Equity Index Fund
- -------------------------------------------------------------------------

     Foreign Equities.  The Funds' investments in the securities of foreign
issuers may include both securities of foreign corporations and banks, as well
as securities of foreign governments and their political subdivisions.

     Investments in foreign securities, whether made directly or through ADRs ,
involve certain inherent risks and considerations not typically associated with
investing in U.S. companies, such as political or economic instability of the
issuer or the country of issue, the difficulty of predicting international trade
patterns, changes in exchange rates of foreign currencies and the possibility of
adverse changes in investment or exchange control regulations.  There may be
less publicly available information about a foreign company than about a U.S.
company.  Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
companies.  In addition, foreign banks and foreign branches of U.S. banks are
subject to less stringent reserve requirements and to different accounting,
auditing, reporting and recordkeeping standards than those applicable to
domestic branches of U.S. banks.  Further, foreign stock markets are generally
not as developed or efficient as those in the U.S., and in most foreign markets
volume and liquidity are less than in the U.S.  Fixed commissions on foreign
stock exchanges are generally higher than the negotiated commissions on U.S.
exchanges, and there is generally less government supervision and regulation of
foreign stock exchanges, brokers and companies than in the U.S.  With respect to
certain foreign countries, there is a possibility of expropriation or
confiscatory taxation, limitations on the removal of assets or diplomatic
developments that could affect investment within those countries.  Additionally,
foreign securities and dividends and interest payable on those securities may be
subject to foreign taxes, including foreign withholding taxes, and other foreign
taxes may apply with respect to securities transactions.  See "Taxes."
Transactions in foreign securities may involve greater time from the trade date
until the settlement date than domestic securities transactions, and may involve
the risk of possible losses through the holding of securities in custodians and
securities depositories in foreign countries.  Additional costs associated with
an investment in foreign securities may include higher transaction costs and the
cost of foreign currency conversions.  Changes in foreign exchange rates will
also affect the value of securities denominated or quoted in currencies other
than the U.S. dollar.  In this regard, the Funds, with the exception of the
International Equity Fund, do not intend to hedge against foreign currency risk
(except on unsettled trades).  Changes in currency exchange rates will affect
the value of unhedged positions and will impact a Fund's net asset value
(positively or negatively) irrespective of the performance of the portfolio
securities held by the Fund.  See the section entitled "Foreign Currency
Transactions" below for the International Equity Fund. The Funds and their
shareowners may encounter substantial difficulties in obtaining and enforcing
judgments against non-U.S. resident individuals and companies.  Because of these
and other factors, securities of foreign companies acquired by the Funds may be
subject to greater fluctuation in price than securities of domestic companies.
Furthermore, because the International Equity Fund will invest substantially all
(and in any event, at least 65%) of the value of its total assets in foreign
securities, the net asset value of the International Equity Fund is expected to
be volatile.


Other Investment Considerations - International Equity Fund
- -----------------------------------------------------------

     Foreign Futures and Options on Futures.  The Adviser and Sub-Adviser may
determine that it would be in the interest of the International Equity Fund to
purchase or sell futures contracts, including interest rate, index, and currency
futures, for the purpose of remaining fully invested and reducing transactions
costs. A stock index futures contract is a bilateral agreement pursuant to which
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the index value (which assigns
relative values to the securities included in the index) at the close of the
last trading day of the contract and the price at which the futures contract is
originally struck.  No physical delivery of the underlying securities in the
index is made.


     The International Equity Fund may also purchase put and call options, and
write covered put and call options, on futures in which it is allowed to invest.
The purchase of futures or call options thereon can serve as a long hedge, and
the sale of futures or the purchase of put options thereon can serve as a short
hedge.  Writing covered call options on futures contracts can serve as a limited
short hedge, and writing covered put options on futures contracts can serve as a
limited long hedge, using a strategy similar to that used for writing covered
options in securities.  The Fund's hedging may include purchases of futures as
an offset against the effect of expected increases in securities prices or
currency exchange rates and sales of futures as an offset against the effect of
expected declines in securities prices or currency exchange rates.  The Fund's
futures transactions may be entered into for hedging purposes or risk
management.  The Fund may also write put options on futures contracts while at
the same time purchasing call options on the same futures contracts in order to
create synthetically a long futures contract position.  Such options would have
the same strike prices and expiration dates.  The Fund will engage in this
strategy only when the Adviser (or the Sub-Adviser) believes it is more
advantageous to the Fund than is purchasing the futures contract.


     The International Equity Fund intends to limit its transactions in futures
contracts and related options so that not more than 25% of its net assets are at
risk.  In connection with a futures transaction, unless the transaction is
covered in accordance with SEC positions, the Fund will maintain a segregated
account with its custodian or sub-custodian consisting of cash or liquid high
grade debt securities equal to the entire amount at risk (less margin deposits)
on a continuous basis.

     Futures purchased or sold by the International Equity Fund (and related
options) will normally be traded in foreign securities.  Participation in
foreign futures and foreign options transactions involves the execution and
clearing of trades on or subject to the rules of a foreign board of trade.
Neither the National Futures Association nor any domestic exchange regulates
activities of any foreign boards of trade, including the execution, delivery and
clearing of transactions, or has the power to compel enforcement of the rules of
a foreign board of trade or any applicable foreign law.  This is true even if
the exchange is formally linked to a domestic market so that a position taken on
the market may be liquidated by a transaction on another market.  Moreover, such
laws or regulations will vary depending on the foreign country in which the
foreign futures or foreign options transaction occurs.  For these reasons,
customers who trade foreign futures of foreign options contracts may not be
afforded certain of the protective measures provided by the Commodity Exchange
Act, the Commodity Futures Trading Commission's ("CFTC") regulations and the
rules of the National Futures Association and any domestic exchange, including
the right to use reparations proceedings before the CFTC and arbitration
proceedings provided by the National Futures Association or any domestic futures
exchange.  In particular, the International Equity Fund's investments in foreign
futures or foreign options transactions may not be provided the same protections
in respect of transactions on United States futures exchanges.  In addition, the
price of any foreign futures or foreign options contract and, therefore the
potential profit and loss thereon may be affected by any variance in the foreign
exchange rate  between the time an order is placed and the time it is
liquidated, offset or exercised.  For a further description of futures contracts
and related options, including a discussion of the limitations imposed by
federal tax law, See Appendix B.

     Reverse Repurchase Agreements.  The International Equity Fund may engage in
reverse repurchase agreements to facilitate portfolio liquidity, a practice
common in the mutual fund industry, for temporary purposes only. In a reverse
repurchase agreement, the Fund would sell a security and enter into an agreement
to repurchase the security at a specified future date and price.  The Fund
generally retains the right to interest and principal payments on the security.
Since the Fund receives cash upon entering into a reverse repurchase agreement,
it may be considered a borrowing.  (See "Borrowing" above.)  When required by
guidelines of the SEC, the Fund will set aside permissible liquid assets in a
segregated account to secure its obligations to repurchase the security.

     Forward Currency Contracts.  The International Equity Fund may enter into
forward currency contracts; such transactions may serve as long hedges (for
example, if the Fund seeks to buy a security denominated in a foreign currency,
it may purchase a forward currency contract to lock in the $US price of the
security) or as short hedges (the Fund anticipates selling a security
denominated in a foreign currency may sell a forward currency contract to lock
in the $US equivalent of the anticipated sales proceeds).

     The International Equity Fund may seek to hedge against changes in the
value of a particular currency by using forward contracts on another foreign
currency or a basket of currencies, the value of which the Adviser or Sub-
Adviser believes will have a positive correlation to the values of the currency
being hedged.  In addition, the Fund may use forward currency contracts to shift
exposure to foreign currency fluctuations from one country to another.  For
example, if the Fund owns securities denominated in a foreign currency and the
Adviser or Sub-Adviser believes that currency will decline relative to another
currency, it might enter into a forward contract to sell an appropriate amount
of the first foreign currency, with payment to be made in the second currency.
Transactions that use two foreign currencies are sometimes referred to as "cross
hedges." Use of different foreign currency magnifies the risk that movements in
the price of the instrument will not correlate or will correlate unfavorably
with the foreign currency being hedged.

     The cost to the International Equity Fund of engaging in forward currency
contracts varies with factors such as the currency involved, the length of the
contract period and the market conditions then prevailing.  Because forward
currency contracts are usually entered into on a principal basis, no fees or
commissions are involved.  When the Fund enters into a forward currency
contract, it relies on the counterparty to make or take delivery of the
underlying currency at the maturity of the contract.  Failure by the
counterparty to do so would result in the loss of any expected benefit of the
transaction.

     As is the case with future contracts, holders and writers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures, by selling or purchasing, respectively, an
instrument identical to the instrument held or written.  Secondary markets
generally do not exist for forward currency contracts, with the result that
closing transactions generally can be made for forward currency contacts only by
negotiating directly with the counterparty.  Thus, there can be no assurance
that the International Equity Fund will in fact be able to close out a forward
currency contract at a favorable price prior to maturity.  In addition, in the
event of insolvency of the counterparty, the Fund might be unable to close out a
forward currency contract at any time prior to maturity.  In either event, the
Fund would continue to be subject to market risk with respect to the position,
and would continue to be required to maintain a position in securities
denominated in the foreign currency or to maintain cash or securities in a
segregated account.

     The precise matching of forward currency contract amounts and the value of
the securities involved generally will not be possible because the value of such
securities, measured in the foreign currency, will change after the foreign
currency contract has been established.  Thus, the International Equity Fund
might need to purchase or sell foreign currencies in the spot (cash) market to
the extent such foreign currency market movements is extremely difficult, and
the successful execution of a short-term hedging strategy is highly uncertain.

     Foreign Currency Transactions.  Although the International Equity Fund
values its assets daily in U.S. dollars, the Fund is not required to convert its
holdings of foreign currencies to U.S. dollars on a daily basis.  The Fund's
foreign currencies generally will be held as "foreign currency call accounts" at
foreign branches of foreign or domestic banks.  These accounts bear interest at
negotiated rates and are payable upon relatively short demand periods.  If a
bank became insolvent, the Fund could suffer a loss of some or all of the
amounts deposited.  The Fund may convert foreign currency to U.S. dollars from
time to time.  Although foreign exchange dealers generally do not charge a
stated commission or fee for conversion, the prices posted generally include a
"spread," which is the difference between the prices at which the dealers are
buying and selling foreign currencies.

     Except where segregated accounts are not required under the 1940 Act, when
this Fund enters into a forward contract or currency futures, the Custodian will
place cash, U.S. government securities, or high-grade debt securities into a
segregated account of this Fund in an amount equal to the value of the Fund's
total assets committed to consummation of forward contracts and currency
futures. If the value of these segregated securities declines, additional cash
or securities will be placed in the account on a daily basis so that the account
value is at least equal to the Fund's commitments to such contracts.


     High Risk Debt Securities ("Junk Bonds").
     ---------------------------------------

     As stated in the International Equity Fund's Prospectus, the Fund may
invest up to 5% of its net assets in non-investment grade debt securities.  Debt
securities rated below Baa by Moody's or BBB by S&P, or of comparable quality,
are considered below investment grade.  Non-investment grade debt securities
""high risk debt securities") may include (i) debt not in default but rated as
low as C by Moody's, S&P, or Fitch IBCA, Inc. ""Fitch IBC""), CC by Thomson
BankWatch ""TB"") or CCC by Duff & Phelps, Inc. ""D&""); (ii) commercial paper
rated as low as C (or D if in default) by S&P or Fitch IBCA, Not Prime by
Moody's,  Duff 4 (or Duff 5 if in default) by Duff, TBW-4 by TBW; and (iii)
unrated debt securities of comparable quality.  Each Fund may also buy debt in
default (rated D by S&P or TBW or Fitch IBCA, DD by Duff, or of comparable
quality) and commercial paper in default (rated D by S&P or Fitch IBCA, Not
Prime by Moody's, Duff 5 by Duff, TBW-4 by TBW, or of comparable quality).  Such
securities, while generally offering higher yields than investment grade
securities with similar maturities, involve greater risks, including the
possibility of (or actual) default or bankruptcy.  They are regarded as
predominantly speculative with respect to the issue's capacity to pay interest
and repay principal.


     The market for high risk debt securities is relatively new and its growth
has paralleled a long economic expansion.  It is not clear how this market would
withstand a prolonged recession or economic downturn, which could severely
disrupt this market and adversely affect the value of such securities.

     Market values of high risk debt securities tend to reflect individual
corporate developments to a greater extent, and tend to be more sensitive to
economic conditions, than do higher rated securities.  As a result, high risk
debt securities generally involve more credit risks than higher rated debt.
During an economic downturn or a sustained period of rising interest rates,
highly leveraged issuers of high risk debt may experience financial stress and
may not have sufficient revenues to meet their payment obligations.  An issuer's
ability to service its debt obligations may also be adversely affected by
specific corporate developments, its own inability to meet specific projected
business forecasts, or unavailability of additional financing.  The risk of loss
due to default by an issuer is significantly greater for high risk debt than for
higher rated debt because the high risk debt is generally unsecured and often
subordinated.

     If the issuer of high risk debt defaulted, the International Equity Fund
might incur additional expenses in seeking recovery.  Periods of economic
uncertainty and changes would also generally result in increased volatility in
the market prices of these securities and thus in the Fund's net asset value.

     If the Fund invested in high risk debt experiences unexpected net
redemptions in a rising interest rate market, it may be forced to liquidate a
portion of its portfolio without regard to their investment merits.  Due to the
limited liquidity of high risk debt securities, the Fund may be forced to
liquidate these securities at a substantial discount.  Any such liquidation
would reduce the Fund's asset base over which expenses could be allocated and
could result in a reduced rate of return for the Fund.

     During periods of falling interest rates, issuers of high risk debt
securities that contain redemption, call or prepayment provisions are likely to
redeem or repay the securities and refinance with other debt at a lower interest
rate.  If the Fund holds debt securities that are refinanced or otherwise
redeemed, it may have to replace the securities with a lower yielding security,
which would result in a lower return.

     Credit ratings evaluate safety of principal and interest payments, but do
not evaluate the market value risk of high risk securities and, therefore, may
not fully reflect the true risks of an investment.  In addition, rating agencies
may not make timely changes in a rating to reflect changes in the economy or in
the condition of the issuer that affect the market value of the security.
Consequently, credit ratings are used only as a preliminary indicator of
investment quality.  Investments in high risk securities will depend more
heavily on the Sub-Adviser's credit analysis than investment-grade debt
securities.  The Adviser (or the Sub-Adviser) will monitor the Fund's
investments and evaluate whether to dispose of or retain high risk securities
whose credit quality may have changed.

     The Fund may have difficulty disposing of certain high risk securities with
a thin trading market.  Not all dealers maintain markets in all these
securities, and for many such securities there is no established retail
secondary market.  The Adviser (or the Sub-Adviser) anticipates that such
securities may be sold only to a limited number of dealers or institutional
investors.  To the extent a secondary trading market does exist, it is generally
not as liquid as that for higher-rated securities; a lack of a liquid secondary
market may adversely affect the market price of a security, which may in turn
affect the Fund's net asset value and ability to dispose of particular
securities in order to meet liquidity needs or to respond to a specific economic
event, or may make it difficult for the Fund to obtain accurate market
quotations for valuation purposes.  Market quotations on many high risk
securities may be available only from a limited number of dealers and may not
necessarily represent firm bids or prices for actual sales.  During periods of
thin trading, the spread between bid and asked prices is likely to increase
significantly, and adverse publicity and investor perceptions (whether or not
based on fundamental analysis) may decrease the value and liquidity of a high
risk security.

     Legislation has from time to time been or may be proposed that is designed
to limit the use of certain high risk debt.  It is not possible to predict the
effect of such legislation on the market for high risk debt.  However, any
legislation that may be proposed or enacted could have a material adverse effect
on the value of these securities, the existence of a secondary trading market
for the securities and, as a result, the Fund's net asset values.

     Sovereign Debt. The International Equity Fund may invest up to 5% of its
net assets in obligations of foreign countries and political entities
("Sovereign Debt"), which may trade at a substantial discount from face value.
The Fund may hold and trade Sovereign Debt of emerging market countries in
appropriate circumstances and to participate in debt conversion programs.
Emerging country Sovereign Debt involves a high degree of risk, is generally
lower-quality debt, and is considered speculative in nature. The issuer or
governmental authorities that control Sovereign Debt repayment "Sovereign
Debtor") may be unable or unwilling to repay principal or interest when due in
accordance with the terms of the debt. A Sovereign Debtor's willingness or
ability to repay principal and interest due in a timely manner may be affected
by, among other factors, its cash flow situation, the extent of its foreign
reserves, the availability of sufficient foreign exchange on the date a payment
is due, the relative size of the debt service burden to the economy as a whole,
the Sovereign Debtor's policy towards the International Monetary Fund (the
"IMF'') and the political constraints to which the Sovereign Debtor may be
subject. Sovereign Debtors may also be dependent on expected disbursements from
foreign governments, multilateral agencies and others abroad to reduce principal
and interest arrearage on their debt. The commitment of these third parties to
make such disbursements may be conditioned on the Sovereign Debtor's
implementation of economic reforms or economic performance and the timely
service of the debtor's obligations. The Sovereign Debtor's failure to meet
these conditions may cause these third parties to cancel their commitments to
provide funds to the Sovereign Debtor, which may further impair the debtor's
ability or willingness to timely service its debts. In certain instances, a Fund
may invest in Sovereign Debt that is in default as to payments of principal or
interest. A Fund holding non-performing Sovereign Debt may incur additional
expenses in connection with any restructuring of the issuer's obligations or in
otherwise enforcing its rights thereunder.

     Brady Bonds.  The International Equity Fund may invest up to 5% of its net
assets in Brady Bonds as part of its investment in Sovereign Debt of countries
that have restructured or are in the process of restructuring their Sovereign
Debt pursuant to the Brady Plan.

     Brady Bonds are issued under the framework of the Brady Plan, an initiative
announced by former U.S. Treasury Secretary Nicholas F. Brady in 1989 as a
mechanism for debtor nations to restructure their outstanding external
indebtedness. The Brady Plan contemplates, among other things, the debtor
nation's adoption of certain economic reforms and the exchange of commercial
bank debt for newly issued bonds. In restructuring its external debt under the
Brady Plan framework, a debtor nation negotiates with its existing bank lenders
as well as the World Bank or IMF. The World Bank or IMF supports the
restructuring by providing funds pursuant to loan agreements or other
arrangements that enable the debtor nation to collateralize the new Brady Bonds
or to replenish reserves used to reduce outstanding bank debt. Under these loan
agreements or other arrangements with the World Bank or IMF, debtor nations have
been required to agree to implement certain domestic monetary and fiscal
reforms. The Brady Plan sets forth only general guiding principles for economic
reform and debt reduction, emphasizing that solutions must be negotiated on a
case-by-case basis between debtor nations and their creditors.

     Brady Bonds are recent issues and do not have a long payment history.
Agreements implemented under the Brady Plan are designed to achieve debt and
debt-service reduction through specific options negotiated by a debtor nation
with its creditors. As a result, each country offers different financial
packages. Options have included the exchange of outstanding commercial bank debt
for bonds issued at 100% of face value of such debt, bonds issued at a discount
of face value of such debt, and bonds bearing an interest rate that increases
over time and the advancement of the new money for bonds. The principal of
certain Brady Bonds has been collateralized by U.S. Treasury zero coupon bonds
with a maturity equal to the final maturity of the Brady Bonds. Collateral
purchases are financed by the IMF, World Bank and the debtor nation's reserves.
Interest payments may also be collateralized in part in various ways.

     Brady Bonds are often viewed as having three or four valuation components:
(i) the collateralized repayment of principal at final maturity; (ii) the
collateralized interest payments; (iii) the uncollateralized interest payments;
and (iv) any uncollateralized principal at maturity (these uncollateralized
amounts constitute the "residual risk"). In light of the residual risk of Brady
Bonds and, among other factors, the history of defaults with respect to
commercial bank loans by public and private entities of countries issuing Brady
Bonds, investments in Brady Bonds can be viewed as speculative.

Other Investment Considerations - The Taxable Bond Funds and Balanced Funds
- ---------------------------------------------------------------------------

     Mortgage-Backed and Asset-Backed Securities.  The Funds may purchase
residential and commercial mortgage-backed as well as other asset-backed
securities (collectively called "asset-backed securities") that are secured or
backed by automobile loans, installment sale contracts, credit card receivables
or other assets and are issued by entities such as Government National Mortgage
Association "GNMA"), Federal National Mortgage Association "FNMA"), Federal Home
Loan Mortgage Corporation "FHLMC"), commercial banks, trusts, financial
companies, finance subsidiaries of industrial companies, savings and loan
associations, mortgage banks and investment banks.  These securities represent
interests in pools of assets in which periodic payments of interest and/or
principal on the securities are made, thus, in effect passing through periodic
payments made by the individual borrowers on the assets that underlie the
securities, net of any fees paid to the issuer or guarantor of the securities.

     The average life of these securities varies with the maturities and the
prepayment experience of the underlying instruments.  The average life of a
mortgage-backed instrument may be substantially less than the original maturity
of the mortgages underlying the securities as the result of scheduled principal
payments and mortgage prepayments.  The rate of such mortgage prepayments, and
hence the life of the certificates, will be a function of current market rates
and current conditions in the relevant housing and commercial markets.  In
periods of falling interest rates, the rate of mortgage prepayments tends to
increase.  During such periods, the reinvestment of prepayment proceeds by a
Fund will generally be at lower rates than the rates that were carried by the
obligations that have been prepaid.  As a result, the relationship between
mortgage prepayments and interest rates may give some high-yielding mortgage-
related securities less potential for growth in value than non-callable bonds
with comparable maturities.  In calculating the average weighted maturity of
each Fund, the maturity of asset-backed securities will be based on estimates of
average life.  There can be no assurance that these estimates will be accurate.


     There are a number of important differences among the agencies and
instrumentalities of the U.S. government that issue mortgage-backed securities
and among the securities that they issue.  Mortgage-backed securities guaranteed
by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and such guarantee is backed by the full faith and credit of the United
States.  GNMA is a wholly owned U.S. government corporation within the
Department of Housing and Urban Development.  GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee.  Mortgage-backed securities issued by FNMA
include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of FNMA and are not backed by or
entitled to the full faith and credit of the United States, but are supported by
the right of the issuer to borrow from the Treasury.  FNMA is a government-
sponsored organization owned entirely by private stockholders.  Fannie Maes are
guaranteed as to timely payment of the principal and interest by FNMA.
Mortgage-backed securities issued by the FHLMC include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PCs").  FHLMC is a
corporate instrumentality of the United States, created pursuant to an Act of
Congress.  Freddie Macs are not guaranteed by the United States or by any
Federal Home Loan Bank and do not constitute a debt or obligation of the United
States or of any Federal Home Loan Bank. Freddie Macs entitle the holder to
timely payment of interest, which is guaranteed by the FHLMC.  FHLMC guarantees
either ultimate collection or timely payment of all principal payments on the
underlying mortgage loans.  When FHLMC does not guarantee timely payment of
principal, FHLMC may remit the amount due on account of its guarantee of
ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.


     As stated in the Prospectus for the Funds, mortgage-backed securities such
as collateralized mortgage obligations ("CMOs") may be purchased. There are
several types of mortgage-backed securities which provide the holder with a pro
rata interest in the underlying mortgages, and CMOs which provide the holder
with a specified interest in the cash flow of a pool of underlying mortgages or
other mortgage-backed securities.  CMOs are issued in multiple classes and their
relative payment rights may be structured in many ways.  In many cases, however,
payments of principal are applied to the CMO classes in order of their
respective maturities, so that no principal payments will be made on a CMO class
until all other classes having an earlier maturity date are paid in full.  The
classes may include accrual certificates (also known as "Z-Bonds"), which do not
accrue interest at a specified rate until other specified classes have been
retired and are converted thereafter to interest-paying securities.  They may
also include planned amortization classes ("PACs") which generally require,
within certain limits, that specified amounts of principal be applied to each
payment date, and generally exhibit less yield and market volatility than other
classes.  Investments in CMO certificates can expose the Fund to greater
volatility and interest rate risk than other types of mortgage-backed
obligations.  Prepayments on mortgage-backed securities generally increase with
falling interest rates and decrease with rising interest rates; furthermore,
prepayment rates are influenced by a variety of economic and social factors.
Each Taxable Bond Funds will invest less than 50% of its respective total assets
in CMOs.

     The yield characteristics of asset-backed securities differ from
traditional debt securities.  A major difference is that the principal amount of
the obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time.  As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected may reduce yield to maturity, while a prepayment rate that is slower
than expected may have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments may increase, while slower than expected prepayments may
decrease, yield to maturity.  Moreover, asset-backed securities may involve
certain risks that are not presented by mortgage-backed securities arising
primarily from the nature of the underlying assets (i.e., credit card and
automobile loan receivables as opposed to real estate mortgages).  For example,
credit card receivables are generally unsecured and may require the repossession
of personal property upon the default of the debtor which may be difficult or
impracticable in some cases.

     Asset-backed securities may be subject to greater risk of default during
periods of economic downturn than other instruments.  Also, while the secondary
market for asset-backed securities is ordinarily quite liquid, in times of
financial stress the secondary market may not be as liquid as the market for
other types of securities, which could result in a Fund experiencing difficulty
in valuing, or liquidating such securities.

     In general, the collateral supporting non-mortgage asset-backed securities
is of shorter maturity than mortgage loans.  Like other fixed-income securities,
when interest rates rise the value of an asset-backed security generally will
decline; however, when interest rates decline, the value of an asset-backed
security with prepayment features may not increase as much as that of other
fixed-income securities.

     Non-mortgage asset-backed securities do not have the benefit of the same
security in the collateral as mortgage-backed securities.  Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
have given debtors the right to reduce the balance due on the credit cards.
Most issuers of automobile receivables permit the servicers to retain possession
of the underlying obligations.  If the servicer were to sell these obligations
to another party, there is the risk that the purchaser would acquire an interest
superior to that of the holders of related automobile receivables.  In addition,
because of the large number of vehicles involved in a typical issuance and
technical requirements under state laws, the trustee for the holders of the
automobile receivables may not have an effective security interest in all of the
obligations backing such receivables. Therefore, there is a possibility that
payments on the receivables together with recoveries on repossessed collateral
may not, in some cases, be able to support payments on these securities.

     Variable Rate Medium Term Notes.  The Funds may purchase variable rate
medium term notes which provide for periodic adjustments in the interest rates.
The adjustments in interest rates reflect changes in an index (which may be the
Lehman Brothers 1-3 Year Government/Corporate Bond Index, the Lehman Brothers
Intermediate Government/Corporate Bond Index or the Lehman Brothers
Government/Corporate Bond Index).

Other Investment Considerations - Taxable Bond Funds and Balanced Funds.
- -----------------------------------------------------------------------

     Stripped Securities. Each Fund may purchase participations in trusts that
hold U.S. Treasury and agency securities (such as TIGRs and CATs) and also may
purchase Treasury receipts and other "stripped" securities that evidence
ownership in either the future interest payments or the future principal
payments of U.S. government obligations.  These participations are issued at a
discount to their "face value," and may (particularly in the case of stripped
mortgage-backed securities) exhibit greater price volatility than ordinary debt
securities because of the manner in which their principal and interest are
returned to investors.

Other Investment Considerations - Balanced Funds and Emerging Growth Fund
- -------------------------------------------------------------------------

     Subsequent to its purchase by a Fund, a rated security may cease to be
rated or its rating may be reduced below the minimum rating required for
purchase by the Fund.  The Adviser will consider such an event in determining
whether the Fund should continue to hold the security.  The Adviser will sell
promptly any securities that are not rated investment grade by at least one
nationally recognized rating agency and that exceed 5% of the Fund's net assets.

Other Investment Considerations - Taxable Bond Funds
- ----------------------------------------------------

     In order to reduce a negative deviation in return between each Fund and its
respective bond index, each Fund will normally attempt to be fully invested.

     In an effort to make a Fund's duration and return comparable to those of
its respective bond index, the Adviser will monitor a Fund's portfolio and
market changes in accordance with procedures established by the Adviser under
the supervision of the Board of Directors.   The calculation of the Fund's
duration and average portfolio maturity will be based on certain estimates
relating to the duration and maturity of the securities held by a Fund.  There
can be no assurance that these estimates will be accurate or that the duration
or average portfolio maturity of a Fund will always remain within the maximum
limits described in the Prospectus.  The value of each Fund's portfolio, as is
generally the case with each bond index, can be expected to vary inversely from
changes in prevailing interest rates.

Other Investment Considerations - Tax-Exempt Intermediate Bond Fund
- -------------------------------------------------------------------

     The Fund's cash balances may be invested in short-term municipal notes and
tax-exempt commercial paper, as well as municipal bonds with remaining
maturities of thirteen months or less and securities issued by other investment
companies which invest in high quality, short-term municipal debt securities.
The value of the Fund's portfolio can be expected to vary inversely to changes
in prevailing interest rates.

     From time to time, on a temporary defensive basis due to market conditions,
the Fund may hold without any limitation uninvested cash reserves and invest
without any limitations in high quality short-term taxable money market
obligations in such proportions as in the opinion of the Adviser, prevailing
market or economic conditions warrant.  Uninvested cash reserves will not earn
income.  See "Investment Strategies & Risks - Money Market Instruments" above.
Taxable obligations acquired by the Fund will not exceed under normal conditions
20% of the Fund's net assets at the time of purchase.


     Municipal Obligations.  Municipal obligations which may be acquired by the
Tax-Exempt Intermediate Bond Fund include debt obligations issued by
governmental entities to obtain funds for various public purposes, including the
construction of a wide range of public facilities, the refunding of outstanding
obligations, the payment of general operating expenses and the extension of
loans to public institutions and facilities.

     Opinions relating to the validity of municipal obligations and to the
exemption of interest thereon from federal income tax are rendered by bond
counsel to the respective issuers at the time of issuance.  Neither the Fund not
the Adviser will review the proceedings relating to the issuance of municipal
obligations or the basis for such opinions.

     Certain of the municipal  obligations held by the Fund may be insured at
the time of issuance as to the timely payment of principal and interest.  The
insurance policies will usually be obtained by the issuer of the municipal
obligation at the time of its original issuance.  In the event that the issuer
defaults on interest or principal payment, the insurer will be notified and will
be required to make payment to the bondholders.  There is, however, no guarantee
that the insurer will meet its obligations.  In addition, such insurance will
not protect against market fluctuations caused by changes in interest rates and
other factors, including credit downgrades, supply and demand.  The Fund may,
from time to time, invest more than 25% of its assets in municipal  obligations
covered by insurance policies.

     The payment of principal and interest on most securities purchased by the
Fund will depend upon the ability of the issuers to meet their obligations.  An
issuer's obligations under its municipal  obligations are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by federal or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
enforcement of such obligations or upon the ability of municipalities to levy
taxes.  The power or ability of an issuer to meet its obligations for the
payment of interest on, and principal of, its municipal  obligations may be
materially adversely affected by litigation or other conditions.

     Certain types of municipal  obligations (private activity bonds) have been
or are issued to obtain funds to provide privately operated housing facilities,
pollution control facilities, convention or trade show facilities, mass transit,
airport, port or parking facilities and certain local facilities for water
supply, gas, electricity or sewage or solid waste disposal.  Private activity
bonds are also issued on behalf of privately held or publicly owned corporations
in the financing of commercial or industrial facilities.  State and local
governments are authorized in most states to issue private activity bonds for
such purposes in order to encourage corporations to locate within their
communities.  The principal and interest on these obligations may be payable
from the general revenues of the users of such facilities.

     Municipal  obligations purchased by the Fund may be backed by letters of
credit issued by foreign and domestic banks and other financial institutions.
Such letters of credit are not necessarily subject to federal deposit insurance
and adverse developments in the banking industry could have a negative effect on
the credit quality of the Fund's portfolio securities and its ability to
maintain a stable net asset value and share price.  Letters of credit issued by
foreign banks, like other obligations of foreign banks, may involve certain
risks in addition to those of domestic obligations.

     The Fund may purchase put options on municipal  obligations.  A put gives
the Fund the right to sell a municipal obligation at a specified price at any
time before a specified date.  A put will be sold, transferred or assigned only
with the related municipal obligation.  The Fund will acquire puts only to
enhance liquidity, shorten the maturity of the related municipal security or
permit the Fund to invest its assets at more favorable rates.  The aggregate
price of a security subject to a put may be higher than the price which
otherwise would be paid for the security without such an option, thereby
increasing the security's cost and reducing its yield.

     From time to time, proposals have been introduced before Congress for the
purpose of restricting or eliminating the federal income tax exemption for
interest on municipal  obligations.  For example, under the Tax Reform Act of
1986, interest on certain private activity bonds must be included in an
investor's alternative minimum taxable income, and corporate investors must
include all tax-exempt interest in their federal alternative minimum taxable
income.  The Company cannot, of course, predict what legislation, if any, may be
proposed in the future as regards the income tax status of interest on municipal
obligations, or which proposals, if any, might be enacted.  Such proposals,
while pending or if enacted, might materially and adversely affect the
availability of municipal  obligations for investment by the Fund and the
liquidity and value of the Fund's portfolio.  In such an event, the Company
would reevaluate the Fund's investment objective and policies and consider
possible changes in its structure or possible dissolution.


     Municipal Lease Obligations.  As stated in the Prospectus, the Fund may
acquire municipal lease obligations which are issued by a state or local
government authority to acquire land and a wide variety of equipment and
facilities. These obligations typically are not fully backed by the
municipality's credit, and their interest may become taxable if the lease is
assigned.  If the funds are not appropriated for the following year's lease
payments, the lease may terminate, with the possibility of default on the lease
obligation and significant loss to the Fund.  Certificates of participation in
municipal lease obligations or installment sale contracts entitle the holder to
a proportionate interests in the lease-purchase payments made.  The Adviser
determines and monitors the liquidity of municipal lease obligations (including
certificates of participation) under guidelines approved by the Board of
Directors requiring the Advisor to evaluate the credit quality of such
obligations and report on the nature of and the Fund's trading experience in the
municipal lease market.  Under the guidelines, municipal lease obligations that
are not readily marketable and transferable are treated as illiquid.  In making
a determination that a municipal lease obligation is liquid, the Adviser may
consider, among other things (i) whether the lease can be canceled; (ii) the
likelihood that the assets represented by the lease can be sold; (iii) the
strength of the lessee's general credit; (iv) the likelihood that the
municipality will discontinue appropriating funds for the leased property
because the property is no longer deemed essential to the operations of the
municipality; and (v) availability of legal recourse in the event of failure to
appropriate.  The Fund will not knowingly invest more than 10% of the value of
its net assets in securities, including municipal leases, that are illiquid.


     Stand-By Commitments.  The Tax-Exempt Intermediate Bond Fund may acquire
"stand-by commitments" with respect to municipal  obligations held in its
portfolio.  Under a "stand-by commitment" a dealer agrees to buy from the Fund,
at the Fund's option, specified municipal  obligations at a specified price.
"Stand-by commitment" acquired by the Fund may also be referred to in this
Statement of Additional Information as "put" options.

     The amount payable to the Fund upon its exercise of a "stand-by commitment"
is normally (i) the Fund's acquisition cost of the municipal  obligations
(excluding any accrued interest which the Fund paid on their acquisition), less
any amortized market premium or plus any amortized market or original issue
discount during the period the Fund owned the securities, plus (ii) all interest
accrued on the securities since the last interest payment date during that
period.  A stand-by commitment may be sold, transferred or assigned by the Fund
only with the instrument involved.


     The Fund expects that "stand-by commitments" will generally be available
without the payment of any direct or indirect consideration.  However, if
necessary or advisable, the Fund may pay for a "stand-by commitment" either
separately in cash or by paying a higher price for the portfolio securities
which are acquired subject to the commitment (thus reducing the yield to
maturity otherwise available for the same securities).  The total amount paid in
either manner for outstanding "stand-by commitments" held by the Fund will not
exceed 1/2 of 1% of the value of its total assets calculated immediately after
each "stand-by commitment" is acquired.


     The Fund intends to enter into "stand-by commitments" only with dealers,
banks and broker/dealers which, in the investment adviser's opinion, present
minimal credit risks.  The Fund's reliance upon the credit of these dealers,
banks and broker/dealers is secured by the value of the underlying municipal
obligations that are subject to a commitment.

     The Fund would acquire "stand-by commitments" solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes.  The acquisition of a "stand-by commitment" would not affect
the valuation or assumed maturity of the underlying Municipal Securities, which
would continue to be valued in accordance with the ordinary method of valuation
employed by the Fund. "Stand-by commitment" which would be acquired by the Fund
would be valued at zero in determining net asset value.  Where the Fund paid any
consideration directly or indirectly for a "stand-by commitment" its cost would
be reflected as unrealized depreciation for the period during which the
commitment was held by the Fund.

     Variable and Floating Rate Instruments. Municipal  obligations purchased by
the Fund may include variable and floating rate instruments issued by industrial
development authorities and other governmental entities.  If such instruments
are unrated, they will be determined by the Fund's Adviser (under the
supervision of the Board of Directors) to be of comparable quality at the time
of purchase to investment grade.  While there may be no active secondary market
with respect to a particular variable or floating rate demand instrument
purchased by the Fund, the Fund may (at any time or during specified periods not
exceeding thirteen months, depending upon the instrument involved) demand
payment in full of the principal of the instrument and has the right to resell
the instrument to a third party.  The absence of such an active secondary
market, however, could make it difficult for the Fund to dispose of a variable
or floating rate demand instrument if the issuer defaulted on its payment
obligation or during periods that the Fund is not entitled to exercise its
demand rights, and the Fund could, for these or other reasons, suffer a loss
with respect to such instruments.

     With respect to the variable and floating rate instruments that may be
acquired by the Tax-Exempt Intermediate Bond Fund the Adviser will consider the
earning power, cash flows and other liquidity ratios of the issuers and
guarantors of such instruments and, if the instrument is subject to a demand
feature, will monitor their financial status to meet payment on demand.  In
determining average weighted portfolio maturity, an instrument will usually be
deemed to have a maturity equal to the longer of the period remaining to the
next interest rate adjustment or the time the Fund can recover payment of
principal as specified in the instrument.  Variable U.S. government obligations
held by the Fund, however, will be deemed to have maturities equal to the period
remaining until the next interest rate adjustment.


 Other Investment Considerations - MicroCap Fund
- ------------------------------------------------

     Small Cap Volatility.  Companies in which the Fund primarily invests will
include those that have limited product lines, markets, or financial resources,
or are dependent on a small management group.  In addition, because these stocks
are not well-known to the investing public, do not have significant
institutional ownership, and are followed by relatively few security analysts,
there will normally be less publicly available information concerning these
securities compared to what is available for the securities of larger companies.
Adverse publicity and investor perceptions, whether based on fundamental
analysis, can decrease the value and liquidity of securities held by the Fund.
Historically, small capitalization stocks have been more volatile in price than
larger capitalization stocks.  Among the reasons for the greater price
volatility of these small company stocks are the less certain growth prospects
of smaller firms, the lower degree of liquidity in the markets for such stocks,
the greater sensitivity of small companies to changing economic conditions and
the fewer market makers and the wider spreads between quoted bid and asked
prices which exist in the over-the-counter market for such stocks.  Besides
exhibiting greater volatility, small company stocks may, to a degree, fluctuate
independently of larger company stocks.  Small company stocks may decline in
price as large company stocks rise, or rise in price as large company stocks
decline.  Investors should therefore expect that the Fund will be more volatile
than, and may fluctuate independently of, broad stock market indices such as the
S&P 500 Index.

Other Investment Considerations - Equity Index Fund
- ---------------------------------------------------

     Equity Index Fund Management Techniques  When purchasing securities for the
Equity Index Fund's portfolio, the Adviser will consider initially the relative
market capitalization weightings of the stocks included in the S&P 500 Index.
The weighted capitalization of an issuer is determined by dividing the issuer's
market capitalization by the total market capitalizations of all issuers
included in the S&P 500 Index.

     The Adviser will then compare the industry sector diversification of the
stocks in the Fund, acquired solely on the basis of their weighted
capitalizations, with the industry sector diversification of all issuers
included in the S&P 500 Index.  This comparison is made because the Adviser
believes, unless the Fund holds all stocks included in the S&P 500 Index which
it currently does not, that the selection of stocks for purchase by the Fund
solely on the basis of their weighted market capitalizations would tend to place
heavier concentration (as compared to the S&P 500 Index) in certain industry
sectors that are dominated by the larger corporations, such as communications,
automobile, oil and energy.  As a result, events disproportionately affecting
such industries could affect the performance of the S&P 500 Index.  Conversely,
if smaller companies were not purchased by the Fund, industries included in the
S&P 500 Index that are dominated by smaller market-capitalized companies would
be underrepresented (as compared to the S&P 500 Index).

     If an issuer drops in ranking, or is eliminated entirely from the S&P 500
Index, the Adviser may be required to sell some or all of the common stock of
such issuer then held by the Fund.  Sales of portfolio securities may be made at
times when, if the Adviser were not required to effect purchases and sales of
portfolio securities in accordance with the S&P 500 Index, such securities might
not be sold.  Such sales may result in lower prices for such securities than may
have been realized or in losses that may not have been incurred if the Adviser
were not required to effect the purchases and sales. "Adverse events" will not
necessarily be the basis for the disposition of portfolio securities, unless an
event causes the issuer to be eliminated entirely from the S&P 500 Index.
"Adverse events" include the failure of an issuer to declare or pay dividends,
the institution against an issuer of materially adverse legal proceedings, the
existence or threat of defaults materially and adversely affecting an issuer's
future declaration and payment of dividends, or the existence of other
materially adverse credit factors.  However, although the Adviser does not
intend to screen securities for investment by the Fund by traditional methods of
financial and market analysis, the Adviser will monitor the Fund's investment
with a bias towards removing stocks of companies which may impair for any reason
the Fund's ability to achieve its investment objective.

     For these reasons, the Adviser will identify the sectors which are (or,
except for sector balancing, would be) most underrepresented in the Fund's
portfolio and will purchase balancing securities in these sectors until the
portfolio's sector weightings closely match that of the S&P 500 Index.  This
process continues until the portfolio is fully invested (except for cash
holdings).

     The Fund may occasionally receive securities that are outside of the S&P
500 Index due to corporate reorganizations or spin-offs.  The Fund will dispose
of those securities in due course consistent with the Fund's investment
objective.

Other Investment Considerations - Bond IMMDEX/TM Fund
- -----------------------------------------------------

     The IMMDEX/TM Model.  The IMMDEX/TM model has been developed and is
maintained by Capital Management Sciences "Capital Management") under the
"IMMDEX/TM " trademark.  Capital Management is neither a sponsor of the Bond
IMMDEX/TM Fund nor affiliated in any way with the Bond IMMDEX/TM Fund or the
Adviser.  Neither is Capital Management in any way affiliated with Lehman
Brothers which claims no interest in the model or its ability to effectively or
accurately replicate the Lehman Brothers Government/Corporate Bond Index.
Further, Capital Management is not responsible for the management or results of
the Bond IMMDEX/TM Fund's portfolio.  Rather, the Adviser will use the IMMDEX/TM
model and the other investment techniques described in the Prospectus in
choosing portfolio securities and executing transactions in an effort to produce
an annual rate of total return for the Bond IMMDEX/TM Fund that is comparable,
before Fund expenses, to that of the Lehman Brothers Government/Corporate Bond
Index.


Other Portfolio Information
- ---------------------------

     Options Trading.  As stated in the Prospectus, the Bond Funds, Balanced
Funds and Equity Funds may purchase put and (with the exception of the Tax-
Exempt Intermediate Bond Fund) call options. Option purchases by a Fund (except
the International Equity Fund) will not exceed 5% of its net assets and the
International Equity Fund may purchase put and call options without limit. Such
options may relate to particular securities or to various indices and may or may
not be listed on a national securities exchange and issued by the Options
Clearing Corporation.  (In the case of the Equity Index Fund, such options will
relate only to stock indices.)  This is a highly specialized activity which
entails greater than ordinary investment risks, including the complete loss of
the amount paid as premiums to the writer of the option. Regardless of how much
the market price of the underlying security or index increases or decreases, the
option buyer's risk is limited to the amount of the original investment for the
purchase of the option.  However, options may be more volatile than the
underlying securities or indices, and therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying securities.  In contrast to an option on a particular
security, an option on an index provides the holder with the right to make or
receive a cash settlement upon exercise of the option.  The amount of this
settlement will be equal to the difference between the closing price of the
index at the time of exercise and the exercise price of the option expressed in
dollars, times a specified multiple.


    The Tax-Exempt Intermediate Bond Fund will only purchase put options on
Municipal  obligations, and will do so only to enhance liquidity, shorten the
maturity of the related municipal security or permit the Fund to invest its
assets at more favorable rates.  The Taxable Bond Funds and International Equity
Fund will engage in unlisted over-the-counter options only with broker-dealers
deemed creditworthy by the Adviser (or the Sub-Adviser).  Closing transactions
in certain options are usually effected directly with the same broker-dealer
that effected the original option transaction.  A Fund bears the risk that the
broker-dealer will fail to meet its obligations.  There is no assurance that a
liquid secondary trading market exists for closing out an unlisted option
position.  Furthermore, unlisted options are not subject to the protections
afforded purchasers of listed options by the Options Clearing Corporation, which
performs the obligations of its members who fail to perform in connection with
the purchase or sale of options.


     A call option gives the purchaser of the option the right to buy, and a
writer the obligation to sell, the underlying security or index at the stated
exercise price at any time prior to the expiration of the option, regardless of
the market price of the security.  The premium paid to the writer is in
consideration for undertaking the obligations under the option contract. A put
option gives the purchaser the right to sell the underlying security or index at
the stated exercise price at any time prior to the expiration date of the
option, regardless of the market price of the security or index.  Put and call
options purchased by a Fund will be valued at the last sale price or, in the
absence of such a price, at the mean between bid and asked prices.

     Each Fund may purchase put options on portfolio securities at or about the
same time that it purchases the underlying security or at a later time.  By
buying a put, a Fund limits its risk of loss from a decline in the market value
of the security until the put expires.  Any appreciation in the value of and
yield otherwise available from the underlying security, however, will be
partially offset by the amount of the premium paid for the put option and any
related transaction costs.  Call options may be purchased by a Fund in order to
acquire the underlying security at a later date at a price that avoids any
additional cost that would result from an increase in the market value of the
security.  A call option may also be purchased to increase a Fund's return to
investors at a time when the call is expected to increase in value due to
anticipated appreciation of the underlying security.  Prior to its expiration, a
purchased put or call option may be sold in a "closing sale transaction" (a sale
by a Fund, prior to the exercise of the option that it has purchased, of an
option of the same series), and profit or loss from the sale will depend on
whether the amount received is more or less than the premium paid for the option
plus the related transaction costs.  In addition, each Fund (with the exception
of the Tax-Exempt Intermediate Bond Fund) may sell covered call options listed
on a national securities exchange.  Such options may relate to particular
securities or to various indices.  (In the case of the Equity Index Fund, such
options will relate only to stock indices.)  A call option on a security is
covered if a Fund owns the security underlying the call or has an absolute and
immediate right to acquire that security without additional cash consideration
(or, if additional cash consideration is required, cash or cash equivalents in
such amount as required are held in a segregated account by its custodian) upon
conversion or exchange of other securities held by it.  A call option on an
index is covered if a Fund maintains with its custodian cash or cash equivalents
equal to the contract value.  A call option is also covered if a Fund holds a
call on the same security or index as the call written where the exercise price
of the call held is (i) equal to or less than the exercise price of the call
written, or (ii) greater than the exercise price of the call written provided
the difference is maintained by a Fund in cash or cash equivalents in a
segregated account with its custodian. The aggregate value of the Fund's assets
subject to covered options written by the Taxable Bond Funds, Balanced Income,
Balanced Growth, Growth and Income, Equity Index and MicroCap Funds will not
exceed 5%, 5%, 25%, 5%, 5% and 5%, respectively, of the value of its net assets
during the current year. The International Equity Fund may write call options on
securities and on various stock indices which will be traded on a recognized
securities or futures exchange or over the counter and during the current year
the aggregate value of the Fund's assets subject to options written by the Fund
will not exceed 5% of the value of its net assets.

     A Fund's obligation under a covered call option written by it may be
terminated prior to the expiration date of the option by the Fund's executing a
closing purchase transaction, which is effected by purchasing on an exchange an
option of the same series (i.e., same underlying security or index, exercise
price and expiration date) as the option previously written. Such a purchase
does not result in the ownership of an option.  A closing purchase transaction
will ordinarily be effected to realize a profit on an outstanding option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to permit the writing of a new option containing
different terms.  The cost of such a liquidation purchase plus transactions
costs may be greater than the premium received upon the original option, in
which event a Fund will have incurred a loss in the transaction.  An option
position may be closed out only on an exchange which provides a secondary market
for an option of the same series.  There is no assurance that a liquid secondary
market on an exchange will exist for any particular option.  A covered call
option writer, unable to effect a closing purchase transaction, will not be able
to sell an underlying security until the option expires or the underlying
security is delivered upon exercise with the result that the writer in such
circumstances will be subject to the risk of market decline during such period.
A Fund will write an option on a particular security only if the Adviser
believes that a liquid secondary market will exist on an exchange for options of
the same series which will permit the Fund to make a closing purchase
transaction in order to close out its position.

     By writing a covered call option on a security, a Fund foregoes the
opportunity to profit from an increase in the market price of the underlying
security above the exercise price except insofar as the premium represents such
a profit, and it is not able to sell the underlying security until the option
expires or is exercised or the Fund effects a closing purchase transaction by
purchasing an option of the same series.  Except to the extent that a written
call option on an index is covered by an option on the same index purchased by
the Fund, movements in the index may result in a loss to the Fund; however, such
losses may be mitigated by changes in the value of securities held by the Fund
during the period the option was outstanding.  The use of covered call options
will not be a primary investment technique of the Funds.  When a Fund writes a
covered call option, an amount equal to the net premium (the premium less the
commission) received by the Fund is included in the liability section of the
Fund's statement of assets and liabilities.  The amount of the liability will be
subsequently marked-to-market to reflect the current value of the option
written.  The current value of the traded option is the last sale price or, in
the absence of a sale, the average of the closing bid and asked prices.  If an
option expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the liability related to such option will be eliminated.  Any gain on
a covered call option on a security may be offset by a decline in the market
price of the underlying security during the option period.  If a covered call
option on a security is exercised, the Fund may deliver the underlying security
held by it or purchase the underlying security in the open market.  In either
event, the proceeds of the sale will be increased by the net premium originally
received, and the Fund will realize a gain or loss.  Premiums from expired
options written by a Fund and net gains from closing purchase transactions are
treated as short-term capital gains for federal income tax purposes, and losses
on closing purchase transactions are short-term capital losses.

     The International Equity Fund may also write (i.e., sell) covered put
options on securities and various securities indices.  The writer of a put
incurs an obligation to buy the security underlying the option from the put's
purchaser at the exercise price at any time on or before the termination date,
at the purchaser's election (certain options the Fund writes will be exercisable
by the purchaser only on a specific date).  Generally, a put is "covered" if the
Fund maintains cash, U.S. government securities or other liquid high grade debt
obligations equal to the exercise price of the option or if the Fund holds a put
on the same underlying security with a similar or higher exercise price.  By
writing a covered put option on a security, the Fund receives a premium for
writing the option however, the Fund assumes the risk that the value of the
security will decline before the exercise date in which event, the Fund may
incur a loss in excess of the premium received when the put is exercised.

     As noted previously, there are several risks associated with transactions
in options on securities and indices. These risks include (i) an imperfect
correlation between the change in market value of the securities the Fund holds
and the prices of options relating to the securities purchased or sold by the
Fund; and (ii) the possible lack of a liquid secondary market for an option. A
decision as to whether, when and how to use options involves the exercise of
skill and judgment, and a transaction may be unsuccessful to some degree because
of market behavior or unexpected events.

     Futures Contracts and Related Options.  The Adviser may determine that it
would be in the best interest of the Taxable Bond Funds, Balanced Funds and
Equity Funds to purchase or sell futures contracts, or options thereon, as a
hedge against changes resulting from market conditions in the value of the
securities held by a Fund, or of securities which it intends to purchase to
maintain liquidity, to have fuller exposure to price movements in the respective
stock or bond index or to reduce transaction costs.  The International Equity
Fund may engage in foreign futures and options (see "Other Investment
Considerations-- International Equity Fund-- Foreign Futures and Options on
Futures").  In addition, the Equity Index Fund will purchase and sell futures
and related options (based only on the S&P 500 Index) to maintain cash reserves
while simulating full investment in the stocks underlying the S&P 500 Index to
keep substantially all of its assets exposed to the market (as represented by
the S&P 500 Index) and to reduce transaction costs. For example, a Fund may
enter into transactions involving a bond or stock index futures contract, which
is a bilateral agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the index value (which assigns relative values to the
securities included in the index) at the close of the last trading day of the
contract and the price at which the futures contract is originally struck.  No
physical delivery of the underlying bonds or stocks in the index is made. The
Adviser may also determine that it would be in the interest of a Fund to
purchase or sell interest rate futures contracts, or options thereon, which
provide for the future delivery of specified fixed-income securities.  In
addition, the Equity Index Fund may purchase and sell futures and related
options (based only on the S&P 500 Index) to maintain cash reserves while
simulating full investment in the stocks underlying the S&P 500 Index, to keep
substantially all of its assets exposed to the market (as represented by the S&P
500 Index), and to reduce transaction costs.  The International Equity Fund will
only enter into futures contracts and futures options which are standardized and
traded on a U.S. or foreign exchange, board of trade or similar entity, or in
the case of futures options, for which an established over-the-counter market
exists.  The Sub-Adviser of the International Equity Fund anticipates engaging
in transactions from time to time in foreign stock index futures such as the
ALL-ORDS (Australia), CAC-40 (France), TOPIX (Japan) and the FTSE-100 (United
Kingdom).

     Risks associated with the use of futures contracts and options on futures
include (a) imperfect correlation between the change in market values of the
securities held by a Fund and the prices of related futures contracts and
options on futures purchased or sold by the Fund, and (b) the possible lack of a
liquid secondary market for futures contracts (or related options) and the
resulting inability of a Fund to close open futures positions, which could have
an adverse impact on the Fund's ability to hedge.

     Positions in futures contracts may be closed out only on an exchange which
provides a secondary market for such futures.  However, there can be no
assurance that a liquid secondary market will exist for any particular futures
contract at any specific time.  Thus, it may not be possible to close a futures
position.  In the event of adverse price movements, the Fund would continue to
be required to make daily cash payments to maintain its required margin.  In
such situations, if the Fund has insufficient cash, it may have to sell
portfolio holdings to meet daily margin requirements at a time when it may be
disadvantageous to do so.  In addition, the Fund may be required to make
delivery of the instruments underlying futures contracts it holds.  The
inability to close options and futures positions also could have an adverse
impact on the Fund's ability to effectively hedge.

     Successful use of futures by the Fund is also subject to the Investment
Adviser's (or Sub-Adviser's) ability to correctly predict movements in the
direction of the market.  For example, if a Fund has hedged against the
possibility of a decline in the market adversely affecting securities held by it
and securities prices increase instead, the Fund will lose part or all of the
benefit to the increased value of its securities which it has hedged because it
will have approximately equal offsetting losses in its futures positions. In
addition, in some situations, if the Fund has insufficient cash, it may have to
sell securities to meet daily variation margin requirements.  Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market.  The Fund may have to sell securities at a time when
it may be disadvantageous to do so.

     The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and extremely high
degree of leverage involved in futures pricing.  As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to the investor.  For example, if at the time of
purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out.  A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out.   Thus, a purchase or sale
of a futures contract may result in losses in excess of the amount invested in
the contract.

     Utilization of futures transactions by a Fund involves the risk of loss by
the Fund of margin deposits in the event of bankruptcy of a broker with whom the
Fund has an open position in a futures contract of related option.

     Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day.  The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session.  Once
the daily limit has been reached in a particular type of contract,  no trades
may be made on that day at a price beyond that limit.  The  daily limit governs
only price movement during a particular trading day and therefore does not limit
potential losses, because the limit may prevent the liquidation of unfavorable
positions.  Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading,  thereby
preventing prompt liquidation of futures positions and subjecting some futures
traders to substantial losses.

     The trading of futures contracts is also subject to the risk of trading
halts, suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.

     Each Fund's commodities transactions must constitute bona fide hedging or
other permissible transactions pursuant to regulations promulgated by the
Commodities and Futures Trading Commissions ("CFTC").  In addition, a Fund may
not engage in such transactions if the sum of the amount of initial margin
deposits and premiums paid for unexpired commodity options, other than for bona
fide hedging transactions, would exceed 5% of the liquidation value of its
assets, after taking into account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the percentage limitation. In connection with a
futures transaction, unless the transaction is covered in accordance with SEC
positions, the Fund will maintain a segregated account with its custodian or
sub-custodian consisting of cash or liquid high grade debt securities to the
entire amount at risk (less margin deposits) on a continuous basis.  The Company
intends to comply with the regulations of the CFTC exempting the Fund from
registrations as a "commodity pool operator".

     The Taxable Bond Funds and Growth and Income Fund intend to limit their
transactions in futures contracts and related options so that not more than 5%
of each Fund's respective net assets are at risk.  The Equity Index Fund and
International Equity Fund intend to limit their transactions in futures
contracts so that not more than 10% and 25% of each Fund's respective net assets
are at risk. For a more detailed description of futures contracts and futures
options, including a discussion of the limitations imposed by federal tax law,
see Appendix B.

     Foreign Securities and American Depository Receipts ("ADRs"). The Taxable
Bond Funds, Balanced Funds, Growth and Income, Growth, Special Growth, Emerging
Growth, MicroCap and International Equity Funds may invest in sponsored ADRs.
The International Equity Fund may also invest in unsponsored ADRs. ADRs are
receipts issued by an American bank or trust company evidencing ownership of
underlying securities issued by a foreign issuer.  ADRs may be listed on a
national securities exchange or may trade in the over-the-counter market.  ADR
prices are denominated in U.S. dollars; the underlying security may be
denominated in a foreign currency.  The underlying security may be subject to
foreign government taxes which would reduce the yield on such securities.
Investments in foreign securities and ADRs also involve certain inherent risks,
such as political or economic instability of the country of issue, the
difficulty of predicting international trade patterns and the possibility of
imposition of exchange controls.  Such securities may also be subject to greater
fluctuations in price than securities of domestic corporations.  In addition,
there may be less publicly available information about a foreign company than
about a domestic company.  Foreign companies generally are not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies.  With respect to certain foreign
countries, there is a possibility of expropriation or confiscatory taxation, or
diplomatic developments which could affect investment in those countries.

     While "sponsored" and "unsponsored" ADR programs are similar, there are
differences regarding ADR holders' rights and obligations and the practices of
market participants.  A depository may establish an unsponsored facility without
participation by (or acquiescence of) the underlying issuer; typically, however,
the depository requests a letter of non-objection from the underlying issuer
prior to establishing the facility.  Holders of unsponsored ADRs generally bear
all the costs of the ADR facility.  The depository usually charges fees upon the
deposit and withdrawal of the underlying securities, the conversion of dividends
into U.S. dollars, the disposition of non-cash distribution, and the performance
of other services.  The depository of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
underlying issuer or to pass through voting rights to ADR holders in respect of
the underlying securities.

     Sponsored ADR facilities are created in generally the same manner as
unsponsored facilities, except that sponsored ADRs are established jointly by a
depository and the underlying issuer through a deposit agreement.  The deposit
agreement sets out the rights and responsibilities of the underlying issuer, the
depository and the ADR holders.  With sponsored facilities, the underlying
issuer typically bears some of the costs of the ADR (such as dividend payment
fees of the depository), although ADR holders may bear costs such as deposit and
withdrawal fees.  Depositories of most sponsored ADRs agree to distribute
notices of shareholder meetings, voting instructions, and other shareholder
communications and information to the ADR holders at the underlying issuer's
request.

     Zero Coupon Bonds.  Zero coupon obligations have greater price volatility
than coupon obligations and will not result in the payment of interest until
maturity, provided that a Fund will purchase such zero coupon obligations only
if the likely relative greater price volatility of such zero coupon obligations
is not inconsistent with the Fund's investment objective.  Although zero coupon
securities pay no interest to holders prior to maturity, interest on these
securities is reported as income to a Fund and distributed to its shareowners.
These distributions must be made from a Fund's cash assets or, if necessary,
from the proceeds of sales of portfolio securities.  Additional income producing
securities may not be able to be purchased with cash used to make such
distributions and its current income ultimately may be reduced as a result.

     Convertible Securities.  The Balanced Funds, Growth and Income, Growth,
Special Growth, Emerging Growth, MicroCap and International Equity Funds may
hold convertible securities.  Convertible securities entitle the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the securities mature or are redeemed, converted or exchanged.  Prior to
conversion, convertible securities have characteristics similar to ordinary debt
securities in that they normally provide a stable stream of income with
generally higher yields than those of common stock of the same or similar
issuers.  Convertible securities rank senior to common stock in a corporation's
capital structure and therefore generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security.  In investing in convertibles, a
Fund is looking for the opportunity, through the conversion feature, to
participate in the capital appreciation of the common stock into which the
securities are convertible, while earning higher current income than is
available from the common stock.

     During normal market conditions, no more than 5% of a Fund's net assets
will be purchased or held in convertible or other securities that (1) are not
rated at the time of purchase investment grade by S&P, Moody's or other
nationally recognized rating agencies; (2) are unrated and have not been
determined by the Adviser (or Adviser and Sub-Adviser with regard to the
International Equity Fund) to be of comparable quality to a security rated
investment grade; or (3) in the case of the International Equity Fund, have not
received the foreign equivalent of investment grade by a rating agency
recognized in the local market and determined to be of comparable quality by the
Adviser and Sub-Adviser.  Securities rated below investment grade are
predominantly speculative and are commonly referred to as junk bonds.  To the
extent a Fund purchases convertibles rated below investment grade or
convertibles that are not rated, a greater risk exists as to the timely
repayment of the principal of, and the timely payment of interest or dividends
on, such securities.  Subsequent to its purchase by a Fund, a rated security may
cease to be rated or its rating may be reduced below a minimum rating for
purchase by the Fund.  The Adviser (and Sub-Adviser for the International Equity
Fund) will consider such an event in determining whether a Fund should continue
to hold the security.  The Adviser (and Sub-Adviser for the International Equity
Fund) will sell promptly any securities that are non-investment grade as a
result of these events and that exceed 5% of a Fund's net assets.

     As described in the Prospectus, the Funds may invest a portion of their
assets in convertible securities that are rated below investment grade.

     Warrants. The Balanced Growth, Balanced Income, Growth and Income, Growth,
Special Growth, Emerging Growth, MicroCap and International Equity Funds may
purchase warrants and similar rights, which are privileges issued by
corporations enabling the owners to subscribe to and purchase a specified number
of shares of the corporation at the specified price during a specified period of
time.  Warrants basically are options to purchase equity securities at a
specific price valid for a specific period of time.  They do not represent
ownership of the securities, but only the right to buy them.  They have no
voting rights, pay no dividends and have no rights with respect to the assets of
the company issuing them.  Warrants differ from call options in that warrants
are issued by the issuer of the security which may be purchased on their
exercise, whereas call options may be written or issued by anyone.  The prices
of warrants do not necessarily move parallel to the prices of the underlying
securities.

     The purchase of warrants involves the risk that a Fund could lose the
purchase value of a warrant if the right to subscribe to additional shares is
not exercised prior to the warrant's expiration.  Also, the purchase of warrants
involves the risk that the effective price paid for the warrant added to the
subscription price of the related security may exceed the value of the
subscribed security's market price such as when there is no movement in the
level of the underlying security.  During normal market conditions, no more than
5% of each Fund's net assets will be invested in warrants. This 5% limit
includes warrants that are not listed on any stock exchange, and such warrants
are limited to 2% of the International Equity Fund's net assets.  Warrants
acquired by the International Equity Fund in units or attached to securities are
not subject to these limits.

     Short Sales. The MicroCap Fund may engage in short sales. If the MicroCap
Fund engages in short sales, it need not segregate Fund assets if it "covers"
the position.  A position is "covered" if, at the time the Fund sells the
security or thereafter, the Fund also owns that security or holds a call option
on that security with a strike price no higher than the price at which the
security was sold.  For federal tax purposes, a short sale is considered
consummated upon delivery of securities to close the short sale.  The gains or
losses realized by the Fund from short sale transactions normally will be
characterized as capital gains or losses although short sales that are part of
certain hedging transactions or straddles may receive different tax treatment.
Special rules generally operate to prevent the use of short sales to convert
short-term capital gain into long-term capital gain and long-term capital loss
into short-term capital loss.   As a result, these transactions may increase the
amount of short-term capital gain realized by the Fund which is taxed as
ordinary income when distributed to its shareowners and may reduce the Fund's
short-term capital loss available to reduce its ordinary income.  The impact of
the tax consequences of short sale transactions engaged in by the Fund on
distributions to shareowners will be closely monitored.

     Guaranteed Investment Contracts.  The Taxable Bond Funds may make limited
investments in guaranteed investment contracts ("GICs") issued by highly rated
U.S. insurance companies.  Pursuant to such contracts, a Fund makes cash
contributions to a separate account of the insurance company which has been
segregated from the general assets of the issuer.  The insurance company then
pays to the Fund at the end of the contract an amount equal to the cash
contributions adjusted for the total return of an index.  A GIC is a separate
account obligation of the issuing insurance company.  A Fund will only purchase
GICs from issuers which, at the time of purchase, are rated A or higher by
Moody's or S&P, have assets of $1 billion or more and meet quality and credit
standards established by the Adviser.  Generally, GICs are not assignable or
transferable without the permission of the issuing insurance companies, and an
active secondary market in GICs does not currently exist.  Therefore, GICs are
considered by the Fund to be subject to the 10% limitation on illiquid
investments.  Generally, a GIC allows a purchaser to buy an annuity with the
money accumulated under the contract; however, a Fund will not purchase any such
annuities.

     Small Companies and Unseasoned Issuers.  Small companies in which the Funds
may invest may have limited product lines, markets, or financial resources, or
may be dependent upon a small management group, and their securities may be
subject to more abrupt or erratic market movements than larger, more established
companies, both because their securities are typically traded in lower volume
and because the issuers are typically subject to a greater degree of change in
their earnings and prospects.

     Companies in which the MicroCap and Emerging Growth Funds primarily invest
will include those that have limited product lines, markets, or financial
resources, or are dependent upon a small management group.  In addition, because
these stocks are not well known to the investing public, do not have significant
institutional ownership, and are followed by relatively few securities analysts,
there will normally be less publicly available information concerning these
securities compared to what is available for the securities of larger companies.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, can decrease the value and liquidity of securities held by the Funds.
Historically small capitalization stocks have been more volatile in price than
larger capitalization stocks.  Among the reasons for the greater price
volatility of these small company stocks are the less certain growth prospects
of smaller firms, the lower degree of liquidity in the markets for such stocks,
the greater sensitivity of small companies to changing economic conditions and
the fewer market makers and the wider spreads between quoted bid and asked
prices which exist in the over-the-counter market for such stocks.  Besides
exhibiting greater volatility, small company stocks may, to a degree, fluctuate
independently of larger company stocks.  Small company stocks may decline in
price as large company stocks rise, or rise in price as large company stocks
decline.  Investors should therefore expect that the Funds will be more volatile
than, and may fluctuate independently of, broad stock market indices such as the
S&P 500 Index.


     Securities of unseasoned companies, that is, companies with less than three
years' of continuous operation, which present risks considerably greater than do
common stocks of more established companies, may be acquired from time to time
by the MicroCap Fund when the Adviser believes such investments offer
possibilities of attractive capital appreciation.


     Each Fund may sell a portfolio investment soon after its acquisition if the
Adviser believes that such a disposition is consistent with attaining the
investment objective of the Fund.  Portfolio investments may be sold for a
variety of reasons, such as a more favorable investment opportunity or other
circumstances bearing on the desirability of continuing to hold such
investments.  A high rate of portfolio turnover (over 100%) may involve
correspondingly greater brokerage commission expenses and other transaction
costs, which must be borne directly by the Fund and ultimately by its
shareowners.  High portfolio turnover may result in the realization of
substantial net capital gains; to the extent short-term capital gains are
realized, distributions relating from such gains will be ordinary income for
federal income tax purposes.

Investment Limitations
- ----------------------

     Each Fund is subject to the investment limitations enumerated in this
subsection which may be changed with respect to a particular Fund only by a vote
of the holders of a majority of such Fund's outstanding shares (as defined under
"Miscellaneous" below).

     No Fund may:

     1.   Make loans, except that a Fund may purchase and hold debt instruments
and enter into repurchase agreements in accordance with its investment objective
and policies and may lend portfolio securities in an amount not exceeding 30% of
its total assets.

     2.   Purchase securities of companies for the purpose of exercising
control.

     3.   Purchase or sell real estate or with respect to the International
Equity Fund, real estate limited partnerships, except that each Fund may
purchase securities of issuers which deal in real estate and may purchase
securities which are secured by interests in real estate.

     4.   Acquire any other investment company or investment company security
except in connection with a merger, consolidation, reorganization or acquisition
of assets or where otherwise permitted by the 1940 Act.

     5.   Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as a Fund might be deemed to be an
underwriter upon the disposition of portfolio securities acquired within the
limitation on purchases of restricted securities and except to the extent that
the purchase of securities directly from the issuer thereof in accordance with
the Fund's investment objective, policies and limitations may be deemed to be
underwriting.

     6.   Write or sell put options, call options, straddles, spreads, or any
combination thereof, except for transactions in options on securities, indices
of securities, futures contracts and options on futures contracts.

     7.   Purchase securities on margin, make short sales of securities or
maintain a short position (in an amount exceeding one-third of the Fund's net
assets, with respect to the MicroCap Fund), except that (a) this investment
limitation shall not apply to a Fund's transactions in futures contracts and
related options and, with respect to MicroCap Fund, short sales against the box,
and (b) a Fund may obtain short-term credit as may be necessary for the
clearance of purchases and sales of portfolio securities.

     8.   Purchase or sell commodity contracts, or invest in oil, gas or mineral
exploration or development programs, except that each Fund may, to the extent
appropriate to its investment objective, purchase publicly traded securities of
companies engaging in whole or in part in such activities and may enter into
futures contracts and related options.


     9.   Purchase securities of any one issuer (other than securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities) if,
immediately after such purchase, more than 5% of the value of the Fund's total
assets would be invested in the securities of such issuer, or more than 10% of
the issuer's outstanding voting securities would be owned by the Fund or the
Company, except that up to 25% of the value of the Fund's total assets may be
invested without regard to these limitations.  For purposes of this limitation,
a security is considered to be issued by the entity (or entities) whose assets
and revenues back the security.  A guarantee of a security shall not be deemed
to be a security issued by the guarantor when the value of all securities issued
and guaranteed by the guarantor, and owned by the Fund, does not exceed 10% of
the value of the Fund's total assets.


     10.  Purchase any securities which would cause 25% or more of the value of
the Fund's total assets at the time of purchase to be invested in the securities
of one or more issuers conducting their principal business activities in the
same industry; provided that, (a) with regard to all Funds except the Tax-Exempt
Intermediate Bond Fund, there is no limitation with respect to instruments
issued or guaranteed by the United States, its agencies or instrumentalities and
repurchase agreements secured by such instruments; (b) with regard to the Tax-
Exempt Intermediate Bond Fund, there is no limitation with respect to
instruments issued or guaranteed by the United States, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions and
repurchase agreements secured by such instruments; (c) wholly owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents; and
(d) utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered a
separate industry.

     11.  Borrow money or issue senior securities, except that each Fund may
borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of the total assets (one-third of the
value of the total assets, with respect to the MicroCap Fund) at the time of
such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of the Fund's total assets (one-
third of the value of the total assets, with respect to the MicroCap Fund) at
the time of such borrowing. A Fund will not purchase securities while its
borrowings (including reverse repurchase agreements) in excess of 5% of its
total assets are outstanding.  The MicroCap Fund may not enter into reverse
repurchase agreements exceeding in the aggregate one-third of its total assets.
Securities held in escrow or separate accounts in connection with the Fund's
investment practices described in this SAI or in the Prospectuses are not deemed
to be pledged for purposes of this limitation.


     12.  With respect to the Tax-Exempt Intermediate Bond Fund, invest less
than 80% of its net assets in securities the interest on which is exempt from
federal income tax except during defensive periods or during unusual market
conditions.  For purposes of this fundamental policy, Municipal  obligations
that are subject to federal alternative minimum tax are considered taxable.


     If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in the value of
the Fund's portfolio securities will not constitute a violation of such
limitation.

     If due to market fluctuations or other reasons, the amount of borrowings
and reverse repurchase agreements exceed the limit stated above, the Funds
(except the MicroCap Fund) will promptly reduce such amount.  With respect to
the MicroCap Fund, if due to market fluctuations or other reasons, the total
assets of the Fund fall below 300% of its borrowings, the Fund will reduce its
borrowings in compliance with the 1940 Act. Except as otherwise provided in
Investment Restriction No. 10 above, for the purpose of such restriction, in
determining industry classification with respect to the International Equity
Fund, the Company intends to use the Morgan Stanley Capital International
classification titles.


     With respect to investment limitation No. 3 under "Additional Investment
Limitations" as it relates to the Tax-Exempt Intermediate Bond Fund, real estate
shall include real estate mortgages.  Although the foregoing investment
limitations would permit the Tax-Exempt Intermediate Bond Fund to invest in
options, futures contracts, options on futures contracts and engage in
securities lending, the Fund, during the current fiscal year, does not intend to
trade in such instruments (except that the Fund may purchase put options on
Municipal  obligations as described in the Prospectus) or lend portfolio
securities.  Prior to engaging in any such transactions, the Fund will provide
its shareowners with notice and add any additional descriptions concerning the
instruments to the Prospectus and this SAI as may be required.  With respect to
investment limitation No. 10 under "Additional Investment Limitations," asset-
backed securities will be divided according to the type of assets underlying the
security.  For example, automobile loans, credit card receivables and
installment sales contracts will each be considered a separate industry.



                                NET ASSET VALUE


     The net asset value per share of each Fund is calculated separately for the
Institutional Shares, Retail A Shares and Retail B Shares by adding the value of
all portfolio securities and other assets belonging to the particular Fund that
are allocated to a particular series, subtracting the liabilities charged to
that series, and dividing the result by the number of outstanding shares of that
series.  Assets belonging to a Fund consist of the consideration received upon
the issuance of shares of the particular Fund together with all net investment
income, realized gains/losses and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of the Company not belonging to a particular investment portfolio. The
liabilities that are charged to a Fund are borne by each share of the Fund,
except for certain payments under the Funds' Distribution and Service Plans and
Shareowner Servicing Plans applicable only to Retail A Shares and Retail B
Shares.  Subject to the provisions of the Articles of Incorporation,
determinations by the Board of Directors as to the direct and allocable
liabilities, and the allocable portion of any general assets, with respect to a
particular Fund are conclusive.


     Shares which are traded on a recognized domestic stock exchange are valued
at the last sale price on the securities exchange on which such securities are
primarily traded or at the last sale price on the national securities market.
The value of a Fund's portfolio securities that are traded on stock exchanges
outside the United States are based upon the price on the exchange as of the
close of business of the exchange immediately preceding the time of valuation,
except when an occurrence subsequent to the time a value was so established is
likely to have changed such value.  Exchange- traded securities for which there
were no transactions are valued on the average of the current bid and asked
prices for the International Equity Fund and at the current bid prices for the
other Funds.   Securities traded on only over-the-counter markets are valued on
the basis of closing over-the-counter bid prices. Securities trading in over-
the-counter markets in European and Pacific Basin countries is normally
completed well before 3:00 P.M. Central time.  In addition, European and Pacific
Basin securities trading may not take place on all business days.  Furthermore,
trading takes place in Japanese markets on certain Saturdays and in various
foreign markets on days which are not business days in New York and on which the
net asset value of a Fund, including the International Equity Fund, is not
calculated.  The calculation of the net asset value of a Fund, including the
International Equity Fund, may not take place contemporaneously with the
determination of the prices of portfolio securities used in such calculation.
Events affecting the values of portfolio securities that occur between the time
their prices are determined and 3:00 P.M. Central time, and at other times, may
not be reflected in the calculation of net asset value of a Fund.



                 ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

     Computation of Offering Price of the Funds.  An illustration of the
computation of the initial offering price per share of the Retail A Shares based
on the value of each such Fund's net assets and number of outstanding securities
at October 31, 1998, revised to reflect sales loads in effect commencing January
1, 1999 as follows:


<TABLE>
<CAPTION>

                                          Short-Term Bond         Intermediate Bond     Tax-Exempt Intermediate      Bond IMMDEX/TM
                                            Market Fund              Market Fund               Bond Fund                   Fund
                                            -----------              -----------              -----------              -----------
<C>                                          <C>                      <C>                      <C>                      <C>

Net Assets (000s)                             $75,410                  $29,550                  $32,466                  $95,301
Number of Shares
  Outstanding  (000s)                          7,291                    2,813                    3,087                    3,285
Net Asset Value
  Per Share                                    10.34                    10.50                    10.52                    29.01
Sales Charge, 3.75%
  of offering price
  (3.90% of net asset
  value per share)                              0.40                     0.41                     0.41                     1.13

Public Offering Price                          10.74                    10.91                    10.93                    30.14


                                          Balanced Income          Balanced Growth         Growth and Income           Equity Index
                                                Fund                     Fund                     Fund                     Fund
                                            -----------              -----------              -----------              -----------

Net Assets (000s)                             $10,614                  $59,657                  $190,331                 $110,129
Number of Shares
  Outstanding  (000s)                           965                     2,001                    4,286                    1,477

Net Asset Value
  Per Share                                    11.00                    29.82                    44.41                    74.58
Sales Charge, 4.50%
  of offering price
  (4.71% of net asset
  value per share)                              0.52                     1.41                     2.09                     3.51
Public Offering Price                          11.52                    31.23                    46.50                    78.09


                                               Growth               Special Growth          Emerging Growth              MicroCap
                                                Fund                     Fund                     Fund                     Fund
                                            -----------              -----------              -----------              -----------

Net Assets (000s)                             $38,213                  $136,146                 $12,884                  $12,419
Number of Shares
  Outstanding  (000s)                          1,070                    3,622                    1,348                    1,003
Net Asset Value
  Per Share                                    35.72                    37.59                     9.56                    12.38
Sales Charge, 4.50%
  of offering price
  (4.71% of net asset
  value per share)                              1.68                     1.77                     0.45                     0.58
Public Offering Price                          37.40                    39.36                    10.01                    12.96


                                        International Equity
                                                Fund
                                            -----------

Net Assets (000s)                              $6,486
Number of Shares
  Outstanding  (000s)                           427
Net Asset Value
  Per Share                                    15.18
Sales Charge, 4.50%
  of offering price
  (4.71% of net asset
  value per share)                              .72
Public Offering Price                          15.90

</TABLE>


     Shareowner Organizations or Institutions may be paid by the Funds for
advertising, distribution or shareowner services. Depending on the terms of the
particular account, Shareowner Organizations or Institutions also may charge
their customers fees for automatic investment, redemption and other services
provided.  Such fees may include, for example, account maintenance fees,
compensating balance requirements or fees based upon account transactions,
assets or income.  Shareowner Organizations or Institutions are responsible for
providing information concerning these services and any charges to any customer
who must authorize the purchase of Fund shares prior to such purchase.

     Under the 1940 Act, the Funds may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the SEC; (b)
the Exchange is closed for other than customary weekend and holiday closings;
(c) the SEC has by order permitted such suspension; or (d) an emergency exists
as determined by the SEC.  (The Funds may also suspend or postpone the recording
of the transfer of their shares upon the occurrence of any of the foregoing
conditions.)

     The Company has filed an election pursuant to Rule 18f-1 under the 1940 Act
which provides that each portfolio of the Company is obligated to redeem shares
solely in cash up to $250,000 or 1% of such portfolio's net asset value,
whichever is less, for any one shareholder within a 90-day period.  Any
redemption beyond this amount may be made in proceeds other than cash.

     In addition to the situations described in the Funds' Prospectus under
"Redemption of Shares," the Funds may redeem shares involuntarily to reimburse
the Funds for any loss sustained by reason of the failure of a shareowner to
make full payment for shares purchased by the shareowner or to collect any
charge relating to a transaction effected for the benefit of a shareowner which
is applicable to Fund shares as provided in the Prospectus from time to time.


Reducing Your Sales Charge on Retail A Shares.
- ----------------------------------------------

     A. Rights of Accumulation

     As stated in the Prospectus, a reduced sales charge applies to any purchase
of Retail A Shares of any Firstar Fund that is sold with a sales charge (an
"Eligible Fund") where an investor's then current aggregate investment is
$100,000 or more. "Aggregate investment" means the total of (a) the dollar
amount of the then current purchase of shares of an Eligible Fund, and (b) the
value (based on current net asset value) of previously purchased and
beneficially owned shares of any Eligible Fund on which a sales charge has been
paid.  If, for example, an investor beneficially owns shares of one or more
Eligible Fund, with an aggregate current value of $99,000 on which a sales
charge has been paid and subsequently purchases shares of an Eligible Fund which
is an Equity Fund having a current value of $1000, the sales charge applicable
to the subsequent purchase would be reduced to 3.75% of the offering price.
Similarly, each subsequent investment in Eligible Fund shares may be added to an
investor's aggregate investment at the time of purchase to determine the
applicable sales charge.

     B. Letter of Intent

     As discussed in the Prospectus, Retail A Shares of the Company purchased
over a 13-month period through a Letter of Intent qualify for the same reduced
sales charge as if all purchased at once.  During the term of the Letter of
Intent, the transfer agent will hold in escrow shares equal to 5% of the amount
indicated in the Letter of Intent for payment of a higher sales charge if an
investor does not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when an investor fulfills the terms of the Letter of
Intent by purchasing the specified amount.  Any redemptions made during the 13-
month period will be subtracted from the amount of purchases in determining
whether the Letter of Intent has been completed.  If total purchases qualify for
a further sales charge reduction, the sales charge will be adjusted to reflect
an investor's total purchases.  If total purchases are less than the amount
specified in the Letter of Intent, an investor will be requested to remit an
amount equal to the difference between the sales charge actually paid and the
sales charge applicable to the total purchases.  If such remittance is not
received within 20 days, the transfer agent, as attorney-in-fact pursuant to the
terms of the Letter of Intent and at the Distributor's direction, will redeem an
appropriate number of shares held in escrow to realize the difference.  Signing
a Letter of Intent does not bind an investor to purchase the full amount
indicated as the sales charge in effect at the time of signing, but an investor
must complete the intended purchase in accordance with the terms of the Letter
of Intent to obtain the reduced sales charge.  To apply, an investor must
indicate his or her intention to do so under a Letter of Intent at the time of
purchase of Shares.

     Exchange Privilege. By use of the exchange privilege, shareowners authorize
the transfer agent to act on telephonic or written exchange instructions from
any person representing himself to be the shareowner or in some cases, the
shareowner's registered representative or account representative of record, and
believed by the transfer agent to be genuine.  The transfer agent's records of
such instructions are binding.  The exchange privilege may be modified or
terminated at any time upon notice to shareowners.

     Exchange transactions described in paragraphs A, B, C, D, E and F below
will be made on the basis of the relative net asset values per share of the
Funds included in the transaction.

     A.  Retail A Shares of any Fund purchased with a sales charge, as well as
additional shares acquired through reinvestment of dividends or distributions on
such shares, may be exchanged without a sales charge for other Retail A Shares
of any other Fund offered by the Company.

     B.  Retail A Shares of any Fund offered by the Company or Money Market Fund
Shares ("MMF Shares") acquired by a previous exchange transaction involving
Retail A Shares on which a sales charge has directly or indirectly been paid
(e.g., shares purchased with a sales charge or issued in connection with an
exchange involving shares that had been purchased with a sales charge) as well
as additional Shares acquired through reinvestment of dividends or distributions
on such Shares, may be exchanged without a sales charge for Retail A Shares of
any other Fund offered by the Company with a sales charge.  To accomplish an
exchange under the provisions of this paragraph, investors must notify the
transfer agent of their prior ownership of Retail A Shares and their account
number.

     C.  Retail B Shares acquired pursuant to an exchange transaction will
continue to be subject to a contingent deferred sales charge.  However, Retail B
Shares that have been acquired through an exchange of  Retail B Shares may be
exchanged for other Retail B Shares without the payment of a contingent deferred
sales charge at the time of exchange.  In determining the holding period for
calculating the contingent deferred sales charge payable on redemption of Retail
B Shares, the holding period of the shares originally held will be added to the
holding period of the shares acquired through exchange.


     D.  Retail B Shares may be exchanged for MMF Shares (but not for
Institutional Money Market Fund Shares) without paying a contingent deferred
sales charge.  In determining the holding period for calculating the contingent
deferred sales charge payable on redemption of Retail B Shares, the holding
period of the shares originally held will be added to the holding period of the
shares acquired through exchange.  If the shareowner subsequently exchanges the
shares back into Retail B Shares of a Fund, the holding period accumulation on
the shares will continue to accumulate.  In the event that a shareholder wishes
to redeem MMF Shares acquired by exchange for Retail B Shares of a Fund, the
contingent deferred sales charge applicable to the accumulated Retail B Shares
and Money Market Fund Shares will be charged.


     E.  Retail A Shares of any Fund may be exchanged without a sales load for
Retail A Shares in any other Fund for shares of any other Fund that are offered
without a sales load.

     F.  Institutional Shares of any Fund may be exchanged for Institutional
Shares of any other Fund.

     Except as stated above, a sales load will be imposed when shares of any
Fund that were purchased or otherwise acquired without a sales load are
exchanged for Retail A Shares of another Fund which are sold with a sales load.


     Retail A Shares of any Fund will be exchanged for Institutional Shares
if the shares are registered in the name of an employer-sponsored qualified
retirement plan administered by Firstar and assets equal or exceed $1 million
at the preceding month-end. The date of the exchange will be 15 business
days following the month-end in which the plan assets equal or exceed $1
million.


     Shares in a Fund from which the shareowner is withdrawing an investment
will be redeemed at the net asset value per share next determined on the date of
receipt.  Shares of the new Fund into which the shareowner is investing will be
purchased at the net asset value per share next determined (plus any applicable
sales charge) after acceptance of the request by the Company in accordance with
the policies for accepting investments.  Exchanges of Shares will be available
only in states where they may legally be made.

     Exemptions from CDSC.  Certain types of redemptions may also qualify for an
exemption from the contingent deferred sales charge. To receive exemptions (vi)
or (viii) below, a shareowner must explain the status of his or her redemption.
If you think you may be eligible for a contingent deferred sales charge waiver
listed below, be sure to notify your Shareowner Organization or the Distributor
at the time Retail B Shares are redeemed. The following is a more detailed
description of certain of the instances described in the Prospectus in which the
contingent deferred sales charge with respect to the B  Shares is assessed:


(i) redemptions in connection with required (or, in some cases, discretionary)
distributions to participants or beneficiaries of an employee pension, profit
sharing or other trust or qualified retirement or Keogh plan, individual
retirement account or custodial account maintained pursuant to Section 403(b)(7)
of the Internal Revenue Code of 1986, as amended (the "Code");

(ii) redemptions in connection with required (or, in some cases, discretionary)
distributions to participants in qualified retirement or Keogh plans, individual
retirement accounts or custodial account maintained pursuant to Section
403(b)(7) of the Code due to death, disability or the attainment of a specified
age;

(iii) redemptions in connection with the death or disability of a shareowner; or

(iv) redemptions resulting from certain tax-free returns of excess contributions
pursuant to section 408(d)(4) or (5) of the Code.


     Additional Information Regarding Shareowner Services for Retail Shares
     -----------------------------------------------------------------------

     The Retail A and Retail B Shares of the Funds offer a Periodic Investment
Plan whereby a shareowner may automatically make purchases of shares of a Fund
on a regular, monthly basis ($50 minimum per transaction).  Under the Periodic
Investment Plan, a shareowner's designated bank or other financial institution
debits a preauthorized amount on the shareowner's account each month and applies
the amount to the purchase of Retail A and Retail B Shares.  The Periodic
Investment Plan must be implemented with a financial institution that is a
member of the Automated Clearing House.  No service fee is currently charged by
a Fund for participation in the Periodic Investment Plan. A $20 fee will be
imposed by the transfer agent if sufficient funds are not available in the
shareowner's account or the shareowner's account has been closed at the time of
the automatic transaction.

     The Periodic Investment Plan permits an investor to use "Dollar Cost
Averaging" in making investments.  Instead of trying to time market performance,
a fixed dollar amount is invested in Retail A or Retail B Shares at
predetermined intervals.  This may help investors to reduce their average cost
per share because the agreed upon fixed investment amount allows more Retail A
or Retail B Shares to be purchased during periods of lower Retail A or Retail B
Share prices and fewer Retail A or Retail B Shares to be purchased during
periods of higher Retail A or Retail B Share prices.  In order to be effective,
Dollar Cost Averaging should usually be followed on a sustained, consistent
basis.  Investors should be aware, however, that Retail A or Retail B Shares
bought using Dollar Cost Averaging are purchased without regard to their price
on the day of investment or to market trends.  Dollar Cost Averaging does not
assure a profit and does not protect against losses in a declining market.  In
addition, while investors may find Dollar Cost Averaging to be beneficial, it
will not prevent a loss if an investor ultimately redeems his Retail A or Retail
B Shares at a price which is lower than their purchase price.  An investor may
want to consider his financial ability to continue purchases through periods of
low price levels.

     The Retail A and Retail B Shares of the Funds permit shareowners to effect
ConvertiFund/R transactions, an automated method by which a Retail shareowner
may invest proceeds from one account to another account of the Retail A or
Retail B Shares of the Firstar family of funds, as the case may be.  Such
proceeds include dividend distribution, capital gain distributions and
systematic withdrawals. ConvertiFund/R transactions may be used to invest funds
from a regular account to another regular account, from a qualified plan account
to another qualified plan account, or from a qualified plan account to a regular
account.

     The Retail A and Retail B Shares of the Funds offer shareowners a
Systematic Withdrawal Plan, which allows a shareowner who owns shares of a Fund
worth at least $5,000 at current net asset value at the time the shareowner
initiates the Systematic Withdrawal Plan to designate that a fixed sum ($50
minimum per transaction) be distributed to the shareowner or as otherwise
directed at regular intervals.

Special Procedures for In-Kind Payments
- ----------------------------------------

     Payment for shares of a Fund may, in the discretion of the Fund, be made in
the form of securities that are permissible investments for the Fund as
described in its Prospectus.  For further information about this form of
payment, contact Investor Services at 414-287-3710.  In connection with an
in-kind securities payment, a Fund will require, among other things, that the
securities be valued on the day of purchase in accordance with the pricing
methods used by the Fund; that the Fund receive satisfactory assurances that it
will have good and marketable title to the securities received by it; that the
securities be in proper form for transfer to the Fund; that adequate information
be provided to the Fund concerning the basis and other tax matters relating to
the securities; and that the amount of the purchase be at least $1,000,000.


                              DESCRIPTION OF SHARES

     The Company's Articles of Incorporation authorize the Board of Directors to
issue up to 150,000,000,000 full and fractional shares of common stock, $.0001
par value per share, which is divided into thirty classes (each, a "class" or
"fund").  Each class below is divided into three series designated as
Institutional Shares, Retail A Shares and Retail B Shares (each, a "Series") and
consists of the number of shares set forth next to its Fund name in the table
below:


                                                       Number of Authorized
                       Represents Interest             Shares in Each Series
Class-Series of
Common Stock

6-Institutional        Special Growth                       500 Million
6-A                                                         500 Million
6-B                                                         500 Million
7-Institutional        Bond IMMDEX/TM                       500 Million
7-A                                                         500 Million
7-B                                                         500 Million
8-Institutional        Equity Index                         500 Million
8-A                                                         500 Million
8-B                                                         500 Million
9-Institutional        Growth and Income                    500 Million
9-A                                                         500 Million
9-B                                                         500 Million
10-Institutional       Short-Term Bond Market               500 Million
10-A                                                        500 Million
10-B                                                        500 Million
11-Institutional       Balanced Growth                      500 Million
11-A                                                        500 Million
11-B                                                        500 Million
12-Institutional       Growth                               500 Million
12-A                                                        500 Million
12-B                                                        500 Million
13-Institutional       Intermediate Bond Market             500 Million
13-A                                                        500 Million
13-B                                                        500 Million
14-Institutional       Tax-Exempt Intermediate Bond         500 Million
14-A                                                        500 Million
14-B                                                        500 Million
15-Institutional       International Equity                 500 Million
15-A                                                        500 Million
15-B                                                        500 Million
16-Institutional       MicroCap                              50 Million
16-A                                                         50 Million
16-B                                                         50 Million
17-Institutional       Balanced Income                      100 Million
17-A                                                        100 Million
17-B                                                        100 Million
18-Institutional       Emerging Growth                      100 Million
18-A                                                        100 Million
18-B                                                        100 Million

     The Board of Directors has also authorized the issuance of classes 1
through 5 common stock representing interests in five other separate investment
portfolios which are described in a separate statement of additional
information.  The remaining authorized shares are classified into eleven
additional classes representing interests in other potential future investment
portfolios of the Company.  The Directors may similarly classify or reclassify
any particular class of shares into one or more additional series.

     In the event of a liquidation or dissolution of the Company or an
individual Fund, shareowners of a particular Fund would be entitled to receive
the assets available for distribution belonging to such Fund, and a
proportionate distribution, based upon the relative assets of the Company's
respective investment portfolios, of any general assets not belonging to any
particular portfolio which are available for distribution.  Subject to the
allocation of certain costs, expenses, charges and reserves attributed to the
operation of a particular series as described in the Funds' Prospectuses,
shareowners of a Fund are entitled to participate equally in the net
distributable assets of the particular Fund involved on liquidation, based on
the number of shares of the Fund that are held by each shareowner.

     Shareowners of each class of the Funds are entitled to one vote for each
full share held and proportionate fractional votes for fractional shares held.
Shareowners of the Funds, as well as those of any other investment portfolio
offered by the Company, will vote together in the aggregate and not separately
on a portfolio-by -portfolio basis, except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareowners of a particular class or a particular series
within a class. Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted to the holders of the outstanding voting securities of an
investment company such as the Company shall not be deemed to have been
effectively acted upon unless approved by the shareowners of each portfolio
affected by the matter.  A portfolio is affected by a matter unless it is clear
that the interests of each portfolio in the matter are substantially identical
or that the matter does not affect any interest of the portfolio.  Under the
Rule, the approval of an investment advisory agreement or any change in a
fundamental investment policy would be effectively acted upon with respect to a
portfolio only if approved by a majority of the outstanding shares of such
portfolio.  However, the Rule also provides that the ratification of the
appointment of independent accountants, the approval of principal underwriting
contracts and the election of Directors may be effectively acted upon by
shareowners of the Company voting together in the aggregate without regard to
particular portfolios.  Similarly, on any matter submitted to the vote of
shareowners which only pertains to agreements, liabilities or expenses
applicable to one series of a Fund (such as a Distribution and Service Plan
applicable to Retail A or B Shares) but not the other series of the same Fund,
only the affected series will be entitled to vote.  Each Retail Share of a Fund
represents an equal proportionate interest with other Retail Shares in that
Fund.  Shares are entitled to such dividends and distributions earned on its
assets as are declared at the discretion of the Board of Directors.  Shares of
the Funds do not have preemptive rights.

     When issued for payment as described in the Funds' Prospectus and this SAI,
shares of the Funds will be fully paid and non-assessable by the Company, except
as provided in Section 180.0622(2)(b) of the Wisconsin Business Corporation Law,
as amended, which in general provides for personal liability on the part of a
corporation's shareowners for unpaid wages of employees.  The Company does not
intend to have any employees and, to that extent, the foregoing statute will be
inapplicable to holders of Fund shares and will not have a material effect on
the Company.

     The Articles of Incorporation authorize the Board of Directors, without
shareowner approval (unless otherwise required by applicable law), to:  (a) sell
and convey the assets belonging to a series of shares to another management
investment company for consideration which may include securities issued by the
purchaser and, in connection therewith, to cause all outstanding shares of such
series to be redeemed at a price which is equal to their net asset value and
which may be paid in cash or by distribution of the securities or other
consideration received from the sale and conveyance; (b) sell and convert the
assets belonging to a series of shares into money and, in connection therewith,
to cause all outstanding shares of such series to be redeemed at their net asset
value; or (c) combine the assets belonging to a series of shares with the assets
belonging to one or more other series of shares if the Board of Directors
reasonably determines that such combination will not have a material adverse
effect on the shareowners of any series participating in such combination and,
in connection therewith, to cause all outstanding shares of any such series to
be redeemed or converted into shares of another series of shares at their net
asset value.


                    ADDITIONAL INFORMATION CONCERNING TAXES

     Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income to
shareholders each year, so that the Fund itself generally will be relieved of
federal income and excise taxes.  If a Fund were to fail to so qualify: (1) the
Fund would be taxed at regular corporate rates without any deduction for
distributions to shareholders; and (2) shareholders would be taxed as if they
received ordinary dividends, although corporate shareholders could be eligible
for the dividends received deduction.

     The Tax Exempt Intermediate Bond Fund intends to invest all or
substantially all, of its assets in debt obligations, the interest on which is
exempt for federal income tax purposes.  For the Fund to pay tax-exempt
dividends for any taxable year, at least 50% of the aggregate value of the
Fund's assets at the close of each quarter of the Fund's taxable year must
consist of exempt-interest obligations.

     The Tax-Exempt Intermediate Bond Fund is designed to provide investors with
current tax-exempt interest income.  The Fund is not intended to constitute a
balanced investment program and is not designed for investors seeking capital
appreciation or maximum tax-exempt income irrespective of fluctuations in
principal.  Shares of the Fund may not be suitable for tax-exempt institutions,
or for retirement plans qualified under Section 401 of the Internal Revenue Code
of 1986 (the "Code"), H.R. 10 plans and individual retirement accounts because
such plans and accounts are generally tax-exempt and, therefore, not only would
not gain any additional benefit from the Fund's dividends being tax-exempt, but
such dividends ultimately would be taxable to the beneficiaries when distributed
to them.  In addition, the Fund may not be an appropriate investment for
entities which are "substantial users" of facilities financed by private
activity bonds or "related persons" thereof.  "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who regularly
uses a part of such facilities in his trade or business and whose gross revenues
derived with respect to the facilities financed by the issuance of bonds are
more than 5% of the total revenues derived by all users of such facilities, who
occupies more than 5% of the usable area of such facilities ,or for whom such
facilities, or a part thereof were specifically constructed, reconstructed or
acquired.  "Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S Corporation and its
shareowners.



                           MANAGEMENT OF THE COMPANY

     The business and affairs of the Funds are managed under the direction of
the Board of Directors of the Company.  The Board is responsible for acting on
behalf of the shareowners.


     The Board does not normally hold shareholder meetings except when required
by the 1940 Act or other applicable law.  The Board will call a shareholders'
meeting for the purpose of voting on the question of removal of a Director when
requested to do so in writing by the record holders of not less than 10% of the
outstanding shares of the Company that are entitled to vote.



Directors and Officers

      The Directors and Officers of the Company, their addresses, principal
occupations during the past five years and other affiliations are as follows:

                       Position(s)      Principal Occupations During Past 5
Name, Address & Age    held with the    Years and Other Affiliations
                       Company


James M. Wade          Chairman of      Vice President and Chief Financial
2802 Wind Bluff        the Board        Officer, Johnson Controls, Inc. (a
Circle                                  controls manufacturing company)
Wilmington, NC  28409                   January 1987-May 1991.
Age: 55

Glen R. Bomberger       Director         Executive Vice President, Chief
One Park Plaza                           Financial Officer and Director, A.O.
11270 West Park Place                    Smith Corporation (a diversified
Milwaukee, WI  53224-                    manufacturing company) since January
3690                                     1987; Director of companies
Age: 61                                  affiliated with A.O. Smith
                                         Corporation; Chief Financial
                                         Officer, Director and Vice
                                         President, Smith Investment Company;
                                         Officer and Director of companies
                                         affiliated with Smith Investment
                                         Company.

Jerry G. Remmel         Director         Vice President, Treasurer and Chief
16650A Lake Circle                       Financial Officer of Wisconsin
Brookfield, WI  53005                    Energy Corporation 1994-1996;
Age: 67                                  Treasurer of Wisconsin Electric
                                         Power Company 1973-1996; Director of
                                         Wisconsin Electric Power Company
                                         1989-1996; Senior Vice President,
                                         Wisconsin Electric Power Company
                                         1988 - 1994; Chief Financial
                                         Officer, Wisconsin Electric Power
                                         Company 1983-1996; Vice President
                                         and Treasurer, Wisconsin Electric
                                         Power Company, 1983 - 1989.

Richard K. Riederer     Director         President and Chief Executive
400 Three Springs                        Officer of Weirton Steel since 1995;
Drive                                    Director of Weirton Steel since
Weirton, WV  26062-                      1993; Executive Vice President and
4989                                     Chief Financial Officer, Weirton
Age: 54                                  Steel January 1994 - 1995; Vice
                                         President of Finance and Chief
                                         Financial Officer, Weirton Steel
                                         January 1989-1994; Member, Board of
                                         Directors of American Iron and Steel
                                         Institute since 1995; Member, Board
                                         of Directors, National Association
                                         of Manufacturers since 1995; Member,
                                         Board of Directors, WESBANCO since
                                         September 1997.

Charles R. Roy*         Director         Vice President - Finance, Chief
14245 Heatherwood                        Financial Officer and Secretary,
Court                                    Rexnord Corporation (an equipment
Elm Grove, WI  53122                     manufacturing company), 1988 - 1992;
Age: 68                                  Vice President - Finance and
                                         Administration, Rexnord Inc., 1982 -
                                         1988; Officer and Director of
                                         several Rexnord subsidiaries until
                                         1992.

Mary Ellen Stanek*      Director,        President of FIRMCO since 1994 and
777 E. Wisconsin        President and    Chief Executive Officer, FIRMCO
Avenue,                 Treasurer        since 1998; Director of FIRMCO
Suite 800                                since 1992 and Director Fixed
Milwaukee, WI  53202                     Income Securities of FIRMCO since
Age: 42                                  1990.


W. Bruce McConnell, III Secretary        Partner of the law firm of Drinker,
Philadelphia National                    Biddle & Reath LLP.
Bank Building
1345 Chestnut Street
Philadelphia, PA
19107
Age: 55

Laura J. Rauman         Vice President   Vice President of Operations,
777 E. Wisconsin                         FIRMCO since 1995; Senior Auditor,
Avenue,                                  Price Waterhouse, LLP, prior
Suite 800                                thereto.
Milwaukee, WI 53202
Age: 30

Joseph C. Neuberger     Assistant        Vice President, Firstar Mutual Fund
615 E. Michigan Street  Treasurer        Services, LLC since 1994; Manager,
Milwaukee, WI 53202                      Arthur Andersen LLP, prior thereto.
Age: 37


Bronson J. Haase*       Director         President and CEO of Wisconsin Gas
626 E. Wisconsin                         Company, WICOR Energy, FieldTech
Avenue                                   and Vice President of WICOR, Inc.
Milwaukee, WI 53202                      since 1998; President and CEO of
Age: 54                                  Ameritech- Wisconsin (formerly
                                         Wisconsin Bell Communications)
                                         1993-1997; Trustee of Roundy Foods.


*  Messrs. Haase, Roy and Ms. Stanek are considered by the Company to be
"interested persons" of the Company as defined in the 1940 Act.



     The following chart provides certain information about the Director fees
for the year ended October 31, 1998 of the Company's Directors.

                                                             TOTAL
                               PENSION OR                 COMPENSATION
                               RETIREMENT    ESTIMATED        FROM
                 AGGREGATE      BENEFITS       ANNUAL        COMPANY
               COMPENSATION    ACCRUED AS     BENEFITS      AND FUND
   NAME OF       FROM THE     PART OF FUND      UPON     COMPLEX<F1> PAID
PERSON/POSITI     COMPANY       EXPENSES     RETIREMENT   TO DIRECTORS
     ON
James M. Wade     $18,500          $0            $0         $18,500
 Chairman of
  the Board

   Glen R.       $15,000<F2>       $0            $0         $15,000
  Bomberger
  Director

  Jerry G.        $15,000          $0            $0         $15,000
   Remmel
  Director

 Richard K.       $15,000          $0            $0         $15,000
  Riederer
  Director

 Charles R.       $15,000          $0            $0         $15,000
     Roy
  Director

 Bronson J.       $3,500           $0            $0          $3,500
    Haase
  Director


<F1> The "Fund Complex" includes only the Company.  The Company is comprised of
     18 separate portfolios.
<F2> Includes $15,000 which Mr. Bomberger elected to defer under the Company's
     deferred compensation plan.


     Each Director receives an annual fee of $10,000, a $1,000 per meeting
attendance fee and reimbursement of expenses incurred as a Director.  The
Chairman of the Board is entitled to receive an additional $3,500 per annum for
services in such capacity.  For the fiscal year ended October 31, 1998, the
Directors and Officers received aggregate fees and reimbursed expenses of
$82,754. Ms. Stanek, Ms. Rauman and Mr. Neuberger receive no fees from the
Company for their services as President and Treasurer, Vice President and
Assistant Treasurer respectively, although FIRMCO, of which Ms. Stanek and Ms.
Rauman are President and Vice President of Operations, respectively, receives
fees from the Company for advisory services and Firstar Mutual Fund Services,
LLC of which Mr. Neuberger is Vice President, receives fees from the Company for
administration, transfer agency and accounting services.  FIRMCO is a wholly
owned subsidiary of Firstar Corporation.  Drinker Biddle & Reath LLP, of which
Mr. McConnel is a partner, receives legal fees as counsel to the Company.  As of
the date of this SAI, the Directors and Officers of the Company, as a group,
owned less than 1% of the outstanding shares of each Fund.

     Directors, employees, retirees and their families of Firstar Corporation or
its affiliates are exempt and do not have to pay front-end sales charges
(provided the status of the investment is explained at the time of investment)
on purchases of Retail A Shares.  These exemptions to the imposition of a front-
end sales charge are due to the nature of the investors and/or the reduced sales
efforts that will be needed in obtaining such investments.


Advisory Services
- ------------------

     FIRMCO became the investment adviser to the Short-Term Bond Market Fund,
Special Growth Fund, Bond IMMDEX/TM Fund and Equity Index Fund as of February 3,
1992 and became the investment adviser to the Growth and Income Fund effective
June 17, 1993.  Prior thereto, investment advisory services were provided by
Firstar Trust Services, an affiliate of FIRMCO.  Firstar Corporation has
guaranteed all obligations incurred by FIRMCO in connection with its Investment
Advisory Agreement.  FIRMCO is also the investment adviser to the Growth Fund,
Intermediate Bond Market Fund, Balanced Income Fund, Balanced Growth Fund, Tax-
Exempt Intermediate Bond Fund, Emerging Growth Fund, MicroCap Fund and
International Equity Fund.  In its Investment Advisory Agreement, the Adviser
has agreed to pay all expenses incurred by it in connection with its advisory
activities, other than the cost of securities and other investments, including
brokerage commissions and other transaction charges, if any, purchased or sold
for the Funds.

     In addition to the compensation stated in the Prospectus, the Adviser is
entitled to 4/10ths of the gross income earned by each Fund on each loan of its
securities, excluding capital gains or losses, if any.  Pursuant to current
policy of the SEC, the Adviser does not intend to receive compensation for such
securities lending activity.  The Adviser may voluntarily waive advisory fees
otherwise payable by the Funds.


     For the services provided and expenses assumed by the Adviser under its
Investment Advisory Agreement in effect for the fiscal years ended October 31,
1998, 1997 and1996, the Adviser was paid and waived advisory fees as follows:


                 Net Advisory Fees Paid (Advisory Fees Waived)


<TABLE>
<CAPTION>

                                                      1998                     1997                           1996
                                                      -----                   -----                           -----
<C>                                           <C>                      <C>                            <C>
Short-Term Bond Market Fund                    $550,921 (528,964)       $669,603 (605,038)            $552,764 (556,286)

Special Growth Fund                                5,243,173 (24)            5,168,254 (0)               4,279,091 (250)

Bond IMMDEX/TM Fund                                 1,551,355 (0)            1,294,766 (0)             1,074,956 (1,673)

Equity Index Fund                             1,076,720 (179,779)              815,050 (0)                   555,115 (0)

Intermediate Bond Market Fund                 1,080,528 (410,430)        778,669 (345,403)             562,082 (288,147)

Growth Fund                                        1,663,048 (72)        1,470,245 (2,052)             1,245,050 (8,639)

Balanced Growth Fund                          1,345,543 (403,169)      1,056,380 (334,926)             789,896 (309,983)

Growth and Income Fund                              4,513,188 (0)           3,086,069 (45)            1,870,213 (18,262)

Tax-Exempt Intermediate Bond Fund               217,113 (207,408)        109,101 (176,855)              40,050 (159,121)

International Equity Fund                       641,868 (219,464)        422,050 (370,710)             302,570 (332,273)

Emerging Growth Fund                            365,419 (135,525)      46,258 (28,226)<F1>

Balanced Income Fund                         60,206 (177,189)<F3>
                                                                                                    609,196 (72,149)<F2>
MicroCap Fund                                   1,685,137 (2,576)           1,318,931 (33)                 356,130 (135)

</TABLE>

- ----------------------
<F1> From inception (August  15, 1997) to October 31,1997.
<F2> For the fiscal periods August 1, 1995 through June 30,1996 and July 1,1996
     through October 31,1996.
<F3> From inception (December 1,1997) to October 1,1998.

     Under its Investment Advisory Agreement, the Adviser is not liable for any
error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the performance of such Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Adviser in the performance of its duties or from
its reckless disregard of its duties and obligations under the Agreement.

     With regard to the International Equity Fund, under the Investment Advisory
Agreement, the Adviser is authorized to delegate its responsibilities to another
adviser.  The Adviser has appointed Hansberger Global Investors, Inc. as Sub-
Adviser to the International Equity Fund.  The Sub-Adviser determines the
securities to be purchased, retained or sold by the Fund.  See "Sub-Adviser"
below.

     Sub-Adviser.  The International Equity Fund receives sub-advisory services
from Hansberger Global Investors, Inc. (the "Sub-Adviser").  Under the terms of
the Sub-Advisory Agreement between the Adviser and Sub-Adviser, the Sub-Adviser
furnishes investment advisory and portfolio management services to the
International Equity Fund with respect to its investments.  The Sub-Adviser is
responsible for decisions to buy and sell the International Equity Fund's
investments and all other transactions related to investment therein.  The Sub-
Adviser negotiates brokerage commissions and places orders of purchases and
sales of the International Equity Fund's portfolio securities.  During the term
of the Sub-Advisory Agreement, the Sub-Adviser will bear all expenses incurred
by it in connection with its services under such agreement.

     Pursuant to the Sub-Advisory Agreement, in the absence of willful
misfeasance, bad faith or gross negligence on the part of the Sub-Adviser or
reckless disregard of its obligations and duties thereunder, or loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services, the Sub-Adviser will not be subject to any liability to the Adviser,
the International Equity Fund or the Company, or to any shareowner of the
International Equity Fund or the Company, for any act or omission in the course
of, or connected with, rendering services under the Sub-Advisory Agreement.  See
"Banking Laws and Regulations" below for information regarding certain banking
laws and regulations and their applicability to the Sub-Adviser and its services
under the Sub-Adviser agreement.


     Prior to September 2, 1997, State Street Bank and Trust Company served as
sub-adviser to the International Equity Fund. For the services provided under
the sub-advisory agreements in effect for the fiscal years ended October 31,
1998, 1997 and 1996, the Sub-Adviser and State Street Bank and Trust Company
were paid and waived sub-advisory fees as follows:


             Net Sub-Advisory Fees Paid (Sub-Advisory Fees Waived)


                             1998              1997              1996
                            -----             -----             -----
International
Equity Fund              381,819 (0)       227,372 (0)       161,584 (0)

     Banking Laws and Regulations.  Banking laws and regulations, including the
Glass-Steagall Act as presently interpreted by the Board of Governors of the
Federal Reserve System, presently (a) prohibit a bank holding company registered
under the Federal Bank Holding Company Act of 1956 or any bank or non-bank
affiliate thereof from sponsoring, organizing, controlling or distributing the
shares of a registered, open-end investment company continuously engaged in the
issuance of its shares, and prohibit banks generally from underwriting
securities, but (b) do not prohibit such a bank holding company or affiliate or
banks generally from acting as investment adviser, transfer agent or custodian
to such an investment company or from purchasing shares of such a company as
agent and upon order of a customer.  In 1971, the United States Supreme Court
held in Investment Company Institute vs. Camp that the Glass-Steagall Act
prohibits a national bank from operating a fund for the collective investment of
managing agency accounts.  Subsequently, the Board of Governors of the Federal
Reserve System (the "Board") issued a regulation and interpretation to the
effect that the Glass-Steagall Act and such decision forbid a bank holding
company registered under the Federal Bank Holding Company Act of 1956 (the
"Holding Company Act"), or any non-bank affiliate thereof from sponsoring,
organizing or controlling a registered, open-end investment company continuously
engaged in the issuance of its shares, but did not prohibit such a holding
company or affiliate from acting as investment adviser, transfer agent and
custodian to such an investment company.  In 1981, the United States Supreme
Court held in Board of Governors of the Federal Reserve System v. Investment
Company Institute that the Board did not exceed its authority under the Holding
Company Act when it adopted its regulation and interpretation authorizing bank
holding companies and their non-bank affiliates to act as investment advisers to
registered closed-end investment companies.  FIRMCO and Firstar Trust Services
("Firstar Trust") are subject to such banking laws and regulations.

     FIRMCO and Firstar Trust believe that they may perform the services for the
Funds contemplated by their respective agreements with the Company without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations.  These companies further believe that, if the question were
properly presented, a court should hold that these companies may each perform
such activities without violation of the Glass-Steagall Act or other applicable
banking laws and or regulations.  It should be noted, however, there have been
no cases deciding whether banks and their affiliates may perform services
comparable to those performed by these companies, and future changes in either
federal or state statutes and regulations relating to permissible activities of
banks or trust companies and their subsidiaries or affiliates, as well as
further judicial or administrative decisions or interpretations of present and
future statutes and regulations, could prevent such companies from continuing to
perform such services for the Funds.  If the companies were prohibited from
continuing to perform advisory, accounting, shareowner servicing and custody
services for the Funds, it is expected that the Board of Directors would
recommend that the Funds enter into new agreements or would consider the
possible termination of the Funds.  Any new advisory or sub-advisory agreement
would be subject to shareowner approval.

     Shares of the Funds are not bank deposits, are neither endorsed by, insured
by, or guaranteed by, obligations of, nor otherwise supported by the FDIC, the
Federal Reserve Board, Firstar Bank, N.A. or FIRMCO, their affiliates or any
other bank, or any other governmental agency.  An investment in the Funds
involves risks including possible loss of principal.

Administration and Distribution Services
- -----------------------------------------

     Firstar Trust Company became a Co-Administrator to the Funds on September
1, 1994, and assigned its rights and obligations to Firstar Mutual Fund
Services, LLC on October 1, 1998, and B. C. Ziegler and Company ("Ziegler")
became a Co-Administrator to the Funds on January 1, 1995.  Under the Co-
Administration Agreement, the following administrative services are provided
jointly by the Co-Administrators: assist in maintaining office facilities,
furnish clerical services, stationery and office supplies; monitor the company's
arrangements with respect to services provided by Shareowner Organizations and
Institutions; and generally assist in the Funds' operations.  The following
administrative services are provided by Ziegler: review and comment upon the
registration statement and amendments thereto prepared by Firstar Mutual Fund
Services, LLC or counsel to the Company, as requested by Firstar Mutual Fund
Services, LLC; review and comment upon sales literature and advertising relating
to the Company, as requested by Firstar Mutual Fund Services, LLC; assist in the
administration of the marketing budget; periodically review Blue Sky
registration and sales reports for the Funds; attend meetings of the Board of
Directors, as requested by the Board of Directors of the Company; and such other
services as may be requested in writing and expressly agreed to by Ziegler.  The
following administrative services are provided by Firstar Mutual Fund Services,
LLC: compile data for and prepare, with respect to the Funds, timely Notices to
the SEC required pursuant to Rule 24f-2 under the 1940 Act and Semi-Annual
Reports to the SEC and current Shareowners; coordinate execution and filing by
the Company of all federal and state tax returns and required tax filings other
than those required to be made by the Company's custodian and transfer agent;
prepare compliance filings and Blue Sky registrations pursuant to state
securities laws with the advice of the Company's counsel; assist to the extent
requested by the Company with the Company's preparation of Annual and Semi-
Annual reports to Fund shareowners and Registration Statements for the Funds;
monitor each Fund's expense accruals and cause all appropriate expenses to be
paid on proper authorization from each Fund; monitor each Fund's status as a
regulated investment company under Subchapter M of the Code; maintain each
Fund's fidelity bond as required by the 1940 Act; and monitor compliance with
the policies and limitations of each Fund as set forth in the Prospectus, SAI,
By-laws and Articles of Incorporation.

     The Co-Administrators are entitled to receive a fee for their
administrative services, computed daily and payable monthly, at the annual rate
of 0.125% of the Company's first $2 billion of average aggregate daily net
assets, plus 0.10% of the Company's average aggregate daily net assets in excess
of $2 billion.  The Co-Administrators may voluntarily waive all or a portion of
their administrative fee from time to time.  These waivers may be terminated at
any time at the Co-Administrators' discretion.

     Each of the Co-Administrators has agreed to pay all expenses incurred by it
in connection with its administrative activities.  Under the Co-Administration
Agreement, the Co-Administrators are not liable for any error of judgment or
mistake of law or for any loss suffered by the Funds in connection with the
performance of the Co-Administration Agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the Co-
Administrators in the performance of their respective duties or from their
reckless disregard of their duties and obligations under the Agreement.

     The Distributor provides distribution services for each Fund as described
in the Funds' Prospectus pursuant to a Distribution Agreement with the Funds
under which the Distributor, as agent, sells shares of each Fund on a continuous
basis.  The Distributor has agreed to use its best efforts to solicit orders for
the sale of shares, although it is not obliged to sell any particular amount of
shares.  The Distributor causes expenses to be paid for the cost of printing and
distributing prospectuses to persons who are not shareowners of the Funds
(excluding preparation and printing expenses necessary for the continued
registration of the Funds' shares) and of printing and distributing all sales
literature. For the fiscal year ended October 31, 1998, 1997, and 1996 Ziegler
received no fees for its distribution services.


     For its administrative services for the fiscal years ended October 31,
1998, 1997 and 1996, the Co-Administrators were paid and waived the following
administrative fees:


           Net Administration Fees Paid (Administration Fees Waived)


<TABLE>
<CAPTION>
                                                 1998                     1997                      1996
                                                -----                     -----                     -----
<C>                                       <C>                       <C>                      <C>
Short-Term Bond Market Fund               $69,432  (126,882)        $86,550 (149,862)        $83,969 (127,339)

Special Growth Fund                        269,375 (492,978)        245,929 (521,369)        257,995 (394,054)

Bond IMMDEX/TM Fund                        200,288 (364,601)        167,223 (318,234)        159,028 (251,337)

Equity Index Fund                          195,703 (353,692)        134,156 (229,162)        159,028 (251,337)

Intermediate Bond Market Fund              115,423 (210,207)         79,413 (171,118)         78,123 (116,341)


Growth Fund                                 85,845 (156,347)         71,750 (146,715)         75,054 (115,984)

Balanced Income Fund                     12,498 (22,106)<F3>

Balanced Growth Fund                        90,542 (164,087)         73,298 (133,271)         65,092 (102,563)

Growth and Income Fund                     233,865 (423,689)        171,898 (286,778)         65,092 (102,563)

Tax-Exempt Intermediate Bond Fund            32,957 (59,803)          22,619 (41,122)          20,315 (25,259)

International Equity Fund                    24,861 (44,829)          20,840 (38,741)          20,015 (30,231)

                                                                                           23,766 (30,742)<F1>
MicroCap Fund                                43,380 (79,285)          29,709 (68,284)          12,113 (12,058)


Emerging Growth Fund                         26,045 (46,986)        3,488 (7,567)<F2>


</TABLE>


<F1> For the fiscal periods August 1, 1995 through June 30, 1996 and July 1,
     1996 through October 31, 1996.
<F2> From inception (August 15, 1997) to October 31, 1997.
<F3> From inception (December 1,1997) to October 31, 1998.

Shareowner Organizations
- -------------------------

Retail A Shares
     As stated in the Funds' Prospectus the Funds intend to enter into
agreements from time to time with Shareowner Organizations providing for support
and/or distribution services to customers of the Shareowner Organizations who
are the beneficial owners of Retail A Shares of the Fund. Under the agreements,
the Funds may pay Shareowner Organizations up to 0.25% (on an annualized basis)
of the average daily net asset value of Retail A Shares beneficially owned by
their customers. Support services provided by Shareowner Organizations under
their Service Agreements or Distribution and Service Agreements may include:
(i) processing dividend and distribution payments from a Fund; (ii) providing
information periodically to customers showing their share positions; (iii)
arranging for bank wires; (iv) responding to customer inquiries; (v) providing
sub-accounting with respect to shares beneficially owned by customers or the
information necessary for sub-accounting; (vi) forwarding shareowner
communications; (vii) assisting in processing share purchase, exchange and
redemption requests from customers; (viii) assisting customers in changing
dividend options, account designations and addresses; and (ix) other similar
services requested by the Funds.  In addition, Shareowner Organizations, under
the Distribution and Service Plan applicable to Retail A Shares, may provide
assistance (such as the forwarding of sales literature and advertising to their
customers) in connection with the distribution of Retail A Shares.  All fees
paid under these agreements are borne exclusively by the Funds' Retail A Shares.


     The Funds' arrangements with Shareowner Organizations under the agreements
are governed by two Plans (a Service Plan and a Distribution and Service Plan)
for the Retail A Shares, which have been adopted by the Board of Directors.


Retail B Shares
     The Company has also adopted a Distribution and Service Plan pursuant to
Rule 12b-1 and a Service Plan with respect to the Retail B Shares of the Funds.
Under the Distribution and Service Plan, payments by the Company (i) for
distribution expenses may not exceed  0.75% (annualized) of the average daily
net assets attributable to a Fund's outstanding Retail B Shares; and (ii) for
shareholder liaison services may not exceed 0.25% (annualized), respectively, of
the average daily net assets attributable to each Fund's outstanding Retail B
Shares.  Under the separate Service Plan for the Retail B Shares, payments by
the Company for shareholder administrative support services may not exceed 0.25%
(annualized) of the average daily net assets attributable to each Fund's
outstanding Retail B Shares.

     Because the Distribution and Service Plans contemplate the provision of
services related to the distribution of Retail A and Retail B Shares (in
addition to support services), those Plans have been adopted in accordance with
Rule 12b-1 under the 1940 Act.  In accordance with the Plans, the Board of
Directors reviews, at least quarterly, a written report of the amounts expended
in connection with the Funds' arrangements under the Plans and the purposes for
which the expenditures were made.  In addition, the arrangements must be
approved annually by a majority of the Directors, including a majority of the
Directors who are not "interested persons" of the Funds (as defined in the 1940
Act) and have no direct or indirect financial interest in such arrangements (the
"Disinterested Directors").


     The Funds believe that there is a reasonable likelihood that their
arrangements with Shareowner Organizations will benefit each Fund and the
holders of Retail A or Retail B Shares as a way of allowing Shareowner
Organizations to participate with the Funds in the provision of support and
distribution services to customers of the Shareowner Organization who own Retail
A or Retail B Shares.  Any material amendment to the arrangements with
Shareowner Organizations under other agreements must be approved by a majority
of the Board of Directors (including a majority of the Disinterested Directors),
and any amendment to increase materially the costs under the Distribution and
Service Plan with respect to a Fund must be approved by the holders of a
majority of the outstanding Retail A or Retail B Shares of the Fund involved.
So long as the Plans are in effect, the selection and nomination of the members
of the Board of Directors who are not "interested persons" (as defined in the
1940 Act) of the Funds will be committed to the discretion of such Disinterested
Directors.

     The Funds paid fees to Shareowner Organizations, none of which were
affiliated with the Adviser, pursuant to the Service Plan for Retail A Shares
for the fiscal year ended October 31, 1998 as follows:


                                            Fees Paid to Non-Affiliated
                                              Shareowner Organizations
                                            ---------------------------


          Short-Term Bond Market Fund                   $773
          Special Growth Fund                          2,163
          Bond IMMDEX/TM Fund                              0
          Equity Index Fund                            4,301
          Intermediate Bond Market Fund                   83
          Growth Fund                                      5
          Balanced Income Fund                             0
          Balanced Growth Fund                           395
          Growth and Income Fund                       1,068
          Tax-Exempt Intermediate Bond Fund                0
          International Equity Fund                        0
          MicroCap Fund                                    0
          Emerging Growth Fund                             0


     The Funds paid fees to Shareowner Organizations, all of which were
affiliated with the Adviser, pursuant to the Service Plan for Retail A Shares
for the fiscal year ended October 31, 1998 as follows:


                                             Fees Paid to by Affiliated
                                              Shareowner Organizations
                                             --------------------------


          Short-Term Bond Market Fund               $169,222
          Special Growth Fund                        381,221
          Bond IMMDEX/TM Fund                        196,204
          Equity Index Fund                          239,637
          Intermediate Bond Market Fund               62,191
          Balanced Income Fund                        10,544
          Growth Fund                                 81,362
          Balanced Growth Fund                       135,464
          Growth and Income Fund                     414,008
          Tax-Exempt Intermediate Bond Fund           61,560
          International Equity Fund                   17,228
          MicroCap Fund                               39,987
          Emerging Growth Fund                        23,438

     Under the terms of their agreement with Firstar, Shareowner Organizations
are required to provide a schedule of any fees that they may charge to their
customers relating to the investment of their assets in shares covered by the
agreements.  In addition, investors should contact their Shareowner
Organizations with respect to the availability of shareowner services and the
particular Shareowner Organization's procedures for purchasing and redeeming
shares.  It is the responsibility of Shareowner Organizations to transmit
purchase and redemption orders and record those orders in customers' accounts on
a timely basis in accordance with their agreements with customers.  At the
request of a Shareowner Organization, the transfer agent's charge of $12.00 for
each payment made by wire of redemption proceeds may be billed directly to the
Shareowner Organization.  No amounts were paid under the Plans applicable to the
Retail B Shares during the fiscal year ended October 31, 1998.

            CUSTODIAN, TRANSFER AGENT AND ACCOUNTING SERVICES AGENT

     Firstar Bank Milwaukee, N.A. serves as custodian of all the Funds' assets.
Under the Custody Agreement, Firstar Bank Milwaukee, N.A. has agreed to (i)
maintain a separate account in the name of each Fund, (ii) make receipts and
disbursements of money on behalf of each Fund, (iii) collect and receive all
income and other payments and distributions on account of each Fund's portfolio
investments, (iv) respond to correspondence from shareowners, security brokers
and others relating to its duties and (v) make periodic reports to the Company
concerning each Fund's operations.  Firstar Bank Milwaukee, N.A. may, at its own
expense, open and maintain a custody account or accounts on behalf of each Fund
with other banks or trust companies, provided that Firstar Bank Milwaukee, N.A.
shall remain liable for the performance of all of its duties under the Custody
Agreement notwithstanding any delegation.  For its services as custodian,
Firstar Bank Milwaukee, N.A. is entitled to receive a fee, payable monthly,
based on the annual rate of 0.02% of the Company's first $2 billion of total
assets, plus 0.015% of the Company's next $2 billion of total assets, and 0.01%
of the Company's next $1 billion and 0.005% on the balance.  In addition,
Firstar Bank Milwaukee, N.A., as custodian, is entitled to certain charges for
securities transactions and reimbursement for expenses. The Chase Manhattan Bank
performs certain foreign custodial services related to the International Equity
Fund.

     Firstar Mutual Fund Services, LLC, 615 East Michigan Street, Milwaukee,
Wisconsin 53202, serves as transfer agent and dividend disbursing agent for each
Fund under a Shareowner Servicing Agent Agreement.  As transfer and dividend
disbursing agent, Firstar Mutual Fund Services, LLC has agreed to (i) issue and
redeem shares of the Funds, (ii) make dividend and other distributions to
shareowners of the Funds, (iii) respond to correspondence by Fund shareowners
and others relating to its duties, (iv) maintain shareowner accounts, and (v)
make periodic reports to the Funds.  For its transfer agency and dividend
disbursing services, Firstar Mutual Fund Services, LLC is entitled to receive a
fee at the rate of $15.00 per shareowner account with an annual minimum of
$24,000 per Fund, plus certain other transaction charges and reimbursement for
expenses.

     In addition, all of the Funds have entered into a Fund Accounting Servicing
Agreement with Firstar Mutual Fund Services, LLC pursuant to which Firstar
Mutual Fund Services, LLC has agreed to maintain the financial accounts and
records of the Funds in compliance with the 1940 Act and to provide other
accounting services to the Funds.  For its accounting services, Firstar Mutual
Fund Services, LLC is entitled to receive fees, payable monthly, at the
following annual rates of the market value of each Fund's assets; Balanced
Income Fund, Balanced Growth Fund, Growth and Income Fund,  Equity Index Fund,
Growth Fund, Special Growth Fund, Emerging Growth Fund, MicroCap Fund -- $27,500
on the first $40 million, 0.0125% on the next $200 million, and 0.00625% on the
balance, plus out-of-pocket expenses, including pricing expenses; and Short-Term
Bond Market Fund, Intermediate Bond Market Fund, Tax-Exempt Intermediate Bond
Fund, Bond IMMDEX/TM Fund and International Equity Fund -- $31,250 on the first
$40 million, 0.025% on the next $200 million, 0.0125% on the next $200 million,
0.00625% on the balance, plus out-of-pocket expenses, including pricing
expenses.

                                    EXPENSES

     Operating expenses of the Funds include taxes, interest, fees and expenses
of Directors and officers, SEC fees, state securities and qualification fees,
advisory fees, administrative fees, Shareowner Organization fees (Retail A and
Retail B Shares only), charges of the custodian and transfer agent, dividend
disbursing agent and accounting services agent, certain insurance premiums,
auditing and legal expenses, costs of preparing and printing prospectuses for
regulatory purposes and for distribution to shareowners, costs of shareowner
reports and meetings, membership fees in the Investment Company Institute, and
any extraordinary expenses.  The Funds also pay any brokerage fees, commissions
and other transactions charges (if any) incurred in connection with the purchase
or sale of portfolio securities.


                INDEPENDENT ACCOUNTANTS AND FINANCIAL STATEMENTS


     PricewaterhouseCoopers LLP, independent accountants, 100 East Wisconsin
Avenue, Suite 1500, Milwaukee, Wisconsin, 53202, serve as auditors for the
Company.  The Company's Annual Report to Shareholders with respect to the Funds
for the fiscal year ended October 31, 1998 has been filed with the SEC.  The
financial statements and notes thereto in such Annual Report (the "Financial
Statements") are incorporated by reference into this Statement of Additional
Information.  The Financial Statements and Independent Accountants Report
thereon, in such Annual Report have been incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.


                                    COUNSEL

     Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the
Company, is a partner), Philadelphia National Bank Building, 1345 Chestnut
Street, Philadelphia, Pennsylvania 19107, serve as counsel to the Company and
will pass upon the legality of the shares offered by the Funds' Prospectuses.

                            PERFORMANCE CALCULATIONS

     From time to time, the total return of the Retail A Shares, Retail B Shares
and Institutional Shares of each Fund and the yields of such shares of the
Short-Term Bond Market Fund, Intermediate Bond Market Fund, Tax-Exempt
Intermediate Bond Fund and Bond IMMDEX/TM Fund (each, a "Bond  Fund") may be
quoted in advertisements, shareowner reports or other communications to
shareowners.  Performance information is generally available by calling the
Firstar Funds Center at 1-800-228-1024.


Yield Calculations
- ------------------

     Yield is computed based on the net income of a series of shares of a Bond
Fund during a 30-day (or one-month) period, which will be identified in
connection with the particular yield quotation, more specifically, the yield of
a series of shares is calculated by dividing the net investment income per share
for that series (as described below) earned during a 30-day (or one-month)
period by the net asset value per share for that series (including the maximum
front end sales charge of 3.75% for the Retail A Shares of the Bond Funds) on
the last day of the period and annualizing the result on a semiannual basis by
adding one to the quotient, raising the sum to the power of six, subtracting one
from the result and then doubling the difference.  Net investment income per
share earned during the period attributable to that series is based on the
average daily number of shares of the series outstanding during the period
entitled to receive dividends and includes dividends and interest earned during
the period attributable to that series minus expenses accrued for the period,
attributable to that series net of reimbursements.

This calculation can be expressed as follows:

                            a-b
               Yield = 2 [(----- + 1)6 - 1]
                           c x d

          Where:    a =  dividends and interest earned during the period.

                    b =  expenses accrued for the period (net of
                         reimbursements).

                    c =  the average daily number of shares outstanding during
                         the period that were entitled to receive dividends.

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

     For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the portfolio.  A Fund calculates
interest earned on any debt obligations held in its portfolio by computing the
yield to maturity of each obligation held by it based on the market value of the
obligation (including actual accrued interest) at the close of business on the
last business day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest) and dividing
the result by 360 and multiplying the quotient by the market value of the obli-
gation (including actual accrued interest) in order to determine the interest
income on the obligation for each day of the subsequent month that the
obligation is in the portfolio.  For purposes of this calculation, it is assumed
that each month contains 30 days.  The maturity of an obligation with a call
provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date.  With respect to debt
obligations purchased at a discount or premium, the formula generally calls for
amortization of the discount or premium.  The amortization schedule will be
adjusted monthly to reflect changes in the market values of such debt
obligations.

     Interest earned on tax-exempt obligations of the Tax-Exempt Intermediate
Bond Fund that are issued without original issue discount and have a current
market discount is calculated by using the coupon rate of interest instead of
the yield to maturity.  In the case of tax-exempt obligations that are issued
with original issue discount but which have discounts based on current market
value that exceed the then-remaining portion of the original issue discount
(market discount), the yield to maturity is the imputed rate based on the
original issue discount calculation.  On the other hand, in the case of tax-
exempt obligations that are issued with original issue discount but which have
the discounts based on current market value that are less than the then-
remaining portion of the original issue discount (market premium), the yield to
maturity is based on the market value.

     With respect to mortgage or other receivables-backed obligations which are
expected to be subject to monthly payments of principal and interest ("pay
downs"), (a) gain or loss attributable to actual monthly pay downs are accounted
for as an increase or decrease to interest income during the period; and (b) a
Fund may elect either (i) to amortize the discount and premium on the remaining
security, based on the cost of the security, to the weighted average maturity
date, if such information is available, or to the remaining term of the
security, if any, if the weighted average maturity date is not available, or
(ii) not to amortize discount or premium on the remaining security.

     Undeclared earned income may be subtracted from the net asset value per
share (variable "d" in the formula).  Undeclared earned income is the net
investment income which, at the end of the 30-day base period, has not been
declared as a dividend, but is reasonably expected to be and is declared as a
dividend shortly thereafter.

     In addition, the Tax-Exempt Intermediate Bond Fund may advertise a "tax-
equivalent yield" which shows the level of taxable yield needed to produce an
after-tax equivalent to the tax-free yield of the Fund.  This is done by
increasing the yield of the series of shares (calculated as stated above) by the
amount necessary to reflect the payment of federal income taxes at a stated
rate. This is computed by:  (a) dividing the portion of the Fund's yield for a
particular series (as calculated above) that is exempt from federal income tax
by one minus a stated federal income tax rate; and (b) adding the figure
resulting from (a) above to that portion, if any, of the Fund's yield that is
not exempt from federal income tax. The "tax-equivalent" yield will always be
higher than the "yield of the Fund."

     For the 30-day period ended October 31, 1998, the annualized yields for
Institutional Shares of the Short-Term Bond Market Fund, Intermediate Bond
Market Fund, Tax-Exempt Intermediate Bond Fund and Bond IMMDEX/TM Fund were
5.28%, 5.05%, 3.69% and 5.35%, respectively.  Without fees waived by the
Adviser and the Co-Administrators during such period, the annualized yields
would have been 4.94%, 4.85%, 3.38% and 5.28%, respectively. For the same
period, the tax- equivalent annualized yield for the Tax-Exempt Intermediate
Bond Fund same period would have been 5.35% (assuming a federal income tax
rate of 31%). Without fees waived by the Adviser and Co-Administrators during
such period, the tax-equivalent annualized yield for such Fund would have
been 4.90%.

     For the 30-day period ended October 31, 1998, the annualized yields,
assuming the maximum sales charge, for Retail Shares of the Short-Term Bond
Market Fund, Intermediate Bond Market Fund, Tax-Exempt Intermediate Bond Fund
and Bond IMMDEX/TM Fund were 4.92%, 4.70%, 3.37% and 5.00%, respectively.
Without fees waived by the Adviser and the Co-Administrators during such period,
the annualized yields would have been 4.58%, 4.50%, 3.06% and 4.93%,
respectively.  For the same period, the tax-equivalent annualized yield for the
Tax-Exempt Intermediate Bond Fund would have been 4.88% (assuming a federal
income tax rate of 31%).  Without fees waived by the Adviser and Co-
Administrators during such period, the tax-equivalent annualized yield for such
Fund would have been 4.43%.

     For the 30-day period ended October 31, 1998, the annualized yields for
Retail Shares of the Short-Term Bond Market Fund, Intermediate Bond Market Fund,
Tax-Exempt Intermediate Bond Fund and Bond IMMDEX a Fund purchased without a
front-end sales charge were 5.02%, 4.79%, 3.44% and 5.10%, respectively.
Without fees waived by the Adviser and the Co-Administrators during such period,
the annualized yields would have been 4.68%, 4.59%, 3.13% and 5.03%,
respectively.  For the same period, the tax-equivalent annualized yield for the
Tax-Exempt Intermediate Bond Fund purchased without a front-end sales charge
would have been 4.99% (assuming a federal income tax rate of 31%). Without fees
waived by the Adviser and Co-Administrators during such period, the tax-
equivalent annualized yield for such Fund would have been 4.54%.

Total Return Calculations.
- --------------------------

     Each Fund computes "average annual total return" separately for its Retail
A, Retail B and Institutional Shares.  Average annual total return reflects the
average annual percentage change in value of an investment in shares of a series
over the measuring period.  This is computed by determining the average annual
compounded rates of return during specified periods that equate the initial
amount invested in a particular series to the ending redeemable value of such
investment in the series.  This is done by dividing the ending redeemable value
of a hypothetical $1,000 initial payment by $1,000 and raising the quotient to a
power equal to one divided by the number of years (or fractional portion
thereof) covered by the computation and subtracting one from the result.  This
calculation can be expressed as follows:

                    P(1 + T)n  = ERV

               Where: T =     average annual total return.

                       ERV =  ending redeemable value at the end of the period
                              covered by the computation of a hypothetical
                              $1,000 payment made at the beginning of the
                              period.

                      P =     hypothetical initial payment of $1,000.

                      n =     period covered by the computation, expressed in
                              terms of years.


     The Funds may compute aggregate total return, which reflects the total
percentage change in value over the measuring period. The Funds compute their
aggregate total returns separately for the Retail A, Retail B and Institutional
Series, by determining the aggregate rates of return during specified periods
that likewise equate the initial amount invested in a particular series to the
ending redeemable value of such investment in the series.  The formula for
calculating aggregate total return is as follows:

                      ERV
               T = [(-----) - 1]
                       P

     The calculations of average annual total return and aggregate total return
assume the reinvestment of all dividends and capital gain distributions on the
reinvestment dates during the period.  The ending redeemable value (variable
"ERV" in each formula) is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations.  In addition, the Funds' average
annual total return and aggregate total return reflect the deduction of the
4.50% maximum front-end sales charge for equity funds and 3.75% maximum front
end sales charge for fixed income funds in connection with the purchase of
Retail A Shares and the maximum sales load charged in connection with
redemptions of Retail B Shares (5.00%).  The Funds may also advertise total
return data without reflecting sales charges in accordance with the rules of the
Securities and Exchange Commission.  Quotations that do not reflect the sales
charge will, of course, be higher than quotations that do reflect the sales
charge.

     The total return and yield of a Fund's Shares may be compared in
publications to those of other mutual funds with similar investment objectives
and to stock, bond and other relevant indices, rankings, or other information
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds or to investments for which
reliable performance data is available. For example, the total return and
yield, as appropriate, of a Fund's shares may be compared to data prepared by
Lipper Analytical Services, Inc. The total return of a bond or balanced Fund's
shares may be compared to the Lehman Brothers 1-3 Year Government/Corporate
Bond Index; the Merrill Lynch 1-2.99 U.S. Treasury Bond Index; the Lehman
Brothers Intermediate Government/Corporate Bond Index; the Lehman Brothers
5-Year General Obligation Bond Index; the Lehman Brothers Government/
Corporate Bond Index; and the Consumer Price Index. In addition, the total
return of an equity Fund's shares may be compared to the S&P 500 Index; the
S&P MidCap 400 Index, the S&P SmallCap 600 Index, the NASDAQ Composite Index,
an index of unmanaged groups of common stocks of domestic companies that are
quoted on the National Association of Securities Quotation System; the Dow
Jones Industrial Average, a recognized unmanaged index of common stocks of
30 industrial companies listed on the New York Stock Exchange; the Wilshire
Top 750 Index, an index of all domestic equity issues which are traded over
the national exchanges; the Russell 2000 Index; the Value Line Composite Index,
an unmanaged index of nearly 1,700 stocks reviewed in Ratings & Reports; the
Russell MidCap; the Wilshire Next 1750 Index; the Wilshire MidCap 750 Index;
and the Consumer Price Index. In addition, the total return of a series of
shares of the International Equity Fund will be compared to the GDP EAFE Index
and may be compared to the Salomon-Russell Indices, Russell Universe Indices,
Lipper International Indices, and the domestic indices listed above.  Total
return and yield data as reported in national financial publications, such as
Money Magazine, Forbes, Barron's, Morningstar Mutual Funds, Mutual Funds
Magazine, Kiplinger's Personal Finance Magazine, The Wall Street Journal and The
New York Times, or in publications of a local or regional nature, may also be
used in comparing the performance of the Funds.

     Performance quotations represent past performance, and should not be
considered as representative of future results.  The investment return and
principal value of an investment in a Fund's series of shares will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.  Since performance will fluctuate, performance data for a Fund
cannot necessarily be used to compare an investment in a Fund's series of shares
with bank deposits, savings accounts and similar investment alternatives which
often provide an agreed or guaranteed fixed yield for a stated period of time.
Investors should remember that performance is generally a function of the kind
and quality of the investments held in a portfolio, portfolio maturity,
operating expenses and market conditions.  Any fees charged by Institutions
directly to their customer accounts in connection with investments in a Fund
will not be included in the Fund's calculations of yield and total return and
will reduce the yield and total return received by the accounts.



                              PERFORMANCE HISTORY

                        AVERAGE ANNUAL TOTAL RETURN<F1>
                              INSTITUTIONAL SHARES

                                                              Since
                       1 Year    5 Years  10 Years          inception
                                                         (inception date)

SHORT-TERM BOND MARKET   6.84%     5.87%     7.35%              --

INTERMEDIATE BOND
  MARKET                 7.83%     6.19%        --      6.80% (Jan 5,1993)

TAX-EXEMPT
  INTERMEDIATE BOND      5.88%     4.85%        --     5.17% (Feb. 8, 1993)

BOND IMMDEX/TM           9.41%     7.00%     8.90%              --

BALANCED INCOME             --        --        --     12.70% (Dec. 1,1997)

BALANCED GROWTH          8.83%    11.47%        --    11.31% (Mar. 30, 1992)

GROWTH AND INCOME       18.35%    20.11%        --    14.84% (Dec, 29, 1989)

EQUITY INDEX            21.93%    20.90%    17.40%              --

GROWTH                  18.89%    15.59%        --    14.63% (Dec. 29,1992)

SPECIAL GROWTH         (5.66)%    10.94%        --    13.43% (Dec. 28, 1989)

EMERGING GROWTH        (6.35)%        --        --    (2.86)% (Aug. 15,1997)

MICROCAP              (21.51)%        --        --    18.89% (Aug. 1, 1995)

INTERNATIONAL EQUITY  (15.97)%        --        --    (4.04)% (Apr. 28,1994)



                        AVERAGE ANNUAL TOTAL RETURN<F1>
                                 RETAIL A SHARES

                                                              Since
                       1 Year    5 Years  10 Years          inception
                                                         (inception date)


SHORT-TERM BOND MARKET   2.58%     4.88%     6.84%              --

INTERMEDIATE BOND
  MARKET                 3.55%     5.19%        --      5.93% (Jan 5,1993)

TAX-EXEMPT
  INTERMEDIATE BOND      1.79%     3.86%        --     4.30% (Feb. 8, 1993)

BOND IMMDEX/TM           5.01%     5.99%     8.38%              --

BALANCED INCOME             --        --        --     8.10% (Dec. 1,1997)

BALANCED GROWTH          3.70%    10.25%        --    10.37% (Mar. 30, 1992)

GROWTH AND INCOME       12.76%    18.81%        --    14.12% (Dec, 29, 1989)

EQUITY INDEX            16.16%    19.58%    15.99%              --

GROWTH                  13.25%    14.33%        --    13.55% (Dec. 29,1992)

SPECIAL GROWTH        (10.14)%     9.73%        --    12.72% (Dec. 28, 1989)

EMERGING GROWTH       (10.82)%        --        --    (6.65)% (Aug. 15,1997)

MICROCAP              (25.22)%        --        --    16.91% (Aug. 1, 1995)

INTERNATIONAL EQUITY  (19.95)%        --        --    (5.20)% (Apr. 28,1994)

         <F1> Average annual total return calculations are for periods ended
October 31, 1998, but reflect loads in effect commencing January 1, 1999.

     The performance of the Short-Term Bond Market, Bond IMMDEX/TM and Equity
Index Funds for the period prior to December 29, 1989 and for Balanced Income
Fund for the period prior to December 1, 1997 is represented by the performance
of collective investment funds which operated prior to the effectiveness of the
registration statement of the Firstar Short-Term Bond Market, Bond IMMDEX/TM and
Equity Index and Balanced Income Funds.  At the time of the Firstar Short-Term
Bond Market, Bond IMMDEX/TM, Equity Index and Balanced Income Funds' inception,
each collective investment fund was operated using materially equivalent
investment objectives, policies, guidelines and restrictions as its
corresponding Firstar fund.  In connection with the Firstar Short-Term Bond
Market, Bond IMMDEX/TM and Equity Index Funds' commencement of operations, on
December 29, 1989 and Balance Income Funds' commencement of operations, on
December 1, 1997, each collective investment fund transferred its assets to its
Firstar Fund equivalent.

     The collective investment funds were not registered under the 1940 Act and
were and are not subject to certain restrictions that are imposed by the 1940
Act and the Internal Revenue Code.  If the collective investment funds had been
registered under the 1940 Act, performance may have been adversely affected.
Performance of the collective investment funds has been restated to reflect the
Firstar Short-Term Bond Market, Bond IMMDEX/TM, Equity Index and Balanced Income
Funds' respective actual expenses during each such Fund's first fiscal year.
'Performance quotations of each collective investment fund present past
performance of the FIRMCO managed collective funds, which are separate and
distinct from Firstar Short-Term Bond Market Fund, Bond IMMDEX Fund, Equity
Index Fund and Balanced Income Fund, do not represent past performance o those
Funds and should not be considered as representative of future results of those
Funds.


     Prior to January 10, 1995, the Funds offered to retail and institutional
investors one series of shares with neither a sales charge nor a 0.25% service
organization fee.  Retail Share performance reflects the deduction of the
current maximum sales charge of 4.50% for equity funds and 3.75% for fixed
income funds, but for periods prior to January 10, 1995, Retail Share
performance does not reflect service organization fees.  If service organization
fees had been reflected, performance would be reduced.

     Performance assumes the reinvestment of all net investment income and
capital gains and reflects fee waivers.  In the absence of fee waivers,
performance would be reduced.  Performance quotations represent past
performance, and should not be considered as representative of future results.

     The Funds may also from time to time include discussions or illustrations
of the effects of compounding in advertisements. "Compounding" refers to the
fact that, if dividends or other distributions on a Fund investment are
reinvested by being paid in additional Fund shares, any future income or capital
appreciation of a Fund would increase the value, not only of the original Fund
investment, but also of the additional Fund shares received through
reinvestment.  As a result, the value of the Fund investment would increase more
quickly than if dividends or other distribution had been paid in cash.  The
Funds may also include discussions or illustrations of the potential investment
goals of a prospective investor, investment management techniques, policies or
investment suitability of a Fund, economic conditions, the effects of inflation
and historical performance of various asset classes, including but not limited
to, stocks, bonds and Treasury bills.  From time to time advertisements or
communications to shareowners may summarize the substance of information
contained in shareowner reports (including the investment composition of a
Fund), as well as the views of the Adviser or Sub-Adviser as to market,
economic, trade and interest trends, legislative, regulatory and monetary
developments, investment strategies and related matters believed to be of
relevance to a Fund.  The Funds may also include in advertisements, charts,
graphs or drawings which illustrate the potential risks and rewards of
investment in various investment vehicles, including but not limited to stocks,
bonds, treasury bills and shares of a Fund.  In addition, advertisement or
shareowner communications may include a discussion of certain attributes or
benefits to be derived by an investment in a Fund.  Such advertisements or
communications may include symbols, headlines or other materials which highlight
or summarize the information discussed in more detail therein.


                                 MISCELLANEOUS

     As used in this SAI and in the Funds' Prospectuses, a majority of the
outstanding shares of a Fund or portfolio means, with respect to the approval of
an investment advisory agreement or a charge in a fundamental investment policy,
the lesser of (1) 67% of the shares of the particular Fund or portfolio
represented at a meeting at which the holders of more than 50% of the
outstanding shares of such Fund or portfolio are present in person or by proxy,
or (2) more than 50% of the outstanding shares of such Fund or portfolio.


     As of January 31, 1999, the Adviser and its affiliates held of record
substantially all of the outstanding shares of each of the Company's investment
portfolios as agent, custodian, trustee or investment adviser on behalf of their
customers.  At such date, Firstar Trust Services, P.O. Box 2054, Milwaukee,
Wisconsin 53201, and its affiliated banks held as beneficial owner five percent
or more of the outstanding shares of the following investment portfolios of the
Company because they possessed sole voting or investment power with respect to
such shares: Money Market Fund: 1.0%; Institutional Money Market Fund: 69%; Tax-
Exempt Money Market Fund: 48%; U.S. Treasury Money Market Fund: 31%; U.S.
Government Money Market Fund: 68%; Growth and Income Fund: 67%; Short-Term Bond
Market Fund: 58%; Special Growth Fund: 73%; Bond IMMDEX/TM Fund: 72%; Equity
Index Fund: 75%; Balanced Income Fund: 74%, Balanced Growth Fund: 75%;
Intermediate Bond Market Fund: 81%; Growth Fund: 82%; Tax-Exempt Intermediate
Bond Fund: 61%; International Equity Fund: 84%; MicroCap Fund: 80%, and
Emerging Growth Fund: 81%.  At such date, no other person was known by the
Company to hold of record or beneficially 5% or more of the outstanding
shares of any investment portfolio of the Company.


     The Equity Index Fund is not sponsored, endorsed, sold or promoted by
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P").  S&P
makes no representation or warranty, express or implied, to the shareholders of
the Equity Index Fund or any member of the public regarding the advisability of
investing in securities generally or in the Equity Index Fund particularly or
the ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the Company is the licensing of certain trademarks
and trade names of S&P and of the S&P 500 Index which is determined, composed
and calculated by S&P without regard to the Company or the Equity Index Fund.
S&P has no obligation to take the needs of the Company or shareholders of the
Equity Index Fund into consideration in determining, composing or calculating
the S&P 500 Index.  S&P is not responsible for and has not participated in the
determination of the prices and amount of the Equity Index Fund or the timing of
the issuance or sale of the Equity Index Fund  or in the determination or
calculation of the equation by which the Equity Index Fund  is to be converted
into cash.  S&P has no obligation or liability in connection with the
administration, marketing or trading of the Equity Index Fund.

     S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.  S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY LICENSEE, OWNERS OF THE PRODUCT, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN.  S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN.  WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.


                                   APPENDIX A
                                  -----------


COMMERCIAL PAPER RATINGS
- -------------------------

     A Standard & Poor's ("S&P") commercial paper rating is a current assessment
of the likelihood of timely payment of debt having an original maturity of no
more than 365 days.  The following summarizes the rating categories used by
Standard and Poor's for commercial paper:

     "A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.

     "A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.

     "A-3" - Obligations exhibit adequate protection parameters.  However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.

     "B" - Obligations are regarded as having significant speculative
characteristics.  The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.

     "C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.

     "D" - Obligations are in payment default.  The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period.  The "D" rating will be used upon the
filing of a bankruptcy petition or the taking of a similar action if payments on
an obligation are jeopardized.

     Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted.  The following summarizes the
rating categories used by Moody's for commercial paper:

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

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

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

     "Not Prime" - Issuers do not fall within any of the Prime rating
categories.


     The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category.  The following summarizes the rating categories used by Duff & Phelps
for commercial paper:

     "D-1+" - Debt possesses the highest certainty of timely payment.  Short-
term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.

     "D-1" - Debt possesses very high certainty of timely payment.  Liquidity
factors are excellent and supported by good fundamental protection factors.
Risk factors are minor.

     "D-1-" - Debt possesses high certainty of timely payment.  Liquidity
factors are strong and supported by good fundamental protection factors.  Risk
factors are very small.

     "D-2" - Debt possesses good certainty of timely payment.  Liquidity factors
and company fundamentals are sound.  Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk factors
are small.

     "D-3" - Debt possesses satisfactory liquidity and other protection factors
qualify issues as to investment grade.  Risk factors are larger and subject to
more variation.  Nevertheless, timely payment is expected.

     "D-4" - Debt possesses speculative investment characteristics.  Liquidity
is not sufficient to insure against disruption in debt service.  Operating
factors and market access may be subject to a high degree of variation.

     "D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.


     Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities.  The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:

     "F1" - Securities possess the highest credit quality.  This designation
indicates the strongest capacity for timely payment of financial commitments and
may have an added "+"to denote any exceptionally strong credit feature.

     "F2" - Securities possess good credit quality.  This designation indicates
a satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.

     "F3" - Securities possess fair credit quality.  This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.

     "B" - Securities possess speculative credit quality.  This designation
indicates minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.

     "C" - Securities possess high default risk.  This designation indicates
that default is a real possibility and that the capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic
environment.

     "D" - Securities are in actual or imminent payment default.


     Thomson BankWatch short-term ratings assess the likelihood of an untimely
payment of principal and interest of debt instruments with original maturities
of one year or less.  The following summarizes the ratings used by Thomson
BankWatch:

     "TBW-1" - This designation represents Thomson BankWatch's highest category
and indicates a very high likelihood that principal and interest will be paid on
a timely basis.

     "TBW-2" - This designation represents Thomson BankWatch's second-highest
category and indicates that while the degree of safety regarding timely
repayment of principal and interest is strong, the relative degree of safety is
not as high as for issues rated "TBW-1."

     "TBW-3" - This designation represents Thomson BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.

     "TBW-4" - This designation represents Thomson BankWatch's lowest rating
category and indicates that the obligation is regarded as non-investment grade
and therefore speculative.


CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
- -----------------------------------------------

     The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:

     "AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's.  The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.

     "AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree.  The obligor's capacity to meet its financial commitment
on the obligation is very strong.

     "A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories.  However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.

     "BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.

     Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest.  While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.

     "BB" - An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues.  However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.

     "B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation.  Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.

     "CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions for
the obligor to meet its financial commitment on the obligation.  In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.

     "CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.

     "C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action has been taken, but payments on this
obligation are being continued.

     "D" - An obligation rated "D" is in payment default.  The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period.  The "D" rating also will
be used upon the filing of a bankruptcy petition or the taking of a similar
action if payments on an obligation are jeopardized.

     PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified
by the addition of a plus or minus sign to show relative standing within the
major rating categories.

     "r" - This symbol is attached to the ratings of instruments with
significant noncredit risks.  It highlights risks to principal or volatility of
expected returns which are not addressed in the credit rating.  Examples
include: obligations linked or indexed to equities, currencies, or commodities;
obligations exposed to severe prepayment risk - such as interest-only or
principal-only mortgage securities; and obligations with unusually risky
interest terms, such as inverse floaters.

     The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

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

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

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

     "Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.

     Con. (---) - Bonds for which the security depends upon the completion of
some act or the fulfillment of some condition are rated conditionally.  These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches.  Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.

     Note:  Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa".  The modifier 1 indicates that
the obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of its generic rating category.

     The following summarizes the long-term debt ratings used by Duff & Phelps
for corporate and municipal long-term debt:

     "AAA" - Debt is considered to be of the highest credit quality.  The risk
factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.

     "AA" - Debt is considered to be of high credit quality.  Protection factors
are strong.  Risk is modest but may vary slightly from time to time because of
economic conditions.

     "A" - Debt possesses protection factors which are average but adequate.
However, risk factors are more variable in periods of greater economic stress.

     "BBB" - Debt possesses below-average protection factors but such protection
factors are still considered sufficient for prudent investment.  Considerable
variability in risk is present during economic cycles.

     "BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these ratings
is considered to be below investment grade.  Although below investment grade,
debt rated "BB" is deemed likely to meet obligations when due.  Debt rated "B"
possesses the risk that obligations will not be met when due.  Debt rated "CCC"
is well below investment grade and has considerable uncertainty as to timely
payment of principal, interest or preferred dividends.  Debt rated "DD" is a
defaulted debt obligation, and the rating "DP" represents preferred stock with
dividend arrearages.

     To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.

     The following summarizes the ratings used by Fitch IBCA for corporate and
municipal bonds:

     "AAA" - Bonds considered to be investment grade and of the highest credit
quality.  These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments.  This capacity is highly unlikely to be adversely
affected by foreseeable events.

     "AA" - Bonds considered to be investment grade and of very high credit
quality.  These ratings denote a very low expectation of credit risk and
indicate very strong capacity for timely payment of financial commitments.  This
capacity is not significantly vulnerable to foreseeable events.

     "A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of financial commitments.  This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.

     "BBB" - Bonds considered to be investment grade and of good credit quality.
These ratings denote that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity.

     "BB" - Bonds considered to be speculative.  These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic changes over time; however, business or financial alternatives
may be available to allow financial commitments to be met.  Securities rated in
this category are not investment grade.

     "B" - Bonds are considered highly speculative.  These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.

     "CCC", "CC", "C" - Bonds have high default risk.  Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.

     "DDD," "DD" and "D" - Bonds are in default.  Securities are not meeting
obligations and are extremely speculative. "DDD" designates the highest
potential for recovery of amounts outstanding on any securities involved and "D"
represents the lowest potential for recovery.

     To provide more detailed indications of credit quality, the Fitch IBCA
ratings from and including "AA" to "B" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.

     Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers.  The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:

     "AAA" - This designation indicates that the ability to repay principal and
interest on a timely basis is extremely high.

     "AA" - This designation indicates a very strong ability to repay principal
and interest on a timely basis, with limited incremental risk compared to issues
rated in the highest category.

     "A" - This designation indicates that the ability to repay principal and
interest is strong.  Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

     "BBB" - This designation represents the lowest investment-grade category
and indicates an acceptable capacity to repay principal and interest.  Issues
rated "BBB" are more vulnerable to adverse developments (both internal and
external) than obligations with higher ratings.

     "BB," "B," "CCC," and "CC," - These designations are assigned by Thomson
BankWatch to non-investment grade long-term debt.  Such issues are regarded as
having speculative characteristics regarding the likelihood of timely payment of
principal and interest. "BB" indicates the lowest degree of speculation and "CC"
the highest degree of speculation.

     "D" - This designation indicates that the long-term debt is in default.

     PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a
plus or minus sign designation which indicates where within the respective
category the issue is placed.


MUNICIPAL NOTE RATINGS
- -----------------------

     A Standard and Poor's rating reflects the liquidity concerns and market
access risks unique to notes due in three years or less.  The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:

     "SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest.  Those issues determined to possess very strong
characteristics are given a plus (+) designation.

     "SP-2" - The issuers of these municipal notes exhibit satisfactory capacity
to pay principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.

     "SP-3" - The issuers of these municipal notes exhibit speculative capacity
to pay principal and interest.

     Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG").  Such
ratings recognize the differences between short-term credit risk and long-term
risk.  The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:

     "MIG-1"/"VMIG-1" - This designation denotes best quality.  There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.

     "MIG-2"/"VMIG-2" - This designation denotes high quality, with margins of
protection that are ample although not so large as in the preceding group.

     "MIG-3"/"VMIG-3" - This designation denotes favorable quality, with all
security elements accounted for but lacking the undeniable strength of the
preceding grades.  Liquidity and cash flow protection may be narrow and market
access for refinancing is likely to be less well established.

     "MIG-4"/"VMIG-4" - This designation denotes adequate quality.  Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.

     "SG" - This designation denotes speculative quality.  Debt instruments in
this category lack of margins of protection.


     Fitch IBCA and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.



                                   APPENDIX B
                                  -----------

             ADDITIONAL INFORMATION CONCERNING FUTURES AND RELATED
                                    OPTIONS


As stated in the Prospectuses, certain of the Funds may enter into futures
contracts and options for hedging or other purposes.  Such transactions are
described in this Appendix.

I.   Interest Rate Futures Contracts
     -------------------------------

     Use of Interest Rate Futures Contracts.  Bond prices are established in
both the cash market and the futures market.  In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade.  In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date.  Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships.  Accordingly, a Fund may use interest rate futures as
a defense, or hedge, against anticipated interest rate changes and not for
speculation.  As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.

     A Fund presently could accomplish a similar result to that which they hope
to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline.  However, because
of the liquidity that is often available in the futures market the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by a Fund, through using futures contracts.

     Description of Interest Rate Futures Contracts.  An interest rate futures
contract sale would create an obligation by a Fund as seller, to deliver the
specific type of financial instrument called for in the contract at a specific
future time for a specified price.  A futures contract purchase would create an
obligation by a Fund, as purchaser, to take delivery of the specific type of
financial instrument at a specific future time at a specific price.  The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until at or near that date.  The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.

     Although interest rate futures contracts by their terms call for actual
delivery or acceptance of securities, in most cases the contracts are closed out
before the settlement date without the making or taking of delivery of
securities.  Closing out a futures contract sale is effected by a Fund's
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date.  If the price
in the sale exceeds the price in the offsetting purchase, the Fund is paid the
difference and thus realizes a gain.  If the offsetting purchase price exceeds
the sale price, the Fund pays the difference and realizes a loss.  Similarly,
the closing out of a futures contract purchase is effected by a Fund's entering
into a futures contract sale.  If the offsetting sale price exceeds the purchase
price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.

     Interest rate futures contracts are traded in an auction environment on the
floors of several exchanges - principally, the Chicago Board of Trade, the
Chicago Mercantile Exchange and the New York Futures Exchange.  The Funds would
deal only in standardized contracts on recognized exchanges.  Each exchange
guarantees performance under contract provisions through a clearing corporation,
a nonprofit organization managed by the exchange membership.

     A public market now exists in futures contracts covering various financial
instruments including long-term U.S. Treasury Bonds and Notes; Government
National Mortgage Association (GNMA) modified pass-through mortgage-backed
securities; three-month U.S. Treasury Bills; and ninety-day commercial paper. A
Fund may trade in any futures contract for which there exists a public market,
including, without limitation, the foregoing instruments.

     Examples of Futures Contract Sale.  A Fund would engage in an interest rate
futures contract sale to maintain the income advantage from continued holding of
a long-term bond while endeavoring to avoid part or all of the loss in market
value that would otherwise accompany a decline in long-term securities prices.
Assume that the market value of a certain security in a Fund's portfolio tends
to move in concert with the futures market prices of long-term U.S. Treasury
bonds ("Treasury bonds").  The Adviser wishes to fix the current market value of
this portfolio security until some point in the future.  Assume the portfolio
security has a market value of 100, and the Adviser believes that, because of an
anticipated rise in interest rates, the value will decline to 95.  The Fund
might enter into futures contract sales of Treasury bonds for an equivalent of
98.  If the market value of the portfolio security does indeed decline from 100
to 95, the equivalent futures market price for the Treasury bonds might also
decline from 98 to 93.

     In that case, the five-point loss in the market value of the portfolio
security would be offset by the five-point gain realized by closing out the
futures contract sale.  Of course, the futures market price of Treasury bonds
might well decline to more than 93 or to less than 93 because of the imperfect
correlation between cash and futures prices mentioned below.

     The Adviser could be wrong in its forecast of interest rates and the
equivalent futures market price could rise above 98.  In this case, the market
value of the portfolio securities, including the portfolio security being
protected, would increase.  The benefit of this increase would be reduced by the
loss realized on closing out the futures contract sale.

     If interest rate levels did not change, the Fund in the above example might
incur a loss of 2 points (which might be reduced by an offsetting transaction
prior to the settlement date).  In each transaction, transaction expenses would
also be incurred.

     Examples of Futures Contract Purchase.  A Fund  might engage in an interest
rate futures contract purchase when it is not fully invested in long-term bonds
but wishes to defer for a time the purchase of long-term bonds in light of the
availability of advantageous interim investments, e.g., shorter-term securities
whose yields are greater than those available on long-term bonds.  A Fund's
basic motivation would be to maintain for a time the income advantage from
investment in the short-term securities; the Fund would be endeavoring at the
same time to eliminate the effect of all or part of an expected increase in
market price of the long-term bonds that the fund may purchase.

     For example, assume that the market price of a long-term bond that the Fund
may purchase, currently yielding 10%, tends to move in concert with futures
market prices of Treasury bonds.  The Adviser wishes to fix the current market
price (and thus 10% yield) of the long-term bond until the time (four months
away in this example) when it may purchase the bond.  Assume the long-term bond
has a market price of 100, and the Adviser believes that, because of an
anticipated fall in interest rates, the price will have risen to 105 (and the
yield will have dropped to about 9 1/2%) in four months.  The Fund might enter
into futures contracts purchases of Treasury bonds for an equivalent price of
98.  At the same time, the Fund could, for example, assign a pool of investments
in short-term securities that are either maturing in four months or earmarked
for sale in four months, for purchase of the long-term bond at an assumed market
price of 100.  Assume these short-term securities are yielding 15%.  If the
market price of the long-term bond does indeed rise from 100 to 105, the
equivalent futures market price for Treasury bonds might also rise from 98 to
103.  In that case, the 5-point increase in the price that the Fund pays for the
long-term bond would be offset by the 5-point gain realized by closing out the
futures contract purchase.

     The Adviser could be wrong in its forecast of interest rates; long-term
interest rates might rise to above 10%; and the equivalent futures market price
could fall below 98.  If short-term rates at the same time fall to 10% or below,
it is possible that the Fund would continue with its purchase program for long-
term bonds.  The market price of available long-term bonds would have decreased.
The benefit of this price decrease, and thus yield increase, will be reduced by
the loss realized on closing out the futures contract purchase.

     If, however, short-term rates remained above available long-term rates, it
is possible that the Fund would discontinue its purchase program for long-term
bonds.  The yield on short-term securities in the portfolio, including those
originally in the pool assigned to the particular long-term bond, would remain
higher than yields on long-term bonds.  The benefit of this continued
incremental income will be reduced by the loss realized on closing out the
futures contract purchase.

     In each transaction, expenses would also be incurred.

II.  Index Futures Contracts.
     ------------------------

     A stock or bond index assigns relative values to the stocks or bonds
included in the index and the index fluctuates with changes in the market values
of the stocks or bonds included.  Some stock index futures contracts are based
on broad market indexes, such as the Standard & Poor's 500 or the New York Stock
Exchange Composite Index.  In contrast, certain exchanges offer futures
contracts on narrower market indexes, such as the Standard & Poor's 100 or
indexes based on an industry or market segment, such as oil and gas stocks.
Futures contracts are traded on organized exchanges regulated by the Commodity
Futures Trading Commission.  Transactions on such exchanges are cleared through
a clearing corporation, which guarantees the performance of the parties to each
contract.

     A Fund may sell index futures contracts as set forth in the Prospectuses. A
Fund may do so either to hedge the value of its portfolio as a whole, or to
protect against declines, occurring prior to sales of securities, in the value
of the securities to be sold.  Conversely, a Fund may purchase index futures
contracts. In a substantial majority of these transactions, a Fund will purchase
such securities upon termination of the long futures position, but a long
futures position may be terminated without a corresponding purchase of
securities.

     In addition, a Fund may utilize index futures contracts in anticipation of
changes in the composition of its portfolio holdings.  For example, in the event
that a Fund expects to narrow the range of industry groups represented in its
holdings it may, prior to making purchases of the actual securities, establish a
long futures position based on a more restricted index, such as an index
comprised of securities of a particular industry group.  A Fund may also sell
futures contracts in connection with this strategy, in order to protect against
the possibility that the value of the securities to be sold as part of the
restructuring of the portfolio will decline prior to the time of sale.

     The following are examples of transactions in stock index futures (net of
commissions and premiums, if any).

               ANTICIPATORY PURCHASE HEDGE:  Buy the Future Hedge
                  Objective:  Protect Against Increasing Price

          Portfolio                                          Futures
          ----------                                        ----------

                             -Day Hedge is Placed-

  Anticipate Buying $62,500                       Buying 1 Index Futures at 125

       Equity Portfolio                       Value of Futures=$62,500/Contract

                             -Day Hedge is Lifted-

  Buy Equity Portfolio with                        Sell 1 Index Futures at 130
    Actual Cost = $65,000                    Value of Futures = $65,000/Contract

Increase in Purchase Price = $2,500                  Gain on Futures = $2,500

                  HEDGING A STOCK PORTFOLIO:  Sell the Future
                  Hedge Objective:  Protect Against Declining
                             Value of the Portfolio

Factors:

Value of Stock Portfolio = $1,000,000
Value of Futures Contract = 125 x $500 = $62,500
Portfolio Beta Relative to the Index = 1.0


          Portfolio                                          Futures
          ----------                                        ----------

                             -Day Hedge is Placed-

Anticipate Selling $1,000,000                      Sell 16 Index Futures at 125
       Equity Portfolio                           Value of Futures = $1,000,000

                             -Day Hedge is Lifted-

    Equity Portfolio - Own                         Buy 16 Index Futures at 120
 Stock with Value = $960,000                       Value of Futures = $960,000
Loss in Portfolio Value = $40,000                   Gain on Futures = $40,000


If, however, the market moved in the opposite direction, that is, market value
decreased and the Fund had entered into an anticipatory purchase hedge, or
market value increased and the Fund had hedged its stock portfolio, the results
of the Fund's transactions in stock index futures would be as set forth below.

          Portfolio                                          Futures
          ----------                                        ----------

                             -Day Hedge is Placed-

  Anticipate Buying $62,500                       Buying 1 Index Futures at 125

       Equity Portfolio                        Value of Futures=$62,500/Contract

          Portfolio                                          Futures
         -----------                                        -----------
                             -Day Hedge is Lifted-

  Buy Equity Portfolio with                        Sell 1 Index Futures at 120
    Actual Cost - $60,000                   Value of Futures = $60,000/Contract
Decrease in Purchase Price = $2,500                  Loss on Futures = $2,500


                  HEDGING A STOCK PORTFOLIO:  Sell the Future
                  Hedge Objective:  Protect Against Declining
                             Value of the Portfolio

Factors:

Value of Stock Portfolio = $1,000,000
Value of Futures Contract = 125 x $500 = $62,500
Portfolio Beta Relative to the Index = 1.0

          Portfolio                                          Futures
          ----------                                        ----------

                             -Day Hedge is Placed-

Anticipate Selling $1,000,000                      Sell 16 Index Futures at 125
       Equity Portfolio                           Value of Futures = $1,000,000

                             -Day Hedge is Lifted-

    Equity Portfolio - Own                         Buy 16 Index Futures at 130
Stock with Value = $1,040,000                     Value of Futures = $1,040,000
Gain in Portfolio Value = $40,000                   Loss on Futures = $40,000

III. Futures Contracts on Foreign Currencies
     ---------------------------------------


     A futures contract on foreign currency creates a binding obligation on one
party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of foreign currency for an amount fixed in U.S.
dollars.  Foreign currency futures may be used by the International Equity Fund
to hedge against exposure to fluctuations in exchange rates between the U.S.
dollar and other currencies arising from multinational transactions.


IV.  Margin Payments.
     ----------------

     Unlike when a Fund purchases or sells a security, no price is paid or
received by the Fund upon the purchase or sale of a futures contract.
Initially, in accordance with the terms of the exchange on which such futures
contract is traded, the Fund may be required to deposit with the broker or in a
segregated account with the Fund's custodian an amount of cash or cash
equivalents, the value of which may vary but is generally equal to 10% or less
of the value of the contract.  This amount is known as initial margin.  The
nature of initial margin in futures transactions is different from that of
margin in security transactions in that futures contract margin does not involve
the borrowing of funds by the customer to finance the transactions.  Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Fund upon termination of the futures
contract assuming all contractual obligations have been satisfied.  Subsequent
payments, called variation margin, to and from the broker, will be made on a
daily basis as the price of the underlying security or index fluctuates making
the long and short positions in the futures contract more or less valuable, a
process known as marking to the market.  For example, when a Fund has purchased
a futures contract and the price of the contract has risen in response to a rise
in the underlying instruments, that position will have increased in value and
the Fund will be entitled to receive from the broker a variation margin payment
equal to that increase in value.  Conversely, where a Fund has purchased a
futures contract and the price of the future contract has declined in response
to a decrease in the underlying instruments, the position would be less valuable
and the Fund would be required to make a variation margin payment to the broker.
At any time prior to expiration of the futures contract, the Adviser and, where
applicable, the Sub-Adviser may elect to close the position by taking an
opposite position, subject to the availability of a secondary market, which will
operate to terminate the Fund's position in the futures contract.  A final
determination of variation margin is then made, additional cash is required to
be paid by or released to the Fund, and the Fund realizes a loss or gain.

V.   Risks of Transactions in Futures Contracts.
     -------------------------------------------

     There are several risks in connection with the use of futures by a Fund as
a hedging device.  One risk arises because of the imperfect correlation between
movements in the price of the future and movements in the price of the
securities which are the subject of the hedge.  The price of the future may move
more than or less than the price of the securities being hedged.  If the price
of the future moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the price of the
securities being hedged has moved in an unfavorable direction, the Fund would be
in a better position than if it had not hedged at all.  If the price of the
securities being hedged has moved in a favorable direction, this advantage will
be partially offset by the loss on the future. If the price of the future moves
more than the price of the hedged securities, the Fund involved will experience
either a loss or gain on the future which will not be completely offset by
movements in the price of the securities which are the subject of the hedge.  To
compensate for the imperfect correlation of movements in the price of securities
being hedged and movements in the price of futures contracts, a Fund may buy or
sell futures contracts in a greater dollar amount than the dollar amount of
securities being hedged if the volatility over a particular time period of the
prices of such securities has been greater than the volatility over such time
period of the future, or if otherwise deemed to be appropriate by the Adviser.
Conversely, a Fund may buy or sell fewer futures contracts if the volatility
over a particular time period of the prices of the securities being hedged is
less than the volatility over such time period of the futures contract being
used, or if otherwise deemed to be appropriate by the Adviser.  It is also
possible that, where a Fund has sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of securities held
by the Fund may decline.  If this occurred, the Fund would lose money on the
future and also experience a decline in value in its portfolio securities.

     Where futures are purchased to hedge against a possible increase in the
price of securities before a Fund is able to invest its cash (or cash
equivalents) in securities (or options) in an orderly fashion, it is possible
that the market may decline instead; if the Fund then concludes not to invest in
securities or options at that time because of concern as to possible further
market decline or for other reasons, the Fund will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.

     In instances involving the purchase of futures contracts by a Fund, an
amount of cash and cash equivalents, equal to the market value of the futures
contracts, will be deposited in a segregated account with the Fund's custodian
and/or in a margin account with a broker to collateralize the position and
thereby insure that the use of such futures is unleveraged.

     In addition to the possibility that there may be an imperfect correlation,
or no correlation at all, between movements in the futures and the securities
being hedged, the price of futures may not correlate perfectly with movement in
the cash market due to certain market distortions.  Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through off-setting transactions which could distort the normal relationship
between the cash and futures markets.  Second, with respect to financial futures
contracts, the liquidity of the futures market depends on participants entering
into off-setting transactions rather than making or taking delivery.  To the
extent participants decide to make or take delivery, liquidity in the futures
market could be reduced thus producing distortions.  Third, from the point of
view of speculators, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market.  Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.  Due to the possibility of price distortion in the futures
market, and because of the imperfect correlation between the movements in the
cash market and movements in the price of futures, a correct forecast of general
market trends or interest rate movements by the Adviser and, where applicable,
Sub-Adviser may still not result in a successful hedging transaction over a
short time frame.

     Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures.  Although a Fund
intends to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time.  In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, a Fund would continue to be required to make daily cash payments of
variation margin.  However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated.  In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract and thus provide an offset on a futures contract.

     Further, it should be noted that the liquidity of a secondary market in a
futures contract may be adversely affected by "daily price fluctuation limits"
established by commodity exchanges which limit the amount of fluctuation in a
futures contract price during a single trading day.  Once the daily limit has
been reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open futures positions.  The
trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal activity, which could at times make it difficult or
impossible to liquidate existing positions or to recover excess variation margin
payments.

     Successful use of futures by a Fund is also subject to the Adviser's or,
where applicable, the Sub-Adviser's ability to predict correctly movements in
the direction of the market.  For example, if a Fund has hedged against the
possibility of a decline in the market adversely affecting securities held in
its portfolio and securities prices increase instead, the Fund will lose part or
all of the benefit to the increased value of its securities which it has hedged
because it will have offsetting losses in its futures positions.  In addition,
in such situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements.  Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market.  A Fund may have to sell securities at a time when it
may be disadvantageous to do so.

VI.  Options on Futures Contracts.
     -----------------------------

     A Fund may purchase options on the futures contracts described above and,
if permitted by its investment objective and policies,  may also write options
on futures contracts.  A futures option gives the holder, in return for the
premium paid, the right to buy (call) from or sell (put) to the writer of the
option a futures contract at a specified price at any time during the period of
the option.  Upon exercise, the writer of the option is obligated to pay the
difference between the cash value of the futures contract and the exercise
price.  Like the buyer or seller of a futures contract, the holder, or writer,
of an option has the right to terminate its position prior to the scheduled
expiration of the option by selling, or purchasing, an option of the same
series, at which time the person entering into the closing transaction will
realize a gain or loss. A Fund will be required to deposit initial margin and
variation margin with respect to put and call options on futures contracts
written by it pursuant to brokers' requirements similar to those described
above.  Net option premiums received will be included as initial margin
deposits.  As an example, in anticipation of a decline in interest rates, a Fund
may purchase call options on futures contracts as a substitute for the purchase
of futures contracts to hedge against a possible increase in the price of
securities which the Fund intends to purchase.  Similarly, if the value of the
securities held by a Fund is expected to decline as a result of an increase in
interest rates, the Fund might purchase put options or write call options on
futures contracts rather than sell futures contracts.

     Investments in futures options involve some of the same considerations that
are involved in connection with investments in futures contracts (for example,
the existence of a liquid secondary market).  In addition, the purchase or sale
of an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased.  Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities.  In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract.  Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may frequently
involve less potential risk to a Fund because the maximum amount at risk is the
premium paid for the options (plus transaction costs).  Although permitted by
their fundamental investment policies, the Funds do not currently intend to
write futures options, and will not do so in the future absent any necessary
regulatory approvals.

VII. Accounting and Tax Treatment.
     -----------------------------

     Accounting for futures contracts and options will be in accordance with
generally accepted accounting principles.

     The tax principles applicable to futures contracts and options are complex
and, in some cases, uncertain.  Such investments may cause a Fund to recognize
taxable income prior to the receipt of cash, thereby requiring the Fund to
liquidate other positions, or to borrow money, so as to make sufficient
distributions to shareholders to avoid corporate-level tax.  Moreover, some or
all of the taxable income recognized may be ordinary income or short-term
capital gain, so that the distributions may be taxable to shareholders as
ordinary income.






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