INFINITY MUTUAL FUNDS INC, 485BPOS, 1997-04-29

INFINITY MUTUAL FUNDS INC
485BPOS, 1997-04-29

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Securities Act File No. 33-34080
Investment Company Act File No. 811-6076
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/

Pre-Effective Amendment No. ___ / /

Post-Effective Amendment No. 32 /x/

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/

Amendment No. 32 /x/

(Check appropriate box or boxes)

THE INFINITY MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)

3435 Stelzer Road, Columbus, Ohio 43219
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (614) 470-8000

George O. Martinez, Esq.
3435 Stelzer Road
Columbus, Ohio 43219
(Name and Address of Agent for Service)

copy to:

Stuart H. Coleman, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038-4982

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

__ immediately upon filing pursuant to paragraph (b)

X on April 30, 1997 pursuant to paragraph (b)

____ 60 days after filing pursuant to paragraph (a)(i)

____ on (date) pursuant to paragraph (a)(i)

____ 75 days after filing pursuant to paragraph (a)(ii)

____ on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

____ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Registrant has registered an indefinite number of its shares of Common Stock
under the Securities Act of 1933 pursuant to Section 24(f) of the Investment
Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal year ended
December 31, 1996 was filed on February 28, 1997.

THE INFINITY MUTUAL FUNDS, INC.

Alpha Government Securities Portfolio

Cross-Reference Sheet Pursuant to Rule 495(a)

Items in
Part A of
Form N-1A Caption Page

1 Cover Page Cover
2 Synopsis 2
3 Condensed Financial Information 3
4 General Description of Registrant 4, 15
5 Management of the Fund 8
5(a) Management's Discussion of Fund Performance *
6 Capital Stock and Other Securities 15
7 Purchase of Securities Being Offered 11
8 Redemption or Repurchase 13
9 Pending Legal Proceedings *

Items in
Part B of
Form N-1A

10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-6
15 Control Persons and Principal Holders
of Securities B-8, B-18
16 Investment Advisory and Other Services B-9
17 Brokerage Allocation B-17
18 Capital Stock and Other Securities B-18
19 Purchase, Redemption and Pricing of
Securities Being Offered B-13
20 Tax Status *
21 Underwriters *
22 Calculations of Performance Data B-16
23 Financial Statements B-20
- ------------

*Omitted since answer is negative or inapplicable.

<PAGE>

THE INFINITY MUTUAL FUNDS, INC.

Correspondent Cash Reserves Money Market Portfolio
Correspondent Cash Reserves Tax Free Money Market Portfolio
Cross-Reference Sheet Pursuant to Rule 495(a)

Items in
Part A of
Form N-1A Caption
Page

1 Cover Page Cover
2 Synopsis 2
3 Condensed Financial Information 3
4 General Description of Registrant 5, 16
5 Management of the Fund 9
5(a) Management's Discussion of Fund Performance *
6 Capital Stock and Other Securities 16
7 Purchase of Securities Being Offered 11
8 Redemption or Repurchase 13
9 Pending Legal Proceedings *

Items in
Part B of
Form N-1A

10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-15
15 Control Persons and Principal Holders
of Securities B-18, B-27
16 Investment Advisory and Other Services B-18
17 Brokerage Allocation B-25
18 Capital Stock and Other Securities B-26
19 Purchase, Redemption and Pricing of
Securities Being Offered B-23
20 Tax Status *
21 Underwriters *
22 Calculations of Performance Data B-24
23 Financial Statements B-35

- ------------

*Omitted since answer is negative or inapplicable.
<PAGE>

THE INFINITY MUTUAL FUNDS, INC.

AmeriStar Portfolios

Cross-Reference Sheet Pursuant to Rule 495(a)

Items in
Part A of
Form N-1A Caption

Prime Money Market
and U.S. Treasury
Money Market Portfolios

Investor Trust
Shares Shares
-------- ------
<S> <C> <C>
1 Cover Page Cover Cover
2 Synopsis 3 3
3 Condensed Financial Information 4 4
4 General Description of Registrant 6 5
5 Management of the Fund 8 7
5(a) Management's Discussion of Fund's Performance * *
6 Capital Stock and Other Securities 18 13
7 Purchase of Securities Being Offered 11 9
8 Redemption or Repurchase 13 10
9 Pending Legal Proceedings * *

Items in
Part B of
Form N-1A
Both
Classes
-------
10 Cover Page B-1
11 Table of Contents B-1
12 General Information and History *
13 Investment Objectives and Policies B-2
14 Management of the Fund B-11
15 Control Persons and Principal Holders B-11,B-23
of Securities
16 Investment Advisory and Other Services B-14
17 Brokerage Allocation B-22
18 Capital Stock and Other Securities B-23
19 Purchase, Redemption and Pricing of B-18
Securities Being Offered
20 Tax Status *
21 Underwriters *
22 Calculations of Performance Data B-21
23 Financial Statements B-30

Items in
Part C of
Form N-1A All Portfolios

24 Financial Statements and Exhibits C-1
25 Persons Controlled by or Under Common
Control with Registrant C-5
26 Number of Holders of Securities C-5
27 Indemnification C-5
28 Business and Other Connections of C-6
Investment Adviser
29 Principal Underwriters C-10
30 Location of Accounts and Records C-10
31 Management Services C-11
32 Undertakings C-11
</TABLE>

- ------------

*Omitted since answer is negative or inapplicable.
<PAGE>

PROSPECTUS
April 30, 1997

LOGO

THE INFINITY MUTUAL FUNDS, INC.
Alpha Government Securities Portfolio
- --------------------------------------------------------------------------------

The Infinity Mutual Funds, Inc. (the "Fund") is an open-end, management
investment company, known as a series fund. By this Prospectus, shares of the
Fund's Alpha Government Securities Portfolio (the "Portfolio") are being
offered.

The Portfolio is a diversified, money market mutual fund that seeks to
provide investors with as high a level of current income as is consistent with
the preservation of capital and the maintenance of liquidity. The Portfolio
invests only in short-term securities issued or guaranteed as to principal and
interest by the U.S. Government, its agencies or instrumentalities and
repurchase agreements in respect thereof.

The Portfolio's shares are offered only to clients of certain financial
institutions which have entered into service agreements with the Fund. You can
invest, reinvest or redeem shares of the Portfolio at any time without charge or
penalty.

BEA Associates (the "Adviser") serves as the Portfolio's investment adviser.

BISYS Fund Services Limited Partnership ("BISYS") serves as the Portfolio's
administrator and distribtribtor.

An investment in the Portfolio is neither insured nor guaranteed by the U.S.
Government. There can be no assurance that the Portfolio will be able to
maintain a stable net asset value of $1.00 per share.
------------------------

This Prospectus sets forth concisely information about the Fund and the
Portfolio that an investor should know before investing. It should be read and
retained for future reference.

Portfolio shares are not deposits or obligations of, or endorsed or
guaranteed by, any bank, and are not federally insured by the Federal Deposit
Insurance Corporation, the Federal Reserve Board or any other governmental
agency. Portfolio shares involve certain investment risks, including the
possible loss of principal.

TABLE OF CONTENTS

Page
-----------
Expense Summary....................................... 2
Financial Highlights.................................. 3
Yield Information..................................... 4
Description of the Portfolio.......................... 4
Management of the Portfolio........................... 9
How to Buy Shares..................................... 12
How to Redeem Shares.................................. 14
Dividends, Distributions and Taxes.................... 15
General Information................................... 17

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Expense Summary

(as a percentage of average daily net assets)

Management Fees..................................... .10%
Other Expenses (net of fee waivers)................. .76%

Total Operating Expenses (net of fee waivers)....... .86%
Example: 1 Year $ 9
You would pay the following expenses on a $1,000 investment, 3 Years $27
assuming (1) 5% annual return and (2) redemption at the 5 Years $48
end of each time period: 10 Years $106

The amounts listed in the example should not be considered as
representative of past or future expenses and actual expenses may be greater or
less than those indicated. Moreover, while the example assumes a 5% annual
return, the Portfolio's actual performance will vary and may result in an actual
return greater or less than 5%.

The purpose of the foregoing table is to assist you in understanding the
costs and expenses borne by the Portfolio, the payment of which will reduce
investors' annual return. The expenses noted above, without fee waivers, would
be: Other Expenses -- 1.13% and Total Operating Expenses -- 1.23%. Financial
institutions also may charge their customers fees in connection with the
operation of the "sweep" program which are for services unrelated to those
provided pursuant to Shareholder Services Agreements. For a further description
of the various costs and expenses incurred in the Portfolio's operation, see
"Management of the Portfolio."

Financial Highlights

Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data for each period indicated. The information in the
table has been audited by KPMG Peat Marwick LLP, the Portfolio's independent
auditors, whose report thereon appears in the Statement of Additional
Information. Further financial data and related notes are included in the
Statement of Additional Information, available upon request.
<TABLE>
<CAPTION>

Year Ended
-------------------------------------------------------------------------------- Period Ended
December 31, December 31, December 31, December 31, December 31, December 31, December 31,
1996 1995 1994 1993 1992 1991 1990*
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>

Net asset value, beginning of
year.......................... $0.999 $ 0.999 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
------------ ------------ ------------ ------------ ------------ ------------ -------------
Income from investment
operations:
Net investment income....... 0.044 0.048 0.036 0.027 0.033 0.054 0.020
Net realized gains (losses) from
securities transactions....... -- -- (0.004) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income from investment
operations.................... 0.044 0.048 0.032 0.027 0.033 0.054 0.020
------------ ------------ ------------ ------------ ------------ ------------ -------------
Less dividends and
distributions:
Dividends from net
investment income............. (0.044) (0.048) (0.036) (0.027) (0.033) (0.054) (0.020)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions................. (0.044) (0.048) (0.036) (0.027) (0.033) (0.054) (0.020)
------------ ------------ ------------ ------------ ------------ ------------ -------------
Increase due to voluntary
capital contribution from
affiliates.................... -- -- 0.003 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ -----------
Net asset value, end of
year.......................... $ 0.999 $ 0.999 0.999 $ 1.000 $ 1.000 $ 1.0000 $ 1.000
------------ ------------ ------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ ------------ ------------ -----------
Total Return.................. 4.54% 4.95% 3.65% 2.73% 3.39% 5.54% 2.02%+
Ratios/Supplemental Data:
Net assets, end of period
(000s)........................ $ 23,561 $ 54,881 $ 43,104 $ 39,069 $ 43,124 $ 62,489 $ 62,557
Ratio of expenses to average
net assets.................... 0.86% 0.76% 0.60% 0.56% 0.60% 0.57% 0.69%++
Ratio of net investment
income to average net
assets...................... 4.45% 4.83% 3.61% 2.70% 3.40% 5.39% 7.11%++

Ratio of expenses to
average net assets** 1.23%*** 1.11% 1.06% 1.06% 1.10% 1.07% 1.19++
Ratio of net investment
income to average net assets** 4.10% 4.48% 3.15% 2.20% 2.90% 4.89% 6.61++

<FN>

- ---------------
* For the period September 20, 1990 (commencement of operations) through
December 31, 1990.

** During the period, certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

***During the year ended December 31, 1996, the Portfolio received credits from
its custodian for interest earned on uninvested balances which were used to
offset custodian fees. If such credits had not occurred, the expense ratio
would have been as indicated. The ratio of net investment income was not
affected.
</FN>

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

Yield Information

From time to time, the Portfolio will advertise its yield and effective
yield. Both yield figures are based on historical earnings and are not intended
to indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of the Portfolio refers to the income
generated by an investment in the Portfolio over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Portfolio is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment.

Yield information is useful in reviewing the Portfolio's performance, but
because yields will fluctuate, such information under certain conditions may not
provide a basis for comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other investment
companies which may use a different method of computing yield.

Comparative performance information may be used from time to time in
advertising or marketing the Portfolio's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitor, N. Palm Beach, Fla. 33408, IBC
Money Fund Report, Morningstar, Inc., other industry publications and national
financial publications, including Money, Forbes, Barron's, The Wall Street
Journal and The New York Times, or local or regional publications.

Description of the Portfolio

Investment Objective

The Portfolio seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. The Portfolio's investment objective cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of the Portfolio's outstanding voting
shares. There can be no assurance that the Portfolio's investment objective will
be achieved. Securities in which the Portfolio invests may not earn as high a
level of current income as long-term or lower quality securities which generally
have less liquidity, greater market risk and more fluctuation in market value.

Management Policies

The Portfolio invests only in short-term securities issued or guaranteed as
to principal and interest by the U.S. Government, its agencies or
instrumentalities and may enter into repurchase agreements and reverse
repurchase agreements with respect to such securities. The Portfolio also may
lend securities from its portfolio as described below.

The Portfolio seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost of method
of valuing the Portfolio's securities pursuant to Rule 2a-7 under the 1940 Act.
In accordance with Rule 2a-7, the Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 13 months or less and invest only in
U.S. dollar denominated securities. The Board of Directors has delegated to the
Adviser the day-to-day operations of the Portfolio; however, the Board of
Directors retains ultimate responsibility for compliance with Rule 2a-7 under
the 1940 Act. For further information regarding the amortized cost method of
valuing securities, see "Determination of Net Asset Value" in the Portfolio's
Statement of Additional Information. There can be no assurance that the
Portfolio will be able to maintain a stable net asset value of $1.00 per share.

Portfolio Securities

U.S. Government Obligations. The Portfolio may invest in securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities. Such
securities include U.S. Treasury securities, such as bills, notes, bonds and
certificates of indebtedness, which differ only in their interest rates,
maturities and times of issuance, and issues of U.S. Government agencies and
instrumentalities established under the authority of an act of Congress. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the Treasury; others, such as those issued by
the Federal National Mortgage Association, by discretionary authority of the
U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student Loan Marketing
Association, only by the credit of the agency or instrumentality. These
securities bear fixed, floating or variable rates of interest. Interest may
fluctuate based on generally recognized reference rates or the relationship of
rates. While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law. The Portfolio
will invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.

Repurchase Agreements. The Portfolio may enter into repurchase agreements.
Repurchase agreements involve the acquisition by the Portfolio of an underlying
debt instrument, subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the instrument at a fixed price usually not more than one
week after its purchase. Certain costs may be incurred in connection with the
sale of the securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Portfolio may be delayed or limited.

Investment Practices

Portfolio Lending. From time to time, the Portfolio may lend securities
from its portfolio to brokers, dealers and other financial institutions needing
to borrow securities to complete certain transactions. Such loans may not exceed
33 1/3% of the Portfolio's total assets. In connection with such loans, the
Portfolio will receive collateral consisting of cash or U.S. Government
securities. Such collateral will be maintained at all times in an amount equal
to at least 100% of the current market value of the loaned securities. The
Portfolio can increase its income through the investment of such collateral. The
Portfolio continues to be entitled to the interest or other distributions
payable on the loaned security and receives interest on the amount of the loan.
Such loans will be terminable at any time upon specified notice. The Portfolio
might experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Portfolio.

Reverse Repurchase Agreements. The Portfolio, to a limited extent, may
borrow for investment purposes. This borrowing, which is known as leveraging,
will be on a secured basis through the entering into reverse repurchase
agreements with banks, brokers or dealers. Reverse repurchase agreements involve
the transfer by the Portfolio of an underlying debt instrument in return for
cash proceeds based on a percentage of the value of the security. The Portfolio
retains the right to receive interest and principal payments on the security.
The Portfolio will use the proceeds of reverse repurchase agreements only to
make investments which generally either mature or have a demand feature to
resell to the issuer at a date simultaneous with or prior to the expiration of
the reverse repurchase agreement. At an agreed upon future date, the Portfolio
repurchases the security at principal plus accrued interest. In certain types of
agreements, there is no agreed upon repurchase date and interest payments are
calculated daily, often based on the prevailing overnight repurchase rate. As a
result of these transactions, the Portfolio may be exposed to greater potential
fluctuations in the value of its assets. Interest costs on the money borrowed
may exceed the return received on the securities purchased. The Fund's Directors
have considered the risks to the Portfolio and its shareholders which may result
from the entry into reverse repurchase agreements and have determined that the
entry into such agreements is consistent with the Portfolio's investment
objective and management policies.

When-Issued Securities. The Portfolio may purchase U.S. Government
securities on a when-issued or forward commitment basis, which means that
delivery and payment for such securities ordinarily take place within 45 days
after the date of the commitment to purchase. The payment obligation and the
interest rate that will be received on the securities are fixed at the time the
buyer enters into the commitment. The Portfolio will make commitments to
purchase such securities only with the intention of actually acquiring the
securities, but the Portfolio may sell these securities before the settlement
date if it is deemed advisable. The Portfolio will not accrue income in respect
of a security purchased on a when-issued or forward commitment basis prior to
its stated delivery date.

Illiquid Securities. The Portfolio will not invest more than 10% of the
value of its net assets in illiquid securities. The term "illiquid securities"
for this purpose means securities that cannot be disposed of within seven days
in the ordinary course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other instruments,
certain restricted securities. As to these securities, the Portfolio is subject
to a risk that should the Portfolio desire to sell them when a ready buyer is
not available at a price the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

Certain Fundamental Policies

The Portfolio may (i) borrow money, but only (a) from banks for temporary
or emergency (not leveraging) purposes, in an amount up to 15% of the value of
the Portfolio's total assets (including the amount borrowed) valued at the
lesser of cost or market, less liabilities (not including the amount borrowed)
at the time the borrowing is made (borrowings repaid within 60 days and not
renewed or extended are presumed to be for temporary purposes) (while borrowings
exceed 5% of the value of the Portfolio's total assets, the Portfolio will not
make any additional investments), and (b) in connection with the entry into
reverse repurchase agreements. At no time may total borrowings exceed 33 1/3% of
the value of the Portfolio's total assets; (ii) pledge, hypothecate, mortgage or
otherwise encumber its assets, but only (a) to secure borrowings for temporary
or emergency purposes and (b) in connection with the entry into reverse
repurchase agreements in an amount equal to the aggregate amount of its reverse
repurchase obligations, plus accrued interest in certain cases; and (iii)invest
up to 10% of its net assets in repurchase agreements providing for settlement in
more than seven days after notice and in securities that are illiquid. This
paragraph describes fundamental policies that cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Portfolio's
outstanding voting shares. See "Investment Objective and Management Policies --
Investment Restrictions" in the Portfolio's Statement of Additional Information.

Investment Considerations

General. The Portfolio will attempt to increase yields by trading to take
advantage of short-term market variations. This policy is expected to result in
high portfolio turnover but should not adversely affect the Portfolio since it
usually will not pay brokerage commissions on purchases of U.S. Government
securities. The value of the portfolio securities held by the Portfolio will
vary inversely to changes in prevailing interest rates. Thus, if interest rates
have increased from the time a security was purchased, such security, if sold,
might be sold at a price less than its cost. Similarly, if interest rates have
declined from the time a security was purchased, such security, if sold, might
be sold at a price greater than its purchase cost. In either instance, if the
security was purchased at face value and held to maturity, no gain or loss will
be realized.

Simultaneous Investments. Investment decisions for the Portfolio are made
independently from those of the Fund's other portfolios and other investment
companies or accounts managed by the Adviser. However, if such other entities
desire to invest in, or dispose of, the same securities as the Portfolio,
available investments or opportunities for sales will be allocated equitably to
each of them. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Portfolio or the price paid or
received by the Portfolio.
- --------------------------------------------------------------------------------

Management of the Portfolio

Board of Directors

The business affairs of the Fund are managed under the general supervision
of its Board of Directors. The Portfolio's Statement of Additional Information
contains the name and general business experience of each Director.

Investment Adviser

BEA Associates, located at One Citicorp Center, 153 East 53rd Street, New
York, New York 10022, serves as the Portfolio's investment adviser. The Adviser
is a New York general partnership comprised of Credit Suisse Capital Corporation
("CSCC"), an indirect, wholly-owned subsidiary of Credit Suisse, and Basic
Appraisals, Inc. (which formerly was known as BEA Associates, Inc., the
Portfolio's predecessor sub-investment adviser). The Adviser is a registered
investment adviser which, together with its predecessor companies, has been in
the money management business for over 50 years and currently manages
approximately $30 billion in assets. The Adviser manages global equity,
balanced, fixed-income and derivative securities accounts for other investment
companies and private individuals, corporate pension and profit-sharing plans,
state pension funds, union funds, endowments and charitable institutions.

The Adviser supervises and assists in the overall management of the
Portfolio's affairs under an Investment Advisory Agreement with the Fund,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law.

For the fiscal year ended December 31, 1996, the Portfolio paid the Adviser
a monthly fee at the annual rate of .10 of 1% of the value of the Portfolio's
average daily net assets.

Administrator and Distributor

BISYS Fund Services Limited Partnership, located at 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as the Portfolio's administrator and
distributor. BISYS currently provides administrative or sub-administrative
services to, and distributes the shares of, other investment companies with over
$120 billion in assets. BISYS is a wholly-owned subsidiary of The BISYS Group,
Inc.

Under its Administration Agreement with the Fund, BISYS generally assists
in all aspects of the Fund's operations, other than providing investment advice,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law. In connection therewith, BISYS provides the Fund with office
facilities, personnel and certain clerical and bookkeeping services (e.g.,
preparation of reports to shareholders and the Securities and Exchange
Commission and filing of Federal, state and local income tax returns) that are
not being furnished by The Bank of New York, the Fund's Custodian.

Under the terms of the Administration Agreement, the Portfolio has agreed
to pay BISYS a monthly fee based on the Portfolio's assets as shown
below:

Portfolio's Average
Annual Rate Daily Net Assets
- --------------- ----------------------------------------------
.13% Less than $200 million
.12% $200 million to less than $300 million
.11% $300 million to less than $350 million
.10% $350 million and over

For the fiscal year ended December 31, 1996, the Portfolio paid BISYS a
monthly fee at the effective annual rate of .08 of 1% of the value of the
Portfolio's average daily net assets pursuant to an undertaking by BISYS.

As distributor, BISYS makes a continuous offering of the Portfolio's shares
and bears the costs and expenses of printing and distributing to prospective
investors copies of any prospectuses, statements of additional information and
annual and interim reports of the Portfolio (after such items have been prepared
and set in type by the Fund) which are used in connection with the offering of
shares, and the costs and expenses of preparing, printing and distributing any
other literature used by BISYS in connection with the offering of the
Portfolio's shares for sale to the public.

Shareholder Services Agreement

The Fund may enter into Shareholder Services Agreements with one or more
financial institutions (which may include banks), with respect to certain
services to be provided to the Portfolio's shareholders. Under a Shareholder
Services Agreement, the financial institution would agree to: develop and
monitor the investor programs that are offered from time to time in connection
with effecting transactions in Portfolio shares; provide dedicated walk-in and
telephone facilities to handle shareholder inquiries and investor needs; develop
and maintain specialized systems for the automatic investment of such
institution's client account balances; pay for the operation of arrangements
that facilitate same-day share purchases by such institution's clients; and
provide a facility to receive purchase and redemption orders and various other
services for the Portfolio's shareholders. To date, the Fund has entered into a
Shareholder Services Agreement with one financial institution.

For the services provided and expenses assumed pursuant to a Shareholder
Services Agreement, the Portfolio will agree to pay the financial institution a
monthly fee at the annual rate of .45 of 1% of the average daily value of the
Portfolio's shares owned by shareholders who are clients of the financial
institution. For the fiscal year ended December 31, 1996, the Portfolio paid the
financial institution a monthly fee at the effective annual rate of .15 of 1% of
the value of the Portfolio's average daily net assets pursuant to an undertaking
by the financial institution.

The Glass-Steagall Act and other applicable laws prohibit Federally
chartered or supervised banks and savings and loan associations from engaging in
certain aspects of the business of issuing, underwriting, selling and/or
distributing securities. Nevertheless, these financial institutions are
permitted to act as agents for their customers by making securities, such as
mutual fund securities, available to their customers. Accordingly, these
financial institutions will be engaged under a Shareholder Services Agreement
only to perform administrative and shareholder servicing functions. These
financial institutions are permitted to receive compensation for such services.
However, judicial or administrative decisions or interpretations of such laws,
as well as changes in either Federal or state statutes or regulations relating
to the permissible activities of these financial institutions or their
subsidiaries or affiliates, could prevent such an entity from continuing to
perform all or part of its activities pursuant to a Shareholder Services
Agreement. If such an entity were prohibited from so acting, its shareholder
clients would be permitted to remain Fund shareholders and alternative means for
continuing the services provided to such shareholders would be sought.

Custodian and Transfer Agent

The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's Custodian. BISYS Fund Services Ohio, Inc., an affiliate of BISYS,
located at 3435 Stelzer Road, Columbus, Ohio 43219-3035, is the Fund's Transfer
and Dividend Disbursing Agent (the "Transfer Agent").

Expenses

All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by others. The expenses borne by the
Fund include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser or BISYS, or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory, administration and other
shareholder services fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
auditing and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
calculating the net asset value of the Portfolio's shares, costs of
shareholders' reports and corporate meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders, and any extraordinary expenses.

Expenses attributable to the Portfolio are charged against the assets of
the Portfolio; other expenses of the Fund are allocated among the Fund's
portfolios on the basis determined by the Board of Directors, including, but not
limited to, proportionately in relation to the net assets of each portfolio.

How to Buy Shares

General

Portfolio shares may be purchased only by clients of certain financial
institutions (which may include banks) and their affiliates that have entered
into a Shareholder Services Agreement with the Fund. You should consult your
financial institution to see if you are eligible to purchase Portfolio shares.
The Fund does not impose any sales load in connection with the purchase of
Portfolio shares. Stock certificates are issued only upon written request. No
certificates are issued for fractional shares. The Fund reserves the right to
reject any purchase order.

The minimum initial investment in the Portfolio is $1,000. Subsequent
investments must be at least $100. The Fund reserves the right to offer the
Portfolio's shares through certain "sweep" programs without regard to minimum
purchase requirements. When purchasing shares, be sure to indicate the name of
the Portfolio and the amount to be invested.

Shares are sold on a continuous basis at the net asset value per share next
determined after an order in proper form and Federal Funds (monies of member
banks within the Federal Reserve System which are held on deposit at a Federal
Reserve Bank) are received by the Transfer Agent. See "Terms of Purchase" below.
If you do not remit Federal Funds, your payment must be converted into Federal
Funds. This usually occurs within one business day of receipt of a bank wire or
within two business days of receipt of a check drawn on a member bank of the
Federal Reserve System. Checks drawn on banks which are not members of the
Federal Reserve System may take considerably longer to convert into Federal
Funds. Prior to receipt of Federal Funds, your money will not be invested.

Wire Orders

If you desire to purchase shares by wire, you should request your bank to
transmit immediately available funds by wire to The Bank of New York, DDA
#8900118830, for purchases of shares in your name. It is important that the wire
include your name, address and Taxpayer Identification Number, indicate whether
a new account is being established or a subsequent payment is being made to an
established account and indicate the name of the Fund and Portfolio. If a
subsequent payment is being made, your Fund account number should be included.
Information on remitting funds in this manner may be obtained from your bank,
which must be a commercial bank that is either a member of the Federal Reserve
System or has a correspondent bank located in New York City.

Automatically Through "Sweep" Programs

You may be eligible for an automatic investment privilege through your
account with your financial institution, commonly called a "sweep," under which
amounts in excess of a certain minimum held in your account will be invested
automatically in shares of the Portfolio at predetermined intervals at the next
determined net asset value. If you desire to use this privilege, you should
consult your financial institution for details. It is your financial
institution's responsibility to transmit your order on a timely basis. The
"sweep" program may be modified or terminated at any time by the Fund.

Terms of Purchase

If your purchase order is received by the Transfer Agent by 12:00 noon,
Eastern time, on a business day (which, as used herein, shall include each day
that the New York Stock Exchange and the Fund's Custodian are open for
business), shares will be purchased as of 12:00 noon, Eastern time, on such
business day if payment is received in, or is converted into, Federal Funds by
4:00 p.m., Eastern time, by the Transfer Agent on that day. If your purchase
order is received after 12:00 noon, Eastern time, or if payment in Federal Funds
is not received by 4:00 p.m., Eastern time, shares will be purchased as of 12:00
noon, Eastern time, on the business day on which Federal Funds are available. If
you effect transactions in shares of the Portfolio through your financial
institution, it is your financial institution's responsibility to transmit
orders so that they will be received by the Transfer Agent in time to receive
the next determined net asset value as described above.

The Portfolio's net asset value per share is determined as of 12:00 noon,
Eastern time, on each business day. Net asset value per share is computed by
dividing the value of the Portfolio's net assets (i.e., the value of its assets
less liabilities) by the total number of its shares outstanding. See
"Determination of Net Asset Value" in the Portfolio's Statement of Additional
Information.

Federal regulations require that you provide a certified Taxpayer
Identification Number upon opening or reopening an account. See "Dividends,
Distributions and Taxes" for further information concerning this requirement.

How to Redeem Shares

General

You may request redemption of your shares at any time. Redemptions may be
made automatically through "sweep" programs. See "How to Buy Shares __
Automatically Through 'Sweep' Programs." When a request is received in proper
form, the Fund will redeem the shares at the next determined net asset value.

The Fund ordinarily will make payment for all shares redeemed within seven
days after receipt by the Transfer Agent of a redemption request in proper form,
except as provided by the rules of the Securities and Exchange Commission.

Dividends, Distributions and Taxes

The Portfolio declares dividends from net investment income on each day
that the Portfolio is open for business. Dividends usually are paid on the last
calendar day of each month, and are automatically reinvested in additional
shares at net asset value or, at your option, paid in cash. The Portfolio's
earnings for Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. Shares begin accruing dividends on the day the purchase
order is received in proper form by the Transfer Agent, if received by 12:00
noon, New York time, on such day, and continue to earn dividends through the day
before a redemption order for such shares is processed by the Transfer Agent. If
you redeem all shares in your account at any time during the month, all
dividends to which you are entitled will be paid to you along with the proceeds
of the redemption.

Distributions from net realized securities gains, if any, are declared and
paid once a year, but the Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), and in all events in a manner consistent with
the provisions of the 1940 Act. You may choose whether to receive distributions
in cash or to reinvest in additional shares at net asset value. All expenses are
accrued daily and deducted before declaration of dividends to investors.

If you elect to receive distributions in cash and your distribution checks
(1) are returned to the Fund marked "undeliverable" or (2) remain uncashed for
six months, your cash election will be changed automatically and your future
dividend and capital gains distributions will be reinvested in Portfolio shares
at the net asset value determined as of the date of payment of the distribution.
In addition, any such undeliverable checks or checks that remain uncashed for
six months will be canceled and will be reinvested in Portfolio shares at the
net asset value determined as of the date of cancellation.

Dividends derived from interest and distributions from any net realized
short-term securities gains generally are taxable to investors as ordinary
income, whether received in cash or reinvested in additional Portfolio shares.
Distributions from net realized long-term securities gains, if any, generally
are taxable as long-term capital gains regardless of how long shareholders have
held their shares and whether such distributions are received in cash or
reinvested in additional Portfolio shares. No dividend will qualify for the
dividends-received deduction allowable to certain corporations.

Dividends derived from net investment income and distributions from net
realized short-term securities gains paid by the Portfolio to a foreign investor
generally are subject to U.S. nonresident withholding taxes at the rate of 30%,
unless the investor claims the benefit of a lower rate specified in a tax
treaty. Distributions from net realized long-term securities gains paid by the
Portfolio to a foreign investor generally will not be subject to U.S.
nonresident withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor certifies
his non-U.S. residency status.

Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and distributions
from net realized securities gains of the Portfolio paid to a shareholder if
such shareholder fails to certify either that the Taxpayer Identification Number
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the Internal Revenue Service of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return. Furthermore,
the Internal Revenue Service may notify the Fund to institute backup withholding
if the Internal Revenue Service determines a shareholder's Taxpayer
Identification Number is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.

A Taxpayer Identification Number is either the Social Security number or
employer identification number of the record owner of the account. Any tax
withheld as a result of backup withholding does not constitute an additional tax
imposed on the record owner of the account, and may be claimed as a credit on
the record owner's Federal income tax return.

Notice as to the tax status of your dividends and distributions will be
mailed to you annually. You also will receive periodic summaries of your account
which will include information as to income dividends and distributions from
securities gains, if any, paid during the year. Dividends and distributions
attributable to interest from direct obligations of the United States and paid
by the Portfolio to individuals currently are not subject to tax in most states.
Dividends and distributions attributable to interest from other securities in
which the Portfolio may invest may be subject to state tax. The Fund intends to
provide shareholders with a statement which sets forth the percentage of
dividends and distributions paid by the Portfolio that is attributable to
interest income from direct obligations of the United States.

Management of the Fund believes that the Portfolio qualified for the fiscal
year ended December 31, 1996 as a "regulated investment company" under the Code.
The Portfolio intends to continue to so qualify if such qualification is in the
best interests of its shareholders. Such qualification relieves the Portfolio of
any liability for Federal income tax to the extent its earnings are distributed
in accordance with applicable provisions of the Code. The Code subjects
regulated investment companies, such as the Portfolio, to a non-deductible 4%
excise tax to the extent that such investment companies do not distribute a very
substantial portion of their taxable investment income and capital gains,
generally determined on a calendar year basis.

You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.

General Information

The Fund was incorporated under Maryland law on March 6, 1990, and the
Portfolio commenced operations on September 20, 1990. The Fund is authorized to
issue 12 billion 500 million shares of Common Stock (with 1 billion allocated to
the Portfolio), par value $.001 per share. Each share has one vote.

Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Fund to hold annual meetings of shareholders. As a result,
shareholders may not consider each year the election of Directors or the
appointment of auditors. However, pursuant to the Fund's By-Laws, the holders of
at least 10% of the shares outstanding and entitled to vote may require the Fund
to hold a special meeting of shareholders for purposes of removing a Director
from office or for any other purpose. Shareholders may remove a Director by the
affirmative vote of a majority of the Fund's outstanding voting shares. In
addition, the Board of Directors will call a meeting of shareholders for the
purpose of electing Directors if, at any time, less than a majority of the
Directors then holding office have been elected by shareholders.

The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act and for other purposes. A shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. For certain matters Fund
shareholders vote together as a group; as to others they vote separately by
portfolio. By this Prospectus, shares of the Alpha Government Securities
Portfolio are being offered. From time to time, other portfolios may be
established and sold pursuant to other offering documents.

To date, 14 portfolios of shares have been authorized. The other portfolios
are not being offered by this Prospectus. All consideration received by the Fund
for shares of one of the portfolios and all assets in which such consideration
is invested, belong to that portfolio (subject only to the rights of creditors
of the Fund) and will be subject to the liabilities related thereto. The income
and expenses attributable to one portfolio (and as to classes within a
portfolio) are treated separately from those of the other portfolios (and
classes).

The Transfer Agent maintains a record of your ownership and sends
confirmations and statements of account.

Shareholder inquiries may be made by writing to the Fund at 3435 Stelzer
Road, Columbus, Ohio 43219-3035.

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and in the Fund's
official sales literature in connection with the offer of the Fund's shares,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Fund. This Prospectus does not
constitute an offer in any State in which, or to any person to whom, such
offering may not lawfully be made.

PROSPECTUS
(LOGO)
April 30, 1997

(LOGO)

----------------------------

The Infinity Mutual Funds, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035

----------------------------

Investment Adviser
BEA ASSOCIATES
One Citicorp Center
153 East 53rd Street
New York, NY 10019

----------------------------

Administrator and Distributor
BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219-3035

----------------------------

Custodian
THE BANK OF NEW YORK
90 Washington Street
New York, NY 10286

----------------------------

Transfer Agent
& Dividend Disbursing Agent
BISYS FUND SERVICES OHIO, INC.
3435 Stelzer Road
Columbus, Ohio 43219-3035

(LOGO)

THE INFINITY MUTUAL FUNDS, INC.
ALPHA GOVERNMENT SECURITIES PORTFOLIO
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 30, 1997

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus of the
Alpha Government Securities Portfolio (the "Portfolio") of The Infinity Mutual
Funds, Inc. (the "Fund"), dated April 30, 1997, as it may be revised from time
to time. To obtain a copy of the Portfolio's Prospectus, please write to the
Fund at 3435 Stelzer Road, Columbus, Ohio 43219-3035. This Statement of
Additional Information relates only to the Portfolio and not to any of the
Fund's other portfolios.

BEA Associates (the "Adviser") serves as the Portfolio's investment
adviser.

BISYS Fund Services Limited Partnership ("BISYS") serves as the Portfolio's
administrator and distributor.

TABLE OF CONTENTS
PAGE

Investment Objective and Management Policies................... B-2
Management of the Fund......................................... B-6
Management Arrangements........................................ B-9
Purchase and Redemption of Shares............................. B-13
Determination of Net Asset Value.............................. B-15
Yield Information............................................. B-16
Portfolio Transactions........................................ B-17
Information About the Portfolio............................... B-18
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors..................... B-19
Financial Statements.......................................... B-20

<PAGE>

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PORTFOLIO'S PROSPECTUS ENTITLED "DESCRIPTION OF THE
PORTFOLIO."

REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements.
The Fund's custodian or sub-custodian employed in connection with third-party
repurchase transactions will have custody of, and will hold in a segregated
account, securities acquired by a Portfolio under a repurchase agreement. In
connection with its third-party repurchase transactions, the Fund will employ
only eligible sub-custodians which meet the requirements set forth in Section
17(f) of the Investment Company Act of 1940, as amended (the "1940 Act"), and
the rules thereunder. Repurchase agreements are considered by the staff of the
Securities and Exchange Commission to be loans by the Portfolio. In an attempt
to reduce the risk of incurring a loss on a repurchase agreement, the Portfolio
will enter into repurchase agreements only with domestic banks (including
foreign branches and subsidiaries of domestic banks) with total assets in excess
of one billion dollars or primary government securities dealers reporting to the
Federal Reserve Bank of New York, with respect to securities in which the
Portfolio may invest or government securities regardless of their remaining
maturities, and will require that additional securities be deposited with it if
the value of the securities purchased should decrease below resale price. The
Adviser will monitor on an ongoing basis the value of the collateral to assure
that it always equals or exceeds the repurchase price. The Portfolio will
consider on an ongoing basis the creditworthiness of the institutions with which
it enters into repurchase agreements.

REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse
repurchase agreements. The Portfolio will maintain in a segregated custodial
account permissible liquid assets equal to the aggregate amount of its reverse
repurchase obligations, plus accrued interest, in certain cases, in accordance
with releases promulgated by the Securities and Exchange Commission. The
Securities and Exchange Commission views reverse repurchase agreement
transactions as collateralized borrowings, and, pursuant to the 1940 Act, the
Portfolio must maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Portfolio may be required to sell some of its
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time.

ILLIQUID SECURITIES. Where a substantial market of qualified institutional
buyers develops for certain restricted securities purchased by the Portfolio
pursuant to Rule 144A under the Securities Act of 1933, as amended, the Fund
intends to treat such securities as liquid securities in accordance with
procedures approved by the Fund's Board. Because it is not possible to predict
with assurance how the market for specific restricted securities sold pursuant
to Rule 144A will develop, the Fund's Board has directed the Adviser to monitor
carefully the Portfolio's investments in such securities with particular regard
to trading activity, availability of reliable price information and other
relevant information. To the extent that, for a period of time, qualified
institutional buyers cease purchasing restricted securities pursuant to Rule
144A, the Portfolio's investing in such securities may have the effect of
increasing the level of illiquidity in its investment portfolio during such
period.

FORWARD COMMITMENTS. Securities purchased on a forward commitment or
when-issued basis are subject to changes in value (generally changing in the
same way, i.e., appreciating when interest rates decline and depreciating when
interest rates rise) based upon the public's perception of the creditworthiness
of the issuer and changes, real or anticipated, in the level of interest rates.
Securities purchased on a forward commitment or when- issued basis may expose
the Portfolio to risks because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when the
Portfolio is fully or almost fully invested may result in greater potential
fluctuation in the value of the Portfolio's net assets and its net asset value
per share.

LENDING PORTFOLIO SECURITIES. To a limited extent, the Portfolio may lend
its portfolio securities to brokers, dealers and other financial institutions,
provided it receives cash collateral which at all times is maintained in an
amount equal to at least 100% of the current market value of the securities
loaned. By lending its portfolio securities, the Portfolio can increase its
income through the investment of the cash collateral. For the purposes of this
policy, the Fund considers collateral consisting of U.S. Government securities
to be the equivalent of cash. Such loans may not exceed 33-1/3% of the
Portfolio's total assets. From time to time, the Fund may pay a part of the
interest earned from the investment of collateral received for securities loaned
to the borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," in an amount determined by the Board of
Directors to be reasonable and based solely on services rendered.

The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Portfolio making the loan must receive at least 100% cash collateral from
the borrower; (2) the borrower must increase such collateral whenever the market
value of the securities rises above the level of such collateral; (3) the
Portfolio must be able to terminate the loan at any time; (4) the Portfolio must
receive reasonable interest on the loan, as well as any interest or other
distributions payable on the loaned securities, and any increase in market
value; and (5) the Portfolio may pay only reasonable custodian fees in
connection with the loan.

INVESTMENT RESTRICTIONS

The Fund has adopted the following restrictions as fundamental policies
which apply to the Portfolio. These restrictions cannot be changed without
approval by the holders of a majority (as defined in the 1940 Act) of the
outstanding voting shares of the Portfolio. The Portfolio may not:

1. Purchase common stocks, preferred stocks, warrants or other equity
securities, or purchase corporate bonds or debentures, state bonds, municipal
bonds or industrial revenue bonds (except through the purchase of debt
obligations referred to above and in the Portfolio's Prospectus).

2. Borrow money, except (i) from banks for temporary or emergency (not
leveraging) purposes in an amount up to 15% of the value of the Portfolio's
total assets (including the amount borrowed) based on the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made (while borrowings exceed 5% of the value of the Portfolio's
total assets, the Portfolio will not make any additional investments) and (ii)
in connection with the entry into reverse repurchase agreements. At no time may
total borrowings exceed 33-1/3% of the value of the Portfolio's total assets.

3. Pledge, hypothecate, mortgage or otherwise encumber its assets, except
(i) to secure borrowings for temporary or emergency purposes and (ii) in
connection with the purchase of securities on a forward commitment basis and the
entry into reverse repurchase agreements.

4. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act), other than in connection with the entry into certain reverse
repurchase agreements.

5. Sell securities short or purchase securities on margin.

6. Write or purchase put or call options or combinations thereof.

7. Act as underwriter of securities of other issuers. The Portfolio may not
enter into repurchase agreements providing for settlement in more than seven
days after notice or purchase securities which are illiquid, if, in the
aggregate, more than 10% of its net assets would be so invested.

8. Purchase or sell real estate, real estate investment trust securities,
commodities, or oil and gas interests.

9. Make loans to others, except through the purchase of debt obligations
and through repurchase agreements referred to in the Portfolio's Prospectus, and
except that the Portfolio may lend its portfolio securities in an amount not to
exceed 33-1/3% of the value of its total assets. Any loans of portfolio
securities will be made according to guidelines established by the Securities
and Exchange Commission and the Fund's Directors.

10. Invest in companies for the purpose of exercising control.

11. Invest in securities of other investment companies, except as they may
be acquired as part of a merger, consolidation or acquisition of assets.

12. Invest more than 25% of its total assets in the securities of issuers
in any single industry, provided that there shall be no such limitation on
investments in obligations issued or guaranteed by the U.S. Government.

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

The Fund may make commitments more restrictive than the restrictions listed
above so as to permit the sale of Portfolio shares in certain states. Should the
Fund determine that a commitment is no longer in the best interests of the
Portfolio and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of the Portfolio's shares in the state
involved.

MANAGEMENT OF THE FUND

Directors and officers of the Fund, together with information as to their
principal business occupations during at least the last five years, are shown
below. Each Director who is deemed to be an "interested person" of the Fund, as
defined in the 1940 Act, is indicated by an asterisk.

DIRECTORS OF THE FUND

*WILLIAM B. BLUNDIN, PRESIDENT AND CHAIRMAN OF THE BOARD OF
DIRECTORS. An employee of BISYS Fund Services, Inc.
BISYS' general partner. Mr. Blundin also is an
officer of other investment companies administered by
BISYS or its affiliates. He is 59 years old and his
address is 125 West 55th Street, New York, New York
10019.

NORMA A. COLDWELL, DIRECTOR. International Economist and
Consultant; Executive Vice President of Coldwell
Financial Consultants; Trustee and Treasurer of
Meridian House International (International Education
and Cultural Group); Member of the Board of Advisors
of Meridian International Center and Emerging Capital
Markets, S.A. (Montevideo, Uruguay); formerly Chief
International Economist of Riggs National Bank, Washington,
D.C. She is 71 years old and her address is 3330 Southwestern
Boulevard, Dallas, Texas 75225.

RICHARD H. FRANCIS, DIRECTOR. Former Executive Vice President
and Chief Financial Officer of Pan American World
Airways, Inc. (currently, debtor-in-possession under
the U.S. Bankruptcy Code), March 1988 to October 1991;
Senior Vice President and Chief Financial Officer of
American Standard Inc., 1960 to March 1988. Mr.
Francis is a director of Allendale Mutual Insurance
and The Indonesia Fund, Inc. He is 64 years old and
his address is 40 Grosvenor Road, Short Hills, New
Jersey 07078.

WILLIAM W. McINNES, DIRECTOR. Private investor. From July 1978
to February 1993, he was Vice President--Finance and
Treasurer of Hospital Corp. of America. He is also a
director of Gulf South Medical Supply and Diversified
Trust Co. He is 48 years old and his address is 116
30th Avenue South, Nashville, Tennessee 37212.

ROBERT A. ROBINSON, DIRECTOR. Private investor. Since 1991,
President Emeritus, and from 1968 to 1991, President
of The Church Pension Group, NYC. From 1956 to 1966,
Senior Vice President of Colonial Bank & Trust Co.
He is also a director of Mariner Institutional Funds,
Inc., Mariner Tax-Free Institutional Funds, Inc., UST
Master Funds, UST Master Tax Exempt Funds, H.B. and
F.H. Bugher Foundation, Morehouse-Barlow Co.
Publishers, The Canterbury Cathedral Trust in America,
The Living Church Foundation and Hoosac School. He is 71
years old and his address is 2 Hathaway Common, New Canaan,
Connecticut 06840.

OFFICERS OF THE FUND

JEFFREY C. CUSICK, VICE PRESIDENT AND ASSISTANT SECRETARY. An
employee of BISYS Fund Services, Inc. since July 1995,
and an officer of other investment companies administered by
BISYS or its affiliates. From September 1993 to July 1995, he
was Assistant Vice President and, from 1989 to September 1993,
he was Manager--Client Services, of Federated Administrative
Services. He is 38 years old and his address is 3435 Stelzer
Road, Columbus, Ohio 43219.

WILLIAM TOMKO, Vice President. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates. He
is 38 years old and his address is 3435 Stelzer Road,
Columbus, Ohio 43219.

MARTIN R. DEAN, TREASURER. An employee of BISYS Fund Services,
Inc. since May 1994, and an officer of other
investment companies administered by BISYS or its
affiliates. Prior thereto, he was a Senior Manager
of KPMG Peat Marwick LLP. He is 33 years old and his
address is 3435 Stelzer Road, Columbus, Ohio 43219.

GEORGE O. MARTINEZ, SECRETARY. Senior Vice President and
Director of Legal and Compliance Services with BISYS
Fund Services, Inc. since April 1995, and an officer
of other investment companies administered by BISYS
or its affiliates. Prior thereto, he was Vice
President and Associate General Counsel with Alliance
Capital Management L.P. He is 37 years old and his
address is 3435 Stelzer Road, Columbus, Ohio 43219.

ROBERT L. TUCH, ASSISTANT SECRETARY. An employee of BISYS Fund
Services, Inc. since June 1991, and an officer of
other investment companies administered by BISYS or
its affiliates. He is 45 years old and his address
is 3435 Stelzer Road, Columbus, Ohio 43219.

ALAINA METZ, ASSISTANT Secretary. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates.
She is 29 years old and her address is 3435 Stelzer
Road, Columbus, Ohio 43219.

Directors and officers of the Fund, as a group, owned less than 1% of the
Portfolio's shares of Common Stock outstanding on April 11, 1997.

The Fund does not pay any remuneration to its officers and Directors other
than fees and expenses to those Directors who are not directors, officers or
employees of the Adviser or BISYS or any of their affiliates. The aggregate
amount of compensation paid to each such Director by the Fund for year ended
December 31, 1996 was as follows:

Name of Board Aggregate Total
Member Compensation Compensation
from Fund* From Fund and
Fund Complex
Paid to Board
Member*
- ------------------- --------------------------------------------------------
Norma A. Coldwell $18,000 $18,000
Richard H. Francis $18,000 $18,000
William W. McInnes $18,000 $18,000
Robert A. Robinson $18,000 $18,000
- ----------------------
* Amount does not include reimbursed expenses for attending Board meetings,
which amounted to $13,000 for all Directors as a group.

MANAGEMENT ARRANGEMENTS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PORTFOLIO'S PROSPECTUS ENTITLED "MANAGEMENT OF THE
PORTFOLIO."

INVESTMENT ADVISORY AGREEMENT. The Adviser provides investment advisory
services pursuant to the Investment Advisory Agreement (the "Advisory
Agreement") dated March 31, 1995, with the Fund. The Advisory Agreement is
subject to annual approval by (i) the Fund's Board of Directors or (ii) vote of
a majority (as defined in the 1940 Act) of the Portfolio's outstanding voting
securities, provided that in either event the continuance also is approved by a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or the Adviser, by vote cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement was last
approved by the Fund's Board of Directors, including a majority of the Directors
who are not "interested persons" of any party to the Advisory Agreement, at a
meeting held on November 14, 1996. Shareholders approved the Advisory Agreement
on March 31, 1995. The Advisory Agreement is terminable without penalty, on 60
days' notice, by the Fund's Board of Directors or by vote of the holders of a
majority of the Portfolio's outstanding voting securities, or, on not less than
90 days' notice, by the Adviser. The Advisory Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).

The Adviser is a New York general partnership comprised of Credit Suisse
Capital Corporation ("CSCC"), an indirect, wholly-owned subsidiary of Credit
Suisse, and Basic Appraisals, Inc. (formerly known as BEA Associates, Inc.). The
Adviser is majority-owned by CSCC and is governed by a board of directors, which
is controlled by CSCC, and an executive committee which runs its day-to-day
affairs and advisory activities.

The following persons are directors, executive committee members and/or
senior officers of the Adviser: Mark Arnold, Chief Operating Officer, Director,
Co-Chairman of Executive Committee and Managing Director; Emilio Bassini, Chief
Financial Officer, Executive Committee Member and Managing Director; Peter
Bosshard, Vice Chairman of the Board of Directors and Executive Committee
Member; Hans Geiger, Director; Jeffrey A. Geller, Executive Committee Member and
Managing Director; John B. Hurford, Vice Chairman of Executive Committee and
Managing Director; Hermann Maurer, Director; Michael F. Orr, Director; William
W. Priest, Jr., Chief Executive Officer, Secretary, Director, Co-Chairman of
Executive Committee and Managing Director; Daniel Regoletti, Director; William
R. Wirth, Chairman of the Board of Directors and Executive Committee Member; and
Albert L. Zesiger, Honorary Chairman of Executive Committee and Managing
Director.

The Adviser provides investment advisory services in accordance with the
stated policies of the Portfolio, subject to the approval of the Fund's Board of
Directors. The Adviser provides the Portfolio with Investment Officers who are
authorized by the Fund's Board of Directors to execute purchases and sales of
securities. The Chief Investment Officer of the Portfolio is Mark Silverstein
who is an employee of the Adviser. The Adviser also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Portfolio as well as for other
funds advised by the Adviser. All purchases and sales are reported for the
Board's review at the meeting subsequent to such transactions.

As compensation for its services, the Portfolio pays the Adviser a monthly
fee at the annual rate of .10 of 1% of the value of the Portfolio's average
daily net assets. For the fiscal years ended December 31, 1994, 1995 and 1996,
the Portfolio paid the Adviser $59,727, $49,823 and $33,718, respectively.

Prior to March 31, 1995, Infinity Advisers, Inc. served as the Portfolio's
investment manager and received an annual fee of $4,000 from the Portfolio.
Prior to such date, the Adviser served as the Portfolio's sub-investment
adviser.

ADMINISTRATION AGREEMENT. BISYS provides certain administrative services
pursuant to the Administration Agreement (the "Administration Agreement") dated
February 11, 1997, with the Fund. The Administration Agreement will continue
until December 31, 1997 and thereafter is subject to annual approval by (i) the
Fund's Board of Directors or (ii) vote of a majority (as defined in the 1940
Act) of the Portfolio's outstanding voting securities, provided that in either
event the continuance also is approved by a majority of the Directors who are
not "interested persons" (as defined in the 1940 Act) of the Fund or BISYS, by
vote cast in person at a meeting called for the purpose of voting such approval.
The Administration Agreement was last approved by the Fund's Board of Directors,
including a majority of the Directors who are not "interested persons" of any
party to the Administration Agreement, at a meeting held on February 11, 1997.
The Administration Agreement is terminable without penalty, at any time if for
cause, by the Fund's Board of Directors or by vote of the holders of a majority
of the Portfolio's outstanding voting securities, or, on not less than 90 days'
notice, by BISYS. The Administration Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act).

As compensation for its services, the Portfolio has agreed to pay BISYS a
monthly fee based on the Portfolio's assets as shown below:

Portfolio's Average
ANNUAL RATE DAILY NET ASSETS
- ----------- ----------------
.13% Less than $200 million
.12% $200 million to less than $300 million
.11% $300 million to less than $350 million
.10% $350 million and over

For the fiscal years ended December 31, 1994, 1995 and 1996, the
administration fees payable by the Portfolio to the Portfolio's predecessor
administrator amounted to $77,644, $64,007 and $43,664, respectively; however,
pursuant to undertakings, the Portfolio's predecessor administrator reduced its
fees for such periods by $29,863, $24,939 and $16,795, respectively, resulting
in net fees paid by the Portfolio to administrator of $47,781, $39,068 and
$26,869, respectively.

SHAREHOLDER SERVICES AGREEMENT. Certain financial institutions (which may
include banks) may provide shareholder services as described in the Prospectus
pursuant to a Shareholder Services Agreement (the "Shareholder Services
Agreement") with the Fund. The Shareholder Services Agreement is subject to
annual approval by (i) the Fund's Board of Directors or (ii) vote of a majority
(as defined in the 1940 Act) of the Portfolio's outstanding voting securities,
provided that in either event the continuance also is approved by a majority of
the Directors who are not "interested persons" (as defined in the 1940 Act) of
the Fund or such institution, by vote cast in person at a meeting called for the
purpose of voting such approval. The Board of Directors, including a majority of
the Directors who are not "interested persons" of any party to the Shareholder
Services Agreement, last approved the Shareholder Services Agreement at a
meeting held on November 14, 1996. The Shareholder Services Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board of Directors
or by vote of the holders of a majority of the Portfolio's outstanding voting
securities, or, on not less than 90 days' notice, by such institution. The
Shareholder Services Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act). To date, the Fund has entered into a
Shareholder Services Agreement with one financial institution.

As compensation for its services and any expenses assumed, the Portfolio
has agreed to pay such financial institutions a monthly fee at the annual rate
of .45 of 1% of the average daily value of the Portfolio's shares owned by
shareholders who are clients of the financial institution. For the fiscal year
ended December 31, 1996, $151,145 was payable pursuant to the Shareholder
Services Agreement; however, the financial institution waived $100,894 of such
amount resulting in a net fee paid by the Portfolio of $50,251 for fiscal 1996
pursuant to the Shareholder Services Agreement to the financial institution.

DISTRIBUTION AGREEMENT. BISYS acts as the exclusive distributor of the
Portfolio's shares on a best efforts basis pursuant to a Distribution Agreement
(the "Distribution Agreement") dated February 11, 1997 with the Fund. Shares are
sold on a continuous basis by BISYS as agent, although BISYS is not obliged to
sell any particular amount of shares. No compensation is payable by the
Portfolio to BISYS for its distribution services.

EXPENSES. All expenses incurred in the operation of the Fund are borne by
the Fund, except to the extent specifically assumed by others. The expenses
borne by the Fund include: organizational costs, taxes, interest, brokerage fees
and commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser or BISYS or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory, administration and other
shareholder services fees, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
auditing and legal expenses, costs of calculating the net asset value of the
Portfolio's shares, costs of maintaining corporate existence, costs of
independent pricing services, costs attributable to investor services
(including, without limitation, telephone and personnel expenses), costs of
shareholders' reports and corporate meetings, costs of preparing and printing
prospectuses and statements of additional information for regulatory purposes
and for distribution to existing shareholders, and any extraordinary expenses.
Expenses attributable to the Portfolio are charged against the assets of the
Portfolio; other expenses of the Fund are allocated among the Fund's portfolios
on the basis determined by the Board of Directors, including, but not limited
to, proportionately in relation to the net assets of each portfolio.

The Adviser and BISYS have agreed that if, in any fiscal year, the
aggregate expenses of the Portfolio, exclusive of taxes, brokerage, interest on
borrowings and (with the prior written consent of the necessary state securities
commissions) extraordinary expenses, but including the investment advisory and
administration fees, exceed the expense limitation of any state having
jurisdiction over the Portfolio, the Fund may deduct from the payment to be made
to the Adviser and/or BISYS under their respective Agreements, or the Adviser
and/or BISYS will bear, such excess expense to the extent required by state law.
Such deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.

PURCHASE AND REDEMPTION OF SHARES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTIONS IN THE PORTFOLIO'S PROSPECTUS ENTITLED "HOW TO BUY SHARES" AND
"HOW TO REDEEM SHARES."

"SWEEP" PROGRAM. The Portfolio's shares may be purchased through the
"sweep" program established by certain financial institutions under which a
portion of their customers' accounts may be automatically invested in the
Portfolio. The customer becomes the beneficial owner of specific shares of the
Fund which may be purchased, redeemed and held by the financial institution in
accordance with the customer's instructions and may fully exercise all rights as
a shareholder. The shares will be held by BISYS Fund Services Ohio, Inc. (the
"Transfer Agent") in book-entry form. A statement with regard to the customer's
shares is generally supplied to the customer monthly, and confirmations of all
transactions for the account of the customer ordinarily are available to the
customer promptly on request. In addition, each customer is sent proxies,
periodic reports and other information from the Fund with regard to shares of
the Portfolio. The customer's shares are fully assignable and may be encumbered
by the customer. The "sweep" agreement can be terminated by the customer at any
time, without affecting its beneficial ownership of the shares.

To obtain the benefits of this service, a customer typically is required to
maintain a minimum balance subject to a monthly maintenance fee, or a higher
minimum balance for which no monthly fee would be imposed. In either case, a
penalty fee is imposed if the minimum should not be maintained. In general, the
automatic investment in the Portfolio's shares occurs on the same day that
withdrawals are made by the financial institution, at the next determined net
asset value after the order is received.

All agreements which relate to the service are with the financial
institution. Neither BISYS nor the Fund is a party to any of those agreements
and no part of the compensation received by the financial institution flows to
the Fund or to BISYS or to any of their affiliates, either directly or
indirectly. Further information concerning this program and any related charges
or fees is provided by the financial institution prior to any purchase of the
Portfolio's shares. Any fees charged by the financial institution effectively
reduces the Portfolio's yield for those customers.

TERMS OF PURCHASE. The Fund reserves the right to reject any purchase order
and to change the amount of the minimum investment and subsequent purchases in
the Portfolio.

USING FEDERAL FUNDS. The Transfer Agent or the Fund may attempt to notify
the investor upon receipt of checks drawn on banks that are not members of the
Federal Reserve System as to the possible delay in conversion into Federal Funds
and may attempt to arrange for a better means of transmitting the money.

REOPENING AN ACCOUNT. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided that
the information on the old Account Application is still applicable.

STOCK CERTIFICATES; SIGNATURES. Any certificate representing Portfolio
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each holder of
a joint account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations.
If the signature is guaranteed by a broker or dealer, such broker or dealer must
be a member of a clearing corporation and maintain net capital of at least
$100,000. Guarantees must be signed by an authorized signatory of the guarantor
and "Signature-Guaranteed" should appear with the signature.

SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closing), (b) when trading
in the markets the Portfolio ordinarily utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange Commission so that
disposal of the Portfolio's investments or determination of its net asset value
is not reasonably practicable, or (c) for such other periods as the Securities
and Exchange Commission by order may permit to protect the Portfolio's
shareholders.

DETERMINATION OF NET ASSET VALUE

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PORTFOLIO'S PROSPECTUS ENTITLED "HOW TO BUY SHARES."

AMORTIZED COST PRICING. The valuation of the Portfolio's investment
securities is based upon their amortized cost which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Portfolio would receive if it sold the
instrument.

The Board of Directors has established, as a particular responsibility
within the overall duty of care owed to the Portfolio's investors, procedures
reasonably designed to stabilize the Portfolio's price per share as computed for
the purpose of purchases and redemptions at $1.00. Such procedures include
review of the Portfolio's investment holdings by the Board of Directors, at such
intervals as it deems appropriate, to determine whether the Portfolio's net
asset value calculated by using available market quotations or market
equivalents deviates from $1.00 per share based on amortized cost. In such
review, investments for which market quotations are readily available will be
valued at the most recent bid price or yield equivalent for such securities or
for securities of comparable maturity, quality and type, as obtained from one or
more of the major market makers for the securities to be valued. Other
investments and assets will be valued at fair value as determined in good faith
by the Board of Directors.

The extent of any deviation between the Portfolio's net asset value based
upon available market quotations or market equivalents and $1.00 per share based
on amortized cost will be examined by the Board of Directors. If such deviation
exceeds 1/2 of 1%, the Board of Directors promptly will consider what action, if
any, will be initiated. In the event the Board of Directors determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions from
capital or capital gains; redeeming shares in kind; or establishing a net asset
value per share by using available market quotations or market equivalents.

NEW YORK STOCK EXCHANGE AND CUSTODIAN CLOSINGS. The holidays (as observed)
on which the New York Stock Exchange and the Custodian are closed currently are:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day and Christmas Day.

YIELD INFORMATION

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PORTFOLIO'S PROSPECTUS ENTITLED "YIELD INFORMATION."

For the seven-day period ended December 31, 1996, the Portfolio's yield and
effective yield, net of absorbed expenses, was 4.68% and 4.78%, respectively.
The Portfolio's yield and effective yield for such period without the absorption
of certain expenses would have been 4.31% and 4.40%, respectively. Yield is
computed in accordance with a standardized method which involves determining the
net change in the value of a hypothetical pre- existing Portfolio account having
a balance of one share at the beginning of a seven calendar day period for which
yield is to be quoted, dividing the net change by the value of the account at
the beginning of the period to obtain the base period return, and analyzing the
results (i.e., multiplying the base period return by 365/7). The net change in
the value of the account reflects the value of additional shares purchased with
dividends declared on the original share and any such additional shares and fees
that may be charged to shareholder accounts, in proportion to the length of the
base period and the Portfolio's average account size, but does not include
realized gains and losses or unrealized appreciation and depreciation. Effective
annualized yield is computed by adding 1 to the base period return (calculated
as described above), raising that sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.

Yields will fluctuate and are not necessarily representative of future
results. The investor should remember that yield is a function of the type and
quality of the instruments held, their maturity and operating expenses. An
investor's principal in the Portfolio is not guaranteed. See "Determination of
Net Asset Value" for a discussion of the manner in which the Portfolio's price
per share is determined.

PORTFOLIO TRANSACTIONS

Portfolio securities ordinarily are purchased directly from the issuer or
an underwriter or a market maker for the securities. Usually no brokerage
commissions are paid for such purchases. Purchases from underwriters of
portfolio securities include a concession paid by the issuer to the underwriter
and the purchase price paid to market makers for the securities may include the
spread between the bid and asked price. No brokerage commissions have been paid
by the Portfolio to date.

Transactions are allocated to various dealers by the Portfolio's investment
personnel in their best judgment. The primary consideration is prompt and
effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected to act on an agency basis for
research, statistical or other services to enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms.

Research services furnished by brokers through which the Portfolio effects
securities transactions may be used by the Adviser in advising other funds or
accounts it advises and, conversely, research services furnished to the Adviser
by brokers in connection with other funds or accounts the Adviser advises may be
used by the Adviser in advising the Portfolio. Although it is not possible to
place a dollar value on these services, it is the opinion of the Adviser that
the receipt and study of such services should not reduce the overall expenses of
its research department.

INFORMATION ABOUT THE PORTFOLIOS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE PORTFOLIO'S PROSPECTUS ENTITLED "GENERAL INFORMATION."

The Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive, subscription or conversion rights and are freely
transferable.

The Portfolio will send annual and semi-annual financial statements to all
its shareholders.

As of April 11, 1997, the following shareholders beneficially owned,
directly or indirectly, 5% or more of the Portfolio's outstanding shares:

Percent of
Total Shares
Name and Address Outstanding

The Bank of New York as agent for 19.91%
United Methodist Development
475 Riverside Drive
New York, New York 10115

The Bank of New York as agent for 14.37%
St. John's Riverside Hospital
967 North Broadway
Yonkers, New York 10701

The Bank of New York as agent for 8.52%
Shearson Shopco Malls Ltd.
1250 Broadway
New York, New York 10001

The Bank of New York as agent for 5.09%
New York Employees Pension Plan
Division 1181 ATU
101-49 Woodhaven Blvd.
Ozone Park, New York 11416

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS

The Bank of New York, 90 Washington Street, New York, New York 10286, acts
as custodian of the Portfolio's investments. BISYS Fund Services Ohio, Inc., an
affiliate of BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, acts as the Fund's
transfer and dividend disbursing agent (the "Transfer Agent"). Under the
transfer agency agreement with the Fund, the Transfer Agent maintains
shareholder account records for the Fund, handles certain communications between
shareholders and the Fund and pays dividends and distributions payable by the
Fund. For these services, the Transfer Agent receives a monthly fee compiled on
the basis of the number of shareholder accounts it maintains for the Fund during
the month, and is reimbursed for certain out-of- pocket expenses. Neither The
Bank of New York nor the Transfer Agent has any part in determining the
investment policies of the Portfolio or which securities are to be purchased or
sold by the Portfolio.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York
10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Portfolio's Prospectus.

KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York 10154,
independent auditors, have been selected as the Fund's auditors for the fiscal
year ending December 31, 1997.

<PAGE>

FINANCIAL STATEMENTS

The Portfolio's Annual Report to Shareholders for the fiscal year ended
December 31, 1996 is a separate document supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing therein are incorporated by reference
in this Statement of Additional Information.

<PAGE>

PROSPECTUS APRIL 30, 1997

THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
PRIME MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
INVESTOR SHARES
- ------------------------------------------------------------------------------

The Infinity Mutual Funds, Inc. (the "Fund") is an open-end, management
investment company, known as a series fund. By this Prospectus, the Fund is
offering Investor Shares of two diversified money market portfolios (the
"Portfolios"), that seek to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity.

- - The PRIME MONEY MARKET PORTFOLIO will invest in short-term money market
instruments consisting of securities issued or guaranteed by the U.S. Government
or its agencies or instrumentalities, bank obligations, repurchase agreements,
commercial paper and other corporate obligations.

- - The U.S. TREASURY MONEY MARKET PORTFOLIO will invest only in U.S.
Treasury securities and in other securities guaranteed as to principal and
interest by the U.S. Government, and repurchase agreements in respect thereof.

AN INVESTMENT IN A PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE CAN BE NO ASSURANCE THAT EACH PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.

Each Portfolio's investment adviser is First American National Bank (the
"Adviser").

BISYS Fund Services Limited Partnership ("BISYS") serves as each
Portfolio's administrator and distributor.

Another class of shares--Trust Shares--are offered by a separate prospectus
only to clients of the Adviser and certain other affiliated and non-affiliated
institutions for their qualified trust, custody and/or agency accounts, and are
not offered hereby. Trust Shares and Investor Shares are identical, except as to
the services offered to each class and the expenses borne by each class which
may affect performance. Investors desiring to obtain information about Trust
Shares should ask their sales representative or call 1-800-852-0045.

PORTFOLIO SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, THE ADVISER OR ANY OTHER BANK, AND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER GOVERNMENTAL AGENCY. PORTFOLIO SHARES INVOLVE CERTAIN RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

--------------

This Prospectus sets forth concisely information about the Fund and the
Portfolios that an investor should know before investing. It should be read and
retained for future reference.

The Statement of Additional Information, dated April 30, 1997, which may be
revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund and
Portfolios. For a free copy of the Statement of Additional Information, write to
the Fund at 3435 Stelzer Road, Columbus, Ohio 43219-3035, or call
1-800-852-0045.
- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS

PAGE
------
Annual Operating Expenses.................................... 3
Financial Highlights......................................... 4
Yield Information............................................ 6
Description of the Portfolios................................ 6
Management of the Portfolios................................. 8
How to Buy Shares............................................ 11
How to Redeem Shares......................................... 13
Shareholder Privileges....................................... 15
Dividends, Distributions and Taxes........................... 16
General Information.......................................... 18
Appendix..................................................... A-1

DISTRIBUTED BY: INVESTMENT ADVISER:
BISYS Fund Services Limited First American National
Partnership Bank
3435 Stelzer Road 315 Deaderick Street
Columbus, Ohio 43219-3035 Nashville, Tennessee 37237

For information about opening an account and other Fund services call:
(800) 824-3741
To execute purchases, redemptions and exchanges and for information about the
status of your account call:
(800) 852-0045

<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

U.S.
PRIME TREASURY
PORTFOLIO PORTFOLIO
INVESTOR INVESTOR
SHARES SHARES
----------- -----------
<S> <C> <C>

Management Fees......................... .25% .25%
Other Expenses (after expense
reimbursement)........................ .43% .31%
Total Portfolio Operating Expenses
(after expense reimbursement)*........ .68% .56%

EXAMPLE:
An investor would pay the following expenses on a
$1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time
period:
1 Year................................ $ 7 $ 6
3 Years............................... $ 22 $ 18
5 Years............................... $ 38 $ 31
10 Years.............................. $ 85 $ 70
</TABLE>

- --------------------------------------------------------------------------------

THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS REPRESENTATIVE OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL RETURN, EACH
PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN ACTUAL RETURN
GREATER OR LESS THAN 5%.
- --------------------------------------------------------------------------------

The purpose of the foregoing table is to assist investors in understanding the
costs and expenses borne by a Portfolio, the payment of which will reduce
investors' annual return. The expenses noted above, without reimbursements,
would have been: Other Expenses, .61% and Total Portfolio Operating Expenses,
.86% for the Prime Portfolio; and Other Expenses, .49% and Total Portfolio
Operating Expenses, .74% for the U.S. Treasury Portfolio. For a further
description of the various costs and expenses incurred in a Portfolio's
operation, as well as expense reimbursement or waiver arrangements, see
"Management of the Portfolios."

- ------------

* Certain Service Organizations (as defined below) and other institutions also
may charge their clients direct fees for effecting transactions in Portfolio
shares and the Adviser, its affiliates and certain other institutions may
charge customary account and account transaction fees, which are not Fund
related, with respect to accounts through which or for which Portfolio
shares are purchased or redeemed; such fees are not reflected in the
foregoing table.

<PAGE>
FINANCIAL HIGHLIGHTS

Contained below for each Portfolio is per share operating performance data
for an Investor Share of common stock outstanding, total investment return,
ratios to average net assets and other supplemental data for each period
indicated. The information in the table has been audited by KPMG Peat Marwick
LLP, the Portfolios' independent auditors. Further financial data, related notes
and report of independent auditors accompany the Statement of Additional
Information, available upon request.

AMERISTAR PRIME MONEY MARKET PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994*
--------------- --------------- ---------------
<S> <C> <C> <C>

Net Asset Value, Beginning of Period............................. $ 1.000 $ 1.000 $ 1.000
--------------- --------------- ---------------
Income from investment operations:
Net investment income.......................................... 0.048 0.054 0.031
--------------- --------------- ---------------
Less dividends and distributions:
Dividends from net investment income........................... (0.048) (0.054) (0.031)
--------------- --------------- ---------------
Net Asset Value, End of Period................................... $ 1.000 $ 1.000 $ 1.000
=============== =============== ===============
Total Return..................................................... 4.88% 5.51% 3.13%(a)
Ratios/Supplemental Data:
Net assets, end of period (000's).............................. $ 22,836 $ 63,919 $ 82,351
Ratio of expenses to average net assets........................ 0.68% 0.65% 0.63%(b)
Ratio of net investment income to average net assets........... 4.83% 5.37% 4.06%(b)
Ratio of expenses to average net assets**...................... 0.86%(c) 0.90% 0.93%(b)
Ratio of net investment income to average net assets**......... 4.65% 5.12% 3.76%(b)
- ------------

* For the period March 29, 1994 (commencement of operations) through December
31, 1994.

** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

(a) Not annualized.

(b) Annualized.

(c) During the year ended December 31, 1996, the Portfolio received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees and expenses. If such credits had not
occurred, the expense ratio would have been as indicated. The ratio of net
investment income was not affected.
</TABLE>

<PAGE>
AMERISTAR U.S. TREASURY MONEY MARKET PORTFOLIO

YEAR ENDED YEAR ENDED PERIOD ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994*
-------------- ------------- --------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.000 $ 1.000 $ 1.000
-------------- ------------- --------------
Income from investment operations:
Net investment income................. 0.047 0.053 0.030
-------------- ------------- --------------
Less dividends and distributions:
Dividends from net investment
income.............................. (0.047) (0.053) (0.030)
-------------- ------------- --------------
Net Asset Value, End of Period.......... $ 1.000 $ 1.000 $ 1.000
============== ============= ==============
Total Return............................ 4.78% 5.41% 3.01%(a)
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $ 73,308 $ 168,430 $ 139,715
Ratio of expenses to average net
assets.............................. 0.56% 0.50% 0.54%(b)
Ratio of net investment income to
average net assets.................. 4.72% 5.28% 4.02%(b)
Ratio of expenses to average net
assets**............................ 0.74%(c) 0.75% 0.83%(b)
Ratio of net investment income to
average net assets**................ 4.54% 5.03% 3.73%(b)
- ------------

* For the period March 29, 1994 (commencement of operations) through December
31, 1994.

** During the period certain fees were voluntarily reduced. If such voluntary
fee reductions had not occurred, the ratios would have been as indicated.

(a) Not annualized.

(b) Annualized.

YIELD INFORMATION

From time to time, each Portfolio will advertise its yield and effective
yield. Both yield figures are based on historical earnings and are not intended
to indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of the Portfolio refers to the income
generated by an investment in such Portfolio over a seven-day period (which
period will be stated in the advertisement). This income is then annualized.
That is, the amount of income generated by the investment during that week is
assumed to be generated each week over a 52-week period and is shown as a
percentage of the investment. The effective yield is calculated similarly but,
when annualized, the income earned by an investment in the Portfolio is assumed
to be reinvested. The effective yield will be slightly higher than the yield
because of the compounding effect of this assumed reinvestment. Each Portfolio's
yield and effective yield may reflect absorbed expenses pursuant to any
undertaking that may be in effect.

Yield information is useful in reviewing the Portfolio's performance, but
because yields will fluctuate, under certain conditions such information may not
provide a basis for comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other investment
companies which may use a different method of computing yield.

Comparative performance information may be used from time to time in
advertising or marketing each Portfolio's shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc., Bank Rate Monitor-TM-, N. Palm
Beach, Fla. 33408, IBC's Money Fund Report-TM- and other industry publications.

DESCRIPTION OF THE PORTFOLIOS

INVESTMENT OBJECTIVES

Each Portfolio seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity. Each Portfolio's investment objective cannot be changed without
approval by the holders of a majority (as defined in the Investment Company Act
of 1940, as amended (the "1940 Act")) of such Portfolio's outstanding voting
shares. There can be no assurance that each Portfolio's investment objective
will be achieved. Securities in which each Portfolio will invest may not earn as
high a level of current income as long-term or lower quality securities which
generally have less liquidity, greater market risk and more fluctuation in
market value.

MANAGEMENT POLICIES

Each Portfolio seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, each Portfolio uses the amortized cost
method of valuing its securities pursuant to Rule 2a-7 under the 1940 Act, which
includes various maturity, quality and diversification requirements, certain of
which are summarized below.

In accordance with Rule 2a-7, each Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days months or less and invest
only in U.S. dollar denominated securities determined in accordance with
procedures established by the Fund's Board of Directors to present minimal
credit risks and, with respect to the Prime Portfolio, which are rated in one of
the two highest rating categories for debt obligations by at least two
nationally recognized statistical rating organizations ("NRSRO") (or one NRSRO
if the instrument was rated by only one such organization) or, if unrated, are
of comparable quality as determined in accordance with procedures established by
the Fund's Board of Directors. The NRSROs currently rating instruments of the
type the Prime Portfolio may purchase are Moody's Investors Service, Inc.,
Standard & Poor's Ratings Group, Duff & Phelps Credit Rating Co., Fitch
Investors Service, L.P., IBCA Limited and IBCA Inc. and Thomson BankWatch, Inc.
and their rating criteria are described in the "Appendix" to the Statement of
Additional Information. For further information regarding the amortized cost
method of valuing securities, see "Determination of Net Asset Value" in the
Statement of Additional Information. There can be no assurance that the
Portfolios will be able to maintain a stable net asset value of $1.00 per share.

PRIME PORTFOLIO--The Prime Portfolio will invest in U.S. dollar denominated
short-term money market obligations, including securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, certificates of
deposit, time deposits and bankers' acceptances issued by domestic banks,
foreign branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, loan participation agreements,
guaranteed investment contracts, municipal obligations, repurchase agreements,
asset-backed securities, and high quality domestic and foreign commercial paper
and other high quality short-term corporate obligations, such as floating or
variable rate U.S. dollar denominated demand notes and bonds. The Prime
Portfolio will invest in U.S. dollar denominated obligations issued or
guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities, including obligations of
supranational entities. The Prime Portfolio will not invest more than 35% of the
value of its total assets in foreign securities. See "Appendix-- Portfolio
Securities." The Prime Portfolio also may lend its portfolio securities, enter
into reverse repurchase agreements and purchase restricted securities pursuant
to Rule 144A under the Securities Act of 1933, as amended. See
"Appendix--Investment Practices." During normal market conditions, at least 25%
of the Prime Portfolio's total assets will be invested in domestic and/or
foreign bank obligations. See "Risk Factors Related to the Prime Portfolio"
below.

U.S. TREASURY PORTFOLIO--The U.S. Treasury Portfolio will invest, as a
fundamental policy, at least 65% of the value of its total assets in U.S.
Treasury securities and repurchase agreements in respect thereof. The remainder
of its assets may be invested in other securities guaranteed as to principal and
interest by the U.S. Government and repurchase agreements in respect thereof.
See "Appendix--Portfolio Securities." The U.S. Treasury Portfolio also may lend
its portfolio securities, enter into reverse repurchase agreements and purchase
restricted securities pursuant to Rule 144A under the Securities Act of 1933, as
amended. See "Appendix--Investment Practices."

Instruments which are issued or guaranteed as to principal and interest by
the U.S. Government constitute direct obligations of the United States of
America. The U.S. Treasury Portfolio will not invest in securities issued or
guaranteed by U.S. Government agencies, instrumentalities or
government-sponsored enterprises that are not backed by the full faith and
credit of the United States. Dividends and distributions paid by the U.S.
Treasury Portfolio that are attributable to interest from direct obligations of
the United States currently are not subject to personal income tax in most
states. However, dividends and distributions attributable to interest from
repurchase agreements may be subject to state tax.

RISK FACTORS RELATING TO THE PRIME PORTFOLIO-- To the extent the Prime
Portfolio's investments are concentrated in the banking industry, it will have
correspondingly greater exposure to the risk factors which are characteristic of
such investments. Sustained increases in interest rates can adversely affect the
availability or liquidity and cost of capital funds for a bank's lending
activities, and a deterioration in general economic conditions could increase
the exposure to credit losses. In addition, the value of and the investment
return on the Prime Portfolio's shares will be affected by economic or
regulatory developments in or related to the banking industry, and competition
within the banking industry as well as with other types of financial
institutions. The Prime Portfolio, however, will seek to minimize its exposure
to such risks by investing only in debt securities which are determined to be of
high quality.

Since the Prime Portfolio may invest in securities issued by foreign
governments and any of their political subdivisions, agencies or
instrumentalities, and by foreign branches and foreign subsidiaries of domestic
banks, domestic and foreign branches of foreign banks, and commercial paper
issued by foreign issuers, it may be subject to additional investment risks with
respect to those securities that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible adverse political and economic
developments, seizure or nationalization of foreign deposits, or the adoption of
governmental restrictions with might adversely affect or restrict the payment of
principal and interest on these securities to investors located outside the
country of the issuer.

OTHER INVESTMENT CONSIDERATIONS--Each Portfolio will attempt to increase
yields by trading to take advantage of short-term market variations. This policy
is expected to result in high portfolio turnover but should not adversely affect
the Portfolios since each Portfolio usually will not pay brokerage commissions
on purchases of short-term debt obligations. The value of the securities held by
a Portfolio will vary inversely to changes in prevailing interest rates. Thus,
if interest rates have increased from the time a security was purchased, such
security, if sold, might be sold at a price less than its cost. Similarly, if
interest rates have declined from the time a security was purchased, such
security, if sold, might be sold at a price greater than its purchase cost. In
either instance, if the security is held to maturity, no gain or loss will be
realized. The value of U.S. Treasury securities also will be affected by the
supply and demand, as well as the perceived supply and demand, for such
securities.

Federal income tax law requires the holder of a zero coupon security or of
certain pay-in-kind bonds to accrue income with respect to these securities
prior to the receipt of cash payments. To maintain its qualification as a
regulated investment company and avoid liability for Federal income taxes, each
Portfolio that invests in such securities may be required to distribute such
income accrued with respect to these securities and may have to dispose of
portfolio securities under disadvantageous circumstances in order to generate
cash to satisfy these distribution requirements.

Investment decisions for each Portfolio are made independently from those
of the Fund's other portfolios and other investment companies or accounts
managed by the Adviser or Sub-Adviser. However, if such other entities desire to
invest in, or dispose of, the same securities as a Portfolio, available
investments or opportunities for sales will be allocated equitably to each of
them. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by the Portfolio or the price paid or
received by the Portfolio.

MANAGEMENT OF THE PORTFOLIOS

BOARD OF DIRECTORS

The business affairs of the Fund are managed under the general supervision
of its Board of Directors. The Statement of Additional Information contains the
name and general business experience of each Director.

INVESTMENT ADVISER

First American National Bank, located at First American Center, 315
Deaderick Street, Nashville, Tennessee 37237, serves as each Portfolio's
investment adviser. The Adviser is a wholly-owned subsidiary of First American
Corporation, a registered bank holding company having assets as of December 31,
1996 of approximately $10.4 billion. First American National Bank provides
personal trust, estate, employee benefit trust, corporate trust and custody
services to over 3,000 individual and business clients and investment advisory
services. The Adviser, and its affiliates, as of December 31, 1996, had
approximately $5 billion under trust and approximately $3 billion under
management.

The Adviser and its affiliates deal, trade and invest for their own
accounts and for the accounts of clients which they manage in the types of
securities in which the Portfolios may invest and may have deposit, loan and
commercial banking relationships with the issuers of securities purchased by the
Prime Portfolio. The Adviser has informed the Fund that in making its investment
decisions it does not obtain or use material inside information in its or its
affiliates' possession.

The Adviser supervises and assists in the management of each Portfolio's
affairs under an Investment Advisory Agreement between the Adviser and the Fund,
subject to the authority of the Fund's Board of Directors in accordance with
Maryland law. All activities of the Adviser are conducted by persons who are
also officers of one or more of the Adviser's affiliates.

The Adviser has engaged Barnett Capital Advisors, Inc. (the "Sub-Adviser"),
located at 9000 Southside Boulevard, Building 100, Jacksonville, Florida 32256,
to provide the day-to-day management of the Prime Portfolio's investments.

Under the terms of the Investment Advisory Agreement, the Fund has agreed
to pay the Adviser a monthly fee at the annual rate of .25 of 1% of the value of
each Portfolio's average daily net assets less, in the case of the Prime
Portfolio, any amount payable by the Fund to the Sub-Adviser. Pursuant to the
Sub-Investment Advisory Agreement among the Fund, the Adviser and the
Sub-Adviser, the Fund has agreed to pay the Sub-Adviser a monthly fee at the
annual rate of .15 of 1% of the value of the Prime Portfolio's average daily net
assets. For the fiscal year ended December 31, 1996, the Fund paid the Adviser a
monthly fee at the annual rate of .10 of 1% of the value of the Prime
Portfolio's and .25 of 1% of the value of the U.S. Treasury Portfolio's average
daily net assets. For such year, the Fund paid the Sub-Adviser at the annual
rate of .15 of 1% of the value of the Prime Portfolio's average daily net
assets.

From time to time, the Adviser and/or the Sub-Adviser may waive receipt of
their respective fees and/or voluntarily assume certain expenses of a Portfolio,
which would have the effect of lowering the expense ratio of that Portfolio and
increasing yield to its investors. The Portfolio will not pay the Adviser and/or
the Sub-Adviser at a later time for any amounts that may be waived, nor will the
Portfolio reimburse the Adviser and/or the Sub-Adviser for any amounts that may
be assumed.

ADMINISTRATOR AND DISTRIBUTOR

BISYS Fund Services Limited Partnership, located at 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as each Portfolio's administrator and
distributor. BISYS currently provides administrative services or
sub-administrative services to, and distributes the shares of, other investment
companies with over $120 billion in assets. BISYS is a wholly-owned subsidiary
of The BISYS Group, Inc.

Under its Administration Agreement with the Fund, BISYS generally assists
in all aspects of the Fund's operations, other than providing investment advice,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law. In connection therewith, BISYS provides the Fund with office
facilities, personnel, and certain clerical and bookkeeping services (e.g.,
preparation of reports to shareholders and the Securities and Exchange
Commission and filing of Federal, state and local income tax returns) that are
not being furnished by The Bank of New York, the Fund's Custodian.

For the fiscal year ended December 31, 1996, the Fund paid BISYS a monthly
administration fee at the annual rate of .10 of 1% of the value of each
Portfolio's average daily net assets.

SHAREHOLDER SERVICES PLAN

Under a shareholder services plan adopted by the Fund's Board of Directors
(the "Plan"), the Fund pays BISYS, as distributor, for the provision of certain
services to the holders of Investor Shares at an annual rate of .25 of 1% of the
value of each Portfolio's average daily net assets represented by Investor
Shares. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding a
Portfolio and providing reports and other information, and services related to
the maintenance of such shareholder accounts. The fee payable for such services
is intended to be a "service fee" as defined in the NASD Conduct Rules. Under
the Plan, BISYS may make payments to certain financial institutions, securities
dealers and other industry professionals that have entered into agreements with
BISYS ("Service Organizations") in respect of these services. BISYS determines
the amounts to be paid to Service Organizations. Service Organizations receive
such fees in respect of the average daily value of Investor Shares owned by
their clients. From time to time, BISYS may defer or waive receipt of fees under
the Plan while retaining the ability to be paid by the Fund under the Plan
thereafter. The fees payable to BISYS under the Plan are payable without regard
to actual expenses incurred.

The Fund understands that Service Organizations may charge fees to their
clients who are the beneficial owners of Investor Shares in connection with
their client accounts. These fees would be in addition to any amounts which may
be received by a Service Organization under its agreement with BISYS. Clients of
Service Organizations should consult their Service Organizations in this regard.

CUSTODIAN AND TRANSFER AGENT

EXPENSES

All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by others. The expenses borne by the
Fund include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser, Sub-Adviser or BISYS, or any of their affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs of calculating the net asset value of each
Portfolio's shares, costs of shareholders' reports and corporate meetings, costs
of preparing and printing certain prospectuses and statements of additional
information, and any extraordinary expenses. Expenses attributable to a
particular Portfolio are charged against the assets of that Portfolio; other
expenses of the Fund are allocated among the Portfolios on the basis determined
by the Board of Directors, including, but not limited to, proportionately in
relation to the net assets of each Portfolio.

HOW TO BUY SHARES

GENERAL

Investor Shares may be purchased through a number of institutions,
including the Adviser and its affiliates such as AmeriStar Capital Markets Inc.,
Service Organizations, and directly from BISYS. When purchasing Portfolio
shares, you must specify the Portfolio being purchased and that the purchase is
for Investor Shares. The Adviser, its affiliates and Service Organizations may
receive different levels of compensation for selling different classes of
Portfolio shares. Stock certificates will not be issued.

The minimum initial investment for each Portfolio is $1,000, and subsequent
investments must be at least $100. For full-time or part-time employees of the
Adviser or any of its affiliates, the minimum initial investment for each
Portfolio is $500, and subsequent investments must be at least $50. The Adviser,
its affiliates and Service Organizations may impose initial or subsequent
investment minimums which are higher or lower than those specified above and may
impose different minimums for different types of accounts or purchase
arrangements. In addition, purchases made in connection with certain shareholder
privileges may have different minimum investment requirements. See "Shareholder
Privileges."

The Fund reserves the right to reject any purchase order for Investor
Shares in whole or in part, including purchases made with foreign checks and
third party checks not originally made payable to the order of the investor.

PROCEDURES

You may purchase Portfolio shares by check or wire, or through TELETRADE or
a sweep program as described below. Investors purchasing shares through the
Adviser, its affiliates or Service Organizations should contact such entity
directly for appropriate instructions, as well as for information about
conditions pertaining to the account and any related fees.

WRITTEN ORDERS--For written orders, you may send your initial or subsequent
purchase order, together with the Fund's Account Application for initial orders,
and your check or money order payable to: The AmeriStar Funds (Portfolio Name),
to The AmeriStar Funds, P.O. Box 182239, Columbus, Ohio 43219-2239. For
subsequent investments, your Fund account number should appear on the check or
money order. All payments should be made in U.S. dollars and, to avoid fees and
delays, should be drawn only on U.S. banks. A charge will be imposed if a check
used for investment in your account does not clear.

WIRE ORDERS--For wire orders, you must call the Transfer Agent at
1-800-852-0045. If a subsequent payment is being made, your Fund account number
should be included. Information on remitting funds in this manner, including any
related fees, may be obtained from your bank.

Subsequent investments also may be made by electronic transfer of funds
from an account maintained in a bank or other domestic financial institution
that is an Automated Clearing House member. For information on purchasing shares
through the Automatic Clearing House, you must call the Transfer Agent at
1-800-852-0045.

AUTOMATICALLY THROUGH "SWEEP" PROGRAMS--Certain investor accounts with the
Adviser, its affiliates and certain Service Organizations may be eligible for an
automatic investment privilege, commonly called a "sweep," under which amounts
in excess of a certain minimum held in these accounts will be invested
automatically in shares of a Portfolio at predetermined intervals at the next
determined net asset value. Investors desiring to use this privilege should
consult such entity at which the investor maintains his account to determine if
it is available and whether any conditions are imposed on its use. It is the
responsibility of the financial institution holding the investor's funds to
transmit such investor's order on a timely basis. The "sweep" program may be
modified or terminated at any time by the Fund.

TELETRADE--You may purchase Portfolio shares (minimum purchase $500,
maximum $50,000 per transaction) without charge by telephone for an existing
Fund account if you have checked the appropriate box and supplied the necessary
information on the Fund's Account Application. The proceeds will be transferred
between the bank account designated on the Account Application and your Fund
account. Only a bank account maintained in a domestic financial institution
which is an Automated Clearing House member may be so designated. TELETRADE
purchases are effected at the net asset value next determined after receipt of
an order in proper form by the Transfer Agent. See "Terms of Purchase" below.
TELETRADE may not be available to certain clients of the Adviser, its affiliates
and certain Service Organizations. The Fund may modify or terminate TELETRADE at
any time or charge a service fee upon notice to shareholders. No such fee
currently is contemplated. If you have selected TELETRADE, you may request such
a purchase of Portfolio shares by telephoning the Transfer Agent at
1-800-852-0045.

TERMS OF PURCHASE

If your purchase order is received by the Transfer Agent by 2:00 p.m.,
Eastern time, on a business day (which, as used herein, shall include each day
the New York Stock Exchange is open for business, except Martin Luther King, Jr.
Day, Columbus Day and Veterans' Day), shares will be purchased as of 2:00 p.m.,
Eastern time, on such business day if payment is received in, or is converted
into, Federal Funds by 4:00 p.m., Eastern time, by the Transfer Agent on that
day. If your purchase order is received after 2:00 p.m., Eastern time, or if
payment in Federal Funds is not received by 4:00 p.m., Eastern time, shares will
be purchased as of 2:00 p.m., Eastern time, on the business day on which Federal
Funds are available. The New York Stock Exchange currently is closed on the
following holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. If you request
transactions in shares of a Portfolio through the Adviser, its affiliates or a
Service Organization, it is such entity's responsibility to transmit orders so
that they will be received by the Transfer Agent in time to receive the next
determined net asset value as described above.

Each Portfolio's net asset value per share is determined as of 2:00 p.m.,
Eastern time, on each business day, except on days where there are not
sufficient changes in the value of a Portfolio's investment securities to
materially affect the Portfolio's net asset value and no purchase orders or
redemption requests have been received. Net asset value per Investor Share is
computed by dividing the value of the Portfolio's net assets attributable to
Investor Shares (i.e., the value of its assets less liabilities) by the total
number of Investor Shares of such Portfolio outstanding. See "Determination of
Net Asset Value" in the Statement of Additional Information.

Federal regulations require that an investor provide a certified TIN upon
opening or reopening an account. See "Dividends, Distributions and Taxes" and
the Fund's Account Application for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject the
investor to a $50 penalty imposed by the Internal Revenue Service ("IRS").

HOW TO REDEEM SHARES

GENERAL

An investor who has purchased shares through an account with the Adviser,
its affiliates or a Service Organization must redeem shares by following
instructions pertaining to such account. If such investors also are the
shareholders of record of those accounts on the books of the Transfer Agent,
they may redeem shares as described below under "Procedures." Such investors
wishing to use the other redemption methods described below must arrange with
the Adviser, its affiliates or the Service Organization for delivery of the
required notice(s) to the Transfer Agent. It is the responsibility of the
Adviser, its affiliates or the Service Organization, as the case may be, to
transmit the redemption order to the Transfer Agent and credit the investor's
account with the redemption proceeds on a timely basis. Other investors may
redeem all or part of their shares in accordance with the procedures described
below.

When a request is received in proper form, the Fund will redeem the shares
at the next determined net asset value. The Fund ordinarily will make payment
for all shares redeemed within seven days after receipt by the Transfer Agent of
a redemption request in proper form, except as provided by the rules of the
Securities and Exchange Commission. HOWEVER, IF YOU HAVE PURCHASED PORTFOLIO
SHARES BY CHECK OR BY TELETRADE AND SUBSEQUENTLY SUBMIT A REDEMPTION REQUEST BY
MAIL, THE REDEMPTION PROCEEDS WILL NOT BE TRANSMITTED TO YOU UNTIL BANK
CLEARANCE OF THE CHECK OR TELETRADE PAYMENT USED FOR INVESTMENT WHICH MAY TAKE
UP TO TEN BUSINESS DAYS. THE FUND WILL DELAY REQUESTS TO REDEEM SHARES BY WIRE
FOR A PERIOD OF UP TO TEN BUSINESS DAYS AFTER RECEIPT BY THE TRANSFER AGENT OF
THE PURCHASE CHECK OR TELETRADE ORDER AGAINST WHICH SUCH REDEMPTION IS
REQUESTED. THIS PROCEDURE DOES NOT APPLY TO SHARES PURCHASED BY WIRE PAYMENT.
PRIOR TO THE TIME THE REDEMPTION IS EFFECTIVE, DIVIDENDS ON SUCH SHARES WILL
ACCRUE AND BE PAYABLE, AND YOU WILL BE ENTITLED TO EXERCISE ALL OTHER RIGHTS OF
BENEFICIAL OWNERSHIP.

The Fund imposes no charges when shares are redeemed. The Adviser, its
affiliates and Service Organizations may charge their clients a fee for
effecting redemptions of Portfolio shares. The value of Portfolio shares
redeemed may be more or less than their original cost, depending upon the
Portfolio's then-current net asset value.

PROCEDURES

WRITTEN ORDERS--Written requests for redemption, indicating the name of the
Portfolio and that Investor Shares are being redeemed, with signature
appropriately guaranteed, if required, and otherwise in accordance with the
requirements listed below, should be mailed to The AmeriStar Funds, P.O. Box
182239, Columbus, Ohio 43219-2239.

REDEMPTION BY CHECK--If you desire to use check redemption, you should
consult the Adviser, its affiliates or your Service Organization to determine
its availability. At such entity's request, the Transfer Agent will provide you
with redemption checks. These checks can be made payable to the order of any
person in an amount not less than $500. The payee of the check may cash or
deposit the check. When a check is presented to the Transfer Agent for payment,
the Transfer Agent will present the check to the Fund as authority to redeem a
sufficient number of full and fractional shares in your account to cover the
amount of the check. This enables you to continue earning daily dividends until
the check is cleared. There currently is no charge for the use of checks;
however, the Transfer Agent may impose a charge for stopping payment of a check
upon your request, or if the check cannot be honored due to insufficient funds
or other valid reason. Shares for which stock certificates have been issued may
not be redeemed by check. The Fund or the Transfer Agent may modify or terminate
the check redemption privilege at any time upon notice to shareholders.

WIRE REDEMPTION PRIVILEGE--After appropriate prior authorization, you may
request by telephone or in writing that redemption proceeds be transmitted by
the Transfer Agent via Federal Funds wire transfer to your bank account.
Redemption requests must be in an amount of at least $1,000. The Fund reserves
the right to refuse any request for a wire transfer and may limit the amount
involved or the number of telephone redemption requests. This Privilege may be
modified or terminated at any time by the Transfer Agent or the Fund.

AUTOMATICALLY THROUGH "SWEEP" PROGRAMS--See Page 12.

TELETRADE--You may redeem Portfolio shares (minimum $500, maximum $50,000
per transaction) without charge by telephone if you have checked the appropriate
box and supplied the necessary information on the Fund's Account Application.
The proceeds will be transferred between your Fund account and the bank account
designated on the Account Application. Only a bank account maintained in a
domestic financial institution which is an Automated Clearing House member may
be so designated. Redemption proceeds will be on deposit in your account at an
Automated Clearing House member bank ordinarily two days after receipt of the
redemption request. The Fund may modify or terminate TELETRADE at any time or
charge a service fee upon notice to shareholders. No such fee currently is
contemplated. If you have selected TELETRADE, you may request such a redemption
of Portfolio shares by telephoning the Transfer Agent at 1-800-852-0045.

REDEMPTION REQUIREMENTS

Written redemption instructions, indicating the name of the Portfolio and
that Investor Shares are being redeemed, and duly endorsed share certificates,
if previously issued, must be received by the Transfer Agent in proper form and
signed exactly as the shares are registered. Except as noted below, all
signatures must be guaranteed. The Transfer Agent has adopted standards and
procedures pursuant to which signature-guarantees in proper form generally will
be accepted from domestic banks, brokers, dealers, credit unions, national
securities exchanges, registered securities associations, clearing agencies and
savings associations, as well as from participants in the New York Stock
Exchange Medallion Signature Program, the Securities Transfer Agents Medallion
Program ("STAMP") and the Stock Exchanges Medallion Program.
Signature-guarantees may not be provided by notaries public. The
signature-guarantee requirement will be waived if the following conditions
apply: (1) the redemption check is payable to the shareholder(s) of record; and
(2) the redemption check is mailed to the shareholder(s) at the address of
record or the proceeds are either mailed or wired to a financial institution
account previously designated. Redemption requests by corporate and fiduciary
shareholders must be accompanied by appropriate documentation establishing the
authority of the person seeking to act on behalf of the account. You may obtain,
from the Fund or the Transfer Agent, forms of resolutions and other
documentation which have been prepared in advance to assist compliance with the
Fund's procedures.

You may redeem or exchange Portfolio shares by telephone if you have
checked the appropriate box on the Fund's Account Application. By selecting a
telephone redemption or exchange privilege, an investor authorizes the Transfer
Agent to act on telephone instructions from any person representing himself or
herself to be the investor, or a representative of the investor's Service
Organization, and reasonably believed by the Transfer Agent to be genuine. The
Fund will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of personal identification, to confirm that instructions are
genuine and, if it does not follow such procedures, the Fund or the Transfer
Agent may be liable for any losses due to unauthorized or fraudulent
instructions. Neither the Fund nor the Transfer Agent will be liable for
following telephone instructions reasonably believed to be genuine.

During times of drastic economic or market conditions, investors may
experience difficulty in contacting the Transfer Agent by telephone to request a
redemption or exchange of Portfolio shares. In such cases, investors should
consider using the other redemption procedures described herein. Use of these
other redemption procedures may result in the investor's redemption request
being processed at a later time than it would have been if telephone redemption
had been used.

SHAREHOLDER PRIVILEGES

The services and privileges described under this heading may not be
available to certain clients of the Adviser, its affiliates and certain Service
Organizations and the Adviser, its affiliates and some Service Organizations may
impose certain conditions on their clients which are different from those
described in this Prospectus. Such investors should consult the Adviser, its
affiliates or their Service Organization in this regard.

EXCHANGE PRIVILEGE

The Exchange Privilege enables you to purchase, in exchange for shares of a
Portfolio, shares of the other Portfolio offered by this Prospectus, or shares
of another AmeriStar Portfolio, to the extent such shares are offered for sale
in your state of residence. If you desire to use this Privilege, you should
consult the Adviser, its affiliate where you maintain your account, your Service
Organization or BISYS to determine if it is available and whether any conditions
are imposed on its use.

To use the Exchange Privilege, you or your Service Organization acting on
your behalf must give exchange instructions to the Transfer Agent in writing or
by telephone, or in accordance with the instructions pertaining to your account
at the Adviser or its affiliates. If you previously established the Telephone
Exchange Privilege, you may telephone exchange instructions by calling
1-800-852-0045. See "How to Redeem Shares--Redemption Requirements." Before any
exchange into a Portfolio offered by another prospectus, you must obtain and
should review a copy of the current prospectus of the Portfolio into which the
exchange is being made. Prospectuses may be obtained from the Adviser, its
affiliates, certain Service Organizations or BISY. The shares being exchanged
must have a current value of at least $500; furthermore, when establishing a new
account by exchange, the shares being exchanged must have a value of at least
the minimum initial investment required for the Portfolio into which the
exchange is being made.

Shares will be exchanged at the next determined net asset value; however, a
sales load may be charged with respect to exchanges into a Portfolio sold with a
sales load. If you are exchanging into a Portfolio that charges a sales load,
you may qualify for share prices which do not include the sales load or which
reflect a reduced sales load, if the shares you are exchanging were: (a)
purchased with a sales load, (b) acquired by a previous exchange from shares
purchased with a sales load, or (c) acquired through reinvestment of dividends
or distributions paid with respect to the foregoing categories of shares. No
fees currently are charged shareholders directly in connection with exchanges
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal administrative fee in accordance with
rules promulgated by the Securities and Exchange Commission. The Fund reserves
the right to reject any exchange request in whole or in part. The Exchange
Privilege may be modified or terminated at any time upon notice to shareholders.

The exchange of shares of one Portfolio for shares of another is treated
for Federal income tax purposes as a sale of the shares given in exchange by the
shareholder and, therefore, an exchanging shareholder may realize a taxable gain
or loss.

AUTOMATIC INVESTMENT PLAN

The Automatic Investment Plan permits you to purchase Portfolio shares
(minimum initial investment of $1,000 and minimum subsequent investments of $100
per transaction) at regular intervals selected by you. Provided your bank or
other financial institution allows automatic withdrawals, Portfolio shares may
be purchased by transferring funds from the bank account designated by you. At
your option, the account designated will be debited in the specified amount, and
Portfolio shares will be purchased, once a month, on either the first or
fifteenth day, or twice a month, on both days. Only an account maintained at a
domestic financial institution which is an Automated Clearing House member may
be so designated. This service enables you to make regularly scheduled
investments and may provide you with a convenient way to invest for long-term
financial goals. You should be aware, however, that periodic investment plans do
not guarantee a profit and will not protect an investor against loss in a
declining market. To establish an Automatic Investment Plan account, you must
check the appropriate box and supply the necessary information on the Account
Application. You may cancel your participation in the Automatic Investment Plan
or change the amount of purchase at any time by mailing written notification to
The AmeriStar Funds, P.O. Box 182239, Columbus, Ohio 43219-2239, and such
notification will be effective three business days following receipt. The Fund
may modify or terminate the Automatic Investment Plan at any time or charge a
service fee. No such fee currently is contemplated.

AUTOMATIC WITHDRAWAL PLAN

The Automatic Withdrawal Plan permits you to request withdrawal of a
specified dollar amount (minimum of $50) on either a monthly, quarterly,
semi-annual or annual basis if you have a $5,000 minimum account. The automatic
withdrawal will be made on the first or fifteenth day, at your option, of the
period selected. To participate in the Automatic Withdrawal Plan, you must check
the appropriate box and supply the necessary information on the Account
Application. The Automatic Withdrawal Plan may be ended at any time by the
investor, the Fund or the Transfer Agent.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio declares dividends from net investment income on each day
that the Portfolio is open for business. Dividends usually are paid on the last
calendar day of each month, and are automatically reinvested in additional
Portfolio shares at net asset value or, at your option, paid in cash. Each
Portfolio's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. Shares begin accruing dividends on the
day the purchase order is received in proper form by the Transfer Agent, and
continue to earn dividends through the day before a redemption order for such
shares is processed by the Transfer Agent. Dividends paid by each class of
shares of a Portfolio will be calculated at the same time and in the same manner
and will be of the same amount regardless of class, except that the expenses
attributable solely to a class will be borne exclusively by such class. If you
redeem all shares in your account at any time during the month, all dividends to
which you are entitled will be paid to you along with the proceeds of the
redemption.

If you elect to receive distributions in cash and your distribution checks
(1) are returned to the Fund marked as "undeliverable" or (2) remain uncashed
for six months, your cash election will be changed automatically and your future
dividend and capital gains distributions will be reinvested in Portfolio shares
at the net asset value determined as of the date of payment of the distribution.
In addition, any such undeliverable checks or checks that remain uncashed for
six months will be canceled and will be reinvested in Portfolio shares at the
net asset value determined as of the date of cancellation.

Distributions from net realized securities gains, if any, are declared and
paid once a year, but each Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), in all events in a manner consistent with the
provisions of the 1940 Act. You may choose whether to receive distributions in
cash or to reinvest in additional Investor Shares at net asset value. All
expenses are accrued daily and deducted before declaration of dividends to
investors.

Dividends derived from interest and distributions from any net realized
short-term securities gains are generally taxable to investors as ordinary
income, whether received in cash or reinvested in additional Portfolio shares.
Distributions from net realized long-term securities gains, if any, generally
are taxable as long-term capital gains regardless of how long shareholders have
held their shares and whether such distributions are received in cash or
reinvested in additional Portfolio shares. Dividends and distributions may be
subject to certain state and local taxes. No dividend will qualify for the
dividends-received deduction allowable to certain corporations.

Dividends paid by a Portfolio derived from net investment income and
distributions from net realized short-term securities gains paid by such
Portfolio to a foreign investor generally are subject to U.S. nonresident
withholding taxes at the rate of 30%, unless the investor claims the benefit of
a lower rate specified in a tax treaty. Distributions from net realized
long-term securities gains paid by a Portfolio to a foreign investor generally
will not be subject to U.S. nonresident withholding tax. However, such
distributions may be subject to backup withholding, as described below, unless
the foreign investor certifies his non-U.S. residency status.

Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and distributions
from net realized securities gains paid to a shareholder if such shareholder
fails to certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from the
IRS of being subject to backup withholding as a result of a failure to properly
report taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding if the
IRS determines a shareholder's TIN is incorrect or if a shareholder has failed
to properly report taxable dividend and interest income on a Federal income tax
return.

A TIN is either the Social Security number or employer identification
number of the record owner of the account. Any tax withheld as a result of
backup withholding does not constitute an additional tax imposed on the record
owner of the account, and may be claimed as a credit on the record owner's
Federal income tax return.

Dividends and distributions attributable to interest from direct
obligations of the United States and paid by a Portfolio to individuals
currently are not subject to tax in most states. Dividends and distributions
attributable to interest from other securities in which the Portfolios may
invest may be subject to state tax. The Fund will provide shareholders with a
statement which sets forth the percentage of dividends and distributions paid by
the U.S. Treasury Portfolio that is attributable to interest income from direct
obligations of the United States.

The Adviser believes that each Portfolio qualified for the fiscal year
ended December 31, 1996 as a "regulated investment company" under the Code. Each
Portfolio intends to continue to so qualify if such qualification is in the best
interests of its shareholders. Such qualification relieves the Portfolio of any
liability for Federal income tax to the extent its earnings are distributed in
accordance with applicable provisions of the Code. In addition, each Portfolio
is subject to a non-deductible 4% excise tax, measured with respect to certain
undistributed amounts of taxable investment income and capital gains.

You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.

GENERAL INFORMATION

The Fund was incorporated under Maryland law on March 6, 1990, and
commenced operations on August 28, 1990.

The Fund is authorized to issue 12 billion 500 million shares of Common
Stock (with 750 million shares allocated to each Portfolio), par value $.001 per
share. Each Portfolio's shares are classified into Investor Shares (375 million)
and Trust Shares (375 million). Trust Shares, which are described in a separate
prospectus, are sold only to clients of the Adviser for their qualified trust,
custody and/or agency accounts and to clients of the Adviser's affiliated and
correspondent banks and other affiliated and non-affiliated institutions for
their similar accounts maintained at such affiliates or institutions. Each share
has one vote and shareholders will vote in the aggregate and not by class except
as otherwise required by law. Only holders of the Investor Shares, however, will
be entitled to vote on matters submitted to shareholders pertaining to the
Shareholder Services Plan.

The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act, and for other purposes. A shareholder of one portfolio is
not deemed to be a shareholder of any other portfolio. For certain matters Fund
shareholders vote together as a group; as to others they vote separately by
portfolio. By this Prospectus, Investor Shares of two of the Fund's AmeriStar
Portfolios are being offered--Prime Money Market Portfolio and U.S. Treasury
Money Market Portfolio, each of which is a diversified money market fund. From
time to time, other portfolios may be established and sold pursuant to other
offering documents. Prior to January 1, 1997, the AmeriStar Portfolios were
named ValueStar Portfolios.

To date, 14 portfolios have been authorized. The other portfolios are not
being offered by this Prospectus. All consideration received by the Fund for
shares of one of the portfolios, and all assets in which such consideration is
invested, belong to that portfolio (subject only to the rights of creditors of
the Fund) and will be subject to the liabilities related thereto. The income and
expenses attributable to one portfolio (and as to classes within a portfolio)
are treated separately from those of the other portfolios (and classes).

The Transfer Agent maintains a record of each investor's ownership and
sends confirmations and statements of account.

Shareholder inquiries may be made by writing to the Fund at 3435 Stelzer
Road, Columbus, Ohio 43219-3035.

APPENDIX

PORTFOLIO SECURITIES

To the extent set forth in this Prospectus, each Portfolio may invest in
the securities described below.

U.S. TREASURY SECURITIES--Each Portfolio may invest in U.S. Treasury
securities which include Treasury Bills, Treasury Notes and Treasury Bonds that
differ in their interest rates, maturities and times of issuance. Treasury Bills
have initial maturities of one year or less; Treasury Notes have initial
maturities of one to ten years; and Treasury Bonds generally have initial
maturities of greater than ten years.

U.S. GOVERNMENT SECURITIES--In addition to U.S. Treasury securities, the
Prime Portfolio and, to a limited extent, the U.S. Treasury Portfolio may invest
in securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; others, such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Interest
may fluctuate based on generally recognized reference rates or the relationship
of rates. While the U.S. Government provides financial support to such U.S.
Government sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law. Each Portfolio
will invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.

ZERO COUPON AND STRIPPED SECURITIES--Each Portfolio may invest in zero
coupon U.S. Treasury securities, which are Treasury Notes and Bonds that have
been stripped of their unmatured interest coupons, the coupons themselves and
receipts or certificates representing interests in such stripped debt
obligations and coupons. A zero coupon security pays no interest to its holder
during its life and is sold at a discount to its face value at maturity. The
amount of the discount fluctuates with the market price of the security. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities that pay interest periodically and are likely to
respond to a greater degree to changes in interest rates than non-zero coupon
securities having similar maturities and credit qualities.

REPURCHASE AGREEMENTS--Each Portfolio may enter into repurchase agreements,
which involve the acquisition by a Portfolio of an underlying debt instrument,
subject to an obligation of the seller to repurchase, and such Portfolio to
resell, the instrument at a fixed price usually not more than one week after its
purchase. Certain costs may be incurred by a Portfolio in connection with the
sale of the securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Portfolio may be delayed or limited.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES--The
Prime Portfolio may invest in obligations issued or guaranteed by one or more
foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Sub-Adviser to be of comparable
quality to the other obligations in which the Prime Portfolio may invest. Such
securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Prime Portfolio's assets invested in securities issued by foreign governments
will vary depending on the relative yields of such securities, the economic and
financial markets of the countries in which the investments are made and the
interest rate climate of such countries. See "Description of the Portfolios--
Risk Factors Relating to the Prime Portfolio."

BANK OBLIGATIONS--The Prime Portfolio will invest in bank obligations
(other than those issued by the Adviser or its affiliates), including
certificates of deposit, time deposits, bankers' acceptances and other
short-term obligations of domestic banks, foreign subsidiaries of domestic
banks, foreign branches of domestic banks, and domestic and foreign branches of
foreign banks, domestic savings and loan associations and other banking
institutions. See "Description of the Portfolios--Risk Factors Relating to the
Prime Portfolio." Certificates of deposit are negotiable certificates evidencing
the obligation of a bank to repay funds deposited with it for a specified period
of time. Time deposits are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Bankers'
acceptances are credit instruments evidencing the obligation of a bank to pay a
draft drawn on it by a customer. These instruments reflect the obligation both
of the bank and of the drawer to pay the face amount of the instrument upon
maturity. The other short-term obligations may include uninsured, direct
obligations, bearing fixed, floating or variable interest rates.

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS--The Prime
Portfolio may invest in commercial paper, which consists of short-term,
unsecured promissory notes issued to finance short-term credit needs. The
commercial paper purchased by the Prime Portfolio will consist only of direct
obligations issued by domestic and foreign entities. The other corporate
obligations in which the Prime Portfolio may invest consist of high quality,
U.S. dollar denominated short-term bonds and notes (including variable amount
master demand notes) issued by domestic and foreign corporations.

FLOATING AND VARIABLE RATE OBLIGATIONS--The Prime Portfolio also may
purchase floating and variable rate demand notes and bonds, which are
obligations ordinarily having stated maturities in excess of 397 days, but which
permit the holder to demand payment of principal at any time, or at specified
intervals not exceeding 397 days, in each case upon not more than 30 days'
notice. Variable rate demand notes include master demand notes which are
obligations that permit the Prime Portfolio to invest fluctuating amounts, at
varying rates of interest, pursuant to direct arrangements between the Prime
Portfolio, as lender, and the borrower. These obligations permit daily changes
in the amounts borrowed. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that such
instruments generally will be traded, and there generally is no established
secondary market for these obligations, although they are redeemable at face
value. Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Prime Portfolio's right to redeem is
dependent on the ability of the borrower to pay principal and interest on
demand. Such obligations frequently are not rated by credit rating agencies and,
if not so rated, the Prime Portfolio may invest in them only if the Sub-Adviser,
acting upon delegated authority from the Fund's Board of Directors, determines
that at the time of investment the obligations are of comparable quality to the
other obligations in which the Prime Portfolio may invest. The Sub-Adviser, on
behalf of the Prime Portfolio, will consider on an ongoing basis the
creditworthiness of the issuers of the floating and variable rate demand
obligations held by the Portfolio. The Prime Portfolio will not invest more than
10% of the value of its net assets in floating or variable rate demand
obligations as to which it cannot exercise the demand feature on not more than
seven days' notice if the Sub-Adviser determines, acting upon delegated
authority from, and procedures established by, the Fund's Board of Directors,
that there is no secondary market available for these obligations, and in other
securities that are illiquid.

NOTES--The Prime Portfolio also may purchase unsecured promissory notes
("Notes") which are not readily marketable and have not been registered under
the Securities Act of 1933, provided such investments are consistent with its
investment objective. The Portfolio will invest no more than 10% of its net
assets in such Notes and in other securities that are illiquid.

PARTICIPATION INTERESTS AND TRUST RECEIPTS--The Prime Portfolio may
purchase from financial institutions and trusts created by such institutions
participation interests and trust receipts in securities in which it may invest
and may enter into loan participation agreements. See "Investment Objectives and
Management Policies--Portfolio Securities" in the Statement of Additional
Information. A participation interest or receipt gives the Prime Portfolio an
undivided interest in the security in the proportion that the Prime Portfolio's
participation interest or receipt bears to the total principal amount of the
security. These instruments may have fixed, floating or variable rates of
interest with remaining maturities of 397 days or less. If the instrument is
unrated, or has been given a rating below that which is permissible for purchase
by the Prime Portfolio, the instrument will be backed by an irrevocable letter
of credit or guarantee of a bank or other entity the debt securities of which
are rated high quality, or the payment obligation otherwise will be
collateralized by U.S. Government securities, or, in the case of unrated
instruments, the Sub-Adviser, acting upon delegated authority from the Fund's
Board of Directors, must have determined that the instrument is of comparable
quality to those instruments in which the Prime Portfolio may invest.
Participation interests or trust receipts with a rating below high quality that
are backed by an irrevocable letter of credit or guarantee as described above
will be purchased only if the Sub-Adviser, acting as described above, determines
after an analysis of, among other factors, the creditworthiness of the guarantor
that such instrument is high quality, and if the rating agency did not include
the letter of credit or guarantee in its determination of the instrument's
rating. If the rating of a participation interest or trust receipt is reduced
subsequent to its purchase by the Prime Portfolio, the Sub-Adviser will
consider, in accordance with procedures established by the Board of Directors,
all circumstances deemed relevant in determining whether the Prime Portfolio
should continue to hold the instrument. The guarantor of a participation
interest or trust receipt will be treated as a separate issuer. For certain
participation interests and trust receipts, the Prime Portfolio will have the
unconditional right to demand payment, on not more than seven days' notice, for
all or any part of the Prime Portfolio's interest in the security, plus accrued
interest. As to these instruments, the Prime Portfolio intends to exercise its
right to demand payment only upon a default under the terms of the security, as
needed to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio. Not more than 10% of the value of the Prime
Portfolio's net assets will be invested in participation interests and trust
receipts that do not have this demand feature, and in other securities that are
illiquid.

GUARANTEED INVESTMENT CONTRACTS--The Prime Portfolio may make limited
investments in guaranteed investment contracts ("GICs") issued by highly rated
U.S. insurance companies. Pursuant to such a contract, the Prime Portfolio would
make cash contributions to a deposit fund of the insurance company's general
account. The insurance company would then credit to the Prime Portfolio on a
monthly basis interest which is based on an index (in most cases the Salomon
Brothers CD Index), but is guaranteed not to be less than a certain minimum
rate. The Portfolio will not invest more than 10% of the value of its net assets
in GICs and in other illiquid securities. The Prime Portfolio currently does not
expect to invest more than 5% of its net assets in GICs.

ASSET-BACKED SECURITIES--The Prime Portfolio may purchase asset-backed
securities, which are securities issued by special purpose entities whose
primary assets consist of a pool of mortgages, loans, receivables or other
assets. Payment of principal and interest may depend largely on the cash flows
generated by the assets backing the securities and, in certain cases, supported
by letters of credit, surety bonds or other forms of credit or liquidity
enhancements. The value of asset-backed securities also may be affected by the
creditworthiness of the servicing agent for the pool of assets, the originator
of the loans or receivables or the financial institution providing the credit
support.

MUNICIPAL OBLIGATIONS--The Prime Portfolio may make limited investments (up
to 5% of its net assets) in municipal obligations when their yield on a pre-tax
basis is comparable to that of taxable money market instruments. Municipal
obligations are debt obligations issued by states, territories and possessions
of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or multistate agencies or
authorities. While in general, municipal obligations are tax exempt securities
having relatively low yields as compared to taxable, non-municipal obligations
of similar quality, certain issues of municipal obligations, both taxable and
non-taxable, offer yields comparable and in some cases greater than the yields
available on other permissible investments. Dividends received by shareholders
of the Prime Portfolio which are attributable to interest income received by it
from municipal obligations generally will be subject to Federal income tax. The
Prime Portfolio currently intends to invest no more than 5% of its net assets in
municipal obligations. However, this percentage may be varied from time to time
without shareholder approval.

INVESTMENT PRACTICES

LENDING PORTFOLIO SECURITIES--From time to time, each Portfolio may lend
securities from its investment portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33 1/3% of the value of the relevant Portfolio's total
assets. In connection with such loans, each Portfolio will receive collateral
consisting of cash or U.S. Government securities which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. Each Portfolio can increase its income through the investment
of such collateral. Each Portfolio continues to be entitled to payments in
amounts equal to the interest and other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. A Portfolio might experience risk
of loss if the institution with which it has engaged in a portfolio loan
transaction breaches its agreement with such Portfolio.

REVERSE REPURCHASE AGREEMENTS--Each Portfolio may enter into reverse
repurchase agreements with banks, brokers or dealers. Reverse repurchase
agreements involve the transfer by the Portfolio of an underlying debt
instrument in return for cash proceeds based on a percentage of the value of the
security. Each Portfolio retains the right to receive interest and principal
payments on the security. The Portfolio will use the proceeds of reverse
repurchase agreements only to make investments which generally either mature or
have a demand feature to resell to the issuer at a date simultaneous with or
prior to the expiration of the reverse repurchase agreement. At an agreed upon
future date, the Portfolio repurchases the security at principal plus accrued
interest. In certain types of agreements, there is no agreed upon repurchase
date and interest payments are calculated daily, often based on the prevailing
overnight repurchase rate. As a result of these transactions, each Portfolio may
be exposed to greater potential fluctuations in the value of its assets and its
net asset value per share. Interest costs on the money borrowed may exceed the
return received on the securities purchased. The Fund's Directors have
considered the risks to each Portfolio and its shareholders which may result
from the entry into reverse repurchase agreements and have determined that the
entry into such agreements is consistent with each Portfolio's investment
objective and management policies.

WHEN-ISSUED SECURITIES--Each Portfolio may purchase money market securities
on a when-issued or forward commitment basis, which means that delivery and
payment for such securities ordinarily take place after the date of the
commitment to purchase. The payment obligation and the interest rate receivable
on the securities are fixed when the buyer enters into the commitment. A
Portfolio will commit to purchase such securities only with the intention of
actually acquiring the securities, but such Portfolio may sell these securities
before the settlement date if it is deemed advisable. A Portfolio will not
accrue income in respect of a security purchased on a forward commitment basis
prior to its stated delivery date.

ILLIQUID SECURITIES--Each Portfolio may invest up to 10% of the value of
its net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests and trust receipts that are not subject to the
demand feature described above, floating and variable rate demand obligations as
to which the Portfolio cannot exercise the related demand feature described
above on not more than seven days' notice and as to which there is no secondary
market and repurchase agreements providing for settlement in more than seven
days after notice. As to these securities, the Portfolio is subject to a risk
that should the Portfolio desire to sell them when a ready buyer is not
available at a price the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

BORROWING MONEY--As a fundamental policy, each Portfolio is permitted to
borrow money in an amount up to 33 1/3% of the value of its total assets.
However, each Portfolio currently intends to borrow money only (a) for temporary
or emergency (not leveraging) purposes or (b) in connection with the entry into
reverse repurchase agreements, in an amount up to 33 1/3% of the value of its
total assets (including the amount borrowed) valued at the lesser of cost or
market, less liabilities (not including the amount borrowed) at the time the
borrowing is made. While borrowings exceed 5% of a Portfolio's total assets,
such Portfolio will not make any investments.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND IN THE FUND'S
OFFICIAL SALES LITERATURE IN CONNECTION WITH THE OFFER OF THE FUND'S SHARES,
AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER IN ANY STATE IN WHICH, OR TO ANY PERSON TO WHOM, SUCH
OFFERING MAY NOT LAWFULLY BE MADE.

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. MONEY MARKET MUTUAL FUND SHARES INVOLVE CERTAIN RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

[LOGO]

AMERISTAR PRIME
MONEY MARKET PORTFOLIO
AMERISTAR U.S. TREASURY
MONEY MARKET PORTFOLIO

----------------------------------------
PROSPECTUS

INVESTOR SHARES

APRIL 30, 1997

APPLICATION
ENCLOSED
<PAGE>

PROSPECTUS APRIL 30, 1997
THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
PRIME MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
TRUST SHARES
- --------------------------------------------------------------------------------

The Infinity Mutual Funds, Inc. (the "Fund") is an open-end, management
investment company, known as a series fund. By this Prospectus, the Fund is
offering Trust Shares of two diversified money market portfolios (the
"Portfolios"), that seek to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity.

- - The PRIME MONEY MARKET PORTFOLIO will invest in short-term money market
instruments consisting of securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, bank obligations, repurchase
agreements, commercial paper and other corporate obligations.

- - The U.S. TREASURY MONEY MARKET PORTFOLIO will invest only in U.S. Treasury
securities and in other securities guaranteed as to principal and interest by
the U.S. Government, and repurchase agreements in respect thereof.

Each Portfolio's investment adviser is First American National Bank (the
"Adviser").

BISYS Fund Services Limited Partnership ("BISYS") serves as each
Portfolio's administrator and distributor.

Trust Shares are offered without a sales charge and are sold only to
clients of the Adviser for their qualified trust, custody and/or agency accounts
and to clients of the Adviser's affiliated and correspondent banks and certain
other affiliated and non-affiliated institutions for their similar accounts
maintained at such affiliates or institutions. These accounts are referred to
herein as "Fiduciary Accounts."

Another class of shares--the Investor Shares--are offered by a separate
prospectus to individuals and are not offered hereby. The Trust Shares and
Investor Shares are identical, except as to the services offered to each class
and the expenses borne by each class which may affect performance. Investors
desiring to obtain information about Investor Shares should ask their sales
representative or call 1-800-852-0045.

----------------

This Prospectus sets forth concisely information about the Fund and the
Portfolios that an investor should know before investing. It should be read and
retained for future reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS

PAGE
------
Annual Operating Expenses................................... 3
Financial Highlights........................................ 4
Yield Information........................................... 4
Description of the Portfolios............................... 5
Management of the Portfolios................................ 7
How to Buy Shares........................................... 9
How to Redeem Shares........................................ 10
Exchange Privilege.......................................... 10
Dividends, Distributions and Taxes.......................... 11
General Information......................................... 13
Appendix.................................................... A-1

DISTRIBUTED BY: INVESTMENT ADVISER:

BISYS Fund Services Limited Partnership First American National Bank
3435 Stelzer Road 315 Deaderick Street
Columbus, Ohio 43219-3035 Nashville, Tennessee 37237

For information about opening an account and other Fund services call:
(800) 824-3741
To execute purchases, redemptions and exchanges and for information
about the
status of your acount call: (800) 852-0045
<PAGE>
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

<TABLE>
<CAPTION>
PRIME U.S. TREASURY
PORTFOLIO PORTFOLIO
TRUST TRUST
SHARES SHARES
-------------- --------------
<S> <C> <C>
Management Fees............................................. .25% .25%
Other Expenses.............................................. .40% .27%
Total Portfolio Operating Expenses*......................... .65% .52%

EXAMPLE:
An investor would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return and (2) redemption at the end of each time period:
1 Year............................................. $ 7 $ 5
3 Years............................................ $ 21 $ 16
</TABLE>

- --------------------------------------------------------------------------------

THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.
- --------------------------------------------------------------------------------

The purpose of the foregoing table is to assist investors in understanding
the costs and expenses borne by a Portfolio, the payment of which will reduce
investors' annual return. Other Expenses are based on estimated amounts for the
current fiscal year. For a further description of the various costs and expenses
incurred in a Portfolio's operation, as well as expense reimbursement or waiver
arrangements, see "Management of the Portfolios."

- ------------
* The Adviser, its affiliates and certain other institutions may charge their
clients customary account and account transaction fees, which are not Fund
related, with respect to accounts through which or for which Portfolio
shares are purchased or redeemed; such fees are not reflected in the
foregoing table.

<PAGE>
FINANCIAL HIGHLIGHTS

Contained below for each Portfolio is per share operating performance data
for a Trust Share of common stock outstanding, total investment return, ratios
to average net assets and other supplemental data for the period July 1, 1996
(commencement of initial offering of Trust Shares) through December 31, 1996.
The information in the table has been audited by KPMG Peat Marwick LLP, the
Portfolios' independent auditors. Further financial data, related notes and
report of independent auditors accompany the Statement of Additional
Information, available upon request.

<TABLE>
<CAPTION>
U.S.
PRIME TREASURY
PORTFOLIO PORTFOLIO
------------ -----------
<S> <C> <C>
Net Asset Value, Beginning of Period.... $ 1.000 $ 1.000
Income from investment operations:
Net investment income................. 0.024 0.024
------------ -----------
Less dividends and distributions:
Dividends from net investment
income.............................. (0.024) (0.024)
------------ -----------
Net Asset Value, End of Period.......... $ 1.000 $ 1.000
============ ===========
Total Return............................ 5.00%(a) 4.90%(a)
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $48,101 $109,698
Ratio of expenses to average net
assets.............................. 0.65%(b) 0.52%(b)
Ratio of net investment income to
average net assets.................. 4.86%(b) 4.78%(b)
- ------------

(a) Represents total return for Investor Shares from January 1, 1996 through
June 30, 1996 plus total return for Trust Shares from July 1, 1996 through
December 31, 1996.

(b) Annualized.
</TABLE>

YIELD INFORMATION

Comparative performance information may be used from time to time in
advertising or marketing each Portfolio's shares, including data from Lipper
Analytical Services, Inc., Morningstar, Inc., Bank Rate MonitorTM, N. Palm
Beach, Fla.. 33408, IBC's Money Fund ReportTM and other industry publications.

DESCRIPTION OF THE PORTFOLIOS

INVESTMENT OBJECTIVES

MANAGEMENT POLICIES

In accordance with Rule 2a-7, each Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less and invest only in
U.S. dollar denominated securities determined in accordance with procedures
established by the Fund's Board of Directors to present minimal credit risks
and, with respect to the Prime Portfolio, which are rated in one of the two
highest rating categories for debt obligations by at least two nationally
recognized statistical rating organizations ("NRSRO") (or one NRSRO if the
instrument was rated by only one such organization) or, if unrated, are of
comparable quality as determined in accordance with procedures established by
the Fund's Board of Directors. The NRSROs currently rating instruments of the
type the Prime Portfolio may purchase are Moody's Investors Service, Inc.,
Standard & Poor's Ratings Group, Duff & Phelps Credit Rating Co., Fitch
Investors Service, L.P., IBCA Limited and IBCA Inc. and Thomson BankWatch, Inc.
and their rating criteria are described in the "Appendix" to the Statement of
Additional Information. For further information regarding the amortized cost
method of valuing securities, see "Determination of Net Asset Value" in the
Statement of Additional Information. There can be no assurance that the
Portfolios will be able to maintain a stable net asset value of $1.00 per share.

PRIME PORTFOLIO--The Prime Portfolio will invest in U.S. dollar denominated
short-term money market obligations, including securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities, certificates of
deposit, time deposits and bankers' acceptances issued by domestic banks,
foreign branches of domestic banks, foreign subsidiaries of domestic banks, and
domestic and foreign branches of foreign banks, loan participation agreements,
guaranteed investment contracts, municipal obligations, asset-backed securities,
repurchase agreements, and high quality domestic and foreign commercial paper
and other high quality short-term corporate obligations, such as floating or
variable rate U.S. dollar denominated demand notes and bonds. The Prime
Portfolio will invest in U.S. dollar denominated obligations issued or
guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities, including obligations of
supranational entities. The Prime Portfolio will not invest more than 35% of the
value of its total assets in foreign securities. See "Appendix-- Portfolio
Securities." The Prime Portfolio also may lend its portfolio securities, enter
into reverse repurchase agreements and purchase restricted securities pursuant
to Rule 144A under the Securities Act of 1933, as amended. See
"Appendix--Investment Practices." During normal market conditions, at least 25%
of the Prime Portfolio's total assets will be invested in domestic and/or
foreign bank obligations.

See "Risk Factors Related to the Prime Portfolio" below.

RISK FACTORS RELATING TO THE PRIME PORTFOLIO--To the extent the Prime
Portfolio's investments are concentrated in the banking industry, it will have
correspondingly greater exposure to the risk factors which are characteristic of
such investments. Sustained increases in interest rates can adversely affect the
availability or liquidity and cost of capital funds for a bank's lending
activities, and a deterioration in general economic conditions could increase
the exposure to credit losses. In addition, the value of and the investment
return on the Prime Portfolio's shares will be affected by economic or
regulatory developments in or related to the banking industry, and competition
within the banking industry as well as with other types of financial
institutions. The Prime Portfolio, however, will seek to minimize its exposure
to such risks by investing only in debt securities which are determined to be of
high quality.

Since the Prime Portfolio may invest in securities issued by foreign
governments and any of their political subdivisions, agencies or
instrumentalities, and by foreign branches and foreign subsidiaries of domestic
banks, domestic and foreign branches of foreign banks, and commercial paper
issued by foreign issuers, it may be subject to additional investment risks with
respect to those securities that are different in some respects from those
incurred by a fund which invests only in debt obligations of U.S. domestic
issuers. Such risks include possible adverse political and economic
developments, seizure or nationalization of foreign deposits, or the adoption of
governmental restrictions which might adversely affect or restrict the payment
of principal and interest on these securities to investors located outside the
country of the issuer.

MANAGEMENT OF THE PORTFOLIOS

BOARD OF DIRECTORS

INVESTMENT ADVISER

First American National Bank, located at First American Center, 315
Deaderick Street, Nashville, Tennessee 37237, serves as each Portfolio's
investment adviser. The Adviser is a wholly-owned subsidiary of First American
Corporation, a registered bank holding company having assets as of December 31,
1996 of approximately $ 10.4 billion. First American National Bank provides
personal trust, estate, employee benefit trust, corporate trust and custody
services to over 3,000 individual and business clients and investment advisory
services. The Adviser, and its affiliates, as of December 31, 1996, had
approximately $5 billion under trust and approximately $3 billion under
management.

The Adviser and its affiliates deal, trade and invest for their own
accounts and for the accounts of clients which they manage in the types of
securities in which the Portfolios may invest and may have deposit, loan and
commercial banking relationships with issuers of securities purchased by the
Prime Portfolio. The Adviser has informed the Fund that in making its investment
decisions it does not obtain or use material inside information in its or its
affiliates' possession.

Under the terms of the Investment Advisory Agreement, the Fund has agreed
to pay the Adviser a monthly fee at the annual rate of .25 of 1% of the value of
each Portfolio's average daily net assets less, in the case of the Prime
Portfolio, any amount payable by the Fund to the Sub-Adviser. Pursuant to the
Sub-Investment Advisory Agreement among the Fund, the Adviser and the
Sub-Adviser, the Fund has agreed to pay the Sub-Adviser, a monthly fee at the
annual rate of .15 of 1% of the value of the Prime Portfolio's average daily net
assets. For the fiscal year ended December 31, 1996, the Fund paid the Adviser a
monthly fee at the annual rate of .10 of 1% of the value of the Prime
Portfolio's and .25 of 1% of the value of the U.S. Treasury Portfolio's average
daily net assets. For such year, the Fund paid the Sub-Adviser at the annual
rate of .15 of 1% of the value of the Prime Portfolio's average daily net
assets.

ADMINISTRATOR AND DISTRIBUTOR

Under its Administration Agreement with the Fund, BISYS generally assists
in all aspects of the Fund's operations, other than providing investment advice,
subject to the overall authority of the Fund's Board of Directors in accordance
with Maryland law. In connection therewith, BISYS provides the Fund with office
facilities, personnel, and certain clerical and bookkeeping services (e.g.,
preparation of reports to shareholders and the Securities and Exchange
Commission and filing of Federal, state and local income tax returns) that are
not being furnished by The Bank of New York, the Fund's Custodian.

For the fiscal year ended December 31, 1996, the Fund paid BISYS a monthly
administration fee at the annual rate of .10 of 1% of the value of each
Portfolio's average daily net assets.

As distributor, BISYS makes a continuous offering of each Portfolio's
shares and bears the costs and expenses of printing and distributing to
prospective investors copies of any prospectuses, statements of additional
information and annual and interim reports of each Portfolio (after such items
have been prepared and set in type by the Fund) which are used in connection
with the offering of shares, and the costs and expenses of preparing, printing
and distributing any other literature used by BISYS in connection with the
offering of such Portfolio's shares for sale to the public. Under a shareholder
services plan adopted by the Fund's Board of Directors, the Fund pays BISYS for
the provision of certain services to the holders of Investor Shares at an annual
rate of .25 of 1% of the value of each Portfolio's average daily net assets
represented by Investor Shares. The services provided may include personal
services relating to shareholder accounts, such as answering shareholder
inquiries regarding a Portfolio and providing reports and other information, and
services related to the maintenance of such shareholder accounts.

CUSTODIAN AND TRANSFER AGENT

EXPENSES

All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by others. The expenses borne by the
Fund include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser, Sub-Adviser or BISYS, or any of their affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs of calculating the net asset value of each
Portfolio's shares, costs of shareholders' reports and corporate meetings, costs
of preparing and printing certain prospectuses and statements of additional
information, and any extraordinary expenses. Expenses attributable to a
particular Portfolio are charged against the assets of that Portfolio; other
expenses of the Fund are allocated among the Portfolios on the basis determined
by the Board of Directors, including, but not limited to, proportionately in
relation to the net assets of each Portfolio.

HOW TO BUY SHARES

GENERAL

Orders for purchases of Trust Shares may be placed only for clients of the
Adviser, its affiliated and correspondent banks and other affiliated and
non-affiliated institutions (collectively, "Institutions") for their Fiduciary
Accounts maintained at such Institutions. When purchasing Portfolio shares, the
investor must specify the Portfolio being purchased and that the purchase is for
Trust Shares. Institutions may receive different levels of compensation for
selling different classes of Portfolio shares. Stock certificates will not be
issued. The Fund reserves the right to reject any purchase order.

The minimum initial investment for each Portfolio is $100,000, with no
subsequent minimum investment. The Institution through which Trust Shares are
purchased may impose initial or subsequent investment minimums which are higher
or lower than those specified above and may impose different minimums for
different types of accounts or purchase arrangements.

Investors may purchase Portfolio shares through procedures established by
their Institution and an investor should contact such entity directly for
appropriate instructions, as well as for information about conditions pertaining
to the account and any related fees. The investor's Institution will transmit an
investor's payment to the Fund and will supply the Fund with the required
information. It is the Institution's responsibility to transmit the order
properly on a timely basis.

TERMS OF PURCHASE

If an order for Trust Shares is received by the Transfer Agent by 2:00
p.m., Eastern time, on a business day (which, as used herein, shall include each
day the New York Stock Exchange is open for business, except Martin Luther King,
Jr. Day, Columbia Day and Veterans' Day), shares will be purchased as of 2:00
p.m., Eastern time, on such business day if payment is received in, or converted
into, Federal Funds by 4:00 p.m., Eastern time, by the Transfer Agent on that
day. If a purchase order for Trust Shares is received after 2:00 p.m., Eastern
time, or if payment in Federal Funds is not received by 4:00 p.m., Eastern time,
shares will be purchased as of 2:00 p.m., Eastern time, on the business day on
which Federal Funds are available. The New York Stock Exchange currently is
closed on the following holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
It is the Institution's responsibility to transmit orders so that they will be
received by the Transfer Agent in time to receive the next determined net asset
value as described above.

Each Portfolio's net asset value per share is determined as of 2:00 p.m.,
Eastern time, on each business day, except on days where there are not
sufficient changes in the value of a Portfolio's investment securities to
materially affect the Porfolio's net asset value and no purchase orders or
redemption requests have been received. Net asset value per Trust Share is
computed by dividing the value of the Portfolio's net assets attributable to
Trust Shares (i.e., the value of its assets less liabilities) by the total
number of Trust Shares of such Portfolio outstanding. See "Determination of Net
Asset Value" in the Statement of Additional Information.

Federal regulations require that an investor provide a certified Taxpayer
Identification Number ("TIN") upon opening or reopening an account. See
"Dividends, Distributions and Taxes" for further information concerning this
requirement. Failure to furnish a certified TIN to the Fund could subject the
investor to a $50 penalty imposed by the Internal Revenue Service ("IRS").

HOW TO REDEEM SHARES

An investor may redeem Trust Shares by following the instructions
pertaining to the investor's Fiduciary Account provided by the Institution at
which such account is maintained. It is the responsibility of the investor's
Institution to transmit the redemption request to the Transfer Agent and credit
the investor's Fiduciary Account with the redemption proceeds on a timely basis.

When a request is received in proper form, the Fund will redeem the shares
at the next determined net asset value. If a request for redemption is received
in proper form by the Transfer Agent prior to 2:00 p.m., Eastern time, on a
business day, the proceeds of the redemption, if transfer by wire is requested,
ordinarily will be made in Federal Funds wired to the investor's account at his
or her Institution on the same day. To allow the Adviser to most effectively
manage each Portfolio, investors are urged to initiate redemptions of shares as
early in the day as possible and to notify the Transfer Agent at least one day
in advance of redemptions in excess of $1 million. The Fund reserves the right
to wire redemption proceeds up to seven days after receiving the redemption
order if an earlier payment could adversely affect the Fund. In making
redemption requests the names of the registered shareholders and their account
numbers must be supplied.

The Fund imposes no charges when shares are redeemed. An investor's
Institution may charge their clients a fee for effecting redemptions of
Portfolio shares. The value of Portfolio shares redeemed may be more or less
than their original cost, depending upon the Portfolio's then-current net asset
value.

The Fund reserves the right to redeem an investor's account at its option
upon not less than 45 days' written notice if the net asset value of the
investor's account is $500 or less, for reasons other than market conditions,
and remains so during the notice period.

The Transfer Agent is authorized to act on telephone instructions from any
person representing himself or herself to be a representative of the investor's
Institution and reasonably believed by the Transfer Agent to be genuine. The
Fund will require the Transfer Agent to employ reasonable procedures, such as
requiring a form of identification, to confirm that instructions are genuine
and, if it does not follow such procedures, the Fund or the Transfer Agent may
be liable for any losses due to unauthorized or fraudulent instructions. Neither
the Fund nor the Transfer Agent will be liable for following telephone
instructions reasonably believed to be genuine.

EXCHANGE PRIVILEGE

The Exchange Privilege enables an investor to purchase, in exchange for
shares of a Portfolio, shares of the other Portfolio offered by this Prospectus,
or shares of another AmeriStar Portfolio, to the extent such shares are offered
for sale in the investor's state of residence. The Exchange Privilege may not be
available to clients of certain Institutions and some Institutions may impose
certain conditions on their clients which are different from those described in
this Prospectus. If an investor desires to use this Privilege, the investor
should consult the Institution at which the investor maintains his or her
Fiduciary Account to determine if it is available and whether any conditions are
imposed on its use.

To use this Privilege, an investor must give exchange instructions in
accordance with the instructions pertaining to the investor's Fiduciary Account
maintained at the investor's Institution. Before any exchange into a Portfolio
offered by another prospectus, an investor must obtain and should review a copy
of the current prospectus of the Portfolio into which the exchange is being
made.

Prospectuses may be obtained from the investor's Institution or BISYS. The
shares being exchanged must have a current value of at least $500; furthermore,
when establishing a new account by exchange, the shares being exchanged must
have a value of at least the minimum initial investment required for the
Portfolio into which the exchange is being made.

Shares will be exchanged at the next determined net asset value. No fees
currently are charged shareholders directly in connection with exchanges
although the Fund reserves the right, upon not less than 60 days' written
notice, to charge shareholders a nominal administrative fee in accordance with
rules promulgated by the Securities and Exchange Commission. The Fund reserves
the right to reject any exchange request in whole or in part. The Exchange
Privilege may be modified or terminated at any time upon notice to shareholders.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio declares dividends from net investment income on each day
that the Portfolio is open for business. Dividends usually are paid on the last
calendar day of each month, and are automatically reinvested in additional
Portfolio shares at net asset value or, at the investor's option, paid in cash.
Each Portfolio's earnings for Saturdays, Sundays and holidays are declared as
dividends on the preceding business day. Shares begin accruing dividends on the
day the purchase order is received in proper form by the Transfer Agent, and
continue to earn dividends through the day before a redemption order for such
shares is processed by the Transfer Agent. Dividends paid by each class of
shares of a Portfolio will be calculated at the same time and in the same manner
and will be of the same amount, except that the expenses attributable solely to
a class will be borne exclusively by such class. If an investor redeems all
shares in his account at any time during the month, all dividends to which such
investor is entitled will be paid to the investor along with the proceeds of the
redemption.

If a shareholder elects to receive distributions in cash and the
shareholder's distribution checks (1) are returned to the Fund marked
"undeliverable" or (2) remain uncashed for six months, the shareholder's cash
election will be changed automatically and future dividend and capital gains
distributions will be reinvested in Portfolio shares at the net asset value
determined as of the date of payment of the distribution. In addition, any such
undeliverable checks or checks that remain uncashed for six months will be
canceled and will be reinvested in Portfolio shares at the net asset value
determined as of the date of cancellation.

Distributions from net realized securities gains, if any, are declared and
paid once a year, but each Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code
of 1986, as amended (the "Code"), in all events in a manner consistent with the
provisions of the 1940 Act. Each investor may choose whether to receive
distributions in cash or to reinvest in additional Portfolio shares at net asset
value. All expenses are accrued daily and deducted before declaration of
dividends to investors.

No dividend will qualify for the dividends-received deduction allowable to
certain corporations.

Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and distributions
from net realized securities gains paid to a shareholder if such shareholder
fails to certify either that the TIN furnished in connection with opening an
account is correct, or that such shareholder has not received notice from the
IRS of being subject to backup withholding as a result of a failure to properly
report taxable dividend or interest income on a Federal income tax return.
Furthermore, the IRS may notify the Fund to institute backup withholding if the
IRS determines a shareholder's TIN is incorrect or if a shareholder has failed
to properly report taxable dividend and interest income on a Federal income tax
return.

Notice as to the tax status of dividends and distributions is mailed
annually. Investors also will receive periodic summaries of their account which
will include information as to income dividends and distributions from
securities gains, if any, paid during the year.

The Adviser believes that each Portfolio qualified for the fiscal year
ended December 31, 1996 as a "regulated investment company" under the Code. Each
Portfolio intends to continue to so qualify if such qualification is in the best
interests of its shareholders. Such qualification relieves the Portfolio of any
liability for Federal income tax to the extent its earnings are distributed in
accordance with applicable provisions of the Code. Each Portfolio is subject to
a non-deductible 4% excise tax, measured with respect to certain undistributed
amounts of taxable investment income and capital gains.

Each investor should consult its tax adviser regarding specific questions
as to Federal, state or local taxes. In addition, investors should consult their
financial and tax advisers before buying Portfolio shares to determine, among
other matters, the tax consequences to them of their purchase, including the
effect of selling any assets to fund such purchase.

GENERAL INFORMATION

The Fund was incorporated under Maryland law on March 6, 1990, and
commenced operations on August 28, 1990.

The Fund is authorized to issue 12 billion 500 million shares of Common
Stock (with 750 million shares allocated to each Portfolio), par value $.001 per
share. Each Portfolio's shares are classified into Trust Shares (375 million)
and Investor Shares (375 million). Investor Shares, which are described in a
separate prospectus, are sold through a number of institutions, including the
Adviser and its affiliates, BISYS and certain Service Organizations. Each share
has one vote and shareholders will vote in the aggregate and not by class except
as otherwise required by law. Only holders of the Investor Shares, however, will
be entitled to vote on matters submitted to shareholders pertaining to the
Fund's Shareholder Services Plan.

The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act, and for other purposes. A shareholder of one portfolio is
not deemed to be a shareholder of any other portfolio. For certain matters Fund
shareholders vote together as a group; as to others they vote separately by
portfolio. By this Prospectus, Trust Shares of two of the Fund's AmeriStar
Portfolios are being offered--Prime Money Market Portfolio and U.S. Treasury
Money Market Portfolio, each of which is a diversified money market fund. From
time to time, other portfolios may be established and sold pursuant to other
offering documents. Prior to January 1, 1997, the AmeriStar Portfolios were
named ValueStar Portfolios.

To date, 14 portfolios have been authorized. The other portfolios are not
being offered by this Prospectus. All consideration received by the Fund for
shares of one of the portfolios, and all assets in which such consideration is
invested, belong to that portfolio (subject only to the rights of creditors of
the Fund) and will be subject to the liabilities related thereto. The income and
expenses attributable to one portfolio are treated separately from those of the
other portfolios.

The Transfer Agent maintains a record of each investor's ownership and
sends confirmations and statements of account.

Shareholder inquiries may be made by writing to the Fund at 3435 Stelzer
Road, Columbus, Ohio 43219-3035.

APPENDIX

PORTFOLIO SECURITIES

To the extent set forth in this Prospectus, each Portfolio may invest in
the securities described below.

U.S. GOVERNMENT SECURITIES--In addition to U.S. Treasury securities, the
Prime Portfolio and, to a limited extent, the U.S. Treasury Portfolio may invest
in securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. Some obligations issued or guaranteed by U.S. Government
agencies and instrumentalities, for example, Government National Mortgage
Association pass-through certificates, are supported by the full faith and
credit of the U.S. Treasury; others, such as those of the Federal Home Loan
Banks, by the right of the issuer to borrow from the Treasury; others, such as
those issued by the Federal National Mortgage Association, by discretionary
authority of the U.S. Government to purchase certain obligations of the agency
or instrumentality; and others, such as those issued by the Student Loan
Marketing Association, only by the credit of the agency or instrumentality.
These securities bear fixed, floating or variable rates of interest. Interest
may fluctuate based on generally recognized reference rates or the relationship
of rates. While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law. Each Portfolio
will invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.

PARTICIPATION INTERESTS AND TRUST RECEIPTS--The Prime Portfolio may
purchase from financial institutions and trusts created by such institutions
participation interests and trust receipts in securities in which it may invest
and may enter into loan participation agreements. See "Investment Objectives and
Management Policies--Portfolio Securities" in the Statement of Additional
Information. A participation interest or receipt gives the Prime Portfolio an
undivided interest in the security in the proportion that the Prime Portfolio's
participation interest or receipt bears to the total principal amount of the
security. These instruments may have fixed, floating or variable rates of
interest with remaining maturities of 397 days or less. If the instrument is
unrated, or has been given a rating below that which is permissible for purchase
by the Prime Portfolio, the instrument will be backed by an irrevocable letter
of credit or guarantee of a bank or other entity the debt securities of which
are rated high quality, or the payment obligation otherwise will be
collateralized by U.S. Government securities, or, in the case of unrated
instrument, the Sub-Adviser, acting upon delegated authority from the Fund's
Board of Directors, must have determined that the instrument is of comparable
quality to those instruments in which the Prime Portfolio may invest.
Participation interests or trust receipts with a rating below high quality that
are backed by an irrevocable letter of credit or guarantee as described above
will be purchased only if the Sub-Adviser, acting as described above, determines
after an analysis of, among other factors, the creditworthiness of the guarantor
that such instrument is high quality, and if the rating agency did not include
the letter of credit or guarantee in its determination of the instrument's
rating. If the rating of a participation interest or trust receipt is reduced
subsequent to its purchase by the Prime Portfolio, the Sub-Adviser will
consider, in accordance with procedures established by the Board of Directors,
all circumstances deemed relevant in determining whether the Prime Portfolio
should continue to hold the instrument. The guarantor of a participation
interest or trust receipt will be treated as a separate issuer. For certain
participation interests and trust receipts, the Prime Portfolio will have the
unconditional right to demand payment, on not more than seven days' notice, for
all or any part of the Prime Portfolio's interest in the security, plus accrued
interest. As to these instruments, the Prime Portfolio intends to exercise its
right to demand payment only upon a default under the terms of the security, as
needed to provide liquidity to meet redemptions, or to maintain or improve the
quality of its investment portfolio. Not more than 10% of the value of the Prime
Portfolio's net assets will be invested in participation interests and trust
receipts that do not have this demand feature, and in other securities that are
illiquid.

GUARANTEED INVESTMENT CONTRACTS--The Prime Portfolio may make limited
investments in guaranteed investment contracts ("GICs") issued by highly rated
U.S. insurance companies. Pursuant to such a contract, the Prime Portfolio would
make cash contributions to a deposit fund of the insurance company's general
account. The insurance company would then credit to the Prime Portfolio on a
monthly basis interest which is based on an index (in most cases the Salomon
Brothers CD Index), but is guaranteed not to be less than a certain minimum
rate. The Portfolio will invest no more than 10% of its net assets in GICs that
are illiquid and in other illiquid securities. The Prime Portfolio currently
does not expect to invest more than 5% of its net assets in GICs.

INVESTMENT PRACTICES

ILLIQUID SECURITIES--Each Portfolio may invest up to 10% of the value of
its net assets in securities as to which a liquid trading market does not exist,
provided such investments are consistent with its investment objective. Such
securities may include securities that are not readily marketable, such as
certain securities that are subject to legal or contractual restrictions on
resale, participation interests that are not subject to the demand feature
described above, floating and variable rate demand obligations as to which the
Portfolio cannot exercise the related demand feature described above on not more
than seven days' notice and as to which there is no secondary market and
repurchase agreements providing for settlement in more than seven days after
notice. As to these securities, the Portfolio is subject to a risk that should
the Portfolio desire to sell them when a ready buyer is not available at a price
the Portfolio deems representative of their value, the value of the Portfolio's
net assets could be adversely effected.

[LOGO]

AMERISTAR PRIME
MONEY MARKET PORTFOLIO

AMERISTAR U.S. TREASURY
MONEY MARKET PORTFOLIO

----------------------------------------
PROSPECTUS

TRUST SHARES

APRIL 30, 1997

THE INFINITY MUTUAL FUNDS, INC.
AMERISTAR FUNDS
PRIME MONEY MARKET PORTFOLIO
U.S. TREASURY MONEY MARKET PORTFOLIO
TRUST SHARES AND INVESTOR SHARES
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 30, 1997

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus for
the Trust Shares or Investor Shares of the AmeriStar Prime Money Market
Portfolio and U.S. Treasury Money Market Portfolio (the "Portfolios") of The
Infinity Mutual Funds, Inc. (the "Fund"), each dated April 30, 1997, as each may
be revised from time to time. To obtain a copy of the relevant Prospectus,
please write to the Fund at 3435 Stelzer Road, Columbus, Ohio 43219-3035. This
Statement of Additional Information relates only to the Portfolios and not to
any of the Fund's other portfolios.

First American National Bank (the "Adviser") serves as each Portfolio's
investment adviser. Barnett Capital Advisors, Inc. (the "Sub-Adviser") serves as
the Prime Portfolio's sub- investment adviser.

BISYS Fund Services Limited Partnership ("BISYS") serves as each
Portfolio's administrator and distributor.

TABLE OF CONTENTS
PAGE
Investment Objectives and Management Policies.................... B-2
Management of the Fund........................................... B-10
Management Arrangements.......................................... B-13
Purchase and Redemption of Shares................................ B-18
Determination of Net Asset Value................................. B-20
Yield Information................................................ B-21
Portfolio Transactions........................................... B-22
Information About the Portfolios................................. B-23
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors........................ B-24
Appendix......................................................... B-25
Financial Statements............................................. B-29

<PAGE>

INVESTMENT OBJECTIVES AND MANAGEMENT POLICIES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED
"DESCRIPTION OF THE PORTFOLIOS."

PORTFOLIO SECURITIES

BANK OBLIGATIONS. (Prime Portfolio only) Domestic commercial banks
organized under Federal law are supervised and examined by the Comptroller of
the Currency and are required to be members of the Federal Reserve System and to
have their deposits insured by the Federal Deposit Insurance Corporation (the
"FDIC"). Domestic banks organized under state law are supervised and examined by
state banking authorities but are members of the Federal Reserve System only if
they elect to join. In addition, state banks whose certificates of deposit
("CDs") may be purchased by the Portfolio are insured by the Bank Insurance Fund
administered by the FDIC (although such insurance may not be of material benefit
to the Prime Portfolio, depending upon the principal amount of the CDs of each
bank held by such Portfolio) and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of Federal and state
laws and regulations, domestic branches of domestic banks, among other things,
are generally required to maintain specified levels of reserves, and are subject
to other supervision and regulation designed to promote financial soundness.

Obligations of foreign branches of domestic banks, foreign subsidiaries of
domestic banks and domestic and foreign branches of foreign banks, such as CDs
and time deposits ("TDs"), may be general obligations of the parent banks in
addition to the issuing branch, or may be limited by the terms of a specific
obligation or governmental regulation. Such obligations are subject to different
risks than are those of domestic banks. These risks include foreign economic and
political developments, foreign governmental restrictions that may adversely
affect payment of principal and interest on the obligations, foreign exchange
controls and foreign withholding and other taxes on interest income. Foreign
branches and subsidiaries are not necessarily subject to the same or similar
regulatory requirements that apply to domestic banks, such as mandatory reserve
requirements, loan limitations, and accounting, auditing and financial
recordkeeping requirements. In addition, less information may be publicly
available about a foreign branch of a domestic bank or about a foreign bank than
about a domestic bank. If a domestic bank with deposits insured by the FDIC
becomes insolvent, unsecured deposits and other general obligations of such
bank's foreign branches will be subordinated to the receivership expenses of the
FDIC and such bank's domestic deposits and would be subject to the loss of
principal to a greater extent than such bank's domestic branch deposits. The
Prime Portfolio's investment in obligations of foreign subsidiaries of domestic
banks are subject, to the extent required by the Investment Company Act of 1940,
as amended (the "1940 Act"), to the limitations on investing in the securities
of other investment companies.

Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal and state
regulation as well as governmental action in the country in which the foreign
bank has its head office. In addition, Federal branches licensed by the
Comptroller of the Currency and branches licensed by certain states ("State
Branches") may be required to: (1) pledge to the regulator, by depositing assets
with a designated bank within the state, a certain percentage of their assets as
fixed from time to time by the appropriate regulatory authority; and (2)
maintain assets within the state in an amount equal to a specified percentage of
the aggregate amount of liabilities of the foreign bank payable at or through
all of its agencies or branches within the state. The deposits of Federal and
State Branches generally must be insured by the FDIC if such branches take
deposits of less than $100,000.

In view of the foregoing factors associated with the purchase of CDs and
TDs issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, the Sub-Adviser carefully evaluates such investments on a
case-by-case basis pursuant to procedures established by the Fund's Board of
Directors.

The Prime Portfolio may invest in short-term U.S. dollar denominated
corporate obligations that are originated, negotiated and structured by a
syndicate of lenders ("Co- Lenders") consisting of commercial banks, thrift
institutions, insurance companies, finance companies or other financial
institutions one or more of which administers the security on behalf of the
syndicate (the "Agent Bank"). Co-Lenders may sell such securities to third
parties called "Participants." The Prime Portfolio may invest in such securities
either by participating as a Co-Lender at origination or by acquiring an
interest in the security from a Co-Lender or a Participant (collectively,
"participation interests"). Co-Lenders and Participants interposed between the
Fund and the corporate borrower (the "Borrower"), together with Agent Banks, are
referred herein as "Intermediate Participants." The Prime Portfolio also may
purchase a participation interest in a portion of the rights of an Intermediate
Participant, which would not establish any direct relationship between the Prime
Portfolio and the Borrower. In such cases, the Prime Portfolio would be required
to rely on the Intermediate Participant that sold the participation interest not
only for the enforcement of the Prime Portfolio's rights against the Borrower
but also for the receipt and processing of payments due to the Prime Portfolio
under the security. Because it may be necessary to assert through an
Intermediate Participant such rights as may exist against the Borrower, in the
event the Borrower fails to pay principal and interest when due, the Prime
Portfolio may be subject to delays, expenses and risks that are greater than
those that would be involved if the Portfolio could enforce its rights directly
against the Borrower. Moreover, under the terms of a participation interest, the
Prime Portfolio may be regarded as a creditor of the Intermediate Participant
(rather than of the Borrower), so that the Fund also may be subject to the risk
that the Intermediate Participant may become insolvent. Similar risks may arise
with respect to the Agent Bank if, for example, assets held by the Agent Bank
for the benefit of the Prime Portfolio were determined by the appropriate
regulatory authority or court to be subject to the claims of the Agent Bank's
creditors. In such cases, the Prime Portfolio might incur certain costs and
delays in realizing payment in connection with the participation interest or
suffer a loss of principal and/or interest. Further, in the event of the
bankruptcy or insolvency of the Borrower, the obligation of the Borrower to
repay the loan may be subject to certain defenses that can be asserted by such
Borrower as a result of improper conduct by the Agent Bank or Intermediate
Participant.

Under normal circumstances, and as a matter of fundamental policy, the
Prime Portfolio will "concentrate" at least 25% of its assets in debt
instruments issued by domestic and foreign companies engaged in the banking
industry, including bank holding companies. Such investments may include CDs,
TDs, bankers' acceptances and obligations issued by bank holding companies, as
well as repurchase agreements entered into with banks (as distinct from non-bank
dealers) in accordance with the policies set forth in "Repurchase Agreements"
below. During periods when the Sub-Adviser determines that the Prime Portfolio
should be in a temporary defensive position, the Portfolio may invest less than
25% of its total assets in the banking industry; during such times the Prime
Portfolio's assets will be invested in accordance with its other investment
policies. The Sub- Adviser may determine that the adoption of a temporary
defensive position with respect to issuers in the banking industry is
appropriate on the basis of such factors as political, economic, market or
regulatory developments adversely affecting that industry as compared to the
industries of other issuers of securities available for investment by the Prime
Portfolio.

INVESTMENT COMPANY SECURITIES. (Both Portfolios) Each Portfolio may invest
in securities issued by other investment companies which principally invest in
securities of the type in which such Portfolio invests. Under the 1940 Act, each
Portfolio's investments in such securities, subject to certain exceptions,
currently are limited to (i) 3% of the total voting stock of any one investment
company, (ii) 5% of the Portfolio's net assets with respect to anyone investment
company and (iii) 10% of the Portfolio's net assets in the aggregate.
Investments in the securities of other investment companies may involve
duplication of advisory fees and certain other expenses.

REPURCHASE AGREEMENTS. (Both Portfolios) Each Portfolio may enter into
repurchase agreements. The Fund's custodian or sub-custodian employed in
connection with third-party repurchase transactions will have custody of, and
will hold in a segregated account, securities acquired by a Portfolio under a
repurchase agreement. In connection with its third-party repurchase
transactions, the Fund will employ only eligible sub- custodians which meet the
requirements set forth in Section 17(f) of the 1940 Act and the rules
thereunder. Repurchase agreements are considered by the staff of the Securities
and Exchange Commission to be loans by the Portfolio entering into them. In an
attempt to reduce the risk of incurring a loss on a repurchase agreement, each
Portfolio will enter into repurchase agreements only with domestic banks
(including foreign branches and subsidiaries of domestic banks) with total
assets in excess of one billion dollars or primary government securities dealers
reporting to the Federal Reserve Bank of New York, with respect to securities in
which such Portfolio may invest or government securities regardless of their
remaining maturities, and will require that additional securities be deposited
with it if the value of the securities purchased should decrease below resale
price. The Adviser and, with respect to the Prime Portfolio, the Sub-Adviser
will monitor on an ongoing basis the value of the collateral to assure that it
always equals or exceeds the repurchase price. Each Portfolio will consider on
an ongoing basis the creditworthiness of the institutions with which it enters
into repurchase agreements.

MUNICIPAL OBLIGATIONS. (Prime Portfolio only) The Prime Portfolio may make
limited investments in municipal obligations. Municipal obligations generally
include debt obligations issued to obtain funds for various public purposes as
well as certain industrial development bonds issued by or on behalf of public
authorities. Municipal obligations are classified as general obligation bonds,
revenue bonds and notes. General obligation bonds are secured by the issuer's
pledge of its faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable from the revenue derived from a particular
facility or class of facilities or, in some cases, from the proceeds of a
special excise or other specific revenue source, but not from the general taxing
power. Industrial development bonds, in most cases, are revenue bonds and
generally do not carry the pledge of the credit of the issuing municipality, but
generally are guaranteed by the corporate entity on whose behalf they are
issued. Notes are short-term instruments which are obligations of the issuing
municipalities or agencies and are sold in anticipation of a bond sale,
collection of taxes or receipt of other revenues. Municipal obligations include
municipal lease/purchase agreements which are similar to installment purchase
contracts for property or equipment issued by municipalities. Municipal
obligations bear fixed, floating or variable rates of interest. Municipal
obligations may be in the form of custodial receipts that give the Prime
Portfolio the right to receive specific future interest or principal payments on
securities held in trust or a special custody account. Certain municipal
obligations are subject to redemption at a date earlier than their stated
maturity pursuant to call options, which may be separated from the related
municipal obligation and purchased and sold separately.

MANAGEMENT POLICIES

REVERSE REPURCHASE AGREEMENTS. (Both Portfolios) Each Portfolio may enter
into reverse repurchase agreements. Each Portfolio will maintain in a segregated
custodial account permissible liquid assets equal to the aggregate amount of its
reverse repurchase obligations, plus accrued interest, in certain cases, in
accordance with releases promulgated by the Securities and Exchange Commission.
The Securities and Exchange Commission views reverse repurchase agreement
transactions as collateralized borrowings, and, pursuant to the 1940 Act, each
Portfolio must maintain continuous asset coverage (that is, total assets
including borrowings, less liabilities exclusive of borrowings) of 300% of the
amount borrowed. If the 300% asset coverage should decline as a result of market
fluctuations or other reasons, the Portfolio may be required to sell some of its
portfolio holdings within three days to reduce the debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time.

ILLIQUID SECURITIES. (Both Portfolios) Where a substantial market of
qualified institutional buyers develops for certain restricted securities
purchased by a Portfolio pursuant to Rule 144A under the Securities Act of 1933,
as amended, the Fund intends to treat such securities as liquid securities in
accordance with procedures approved by the Fund's Board. Because it is not
possible to predict with assurance how the market for specific restricted
securities sold pursuant to Rule 144A will develop, the Fund's Board has
directed the Adviser and the Sub- Adviser to monitor carefully each Portfolio's
investments in such securities with particular regard to trading activity,
availability of reliable price information and other relevant information. To
the extent that, for a period of time, qualified institutional buyers cease
purchasing restricted securities pursuant to Rule 144A, the Portfolio's
investing in such securities may have the effect of increasing the level of
illiquidity in its investment portfolio during such period.

FORWARD COMMITMENTS. (Both Portfolios) Securities purchased on a forward
commitment or when-issued basis are subject to changes in value (generally
changing in the same way, i.e., appreciating when interest rates decline and
depreciating when interest rates rise) based upon the public's perception of the
creditworthiness of the issuer and changes, real or anticipated, in the level of
interest rates. Securities purchased on a forward commitment or when-issued
basis may expose the Portfolio to risks because they may experience such
fluctuations prior to their actual delivery. Purchasing securities on a
when-issued basis can involve the additional risk that the yield available in
the market when the delivery takes place actually may be higher than that
obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when the Portfolio is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Portfolio's net assets and its net asset value per share.

LENDING PORTFOLIO SECURITIES. (Both Portfolios) To a limited extent, each
Portfolio may lend its portfolio securities to brokers, dealers and other
financial institutions, provided it receives cash collateral which at all times
is maintained in an amount equal to at least 100% of the current market value of
the securities loaned. By lending its portfolio securities, each Portfolio can
increase its income through the investment of the cash collateral. For the
purposes of this policy, the Fund considers collateral consisting of U.S.
Government securities to be the equivalent of cash. Such loans may not exceed
33-1/3% of the Portfolio's total assets. From time to time, the Fund may pay a
part of the interest earned from the investment of collateral received for
securities loaned to the borrower or a third party which is unaffiliated with
the Fund, and which is acting as a "placing broker," in an amount determined by
the Board of Directors to be reasonable and based solely on services rendered.

The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Portfolio must receive at least 100% cash collateral from the borrower; (2)
the borrower must increase such collateral whenever the market value of the
securities rises above the level of such collateral; (3) the Portfolio must be
able to terminate the loan at any time; (4) the Portfolio must receive
reasonable interest on the loan, as well as any interest or other distributions
payable on the loaned securities, and any increase in market value; and (5) the
Portfolio may pay only reasonable custodian fees in connection with the loan.

INVESTMENT RESTRICTIONS

Each Portfolio has adopted investment restrictions numbered 1 through 7 as
fundamental policies and the Prime Portfolio has adopted investment restrictions
numbered 13 and 14 and the U.S. Treasury Portfolio has adopted investment
restriction number 15 as additional fundamental policies. These restrictions
cannot be changed, as to a Portfolio, without approval by the holders of a
majority (as defined in the 1940 Act) of the outstanding voting shares of such
Portfolio. Investment restrictions numbered 8 through 12 are not fundamental
policies and may be changed by vote of a majority of the Fund's Directors at any
time. Neither Portfolio may:

1. Invest in commodities, except that each Portfolio may purchase and sell
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.

2. Purchase, hold or deal in real estate, or oil, gas or
other mineral leases or exploration or development programs, but each Portfolio
ay purchase and sell securities that are secured by real estate or issued by
companies that invest or deal in real estate.

3. Borrow money, except that each Portfolio may borrow up to 33-1/3% of its
total assets. For purposes of this investment restriction, a Portfolio's entry
into options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes shall not constitute
borrowing.

4. Make loans to others, except through the purchase of debt obligations
and the entry into repurchase agreements. However, each Portfolio may lend its
securities in an amount not to exceed 33-1/3% of the value of its total assets.
Any loans of portfolio securities will be made according to guidelines
established by the Securities and Exchange Commission and the Fund's Board of
Directors.

5. Act as an underwriter of securities of other issuers, except to the
extent the Portfolio may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.

6. Issue any senior security (as such term is defined in Section 18(f) of
the 1940 Act). The Portfolio's investments permitted under Investment
Restriction Nos. 1, 3, 9 and 10 are not considered senior securities for
purposes of this investment restriction.

7. Purchase securities on margin, but each Portfolio may make margin
deposits in connection with transactions in options, forward contracts, futures
contracts, including those relating to indexes, and options on futures contracts
or indexes.

8. Invest in the securities of a company for the purpose of exercising
management or control, but each Portfolio will vote the securities it owns in
its portfolio as a shareholder in accordance with its views.

9. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
deposit of assets in escrow in connection with writing covered put and call
options and the purchase of securities on a when-issued or forward commitment
basis and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes.

10. Purchase, sell or write puts, calls or combinations thereof, except as
described in the Portfolio's Prospectus and this Statement of Additional
Information.

11. Enter into repurchase agreements providing for settlement in more than
seven days after notice or purchase securities which are illiquid, if, in the
aggregate, more than 10% of the value of the Portfolio's net assets would be so
invested.

12. Invest in securities of other investment companies, except to the
extent permitted under the 1940 Act.

The following investment restrictions numbered 13 and 14 apply only to the
Prime Portfolio. The Prime Portfolio may not:

13. Invest more than 5% of its assets in the obligations of any one issuer,
except that up to 25% of the value of the Prime Portfolio's total assets may be
invested without regard to any such limitation, provided that not more than 10%
of its assets may be invested in securities issued or guaranteed by any single
guarantor of obligations held by the Prime Portfolio.

14. Invest less than 25% of its total assets in securities issued by banks
or invest more than 25% of its assets in the securities of issuers in any other
industry, provided that there shall be no limitation on the purchase of
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. Notwithstanding the foregoing, for temporary defensive
purposes the Prime Portfolio may invest less than 25% of its assets in bank
obligations.

The following investment restriction number 15 applies only to the U.S.
Treasury Portfolio. The U.S. Treasury Portfolio may not:

15. Invest more than 25% of its total assets in the securities of issuers
in any single industry, provided that there shall be no such limitation on
investments in obligations issued or guaranteed by the U.S. Government.

The Fund may make commitments more restrictive than the restrictions listed
above so as to permit the sale of shares of a Portfolio in certain states.
Should the Fund determine that a commitment is no longer in the best interest of
the Portfolio, and its shareholders, the Fund reserves the right to revoke the
commitment by terminating the sale of such Portfolio's shares in the state
involved.

MANAGEMENT OF THE FUND

Directors and officers of the Fund, together with information as to their
principal business occupations during at least the last five years, are shown
below. Each Director who is an "interested person" of the Fund, as defined in
the 1940 Act, is indicated by an asterisk.

DIRECTORS OF THE FUND

*WILLIAM B. BLUNDIN, PRESIDENT AND CHAIRMAN OF THE BOARD OF DIRECTORS.
An employee of BISYS Fund Services, Inc., BISYS' general
partner. Mr. Blundin also is an officer of other investment
companies administered by BISYS or its affiliates. He is 59
years old and his address is 125 West 55th Street, New York,
New York 10019.

NORMA A. COLDWELL, DIRECTOR. International Economist and
Consultant; Executive Vice President of Coldwell
Financial Consultants; Trustee and Treasurer of
Meridian House International (International Education
and Cultural Group); Member of the Board of Advisors
of Meridian International Center and Emerging Capital
Markets, S.A. (Montevideo, Uruguay); formerly, Chief
International Economist of Riggs National Bank, Washington,
D.C. She is 71 years old and her address is 3330 Southwestern
Boulevard, Dallas, Texas 75225.

WILLIAM W. McINNES, DIRECTOR. Private investor. From July 1978
to February 1993, he was Vice-President--Finance and
Treasurer of Hospital Corp. of America. He is also a
director of Gulf South Medical Supply and Diversified
Trust Co. He is 48 years old and his address is 116
30th Avenue South, Nashville, Tennessee 37212.

ROBERT A. ROBINSON, DIRECTOR. Private investor. Since 1991,
President Emeritus, and from 1968 to 1991, President
of The Church Pension Group, NYC. From 1956 to
1966, Senior Vice President of Colonial Bank &
Trust Co. He is also a director of Mariner
Institutional Funds, Inc., Mariner Tax-Free
Institutional Funds, Inc., UST Master Funds, UST
Master Tax Exempt Funds, H.B. and F.H. Bugher
Foundation, Morehouse-Barlow Co. Publishers, The
Canterbury Cathedral Trust in America, The Living
Church Foundation and Hoosac School. He is 71
years old and his address is 2 Hathaway Common, New
Canaan, Connecticut 06840.

OFFICERS OF THE FUND

JEFFREY C. CUSICK, VICE PRESIDENT AND ASSISTANT SECRETARY. An
employee of BISYS Fund Services, Inc. since
July 1995, and an officer of other investment companies
administered by BISYS or its affiliates. From September 1993
to July 1995, he was Assistant Vice President and, from 1989
to September 1993, he was Manager--Client Services, of
Federated Administrative Services. He is 38 years old and his
address is 3435 Stelzer Road, Columbus, Ohio 43219.

WILLIAM TOMKO, VICE PRESIDENT. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates.
He is 38 years old and his address is 3435 Stelzer
Road, Columbus, Ohio 43219.

MARTIN R. DEAN, TREASURER. An employee of BISYS Fund
Services, Inc. since May 1994, and an officer of
other investment companies administered by BISYS or
its affiliates. Prior thereto, he was a Senior
Manager of KPMG Peat Marwick LLP. He is 33 years
old and his address is 3435 Stelzer Road, Columbus,
Ohio 43219.

GEORGE O. MARTINEZ, SECRETARY. Senior Vice President and
Director of Legal and Compliance Services with
BISYS Fund Services, Inc. since April 1995, and an
officer of other investment companies administered
by BISYS or its affiliates. Prior thereto, he was
Vice President and Associate General Counsel with
Alliance Capital Management, L.P. He is 37 years
old and his address is 3435 Stelzer Road, Columbus,
Ohio 43219.

ROBERT L. TUCH, ASSISTANT SECRETARY. An employee of BISYS
Fund Services, Inc. and an officer of other
investment companies administered by BISYS or its
affiliates. He is 45 years old and his address is
3435 Stelzer Road, Columbus, Ohio 43219.

ALAINA METZ, ASSISTANT SECRETARY. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates.
She is 29 years old and her address is 3435 Stelzer
Road, Columbus, Ohio 43219.

For so long as the Shareholder Services Plan described in the section
captioned "Management Arrangements--Shareholder Services Plan" remains in
effect, the Directors of the Fund who are not "interested persons" of the Fund,
as defined in the 1940 Act, will be selected and nominated by the Directors who
are not "interested persons" of the Fund.

Directors and officers of the Fund, as a group, owned less than 1% of
either Portfolio's shares of common stock outstanding on April 11, 1997.

Total Compensation
Aggregate From Fund and
Name of Board Compensation from Fund Complex Paid
Member Fund* To Board Member*

Norma A. Coldwell $18,000 $18,000
Richard H. Francis $18,000 $18,000
William W. McInnes $18,000 $18,000
Robert A. Robinson $18,000 $18,000

- ------------------------------
* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $13,000 for all Directors as a group.

MANAGEMENT ARRANGEMENTS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED
"MANAGEMENT OF THE PORTFOLIOS."

INVESTMENT ADVISORY AGREEMENT. The Adviser provides investment advisory
services pursuant to the Investment Advisory Agreement (the "Agreement") dated
February 15, 1994 with the Fund. As to each Portfolio, the Agreement is subject
to annual approval by (i) the Fund's Board of Directors or (ii) vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
such Portfolio, provided that in either event the continuance also is approved
by a majority of the Board of Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund or the Adviser, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Agreement was
last approved by the Fund's Board of Directors, including a majority of the
directors who are not "interested persons" of any party to the Agreement, at a
meeting held on February 11, 1997. As to each Portfolio, the Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board of Directors
or by vote of the holders of a majority of such Portfolio's shares, or, on not
less than 90 days' notice, by the Adviser. The Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its assignment (as
defined in the 1940 Act).

As compensation for the Adviser's services, the Fund has agreed to pay the
Adviser a monthly investment advisory fee at the annual rate of .25 of 1% of the
value of each Portfolio's average daily net assets less, in the case of the
Prime Portfolio, any amount payable by the Fund to the Sub-Adviser. For the
period March 29, 1994 (commencement of operations of each Portfolio) through
December 31, 1994, and for the fiscal years ended December 31, 1995 and 1996,
$50,754, $64,959 and $74,618, respectively, was payable by the Prime Portfolio
and $183,801, $358,127 and $459,479, respectively, was payable by the U.S.
Treasury Portfolio pursuant to the Agreement. The Adviser waived $7,046 and
$19,089 of such fees payable for the period ended December 31, 1994 by the Prime
Portfolio and U.S. Treasury Portfolio, respectively, resulting in net fees being
paid to the Adviser of $43,708 by the Prime Portfolio and $164,712 by the U.S.
Treasury Portfolio during the fiscal period ended December 31, 1994.

SUB-INVESTMENT ADVISORY AGREEMENT. The Adviser has engaged the Sub-Adviser
to provide investment advisory assistance and day-to-day management of the Prime
Portfolio's investments pursuant to the Sub-Investment Advisory Agreement (the
"Sub- Advisory Agreement") among the Fund, the Adviser and the Sub- Adviser
dated February 15, 1994. The fees payable to the Sub- Adviser for its services
are paid by the Fund. The Sub-Advisory Agreement is subject to annual approval
by (a) the Fund's Board of Directors or (b) vote of a majority (as defined in
the 1940 Act) of the Prime Portfolio's outstanding voting securities, provided
that in either event the continuance also is approved by a majority of the
Fund's Directors who are not "interested persons" (as defined in the 1940 Act)
of any party to the Sub- Advisory Agreement, by vote cast in person at a meeting
called for the purpose of voting on such approval. The Sub-Advisory Agreement
was last approved by the Fund's Board of Directors who are not "interested
persons" of any party to the Sub-Advisory Agreement, at a meeting held on
November 14, 1996. The Sub- Advisory Agreement may be terminated without penalty
(i) by the Fund's Board of Directors or by vote of the holders of a majority of
the Prime Portfolio's shares, upon written notice to the Sub- Adviser, (ii) by
the Adviser (but only upon the approval of the Fund's Board of Directors) upon
60 days' written notice to the Sub-Adviser, or (iii) by the Sub-Adviser upon not
less than 90 days' written notice to the Fund and the Adviser. The Sub- Advisory
Agreement also will terminate automatically in the event of its assignment (as
defined in the 1940 Act). In addition, if the Fund's Agreement with the Adviser
is terminated for any reason (whether by the Fund, by the Adviser or by
operation of law), the Sub-Advisory Agreement will terminate upon the effective
date of such termination of the Investment Advisory Agreement.

The Sub-Adviser provides investment advisory services in accordance with
the stated policies of the Prime Portfolio, subject to the approval of the
Fund's Board of Directors. The Sub-Adviser provides the Prime Portfolio with
investment personnel who are authorized by the Board of Directors to execute
purchases and sales of securities. The Sub-Adviser also maintains a research
department with a professional staff of portfolio managers and securities
analysts who provide research services for the Prime Portfolio as well as for
other funds advised by the Sub-Adviser. All purchases and sales are reported for
the Board's review at the meeting subsequent to such transactions.

As compensation for the Sub-Adviser's services, the Fund has agreed to pay
the Sub-Adviser a monthly sub-investment advisory fee at the annual rate of .15
of 1% of the value of the Prime Portfolio's average daily net assets. For the
period March 29, 1994 (commencement of operations of the Prime Portfolio)
through December 31, 1994 and for the fiscal years ended December 31, 1995 and
1996, $76,130, $97,438 and $111,623, respectively, was payable by the Prime
Portfolio pursuant to the Sub-Advisory Agreement. The Sub-Adviser waived $10,274
of such fee payable for the period ended December 31, 1994, resulting in a net
fee being paid to the Sub-Adviser of $65,856 by the Prime Portfolio during the
fiscal period ended December 31, 1994.

ADMINISTRATION AGREEMENT. BISYS provides certain administrative services
pursuant to the Administration Agreement (the "Administration Agreement") dated
April 25, 1996 with the Fund. As to each Portfolio, the Administration Agreement
will continue until April 25, 2001 and thereafter is subject to annual approval
by (i) the Fund's Board of Directors or (ii) vote of a majority (as defined in
the 1940 Act) of the outstanding voting securities of such Portfolio, provided
that in either event the continuance also is approved by a majority of the
Directors who are not "interested persons" (as defined in the 1940 Act) of the
Fund or BISYS, by vote cast in person at a meeting called for the purpose of
voting such approval. The Administration Agreement was last approved by the
Fund's Board of Directors, including a majority of the Directors who are not
"interested persons" of any party to the Administration Agreement, at a meeting
held on February 11, 1997. As to each Portfolio, the Administration Agreement is
terminable without penalty, at any time if for cause, by the Fund's Board of
Directors or by vote of the holders of a majority of such Portfolio's
outstanding voting securities, or, on not less than 90 days' notice, by BISYS.
The Administration Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).

As compensation for BISYS' services, the Fund has agreed to pay BISYS a
monthly administration fee at the annual rate of .10 of 1% of the value of each
Portfolio's average daily net assets. For the period March 29, 1994
(commencement of operations of each Portfolio) through December 31, 1994 and for
the fiscal years ended December 31, 1995 and 1996, $50,754, $64,959 and $74,618,
respectively, was payable to BISYS or the Portfolios' predecessor administrator
during such periods by the Prime Portfolio and $73,520, $143,251 and $183,791,
respectively, was payable to BISYS or the Portfolios' predecessor administrator
by the U.S. Treasury Portfolio. The Portfolios' administrator waived $7,046 and
$7,767 of such fees payable for the period ended December 31, 1994 by the Prime
Portfolio and U.S. Treasury Portfolio, respectively, resulting in net fees being
paid to the administrator of $43,708 by the Prime Portfolio and $65,753 by the
U.S. Treasury Portfolio during the fiscal period ended December 31, 1994.

DISTRIBUTION AGREEMENT. BISYS acts as the exclusive distributor of each
Portfolio's shares on a best efforts basis pursuant to a Distribution Agreement
(the "Distribution Agreement") dated February 11, 1997 with the Fund. Shares are
sold on a continuous basis by BISYS as agent, although BISYS is not obliged to
sell any particular amount of shares. No compensation is payable by the Fund to
BISYS for its distribution services.

SHAREHOLDER SERVICES PLAN. (Applicable only with respect to the Investor
Shares). The Fund's Directors have adopted a shareholder services plan (the
"Plan") with respect to the Investor Shares pursuant to which each Portfolio
pays BISYS for the provision of certain services to the holders of Investor
Shares at an annual rate of .25% of the value of each Portfolio's Investor
Shares. The Fund's Directors believe that there is a reasonable likelihood that
the Plan will benefit each Portfolio and the holders of its Investor Shares. In
some states, certain institutions effecting transactions in Investor Shares may
be required to register as dealers pursuant to state law.

A quarterly report of the amounts expended under the Plan, and the purposes
for which such expenditures were incurred, must be made to the Directors for
their review. In addition, the Plan provides that material amendments of the
Plan must be approved by the Board of Directors, and by the Directors who are
neither "interested persons" (as defined in the 1940 Act) of the Fund nor have
any direct or indirect financial interest in the operation of the Plan or in the
related Plan agreements, by vote cast in person at a meeting called for the
purpose of considering such amendments. The Plan and related agreements are
subject to annual approval by such vote of the Directors cast in person at a
meeting called for the purpose of voting on the Plan. The Plan was last so
approved on November 14, 1996. The Plan is terminable at any time by vote of a
majority of the Directors who are not "interested persons" and who have no
direct or indirect financial interest in the operation of the Plan or in the
Plan agreements. A Plan agreement is terminable without penalty, at any time, by
such vote of the Directors. A Plan agreement will terminate automatically in the
event of its assignment (as defined in the 1940 Act).

For the fiscal year ended December 31, 1996, fees payable pursuant to the
Plan by the Prime Portfolio and U.S. Treasury Portfolio amounted to $121,038 and
$309,951, respectively, of which amounts BISYS waived receipt of $88,752 and
$224,563, respectively, resulting in $32,286 being paid by the Prime Portfolio
and $85,388 being paid by the U.S. Treasury Portfolio with respect to Investor
Shares pursuant to the Plan.

EXPENSES. All expenses incurred in the operation of the Fund are borne by
the Fund, except to the extent specifically assumed by others. The expenses
borne by the Fund include: organizational costs, taxes, interest, brokerage fees
and commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser, Sub-Adviser or BISYS or any of their affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory and
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs attribut able to investor services
(including, without limitation, tele phone and personnel expenses), costs of
calculating the net asset value of each Portfolio's shares, costs of
shareholders' reports and corporate meetings, costs of preparing and printing
certain prospectuses and statements of additional information, and any
extraordinary expenses. Expenses attributable to a Portfolio are charged against
the assets of that Portfolio; other expenses of the Fund are allocated among the
Portfolios on the basis determined by the Board of Directors, including, but not
limited to, proportionately in relation to the net assets of each Portfolio.

PURCHASE AND REDEMPTION OF SHARES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED "HOW TO
BUY SHARES" AND "HOW TO REDEEM SHARES."

TERMS OF PURCHASE. The Fund reserves the right to reject any purchase order
and to change the amount of the minimum investment and subsequent purchases in
the Portfolios.

"SWEEP" PROGRAM. Each Portfolio's shares may be purchased through the
"sweep" program established by certain financial institutions under which a
portion of their customers' accounts may be automatically invested in the
Portfolio. The customer becomes the beneficial owner of specific shares of the
Portfolio which may be purchased, redeemed and held by the financial institution
in accordance with the customer's instructions and may fully exercise all rights
as a shareholder. The shares will be held by BISYS Fund Services Ohio, Inc. (the
"Transfer Agent") in book-entry form. A statement with regard to the customer's
shares is generally supplied to the customer monthly, and confirmations of all
transactions for the account of the customer ordinarily are available to the
customer promptly on request. In addition, each customer is sent proxies,
periodic reports and other information from the Fund with regard to shares of
the Portfolios. The customer's shares are fully assignable and may be encumbered
by the customer. The "sweep" agreement can be terminated by the customer at any
time, without affecting its beneficial ownership of the shares.

To obtain the benefits of this service, a customer typically is required to
maintain a minimum balance subject to a monthly maintenance fee, or a higher
minimum balance for which no monthly fee would be imposed. In either case, a
penalty fee is imposed if the minimum should not be maintained. In general, the
automatic investment in a Portfolio's shares occurs on the same day that
withdrawals are made by the financial institution, at the next determined net
asset value after the order is received.

All agreements which relate to the service are with the financial
institution. Neither BISYS nor the Fund is a party to any of those agreements
and no part of the compensation received by the financial institution flows to
the Fund or to BISYS or to any of their affiliates, either directly or
indirectly. Further information concerning this program and any related charges
or fees is provided by the financial institution prior to any purchase of a
Portfolio's shares. Any fees charged by the financial institution effectively
reduces the Portfolio's yield for those customers.

REOPENING AN ACCOUNT. An investor may reopen an account with a minimum
investment of $100 without filing a new Account Application during the calendar
year the account is closed or during the following calendar year, provided the
information on the old Account Application is still applicable.

STOCK CERTIFICATES; SIGNATURES. Any certificate representing Portfolio
shares to be redeemed must be submitted with the redemption request. Written
redemption requests must be signed by each shareholder, including each holder of
a joint account, and each signature must be guaranteed. Signatures on endorsed
certificates submitted for redemption also must be guaranteed. The Transfer
Agent has adopted standards and procedures pursuant to which
signature-guarantees in proper form generally will be accepted from domestic
banks, brokers, dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and savings associations,
as well as from participants in the New York Stock Exchange Medallion Signature
Program, the Securities Transfer Agents Medallion Program ("STAMP") and the
Stock Exchanges Medallion Program. Signature-guarantees may not be provided by
notaries public. If the signature is guaranteed by a broker or dealer, such
broker or dealer must be a member of a clearing corporation and maintain net
capital of at least $100,000. Guarantees must be signed by an authorized
signatory of the guarantor and "Signature-Guaranteed" must appear with the
signature.

REDEMPTION COMMITMENT. Each Portfolio has committed itself to pay in cash
all redemption requests by any shareholder of record, limited in amount during
any 90-day period to the lesser of $250,000 or 1% of the value of such
Portfolio's net assets at the beginning of such period. Such commitment is
irrevocable without the prior approval of the Securities and Exchange
Commission. In the case of requests for redemption in excess of such amount, the
Board of Directors reserves the right to make payments in whole or in part in
securities or other assets in case of an emergency or any time a cash
distribution would impair the liquidity of the Portfolio to the detriment of the
existing shareholders. In this event, the securities would be valued in the same
manner as the Portfolio is valued. If the recipient sold such securities,
brokerage charges might be incurred.

SUSPENSION OF REDEMPTIONS. The right of redemption may be suspended or the
date of payment postponed (a) during any period when the New York Stock Exchange
is closed (other than customary weekend and holiday closing), (b) when trading
in the markets the Portfolio normally utilizes is restricted, or when an
emergency exists as determined by the Securities and Exchange Commission so that
disposal of the Portfolio's investments or determination of its net asset value
is not reasonably practicable, or (c) for such other periods as the Securities
and Exchange Commission by order may permit to protect the Portfolio's
shareholders.

DETERMINATION OF NET ASSET VALUE

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED "HOW TO
BUY SHARES."

AMORTIZED COST PRICING. The valuation of each Portfolio's investment
securities is based upon their amortized cost which does not take into account
unrealized capital gains or losses. This involves valuing an instrument at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium, regardless of the impact of fluctuating interest rates on the market
value of the instrument. While this method provides certainty in valuation, it
may result in periods during which value, as determined by amortized cost, is
higher or lower than the price the Portfolio would receive if it sold the
instrument.

The Board of Directors has agreed, as a particular responsibility within
the overall duty of care owed to the Portfolios' investors, to establish
procedures reasonably designed to stabilize each Portfolio's price per share as
computed for the purpose of purchases and redemptions at $1.00. Such procedures
include review of each Portfolio's investment holdings by the Board of
Directors, at such intervals as it deems appropriate, to determine whether such
Portfolio's net asset value calculated by using available market quotations or
market equivalents deviates from $1.00 per share based on amortized cost. In
such review, investments for which market quotations are readily available will
be valued at the most recent bid price or yield data for such securities or for
securities of comparable maturity, quality and type, as obtained from one or
more of the major market makers for the securities to be valued. Other
investments and assets will be valued at fair value as determined in good faith
by the Board of Directors.

The extent of any deviation between a Portfolio's net asset value based
upon available market quotations or market equivalents and $1.00 per share based
on amortized cost will be examined by the Board of Directors. If such deviation
exceeds 1/2 of 1%, the Board of Directors promptly will consider what action, if
any, will be initiated. In the event the Board of Directors determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, it has agreed to take such corrective
action as it regards as necessary and appropriate, including: selling portfolio
instruments prior to maturity to realize capital gains or losses or to shorten
average portfolio maturity; withholding dividends or paying distributions from
capital or capital gains; redeeming shares in kind; or establishing a net asset
value per share by using available market quotations or market equivalents.

YIELD INFORMATION

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED "YIELD
INFORMATION."

For the seven-day period ended December 31, 1996, the Prime
Portfolio's yield was 4.75% for Investor Shares and 5.04% for Trust Shares, and
its effective yield was 4.85% for Investor Shares and 5.16% for Trust Shares.
The U.S. Treasury Portfolio's yield for such period was 4.66% for Investor
Shares and 4.91% for Trust Shares, and its effective yield was 4.76% for
Investor Shares and 5.02% for Trust Shares. These yield figures reflect the
absorption of certain expenses and/or waiver of fees for Investor Shares,
without which the yield and effective yield for the seven-day period ended
December 31, 1996 would have been 4.57% and 4.67%, respectively, for the Prime
Portfolio's Investor Shares and 4.48% and 4.57%, respectively, for the U.S.
Treasury Portfolio's Investor Shares. Yield will be computed in accordance with
a standardized method which involves determining the net change in the value of
a hypothetical pre- existing Portfolio account having a balance of one share at
the beginning of a seven calendar day period for which yield is to be quoted,
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return, and annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional shares purchased with dividends
declared on the original share and any such additional shares and fees that may
be charged to shareholder accounts, in proportion to the length of the base
period and the Portfolio's average account size, but does not include realized
gains and losses or unrealized appreciation and depreciation. Effective
annualized yield is computed by adding 1 to the base period return (calculated
as described above), raising that sum to a power equal to 365 divided by 7, and
subtracting 1 from the result.

From time to time, advertising materials for a Portfolio may refer to or
discuss current or past business, political, economic or financial conditions,
such as U.S. monetary or fiscal policies and actual or proposed tax legislation.
In addition, from time to time, advertising materials for a Portfolio may
include information concerning retirement and investing for retirement, average
life expectancy and pension and social security benefits.

PORTFOLIO TRANSACTIONS

Transactions are allocated to various dealers by each Portfolio's
investment personnel in their best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected to act on an agency basis for
research, statistical or other services to enable the Adviser and/or Sub-Adviser
to supplement their own research and analysis with the views and information of
other securities firms.

To the extent any research services are furnished by brokers through which
each Portfolio effects securities transactions, the Adviser and, with respect to
the Prime Portfolio, the Sub-Adviser may use such information in advising other
funds or accounts they advise and, conversely, to the extent any research
services are furnished to the Adviser and/or Sub-Adviser by brokers in
connection with other funds or accounts the Adviser or Sub-Advisers advise, the
Adviser and/or Sub- Adviser also may use such information in advising the
Portfolios. Although it is not possible to place a dollar value on these
services, if they are provided, it is the opinion of each Adviser that the
receipt and study of any such services should not reduce the overall expenses of
its research department.

INFORMATION ABOUT THE PORTFOLIOS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN CONJUNCTION
WITH THE SECTION IN THE RELEVANT PROSPECTUS OF THE PORTFOLIOS ENTITLED "GENERAL
INFORMATION."

Each Portfolio share has one vote and, when issued and paid for in
accordance with the terms of the offering, is fully paid and non-assessable.
Shares have no preemptive, subscription or conversion rights and are freely
transferable.

Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted under the provisions of the 1940 Act or applicable state law or
otherwise, to the holders of the outstanding voting securities of an investment
company, such as the Fund, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by such matter. Rule 18f-2 further provides that a
portfolio shall be deemed to be affected by a matter unless it is clear that the
interests of each portfolio in the matter are identical or that the matter does
not affect any interest of such portfolio. However, the Rule exempts the
election of directors from the separate voting requirements of the Rule.

Each Portfolio will send annual and semi-annual financial statements to all
its shareholders.

As of April 11, 1997, the following shareholders were record owners of 5%
or more of the indicated Portfolio's outstanding shares:

Percent of
Total Shares
NAME AND ADDRESS OUTSTANDING

PRIME PORTFOLIO:
First American National Bank 98.13% Investor Shares
Attn: AmeriStar Investment Management & Trust 99.99% Trust Shares
800 First American Center
Nashville, TN 37237

U.S. TREASURY PORTFOLIO:

First American National Bank 97.69% Investor Shares
Attn: AmeriStar Investment 99.99% Trust Shares
Management & Trust
800 First American Center
Nashville, TN 37237

A shareholder who beneficially owns, directly or indirectly, more than 25%
of a Portfolio's voting securities may be deemed a "control person" (as defined
in the 1940 Act) of the Portfolio.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS

The Bank of New York, 90 Washington Street, New York, New York 10286, acts
as custodian of each Portfolio's investments. BISYS Fund Services Ohio, Inc., an
affiliate of BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, acts as the Fund's
transfer and dividend disbursing agent. Under the transfer agency agreement with
the Fund, the Transfer Agent maintains shareholder account records for the Fund,
handles certain communications between shareholders and the Fund and pays
dividends and distributions payable by the Fund. For these services, the
Transfer Agent receives a monthly fee compiled on the basis of the number of
shareholder accounts it maintains for the Fund during the month, and is
reimbursed for certain out-of- pocket expenses. Neither The Bank of New York nor
the Transfer Agent has any part in determining the investment policies of either
Portfolio or which securities are to be purchased or sold by a Portfolio.

KPMG Peat Marwick LLP, Two Nationwide Plaza, Columbus, Ohio 43215,
independent auditors, have been selected as the Fund's auditors for the year
ending December 31, 1997.

<PAGE>
APPENDIX

Description of the two highest commercial paper, bond and other short- and
long-term rating categories assigned by Standard & Poor's Ratings Group ("S&P"),
Moody's Investors Service, Inc. ("Moody's"), Fitch Investors Service, L.P.
("Fitch"), Duff & Phelps Credit Rating Co. ("Duff"), IBCA Inc. and IBCA Limited
("IBCA"), and Thomson BankWatch, Inc. ("BankWatch"):

Commercial Paper and Short-Term Ratings

The designation A-1 by S&P indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus sign (+)
designation. Capacity for timely payment on issues with an A-2 designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.

The rating Prime-1 (P-1) is the highest commercial paper rating assigned by
Moody's. Issuers of P-1 paper must have a superior capacity for repayment of
short-term promissory obligations, and ordinarily will be evidenced by leading
market positions in well established industries, high rates of return of funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.
Issues rated Prime-2 (P-2) have a strong capacity for repayment of short-term
promissory obligations. This ordinarily will be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.

The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest
degree of assurance for timely payment. The rating Fitch-2 (Very Good Grade) is
the second highest commercial paper rating assigned by Fitch which reflects an
assurance of timely payment only slightly less in degree than the strongest
issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors which are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated A1+ are
supported by the highest capacity for timely repayment. Obligations rated A2 are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.

The rating TBW-1 is the highest short-term obligation rating assigned by
BankWatch. Obligations rated TBW-1 are regarded as having the strongest capacity
for timely repayment. Obligations rated TBW-2 are supported by a strong capacity
for timely repayment, although the degree of safety is not as high as for issues
rated TBW-1.

Bond and Long-Term Ratings

Bonds rated AAA are considered by S&P to be the highest grade obligations
and possess an extremely strong capacity to pay principal and interest. Bonds
rated AA by S&P are judged by S&P to have a very strong capacity to pay
principal and interest, and in the majority of instances, differ only in small
degrees from issues rated AAA.

Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Bonds rated Aa by Moody's are judged by Moody's 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 Aaa bonds because margins of
protection may not be as large or fluctuations of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger. Moody's applies numerical modifiers 1, 2
and 3 in the Aa rating category. The modifier 1 indicates a ranking for the
security in the higher end of this rating category, the modifier 2 indicates a
mid-range ranking, and the modifier 3 indicates a ranking in the lower end of
the rating category.

Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade,
broadly marketable, suitable for investment by trustees and fiduciary
institutions and liable to but slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a showing of
earnings several times or many times interest requirements, with such stability
of applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be
of safety virtually beyond question and are readily salable, whose merits are
not unlike those of the AAA class, but whose margin of safety is less strikingly
broad. The issue may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more
local type of market.

Bonds rated AAA are judged by Duff to be of the highest credit quality with
negligible risk factors; only slightly more than U.S. Treasury debt. Bonds rated
AA are judged by Duff to be of high credit quality with strong protection
factors. Risk is modest but may vary slightly from time to time because of
economic conditions.

Obligations rated AAA by IBCA have the lowest expectation of investment
risk. Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly. Obligations for which there
is a very low expectation of investment risk are rated AA by IBCA. Capacity for
timely repayment of principal and interest is substantial. Adverse changes in
business, economic or financial conditions may increase investment risk albeit
not very significantly.

INTERNATIONAL AND U.S. BANK RATINGS

An IBCA bank rating represents IBCA's current assessment of the strength of
the bank and whether such bank would receive support should it experience
difficulties. In its assessment of a bank, IBCA uses a dual rating system
comprised of Legal Ratings and Individual Ratings. In addition, IBCA assigns
banks Long- and Short-Term Ratings as used in the corporate ratings discussed
above. Legal Ratings, which range in gradation from 1 through 5, address the
question of whether the bank would receive support provided by central banks or
shareholders if it experienced difficulties, and such ratings are considered by
IBCA to be a prime factor in its assessment of credit risk. Individual Ratings,
which range in gradations from A through E, represent IBCA's assessment of a
bank's economic merits and address the question of how the bank would be viewed
if it were entirely independent and could not rely on support from state
authorities or its owners.

In addition to its ratings of short-term obligations, BankWatch assigns a
rating to each issuer it rates, in gradations of A through E. BankWatch examines
all segments of the organization, including, where applicable, the holding
company, member banks or associations, and other subsidiaries. In those
instances where financial disclosure is incomplete or untimely, a qualified
rating (QR) is assigned to the institution. BankWatch also assigns, in the case
of foreign banks, a country rating which represents an assessment of the overall
political and economic stability of the country in which the bank is domiciled.

<PAGE>

FINANCIAL STATEMENTS

The Portfolios' Annual Report to Shareholders for the fiscal year ended
December 31, 1996 is a separate document supplied with this Statement of
Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing therein are incorporated by reference
in this Statement of Additional Information.

<PAGE>

<PAGE>
PROSPECTUS
April 30, 1997

[LOGO]

THE INFINITY MUTUAL FUNDS, INC.
Correspondent Cash Reserves Money Market Portfolio
Correspondent Cash Reserves Tax Free Money Market Portfolio
- ------------------------------------------------------------------------------

The Infinity Mutual Funds, Inc. (the "Fund") is an open-end, management
investment company, known as a series fund. By this Prospectus, the Fund is
offering shares of two diversified money market portfolios (the "Portfolios"),
each with a different investment objective:

- - The CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO (the "Money Market
Portfolio") seeks to provide investors with as high a level of current income
as is consistent with the preservation of capital and the maintenance of
liquidity. The Money Market Portfolio invests in a diversified portfolio of
short-term money market obligations.

- - The CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO (the "Tax
Free Money Market Portfolio") seeks to provide investors with as high a level
of current income exempt from Federal income tax as is consistent with the
preservation of capital and the maintenance of liquidity. The Tax Free Money
Market Portfolio invests in a diversified portfolio of short-term Municipal
Obligations (as defined herein).

Shares are offered only to clients of certain securities dealers that have
entered into clearing arrangements with Correspondent Services Corporation
[CSC], a wholly-owned subsidiary of PaineWebber Incorporated ("PaineWebber").
You can invest, reinvest or redeem shares at any time without charge or penalty
imposed by the Fund.

Mitchell Hutchins Asset Management Inc. (the "Adviser"), a wholly-owned
subsidiary of PaineWebber, is each Portfolio's investment adviser.

BISYS Fund Services Limited Partnership ("BISYS") serves as each
Portfolio's administrator and distributor.

This Prospectus sets forth concisely information about the Fund and the
Portfolios that an investor should know before investing. It should be read and
retained for future reference.

The Statement of Additional Information, dated April 30, 1997, which may be
revised from time to time, provides a further discussion of certain areas in
this Prospectus and other matters which may be of interest to some investors. It
has been filed with the Securities and Exchange Commission and is incorporated
herein by reference. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund and
Portfolios. For a free copy of the Statement of Additional Information, write to
the Fund at 3435 Stelzer Road, Columbus, Ohio 43219-8020, contact your sales
representative or call 1-800-442-3809.

---------------------

PORTFOLIO SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR ENDORSED OR
GUARANTEED BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENTAL
AGENCY. PORTFOLIO SHARES INVOLVE CERTAIN INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
- -------------------------------------------------------------------------------

TABLE OF CONTENTS
PAGE
------
Expense Summary............................................. 2
Financial Highlights........................................ 3
Yield Information........................................... 5
Description of the Portfolios............................... 5
Management of the Portfolios................................ 9
How to Buy Shares........................................... 11
How to Redeem Shares........................................ 13
Dividends, Distributions and Taxes.......................... 14
General Information......................................... 16
Appendix.................................................... A-1

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<PAGE>
EXPENSE SUMMARY

(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)

TAX FREE MONEY
MONEY MARKET MARKET
PORTFOLIO PORTFOLIO
-------------- --------------
Management Fees.............................. .10% .10%
12b-1 Fees................................... .60% .60%
Other Expenses (net of fee waivers).......... .18% .04%

Total Operating Expenses (net of fee waivers) .88% .74%

EXAMPLE:

You would pay the following expenses on 1 Year $ 9 $ 8
a $1,000 investment, assuming (1) 5% 3 Years $ 28 $ 24
annual return and (2) redemption at 5 Years $ 49 $ 41
the end of each time period: 10 Years $108 $ 92

- ------------------------------------------------------------------------------

THE AMOUNTS LISTED IN THE EXAMPLE SHOULD NOT BE CONSIDERED AS
REPRESENTATIVE OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE INDICATED. MOREOVER, WHILE THE EXAMPLE ASSUMES A 5% ANNUAL
RETURN, EACH PORTFOLIO'S ACTUAL PERFORMANCE WILL VARY AND MAY RESULT IN AN
ACTUAL RETURN GREATER OR LESS THAN 5%.

- --------------------------------------------------------------------------------

The purpose of the foregoing table is to assist you in understanding the
costs and expenses borne by a Portfolio, the payment of which will reduce
investors' annual return. The expenses noted above, without fee waivers, would
be: Other Expenses -- .31% and Total Operating Expenses -- 1.01% for the Money
Market Portfolio; and Other Expenses -- .50% and Total Operating Expenses --
1.20% for the Tax Free Money Market Portfolio. With respect to the Tax Free
Money Market Portfolio, Other Expenses are based on estimated amounts for the
current fiscal year. The information in the foregoing table does not reflect any
other fee waivers or expense reimbursement arrangements that were in effect for
the Portfolios during the last fiscal year or may be in effect for either
Portfolio during the current fiscal year. Certain Securities Firms (as defined
below) may charge their clients direct fees for effecting transactions in
Portfolio shares. See "How to Buy Shares." Long-term investors could pay more in
12b-1 fees than the economic equivalent of paying a front-end sales charge. For
a further description of the various costs and expenses incurred in a
Portfolio's operation, see "Management of the Portfolios."

FINANCIAL HIGHLIGHTS

Contained below for each Portfolio is per share operating performance data
for a share of common stock outstanding, total investment return, ratios to
average net assets and other supplemental data for each period indicated. The
information in the tables has been audited by KPMG Peat Marwick LLP, the
Portfolios' independent auditors. Additional financial data, related notes and
report of independent auditors accompany the Statement of Additional
Information, which is available upon request.

CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO*

YEAR ENDED DECEMBER 31, PERIOD ENDED
-------------------------------------------------------- DECEMBER 31,
1996 1995 1994 1993 1992 1991**
------------ -------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000 $ 1.0000 $ 1.0000
------------ -------- -------- -------- -------- -------------
Income from investment operations:
Net investment income................. 0.0462 0.0512 0.0340 0.0245 0.0306 0.0310
Net realized gains (losses) on
securities tranactions.............. 0.0005 0.0011 (0.0024) (0.0001) -- --
------------ -------- -------- -------- -------- -------------
Total income from investment
operations.......................... 0.0467 0.0523 0.0316 0.0244 0.0306 0.0310
------------ -------- -------- -------- -------- -------------
Dividends from net investment income.... (0.0462) (0.0512) (0.0340) (0.0245) (0.0306) (0.0310)
------------ -------- -------- -------- -------- -------------
Net change in net asset value........... 0.0005 0.0011 (0.0024) (0.0001) -- --
------------ -------- -------- -------- -------- -------------
Net Asset Value, End of Period.......... $ 0.9991 $ 0.9986 $ 0.9975 $ 0.9999 $ 1.0000 $ 1.0000
============ ======== ========= ========= ======== =============
Total Return............................ 4.72% 5.24% 3.45% 2.48% 3.11% 5.07%(a)
Ratios/Supplemental Data:
Net assets, end of period (000's)..... $ 1,007,265 $779,011 $458,092 $331,210 $267,895 $192,992
Ratio of expenses to average net
assets.............................. 0.88% 0.85% 0.94% 1.02% 1.12% 0.83%(b)
Ratio of net investment income to
average net assets.................. 4.65% 5.14% 3.47% 2.44% 3.01% 4.99%(b)
Ratio of expenses to average net
assets***........................... 1.01%(c) 1.03% 1.12% 1.20% 1.35% 1.16%(b)
Ratio of net investment income to
average net assets***............... 4.53% 4.96% 3.29% 2.26% 2.78% 4.66%(b)

- ------------------------------
* Prior to December 31, 1996, the Money Market Portfolio offered two classes
of shares--Retail Shares and Institutional Shares. The information in the
table is for the Portfolio's Retail Shares.
** For the period May 20, 1991 (commencement of operations) through December
31, 1991.
*** During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(a) Total return is not annualized, as it may not be representative of the total
return for the year.
(b) Annualized.
(c) During the year ended December 31, 1996, the Portfolio received credits from
its custodian for interest earned on uninvested cash balances which were
used to offset custodian fees. If such credits had not occurred, the expense
ratio would have been as indicated. The ratio of net investment income was
not affected.
</TABLE>

<PAGE>
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO

FOR THE PERIOD
FROM OCTOBER 7,
1996 THROUGH
DECEMBER 31, 1996*
Net Asset Value, Beginning of Period.............. $ 1.0000
--------------
Income from investment operations:
Net investment income........................... 0.0100
--------------
Net income from investment operations........... 0.0100
--------------
Dividends from net investment income.............. (0.0100)
--------------
Net change in net asset value..................... 0.0000
--------------
Net Asset Value, End of Period.................... $ 1.0000
==============
Total Return...................................... 0.66%(a)
Ratios/Supplemental Data:
Net assets, end of period (000's)............... $ 80,409
Ratio of expenses to average net assets......... 0.74%(b)
Ratio of net investment income to average net
assets........................................ 2.80%(b)
Ratio of expenses to average net assets**....... 1.20%(b)(c)
Ratio of net investment income to average net
assets**...................................... 2.34%(b)

- ------------------------------
* Period from commencement of operations.
** During the period, certain fees and expenses were voluntarily waived and/or
reimbursed. If such voluntary reductions and/or reimbursements had not
occurred, the ratios would have been as indicated.
(a) Not annualized.
(b) Annualized.
(c) During the period ended December 31, 1996, the Portfolio received credits
from its custodian for interest earned on uninvested cash balances which
were used to offset custodian fees. If such credits had not occurred, the
expense ratio would have been as indicated. The ratio of net investment
income was not affected.

YIELD INFORMATION

From time to time, each Portfolio will advertise its yield and effective
yield. Both yield figures are based on historical earnings and are not intended
to indicate future performance. It can be expected that these yields will
fluctuate substantially. The yield of a Portfolio refers to the income generated
by an investment in the Portfolio over a seven-day period (which period will be
stated in the advertisement). This income is then annualized. That is, the
amount of income generated by the investment during that week is assumed to be
generated each week over a 52-week period and is shown as a percentage of the
investment. The effective yield is calculated similarly but, when annualized,
the income earned by an investment in the Portfolio is assumed to be reinvested.
The effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. A Portfolio's yield and
effective yield may reflect absorbed expenses pursuant to any undertaking that
may be in effect.

With respect to the Tax Free Money Market Portfolio, tax equivalent yield
is calculated by determining the pre-tax yield which, after being taxed at a
stated rate, would be equivalent to a stated yield or effective yield calculated
as described above.

Yield information is useful in reviewing a Portfolio's performance, but
because yields will fluctuate, under certain conditions such information may not
provide a basis for comparison with domestic bank deposits, other investments
which pay a fixed yield for a stated period of time, or other investment
companies which may use a different method of computing yield.

Comparative performance information may be used from time to time in
advertising or marketing each Portfolio's shares, including data from Lipper
Analytical Services, Inc., Bank Rate Monitor-TM-, IBC's Money Fund Report-TM-,
Morningstar, Inc., other industry publications and national financial
publications, including MONEY, FORBES, BARRON'S, THE WALL STREET JOURNAL and THE
NEW YORK TIMES, or local or regional publications.

DESCRIPTION OF THE PORTFOLIOS

INVESTMENT OBJECTIVE

Each Portfolio seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and the maintenance of
liquidity and, in the case of the Tax Free Money Market Portfolio, exempt from
Federal income tax. Each Portfolio's investment objective cannot be changed
without approval by the holders of a majority (as defined in the Investment
Company Act of 1940, as amended (the "1940 Act")) of such Portfolio's
outstanding voting shares. There can be no assurance that each Portfolio's
investment objective will be achieved. Securities in which each Portfolio
invests may not earn as high a level of current income as long-term or lower
quality securities which generally have less liquidity, greater market risk and
more fluctuation in market value.

MANAGEMENT POLICIES

Each Portfolio seeks to maintain a net asset value of $1.00 per share for
purchases and redemptions. To do so, the Fund uses the amortized cost method of
valuing each Portfolio's securities pursuant to Rule 2a-7 under the 1940 Act,
which includes various maturity, quality and diversification requirements,
certain of which are summarized below.

In accordance with Rule 2a-7, each Portfolio is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less, purchase only
instruments having remaining maturities of 397 days or less and invest only in
U.S. dollar denominated securities determined in accordance with procedures
established by the Board of Directors to present minimal credit risks and which
are rated in one of the two highest rating categories for debt obligations by at
least two nationally recognized statistical rating organizations ("NRSRO") (or
one NRSRO if the instrument was rated by only one such organization) or, if
unrated, are of comparable quality as determined in accordance with procedures
established by the Board of Directors. The Board of Directors has delegated to
the Adviser the day-to-day operations of each Portfolio; however, the Board of
Directors retains ultimate responsibility for compliance with Rule 2a-7 under
the 1940 Act. The NRSROs currently rating instruments of the type each Portfolio
may purchase are Moody's Investors Service, Inc., Standard & Poor's Ratings
Group, Duff & Phelps Credit Rating Co., Fitch Investors Service, L.P., IBCA
Limited and IBCA Inc., and Thomson BankWatch, Inc. and their rating criteria are
described in the "Appendix" to the Statement of Additional Information. For
further information regarding the amortized cost method of valuing securities,
see "Determination of Net Asset Value" in the Statement of Additional
Information. There can be no assurance that each Portfolio will be able to
maintain a stable net asset value of $1.00 per share.

- The MONEY MARKET PORTFOLIO invests in U.S. dollar denominated short-term
money market obligations, including securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities, certificates of deposit, time
deposits, bankers' acceptances and other short-term obligations issued by
domestic banks, foreign branches of domestic banks, foreign subsidiaries of
domestic banks, and domestic and foreign branches of foreign banks, repurchase
agreements, asset-backed securities, and high quality domestic and foreign
commercial paper and other high quality short-term corporate obligations, such
as floating or variable rate U.S. dollar denominated demand notes and bonds. The
Money Market Portfolio invests in U.S. dollar denominated obligations issued or
guaranteed by one or more foreign governments or any of their political
subdivisions, agencies or instrumentalities, including obligations of
supranational entities. See "Appendix -- Portfolio Securities." The Money Market
Portfolio also may lend securities from its portfolio and enter into reverse
repurchase agreements. See "Appendix -- Investment Practices." During normal
market conditions, at least 25% of the Money Market Portfolio's total assets
will be invested in domestic and/or foreign bank obligations. See "Investment
Considerations and Risk Factors" below.

- The TAX FREE MONEY MARKET PORTFOLIO invests at least 80% of the value of
its net assets (except when maintaining a temporary defensive position) in
Municipal Obligations. Municipal Obligations are debt obligations issued by
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities, or
multi-state agencies or authorities, the interest from which is, in the opinion
of bond counsel to the issuer, exempt from Federal income tax. See "Appendix --
Portfolio Securities."

From time to time, the Tax Free Money Market Portfolio may invest more than
25% of the value of its total assets in industrial development bonds which,
although issued by industrial development authorities, may be backed only by the
assets and revenues of the non-governmental users. Interest on Municipal
Obligations (including certain industrial development bonds) which are specified
private activity bonds, as defined in the Internal Revenue Code of 1986, as
amended (the "Code"), issued after August 7, 1986, while exempt from Federal
income tax, is a preference item for the purpose of the alternative minimum tax.
Where a regulated investment company receives such interest, a proportionate
share of any exempt-interest dividend paid by the investment company may be
treated as such a preference item to shareholders. The Tax Free Money Market
Portfolio will invest no more than 20% of the value of its net assets in
Municipal Obligations the interest from which gives rise to a preference item
for the purpose of the alternative minimum tax and, except for temporary
defensive purposes, in other investments subject to Federal income tax.

From time to time, on a temporary basis other than for temporary defensive
purposes (but not to exceed 20% of the value of the Tax Free Money Market
Portfolio's net assets) or for temporary defensive purposes, the Tax Free Money
Market Portfolio may invest in taxable money market instruments of the type in
which the Money Market Portfolio may invest. Dividends paid by the Tax Free
Money Market Portfolio that are attributable to income earned by it from these
securities will be taxable to investors. See "Dividends, Distributions and
Taxes." If the Tax Free Money Market Portfolio purchases taxable money market
instruments the Fund will value them using the amortized cost method and comply
with the provisions of Rule 2a-7 relating to purchases of taxable instruments.
Under normal market conditions, the Fund anticipates that not more than 5% of
the value of the Tax Free Money Market Portfolio's total assets will be invested
in any one category of these securities. See "Appendix -- Portfolio Securities."

INVESTMENT CONSIDERATIONS AND RISK FACTORS

GENERAL. Each Portfolio will attempt to increase yields by trading to take
advantage of short-term market variations. This policy is expected to result in
high portfolio turnover but should not adversely affect the Portfolios since
usually neither Portfolio will pay brokerage commissions on purchases of
short-term debt obligations. The value of the securities held by each Portfolio
will vary inversely to changes in prevailing interest rates. Thus, if interest
rates have increased from the time a security was purchased, such security, if
sold, might be sold at a price less than its cost. Similarly, if interest rates
have declined from the time a security was purchased, such security, if sold,
might be sold at a price greater than its purchase cost. In either instance, if
the security was purchased at face value and held to maturity, no gain or loss
will be realized.

BANK SECURITIES. (Money Market Portfolio only) To the extent the Money
Market Portfolio's investments are concentrated in the banking industry, it will
have correspondingly greater exposure to the risk factors which are
characteristic of such investments. Sustained increases in interest rates can
adversely affect the availability or liquidity and cost of capital funds for
lending activities, and a deterioration in general economic conditions could
increase the exposure to credit losses. In addition, the value of and the
investment return on the Money Market Portfolio's shares will be affected by
economic or regulatory developments in or related to the banking industry, and
competition within the banking industry as well as with other types of financial
institutions. The Money Market Portfolio, however, will seek to minimize its
exposure to such risks by investing only in debt securities which are determined
to be of high quality.

FOREIGN SECURITIES. (Money Market Portfolio only) Since the Money Market
Portfolio may invest in securities issued by foreign governments and any of
their political subdivisions, agencies or instrumentalities, and by foreign
branches of domestic banks, foreign subsidiaries of domestic banks, domestic and
foreign branches of foreign banks, and commercial paper issued by foreign
issuers, it may be subject to additional investment risks with respect to those
securities that are different in some respects from those incurred by a fund
which invests only in debt obligations of U.S. domestic issuers. Such risks
include possible adverse political and economic developments, seizure or
nationalization of foreign deposits, or the adoption of governmental
restrictions which might adversely affect or restrict the payment of principal
and interest on these securities to investors located outside the country of the
issuer.

INVESTING IN MUNICIPAL OBLIGATIONS. (Tax Free Money Market Portfolio only)
The Tax Free Money Market Portfolio may invest more than 25% of the value of its
total assets in Municipal Obligations which are related in such a way that an
economic, business or political development or change affecting one such
security also would affect the other securities; for example, securities the
interest upon which is paid from revenues of similar types of projects, or
securities whose issuers are located in the same state. As a result, the Tax
Free Money Market Portfolio may be subject to greater risk as compared to a fund
that does not follow this practice.

Certain municipal lease/purchase obligations in which the Tax Free Money
Market Portfolio may invest may contain "non-appropriation" clauses which
provide that the municipality has no obligation to make lease payments in future
years unless money is appropriated for such purpose on a yearly basis. Although
"non-appropriation" lease/purchase obligations are secured by the leased
property, disposition of the leased property in the event of foreclosure might
prove difficult. In evaluating the credit quality of a municipal lease/purchase
obligation that is unrated, the Adviser will consider, on an ongoing basis, a
number of factors including the likelihood that the issuing municipality will
discontinue appropriating funding for the leased property.

Certain provisions in the Code relating to the issuance of Municipal
Obligations may reduce the volume of Municipal Obligations qualifying for
Federal tax exemption. One effect of these provisions could be to increase the
cost of the Municipal Obligations available for purchase by the Portfolio and
thus reduce available yield. Shareholders should consult their tax advisers
concerning the effect of these provisions on an investment in the Tax Free Money
Market Portfolio. Proposals that may restrict or eliminate the income tax
exemption for interest on Municipal Obligations may be introduced in the future.
If any such proposal were enacted that would reduce the availability of
Municipal Obligations for investment by the Tax Free Money Market Portfolio so
as to adversely affect Portfolio shareholders, the Portfolio would reevaluate
its investment objective and policies and submit possible changes in the
Portfolio's structure to shareholders for their consideration. If legislation
were enacted that would treat a type of Municipal Obligation as taxable, the Tax
Free Money Market Portfolio would treat such security as a permissible taxable
investment within the applicable limits set forth herein.

SIMULTANEOUS INVESTMENTS. Investment decisions for each Portfolio are made
independently from those of the Fund's other portfolios and other investment
companies or accounts managed by the Adviser. However, if such other entities
desire to invest in, or dispose of, the same securities as a Portfolio,
available investments or opportunities for sales will be allocated equitably to
each of them. In some cases, this procedure may adversely affect the size of the
position obtained for or disposed of by a Portfolio or the price paid or
received by the Portfolio.

MANAGEMENT OF THE PORTFOLIOS

BOARD OF DIRECTORS

The business affairs of the Fund are managed under the general supervision
of its Board of Directors. The Portfolios' Statement of Additional Information
contains the name and general business experience of each Director.

INVESTMENT ADVISER

Mitchell Hutchins Asset Management Inc., located at 1285 Avenue of the
Americas, New York, New York 10019, serves as each Portfolio's investment
adviser. The Adviser is a wholly-owned subsidiary of PaineWebber organized in
May 1977. The Adviser is registered as a broker-dealer under the Securities
Exchange Act of 1934 and as an investment adviser under the Investment Advisers
Act of 1940. As of December 31, 1996, the Adviser served as adviser or
sub-adviser to 30 investment companies with 64 investment portfolios having
aggregate assets in excess of $ 43.9 billion.

The Adviser supervises and assists in the overall management of each
Portfolio's affairs under an Investment Advisory Agreement between the Adviser
and the Fund, subject to the authority of the Fund's Board of Directors in
accordance with Maryland law.

For the fiscal year ended December 31, 1996, the Money Market Portfolio
paid the Adviser a monthly advisory fee at the annual rate of .10 of 1% of the
value of the Money Market Portfolio's average daily net assets. Under the terms
of the Investment Advisory Agreement, the Tax Free Money Market Portfolio also
agreed to pay the Adviser a monthly fee at the annual rate of .10 of 1% of the
value of the Portfolio's average daily net assets. For the period October 7,
1996 (commencement of operations) through December 31, 1996, the Tax Free Money
Market Portfolio paid the Adviser a monthly advisory fee at the effective annual
rate of .05 of 1% of the value of the Tax Free Money Market Portfolio's average
daily net assets, pursuant to an undertaking by the Adviser.

In addition, under the terms of a Special Management Services Agreement
among the Fund, the Adviser and BISYS, each Portfolio has agreed to pay the
Adviser and BISYS each a monthly fee at the annual rate of .05 of 1% of the
value of the Portfolio's average daily net assets for certain services, other
than those provided pursuant to the Portfolios' Distribution Plan. These
services include developing and monitoring customized investor programs
including individual retirement accounts and other ERISA options, automatic
deposit and withdrawal programs and other programs requested by Securities Firms
(as defined below). For the fiscal year ended December 31, 1996, neither
Portfolio paid the Adviser or BISYS a fee pursuant to the Special Management
Services Agreement.

ADMINISTRATOR AND DISTRIBUTOR

BISYS Fund Services Limited Partnership, located at 3435 Stelzer Road,
Columbus, Ohio 43219-8001, serves as each Portfolio's administrator and
distributor. BISYS currently provides administrative or sub-administrative
services to, and distributes the shares of, other investment companies with over
$120 billion in assets. BISYS is a wholly-owned subsidiary of The BISYS Group,
Inc.

Under its Administration Agreement with the Fund, BISYS generally assists
in all aspects of the Fund's operations, other than providing investment advice,
subject to the authority of the Fund's Board of Directors in accordance with
Maryland law. In connection therewith, BISYS provides the Fund with office
facilities, personnel, and certain clerical and bookkeeping services (e.g.,
preparation of reports to shareholders and the Securities and Exchange
Commission and filing of Federal, state and local income tax returns) that are
not being furnished by The Bank of New York, the Fund's Custodian.

For the fiscal year ended December 31, 1996, the Money Market Portfolio
paid the Administrator a monthly administration fee at the annual rate of .10 of
1% of the value of the Money Market Portfolio's average daily net assets. Under
the terms of the Administration Agreement, the Tax Free Money Market Portfolio
also agreed to pay BISYS a monthly fee at the annual rate of .10 of 1% of the
value of the Portfolio's average daily net assets. For the period October 7,
1996 (commencement of operations) through December 31, 1996, no administration
fee was paid by the Tax Free Money Market Portfolio, pursuant to an undertaking
by BISYS.

As described above, under the terms of the Special Management Services
Agreement, each Portfolio also has agreed to pay BISYS a monthly fee at the
annual rate of .05 of 1% of the value of the Portfolio's average daily net
assets.

DISTRIBUTION PLAN

Under a distribution plan adopted by the Fund's Board of Directors pursuant
to Rule 12b-1 under the 1940 Act (the "Distribution Plan"), each Portfolio is
authorized to pay Correspondent Services Corporation [CSC] and correspondent
firms a monthly fee at the annual rate of up to .60 of 1% of the Portfolio's
average daily net assets represented by shares held in accounts serviced by
Correspondent Services Corporation [CSC] and such firms. Such fees are paid
pursuant to an agreement between the Fund and Correspondent Services Corporation
[CSC]. Such fees will be paid in respect of certain services provided by such
firms, including answering client inquiries regarding a Portfolio; assisting
clients in changing dividend options, account designations and addresses;
performing subaccounting; establishing and maintaining shareholder accounts and
records; processing purchase and redemption transactions; investing client cash
account balances automatically in Portfolio shares; providing periodic
statements showing a client's account balance and integrating such statements
with those of other transactions and balances in the client's other accounts
serviced by such firm; arranging for bank wires; and such other services as the
clients may request.

CUSTODIAN AND TRANSFER AGENT

The Bank of New York, 90 Washington Street, New York, New York 10286, is
the Fund's Custodian (the "Custodian"). BISYS Fund Services Ohio, Inc., an
affiliate of BISYS, located at 3435 Stelzer Road, Columbus, Ohio 43219-8001, is
the Fund's Transfer and Dividend Disbursing Agent (the "Transfer Agent").

EXPENSES

All expenses incurred in the operation of the Fund are borne by the Fund,
except to the extent specifically assumed by others. The expenses borne by the
Fund include: organizational costs, taxes, interest, brokerage fees and
commissions, if any, fees of Directors who are not officers, directors,
employees or holders of 5% or more of the outstanding voting securities of the
Adviser or BISYS, or any of their affiliates, Securities and Exchange Commission
fees, state Blue Sky qualification fees, advisory and administration fees,
charges of custodians, transfer and dividend disbursing agents' fees, certain
insurance premiums, industry association fees, auditing and legal expenses,
costs of maintaining corporate existence, costs of independent pricing services,
costs attributable to investor services (including, without limitation,
telephone and personnel expenses), costs of calculating the net asset value of
each Portfolio's shares, costs of shareholders' reports and corporate meetings,
costs of preparing and printing prospectuses and statements of additional
information for regulatory purposes and for distribution to existing
shareholders, and any extraordinary expenses. Expenses attributable to a
Portfolio are charged against the assets of the Portfolio; other expenses of the
Fund are allocated among the Fund's portfolios on the basis determined by the
Board of Directors, including, but not limited to, proportionately in relation
to the net assets of each portfolio.

HOW TO BUY SHARES

GENERAL

Shares may be purchased only by clients of certain securities dealers that
have entered into securities clearing arrangements with Correspondent Services
Corporation [CSC] (the "Securities Firms"). Such clients may include qualified
retirement plans, including pension and profit-sharing plans, whether
established by corporations, partnerships or self-employed individuals, and
individual retirement accounts ("Retirement Plans"). It is not recommended that
the Tax Free Money Market Portfolio be used as a vehicle for Keogh Plans, IRAs
or other qualified retirement plans, because such plans are otherwise entitled
to tax deferred benefits. Certificates representing shares of a Portfolio will
not be issued. The Fund reserves the right to reject any purchase order.

The minimum initial investment for Retirement Plans is $25. The Fund
requires no minimum initial or subsequent investment amounts for other
investors. Certain Securities Firms may impose minimum investment amounts for
purchases of Portfolio shares by their clients. You should consult your
Securities Firm in this regard.

PAYMENTS THROUGH SECURITIES FIRMS

ALL ORDERS MUST BE MADE THROUGH YOUR SECURITIES FIRM. The Securities Firm
will transmit your payment to the Fund and will supply the Fund with the
required information. It is your Securities Firm's responsibility to transmit
your order properly on a timely basis.

WIRE ORDERS

If you have opened a Portfolio account, you may make subsequent
purchases by wire. Information on remitting funds in this manner may be obtained
from your Securities Firm. You should consult your Securities Firm, for
information on any fees that may be charged directly for wires.

TERMS OF PURCHASE

If your purchase order is received by the Transfer Agent by 12:00 noon,
Eastern time, on a business day (which, as used herein, shall include each day
that the New York Stock Exchange and the Fund's Custodian are open for
business), and Federal Funds are received by the Transfer Agent by 4:00 p.m.,
Eastern time, on that day, shares will be purchased as of 12:00 noon, Eastern
time, on such business day. If your purchase order is received after 12:00 noon,
Eastern time, on a given day, or Federal Funds are received after 4:00 p.m.,
Eastern time, on such day, shares will be purchased as of 12:00 noon, Eastern
time, on the next business day.

Each Portfolio's net asset value per share is determined as of 12:00 noon,
Eastern time, on each business day. Net asset value per share is computed by
dividing the value of the Portfolio's net assets (i.e., the value of its assets
less liabilities) by the total number of its shares outstanding. See
"Determination of Net Asset Value" in the Statement of Additional Information.

HOW TO REDEEM SHARES

GENERAL

You may request redemption of your shares at any time through your
Securities Firm. Retirement Plan should consult their tax advisers regarding
possible adverse tax consequences in connection with the redemption of shares.
Redemption requests may be made as described below. When a request is received
in proper form, the Fund will redeem the shares at the next determined net asset
value.

The Fund understands that, if you cease to be a client of a Securities
Firm, or if your Securities Firm's clearing arrangement with Correspondent
Services Corporation [CSC] is discontinued, the Securities Firm will cancel your
Fund account and request the Transfer Agent to remit the proceeds of your
redeemed shares, together with all accrued and unpaid dividends to which you are
entitled. You should consult your Securities Firm in this regard.

The Fund reserves the right to redeem your account at its option upon
not less than 45 days' written notice if your account's net asset value is $500
or less, for reasons other than market conditions, and remains so during the
notice period. Certain Securities Firms may impose, with respect to their
clients' investments in a Portfolio, a minimum account balance which is higher
than that specified above.

PROCEDURES

REDEMPTION BY CHECK. If you desire to use check redemption, you should
consult your Securities Firm to determine its availability. At your Securities
Firm's request, the Transfer Agent will provide you with redemption checks if
you have a $1,000 minimum account. These checks may be made payable to the order
of any person in an amount not less than $100. The payee of the check may cash
or deposit the check. When a check is presented to the Transfer Agent for
payment, the Transfer Agent will present the check to the Fund as authority to
redeem a sufficient number of full and fractional shares in your account to
cover the amount of the check. You continue earning daily dividends until the
check is cleared. There currently is no charge for the use of checks; however,
the Transfer Agent may impose a charge for stopping payment of a check upon your
request, or if the check cannot be honored due to insufficient funds or other
valid reason. The Fund or the Transfer Agent may modify or terminate the check
redemption privilege at any time upon notice to shareholders.

Retirement Plans should contact their Securities Firms for information on
check redemption services.

REPURCHASE THROUGH SECURITIES FIRMS. The Fund will repurchase shares
through Securities Firms. The Fund ordinarily will accept orders to repurchase
shares by wire or telephone from Securities Firms for their customers at the net
asset value next computed after receipt of the order from the Securities Firm,
provided that such request for repurchase is received from the Securities Firm
prior to 12:00 noon, Eastern time, on any business day. It is your Securities
Firm's responsibility to transmit your repurchase order properly on a timely
basis.

These repurchase arrangements are for the convenience of shareholders and
do not involve a charge by the Fund; however, Securities Firms may impose a
charge on the shareholder for transmitting the notice of repurchase to the Fund.
The Fund reserves the right to reject any order for repurchases through a
Securities Firm, but it may not reject other properly submitted requests for
redemption as described herein. The Fund promptly will notify the Securities
Firm of any rejection of a repurchase. For shareholders repurchasing through
their Securities Firm, payments will be made by the Transfer Agent to the
Securities Firm.

AUTOMATIC WITHDRAWAL PLAN. If you desire to participate in the Automatic
Withdrawal Plan, you should consult your Securities Firm to determine its
availability and any conditions which may be imposed on its use. The Automatic
Withdrawal Plan permits you to request withdrawal of a specified dollar amount
(minimum of $50) on either a monthly, quarterly, semi-annual or annual basis if
you have a $1,000 minimum account. The automatic withdrawal will be made on the
first or fifteenth day, at your option, of the period selected. Redemption
proceeds will be on deposit in your designated account at an Automated Clearing
House member bank ordinarily within two days following redemption. To
participate in the Automatic Withdrawal Plan, you must supply your Securities
Firm with the necessary information. Your participation in the Automatic
Withdrawal Plan may be ended at any time by you, your Securities Firm, the Fund
or the Transfer Agent.

Retirement Plan participants who are eligible for distributions from their
Retirement Plan may participate in the Automatic Withdrawal Plan. The Automatic
Withdrawal Plan, however, is not available to Retirement Plan participants who
have elected to have income taxes withheld from their Retirement Plan
distributions. Retirement Plan participants should consult the administrator,
trustee or custodian of their Retirement Plan concerning eligibility to
participate in the Automatic Withdrawal Plan and the timing and consequences of
distributions from a Retirement Plan. Retirement Plans should contact their
Securities Firms for further information on the Automatic Withdrawal Plan.

AUTOMATIC REDEMPTION. Correspondent Services Corporation [CSC] carries
securities accounts and performs clearing services for the Securities Firms and
has instituted an automatic redemption procedure applicable to Portfolio
shareholders. This procedure may be used to satisfy amounts due from you as a
result of purchases of securities or other transactions in your securities
account. Under this procedure, unless you notify your Securities Firm to the
contrary, your securities account will be scanned each business day prior to
12:00 noon, Eastern time, and after application of any cash balances in the
account, a sufficient number of Portfolio shares may be redeemed at the 12:00
noon, Eastern time, pricing that day to satisfy any amounts for which you are
obligated to make payment to your Securities Firm. Redemptions will be effected
on the business day preceding the date you are obligated to make such payment,
and your Securities Firm will receive the redemption proceeds on the day
following the redemption date.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio declares dividends from net investment income on each day
the Portfolio is open for business. Dividends usually are paid on or about the
fifteenth day of each month, and are automatically reinvested in additional
shares at net asset value or, at your option, paid in cash. Each Portfolio's
earnings for Saturdays, Sundays and holidays are declared as dividends on the
preceding business day. Shares begin accruing dividends on the day the purchase
order is received in proper form by the Transfer Agent, if received by 12:00
noon, Eastern time, on such day, and continue to earn dividends through the day
before a redemption order for such shares is processed by the Transfer Agent. If
you redeem all shares in your account at any time during the month, all
dividends to which you are entitled will be paid to you along with the proceeds
of the redemption.

Distributions from net realized securities gains, if any, are declared and
paid once a year, but a Portfolio may make distributions on a more frequent
basis to comply with the distribution requirements of the Code, in all events in
a manner consistent with the provisions of the 1940 Act. Dividends and
distributions ordinarily are reinvested in additional shares of the Portfolio
from which they were paid at net asset value. You may elect to receive dividends
and distributions in cash by contacting your Securities Firm. Dividends and
distributions paid in cash to Retirement Plans which are distributed to such
Plans' participants, however, may be subject to additional tax. Retirement Plans
should consult their tax advisers concerning possible tax consequences of
contributions to or distributions from Retirement Plans. All expenses are
accrued daily and deducted before declaration of dividends to investors.

If you elect to receive distributions in cash and your distribution checks
(1) are returned to the Fund marked "undeliverable" or (2) remain uncashed for
six months, your cash election will be changed automatically and your future
dividend and capital gains distributions will be reinvested in Portfolio shares
at the net asset value determined as of the date of payment of the distribution.
In addition, any such undeliverable checks or checks that remain uncashed for
six months will be canceled and will be reinvested in shares of the Portfolio
from which they were paid at the net asset value determined as of the date of
cancellation.

Dividends paid by the Money Market Portfolio derived from interest and
dividends paid by the Tax Free Money Market Portfolio derived from taxable
investments, together with distributions from any net realized short-term
securities gains, generally are taxable to investors as ordinary income, whether
received in cash or reinvested in additional Portfolio shares. Distributions
from net realized long-term securities gains, if any, generally are taxable as
long-term capital gains regardless of how long shareholders have held their
shares and whether such distributions are received in cash or reinvested in
additional Portfolio shares. Dividends and distributions may be subject to
certain state and local taxes. No dividend will qualify for the
dividends-received deduction allowable to certain corporations.

Except for dividends from taxable investments, the Fund anticipates that
substantially all dividends paid by the Tax Free Money Market Portfolio will not
be subject to Federal income tax. Although all or a substantial portion of the
dividends paid by the Tax Free Money Market Portfolio may be excluded by
shareholders of the Portfolio from their gross income for Federal income tax
purposes, the Portfolio may purchase specified private activity bonds, the
interest from which may be (i) a preference item for purposes of the alternative
minimum tax, or (ii) a factor in determining the extent to which the Social
Security benefits of a beneficial holder of the Portfolio's shares are taxable.
If the Tax Free Money Market Portfolio purchases such securities, the portion of
its dividends related thereto will not necessarily be tax exempt to a beneficial
holder of the Portfolio's shares who is subject to the alternative minimum tax
and/or tax on Social Security benefits and may cause such investor to be subject
to such taxes.

Taxable dividends derived from net investment income and distributions from
net realized short-term securities gains paid by a Portfolio to a foreign
investor generally are subject to U.S. nonresident withholding taxes at the rate
of 30%, unless the foreign investor claims the benefit of a lower rate specified
in a tax treaty. Distributions from net realized long-term securities gains paid
by a Portfolio to a foreign investor generally will not be subject to U.S.
nonresident withholding tax. However, such distributions may be subject to
backup withholding, as described below, unless the foreign investor certifies
his non-U.S. residency status.

Federal regulations generally require the Fund to withhold ("backup
withholding") and remit to the U.S. Treasury 31% of dividends and distributions
from net realized securities gains of a Portfolio paid to a shareholder if such
shareholder fails to certify either that the Taxpayer Identification Number
furnished in connection with opening an account is correct, or that such
shareholder has not received notice from the Internal Revenue Service of being
subject to backup withholding as a result of a failure to properly report
taxable dividend or interest income on a Federal income tax return. Furthermore,
the Internal Revenue Service may notify the Fund to institute backup withholding
if the Internal Revenue Service determines a shareholder's Taxpayer
Identification Number is incorrect or if a shareholder has failed to properly
report taxable dividend and interest income on a Federal income tax return.

Notice as to the tax status of your dividends and distributions is mailed
to you annually from your Securities Firm. You also will be sent periodic
summaries of your account which will include information as to dividends and
distributions from securities gains, if any, paid during the year. For the Tax
Free Money Market Portfolio, these statements will set forth the dollar amount
of income exempt from Federal tax and the dollar amount, if any, subject to
Federal tax. These dollar amounts will vary depending on the size and length of
time of the investor's investment in the Tax Free Money Market Portfolio. If the
Tax Free Money Market Portfolio pays dividends derived from taxable income, it
intends to designate as taxable the same percentage of the day's dividend as the
actual taxable income earned on that day bears to total income earned on that
day. Thus, the percentage of the dividend designated as taxable, if any, may
vary from day to day.

The Adviser believes that each Portfolio has qualified for the fiscal year
ended December 31, 1996 as a "regulated investment company" under the Code. Each
Portfolio intends to continue to so qualify so long as such qualification is in
the best interests of its shareholders. Qualification relieves the Portfolio of
any liability for Federal income tax to the extent its earnings are distributed
in accordance with applicable provisions of the Code. The Code subjects
regulated investment companies, such as the Portfolios, to a non-deductible 4%
excise tax to the extent that such investment companies do not distribute a very
substantial portion of their taxable investment income and capital gains,
generally determined on a calendar year basis.

You should consult your tax adviser regarding specific questions as to
Federal, state or local taxes.

GENERAL INFORMATION

The Fund was incorporated under Maryland law on March 6, 1990, and
commenced operations on August 28, 1990. The Fund is authorized to issue 12
billion 500 million shares of Common Stock (with 2 billion 500 million allocated
to the Money Market Portfolio and 1 billion allocated to the Tax Free Money
Market Portfolio), par value $.001 per share. Each share has one vote.

The Fund is a "series fund," which is a mutual fund divided into separate
portfolios, each of which is treated as a separate entity for certain matters
under the 1940 Act and for other purposes. A shareholder of one portfolio is not
deemed to be a shareholder of any other portfolio. For certain matters Fund
shareholders vote together as a group; as to others they vote separately by
portfolio. By this Prospectus, shares of the Money Market Portfolio and Tax Free
Money Market Portfolio are being offered. From time to time, other portfolios
may be established and sold pursuant to other offering documents.

To date, 14 portfolios of shares have been authorized. The other portfolios
are not being offered by this Prospectus. All consideration received by the Fund
for shares of one of the portfolios and all assets in which such consideration
is invested, belong to that portfolio (subject only to the rights of creditors
of the Fund) and will be subject to the liabilities related thereto. The income
and expenses attributable to one portfolio are treated separately from those of
the other portfolios.

The Transfer Agent maintains a record of your ownership. Your Securities
Firm, will send you confirmations and statements of account.

Shareholder inquiries may be made by writing to The Infinity Mutual Funds,
Inc., CCR Funds, P.O. Box 163879, Columbus, Ohio 43272-5099.

APPENDIX

PORTFOLIO SECURITIES

To the extent set forth above and except as noted below, each Portfolio may
invest in the following securities:

U.S. GOVERNMENT OBLIGATIONS. Each Portfolio may invest in securities issued
or guaranteed by the U.S. Government or its agencies or instrumentalities. Such
securities include U.S. Treasury securities, such as bills, notes, bonds and
certificates of indebtedness, which differ in their interest rates, maturities
and times of issuance, and issues of U.S. Government agencies and
instrumentalities established under the authority of an act of Congress. Some
obligations issued or guaranteed by U.S. Government agencies and
instrumentalities, for example, Government National Mortgage Association
pass-through certificates, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks, by the
right of the issuer to borrow from the Treasury; others, such as those issued by
the Federal National Mortgage Association, by discretionary authority of the
U.S. Government to purchase certain obligations of the agency or
instrumentality; and others, such as those issued by the Student Loan Marketing
Association, only by the credit of the agency or instrumentality. These
securities bear fixed, floating or variable rates of interest. Interest may
fluctuate based on generally recognized reference rates or the relationship of
rates. While the U.S. Government provides financial support to such U.S.
Government-sponsored agencies or instrumentalities, no assurance can be given
that it will always do so, since it is not so obligated by law. The Portfolio
will invest in such securities only when it is satisfied that the credit risk
with respect to the issuer is minimal.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES. The
Money Market Portfolio may invest in obligations issued or guaranteed by one or
more foreign governments or any of their political subdivisions, agencies or
instrumentalities that are determined by the Board of Directors to be of
comparable quality to the other obligations in which the Portfolio may invest.
Such securities also include debt obligations of supranational entities.
Supranational entities include international organizations designated or
supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Coal and Steel Community, the Asian
Development Bank and the InterAmerican Development Bank. The percentage of the
Portfolio's assets invested in securities issued by foreign governments will
vary depending on the relative yields of such securities, the economic and
financial markets of the countries in which the investments are made and the
interest rate climate of such countries. See "Description of the Portfolios --
Investment Considerations and Risk Factors."

CERTIFICATES OF DEPOSIT, TIME DEPOSITS AND BANKERS' ACCEPTANCES. The Money
Market Portfolio will, and, to a limited extent, the Tax Free Money Market
Portfolio may, invest in certificates of deposit, time deposits, bankers'
acceptances and other short-term obligations issued by domestic banks, foreign
branches of domestic banks, foreign subsidiaries of domestic banks, and domestic
and foreign branches of foreign banks. See "Description of the Portfolios --
Investment Considerations and Risk Factors." Certificates of deposit are
certificates representing the obligation of a bank to repay funds deposited with
it for a specified period of time. Time deposits are non-negotiable deposits
maintained in a bank for a specified period of time at a stated interest rate.
Bankers' acceptances are credit instruments evidencing the obligation of a bank
to pay a draft drawn on it by a customer. These instruments reflect the
obligation both of the bank and of the drawer to pay the face amount of the
instrument upon maturity. The other short-term obligations may include
uninsured, direct obligations bearing fixed, floating or variable rates of
interest.

REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements.
Repurchase agreements involve the acquisition by the Portfolio of an underlying
debt instrument, subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the instrument at a fixed price usually not more than one
week after its purchase. Certain costs may be incurred in connection with the
sale of the securities if the seller does not repurchase them in accordance with
the repurchase agreement. In addition, if bankruptcy proceedings are commenced
with respect to the seller of the securities, realization on the securities by
the Portfolio may be delayed or limited.

COMMERCIAL PAPER AND CORPORATE OBLIGATIONS. The Money Market Portfolio and,
to a limited extent, the Tax Free Money Market Portfolio may, invest in
commercial paper and other corporate obligations. Commercial paper consists of
short-term, unsecured promissory notes issued to finance short-term credit
needs. The commercial paper purchased by a Portfolio will consist only of direct
obligations issued by domestic and foreign entities. The other corporate
obligations in which each Portfolio may invest consist of high quality, U.S.
dollar denominated short-term bonds and notes (including variable amount master
demand notes) issued by domestic and foreign corporations.

MUNICIPAL OBLIGATIONS. The Tax Free Money Market Portfolio will invest in
Municipal Obligations. Municipal Obligations generally include debt obligations
issued to obtain funds for various public purposes as well as certain industrial
development bonds issued by or on behalf of public authorities. Municipal
Obligations are classified as general obligation bonds, revenue bonds and notes.
General obligation bonds are secured by the issuer's pledge of its faith, credit
and taxing power for the payment of principal and interest. Revenue bonds are
payable from the revenue derived from a particular facility or class of
facilities or, in some cases, from the proceeds of a special excise or other
specific revenue source, but not from the general taxing power. Industrial
development bonds, in most cases, are revenue bonds and generally do not carry
the pledge of the credit of the issuing municipality, but generally are
guaranteed by the corporate entity on whose behalf they are issued. Notes are
short-term instruments which are obligations of the issuing municipalities or
agencies and are sold in anticipation of a bond sale, collection of taxes or
receipt of other revenues. Municipal Obligations include municipal
lease/purchase agreements which are similar to installment purchase contracts
for property or equipment issued by municipalities. Municipal Obligations bear
fixed, floating or variable rates of interest. Certain Municipal Obligations are
subject to redemption at a date earlier than their stated maturity pursuant to
call options, which may be separated from the related Municipal Obligation and
purchased and sold separately.

TENDER OPTION BONDS. The Tax Free Money Market Portfolio may purchase
tender option bonds. A tender option bond is a Municipal Obligation (generally
held pursuant to a custodial arrangement) having a relatively long maturity and
bearing interest at a fixed rate substantially higher than prevailing short-term
tax exempt rates, that has been coupled with the agreement of a third party,
such as a bank, broker-dealer or other financial institution, pursuant to which
such institution grants the security holders the option, at periodic intervals,
to tender their securities to the institution and receive the face value
thereof. As consideration for providing the option, the financial institution
receives periodic fees equal to the difference between the Municipal
Obligation's fixed coupon rate and the rate, as determined by a remarketing or
similar agent at or near the commencement of such period, that would cause the
securities, coupled with the tender option, to trade at par on the date of such
determination. Thus, after payment of this fee, the security holder effectively
holds a demand obligation that bears interest at the prevailing short-term tax
exempt rate. The Adviser, on behalf of the Fund, will consider on an ongoing
basis the creditworthiness of the issuer of the underlying Municipal Obligation,
of any custodian and of the third party provider of the tender option. In
certain instances and for certain tender option bonds, the option may be
terminable in the event of a default in payment of principal or interest on the
underlying Municipal Obligations and for other reasons. The Tax Free Money
Market Portfolio will not invest more than 10% of the value of its net assets in
securities that are illiquid, which would include tender option bonds as to
which it cannot exercise the tender feature on not more than seven days' notice
if there is no secondary market available for these obligations.

STAND-BY COMMITMENTS. The Tax Free Money Market Portfolio may acquire
"stand-by commitments" with respect to Municipal Obligations held in its
portfolio. Under a stand-by commitment, the Tax Free Money Market Portfolio
obligates a broker, dealer or bank to repurchase, at the Fund's option,
specified securities at a specified price and, in this respect, stand-by
commitments are comparable to put options. The exercise of a stand-by commitment
therefore is subject to the ability of the seller to make payment on demand. The
Tax Free Money Market Portfolio will acquire stand-by commitments solely to
facilitate portfolio liquidity and does not intend to exercise its rights
thereunder for trading purposes. The Tax Free Money Market Portfolio may pay for
stand-by commitments if such action is deemed necessary, thus increasing to a
degree the cost of the underlying Municipal Obligation and similarly decreasing
such security's yield to investors.

FLOATING AND VARIABLE RATE OBLIGATIONS. Each Portfolio may purchase
floating and variable rate demand notes and bonds, which are obligations
ordinarily having stated maturities in excess of 397 days, but which permit the
holder to demand payment of principal at any time, or at specified intervals not
exceeding 397 days, in each case upon not more than 30 days' notice. Variable
rate demand notes include master demand notes which are obligations that permit
the Portfolio to invest fluctuating amounts, at varying rates of interest,
pursuant to direct arrangements between the Portfolio, as lender, and the
borrower. These obligations permit daily changes in the amounts borrowed.
Because these obligations are direct lending arrangements between the lender and
borrower, it is not contemplated that such instruments generally will be traded,
and there generally is no established secondary market for these obligations,
although they are redeemable at face value. Accordingly, where these obligations
are not secured by letters of credit or other credit support arrangements, the
Portfolio's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. These obligations include highly rated
certificates of participation in trusts secured by accounts receivable,
including trade receivables, and other assets. Such obligations frequently are
not rated by credit rating agencies and, if not so rated, the Portfolio may
invest in them only if the Adviser, acting upon delegated authority from, and
subject to ratification by, the Fund's Board of Directors, determines that at
the time of investment the obligations are of comparable quality to the other
obligations in which the Portfolio may invest. The Adviser, on behalf of the
Portfolio, will consider on an ongoing basis the creditworthiness of the issuers
of the floating and variable rate demand obligations held by the Portfolio. The
Portfolio will not invest more than 10% of the value of its net assets in
floating or variable rate demand obligations as to which it cannot exercise the
demand feature on not more than seven days' notice if the Adviser determines,
acting upon delegated authority from, and procedures established by, the Fund's
Board of Directors, that there is no secondary market available for these
obligations, and in other securities that are illiquid.

NOTES. The Money Market Portfolio may purchase unsecured promissory notes
("Notes") which are not readily marketable and have not been registered under
the Securities Act of 1933, provided such investments are consistent with its
investment objective. The Money Market Portfolio will invest no more than 10% of
its net assets in such Notes and in other securities that are illiquid.

ASSET-BACKED SECURITIES. The Money Market Portfolio may purchase
asset-backed securities, which are securities issued by special purpose entities
whose primary assets consist of a pool of mortgages, loans, receivables or other
assets. Payment of principal and interest may depend largely on the cash flows
generated by the assets backing the securities and, in certain cases, supported
by letters of credit, surety bonds or other forms of credit or liquidity
enhancements. The value of asset-backed securities also may be affected by the
creditworthiness of the servicing agent for the pool of assets, the originator
of the loans or receivables or the financial institution providing the credit
support.

PARTICIPATION INTERESTS. The Money Market Portfolio may invest in
short-term corporate obligations that are originated, negotiated and structured
by a syndicate of lenders ("Co-Lenders") consisting of commercial banks, thrift
institutions, insurance companies, finance companies or other financial
institutions one or more of which administers the security on behalf of the
syndicate (the "Agent Bank"). Co-Lenders may sell such securities to third
parties called "Participants." The Money Market Portfolio may invest in such
securities either by participating as a Co-Lender at origination or by acquiring
an interest in the security from a Co-Lender or a Participant (collectively,
"participation interests"). Co-Lenders and Participants interposed between the
Money Market Portfolio and the corporate borrower (the "Borrower"), together
with Agent Banks, are referred to herein as "Intermediate Participants." The
Money Market Portfolio also may purchase a participation interest in a portion
of the rights of an Intermediate Participant. The Money Market Portfolio will
not act as an Agent Bank, guarantor, sole negotiator or sole structuror with
respect to securities that are the subject of a participation interest.

The Tax Free Money Market Portfolio may purchase from financial
institutions participation interests in Municipal Obligations (such as
industrial development bonds and municipal lease/ purchase agreements).

A participation interest gives the Portfolio an undivided interest in the
security in the proportion that the Portfolio's participation interest bears to
the total principal amount of the security. These instruments may have fixed,
floating or variable rates of interest with remaining maturities of 397 days or
less. If the participation interest is unrated, or has been given a rating below
that which is permissible for purchase by the Portfolio, the participation
interest will be backed by an irrevocable or unconditional letter of credit or
guarantee of a bank or other entity the debt securities of which are rated high
quality, or the payment obligation otherwise will be collateralized by U.S.
Government securities, or, in the case of an unrated participation interest, the
Adviser, acting upon delegated authority from the Fund's Board of Directors,
must have determined that the instrument is of comparable quality to those
instruments in which the Portfolio may invest. Participation interests with a
rating below high quality that are backed by an irrevocable letter of credit or
guarantee as described above will be purchased only if the Adviser, acting as
described above and subject to ratification by the Fund's Board of Directors,
determines after an analysis of, among other factors, the creditworthiness of
the guarantor that such participation interest is high quality, and if the
rating agency did not include the letter of credit or guarantee in its
determination of the instrument's rating. If the rating of a participation
interest is reduced subsequent to its purchase by the Portfolio, the Adviser
will consider, in accordance with procedures established by the Board of
Directors, all circumstances deemed relevant in determining whether the
Portfolio should continue to hold the participation interest. For certain
participation interests, the Portfolio will have the right to demand payment, on
not more than seven days' notice, for all or any part of the Portfolio's
participation interest in the security, plus accrued interest. As to these
instruments, although subject to unconditional demand for payment, the Portfolio
intends to exercise its right to demand payment only upon a default under the
terms of the security, as needed to provide liquidity to meet redemptions, or to
maintain or improve the quality of its investment portfolio. Not more than 10%
of the value of a Portfolio's net assets will be invested in participation
interests that do not have this demand feature, and in other securities that are
illiquid.

INVESTMENT PRACTICES

PORTFOLIO LENDING. From time to time, the Money Market Portfolio may lend
securities from its portfolio to brokers, dealers and other financial
institutions needing to borrow securities to complete certain transactions. Such
loans may not exceed 33 1/3% of the Money Market Portfolio's total assets. In
connection with such loans, the Money Market Portfolio will receive collateral
consisting of cash, U.S. Government securities or irrevocable letters of credit
issued by third party financial institutions. Such collateral will be maintained
at all times in an amount equal to at least 100% of the current market value of
the loaned securities. The Money Market Portfolio can increase its income
through the investment of such collateral. The Money Market Portfolio continues
to be entitled to the interest or other distributions payable on the loaned
security and receives interest on the amount of the loan. Such loans will be
terminable at any time upon specified notice. The Money Market Portfolio might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with the Money Market
Portfolio.

REVERSE REPURCHASE AGREEMENTS. The Money Market Portfolio may enter into
reverse repurchase agreements with banks, brokers or dealers. Reverse repurchase
agreements involve the transfer by the Money Market Portfolio of an underlying
debt instrument in return for cash proceeds based on a percentage of the value
of the security. The Money Market Portfolio retains the right to receive
interest and principal payments on the security. The Money Market Portfolio will
use the proceeds of reverse repurchase agreements only to make investments which
generally either mature or have a demand feature to resell to the issuer at a
date simultaneous with or prior to the expiration of the reverse repurchase
agreement. At an agreed upon future date, the Money Market Portfolio repurchases
the security at principal plus accrued interest. In certain types of agreements,
there is no agreed upon repurchase date and interest payments are calculated
daily, often based on the prevailing overnight repurchase rate. As a result of
these transactions, the Money Market Portfolio may be exposed to greater
potential fluctuations in the value of its assets. Interest costs on the money
borrowed may exceed the return received on the securities purchased. The Fund's
Directors have considered the risks to the Money Market Portfolio and its
shareholders which may result from the entry into reverse repurchase agreements
and have determined that the entry into such agreements is consistent with the
Money Market Portfolio's investment objective and management policies.

WHEN-ISSUED SECURITIES. Each Portfolio may purchase money market securities
on a when-issued or forward commitment basis, which means that delivery and
payment for such securities ordinarily take place after the date of the
commitment to purchase. The payment obligation and the interest rate receivable
on the securities are fixed when the Portfolio enters into the commitment. A
Portfolio will commit to purchase such securities only with the intention of
actually acquiring the securities, but the Portfolio may sell these securities
before the settlement date if it is deemed advisable. A Portfolio will not
accrue income in respect of a security purchased on a forward commitment basis
prior to its stated delivery date. No additional forward commitments will be
made if more than 20% of the Portfolio's net assets would be so committed.

ILLIQUID SECURITIES. Neither Portfolio will invest more than 10% of the
value of its net assets in illiquid securities. The term "illiquid securities"
for this purpose means securities that cannot be disposed of within seven days
in the ordinary course of business at approximately the amount at which the
Portfolio has valued the securities and includes, among other instruments,
certain restricted securities. As to these securities, the Portfolio is subject
to a risk that should the Portfolio desire to sell them when a ready buyer is
not available at a price the Portfolio deems representative of their value, the
value of the Portfolio's net assets could be adversely affected.

BORROWING MONEY. As a fundamental policy, each Portfolio may borrow money
from banks for temporary or emergency (not leveraging) purposes, in an amount up
to 15% of the value of the Portfolio's total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made (borrowings
repaid within 60 days and not renewed or extended are presumed to be for
temporary purposes). While such borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments. In addition, the Money Market Portfolio may borrow money in
connection with the entry into reverse repurchase agreements (at no time may
total borrowings exceed 33 1/3% of the value of the Money Market Portfolio's
total assets).

CORRESPONDENT CASH
RESERVES

- ---------------------------------------------
THE INFINITY MUTUAL FUNDS, INC.
3435 Stelzer Road
Columbus, Ohio 43219-8020
- ---------------------------------------------
INVESTMENT ADVISER
MITCHELL HUTCHINS ASSET MANAGEMENT INC.
1285 Avenue of the Americas
New York, New York 10019
- ---------------------------------------------
ADMINISTRATOR AND DISTRIBUTOR
BISYS FUND SERVICES LIMITED PARTNERSHIP
3435 Stelzer Road
Columbus, Ohio 43219-8001
- ---------------------------------------------
CUSTODIAN
THE BANK OF NEW YORK
90 Washington Street
New York, New York 10286

[LOGO]BIS-0039

CORRESPONDENT CASH
RESERVES
[L O G O]

PROSPECTUS
April 30, 1997

THE INFINITY MUTUAL FUNDS, INC.
CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO
CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO
PART B
(STATEMENT OF ADDITIONAL INFORMATION)
APRIL 30, 1997

This Statement of Additional Information, which is not
a prospectus, supplements and should be read in conjunction
with the current Prospectus of Correspondent Cash Reserves Money Market
Portfolio (the "Money Market Portfolio") and Correspondent Cash Reserves Tax
Free Money Market Portfolio (the "Tax Free Money Market Portfolio"), dated April
30, 1997, of The Infinity Mutual Funds, Inc. (the "Fund"), as it may be revised
from time to time. To obtain a copy of the Portfolios' Prospectus, please write
to the Fund at 3435 Stelzer Road, Columbus, Ohio 43219- 8020. This Statement of
Additional Information relates only to the Portfolios and not to any of the
Fund's other portfolios.

Mitchell Hutchins Asset Management Inc. (the
"Adviser") serves as each Portfolio's investment adviser.

BISYS Fund Services Limited Partnership ("BISYS") serves as
each Portfolio's administrator and distributor.

TABLE OF CONTENTS
PAGE

Investment Objective and Management Policies........................... B-2
Management of the Fund................................................. B-15
Management Arrangements................................................ B-18
Purchase and Redemption of Shares...................................... B-23
Determination of Net Asset Value....................................... B-23
Yield Information...................................................... B-24
Portfolio Transactions................................................. B-25
Information About the Portfolios....................................... B-26
Custodian, Transfer and Dividend Disbursing
Agent, Counsel and Independent Auditors............................. B-27
Appendix............................................................... B-28
Financial Statements................................................... B-35

<PAGE>

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE PORTFOLIOS' PROSPECTUS ENTITLED "DESCRIPTION
OF THE PORTFOLIOS."

PORTFOLIO SECURITIES

BANK OBLIGATIONS. (Money Market Portfolio and, to a limited
extent, Tax Free Money Market Portfolio) Domestic commercial banks organized
under Federal law are supervised and examined by the Comptroller of the Currency
and are required to be members of the Federal Reserve System and to have their
deposits insured by the Federal Deposit Insurance Corporation (the "FDIC").
Domestic banks organized under state law are supervised and examined by state
banking authorities but are members of the Federal Reserve System only if they
elect to join. In addition, state banks whose certificates of deposit ("CDs")
may be purchased by the Portfolio are insured by the Bank Insurance Fund
administered by the FDIC (although such insurance may not be of material benefit
to the Portfolio, depending upon the principal amount of the CDs of each bank
held by the Portfolio) and are subject to Federal examination and to a
substantial body of Federal law and regulation. As a result of Federal and state
laws and regulations, domestic branches of domestic banks, among other things,
are generally required to maintain specified levels of reserves, and are subject
to other supervision and regulation designed to promote financial soundness.

Obligations of foreign branches of domestic banks, foreign
subsidiaries of domestic banks and domestic and foreign branches of foreign
banks, such as CDs and time deposits ("TDs"), may be general obligations of the
parent banks in addition to the issuing branch, or may be limited by the terms
of a specific obligation or governmental regulation. Such obligations are
subject to different risks than are those of domestic banks. These risks include
foreign economic and political developments, foreign governmental restrictions
that may adversely affect payment of principal and interest on the obligations,
foreign exchange controls and foreign withholding and other taxes on interest
income. Foreign branches and subsidiaries are not necessarily subject to the
same or similar regulatory requirements that apply to domestic banks, such as
mandatory reserve requirements, loan limitations, and accounting, auditing and
financial recordkeeping requirements. In addition, less information may be
publicly available about a foreign branch of a domestic bank or about a foreign
bank than about a domestic bank. The Portfolio's investment in obligations of
foreign subsidiaries of domestic banks are subject, to the extent required by
the Investment Company Act of 1940, as amended (the "1940 Act"), to the
limitations on investing in the securities of other investment companies.

Obligations of United States branches of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may be
limited by the terms of a specific obligation and by Federal or state regulation
as well as governmental action in the country in which the foreign bank has its
head office. In addition, Federal branches licensed by the Comptroller of the
Currency and branches licensed by certain states ("State Branches") may be
required to: (1) pledge to the regulator, by depositing assets with a designated
bank within the state, a certain percentage of their assets as fixed from time
to time by the appropriate regulatory authority; and (2) maintain assets within
the state in an amount equal to a specified percentage of the aggregate amount
of liabilities of the foreign bank payable at or through all of its agencies or
branches within the state. The deposits of Federal and State Branches generally
must be insured by the FDIC if such branches take deposits of less than
$100,000.

In view of the foregoing factors associated with the purchase of CDs
and TDs issued by foreign branches of domestic banks, by foreign subsidiaries of
domestic banks, by foreign branches of foreign banks or by domestic branches of
foreign banks, the Adviser carefully evaluates such investments on a
case-by-case basis pursuant to procedures established by the Board of Directors.

The Money Market Portfolio may invest in short-term corporate
obligations that are originated, negotiated and structured by a syndicate of
lenders ("Co-Lenders") consisting of commercial banks, thrift institutions,
insurance companies, finance companies or other financial institutions one or
more of which administers the security on behalf of the syndicate (the "Agent
Bank"). Co-Lenders may sell such securities to third parties called
"Participants." The Money Market Portfolio may invest in such securities either
by participating as a Co-Lender at origination or by acquiring an interest in
the security from a Co-Lender or a Participant (collectively, "participation
interests"). Co-Lenders and Participants interposed between the Fund and the
corporate borrower (the "Borrower"), together with Agent Banks, are referred to
herein as "Intermediate Participants." The Money Market Portfolio also may
purchase a participation interest in a portion of the rights of an Intermediate
Participant, which would not establish any direct relationship between the
Portfolio and the Borrower. In such cases, the Money Market Portfolio would be
required to rely on the Intermediate Participant that sold the participation
interest not only for the enforcement of the Portfolio's rights against the
Borrower but also for the receipt and processing of payments due to the
Portfolio under the security. Because it may be necessary to assert through an
Intermediate Participant such rights as may exist against the Borrower, in the
event the Borrower fails to pay principal and interest when due, the Money
Market Portfolio may be subject to delays, expenses and risks that are greater
than those that would be involved if the Portfolio could enforce its rights
directly against the Borrower. Moreover, under the terms of a participation
interest, the Money Market Portfolio may be regarded as a creditor of the
Intermediate Participant (rather than of the Borrower), so that the Portfolio
also may be subject to the risk that the Intermediate Participant may become
insolvent. Similar risks may arise with respect to the Agent Bank if, for
example, assets held by the Agent Bank for the benefit of the Money Market
Portfolio were determined by the appropriate regulatory authority or court to be
subject to the claims of the Agent Bank's creditors. In such cases, the Money
Market Portfolio might incur certain costs and delays in realizing payment in
connection with the participation interest or suffer a loss of principal and/or
interest. Further, in the event of the bankruptcy or insolvency of the Borrower,
the obligation of the Borrower to repay the loan may be subject to certain
defenses that can be asserted by such Borrower as a result of improper conduct
by the Agent Bank or Intermediate Participant. In addition, insurance companies
are affected by economic and financial conditions and are subject to extensive
government regulation, including rate regulation. The property and casualty
industry is cyclical, being subject to dramatic swings in profitability which
can be affected by natural catastrophes and other disasters. Individual
companies may be exposed to material risks, including reserve inadequacy, latent
health exposure and inability to collect from their reinsurance carriers.

Under normal circumstances, and as a matter of fundamental policy, the
Money Market Portfolio will "concentrate" at least 25% of its assets in debt
instruments issued by domestic and foreign companies engaged in the banking
industry, including bank holding companies. Such investments may include CDs,
TDs, bankers' acceptances and obligations issued by bank holding companies, as
well as repurchase agreements entered into with banks (as distinct from non-bank
dealers) in accordance with the policies set forth in "Repurchase Agreements"
below. During periods when the Adviser determines that the Money Market
Portfolio should be in a temporary defensive position, the Portfolio may invest
less than 25% of its total assets in the banking industry; during such times the
Money Market Portfolio's assets will be invested in accordance with its other
investment policies. The Adviser may determine that the adoption of a temporary
defensive position with respect to issuers in the banking industry is
appropriate on the basis of such factors as political, economic, market or
regulatory developments adversely affecting that industry as compared to the
industries of other issuers of securities available for investment by the Money
Market Portfolio.

REPURCHASE AGREEMENTS. (Both Portfolios) Each Portfolio may enter into
repurchase agreements. The Fund's custodian or sub-custodian employed in
connection with third-party repurchase transactions will have custody of, and
will hold in a segregated account, securities acquired by a Portfolio under a
repurchase agreement. In connection with its third-party repurchase
transactions, a Portfolio will employ only eligible sub-custodians which meet
the requirements set forth in Section 17(f) of the 1940 Act and the rules
thereunder. Repurchase agreements are considered by the staff of the Securities
and Exchange Commission to be loans by the Portfolio. In an attempt to reduce
the risk of incurring a loss on a repurchase agreement, a Portfolio will enter
into repurchase agreements only with domestic banks (including foreign branches
and subsidiaries of domestic banks) with total assets in excess of $1 billion or
primary government securities dealers reporting to the Federal Reserve Bank of
New York, with respect to securities in which the Portfolio may invest or
government securities regardless of their remaining maturities, and will require
that additional securities be deposited with it if the value of the securities
purchased should decrease below resale price.

REVERSE REPURCHASE AGREEMENTS. (Money Market Portfolio only) The Money
Market Portfolio may enter into reverse repurchase agreements. The Portfolio
will maintain in a segregated custodial account permissible liquid assets equal
to the aggregate amount of its reverse repurchase obligations, plus accrued
interest, in certain cases, in accordance with releases promulgated by the
Securities and Exchange Commission. The Securities and Exchange Commission views
reverse repurchase agreement transactions as collateralized borrowings, and,
pursuant to the 1940 Act, the Portfolio must maintain continuous asset coverage
(that is, total assets including borrowings, less liabilities exclusive of
borrowings) of 300% of the amount borrowed. If the 300% asset coverage should
decline as a result of market fluctuations or other reasons, the Portfolio may
be required to sell some of its portfolio holdings within three days to reduce
the debt and restore the 300% asset coverage, even though it may be
disadvantageous from an investment standpoint to sell securities at that time.

MUNICIPAL OBLIGATIONS. (Tax Free Money Market Portfolio only) The term
"Municipal Obligations" generally includes debt obligations issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets and water and sewer works. Other public
purposes for which Municipal Obligations may be issued include refunding
outstanding obligations, obtaining funds for general operating expenses and
lending such funds to other public institutions and facilities. In addition,
certain types of industrial development bonds are issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair or improvement of privately operated housing facilities, sports
facilities, convention or trade show facilities, airport, mass transit,
industrial, port or parking facilities, air or water pollution control
facilities and certain local facilities for water supply, gas, electricity or
sewage or solid waste disposal; the interest paid on such obligations may be
exempt from Federal income tax, although current tax laws place substantial
limitations on the size of such issues. Such obligations are considered to be
Municipal Obligations if the interest paid thereon qualifies as exempt from
Federal income tax in the opinion of bond counsel to the issuer. There are, of
course, variations in the security of Municipal Obligations, both within a
particular classification and between classifications.

Floating and variable rate demand obligations are tax exempt
obligations ordinarily having stated maturities in excess of 13 months, but
which permit the holder to demand payment of principal at any time, or at
specified intervals not exceeding 13 months, in each case upon not more than 30
days' notice. The issuer of such obligations ordinarily has a corresponding
right, after a given period, to prepay in its discretion the outstanding
principal amount of the obligations plus accrued interest upon a specified
number of days' notice to the holders thereof. The interest rate on a floating
rate demand obligation is based on a known lending rate, such as a bank's prime
rate, and is adjusted automatically each time such rate is adjusted. The
interest rate on a variable rate demand obligation is adjusted automatically at
specified intervals.

For the purpose of diversification under the 1940 Act, the
identification of the issuer of Municipal Obligations depends on the terms and
conditions of the security. When the assets and revenues of an agency,
authority, instrumentality or other political subdivision are separate from
those of the government creating the subdivision and the security is backed only
by the assets and revenues of the subdivision, such subdivision would be deemed
to be the sole issuer. Similarly, in the case of an industrial development bond,
if that bond is backed only by the assets and revenues of the non-governmental
user, then such non- governmental user would be deemed to be the sole issuer.
If, however, in either case, the creating government or some other entity
guarantees a security, such a guaranty would be considered a separate security
and will be treated as an issue of such government or other entity.

The yields of Municipal Obligations are dependent on a variety of
factors, including general economic and monetary conditions, money market
factors, conditions in the Municipal Obligations market, size of a particular
offering, maturity of the obligation and rating of the issue. The imposition of
the Portfolio's management fee, as well as other operating expenses, will have
the effect of reducing the yield to investors.

Municipal lease obligations or installment purchase contract
obligations (collectively, "lease obligations") have special risks not
ordinarily associated with Municipal Obligations. Although lease obligations do
not constitute general obligations of the municipality for which the
municipality's taxing power is pledged, a lease obligation ordinarily is backed
by the municipality's covenant to budget for, appropriate and make the payments
due under the lease obligation. However, certain lease obligations contain
"nonappropriation" clauses which provide that the municipality has no obligation
to make lease or installment purchase payments in future years unless money is
appropriated for such purpose on a yearly basis. Although "non-appropriation"
lease obligations are secured by the leased property, disposition of the
property in the event of foreclosure might prove difficult. The Tax Free Money
Market Portfolio will seek to minimize these risks by investing only in those
lease obligations that (1) are rated in one of the two highest rating categories
for debt obligations by at least two nationally recognized statistical rating
organizations (or one rating organization if the lease obligation was rated only
by one such organization) or (2) if unrated, are purchased principally from the
issuer or domestic banks or other responsible third parties, in each case only
if the seller shall have entered into an agreement with the Portfolio providing
that the seller or other responsible third party will either remarket or
repurchase the lease obligation within a short period after demand by the
Portfolio. The staff of the Securities and Exchange Commission currently
considers certain lease obligations to be illiquid. Accordingly, not more than
10% of the value of the Tax Free Money Market Portfolio's net assets will be
invested in lease obligations that are illiquid and in other illiquid
securities.

RATINGS OF MUNICIPAL OBLIGATIONS. (Tax Free Money Market Portfolio
only) If, subsequent to its purchase by the Tax Free Money Market Portfolio, (a)
an issue of rated Municipal Obligations ceases to be rated in the highest rating
category by at least two rating organizations (or one rating organization if the
instrument was rated by only one such organization) or the Fund's Board
determines that it is no longer of comparable quality or (b) the Adviser becomes
aware that any portfolio security not so highly rated or any unrated security
has been given a rating by any rating organization below the rating
organization's second highest rating category, the Fund's Board will reassess
promptly whether such security presents minimal credit risk and will cause the
Portfolio to take such action as it determines is in the best interest of the
Portfolio and its shareholders; provided that the reassessment required by
clause (b) is not required if the portfolio security is disposed of or matures
within five business days of the Adviser becoming aware of the new rating and
the Board of Directors is subsequently notified of the Adviser's actions.

To the extent that the ratings given by Moody's Investors Service,
Inc. ("Moody's"), Standard & Poor's Ratings Group ("S&P") or Fitch Investors
Service, L.P. ("Fitch") for Municipal Obligations may change as a result of
changes in such organizations or their rating systems, the Portfolio will
attempt to use comparable ratings as standards for its investments in accordance
with its stated investment policies contained in the Portfolio's Prospectus and
this Statement of Additional Information. The ratings of Moody's, S&P and Fitch
represent their opinions as to the quality of the Municipal Obligations which
they undertake to rate. It should be emphasized, however, that ratings are
relative and subjective and are not absolute standards of quality. Although
these ratings may be an initial criterion for selection of portfolio
investments, the Adviser also will evaluate these securities and the
creditworthiness of the issuers of such securities based upon financial and
other available information.

The average distribution of investments (at value) in Municipal
Obligations by ratings for the fiscal year ended December 31, 1996 computed on a
monthly basis, for the Tax Free Money Market Portfolio was as follows:

Percentage
MOODY'S FITCH S&P OF VALUE

VMIG1/MIG1, F-1+/F-1 SP-1+/SP-1, 95.52%
P-1 A1+/A1
Aaa/Aa AAA/AA AAA/AA 4.48%
-------
100.00%

ILLIQUID SECURITIES. (Both Portfolios) Neither Portfolio will invest
more than 10% of the value of its net assets in illiquid securities. The term
"illiquid securities" for this purpose means securities that cannot be disposed
of within seven days in the ordinary course of business at approximately the
amount at which the Portfolio has valued the securities and includes, among
other things, restricted securities other than those the Adviser has determined
to be liquid pursuant to guidelines established by the Fund's Board and
repurchase agreements maturing in more than seven days. Commercial paper issues
in which the Money Market Portfolio may invest include securities issued by
major corporations without registration under the Securities Act of 1933, as
amended ("1933 Act"), in reliance on the exemption from such registration
afforded by Section 3(a)(3) thereof and commercial paper and medium term notes
issued in reliance on the so-called "private placement" exemption from
registration which is afforded by Section 4(2) of the 1933 Act ("Section 4(2)
paper"). Section 4(2) paper is restricted as to disposition under the Federal
securities laws in that any resale must similarly be made in an exempt
transaction. Section 4(2) paper ordinarily is resold to other institutional
investors through or with the assistance of investment dealers who make a market
in Section 4(2) paper, thus providing liquidity.

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

To facilitate the increased size and liquidity of the institutional
markets for unregistered securities, the Securities and Exchange Commission
adopted Rule 144A under the 1933 Act. Rule 144A establishes a "safe harbor" from
the registration requirements of the 1933 Act for resales of certain securities
to qualified institutional buyers. Section 4(2) paper that is issued by a
company that files reports under the Securities Exchange Act of 1934, as
amended, generally is eligible to be sold in reliance on the safe harbor of Rule
144A. Pursuant to Rule 144A, the institutional restricted securities markets may
provide both readily ascertainable values for restricted securities and the
ability to liquidate an investment in order to satisfy share redemption orders
on a timely basis. An insufficient number of qualified institutional buyers
interested in purchasing certain restricted securities held by the Portfolio,
however, could affect adversely the marketability of such portfolio securities
and the Portfolio might be unable to dispose of such securities promptly or at
reasonable prices. It is anticipated that the market for certain restricted
securities will expand further as a result of Rule 144A and the development of
automated systems for the trading, clearance and settlement of unregistered
securities, such as the PORTAL System sponsored by the National Association of
Securities Dealers, Inc.

The Board of Directors has the ultimate responsibility for determining
whether specific securities are liquid or illiquid, other than those the
Securities and Exchange Commission deems to be illiquid. The Board of Directors
has delegated the function of making day-to-day determinations of liquidity to
the Adviser, pursuant to guidelines approved by the Board. The Adviser takes
into account a number of factors in reaching liquidity decisions, including (1)
the frequency of trades for the security, (2) the number of dealers that make
quotes for the security, (3) the number of dealers that have undertaken to make
a market in the security, (4) the number of other potential purchasers and (5)
the nature of the security and how trading is effected (e.g., the time needed to
sell the security, how offers are solicited and the mechanics of transfer). The
Adviser will monitor the liquidity of restricted securities held by the
Portfolio and report periodically on such decisions to the Board of Directors.

MANAGEMENT POLICIES

LENDING PORTFOLIO SECURITIES. (Money Market Portfolio only) To a
limited extent, the Money Market may lend its portfolio securities to brokers,
dealers and other financial institutions, provided it receives cash collateral
which at all times is maintained in an amount equal to at least 100% of the
current market value of the securities loaned. By lending its portfolio
securities, the Portfolio can increase its income through the investment of the
cash collateral. For the purposes of this policy, the Fund considers collateral
consisting of U.S. Government securities or irrevocable letters of credit issued
by banks whose securities meet the standards for investment by the Portfolio to
be the equivalent of cash. Such loans may not exceed 33-1/3% of the Money Market
Portfolio's total assets. From time to time, the Portfolio may pay a part of the
interest earned from the investment of collateral received for securities loaned
to the borrower or a third party which is unaffiliated with the Fund, and which
is acting as a "placing broker," in an amount determined by the Board of
Directors to be reasonable and based solely on services rendered.

FORWARD COMMITMENTS. (Both Portfolios) Securities purchased on a
forward commitment or when-issued basis are subject to changes in value
(generally changing in the same way, i.e., appreciating when interest rates
decline and depreciating when interest rates rise) based upon the public's
perception of the creditworthiness of the issuer and changes, real or
anticipated, in the level of interest rates. Securities purchased on a forward
commitment or when-issued basis may expose the Portfolio to risks because they
may experience such fluctuations prior to their actual delivery. Purchasing
securities on a when-issued basis can involve the additional risk that the yield
available in the market when the delivery takes place actually may be higher
than that obtained in the transaction itself. Purchasing securities on a forward
commitment or when-issued basis when the Portfolio is fully or almost fully
invested may result in greater potential fluctuation in the value of the
Portfolio's net assets and its net asset value per share.

INVESTMENT RESTRICTIONS

CORRESPONDENT CASH RESERVES MONEY MARKET PORTFOLIO only. The Money
Market Portfolio has adopted the following investment restrictions as
fundamental policies, which cannot be changed without approval by the holders of
a majority (as defined in the 1940 Act) of the Portfolio's outstanding voting
shares. The Portfolio may not:

1. Purchase common stocks, preferred stocks, warrants
or other equity securities.

2. Borrow money, except (i) from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of the value of the
Portfolio's total assets (including the amount borrowed) based on the lesser of
cost or market, less liabilities (not including the amount borrowed) at the time
the borrowing is made (while such borrowings exceed 5% of the value of the
Portfolio's total assets, the Portfolio will not make any additional
investments) and (ii) in connection with the entry into reverse repurchase
agreements. At no time may total
borrowings exceed 33-1/3% of the value of the Portfolio's total
assets.

3. Pledge, hypothecate, mortgage or otherwise encumber
its assets, except (i) to secure borrowings for temporary or
emergency purposes and (ii) in connection with the purchase of securities on a
forward commitment basis and the entry into reverse repurchase agreements.

4. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act), other than in connection with
the entry into certain reverse repurchase agreements.

5. Sell securities short or purchase securities on
margin.

6. Write or purchase put or call options or
combinations thereof.

7. Act as underwriter of securities of other issuers.
The Portfolio may not enter into repurchase agreements
providing for settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than 10% of its net
assets would be so invested.

8. Purchase or sell real estate, real estate
investment trust securities, commodities, or oil and gas
interests.

9. Make loans to others, except through the purchase of debt
obligations and through repurchase agreements referred to in the Portfolio's
Prospectus, and except that the Portfolio may lend its portfolio securities in
an amount not to exceed 33-1/3% of the value of its total assets. Any loans of
portfolio securities will be made according to guidelines established by the
Securities and Exchange Commission and the Fund's Board.

10. Invest in companies for the purpose of exercising
control.

11. Invest in securities of other investment companies, except
as they may be acquired as part of a merger, consolidation or acquisition of
assets.

12. Invest more than 5% of its assets in the obligations of any
one issuer, except that up to 25% of the value of the Portfolio's total assets
may be invested without regard to any such limitation (subject to provisions of
Rule 2a-7), provided that not more than 10% of its assets may be invested in
securities issued or guaranteed by any single guarantor of obligations held by
the Portfolio. Notwithstanding the foregoing, to the extent required by the
rules of the Securities and Exchange Commission, the Portfolio will not invest
more than 5% of its assets in the obligations of any one bank.

* * *

CORRESPONDENT CASH RESERVES TAX FREE MONEY MARKET PORTFOLIO ONLY. The
Tax Free Money Market Portfolio has adopted the following investment
restrictions as fundamental policies, which cannot be changed without approval
by the holders of a majority (as defined in the 1940 Act) of the Portfolio's
outstanding voting shares. The Portfolio may not:

1. Purchase securities other than Municipal Obligations and
Taxable Investments as those terms are defined above and in the Portfolio's
Prospectus.

2. Borrow money, except from banks for temporary or
emergency (not leveraging) purposes in an amount up to 15% of
the value of the Portfolio's total assets (including the amount
borrowed) based on the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made (while
borrowings exceed 5% of the value of the Portfolio's total assets, the Portfolio
will not make any additional investments).

3. Pledge, hypothecate, mortgage or otherwise encumber
its assets, except to secure borrowings for temporary or
emergency purposes.

4. Issue any senior security (as such term is defined
in Section 18(f) of the 1940 Act).

5. Sell securities short or purchase securities on
margin.

6. Write or purchase put or call options or
combinations thereof.

7. The Portfolio may not enter into repurchase agreements
providing for settlement in more than seven days after notice or purchase
securities which are illiquid, if, in the aggregate, more than 10% of its net
assets would be so invested.

8. Purchase or sell real estate, real estate investment trust
securities, commodities, or oil and gas interests, but this shall not prevent
the Portfolio from investing in Municipal Obligations secured by real estate or
interests therein.

9. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements referred to above and in
the Portfolio's Prospectus.

10. Invest in companies for the purpose of exercising
control.

11. Invest in securities of other investment companies, except
as they may be acquired as part of a merger, consolidation or acquisition of
assets.

12. Underwrite the securities of other issuers, except
that the Portfolio may bid separately or as part of a group for
the purchase of Municipal Obligations directly from an issuer
for its own portfolio to take advantage of the lower purchase
price available.

13. Invest more than 25% of its assets in the securities of
issuers in any single industry, provided that there shall be no limitation on
the purchase of tax exempt securities issued by state or municipal governments
or their political subdivisions and, for temporary defensive purposes,
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

For purposes of Investment Restriction No. 13,
industrial development bonds, where the payment of principal and
interest is the ultimate responsibility of companies within the
same industry, are grouped together as an "industry."

* * *

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

The Fund may make commitments more restrictive than the
restrictions listed above so as to permit the sale of Portfolio shares in
certain states. Should the Fund determine that a commitment is no longer in the
best interests of a Portfolio and its shareholders, the Fund reserves the right
to revoke the commitment by terminating the sale of Portfolio shares in the
state involved.

MANAGEMENT OF THE FUND

Directors and officers of the Fund, together with information as
to their principal business occupations during at least the last five years, are
shown below. Each Director who is an "interested person" of the Fund, as defined
in the 1940 Act, is indicated by an asterisk.

DIRECTORS OF THE FUND

*WILLIAM B. BLUNDIN, PRESIDENT AND CHAIRMAN OF THE BOARD OF
DIRECTORS. An employee of BISYS Fund Services, Inc.,
BISYS' general partner. Mr. Blundin also is an officer
of other investment companies administered by BISYS or its
affiliates. He is 59 years old and his address is 125 West 55th
Street, New York, New York 10019.

NORMA A. COLDWELL, DIRECTOR. International Economist and
Consultant; Executive Vice President of Coldwell
Financial Consultants; Trustee and Treasurer of
Meridian House International (International Education
and Cultural Group); Member of the Board of Advisors of
Meridian International Center and Emerging Capital Markets,
S.A. (Montevideo, Uruguay); formerly Chief International
Economist of Riggs National Bank, Washington, D.C. She is 71
years old and her address is 3330 Southwestern Boulevard,
Dallas, Texas 75225.

RICHARD H. FRANCIS, DIRECTOR. Former Executive Vice President
and Chief Financial Officer of Pan American World
Airways, Inc. (currently, debtor-in-possession under
the U.S. Bankruptcy Code), March 1988 to October 1991;
Senior Vice President and Chief Financial Officer of
American Standard Inc., 1960 to March 1988.
Mr. Francis is a director of Allendale Mutual Insurance
and The Indonesia Fund, Inc. He is 64 years old and
his address is 40 Grosvenor Road, Short Hills,
New Jersey 07078.

ROBERT A. ROBINSON, DIRECTOR. Private investor. Since 1991,
President Emeritus, and from 1968 to 1991, President of
The Church Pension Group, NYC. From 1956 to 1966,
Senior Vice President of Colonial Bank & Trust Co. He
is also a director of Mariner Institutional Funds,
Inc., Mariner Tax-Free Institutional Funds, Inc., UST
Master Funds, UST Master Tax Exempt Funds, H.B. and
F.H. Bugher Foundation, Morehouse-Barlow Co.
Publishers, The Canterbury Cathedral Trust in America,
The Living Church Foundation and Hoosac School. He is
71 years old and his address is 2 Hathaway Common, New
Canaan, Connecticut 06840.

OFFICERS OF THE FUND

JEFFREY C. CUSICK, VICE PRESIDENT AND ASSISTANT SECRETARY. An
employee of BISYS Fund Services, Inc. since July 1995,
and an officer of other investment companies
administered by BISYS or its affiliates. From
September 1993 to July 1995, he was Assistant Vice
President and, from 1989 to September 1993, he was
Manager--Client Services, of Federated Administrative
Services. He is 38 years old and his address is
3435 Stelzer Road, Columbus, Ohio 43219.

WILLIAM TOMKO, VICE PRESIDENT. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates. He
is 38 years old and his address is 3435 Stelzer Road,
Columbus, Ohio 43219.

MARTIN R. DEAN, TREASURER. An employee of BISYS Fund Services,
Inc. since May 1994, and an officer of other investment
companies administered by BISYS or its affiliates. Prior
thereto, he was a Senior Manager of KPMG Peat Marwick LLP. He is
33 years old and his address is 3435 Stelzer Road, Columbus,
Ohio 43219.

GEORGE O. MARTINEZ, SECRETARY. Senior Vice President and
Director of Legal and Compliance Services with BISYS
Fund Services, Inc. since April 1995, and an officer of
other investment companies administered by BISYS or
its affiliates. Prior thereto, he was Vice President
and Associate General Counsel with Alliance Capital
Management, L.P. He is 37 years old and his address is
3435 Stelzer Road, Columbus, Ohio 43219.

ROBERT L. TUCH, ASSISTANT SECRETARY. An employee of BISYS Fund
Services, Inc. since June 1991, and an officer of other
investment companies administered by BISYS or its affiliates.
He is 45 years old and his address is 3435 Stelzer Road,
Columbus, Ohio 43219.

ALAINA METZ, ASSISTANT SECRETARY. An employee of BISYS Fund
Services, Inc. and an officer of other investment
companies administered by BISYS or its affiliates. She
is 29 years old and her address is 3435 Stelzer Road,
Columbus, Ohio 43219.

For so long as the Fund's plan described in the section
captioned "Management Arrangements--Distribution Plan" remains in effect, the
Directors of the Fund who are not "interested persons" of the Fund, as defined
in the 1940 Act, will be selected and nominated by the Directors who are not
"interested persons" of the Fund.

Directors and officers of the Fund, as a group, owned less
than 1% of each Portfolio's shares outstanding on April 11,
1997.

The Fund does not pay any remuneration to its officers and
Directors other than fees and expenses to those Directors
who are not directors, officers or employees of the Adviser or BISYS or any of
their affiliates. The aggregate amount of compensation paid to each such
Director by the Fund for the year ended December 31, 1996 was as follows:

Total Compensation
Aggregate From Fund and
Name of Board Compensation Fund Complex Paid
Member from Fund* to Board Member*
- -------------------------------------- ------------------------------ --------------------------------------

Norma A. Coldwell $18,000 $18,000
Richard H. Francis $18,000 $18,000
William W. McInnis $18,000 $18,000
Robert A. Robinson $18,000 $18,000
- ---------------------
</TABLE>

* Amount does not include reimbursed expenses for attending Board
meetings, which amounted to $13,000 for all Directors as a group.

<PAGE>

MANAGEMENT ARRANGEMENTS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE PORTFOLIOS' PROSPECTUS ENTITLED "MANAGEMENT
OF THE PORTFOLIOS."

INVESTMENT ADVISORY AGREEMENT. The Adviser provides investment
advisory services pursuant to the Investment Advisory Agreement (the
"Agreement") dated October 30, 1990, with the Fund. As to each Portfolio, the
Agreement is subject to annual approval by (i) the Fund's Board of Directors or
(ii) vote of a majority (as defined in the 1940 Act) of the outstanding voting
securities of the Portfolio, provided that in either event the continuance also
is approved by a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of the Fund or the Adviser, by vote cast in person at a
meeting called for the purpose of voting on such approval. The Board, including
a majority of the Directors who are not "interested persons" of any party to the
Agreement, last approved the Agreement at a meeting held on November 14, 1996.
Shareholders of the Correspondent Cash Reserves Money Market Portfolio approved
the Agreement on December 20, 1991. As to each Portfolio, the Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of the holders of a majority of the Portfolio's shares, or, on not less than 90
days' notice, by the Adviser. The Agreement will terminate automatically, as to
the relevant Portfolio, in the event of its assignment (as defined in the 1940
Act).

The Adviser is a wholly-owned subsidiary of PaineWebber
Incorporated ("PaineWebber"), which in turn is a wholly-owned subsidiary of
Paine Webber Group Inc. ("PW Group"), a publicly owned financial services
holding company.

The Adviser provides investment advisory services in accordance
with the stated policies of the Portfolios, subject to the approval of the
Fund's Board of Directors. The Adviser provides each Portfolio with Investment
Officers who are authorized by the Board of Directors to execute purchases and
sales of securities. The Money Market Portfolio's Chief Investment Officers are
Susan P. Ryan and Dennis L. McCauley. The Tax Free Money Market Portfolio's
Chief Investment Officers are Elbridge T. Gerry III, Debbie Vermann and Kevin
McIntyre. The Adviser also maintains a research department with a professional
staff of portfolio managers and securities analysts who provide research
services for each Portfolio and for other funds advised by the Adviser. All
purchases and sales are reported for the Board's review at the meeting
subsequent to such transactions.

As compensation for its services, the Fund has agreed to pay the
Adviser a monthly fee at the annual rate of .10 of 1% of the value of each
Portfolio's average daily net assets. For the fiscal years ended December 31,
1994, 1995 and 1996, the advisory fees paid to the Adviser by the Money Market
Portfolio amounted to $430,353, $644,228 and $950,074, respectively. For the
period October 7, 1996 (commencement of operations of the Tax Free Money Market
Portfolio) through December 31, 1996, the advisory fee payable to the Adviser by
the Tax Free Money Market Portfolio amounted to $19,900, which amount was
reduced by $9,950 pursuant to an undertaking by the Adviser, resulting in a net
advisory fee paid to the Adviser by the Tax Free Money Market Portfolio of
$9,950 for the period ended December 31, 1996.

In addition, pursuant to the terms of a Special Management
Services Agreement among the Fund, the Adviser and BISYS, each Portfolio has
agreed to pay the Adviser and BISYS each a monthly fee at the annual rate of .05
of 1% of the value of the Portfolio's average daily net assets. The fee payable
to the Adviser by the Money Market Portfolio under the agreement for the fiscal
years ended December 31, 1994, 1995 and 1996 amounted to $189,112, $306,186 and
$461,556, respectively; however, pursuant to an undertaking, the Adviser waived
the fee in its entirety for each such fiscal year. The fee payable to the
Adviser by the Tax Free Money Market Portfolio under the agreement for the
period October 7, 1996 (commencement of operations of the Tax Free Money Market
Portfolio) through December 31, 1996, amounted to $9,950, which amount was
waived in its entirety pursuant to an undertaking.

ADMINISTRATION AGREEMENT. BISYS provides certain administrative
services pursuant to the Administration Agreement (the "Administration
Agreement") dated April 25, 1996, with the Fund. As to each Portfolio, the
Administration Agreement will continue until December 31, 1997 and thereafter is
subject to annual approval by (i) the Fund's Board or (ii) vote of a majority
(as defined in the 1940 Act) of the outstanding voting securities of the
Portfolio, provided that in either event the continuance also is approved by a
majority of the Directors who are not "interested persons" (as defined in the
1940 Act) of the Fund or the BISYS, by vote cast in person at a meeting called
for the purpose of voting such approval. The Administration Agreement was last
approved by the Fund's Board of Directors, including a majority of the Directors
who are not "interested persons" of any party to the Administration Agreement,
at a meeting held on February 11, 1997. As to each Portfolio, the Administration
Agreement is terminable without penalty, at any time if for cause, by the Fund's
Board or by vote of the holders of a majority of the Portfolio's outstanding
voting securities, or, on not less than 90 days' notice, by BISYS. The
Administration Agreement will terminate automatically, as to the relevant
Portfolio, in the event of its assignment (as defined in the 1940 Act).

As compensation for its services, each Portfolio has agreed to
pay BISYS a monthly fee at the annual rate of .10 of 1% of the value of the
Portfolio's average daily net assets. For the fiscal years ended December 31,
1994, 1995 and 1996, the Money Market Portfolio paid the Portfolios' predecessor
administrator, an affiliate of BISYS, $430,353, $644,228 and $950,074,
respectively. For the period October 7, 1996 (commencement of operations of the
Tax Free Money Market Portfolio) through December 31, 1996, the administration
fee payable to the administrator by the Tax Free Money Market Portfolio amounted
to $19,900, which amount was waived in its entirety pursuant to an undertaking.

In addition, pursuant to the terms of the Special Management
Services Agreement described above, the fee payable to the Portfolios'
predecessor administrator by the Money Market Portfolio under the agreement for
the fiscal years ended December 31, 1994, 1995 and 1996 amounted to $189,112,
$306,186 and $461,555, respectively; however, pursuant to an undertaking, the
Portfolio's predecessor administrator waived the fee in its entirety for each
such fiscal year. The fee payable to the Portfolios' predecessor administrator
by the Tax Free Money Market Portfolio for the period October 7, 1996
(commencement of operations of the Tax Free Money Market Portfolio) through
December 31, 1996, amounted to $9,950, which amount was waived in its entirety
pursuant to an undertaking.

DISTRIBUTION AGREEMENT. BISYS acts as the exclusive distributor
of each Portfolio's shares on a best efforts basis pursuant to a Distribution
Agreement (the "Distribution Agreement") dated February 11, 1997, with the Fund.
Shares are sold on a continuous basis by BISYS as agent, although BISYS is not
obliged to sell any particular amount of shares. No compensation is payable by a
Portfolio to BISYS for its distribution services.

DISTRIBUTION PLAN. Rule 12b-1 (the "Rule") adopted by the
Securities and Exchange Commission under the 1940 Act provides, among other
things, that an investment company may bear expenses of distributing its shares
only pursuant to a plan adopted in accordance with the Rule. Because some or all
of the fees paid to Securities Firms (as defined in the Prospectus) for services
provided to Portfolio shareholders could be deemed to be payment of distribution
expenses, the Fund's Board of Directors has adopted such a plan (the "Plan").
The Fund's Board of Directors believes that there is a reasonable likelihood
that the Plan will benefit each Portfolio and its shareholders. In some states,
certain financial institutions effecting transactions in Portfolio shares may be
required to register as dealers pursuant to state law.

A quarterly report of the amounts expended under the Plan, and
the purposes for which such expenditures were incurred, must be made to the
Board of Directors for its review. In addition, as to each Portfolio, the Plan
provides that it may not be amended to increase materially the costs which
shareholders may bear for distribution pursuant to the Plan without shareholder
approval and that other material amendments of the Plan must be approved by the
Board of Directors, and by the Directors who are neither "interested persons"
(as defined in the 1940 Act) of the Fund nor have any direct or indirect
financial interest in the operation of the Plan or in the related Plan Agreement
between the Fund and Correspondent Services Corporation [CSC], an affiliate of
the Adviser, by vote cast in person at a meeting called for the purpose of
considering such amendments. The Plan and the Plan Agreement are subject to
annual approval by such vote cast in person at a meeting called for the purpose
of voting on the Plan. The Plan and Plan Agreement were so approved on November
14, 1996. The Money Market Portfolio's shareholders approved the Plan on
December 20, 1991. As to each Portfolio, the Plan is terminable at any time by
vote of a majority of the Directors who are not "interested persons" and who
have no direct or indirect financial interest in the operation of the Plan or in
the Plan Agreement or by vote of the holders of a majority of the Portfolio's
shares. As to each Portfolio, the Plan Agreement is terminable without penalty,
at any time, by such vote of the Directors, upon not more than 60 days' written
notice to Correspondent Services Corporation [CSC] or by vote of the holders of
a majority of the Portfolio's shares. The Plan Agreement will terminate
automatically, as to the relevant Portfolio, in the event of its assignment (as
defined in the 1940 Act).

For the fiscal year ended December 31, 1996, the amount payable
pursuant to the Plan by the Money Market Portfolio amounted to $5,568,964;
however, pursuant to an undertaking, the amount was reduced by $229,921,
resulting in a net amount paid by the Money Market Portfolio of $5,339,043
pursuant to the Plan. For the period October 7, 1996 (commencement of operations
of the Tax Free Money Market Portfolio) through December 31, 1996, the amount
payable pursuant to the Plan by the Tax Free Money Market Portfolio amounted to
$119,401; however, pursuant to an undertaking, the amount was reduced by
$49,750, resulting in a net amount paid by the Tax Free Money Market Portfolio
of $69,651 pursuant to the Plan.

EXPENSES. All expenses incurred in the operation of the Fund are
borne by the Fund, except to the extent specifically assumed by others. The
expenses borne by the Fund include: organizational costs, taxes, interest,
brokerage fees and commissions, if any, fees of Directors who are not officers,
directors, employees or holders of 5% or more of the outstanding voting
securities of the Adviser or BISYS or any of their affiliates, Securities and
Exchange Commission fees, state Blue Sky qualification fees, advisory fees,
administration fees, charges of custodians, transfer and dividend disbursing
agents' fees, certain insurance premiums, industry association fees, auditing
and legal expenses, costs of maintaining corporate existence, costs of
independent pricing services, costs attribut able to investor services
(including, without limitation, tele phone and personnel expenses), costs of
calculating the net asset value of each Portfolio's shares, costs of
shareholders' reports and corporate meetings, costs of preparing and printing
prospectuses and statements of additional information for regula tory purposes
and for distribution to existing shareholders, and any extraordinary expenses.
Expenses attributable to a particular Portfolio are charged against the assets
of that Portfolio; other expenses of the Fund are allocated among the Portfolios
on the basis determined by the Board, including, but not limited to,
proportionately in relation to the net assets of each Portfolio.

As to each Portfolio, the Adviser and BISYS have agreed that if
in any fiscal year the aggregate expenses of the Portfolio, exclusive of taxes,
brokerage, interest on borrowings and (with the prior written consent of the
necessary state securities commissions) extraordinary expenses, but including
the advisory and administration fees, exceed the expense limitation of any state
having jurisdiction over the Portfolio, the Fund may deduct from the payment to
be made to BISYS under the Administration Agreement, or the Adviser and/or BISYS
will bear, such excess expense to the extent required by state law. Such
deduction or payment, if any, will be estimated daily, and reconciled and
effected or paid, as the case may be, on a monthly basis.

PURCHASE AND REDEMPTION OF SHARES

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTIONS IN THE PORTFOLIOS' PROSPECTUS ENTITLED "HOW TO BUY
SHARES" AND "HOW TO REDEEM SHARES."

TERMS OF PURCHASE. The Fund reserves the right to reject any
purchase order and to change the amount of the minimum investment and subsequent
purchases in the Portfolios.

SUSPENSION OF REDEMPTIONS. The right of redemption may be
suspended or the date of payment postponed (a) during any period when the New
York Stock Exchange is closed (other than customary weekend and holiday
closing), (b) when trading in the markets a Portfolio ordinarily utilizes is
restricted, or when an emergency exists as determined by the Securities and
Exchange Commission so that disposal of the Portfolio's investments or
determination of its net asset value is not reasonably practicable, or (c) for
such other periods as the Securities and Exchange Commission by order may permit
to protect the Portfolio's shareholders.

DETERMINATION OF NET ASSET VALUE

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE PORTFOLIOS' PROSPECTUS ENTITLED "HOW TO BUY
SHARES."

AMORTIZED COST PRICING. The valuation of each Portfolio's
investment securities is based upon their amortized cost, which does not take
into account unrealized capital gains or losses. This involves valuing an
instrument at its cost and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument. While this method provides
certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Portfolio
would receive if it sold the instrument.

The Board of Directors has established, as a particular
responsibility within the overall duty of care owed to each Portfolio's
investors, procedures reasonably designed to stabilize the Portfolio's price per
share as computed for the purpose of purchases and redemptions at $1.00. Such
procedures include review of the Portfolio's investment holdings by the Board of
Directors, at such intervals as it deems appropriate, to determine whether the
Portfolio's net asset value calculated by using available market quotations or
market equivalents deviates from $1.00 per share based on amortized cost. In
such review, investments for which market quotations are readily available will
be valued at the most recent bid price or yield equivalent for such securities
or for securities of comparable maturity, quality and type, as obtained from one
or more of the major market makers for the securities to be valued. Other
investments and assets will be valued at fair value as determined in good faith
by the Board of Directors.

The extent of any deviation between a Portfolio's net asset
value based upon available market quotations or market equivalents and $1.00 per
share based on amortized cost will be examined by the Board. If such deviation
exceeds 1/2 of 1%, the Board promptly will consider what action, if any, will be
initiated. In the event the Board determines that a deviation exists which may
result in material dilution or other unfair results to investors or existing
shareholders, it has agreed to take such corrective action as it regards as
necessary and appropriate, including: selling portfolio instruments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity; withholding dividends or paying distributions from capital or capital
gains; redeeming shares in kind; or establishing a net asset value per share by
using available market quotations or market equivalents.

NEW YORK STOCK EXCHANGE AND CUSTODIAN CLOSINGS. The holidays (as
observed) on which the New York Stock Exchange and the Custodian are closed
currently are: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans
Day, Thanksgiving and Christmas.

YIELD INFORMATION

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE PORTFOLIOS' PROSPECTUS ENTITLED "YIELD
INFORMATION."

For the seven-day period ended December 31, 1996, the yield and
effective yield of the Money Market Portfolio, net of absorbed expenses, was
4.64% and 4.74%, respectively. The yield and effective yield of the Money Market
Portfolio without the absorption of certain expenses would have been 4.51% and
4.60%, respectively, for the same period. For the seven-day period ended
December 31, 1996, the yield and effective yield of the Tax Free Money Market
Portfolio, net of absorbed expenses, was 3.08% and 3.12%, respectively. The
yield and effective yield of the Tax Free Money Market Portfolio without the
absorption of certain expenses would have been 2.62% and 2.65%, respectively,
for the same period. Yield is computed in accordance with a standardized method
which involves determining the net change in the value of a hypothetical
pre-existing Portfolio account having a balance of one share at the beginning of
a seven calendar day period for which yield is to be quoted, dividing the net
change by the value of the account at the beginning of the period to obtain the
base period return, and analyzing the results (i.e., multiplying the base period
return by 365/7). The net change in the value of the account reflects the value
of additional shares purchased with dividends declared on the original share and
any such additional shares and fees that may be charged to shareholder accounts,
in proportion to the length of the base period and the Portfolio's average
account size, but does not include realized gains and losses or unrealized
appreciation and depreciation. Effective annualized yield is computed by adding
1 to the base period return (calculated as described above), raising that sum to
a power equal to 365 divided by 7, and subtracting 1 from the result.

Based upon a 1996 Federal income tax rate of 39.60%, the Tax
Free Money Market Portfolio's tax equivalent yield for the seven-day period
ended December 31, 1996 was 4.34%. Tax equivalent yield is computed by dividing
that portion of the yield or effective yield (calculated as described above)
which is tax exempt by 1 minus a stated tax rate and adding the quotient to that
portion, if any, of the yield of the Portfolio that is not tax exempt. Each
investor should consult with its tax adviser, and consider its own factual
circumstances and applicable tax laws, in order to ascertain the relevant tax
equivalent yield.

Yields will fluctuate and are not necessarily representative of
future results. The investor should remember that yield is a function of the
type and quality of the instruments held, their maturity and operating expenses.
An investor's principal in a Portfolio is not guaranteed. See "Determination of
Net Asset Value" for a discussion of the manner in which each Portfolio's price
per share is determined.

PORTFOLIO TRANSACTIONS

Portfolio securities ordinarily are purchased directly from the
issuer or an underwriter or a market maker for the securities. Usually no
brokerage commissions are paid for such purchases. Purchases from underwriters
of portfolio securities include a concession paid by the issuer to the
underwriter and the purchase price paid to market makers for the securities may
include the spread between the bid and asked price. No brokerage commissions
have been paid by either Portfolio to date.

Transactions are allocated to various dealers by the Portfolio's
investment personnel in their best judgment. The primary consideration is prompt
and effective execution of orders at the most favorable price. Subject to that
primary consideration, dealers may be selected to act on an agency basis for
research, statistical or other services to enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms.

Research services furnished by brokers through which the
Portfolios effect securities transactions may be used by the Adviser in advising
other funds or accounts it advises and, conversely, research services furnished
to the Adviser by brokers in connection with other funds or accounts the Adviser
advises may be used by the Adviser in advising each Portfolio. Although it is
not possible to place a dollar value on these services, it is the opinion of the
Adviser that the receipt and study of such services should not reduce the
overall expenses of its research department.

INFORMATION ABOUT THE PORTFOLIOS

THE FOLLOWING INFORMATION SUPPLEMENTS AND SHOULD BE READ IN
CONJUNCTION WITH THE SECTION IN THE PORTFOLIOS' PROSPECTUS ENTITLED "GENERAL
INFORMATION."

Each Portfolio share has one vote and, when issued and paid
for in accordance with the terms of the offering, is fully paid and
non-assessable. Shares have no preemptive,
subscription or conversion rights and are freely transferable.

Rule 18f-2 under the 1940 Act provides that any matter required
to be submitted under the provisions of the 1940 Act or applicable state law or
otherwise, to the holders of the outstanding voting securities of an investment
company, such as the Fund, will not be deemed to have been effectively acted
upon unless approved by the holders of a majority of the outstanding shares of
each portfolio affected by such matter. Rule 18f-2 further provides that a
portfolio shall be deemed to be affected by a matter unless it is clear that the
interests of each portfolio in the matter are identical or that the matter does
not affect any interest of such portfolio. However, the Rule exempts the
election of directors from the separate voting requirements of the Rule.

As of April 11, 1997, the following shareholder beneficially
owned, directly or indirectly, 5% or more of the Tax Free Money Market
Portfolio's outstanding shares:

Percent of Total
NAME AND ADDRESS Shares Outstanding

Carolyn Cline-Arazi TTEE 7.42%
Arazi Charitable Remainder UniTrust
2780 Broadway
San Francisco, CA 94115-1105

Each Portfolio will send annual and semi-annual financial
statements to all its shareholders.

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT, COUNSEL
AND INDEPENDENT AUDITORS

The Bank of New York, 90 Washington Street, New York, New York
10286, acts as custodian of each Portfolio's investments. BISYS Fund Services
Ohio, Inc., an affiliate of BISYS, 3435 Stelzer Road, Columbus, Ohio 43219, acts
as the Fund's transfer and dividend disbursing agent (the "Transfer Agent").
Under the transfer agency agreement with the Fund, the Transfer Agent maintains
shareholder account records for each Portfolio, handles certain communications
between shareholders and the Portfolio and pays dividends and distributions
payable by the Portfolio. For these services, the Transfer Agent receives a
monthly fee compiled on the basis of the number of shareholder accounts it
maintains for each Portfolio during the month, and is reimbursed for certain
out-of-pocket expenses. Neither The Bank of New York nor the Transfer Agent has
any part in determining the investment policies of a Portfolio or which
securities are to be purchased or sold by the Portfolio.

Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New
York 10038-4982, as counsel for the Fund, has rendered its opinion as to certain
legal matters regarding the due authorization and valid issuance of the shares
being sold pursuant to the Prospectus.

KPMG Peat Marwick LLP, 345 Park Avenue, New York, New York
10154, independent auditors, have been selected as the Fund's auditors for the
year ending December 31, 1997.

<PAGE>

APPENDIX

Description of the two highest commercial paper, bond, municipal
bond and other short- and long-term rating categories assigned by S&P, Moody's,
Fitch, Duff & Phelps Credit Rating Co. ("Duff"), IBCA Inc. and IBCA Limited
("IBCA"), and Thomson BankWatch, Inc. ("BankWatch"):

COMMERCIAL PAPER AND SHORT-TERM RATINGS

The designation A-1 by S&P indicates that the degree of safety
regarding timely payment is either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics are denoted with a
plus sign (+) designation. Capacity for timely payment on issues with an A-2
designation is strong. However, the relative degree of safety is not as high as
for issues designated A-1.

The rating Prime-1 (P-1) is the highest commercial paper rating
assigned by Moody's. Issuers of P-1 paper must have a superior capacity for
repayment of short-term promissory obligations, and ordinarily will be evidenced
by leading market positions pin well established industries, high rates of
return of funds employed, conservative capitalization structures with moderate
reliance on debt and ample asset protection, broad margins in earnings coverage
of fixed financial charges and high internal cash generation, and well
established access to a range of financial markets and assured sources of
alternate liquidity. Issues rated Prime-2 (P-2) have a strong capacity for
repayment of short-term promissory obligations. This ordinarily will be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

The rating Fitch-1 (Highest Grade) is the highest commercial
paper rating assigned by Fitch. Paper rated Fitch-1 is regarded as having the
strongest degree of assurance for timely payment. The rating Fitch-2 (Very Good
Grade) is the second highest commercial paper rating assigned by Fitch which
reflects an assurance of timely payment only slightly less in degree than the
strongest issues.

The rating Duff-1 is the highest commercial paper rating
assigned by Duff. Paper rated Duff-1 is regarded as having very high certainty
of timely payment with excellent liquidity factors which are supported by ample
asset protection. Risk factors are minor. Paper rated Duff-2 is regarded as
having good certainty of timely payment, good access to capital markets and
sound liquidity factors and company fundamentals. Risk factors are small.

The designation A1 by IBCA indicates that the obligation is
supported by a very strong capacity for timely repayment. Those obligations
rated A1+ are supported by the highest capacity for timely repayment.
Obligations rated A2 are supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic or financial conditions.

The rating TBW-1 is the highest short-term rating assigned by
BankWatch; the rating indicates that the degree of safety regarding timely
repayment of principal and interest is very strong. The rating TBW-2 is the
second highest short-term rating assigned by BankWatch; 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.

BOND AND LONG-TERM RATINGS

Bonds rated AAA are considered by S&P to be the highest grade
obligations and possess an extremely strong capacity to pay principal and
interest. Bonds rated AA by S&P are judged by S&P to have a very strong capacity
to pay principal and interest, and in the majority of instances, differ only in
small degrees from issues rated AAA.

Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Bonds rated Aa by Moody's are judged by Moody's 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 Aaa bonds because
margins of protection may not be as large or fluctuations of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger. Moody's applies numerical modifiers
1, 2 and 3 in the Aa rating category. The modifier 1 indicates a ranking for the
security in the higher end of this rating category, the modifier 2 indicates a
mid-range ranking, and the modifier 3 indicates a ranking in the lower end of
the rating category.

Bonds rated AAA by Fitch are judged by Fitch to be strictly high
grade, broadly marketable, suitable for investment by trustees and fiduciary
institutions and liable to but slight market fluctuation other than through
changes in the money rate. The prime feature of an AAA bond is a showing of
earnings several times or many times interest requirements, with such stability
of applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions. Bonds rated AA by Fitch are judged by Fitch to be
of safety virtually beyond question and are readily salable, whose merits are
not unlike those of the AAA class, but whose margin of safety is less strikingly
broad. The issue may be the obligation of a small company, strongly secured but
influenced as to rating by the lesser financial power of the enterprise and more
local type of market.

Bonds rated AAA by Duff are considered to be of the highest
credit quality. The risk factors are negligible, being only slightly more than
U.S. Treasury debt. Bonds rated AA are considered to be of high credit quality
with strong protection factors. Risk is modest but may vary slightly from time
to time because of economic conditions.

Obligations rated AAA by IBCA have the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk significantly. Obligations
for which there is a very low expectation of investment risk are rated AA by
IBCA. Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business, economic or financial conditions may increase
investment risk albeit not very significantly.

INTERNATIONAL AND U.S. BANK RATINGS

An IBCA bank rating represents IBCA's current assessment of the
strength of the bank and whether such bank would receive support should it
experience difficulties. In its assessment of a bank, IBCA uses a dual rating
system comprised of Legal Ratings and Individual Ratings. In addition, IBCA
assigns banks Long- and Short-Term Ratings as used in the corporate ratings
discussed above. Legal Ratings, which range in gradation from 1 through 5,
address the question of whether the bank would receive support provided by
central banks or shareholders if it experienced difficulties, and such ratings
are considered by IBCA to be a prime factor in its assessment of credit risk.
Individual Ratings, which range in gradations from A through E, represent IBCA's
assessment of a bank's economic merits and address the question of how the bank
would be viewed if it were entirely independent and could not rely on support
from state authorities or its owners.

Description of certain S&P, Moody's and Fitch ratings of
Municipal Obligations:

S&P

MUNICIPAL BOND RATINGS

An S&P municipal bond rating is a current assessment of the
creditworthiness of an obligor with respect to a specific obligation.

The ratings are based on current information furnished by the
issuer or obtained by S&P from other sources it considers reliable, and will
include: (1) likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with the
terms of the obligation; (2) nature and provisions of the obligation; and (3)
protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.

AAA

Debt rated AAA has the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

Debt rated AA has a very strong capacity to pay interest and
repay principal and differs from the highest rated issues only in small degree.
The AA rating may be modified by the addition of a plus or a minus sign, which
is used to show relative standing within the category.

MUNICIPAL NOTE RATINGS

SP-1

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

SP-2

The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.

Moody's

MUNICIPAL BOND RATINGS

Aaa

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

Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are 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 risks appear somewhat larger than in Aaa securities.
Bonds in the Aa category which Moody's believes possess the strongest investment
attributes are designated by the symbol Aa1.

MUNICIPAL NOTE RATINGS

Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade (MIG). Such ratings
recognize the difference between short-term credit risk and long-term risk.
Factors affecting the liquidity of the borrower and short-term cyclical elements
are critical in short- term ratings, while other factors of major importance in
bond risk, long-term secular trends for example, may be less important over the
short run.

A short-term rating may also be assigned on an issue having a
demand feature. Such ratings will be designated as VMIG or, if the demand
feature is not rated, as NR. Short-term ratings on issues with demand features
are differentiated by the use of the VMIG symbol to reflect such characteristics
as payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with no
or limited legal recourse to the issuer in the event the demand is not met.

Moody's short-term ratings are designated Moody's Investment
Grade as MIG 1 or VMIG 1 through MIG 4 or VMIG 4. As the name implies, when
Moody's assigns a MIG or VMIG rating, all categories define an investment grade
situation.

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. Margins of protection are
ample although not so large as in the preceding group.

Fitch

MUNICIPAL BOND RATINGS

The ratings represent Fitch's assessment of the issuer's ability
to meet the obligations of a specific debt issue or class of debt. The ratings
take into consideration special features of the issue, its relationship to other
obligations of the issuer, the current financial condition and operative
performance of the issuer and of any guarantor, as well as the political and
economic environment that might affect the issuer's future financial strength
and credit quality.

AAA

Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events.

Bonds rated AA are considered to be investment grade and of very
high credit quality. The obligor's ability to pay interest and repay principal
is very strong, although not quite as strong as bonds rated AAA. Because bonds
rated in the AAA and AA categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is generally
rated F-1+. Plus (+) and minus (-) signs are used with the rating symbol AA to
indicate the relative position of a credit within the rating category.

SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are
payable on demand or have original maturities of up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

Although the credit analysis is similar to Fitch's bond rating
analysis, the short-term rating places greater emphasis than bond ratings on the
existence of liquidity necessary to meet the issuer's obligations in a timely
manner.

F-1+

EXCEPTIONALLY STRONG CREDIT QUALITY. Issues assigned this rating
are regarded as having the strongest degree of assurance for timely payment.

F-1

VERY STRONG CREDIT QUALITY. Issues assigned this rating reflect
an assurance of timely payment only slightly less in degree than issues rated
F-1+.

F-2

GOOD CREDIT QUALITY. Issues carrying this rating have a
satisfactory degree of assurance for timely payments, but the margin of safety
is not as great as the F-1+ and F-1 categories.

<PAGE>

FINANCIAL STATEMENTS

The Portfolios' Annual Report to Shareholders for the fiscal
year ended December 31, 1996 is a separate document supplied with this Statement
of Additional Information, and the financial statements, accompanying notes and
report of independent auditors appearing therein are incorporated by reference
in this Statement of Additional Information.

<PAGE>

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Included in Part A of the Registration Statement:

Financial Highlights.

Included in Part B of the Registration Statement:

Statements of Investments.*

Statements of Assets and Liabilities.*

Statements of Operations.*

Statements of Changes in Net Assets.*

Notes to Financial Statements.*

Reports of KPMG Peat Marwick LLP, Independent
Auditors.*

- -------------------------
* Incorporated by reference to the Registrant's Annual
Report to Shareholders.

(b) Exhibits:

(1) (a) Articles of Incorporation are incorporated by
reference to Exhibit (1) of the Registration
Statement on Form N-1A, filed on March 29,
1990.

(b) Articles of Amendment are incorporated by
reference to Exhibit (1)(b) of Pre-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A, filed on June 22,
1990.

(c) Articles Supplementary dated October 16,
1990 are incorporated by reference to
Exhibit(1)(c) of Post-Effective Amendment
No. 3 to the Registration Statement on Form
N-1A, filed on October 25, 1990.

(d) Articles Supplementary dated January 9, 1992
are incorporated by reference to Exhibit
(1)(d) of Post-Effective Amendment No. 10 to
the Registration Statement on Form N-1A,
filed on January 17, 1992.

(e) Articles Supplementary dated February 15,
1994 are incorporated by reference to Exhibit
(1)(e) of Post-Effective Amendment No. 22 to
the Registration Statement on Form N-1A,
filed on February 10, 1994.

(f) Articles of Amendment are incorporated by
by reference to Exhibit (1)(f) of Post-
Effective Amendment No. 26 to the
Registration Statement on Form N-1A,
filed on April 30, 1996.

(g) Articles Supplementary dated February 24,
1997 are incorporated by reference to
Exhibit (1)(g) of Post-Effective Amendment
No. 31 to the Registration Statement on
Form N-1A, filed on February 27, 1997.

(2) By-Laws are incorporated by reference to Exhibit
(2) of Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A, filed on June
22, 1990.

(4) Specimen copies of stock certificates are
incorporated by reference to Exhibit (4) of Post-
Effective Amendment No. 6 to the Registration
Statement on Form N-1A, filed on June 7, 1991.

(5) (a)(i) Amended Investment Advisory Agreement
between the Registrant and BEA
Associates is incorporated by reference
to Exhibit (5)(b)(i) of Post-Effective
Amendment No. 15 to the Registration
Statement on Form N-1A, filed on
August 19, 1992.

(a)(ii) Investment Advisory Agreement between
the Registrant and Mitchell Hutchins
Asset Management Inc. is incorporated by
reference to Exhibit (5)(b)(iii) of
Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A,
filed on June 7, 1991.

(a)(iii) Investment Advisory Agreement
between Registrant and First
American National Bank is incorporated
by reference to Exhibit (5)(a)(iii) of
Post-Effective Amendment No. 31 to
Registration Statement on Form N-1A,
filed on February 27, 1997.

(a)(iv) Investment Advisory Agreement
between the Registrant and BEA
Associates is incorporated by
reference to Post-Effective
Amendment No. 25 to the Registration
Statement on Form N-1A, filed on May
1, 1995.

(b)(i) Sub-Investment Advisory Agreement among
Registrant, First American National Bank
and Barnett Banks and Trust Company,
N.A. is incorporated by reference to
Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A,
filed on February 10, 1994.

(c) Administration Agreement between
Registrant and BISYS Fund Services
Limited Partnership dated April 25,
1996, as revised February 11, 1997.

(6) (a) Distribution Agreement between
Registrant and BISYS Fund Services
Limited Partnership dated February 11,
1997.

(b)(i) Form of Plan Agreement, with respect to
Registrant's Correspondent Cash Reserves
Money Market Portfolio and Correspondent
Cash Reserves Tax Free Money Market
Portfolio, is incorporated by
reference to Exhibit (6)(b) of Post-
Effective Amendment No. 6 to the
Registration Statement on Form N-1A,
filed on June 7, 1991.

(b)(ii) Form of Distribution Plan Agreement,
with respect to Registrant's BEA Short
Duration Portfolio is incorporated by
reference to Exhibit (6)(b)(iv) of Post-
Effective Amendment No. 15 to the
Registration Statement on Form N-1A,
filed On August 19, 1992.

(b)(iii) Distribution Plan Agreement, with
respect to Registrant's AmeriStar
Portfolios, is incorporated by reference
to Exhibit (6)(b)(iii) of Post-Effective
Amendment No. 31 to the Registration
Statement on Form N-1A, filed on February
27, 1997.

(8) (a) Custody and Fund Accounting Agreement
with The Bank of New York is
incorporated by reference to
Exhibit (8)(a) of Pre-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A, filed on June
22, 1990.

(b) Form of Foreign Sub-Custodian
Agreement is incorporated by
reference to Post-Effective
Amendment No. 22 to the Registration
Statement on Form N-1A, filed on
February 10, 1994.

(9) (a) Special Management Services Agreement
among the Registrant, Mitchell Hutchins
Asset Management Inc. and Concord
Holding Corporation is incorporated by
reference to Exhibit (9) of Post-
Effective Amendment No. 6 to the
Registration Statement on Form N-1A,
filed on June 7, 1991.

(b) Form of Shareholder Services Agreement
is incorporated by reference to
Exhibit (5)(e) of Pre-Effective
Amendment No. 3 to the Registration
Statement on Form N-1A, filed on
June 22, 1990.

(c) Shareholder Services Plan with respect
to Registrant's AmeriStar Prime Money
Market and U.S. Treasury Money Market
Portfolios is incorporated by reference
to Post-Effective Amendment No. 22 to
the Registration Statement on Form N-1A,
filed on February 10, 1994.

(11) Consent of Independent Auditors.

(15) (a) Plan of Distribution pursuant to Rule
12b-1, with respect to Registrant's
Correspondent Cash Reserves Money Market
Portfolio and Correspondent Cash
Reserves Tax Free Money Market Portfolio,
is incorporated by reference to Exhibit
(15) of Post-Effective Amendment No. 6
to the Registration Statement on Form
N-1A, filed on June 7, 1991.

(b) Distribution Plan pursuant to Rule
12b-1, with respect to Registrant's BEA
Short Duration Portfolio, is
incorporated by reference to
Exhibit (15)(c) of Post-Effective
Amendment No. 15 to the Registration
Statement on Form N-1A filed on
August 19, 1992.

(c) Distribution Plan pursuant to Rule
12b-1, with respect to Registrant's
AmeriStar Portfolios, is incorporated by
reference to Exhibit (15)(c) of Post-
Effective Amendment No. 31 to the
Registration Statement on Form N-1A, filed
February 27, 1997.

(16) Computations of Performance Information
are incorporated by reference to Post-
Effective Amendment No. 25 to the
Registration Statement on Form N-1A,
filed on May 1, 1995.

(17) Financial Data Schedules are
incorporated by reference to
Registrant's Annual Report on Form N-SAR
filed on or about February 27, 1997.

(18) (i) Rule 18f-3 Plans for Registrant's BEA,
CCR and AmeriStar
Portfolios are incorporated by
reference to Post-Effective Amendment
No. 25 to the Registration Statement on
Form N-1A, filed on May 1, 1995.

(ii) Rule 18f-3 Plan for Registrant's
AmeriStar Non-Money Market Portfolios is
incorporated by reference to Exhibit (18)
(ii) of Post-Effective Amendment No. 31
to the Registration Statement on Form N-1A,
filed February 27, 1997.

Other Exhibit: (i) Certificate of Corporate Secretary is
incorporated by reference to Other
Exhibit of Pre-Effective Amendment
No. 3 to the Registration Statement
on Form N-1A, filed on June 22,
1990.

(ii) Powers of Attorney are incorporated by
reference to Pre-Effective Amendment No.
1 and Post-Effective Amendment No. 8 to
the Registration Statement on Form
N-1A, filed on May 23, 1990 and November
15, 1991, respectively.

Item 25. Persons Controlled By or Under Common Control
with Registrant

Not applicable.

Item 26. Number of Holders of Securities

(1) (2)

Number of Record
Holders as of
Title of Class March 31, 1997

Common Stock, par value
$.001 per share

Alpha Government
Securities Portfolio 64

Correspondent Cash Reserves 42,821
Money Market Portfolio

Correspondent Cash Reserves Tax 1,556
Free Money Market Portfolio

AmeriStar Prime Money Market Portfolio

--Trust Shares 2
--Investor Shares 25

AmeriStar Capital Growth Portfolio

--Trust Shares 0
--Investor Shares 5

AmeriStar Core Income
Portfolio

--Trust Shares 0
--Investor Shares 5

AmeriStar Limited
Duration Income Portfolio

--Trust Shares 0
--Investor Shares 6

AmeriStar Tennessee Tax Exempt
Bond Portfolio

--Trust Shares 0
--Investor Shares 6

AmeriStar U.S. Treasury Money
Market Portfolio

--Trust Shares 2
--Investor Shares 10

AmeriStar Dividend Growth Portfolio

--Trust Shares 0
--Investor Shares 4

AmeriStar Limited Duration U.S.
Government Portfolio

--Trust Shares 0
--Investor Shares 4

AmeriStar Limited Duration Tennessee
Tax Free Portfolio

--Trust Shares 0
--Investor Shares 3

Item 27. Indemnification

Reference is made to Article SEVENTH of the Registrant's Articles
of Incorporation filed as Exhibit 1 to the Registration Statement, filed on
March 29, 1990, and to Section 2-418 of the Maryland General Corporation Law.
The application of these provisions is limited by Article VIII of the
Registrant's By-Laws filed as Exhibit 2 to Pre-Effective Amendment No. 3 to the
Registration Statement, filed on June 22, 1990, and by the following undertaking
set forth in the rules promulgated by the Securities and Exchange Commission:

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in such Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in such Act and will
be governed by the final adjudication of such issue.

Reference also is made to the Distribution Agreement filed as
Exhibit 6(a) to Post-Effective Amendment No. 31 to the Registration Statement,
filed February 27, 1997.

Item 28(a). Business and Other Connections of Investment
Adviser and/or Sub-Investment Adviser

(i) Registrant is fulfilling the requirement of this Item 28(a)
to provide a list of the officers and directors of Mitchell Hutchins Asset
Management Inc., the investment adviser of the Registrant's Correspondent Cash
Reserves Money Market Portfolio, together with information as to any other
business, profession, vocation or employment of a substantial nature engaged in
by Mitchell Hutchins Asset Management Inc. or those of its officers and
directors during the past two years, by incorporating by reference the
information contained in the Form ADV filed with the SEC pursuant to the
Investment Advisers Act of 1940 by the Mitchell Hutchins Asset Management Inc.
(SEC File No. 801-13219).

(ii) First American National Bank, the investment adviser of the
Registrant's AmeriStar Portfolios, is a wholly-owned subsidiary of First
American Corporation, a registered bank holding company. To the knowledge of the
Registrant, none of the directors or executive officers of First American
National Bank, except those described below, are or have been, at any time
during the past two years, engaged in any other business, profession, vocation
or employment of a substantial nature, except that certain directors and
executive officers of First American National Bank also hold or have held
various positions with bank and non-bank affiliates of First American National
Bank, including First American Corporation.

<TABLE>
<CAPTION>
Principal Occupation or
Other Employment of a
Position with Substantial
Name Adviser Nature

<S> <C> <C>
Samuel E. Beale, III Director President and Chief
Executive Officer of
Morrison Restaurants,
Inc.

Dennis C. Bottorff Director and President and Chief
Chief Executive Executive Officer of
Officer First American
Corporation

Earnest W. Deavenport, Jr. Director Group Vice President of
Eastman Kodak Company
Reginald D. Dickson Director President Emeritus of
INROADS, Inc.
T. Scott Fillebrown Director Private Investor

James A. Haslam, II Director President and Chief
Executive Officer of
Pilot Corporation
Martha R. Ingram Director Director of Public
Affairs of Ingram
Industries, Inc.
Walter D. Knestrick Director Chairman of the Board
of Walter Knestrick
Contractor, Inc.
Gene C. Koonce Director President and Chief
Executive Officer of
United Cities Gas
Company
James R. Martin Director Chairman and Chief
Executive Officer of
PlastiLine, Inc.
William O. McCoy Director Vice Chairman of the
Board of BellSouth
Corporation
Dale W. Polley Director, Vice Vice Chairman and Chief
Chairman and Administrative Officer
Chief of First American
Administrative Corporation
Officer
Toy F. Reid Director Retired Executive Vice
President of Eastman
Kodak Company
Roscoe R. Robinson Director Vice Chancellor for
Health Affairs of
Vanderbilt University
Medical Center
James F. Smith Director Chairman of the Board
of First American
Corporation
Cal Turner, Jr. Director Chairman and Chief
Executive Officer of
Dollar General
Corporation
David K. Wilson Director Chairman of the Board
of Cherokee Equity
Corporation
Toby S. Wilt Director President of TSW
Investment Company
William S. Wire, II Director Chairman of the Board
of Genesco, Inc.

James C. Armistead, Jr. Executive Vice None
President

John W. Boyle, Jr. President, None
Corporate Bank

R. Booth Chapman Executive Vice None
President

Emery F. Hill Executive Vice None
President

Dennis J. Hooks Executive Vice None
President

Rufus B. King Executive Vice None
President

John W. Logan Executive Vice None
President

Robert A. McCabe, Jr. President, None
General Bank

Robert E. McNeilly, Jr. President and None
Chief Executive
Officer, First
American Trust
Company, N.A.

Martin E. Simmons Executive Vice None
President,
General Counsel
and Corporate
Secretary

Terry S. Spencer Executive Vice None
President

Jonn W. Smithwick Executive Vice None
President

M. Terry Turner Executive Vice None
President

Alexander P. Waddell, IV Senior Vice None
President and
Treasurer

</TABLE>

Item 29. Principal Underwriters

(a) Other investment companies for which Registrant's principal
underwriter (exclusive distributor) acts as principal underwriter or exclusive
distributor:

AFBA Five Star Shares
ARCH Funds
AMCORE Vintage Funds
Ernst World Funds
Fountain Square Funds
HSBC Funds
KeyFunds
MarketWatch Funds
MMA Praxis Funds
Pacific Capital Funds
Pegasus Funds
Republic Funds
Riverside Funds
Summit High Yield Fund

(b) The information required by this Item 29(b) regarding each director or
officer of BISYS Fund Services Limited Partnership is incorporated by reference
to Schedule A of Form BD filed by Concord Financial Group, Inc. pursuant to the
Securities Exchange Act of 1934 (SEC File No. 8- 32480).

Item 30. Location of Accounts and Records

1. BISYS Fund Services Limited Partnership
3435 Stelzer Road
Columbus, Ohio 43219-3035

2. BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, Ohio 43219-3035

3. The Bank of New York
90 Washington Street
New York, New York 10015

4. First American National Bank
315 Deaderick Street
Nashville, Tennessee 37238

5. Mitchell Hutchins Asset Management Inc.
1285 Avenue of the Americas
New York, New York 10019

Item 31. Management Services

Not Applicable.

Item 32. Undertakings

(b) Registrant hereby undertakes

(1) to file a post-effective amendment, using financial
statements which need not be certified, within four to six months from the
effective date of Registrant's 1933 Act registration statement with respect
to the Registrant's AmeriStar Dividend Growth, Limited Duration U.S.
Government and Limited Duration Tennessee Tax Free Portfolio;

(2) to call a meeting of shareholders for the purpose of voting
upon the question of removal of a Director or Directors when requested in
writing to do so by the holders of at least 10% of the Registrant's outstanding
Common Stock and in connection with such meeting to comply with the provisions
of Section 16(c) of the Investment Company Act of 1940 relating to shareholders
communications;

(3) to furnish each person to whom a prospectus is delivered with
a copy of its most current annual report to shareholders, upon request and
without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, and State of New York, on the 28th day
of April, 1997.

THE INFINITY MUTUAL FUNDS, INC.
(Registrant)

By: /s/William B. Blundin*
William B. Blundin, President

Pursuant to the requirements of the Securities Act of 1933,
this Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.

/s/William B. Blundin* President (Principal
WILLIAM B. BLUNDIN Executive Officer) and
Chairman of the Board of
Directors

/s/Martin R. Dean* Treasurer (Chief
MARTIN R. DEAN Financial and
Accounting Officer)

/s/Richard H. Francis* Director
RICHARD H. FRANCIS

/s/Norma A. Coldwell* Director
NORMA A. COLDWELL

/s/William W. McInnes* Director
WILLIAM W. McINNES

/s/Robert A. Robinson* Director
ROBERT A. ROBINSON

*By:/s/Robert L. Tuch April 28, 1997
Robert L. Tuch
Attorney-in-fact

<PAGE>

THE INFINITY MUTUAL FUNDS, INC.

Post-Effective Amendment No. 32 to

Registration Statement on Form N-1A under

the Securities Act of 1933 and

the Investment Company Act of 1940

EXHIBITS

INDEX TO EXHIBITS
Page
Consents of Independent Auditors

EXHIBIT (11)

Independent Auditors' Consent

To The Board of Directors
The Infinity Mutual Funds, Inc.--
Alpha Government Securities Portfolio:

We consent to the use of our report dated February 14, 1997 with respect to
Alpha Government Securities Portfolio (one of the portfolios constituting The
Infinity Mutual Funds, Inc.), incorporated herein by reference, and to the
references to our Firm under the headings "Financial Highlights" in the
Prospectus and "Custodian, Transfer and Dividend Disbursing Agent, Counsel and
Independent Auditors" in the Statement of Additional Information.

KPMG PEAT MARWICK LLP

New York, New York
April 30, 1997

<PAGE>
EXHIBIT (11)

Independent Auditors' Consent

To The Board of Directors
The Infinity Mutual Funds, Inc.--
Correspondent Cash Reserves
Money Market Portfolio and Correspondent Cash Reserves Tax Free Money
Market Portfolio:

We consent to the use of our report dated February 14, 1997 with respect to
the Correspondent Cash Reserves Money Market Portfolio and the Correspondent
Cash Reserves Tax Free Money Market Portfolio (two of the portfolios
constituting The Infinity Mutual Funds, Inc.), incorporated herein by reference,
and to the references to our Firm under the headings "Financial Highlights" in
the Prospectus and "Custodian, Transfer and Dividend Disbursing Agent, Counsel
and Independent Auditors" in the Statement of Additional Information.

KPMG PEAT MARWICK LLP

New York, New York
April 30, 1997

<PAGE>

EXHIBIT (11)

Independent Auditors' Consent

The Board of Directors
The Infinity Mutual Funds, Inc.--
The AmeriStar Mutual Funds:

We consent to the use of our report incorporated by reference herein dated
February 18, 1997 for the AmeriStar Prime Money Market Portfolio (formerly the
ValueStar Prime Money Market Portfolio) and the AmeriStar U.S. Treasury Money
Market Portfolio (formerly the ValueStar U.S. Treasury Money Market Portfolio)
as of December 31, 1996 and for the periods indicated therein, and to the
references to our Firm under the headings "Financial Highlights" in the
Prospectus and "Custodian, Transfer and Dividend Disbursing Agent, Counsel and
Independent Auditors" in the Statement of Additional Information.

KPMG PEAT MARWICK LLP

Columbus, Ohio
April 29, 1997