INFINITY MUTUAL FUNDS INC /MD/, 497, 1999-04-06

INFINITY MUTUAL FUNDS INC /MD/
497, 1999-04-06

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SUBJECT TO COMPLETION, DATED APRIL 6, 1999

STEWARDSHIP FUNDS

PROSPECTUS

____________, 1999

o Large-Cap Equity Fund
o Small-Cap Equity Fund
o Mid-Cap Equity Fund

MANAGED BY
FIRST AMERICAN NATIONAL BANK
Questions?
Call 1-888-FAM-VALUE

AS WITH ALL MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUND SHARES OR DETERMINED WHETHER THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.

The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

<PAGE>

TABLE OF CONTENTS

CAREFULLY REVIEW THIS DESCRIPTION OF THE FUNDS - OBJECTIVES,
IMPORTANT SECTION RISK/RETURN AND EXPENSES
TO LEARN ABOUT EACH
FUND'S GOAL, MAIN __ Overview
INVESTMENT STRATEGIES __ Large-Cap Equity Fund
AND RISKS, PAST __ Small-Cap Equity Fund
PERFORMANCE, AND FEES. __ Mid-Cap Equity Fund

REVIEW THIS SECTION ADDITIONAL INVESTMENT STRATEGIES AND RISKS
FOR ADDITIONAL
INFORMATION ON INVESTMENT __ Family Values Policies
STRATEGIES AND RISKS. __ Large-Cap Equity Fund
__ Small-Cap Equity Fund
__ Mid-Cap Equity Fund
__ Applicable to All Funds
__ Year 2000 Risk

REVIEW THIS SECTION FOR FUND MANAGEMENT
DETAILS ON THE
PEOPLE AND ORGANIZATIONS __ The Investment Adviser
WHO OVERSEE THE FUNDS. __ Portfolio Managers
__ The Administrator and Distributor

REVIEW THIS SECTION FOR SHAREHOLDER INFORMATION
DETAILS ON HOW
SHARES ARE VALUED, HOW TO __ Alternative Purchase Methods
PURCHASE, SELL AND EXCHANGE __ Pricing of Fund Shares
SHARES, RELATED CHARGES AND __ Purchasing and Adding to Your Shares
PAYMENTS OF DIVIDENDS AND __ Selling Your Shares
DISTRIBUTIONS. __ Exchanging Your Shares
__ General Policies on Selling Shares
__ Distribution Arrangements/Sales Charges
__ Dividends, Distributions and Taxes

BACK COVER

WHERE TO LEARN MORE
ABOUT THE FUNDS

OVERVIEW

The Funds The Stewardship Funds consist of three
separate Funds, each with its own investment
strategy and risk/return profile. The Funds
seek capital appreciation and invest
primarily in common stocks. The differences
in investment strategy among the Funds
determine the types of securities in which
each Fund invests and can be expected to
affect the degree of risk each Fund is
subject to and its yield or return. Because
you could lose money by investing in a Fund,
be sure to read all risk disclosure carefully
before investing.

Each Fund invests in the securities of
companies which, in the opinion of the Fund's
management, not only meet traditional
investment standards, but also show evidence
that they conduct their business in a manner
that does not conflict with traditional
family values ("Family Values Policies").
Consequently, the Funds will NOT invest in
companies that directly profit from or
promote:

o abortion
o pornography
o non-marriage lifestyles
o alcohol
o tobacco
o gambling

You should be aware that the Stewardship
Funds:

o Are not bank deposits

o Are not guaranteed, endorsed or insured by
any bank, financial institution or
government entity such as the Federal
Deposit Insurance Corporation

o Are not guaranteed to achieve their stated
goals

WHO MAY WANT TO
INVEST? Consider investing in the Funds if you are:

o seeking to have continuity between your
investments and your personal values

o seeking a long-term goal such as retirement

o looking to add a growth component to your
portfolio

o willing to accept the risks of investing in
the stock markets

The Funds may not be appropriate if you are:

o pursuing a short-term goal or investing
emergency reserves

o uncomfortable with an investment that will
go up and down in value

<PAGE>

DESCRIPTION OF THE FUNDS--OBJECTIVES, RISK/RETURN AND EXPENSES

LARGE-CAP EQUITY FUND

Investment Objective The Fund seeks to provide investors with
Objective long-term capital appreciation.

PRINCIPAL INVESTMENT The Fund invests primarily in the common
STRATEGIES stocks of large U.S. companies with market
capitalizations over $1 billion that the
Adviser believes have the potential to
provide capital appreciation and growth of
income. These companies must offer products
or services and undertake activities that are
consistent with the Fund's Family Values
Policies.

In choosing stocks for the Fund, the
Adviser's strategy is to select well managed
U.S. companies that have demonstrated
sustained patterns of profitability, strong
balance sheets, and the potential to achieve
predictable, above-average earnings growth.
The Adviser seeks to diversify the Fund's
portfolio within the various industries
typically comprising, what the Adviser
believes to be, the classic growth segments
of the U.S. economy: Technology, Consumer
Non-Durables, Health Care, Business Equipment
and Services, Retail, and Capital Goods.

The Fund invests for long-term growth rather
than short-term profits.

PRINCIPAL INVESTMENT RISKS Stocks and other equity securities fluctuate
in price, often based on factors unrelated to
the issuers' value, and such fluctuations can
be pronounced. The value of your investment
in the Fund will fluctuate in response to
movements in the stock market and the
activities of individual portfolio companies.
As a result, you could lose money by
investing in the Fund, particularly if there
is a sudden decline in the share prices of
the Fund's holdings or an overall decline in
the stock market.

Over time, growth companies are expected to
increase their earnings at an above-average
rate. If these expectations are not met, the
stock price can fall drastically--even if
earnings show an absolute increase.

The risks and returns of different industries
can vary over the long-term and short-term.
Because of this, the Fund's performance could
suffer during times when the stocks of the
classic growth industries in which it is
invested are out of favor.

PERFORMANCE BAR CHART AND TABLE

As of the date of this prospectus, the Fund had not completed a year of
operations. Accordingly, no performance information is provided.

FEES AND EXPENSES

If you purchase and Shareholder
hold shares of the Transaction
Large-Cap Equity Fees (fees
Fund, you will pay paid by you CLASS CLASS B
certain fees and directly) A SHARES SHARES
expenses, which are
described in the
tables. Shareholder Maximum sales
transaction fees are charge (load)
paid from your on purchases 4.75%1 None
account. Annual Fund AS A % OF
operating expenses OFFERING PRICE
are paid out of Fund
assets, and are
reflected in the
share price. ------------------------------------------------
Maximum deferred None2 4.00%3
sales charge
(CDSC) AS A %
OF LOWER OF
PURCHASE OR
SALE PRICE

Annual Fund CLASS CLASS
Operating A SHARES B SHARES
Expenses
(fees paid from
Fund assets)
--------------------------------------------------
Management Fee .75% .75%
--------------------------------------------------
Distribution
(12b-1) Fee .25% .75%
--------------------------------------------------
Other Expenses 1.78% 1.88%
--------------------------------------------------
Total Annual Fund 2.78% 3.38%
Operating Expenses4
--------------------------------------------------
Fee Waiver
and/or (.93%) (1.03%)
Expense Reimbursement
--------------------------------------------------
Net Expenses 1.85% 2.35%
--------------------------------------------------
- ------------

1 Sales charges may be reduced depending upon the amount invested or, in
certain circumstances, waived. See "Distribution Arrangements."

2 Shares bought as part of an investment of $1 million or more are not
subject to an initial sales charge, but may be charged a CDSC of 1.00% if
sold within one year of purchase. See "Distribution Arrangements."

3 The CDSC, which is charged if the shares are sold within six years of
purchase, declines as follows: 4%, 3%, 3%, 2%, 2%, 1% to 0% in the seventh
year. Approximately seven years after purchase, Class B shares
automatically convert to Class A shares.

4 Other expenses are based on estimated amounts for the current fiscal year.
The Adviser has agreed to waive receipt of its fees and/or assume other
expenses of the Fund until ------, 2000, so that the Fund's total annual
operating expenses do not exceed 1.85% for Class A and 2.35% for Class B.
The expenses noted above do not reflect any other fee waivers or expense
reimbursement arrangements that may be in effect.

EXPENSE EXAMPLE

Use the example at right LARGE-CAP EQUITY 1 3
to help you compare the FUND Year Years
cost of investing in the Fund
with the cost of investing in CLASS A SHARES $654 $1,029
other mutual funds. It ---------------------------------------------
illustrates the amount of CLASS B SHARES
fees and expenses you would pay, Assuming $638 $1,033
assuming the following: Redemption

o $10,000 investment Assuming no
o 5% annual return Redemption $238 $733
o no changes in the Fund's ---------------------------------------------
operating expenses
o reinvestment of all dividends
and distributions

Because actual returns and operating
expenses will be different,
this example is for comparison only.

<PAGE>

DESCRIPTION OF THE FUNDS--OBJECTIVES, RISK/RETURN AND EXPENSES

SMALL-CAP EQUITY FUND

Investment Objective The Fund seeks to provide investors with
capital appreciation.

PRINCIPAL INVESTMENT
STRATEGIES The Fund invests primarily in the common
stocks of U.S. companies with market
capitalizations of less than $1.5 billion.
These companies must offer products or
services and undertake activities that are
consistent with the Fund's Family Values
Policies.

In choosing stocks for the Fund, the Fund's
Sub-Adviser, Womack Asset Management, seeks
investment opportunities in smaller, well
managed U.S. companies whose shares are
undervalued relative to the companies' growth
potential. The Sub-Adviser employs a
growth-oriented approach which involves
fundamental analysis of the company's
published financial statements with technical
analysis (which relies on price and volume
movements of the company's stock) to discern
potential and risk.

The Sub-Adviser focuses on individual stock
selection (a "bottom-up" approach) rather
than on forecasting stock market trends (a
"top-down" approach). The Sub-Adviser
considers, among other factors:

o projected earnings growth
o relative price strength
o business fundamentals

PRINCIPAL INVESTMENT Stocks and other equity securities fluctuate
RISKS in price, often based on factors unrelated to
the issuers' value, and such fluctuations can
be pronounced. The value of your investment
in the Fund will fluctuate in response to
movements in the stock market and the
activities of individual portfolio companies.
As a result, you could lose money by
investing in the Fund, particularly if there
is a sudden decline in share prices of the
Fund's holdings or an overall decline in the
stock market.

The Fund invests in small-cap companies which
carry additional risks. Smaller companies
typically have more limited product lines,
markets and financial resources, and have
less predictable earnings than larger
companies and their securities trade less
frequently and in more limited volume than
those of larger, more established companies.
As a result, small-cap stocks and thus the
Fund's shares may fluctuate significantly
more in value than larger-cap stocks and
funds that focus on them.

PERFORMANCE BAR CHART AND TABLE

As of the date of this prospectus, the Fund had not completed a year of
operations. Accordingly, no performance information is provided.

FEES AND EXPENSES

If you purchase and Shareholder
hold shares of the Transaction
Small-Cap Equity Fees (fees
Fund, you will pay paid by you CLASS A CLASS B
certain fees and directly) SHARES SHARES
expenses, which are
described in the
tables. Shareholder Maximum sales
transaction fees are charge (load)
paid from your on purchases AS
account. Annual Fund A % OF OFFERING
operating expenses PRICE 4.75%(1) None
are paid out of Fund ----------------------------------------------
assets, and are
reflected in the Maximum deferred
share price. sales charge
(CDSC) AS A %
OF LOWER OF
PURCHASE OR SALE
PRICE None(2) 4.00%(3)

Annual Fund
Operating
Expenses CLASS CLASS
(fees paid from A SHARES B SHARES
Fund assets)
-----------------------------------------------
Management Fee .95% .95%
-----------------------------------------------
Distribution
(12b-1) Fee .25% .75%
-----------------------------------------------
Other Expenses 2.83% 2.93%
-----------------------------------------------
Total Annual Fund
Operating
Expenses4 4.03% 4.63%
-----------------------------------------------
Fee Waiver
and/or Expense
Reimbursement (2.18%) (2.28%)
-----------------------------------------------
Net Expenses 1.85% 2.35%
-----------------------------------------------

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

1 Sales charges may be reduced depending upon the amount invested or, in
certain circumstances, waived. See "Distribution Arrangements."

2 Shares bought as part of an investment of $1 million or more are not subject
to an initial sales charge, but may be charged a CDSC of 1.00% if sold within
one year of purchase. See "Distribution Arrangements."

4 Other expenses are based on estimated amounts for the current fiscal year.
The Adviser has agreed to waive receipt of its fees and/or assume other
expenses of the Fund until _____________, 2000, so that the Fund's total
annual operating expenses do not exceed 1.85% for Class A and 2.35% for Class
B. The expenses noted above do not reflect any other fee waivers or expense
reimbursement arrangements that may be in effect.

<PAGE>

EXPENSE EXAMPLE

Use the example at SMALL-CAP EQUITY FUND 1 3
right to help you Year Years
compare the cost of CLASS A SHARES $654 $1,029
investing in the -------------------------------------------------
Fund with the cost CLASS B SHARES
of investing in Assuming Redemption $638 $1,033
other mutual funds. Assuming no Redemption $238 $733
It illustrates the -------------------------------------------------
amount of fees and
expenses you would
pay, assuming the
following:

o $10,000 investment
o 5% annual return
o no changes in the
Fund's operating
expenses
o reinvestment of all
dividends and
distributions

Because actual
returns and
operating expenses
will be different,
this example is for
comparison only

<PAGE>

DESCRIPTION OF THE FUNDS--OBJECTIVES, RISK/RETURN AND EXPENSES

MID-CAP EQUITY FUND

INVESTMENT OBJECTIVE The Fund seeks to provide investors with
capital appreciation.

PRINCIPAL INVESTMENT The Fund invests primarily in the common
STRATEGIES stocks of companies publicly traded on
U.S. exchanges that have market
capitalizations of $500 million to $5
billion. These companies must offer products
or services and undertake activities that are
consistent with the Fund's Family Values
Policies.

In choosing stocks for the Fund, the Adviser
seeks to identify industries that are
benefiting from major demand trends or themes
and are therefore growing at a much faster
rate than the overall economy. The Adviser
then typically gathers information on the
companies that are benefiting from these
trends or themes. Generally, the Fund will
not invest in a company unless the Adviser
has met with the company's top management.
The Adviser also seeks to talk to suppliers,
purchasers, and competitors to reinforce its
analysis and monitor the Fund's holdings. The
Adviser's experience has been that when mid-
sized companies are backed by major demand
trends, they can create attractive gains for
investors.

PRINCIPAL INVESTMENT Stocks and other equity securities fluctuate
RISKS in price, often based on factors unrelated
to the issuers' value, and such fluctuations
can be pronounced. The value of your
investment in the Fund will fluctuate in
response to movements in the stock market and
the activities of individual portfolio
companies. As a result, you could lose money
by investing in the Fund, particularly if
there is a sudden decline in share prices of
the Fund's holdings or an overall decline in
the stock market.

The Fund invests in mid-cap companies which
carry additional risks. These companies
typically have less predictable earnings than
larger companies and their securities trade
less frequently and in more limited volume
than those of larger, more established
companies. As a result, mid-cap stocks and
thus the Fund's shares may fluctuate more in
value than larger-cap stocks and funds that
focus on them.

Because demand trends and themes can change,
the Fund's performance could suffer if the
Adviser is slow to respond to such changes.

PERFORMANCE BAR CHART AND TABLE

As of the date of this prospectus, the Fund had not completed a year of
operations. Accordingly, no performance information is provided.

FEES AND EXPENSES

If you purchase and Shareholder
hold shares of the Transaction
Mid-Cap Equity Fund, Fees (fees
you will pay certain paid by you CLASS A CLASS B
fees and expenses, directly) SHARES SHARES
which are described
in the tables.
Shareholder Maximum sales
transaction fees are charge (load)
paid from your on purchases AS A 4.75%(1) None
account. Annual Fund % OF OFFERING
operating expenses PRICE
are paid out of Fund
assets, and are --------------------------------------------------
reflected in the Maximum deferred
share price. sales charge
(CDSC) AS A % OF None(2) 4.00%(3)
LOWER OF PURCHASE
OR SALE PRICE

Annual Fund CLASS CLASS
Operating A SHARES B SHARES
Expenses
(fees paid from
Fund assets)
-------------------------------------------------
Management Fee 1.00% 1.00%
-------------------------------------------------
Distribution
(12b-1) Fee .25% .75%
-------------------------------------------------
Other Expenses 1.87% 1.97%
-------------------------------------------------
Total Annual Fund
Operating Expenses(4) 3.12% 3.72%
-------------------------------------------------
Fee Waiver
and/or Expense (1.27%) (1.37%)
Reimbursement
-------------------------------------------------
Net Expenses 1.85% 2.35%
-------------------------------------------------

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

1 Sales charges may be reduced depending upon the amount invested or, in
certain circumstances, waived. See "Distribution Arrangements."

2 Shares bought as part of an investment of $1 million or more are not subject
to an initial sales charge, but may be charged a CDSC of 1.00% if sold within
one year of purchase. See "Distribution Arrangements."

4 Other expenses are based on estimated amounts for the current fiscal year.
The Adviser has agreed to waive receipt of its fees and/or assume other
expenses of the Fund until __________, 2000, so that the Fund's total annual
operating expenses do not exceed 1.85% for Class A and 2.35% for Class B. The
expenses noted above do not reflect any other fee waivers or expense
reimbursement arrangements that may be in effect.

<PAGE>

EXPENSE EXAMPLE

Use the example at MID-CAP EQUITY FUND 1 3
right to help you Year Years
compare the cost of CLASS A SHARES $654 $1,029
investing in the -------------------------------------------------
Fund with the cost CLASS B SHARES
of investing in Assuming Redemption $638 $1,033
other mutual funds.
It illustrates the Assuming no Redemption $238 $733
amount of fees and -------------------------------------------------
expenses you would
pay, assuming the
following:

o $10,000 investment
o 5% annual return
o no changes in the
Fund's operating
expenses
o reinvestment of all
dividends and
distributions

Because actual
returns and
operating expenses
will be different,
this example is for
comparison only.

<PAGE>

ADDITIONAL INVESTMENT STRATEGIES AND RISKS

Family Values Policies--The Adviser will engage one or more independent
research groups to provide the data required by the Adviser to evaluate Family
Values Policies. The Adviser also may use commercially available computer data
bases, and review evaluations published or made available by "watchdog" groups.
These groups generally review publicly available information about corporations
to determine whether they are involved in the businesses of alcohol production,
tobacco production or casino gambling, or whether their primary business,
products or services involve pornography, abortion or non-marriage lifestyles.
Corporations that are involved in such activities will be excluded from the pool
of investment opportunities available to the Funds. The Adviser also reserves
the right to exercise its best judgment to exclude investment in other companies
whose corporate practices may not fall within the exclusions described above,
but nevertheless could be found offensive to what it considers to be basic
traditional family values. These values represent the beliefs and actions which
support the creation, maintenance, and strengthening of the traditional family
unit--two or more people, related by blood, marriage or adoption. The
development of suitable research techniques is largely within the discretion and
judgment of the Adviser. In addition, the Board of Directors may change, subject
to prior notice to shareholders, the ethical standards of the Funds.

The Adviser will attempt to monitor and respond to changes in business policies
by the companies selected for investment. If after investment by a Fund it is
determined that the issuer does not satisfy the Family Values Policies, the
Adviser will seek to sell the securities as soon as reasonably practicable,
which may cause the Fund to sell the securities at a time when it may be
disadvantageous to do so from a purely financial standpoint.

The Family Values Policies will be applied to the Funds' investments in domestic
equity and fixed-income securities and, when the necessary information is
available, to foreign securities, including American Depositary Receipts (ADRs).
The Family Values Policies will not be applied to investments in government
securities.

The Funds' Family Values Policies limit the availability of investment
opportunities more than is customary with other mutual funds, including other
funds managed by the Adviser. The Adviser believes, however, that there are
sufficient investment opportunities which meet the Funds' ethical standards to
permit full investment in accordance with their investment objectives.

LARGE-CAP EQUITY FUND--The Fund will invest at least 70% of its total assets in
large-cap equity securities. The Fund also may invest in debt securities of
domestic issuers rated no lower than investment grade (Baa/BBB) by a credit
rating agency, such as Moody's Investors Service, Inc., Standard & Poor's
Ratings Group, Fitch IBCA, Inc. or Duff & Phelps Credit Rating Co., or, if
unrated, deemed to be of comparable quality by the Adviser.

SMALL-CAP EQUITY FUND--The Fund will invest at least 65% of its total assets in
small-cap equity securities. The Fund also may invest in debt securities of
domestic issuers rated no lower than investment grade (Baa/BBB) by a credit
rating agency, or, if unrated, deemed to be of comparable quality by the
Adviser.

MID-CAP EQUITY FUND--The Fund will invest at least 65% of its total assets in
mid-cap equity securities. The Fund may invest up to 20% of its total assets in
securities of foreign issuers traded on the New York or American Stock Exchange
or in the over-the-counter market in the form of depositary receipts, such as
ADRs. The Fund also may invest in debt securities of domestic issuers rated no
lower than investment grade (Baa/BBB) by a credit rating agency, or, if unrated,
deemed to be of comparable quality by the Adviser.

Securities of foreign issuers (including ADRs) fluctuate in price, often based
on factors unrelated to the issuers' value, and such fluctuations can be
pronounced. Foreign securities tend to be more volatile than U.S. securities
because they include special risks such as exposure to currency fluctuations, a
lack of comprehensive company information, potential instability, and differing
auditing and legal standards.

APPLICABLE TO ALL FUNDS--While the Funds typically invest primarily in common
stocks, the equity securities in which they may invest also include convertible
securities and preferred stocks. Convertible securities are exchangeable for a
certain amount of another form of an issuer's securities, usually common stock,
at a prestated price. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer and, thus, typically
have lower credit ratings than similar non-convertible securities. Preferred
stock pays dividends at a specified rate and has preference over common stock in
the payment of dividends and the liquidation of assets. Preferred stock
ordinarily does not carry voting rights.

To a limited extent, each Fund may invest in debt securities. These securities
will be subject primarily to interest rate and credit risks. Interest rate risk
is the potential for a decline in bond prices due to rising interest rates. In
general, the prices of debt securities are inversely affected by changes in
interest rates and, therefore, are subject to the risk of market price
fluctuations. Credit risk is the possibility that the issuer of the security
will fail to make timely payments of interest or principal to the Fund. The
credit risk of a Fund depends on the quality of its investments. Certain debt
securities that may be purchased by the Funds, such as those rated Baa by
Moody's and BBB by S&P, Fitch and Duff, may be subject to such risk with respect
to the issuing entity and to greater market fluctuations than certain lower
yielding, higher rated securities.

Under adverse market conditions, each Fund may invest some or all of its assets
in money market instruments. Although the Fund would do this to avoid losses, it
could reduce the benefit from any upswing in the market. During such periods,
the Fund may not achieve its investment objective.

Each Fund may invest, to a limited extent, in securities issued by other
investment companies, including those managed by the Adviser, which principally
invest in securities of the type in which the Fund invests. Such investments
will involve duplication of advisory fees and certain other expenses.

Each Fund may invest some assets in derivative securities, such as options and
futures. These instruments would be used primarily to hedge the Fund's portfolio
but may be used to increase returns; however, they sometimes may reduce returns
or increase volatility. In addition, derivatives can be illiquid and highly
sensitive to changes in their underlying security, interest rate or index, and
as a result can be highly volatile. A small investment in certain derivatives
could have a potentially large impact on the Fund's performance.

Each Fund may lend its portfolio securities to brokers, dealers and other
financial institutions, which could subject the Fund to risk of loss if the
institution breaches it agreement with the Fund. In connection with such loans,
the Fund will receive collateral consisting of cash or U.S. Government
securities which will be maintained at all times in an amount equal to 100% of
the current market value of the loaned securities.

YEAR 2000 RISK--Like other funds and business organizations around the world,
the Funds could be adversely affected if the computer systems used by the
Adviser or Sub-Adviser and the Funds' other service providers do not properly
process and calculate date-related information for the year 2000 and beyond. In
addition, Year 2000 issues may adversely affect the companies or other issuers
in which the Funds invest where, for example, such entities incur substantial
costs to address Year 2000 issues or suffer losses caused by the failure to
adequately or timely do so.

The Adviser, the Sub-Adviser and the Funds' other service providers (i.e.,
Administrator, Transfer Agent, Fund Accounting Agent, Custodian and Distributor)
have assured the Funds that they have developed and are implementing clearly
defined and documented plans intended to minimize risks to services critical to
the Funds' operations associated with Year 2000 issues. The Adviser, the
Sub-Adviser and service providers are likewise seeking assurances from their
respective vendors and suppliers that such entities are addressing Year 2000
issues.

While the ultimate costs or consequences of incomplete or untimely resolution of
Year 2000 issues by the Adviser, the Sub-Adviser or the Funds' service providers
cannot be accurately assessed at this time, the Funds currently have no reason
to believe that the Year 2000 plans of the Adviser, the Sub-Adviser and the
Funds' service providers will not be completed by December 31, 1999, or that the
anticipated costs associated with full implementation of their plans will have a
material adverse impact on either their business operations or financial
condition or those of the Funds. If any systems upon which the Funds are
dependent are not Year 2000 ready by December 31, 1999, administrative errors
and account maintenance failures would likely occur.

FUND MANAGEMENT

INVESTMENT ADVISERS

First American National Bank, located at First American Center, 315 Deaderick
Street, Nashville, Tennessee 37237, serves as each Fund's investment adviser.
The Adviser is a wholly-owned subsidiary of First American Corporation, a
registered bank holding company. First American National Bank, and its
affiliates, provide personal trust, estate, employee benefit trust, corporate
trust and custody services to over 7,000 accounts, as well as investment
advisory services. The Adviser, and its affiliates, as of December 31, 1998, had
approximately $10 billion under trust and approximately $6 billion under
management.

The Adviser is responsible for making investment decisions for each Fund,
placing purchase and sale orders and providing research, statistical analysis
and continuous supervision of each Fund's investment portfolio. The Adviser has
engaged Womack Asset Management, Inc. to serve as the Small-Cap Equity Fund's
sub-investment adviser to provide investment advisory assistance and the
day-to-day management of that Fund's investments, as well as investment research
and statistical information.

Womack Asset Management, Inc., located at 1667 Lelia Drive, Suite 101, Jackson,
Mississippi 39216, is a registered investment adviser formed in February 1997.
Womack Asset Management provides investment management services to one other
investment company portfolio and to client discretionary accounts totaling
approximately $160 million as of December 31, 1998.

Set forth below is the investment advisory fee rate payable to the Adviser by
the indicated Fund:

NAME OF FUND ANNUAL RATE
- ---------------------------------- ------------------
Large-Cap Equity Fund .75%
Small-Cap Equity Fund .95%
Mid-Cap Equity Fund 1.00%

PRIMARY PORTFOLIO MANAGERS

The primary portfolio manager for each Fund is as follows:

LARGE-CAP EQUITY FUND--Ronald E. Lindquist. Mr. Lindquist, who has over 30
years' experience as a portfolio manager, has been the Large-Cap Equity Fund's
primary portfolio manager since its inception, and has been employed by the
Adviser since May 1998. Since 1978, he was employed by Deposit Guaranty National
Bank and Commercial National Bank, affiliates of the Adviser.

SMALL-CAP EQUITY FUND--William A. Womack. He has been the Small-Cap Equity
Fund's primary portfolio manager since its inception. Mr. Womack formed Womack
Management in February 1997. For more than 12 years prior thereto, he was a
Senior Vice President and Trust Investment Officer of Deposit Guaranty National
Bank.

MID-CAP EQUITY FUND--Robert A. Rinner. He has been the Mid-Cap Equity Fund's
primary portfolio manager since its inception, and has been a portfolio manager
with the Adviser since April 1996. Prior thereto, Mr. Rinner was a portfolio
manager with Royal Insurance Co.

ADMINISTRATOR AND DISTRIBUTOR

BISYS Fund Services Ohio, Inc. (the "Administrator"), 3435 Stelzer Road,
Columbus, Ohio 43219-3035, serves as each Fund's administrator. The
administrative services of the Administrator include providing office space,
equipment and clerical personnel to the Funds and supervising custodial,
auditing, valuation, bookkeeping, legal and dividend dispersing services.

BISYS Fund Services Limited Partnership (the "Distributor"), an affiliate of the
Administrator, serves as the distributor of each Fund's shares. The Distributor
may provide financial assistance in connection with pre-approved seminars,
conferences and advertising to the extent permitted by applicable state or
self-regulatory agencies, such as the National Association of Securities
Dealers.

SHAREHOLDER INFORMATION

ALTERNATIVE PURCHASE METHODS

Each Fund offers Class A shares and Class B shares. Each Class A share and Class
B share represents an identical pro-rata interest in the relevant Fund's
investment portfolio.

You will need to choose a share class before making your initial investment. (If
only one share class is available through your program, you can refer just to
that information). In making your choice, you should weigh the impact of all
potential costs over the length of your investment, including sales charges and
annual fees. For example, in some cases, it may be more economical to pay an
initial sales charge than to choose a class with no initial sales charge but a
contingent deferred sales charge (CDSC) and higher annual fees.

o Class A shares may be appropriate for investors who prefer to pay the
Fund's sales charge up-front rather than upon the sale of their shares, or
want to take advantage of the reduced sales charges available on larger
investments.

o Class B shares may be appropriate for investors who want to avoid a
front-end sales charge, put 100% of their investment dollars to work
immediately and/or have a longer-term investment horizon.

Your investment representative can help you choose the share class that is
appropriate for you.

PRICING OF FUND SHARES

o HOW NAV IS CALCULATED

The NAV of each class is calculated by adding the total value of the Fund's
investments and other assets attributable to such class, subtracting its
liabilities and then dividing that figure by the number of outstanding shares of
the class:

Per share net asset value (NAV) for each Fund is determined and its shares are
priced at the close of regular trading on the New York Stock Exchange, normally
at 4:00 p.m. Eastern time, on days the Exchange is open, except Columbus Day and
Veterans' Day.

Your order for purchase, sale or exchange of shares is priced at the next NAV
calculated after your order is received by the Fund less any applicable sales
charge as noted in the section on "Distribution Arrangements/Sales Charges."
This is what is known as the offering price.

NAV =

TOTAL ASSETS - LIABILITIES
- --------------------------
Number of Class Shares
Outstanding
You can find each Fund's
NAV daily in THE WALL STREET
JOURNAL and other newspapers.

Each Fund's investments are valued each business day generally by using
available market quotations or at fair value which may be determined by one or
more pricing services approved by the Board of Directors. Each pricing service's
procedures are reviewed under the general supervision of the Board of Directors.
For further information regarding the methods employed in valuing the Funds'
investments, see the Statement of Additional Information.

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES

You may purchase MINIMUM INVESTMENT
Class A shares and -------------------------------
Class B shares ACCOUNT TYPE INITIAL SUBSEQUENT
through a number of
institutions, CLASS A OR B
including the Regular $1,000 $100
Adviser and its (non-retirement)
affiliates, directly Retirement
from the (IRA) $ 100 $ 50
Distributor, or Automatic
through banks, Investment Plan $ 250 $ 25
brokers and other
investment
representatives. All purchases must be in U.S. dollars. A fee will
Certain investment be charged for any checks that do not clear.
representatives may Third-party checks are not accepted.
charge additional
fees and may require A Fund may waive the minimum purchase requirements
higher minimum and may reject any purchase order in whole or in
investments or part.
impose other
limitations on
buying and selling
shares. If you
purchase shares
through an
investment
representative, that
party is responsible
for transmitting
orders in a timely
manner and may have
an earlier cut-off
time for purchase
and sale requests.
Consult your
investment
representative for
specific information.

- -------------------------------------------------------------------------------
Avoid 31% Tax Withholding
A Fund is required to withhold 31% of taxable dividends, capital gains
distributions and redemptions paid to shareholders who have not provided the
Fund with their certified taxpayer identification number in compliance with IRS
rules. To avoid this, make sure you provide your correct Tax Identification
Number (Social Security Number for most investors) on your account application.
- -------------------------------------------------------------------------------

<PAGE>

SHAREHOLDER INFORMATION

INSTRUCTIONS FOR OPENING OR ADDING TO AN ACCOUNT

If purchasing through an investment representative, simply tell your
representative that you wish to purchase shares of the Funds and he or she will
take care of the necessary documentation. For all other purchases, follow the
instructions below.

BY REGULAR MAIL

Initial Investment:

1. Carefully read and complete the account application. Establishing your
account privileges now saves you the inconvenience of having to add them
later.
2. Make check, bank draft or money order payable to "Stewardship Funds."
3. Mail to: Stewardship Funds
P.O. Box 182207
Columbus, Ohio 43218-2207.

Subsequent Investment:

1. Use the investment slip attached to your account statement. Or, if
unavailable,

2. Include the following information on a piece of paper:

o Stewardship Funds/Fund name
o Share class
o Amount invested
o Account name
o Account number
Include your account number on your check.

3. Mail to: Stewardship Funds
Columbus, Ohio 43218-2207.

BY OVERNIGHT SERVICE

See instructions 1-2 above for subsequent investments.
Send to: Stewardship Funds,
c/o BISYS Fund Services,
Attn: T.A. Operations, 3435 Stelzer Road, Columbus, Ohio 43219.

ELECTRONIC PURCHASES

Your bank must participate in the Automated Clearing House (ACH) and must be a
United States Bank. Your bank or broker may charge for this service.

<PAGE>

Establish an electronic purchase option on your account application or call
1-800-000-0000. Your account can generally be set up for electronic purchases
within 15 days.

Call 1-800-000-0000 to arrange a transfer from your bank account.

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES - CONTINUED

ELECTRONIC VS. WIRE TRANSFER

Wire transfers allow financial institutions to
send funds to each other, almost instantaneously.
With an electronic purchase or sale, the
transaction is made through the Automated Clearing
House (ACH) and may take up to eight days to
clear. There is generally no fee for ACH
transactions.

BY WIRE TRANSFER

NOTE: YOUR BANK MAY CHARGE A WIRE TRANSFER FEE.

For initial investment:
Fax the completed account application, along with a request for a confirmation
number to 1-800-000-0000. Follow the instructions below after receiving your
confirmation number.

For initial and subsequent investments:
Instruct your bank to wire transfer your investment to:
The Bank of New York
Routing Number: ABA #021000018
DDA#
Include:
Your name
Your confirmation number
After instructing your bank to wire the funds, call 1-800-000-0000 to advise us
of the amount being transferred and the name of your bank

You can add to your account by using the convenient options described below. The
Funds reserve the right to change or eliminate these privileges at any time with
60 days' notice.

<PAGE>

SHAREHOLDER INFORMATION

PURCHASING AND ADDING TO YOUR SHARES - CONTINUED

AUTOMATIC INVESTMENT PLAN DIRECTED DIVIDEND OPTION

You can make automatic investments By selecting the appropriate box in
in the Funds from your bank the account application, you can
account, through payroll deduction elect to receive your distributions
or from your federal employment, (capital gains and dividends)
Social Security or other regular in cash (check) or have them
government checks. Automatic reinvested in another Fund
investments can be as little as without a sales charge. You must
$25, once you've invested the maintain the minimum balance
$250 minimum required to open the in each Fund into which you plan to
account. reinvest distributions or the
reinvestment will be suspended and
To invest regularly from your bank your distributions paid to you.
account: The Fund may modify or terminate
Complete the Automatic Investment this reinvestment option without
Plan portion on your Account notice. You can change or terminate
Application. your participation in the
Make sure you note: reinvestment option at any time.

o Your bank name, address and account
number
o The amount you wish to invest
automatically (minimum $25)
o How often you want to invest
(every month, 4 times a year,
twice a year or once a year)
o Attach a voided personal check.

To invest regularly from your paycheck or
government check: Call 1-800-000-0000 for an
enrollment form.

<PAGE>

SHAREHOLDER INFORMATION

SELLING YOUR SHARES

You may sell your -------------------------------------------------
shares at any time. WITHDRAWING MONEY FROM YOUR FUND INVESTMENT
Your sales price
will be the next NAV As a mutual fund shareholder, you are technically
after your sell selling shares when you request a withdrawal in
order is received by cash. This is also known as redeeming shares or a
the Fund, its redemption of shares.
transfer agent, or -------------------------------------------------
your investment
representative. CONTINGENT DEFERRED SALES CHARGE
Normally you will When you sell Class B shares, you will be charged
receive your a fee for any shares that have not been held for a
proceeds within a sufficient length of time. These fees will be
week after your deducted from the money paid to you. See the
request is received. section on "Distribution Arrangements/Sales
See section on Charges" below for details.
"General Policies on
Selling Shares" INSTRUCTIONS FOR SELLING SHARES
below.
If you are selling your shares through your
financial adviser or broker, ask him or her for
redemption procedures. Your adviser and/or broker
may have transaction minimums and/or transaction
times which will affect your redemption. For all
other sales transactions, follow the instructions
below.

By telephone 1. Call 1-800-000-0000 with instructions
(UNLESS YOU HAVE as to how you wish to receive your funds
DECLINED TELEPHONE (mail, wire, electronic transfer). (See "General
SALES PRIVILEGES) Policies on Selling Shares--Verifying
Telephone Redemptions" below)
- -------------------------------------------------------------------------------
By mail 1. Call 1-800-000-0000 to request redemption
forms or write a letter of instruction indicating:
o your Fund and account number
o amount you wish to redeem
o address where your check should be sent
o account owner signature
2. Mail to:
Stewardship Funds
P.O. Box 182207
Columbus, OH 43218-2207
- -------------------------------------------------------------------------------
By overnight service See instruction 1 above.
(See "General 2. Send to
Policies on Selling Stewardship Funds
Shares--Redemptions c/o BISYS Fund Services
in Writing Required" Attn: T.A. Operations
below) 3435 Stelzer Road
Columbus, OH 43219

<PAGE>

SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

Wire transfer Call 1-800-000-0000 to request a wire
YOU MUST INDICATE transfer.
THIS OPTION ON YOUR
APPLICATION. If you call by 4 p.m. Eastern time,
your payment will normally be wired
The Fund may charge to your bank on the next business day.
a wire transfer fee.
Note: Your financial
institution may
also charge a
separate fee.

- -------------------------------------------------------------------------------
Electronic Redemptions Call 1-800-000-0000 to request an
electronic redemption.

Your bank must participate If you call by 4 p.m. Eastern time, the NAV of
in the Automated Clearing your shares will normally be determined on the
House (ACH) and must be a same day and the proceeds credited within
U.S. bank. 8 days.

Your bank may charge for
this service.

SYSTEMATIC WITHDRAWAL PLAN

You can receive automatic payments from your account on a monthly, quarterly,
semi-annual or annual basis. The minimum withdrawal is $25. To activate this
feature:

o Make sure you've checked the appropriate box on the account application. Or
call 1-800-000-0000.
o Include a voided personal check.
o Your account must have a value of $5,000 or more to start withdrawals.
o If the value of your account falls below $500, you may be asked to add
sufficient funds to bring the account back to $500, or the Fund may close
your account and mail the proceeds to you.

<PAGE>

SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

GENERAL POLICIES ON SELLING SHARES

REDEMPTIONS IN WRITING REQUIRED
You must request redemption in writing in the following situations:
1. Redemptions from Individual Retirement Accounts ("IRAs").
2. Redemption requests requiring a signature guarantee which include each
of the following.

o Redemptions over $10,000

o Your account registration or the name(s) in your account has changed within
the last 15 days

o The check is not being mailed to the address on your account o The check is
not being made payable to the owner of the account

o The redemption proceeds are being transferred to another Fund account with
a different registration.

A signature guarantee can be obtained from a financial institution, such as a
bank, broker-dealer, or credit union, or from members of the STAMP
(Securities Transfer Agents Medallion Program), MSP (New York Stock Exchange
Signature Program) or SEMP (Stock Exchanges Medallion Program). Members are
subject to dollar limitations which must be considered when requesting their
guarantee. The Transfer Agent may reject any signature guarantee if it
believes the transaction would otherwise be improper.

VERIFYING TELEPHONE REDEMPTIONS
The Fund makes every effort to insure that telephone redemptions are only made
by authorized shareholders. All telephone calls are recorded for your protection
and you will be asked for information to verify your identity. Given these
precautions, unless you have specifically indicated on your application that you
do not want the telephone redemption feature, you may be responsible for any
fraudulent telephone orders. If appropriate precautions have not been taken, the
Transfer Agent may be liable for losses due to unauthorized transactions.

<PAGE>

SHAREHOLDER INFORMATION

SELLING YOUR SHARES - CONTINUED

REDEMPTIONS WITHIN 15 DAYS OF INITIAL INVESTMENT
Before selling recently purchased shares, please note that if your initial
investment was by check, the Fund may delay sending you the proceeds until the
Transfer Agent is satisfied that the check has cleared (which may require up to
15 business days). You can avoid this delay by purchasing shares with a
certified check.

REFUSAL OF REDEMPTION REQUEST
Payment for shares may be delayed under extraordinary circumstances or as
permitted by the SEC in order to protect remaining shareholders.

REDEMPTION IN KIND
The Fund reserves the right to make payment in securities rather than cash,
known as "redemption in kind." This could occur under extraordinary
circumstances, such as a very large redemption that could affect Fund operations
(for example, more than 1% of the Fund's net assets). If the Fund deems it
advisable for the benefit of all shareholders, redemption in kind will consist
of securities equal in market value to your shares. When you convert these
securities to cash, you might have to pay brokerage charges.

CLOSING OF SMALL ACCOUNTS
If your account falls below $500, the Fund may ask you to increase your balance.
If it is still below $500 after 45 days, the Fund may close your account and
send you the proceeds at the current NAV.

UNDELIVERABLE REDEMPTION CHECKS
For any shareholder who chooses to receive distributions in cash: If
distribution checks (1) are returned and marked as "undeliverable" or (2) remain
uncashed for six months, your account will be changed automatically so that all
future distributions are reinvested in your account. Checks that remain uncashed
for six months will be canceled and the money reinvested in the Fund.

<PAGE>

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES

This section describes the sales charges and distribution fees you will pay as
an investor in Class A or Class B shares and ways to qualify for reduced sales
charges.

CALCULATION OF SALES CHARGES

CLASS A SHARES

Class A shares are sold at their public offering price. This price includes the
initial sales charge. Therefore, part of the money you invest will be used to
pay the sales charge. The remainder is invested in Fund shares. The sales charge
decreases with larger purchases. There is no sales charge on reinvested
dividends and distributions.

The current sales charge rates are as follows:

SALES CHARGE SALES CHARGE
AS A % OF AS A % OF
YOUR INVESTMENT OFFERING PRICE YOUR INVESTMENT
- ---------------------------------------------------------------------------
Up to $49,999 4.75% 4.99%
- ---------------------------------------------------------------------------
$50,000 up to $99,999 4.00% 4.17%
- ---------------------------------------------------------------------------
$100,000 up $249,999 3.25% 3.36%
- ---------------------------------------------------------------------------
$250,000 up $499,999 2.50% 2.56%
- ---------------------------------------------------------------------------
$500,000 up $999,999 1.75% 1.78%
- ---------------------------------------------------------------------------
$1,000,000 and above(1) 0.00% 0.00%
- ---------------------------------------------------------------------------

- --------
1 There is no initial sales charge on purchases of $1 million or more.
However, a contingent deferred sales charge (CDSC) of 1.00% will be charged
at the time of redemption of Class A shares purchased without an initial
sales charge as part of an investment of at least $1 million and redeemed
within one year of purchase. This charge will be based on the lower of your
cost for the shares or the shares' NAV at the time of redemption. There is
no CDSC on reinvested distributions. The Distributor may pay financial
representatives an amount up to 1% of the net asset value of Class A shares
purchased by their clients that are subject to a CDSC.

<PAGE>

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

CLASS B SHARES

Class B shares are offered at NAV, without any up-front sales charge. Therefore,
all the money you invest is used to purchase Fund shares. However, if you sell
your Class B shares before the sixth anniversary of purchase, you will have to
pay a contingent deferred sales charge (CDSC) at the time of redemption. The
CDSC will be based on the lower of the NAV at the time of purchase or the NAV at
the time of redemption according to the schedule below. There is no CDSC on
reinvested dividends or distributions.

ALL FUNDS - CLASS B SHARES
- -----------------------------------------------------------------------------
CDSC AS A % OF DOLLAR
YEARS SINCE PURCHASE AMOUNT SUBJECT TO CHARGE
- -----------------------------------------------------------------------------
0-1 4.00%
1-2 3.00%
2-3 3.00%
3-4 2.00%
4-5 2.00%
5-6 1.00%
more than 6 None
- -----------------------------------------------------------------------------
If you sell some but not all of your Class B shares, certain shares not subject
to the CDSC (i.e., shares purchased with reinvested dividends) will be redeemed
first, followed by shares subject to the lowest CDSC (typically shares held for
the longest time).

CONVERSION FEATURE - CLASS B SHARES

o Class B shares automatically convert to Class A shares of the same Fund after
seven years from the end of the month of purchase.

o After conversion, your shares will be subject to the lower distribution and
shareholder servicing fees charged on Class A shares which will increase your
investment return compared to the Class B shares.

o You will not pay any sales charge or fees when your shares convert, nor will
the transaction be subject to any tax.

o If you purchased Class B shares of one Fund which you exchanged for Class B
shares of another Fund, your holding period will be calculated from the time
of your original purchase of Class B shares of the first Fund. The dollar
value of Class A shares you receive will equal the dollar value of the Class
B shares converted.

<PAGE>

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

SALES CHARGE REDUCTIONS
Reduced sales charges for Class A shares are available to shareholders with
investments of $50,000 or more. In addition, you may qualify for reduced sales
charges under the following circumstances.

o Letter of Intent. You inform the Fund in writing that you intend to purchase
enough shares over a 13-month period to qualify for a reduced sales charge.
You must include a minimum of 5% of the total amount you intend to purchase
with your letter of intent.

o Rights of Accumulation. Additional investments will qualify for reduced sales
charges, when the value of shares you already own plus the amount of your
added investment reaches the designated amount for the reduced sales charge.

o Combination Privilege. You inform the Fund in writing that you are eligible
to combine accounts of multiple Funds or accounts of immediate family
household members (spouse and children under 21) to achieve reduced sales
charges.

SALES CHARGE WAIVERS

CLASS A SHARES
The following qualify for waivers or reductions of sales charges:

o Shares purchased by investment representatives through fee-based investment
products or accounts.

o Proceeds from redemptions from another mutual fund complex within 90 days
after redemption, if you can demonstrate to the Fund that you paid a sales
charge for those shares, to the extent of such charge.

o Reinvestment of distributions from a deferred compensation plan, agency,
trust, or custody account that was maintained by the Adviser or its
affiliates or invested in any Fund.

o Shares purchased for trust or other advisory accounts established with the
Adviser or its affiliates.

o Shares purchased by full-time employees (and their family members) of the
Adviser or the Administrator; current and retired directors of the Adviser or
any of its affiliates; current and retired Fund directors; dealers who have
an agreement with the Distributor; and any trade organization to which the
Adviser or the Administrator belongs.

REINSTATEMENT PRIVILEGE
If you have sold Class A or B shares and decide to reinvest in the Fund within a
90-day period, you will not be charged the applicable sales load on amounts up
to the value of the shares you sold. You must provide a written reinstatement
request and payment within 90 days of the date your instructions to sell were
processed.

<PAGE>

SHAREHOLDER INFORMATION

DISTRIBUTION ARRANGEMENTS/SALES CHARGES - CONTINUED

CLASS B SHARES

The CDSC will be waived under certain circumstances, including the following:

o Distributions from retirement plans if the distributions are made following
the death or disability of shareholders or plan participants.

o Redemptions from accounts other than retirement accounts following the death
or disability of the shareholder.

o Returns of excess contributions to retirement plans.

o Distributions of less than 10% of the annual account value under a Systematic
Withdrawal Plan.

o Shares issued in a plan of reorganization sponsored by the Adviser, or shares
redeemed involuntarily in a similar situation.

DISTRIBUTION (12B-1) FEES

12b-1 fees compensate the Distributor and other dealers and investment
representatives for services and expenses relating to the sale and distribution
of the Fund's shares. Because 12b-1 fees are paid from Fund assets on an ongoing
basis, over time they will increase the cost of your investment and may cost you
more than paying other types of sales charges.

o The 12b-1 fees vary by share class as follows:

o Class A shares pay a 12b-1 fee of .25% of the average daily net assets
represented by Class A of the Fund.
o Class B shares pay a 12b-1 fee of .75% of the average daily net assets
represented by Class B of the Fund. This will cause expenses for Class B
shares to be higher and dividends to be lower than for Class A shares.

o The higher 12b-1 fee on Class B shares, together with the CDSC, help the
Distributor sell Class B shares without an "up-front" sales charge. In
particular, these fees help to defray the Distributor's costs of advancing
brokerage commissions to investment representatives.

Long-term shareholders may pay indirectly more than the equivalent of the
maximum permitted front-end sales charge due to the recurring nature of 12b-1
distribution fees.

<PAGE>

SHAREHOLDER INFORMATION

EXCHANGING YOUR SHARES

INSTRUCTIONS FOR EXCHANGING SHARES

You can exchange Exchanges may be made by sending a written
your shares in one request to Stewardship Funds, P.O.
Fund for shares of Box 182207, Columbus OH 43218-2207, or by
the same class of calling 1-800-000-0000. Please provide
another Fund, the following information:
usually without o Your name and telephone number
paying additional o The exact name on your account and
sales charges (see account number
"Notes" below). No o Taxpayer identification number (usually
transaction fees are your Social Security number)
charged for o Dollar value or number of shares to be
exchanges. exchanged
o The name of the Fund from which the
You must meet the exchange is to be made
minimum investment o The name of the Fund into which
requirements for the the exchange is being made.
Fund into which you
are exchanging. See "Selling your Shares" for important
Exchanges from one information about telephone transactions.
Fund to another are
taxable. IMPORTANT INFORMATION ABOUT EXCHANGES. If
shares of the Fund are purchased by check,
those shares cannot be exchanged until the
check has been collected. This could take 10
days or more. The Fund may reject an exchange
request from a shareholder who has made more
than five exchanges between investment
portfolios offered by Fund management in a
year, or more than three exchanges in a
calendar quarter. Although unlikely, the
Funds may reject any exchanges or, upon
60-days' notice shareholders, change or
terminate the exchange privilege. The
exchange privilege is available only in
states where shares of the new Fund may be
sold.

NOTES ON EXCHANGES
When exchanging from a Fund that has no sales charge or a lower sales charge to
a Fund with a higher sales charge, you will pay the difference.

The registration and tax identification numbers of the two accounts must be
identical.

Be sure to read the prospectus carefully of any Fund into which you wish to
exchange shares.

<PAGE>

SHAREHOLDER INFORMATION

DIVIDENDS, DISTRIBUTIONS AND TAXES

All dividends and distributions will be automatically reinvested in Fund shares
unless you request otherwise. There are no sales charges for reinvested
dividends and distributions. Each share class will generate a different dividend
because each has different expenses. Capital gains, if any, are distributed at
least annually.

Each Fund usually pays its shareholders dividends from its net investment income
quarterly.

Dividends paid by a Fund are taxable to most U.S. shareholders as ordinary
income (unless your investment is in an IRA or tax-advantaged account).

An exchange of shares is considered a sale, and any related gains may subject to
applicable taxes.

Dividends are taxable in the year in which they are paid, even if they appear on
your account statement the following year. Dividends and distributions are
treated in the same manner for Federal income tax purposes whether you receive
them in cash or in additional shares.

DISTRIBUTIONS ARE MADE ON A PER SHARE BASIS REGARDLESS OF HOW LONG YOU'VE OWNED
YOUR SHARES. THEREFORE, IF YOU INVEST SHORTLY BEFORE THE DISTRIBUTION DATE, SOME
OF YOUR INVESTMENT WILL BE RETURNED TO YOU IN THE FORM OF A DISTRIBUTION.

You will be notified in January each year about the Federal tax status of
distributions made by the Fund. Depending on your residence for tax purposes,
distributions also may be subject to state and local taxes, including
withholding taxes.

Foreign shareholders may be subject to special withholding requirements. There
is a penalty on certain pre-retirement distributions from retirement accounts.

Because everyone's tax situation is unique, you should consult your tax
professional about Federal, state and local tax consequences.

<PAGE>

For more information about the Funds, the following document is available free
upon request:

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds, including its operations and investment policies.
It is incorporated by reference and is legally considered a part of this
prospectus.

YOU CAN GET FREE COPIES OF THE SAI, OR REQUEST OTHER INFORMATION AND DISCUSS
YOUR QUESTIONS ABOUT THE FUNDS BY CONTACTING A BROKER OR BANK THAT SELLS THE
FUNDS. OR CONTACT THE FUNDS AT:

STEWARDSHIP FUNDS
3435 STELZER ROAD
COLUMBUS, OHIO 43219
TELEPHONE: 1-888-FAM-VALUE

You can review information about the Funds, including the Funds' SAI, at the
Public Reference Room of the Securities and Exchange Commission. You can get
text-only copies:

o For a fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009 or calling 1-800-SEC-0330.

o Free from the Commission's Website at http://www.sec.gov.

Investment Company Act file no. 811-06076.

<PAGE>
SUBJECT TO COMPLETION, DATED APRIL 6, 1999

THE INFINITY MUTUAL FUNDS, INC.
STEWARDSHIP FUNDS

o Large-Cap Equity Fund
o Small-Cap Equity Fund
o Mid-Cap Equity Fund

CLASS A SHARES AND CLASS B SHARES

STATEMENT OF ADDITIONAL INFORMATION
MAY __, 1999

This Statement of Additional Information, which is not a prospectus,
supplements and should be read in conjunction with the current Prospectus for
the Stewardship Funds listed above (each, a "Fund" and collectively, the
"Funds") of The Infinity Mutual Funds, Inc. (the "Company"), dated May __, 1999,
as it may be revised from time to time. To obtain a copy of the Prospectus,
please write to the Company at 3435 Stelzer Road, Columbus, Ohio 43219-3035, or
call toll free 1-888-326-8258. This Statement of Additional Information relates
only to the Funds and not to any of the Company's other portfolios.

TABLE OF CONTENTS
PAGE
----
Description of the Company and the Funds..................................B-2
Management of the Company.................................................B-23
Management Arrangements...................................................B-27
Purchase and Redemption of Shares.........................................B-33
Determination of Net Asset Value..........................................B-41
Shareholder Services and Privileges.......................................B-42
Performance Information...................................................B-46
Dividends, Distributions and Taxes........................................B-47
Portfolio Transactions....................................................B-49
Information About the Company and the Funds...............................B-50
Counsel and Independent Auditors..........................................B-52
Financial Statements......................................................B-52
Appendix..................................................................B-53

The information in this Statement of Additional Information is not complete
and may be changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
Statement of Additional Information is not an offer to sell these securities and
is not soliciting an offer to buy these securities in any state where the offer
or sale is not permitted.
<PAGE>

DESCRIPTION OF THE COMPANY AND THE FUNDS

GENERAL

The Company is a Maryland corporation organized on March 6, 1990. Each Fund
is a separate portfolio of the Company, an open-end management investment
company, known as a mutual fund. Each Fund is a diversified investment company,
which means that, with respect to 75% of its total assets, the Fund will not
invest more than 5% of its assets in the securities of any single issuer. As of
the date of this Statement of Additional Information, none of the Funds had
completed a full fiscal year of operations.

First American National Bank (the "Adviser") serves as each Fund's
investment adviser.

BISYS Fund Services Ohio, Inc. (the "Administrator") serves as each Fund's
administrator.

BISYS Fund Services Limited Partnership (the "Distributor"), an affiliate
of the Administrator, serves as each Fund's distributor.

CERTAIN PORTFOLIO SECURITIES

The following information supplements and should be read in conjunction
with the Funds' Prospectus.

CONVERTIBLE SECURITIES. (All Funds) Convertible securities may be converted
at either a stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to common stock of
the same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar non-convertible securities.

Although to a lesser extent than with fixed income securities, the market
value of convertible securities tends to decline as interest rates increase and,
conversely, tends to increase as interest rates decline. In addition, because of
the conversion feature, the market value of convertible securities tends to vary
with fluctuations in the market value of the underlying common stock. A unique
feature of convertible securities is that as the market price of the underlying
common stock declines, convertible securities tend to trade increasingly on a
yield basis, and so may not experience market value declines to the same extent
as the underlying common stock. When the market price of the underlying common
stock increases, the prices of the convertible securities tend to rise as a
reflection of the value of the underlying common stock. While no securities
investments are without risk, investments in convertible securities generally
entail less risk than investments in common stock of the same issuer.

Convertible securities are investments that provide for a stable stream of
income with generally higher yields than common stocks. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital appreciation through
the conversion feature, which enables the holder to benefit from increases in
the market price of the underlying common stock. There can be no assurance of
capital appreciation, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital appreciation.

WARRANTS. (All Funds) A warrant is an instrument issued by a corporation
which gives the holder the right to subscribe to a specified amount of the
corporation's capital stock at a set price for a specified period of time. A
Fund may invest up to 5% of its net assets in warrants, except that this
limitation does not apply to warrants purchased by the Fund that are sold in
units with, or attached to, other securities.

AMERICAN DEPOSITARY RECEIPTS. (All Funds) Each Fund may invest in the
securities of foreign issuers in the form of American Depositary Receipts
("ADRs") and other forms of depositary receipts. These securities may not
necessarily be denominated in the same currency as the securities into which
they may be converted. ADRs are receipts typically issued by a United States
bank or trust company which evidence ownership of underlying securities issued
by a foreign corporation. Generally, ADRs in registered form are designed for
use in the United States securities markets. Each Fund may invest in ADRs
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the underlying security and a depositary,
whereas a depositary may establish an unsponsored facility without participation
by the issuer of the deposited security. Holders of unsponsored depositary
receipts generally bear all the costs of such facilities and the depositary of
an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security or
to pass through voting rights to the holders of such receipts in respect of the
deposited securities.

U.S. TREASURY SECURITIES. (All Funds) Each Fund 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. (All Funds) In addition to U.S. Treasury
securities, each Fund 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. Principal and 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 Fund will invest in such securities only
when it is satisfied that the credit risk with respect to the issuer is minimal.

BANK OBLIGATIONS. (All Funds) Each Fund may invest in bank obligations
(other than those issued by the Adviser or its affiliates), including
certificates of deposit ("CDs"), time deposits ("TDs"), bankers' acceptances and
other short-term obligations of domestic banks, foreign subsidiaries or foreign
branches of domestic banks, and domestic branches of foreign banks, domestic
savings and loan associations and other banking institutions. 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 CDs may be purchased by the Fund are insured by the Bank Insurance Fund
administered by the FDIC (although such insurance may not be of material benefit
to the Fund, depending upon the principal amount of the CDs of each bank held by
the Fund) 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 branches of foreign banks, such as CDs and 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.

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, or by domestic branches of foreign banks, the Adviser carefully
evaluates such investments on a case-by-case basis.

Each Fund may purchase CDs issued by banks, savings and loan associations
and similar thrift institutions with less than $1 billion in assets, which are
members of the FDIC, provided the Fund purchases any such CD in a principal
amount of not more than $100,000, which amount would be fully insured by the
Bank Insurance Fund or the Savings Association Insurance Fund administered by
the FDIC. Interest payments on such a CD are not insured by the FDIC. No Fund
will own more than one such CD per such issuer.

Each Fund 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 Fund 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 Fund 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 Fund and the Borrower. In such cases, the Fund
would be required to rely on the Intermediate Participant that sold the
participation interest not only for the enforcement of the Fund's rights against
the Borrower but also for the receipt and processing of payments due to the Fund
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 Fund may be
subject to delays, expenses and risks that are greater than those that would be
involved if the Fund could enforce its rights directly against the Borrower.
Moreover, under the terms of a participation interest, the Fund 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 Fund 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 Fund 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.

COMMERCIAL PAPER AND OTHER SHORT-TERM CORPORATE OBLIGATIONS. (All Funds)
Each Fund 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 Funds will consist only of direct obligations
which, at the time of their purchase, are (a) rated not lower than Prime-1 by
Moody's Investors Service, Inc. ("Moody's"), A-1 by Standard & Poor's Ratings
Group ("S&P"), F-1 by Fitch IBCA, Inc. ("Fitch") or Duff-1 by Duff & Phelps
Credit Rating Co. ("Duff"), or (b) issued by companies having an outstanding
unsecured debt issue currently rated not lower than Aa3 by Moody's or AA- by
S&P, Fitch or Duff, or (c) if unrated, determined by the Adviser to be of
comparable quality to those rated obligations which may be purchased by the
Fund.

REPURCHASE AGREEMENTS. (All Funds) Each Fund may enter into repurchase
agreements which involve the acquisition by a Fund of an underlying debt
instrument, subject to an obligation of the seller to repurchase, and such Fund
to resell, the instrument at a fixed price usually not more than one week after
its purchase. 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 Fund under a repurchase agreement.
In connection with its third-party repurchase transactions, the Fund will employ
only eligible sub-custodians that meet the requirements set forth in Section
17(f) of the Investment Company Act of 1940, as amended (the "1940 Act").
Repurchase agreements are considered by the staff of the Securities and Exchange
Commission to be loans by the Fund entering into them. Certain costs may be
incurred by a Fund 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 a Fund may be delayed or
limited. Each Fund will consider on an ongoing basis the creditworthiness of the
institutions with which it enters into repurchase agreements. In an attempt to
reduce the risk of incurring a loss on a repurchase agreement, each Fund will
enter into repurchase agreements only with registered or unregistered securities
dealers or 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 of the type in which such Fund 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. Each Fund will consider on an ongoing basis the
creditworthiness of the institutions with which it enters into repurchase
agreements.

ZERO COUPON AND STRIPPED SECURITIES. (All Funds) Each Fund 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. Each Fund also may invest in zero coupon securities
issued by corporations and financial institutions which constitute a
proportionate ownership of the issuer's pool of underlying U.S. Treasury
securities. 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.

FOREIGN GOVERNMENT OBLIGATIONS; SECURITIES OF SUPRANATIONAL ENTITIES. (All
Funds) Each Fund 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 Adviser to be of comparable quality
to the other obligations in which such Fund 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 a Fund'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.

FLOATING AND VARIABLE RATE OBLIGATIONS. (All Funds) Each Fund 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.
Variable rate demand notes include master demand notes which are obligations
that permit the Fund to invest fluctuating amounts, at varying rates of
interest, pursuant to direct arrangements between the Fund, as lender, and the
borrower. These obligations permit daily changes in the amount 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
Fund'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 a Fund may invest in obligations which are not so
rated only if the Adviser determines that at the time of investment the
obligations are of comparable quality to the other obligations in which the Fund
may invest. The Adviser, on behalf of each Fund, will consider on an ongoing
basis the creditworthiness of the issuers of the floating and variable rate
demand obligations purchased by such Fund.

NOTES. (All Funds) Each Fund may purchase unsecured promissory notes
("Notes") which are not readily marketable and have not been registered under
the Securities Act of 1933, as amended (the "1933 Act"), provided such
investments are consistent with its investment objective.

PARTICIPATION INTERESTS AND TRUST RECEIPTS. (All Funds) Each Fund 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. A participation interest or
receipt gives the Fund an undivided interest in the security in the proportion
that the Fund'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 Fund, 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 Adviser, acting upon delegated authority from the Company's
Board of Directors, must have determined that the instrument is of comparable
quality to those instruments in which the Fund 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 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 Fund, the Adviser will consider, in accordance with
procedures established by the Board of Directors, all circumstances deemed
relevant in determining whether the Fund 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
Fund will have the unconditional right to demand payment, on not more than seven
days' notice, for all or any part of the Fund's interest in the security, plus
accrued interest. As to these instruments, the Fund 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.

GUARANTEED INVESTMENT CONTRACTS. (All Funds) Each Fund may make limited
investments in guaranteed investment contracts ("GICs") issued by highly rated
U.S. insurance companies. Pursuant to such a contract, the Fund would make cash
contributions to a deposit fund of the insurance company's general account. The
insurance company would then credit to the Fund on a monthly basis interest
which is based on an index (in most cases the Salomon Smith Barney CD Index),
but is guaranteed not to be less than a certain minimum rate.

ILLIQUID SECURITIES. (All Funds) Each Fund may invest up to 15% of the
value of its net assets in illiquid securities. As to these securities, the Fund
is subject to a risk that should the Fund desire to sell them when a ready buyer
is not available at a price the Fund deems representative of their value, the
value of the Fund's net assets could be adversely affected. The term "illiquid
securities" for this purpose means securities that cannot be disposed of within
seven days in the ordinary course of business at approximately the amount at
which the Fund has valued the securities and includes, among other things,
restricted securities other than those the Adviser has determined to be liquid
pursuant to guidelines established by the Company's Board and repurchase
agreements maturing in more than seven days. Commercial paper issues include
securities issued by major corporations without registration under the 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. Where a substantial market of qualified institutional buyers
has developed for certain restricted securities purchased by the Fund pursuant
to Rule 144A under the 1933 Act, the Fund intends to treat such securities as
liquid securities in accordance with procedures approved by the Company'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 Company's
Board has directed the Adviser to monitor carefully each Fund'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, a Fund's investing in such securities may have
the effect of increasing the level of illiquidity in its investment portfolio
during such period.

FORWARD COMMITMENTS. (All Funds) Each Fund may purchase securities on a
when-issued or forward commitment basis, which means that the price is fixed at
the time of commitment, but delivery and payment ordinarily take place a number
of days after the date of the commitment to purchase. Each Fund will make
commitments to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. The Fund will not accrue income in
respect of a security purchased on a forward commitment basis prior to its
stated delivery date.

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 Fund 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 Fund
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.

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

MANAGEMENT POLICIES

INVESTMENT TECHNIQUES AND PORTFOLIO TURNOVER RATES. (All Funds) Each Fund
may engage in various investment techniques the use of which involves risk.
Using these techniques may produce higher than normal portfolio turnover for a
Fund and may affect the degree to which its net asset value fluctuates.

Portfolio turnover may vary from year to year, as well as within a year. No
Fund will consider portfolio turnover to be a limiting factor in making
investment decisions. Under normal market conditions, the portfolio turnover
rate for the current fiscal year is anticipated to be less than 200% for the
Small-Cap Equity Fund and Mid-Cap Equity Fund, and is anticipated to be less
than 100% for the Large-Cap Equity Fund. A portfolio turnover rate of 100% is
equivalent to the Fund buying and selling all of the securities in its portfolio
once in the course of a year. Higher portfolio turnover rates are likely to
result in comparatively greater brokerage commissions or transaction costs. In
addition, short-term gains realized from portfolio transactions are taxable to
shareholders as ordinary income.

LENDING PORTFOLIO SECURITIES. (All Funds) From time to time, each Fund 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 331/3% of the value of the relevant
Fund's total assets. In connection with such loans, each Fund 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 Fund can increase its income through
the investment of such collateral. Each Fund continues to be entitled to
payments in amounts equal to the dividends, 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 Fund might
experience risk of loss if the institution with which it has engaged in a
portfolio loan transaction breaches its agreement with such Fund. From time to
time, a Fund may return to the borrower or a third party which is unaffiliated
with the Fund, and which is acting as a "placing broker," a part of the interest
earned from the investment of collateral received for securities loaned.

The Securities and Exchange Commission currently requires that the
following conditions must be met whenever portfolio securities are loaned: (1)
the Fund 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 Fund must be able
to terminate the loan at any time; (4) the Fund must receive reasonable interest
on the loan, as well as any dividends, interest or other distributions payable
on the loaned securities, and any increase in market value; (5) the Fund may pay
only reasonable custodian fees in connection with the loan; and (6) while voting
rights on the loaned securities may pass to the borrower, the Company's Board of
Directors must terminate the loan and regain the right to vote the securities if
a material event adversely affecting the investment occurs.

OPTIONS TRANSACTIONS. (All Funds) Each Fund may purchase call and put
options in respect of specific securities in which the Fund may invest and write
covered call and put option contracts. A call option gives the purchaser of the
option the right to buy, and obligates the writer to sell, the underlying
security at the exercise price at any time during the option period. Conversely,
a put option gives the purchaser of the option the right to sell, and obligates
the writer to buy, the underlying security at the exercise price at any time
during the option period. A covered call option sold by the Fund, which is a
call option with respect to which the Fund owns the underlying security, exposes
the Fund during the term of the option to possible loss of opportunity to
realize appreciation in the market price of the underlying security or to
possible continued holding of a security which might otherwise have been sold to
protect against depreciation in the market price of the security. A covered put
option sold by the Fund exposes the Fund during the term of the option to a
decline in price of the underlying security. A put option sold by the Fund is
covered when, among other things, permissible liquid assets are placed in a
segregated account to fulfill the obligation undertaken.

The principal reason for the Fund writing covered call options is to
realize, through the receipt of premiums, a greater return than would be
realized on its portfolio securities alone. In return for a premium, the writer
of a covered call option forfeits the right to any appreciation in the value of
the underlying security above the strike price for the life of the option (or
until a closing purchase transaction can be effected). Nevertheless, the call
writer retains the risk of a decline in the price of the underlying security.
Similarly, the principal reason for writing covered put options is to realize
income in the form of premiums. The writer of a covered put option accepts the
risk of a decline in the price of the underlying security. The size of the
premiums that the Fund may receive may be adversely affected as new or existing
institutions, including other investment companies, engage in or increase their
option-writing activities.

Options written ordinarily will have expiration dates between one and nine
months from the date written. The exercise price of the options may be below,
equal to or above the market values of the underlying securities at the time the
options are written. In the case of call options, these exercise prices are
referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. The Fund may write (a) in-the-money call options when the Adviser
expects that the price of the underlying security will remain stable or decline
moderately during the option period, (b) at-the-money call options when the
Adviser expects that the price of the underlying security will remain stable or
advance moderately during the option period and (c) out-of-the-money call
options when the Adviser expects that the premiums received from writing the
call option plus the appreciation in market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. In these circumstances, if the market price of the
underlying security declines and the security is sold at this lower price, the
amount of any realized loss will be offset wholly or in part by the premium
received. Out-of-the-money, at-the-money and in-the-money put options (the
reverse of call options as to the relation of exercise price to market price)
may be utilized in the same market environments that such call options are used
in equivalent transactions.

So long as the Fund's obligation as the writer of an option continues, it
may be assigned an exercise notice by the broker-dealer through which the option
was sold, requiring it to deliver, in the case of a call, or take delivery of,
in the case of a put, the underlying security against payment of the exercise
price. This obligation terminates when the option expires or the Fund effects a
closing purchase transaction. The Fund can no longer effect a closing purchase
transaction with respect to an option once it has been assigned an exercise
notice.

While it may choose to do otherwise, the Fund generally will purchase or
write only those options for which the Adviser believes there is an active
secondary market so as to facilitate closing transactions. There is no assurance
that sufficient trading interest to create a liquid secondary market on a
securities exchange will exist for any particular option or at any particular
time, and for some options no such secondary market may exist. A liquid
secondary market in an option may cease to exist for a variety of reasons. In
the past, for example, higher than anticipated trading activity or order flow,
or other unforeseen events, at times have rendered certain clearing facilities
inadequate and resulted in the institution of special procedures, such as
trading rotations, restrictions on certain types of orders or trading halts or
suspensions in one or more options. There can be no assurance that similar
events, or events that otherwise may interfere with the timely execution of
customers' orders, will not recur. In such event, it might not be possible to
effect closing transactions in particular options. If, as a covered call option
writer, the Fund is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise or it
otherwise covers its position.

The Fund intends to treat options in respect of specific securities that
are not traded on a national securities exchange and the securities underlying
covered call options written by the Fund as illiquid securities.

STOCK INDEX OPTIONS. (All Funds) Each Fund may purchase and write put and
call options on stock indexes listed on national securities exchanges or traded
in the over-the-counter market to the extent of 15% of the value of its net
assets. A stock index fluctuates with changes in the market values of the stocks
included in the index. Options on stock indexes are similar to options on stock
except that (a) the expiration cycles of stock index options are monthly, while
those of stock options are currently quarterly, and (b) the delivery
requirements are different. Instead of giving the right to take or make delivery
of a stock at a specified price, an option on a stock index gives the holder the
right to receive a cash "exercise settlement amount" equal to (i) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of exercise, multiplied by (ii) a fixed "index multiplier."
Receipt of this cash amount will depend upon the closing level of the stock
index upon which the option is based being greater than, in the case of a call,
or less than, in the case of a put, the exercise price of the option. The amount
of cash received will be equal to such difference between the closing price of
the index and the exercise price of the option expressed in dollars times a
specified multiple. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or it may let the option expire unexercised.

The effectiveness of the Fund's purchasing or writing stock index options
will depend upon the extent to which price movements in its portfolio correlate
with price movements of the stock index selected. Because the value of an index
option depends upon movements in the level of the index rather than the price of
a particular stock, whether the Fund will realize a gain or loss from the
purchase or writing of options on an index depends upon movements in the level
of stock prices in the stock market generally or, in the case of certain
indexes, in an industry or market segment, rather than movements in the price of
a particular stock. Accordingly, successful use by the Fund of options on stock
indexes will be subject to the Adviser's ability to predict correctly movements
in the direction of the stock market generally or of a particular industry. This
requires different skills and techniques than predicting changes in the price of
individual stocks.

When the Fund writes an option on a stock index, it will place in a
segregated account permissible liquid assets in an amount at least equal to the
market value of the underlying stock index and will maintain the account while
the option is open or will otherwise cover the transaction.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. (All Funds) None of the
Funds will be a commodity pool. However, as a substitute for a comparable market
position in the underlying securities or for hedging purposes, each Fund may
engage in futures and options on futures transactions, as described below.

The commodities transactions of each Fund must constitute bona fide hedging
or other permissible transactions pursuant to regulations promulgated by the
Commodity Futures Trading Commission. In addition, none of the Funds may engage
in such transactions if the sum of the amount of initial margin deposits and
premiums paid for unexpired commodity options, other than for bona fide hedging
transactions, would exceed 5% of the liquidation value of the Fund's total
assets, after taking into account unrealized profits and unrealized losses on
such contracts it has entered into; provided, however, that in the case of an
option that is in-the-money at the time of purchase, the in-the-money amount may
be excluded in calculating the 5%. Pursuant to regulations and/or published
positions of the Securities and Exchange Commission, each Fund may be required
to segregate permissible liquid assets in connection with its commodities
transactions in an amount at least equal to the value of the underlying
commodity.

Initially, when purchasing or selling futures contracts, a Fund will be
required to deposit with the Company's custodian in the broker's name an amount
of cash or cash equivalents up to approximately 10% of the contract amount. This
amount is subject to change by the exchange or board of trade on which the
contract is traded and members of such exchange or board of trade may impose
their own higher requirements. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures position, assuming all
contractual obligations have been satisfied. Subsequent payments, known as
"variation margin," to and from the broker will be made daily as the price of
the index or securities underlying the futures contract fluctuates, making the
long and short positions in the futures contract more or less valuable, a
process known as "marking-to-market." At any time prior to the expiration of a
futures contract, the Fund may elect to close the position by taking an opposite
position, at the then prevailing price, which will operate to terminate its
existing position in the contract.

Although each Fund intends to purchase or sell futures contracts only if
there is an active market for such contracts, no assurance can be given that a
liquid market will exist for any particular contract at any particular time.
Many futures exchanges and boards of trade limit the amount of fluctuation
permitted in futures contract prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract prices could move to the limit for
several consecutive trading days with little or no trading, thereby preventing
prompt liquidation of futures positions and potentially subjecting the relevant
Fund to substantial losses. If it is not possible, or the Fund determines not,
to close a futures position in anticipation of adverse price movements, it will
be required to make daily cash payments of variation margin. In such
circumstances, an increase in the value of the portion of the portfolio being
hedged, if any, may offset partially or completely losses on the futures
contract. However, no assurance can be given that the price of the securities
being hedged will correlate with the price movements in a futures contract and
thus provide an offset to losses on the futures contract.

To the extent a Fund is engaging in a futures transaction as a hedging
device, because of the risk of an imperfect correlation between securities in a
portfolio that are the subject of a hedging transaction and the futures contract
used as a hedging device, it is possible that the hedge will not be fully
effective if, for example, losses on the portfolio securities exceed gains on
the futures contract or losses on the futures contract exceed gains on the
portfolio securities. For futures contracts based on indexes, the risk of
imperfect correlation increases as the composition of a Fund's investments
varies from the composition of the index. In an effort to compensate for the
imperfect correlation of movements in the price of the securities being hedged
and movements in the price of futures contracts, the Fund may buy or sell
futures contracts in a greater or lesser dollar amount than the dollar amount of
the securities being hedged if the historical volatility of the futures contract
has been less or greater than that of the securities. Such "over hedging" or
"under hedging" may adversely affect the Fund's net investment results if market
movements are not as anticipated when the hedge is established.

Successful use of futures by a Fund also is subject to the Adviser's
ability to predict correctly movements in the direction of the market or
interest rates. For example, if a Fund has hedged against the possibility of a
decline in the market adversely affecting the value of securities held in its
portfolio and prices increase instead, such Fund will lose part or all of the
benefit of the increased value of securities which it has hedged because it will
have offsetting losses in its futures positions. Furthermore, if in such
circumstances the Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. The Fund may have to sell such
securities at a time when it may be disadvantageous to do so.

An option on a futures contract gives the purchaser the right, in return
for the premium paid, to assume a position in a futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the option exercise period. The
writer of the option is required upon exercise to assume an offsetting futures
position (a short position if the option is a call and a long position if the
option is a put). Upon exercise of the option, the assumption of offsetting
futures positions by the writer and holder of the option will be accompanied by
delivery of the accumulated cash balance in the writer's futures margin account
which represents the amount by which the market price of the futures contract,
at exercise, exceeds, in the case of a call, or is less than, in the case of a
put, the exercise price of the option on the futures contract.

Call options sold by a Fund with respect to futures contracts will be
covered by, among other things, entering into a long position in the same
contract at a price no higher than the strike price of the call option, or by
ownership of the instruments underlying, or instruments the prices of which are
expected to move relatively consistently with, the instruments underlying the
futures contract. Put options sold by a Fund with respect to futures contracts
will be covered in the same manner as put options on specific securities as
described above.

Upon exercise of an option, the writer of the option delivers to the holder
of the option the futures position and the accumulated balance in the writer's
futures margin account, which represents the amount by which the market price of
the futures contract exceeds, in the case of a call, or is less than, in the
case of a put, the exercise price of the option on the futures contract. The
potential loss related to the purchase of options on futures contracts is
limited to the premium paid for the option (plus transaction costs). Because the
value of the option is fixed at the time of sale, there are no daily cash
payments to reflect changes in the value of the underlying contract; however,
the value of the option does change daily and that change would be reflected in
the net asset value of the Fund.

STOCK INDEX FUTURES AND OPTIONS ON STOCK INDEX Futures. (All Funds) Each
Fund may purchase and sell stock index futures contracts and options on stock
index futures contracts to the extent of 15% of the value of its net assets.

A stock index future obligates the seller to deliver (and the purchaser to
take) an amount of cash equal to a specific dollar amount times the difference
between the value of a specific stock index at the close of the last trading day
of the contract and the price at which the agreement is made. No physical
delivery of the underlying stocks in the index is made. With respect to stock
indexes that are permitted investments, each Fund intends to purchase and sell
futures contracts on the stock index for which it can obtain the best price with
consideration also given to liquidity.

Each Fund may use index futures as a substitute for a comparable market
position in the underlying securities.

FUTURE DEVELOPMENTS. Each Fund may take advantage of opportunities in the
area of options and futures contracts and options on futures contracts and any
other derivative investments which are not presently contemplated for use by
such Fund or which are not currently available but which may be developed, to
the extent such opportunities are both consistent with its investment objective
and legally permissible for the Fund. Before entering into such transactions or
making any such investment, the Fund will provide appropriate disclosure in its
Prospectus or this Statement of Additional Information.

BORROWING MONEY. (All Funds) As a fundamental policy, each Fund is
permitted to borrow money in an amount up to 331/3% of the value of its total
assets. However, each Fund currently intends to borrow money only for temporary
or emergency (not leveraging) purposes, in an amount up to 331/3% 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 Fund's total assets, such
Fund will not make any investments.

SIMULTANEOUS INVESTMENTS. (All Funds) Investment decisions for each Fund
are made independently from those of the other investment companies, investment
advisory accounts, custodial accounts, individual trust accounts and commingled
funds that may be advised by the Adviser or, if applicable, sub-investment
adviser. However, if such other investment companies or managed accounts desire
to invest in, or dispose of, the same securities as the Fund, 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 Fund or the price paid or received by
a Fund.

INVESTMENT RESTRICTIONS

Each Fund's investment objective is a fundamental policy, which cannot be
changed without approval by the holders of a majority (as defined in the 1940
Act) of the Fund's outstanding voting shares. In addition, each Fund has adopted
investment restrictions numbered 1 through 10 as fundamental policies. These
restrictions cannot be changed, as to a Fund, without approval by the holders of
a majority (as defined in the 1940 Act) of such Fund's outstanding voting
securities. Each Fund has adopted investment restrictions numbered 11 through 14
as non-fundamental policies which may be changed by vote of a majority of the
Company's Directors at any time. No Fund may:

1. Invest in commodities, except that each Fund 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 Fund may 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 Fund may borrow up to 331/3% of the value
of its total assets. For purposes of this investment restriction, a Fund'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 Fund may lend its
portfolio securities in an amount not to exceed 331/3% 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 Company's Board of
Directors.

5. Act as an underwriter of securities of other issuers, except to the
extent the Fund may be deemed an underwriter under the 1933 Act 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). A Fund's permitted borrowings and transactions in futures and
options, to the extent permitted under the 1940 Act, are not considered senior
securities for purposes of this investment restriction.

7. Purchase securities on margin, but each Fund 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 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
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.

9. With respect to 75% of its total assets, invest more than 5% of its
assets in the obligations of any single issuer. This investment restriction does
not apply to the purchase of U.S. Government securities.

10. Hold more than 10% of the outstanding voting securities of any single
issuer. This investment restriction applies only with respect to 75% of the
Fund's total assets.

* * *

11. Invest in the securities of a company for the purpose of exercising
management or control, but each Fund will vote (as provided in the Company's
Charter) the securities it owns as a shareholder in accordance with its views.

12. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
deposit of assets in escrow in connection with writing covered put and call
options 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.

13. 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 15% of the value of the Fund's net assets would be so
invested.

14. Purchase securities of other investment companies, except to the extent
permitted under the 1940 Act.

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

MANAGEMENT OF THE COMPANY

The Company's Board of Directors is responsible for the management and
supervision of each Fund. The Board approves all significant agreements with
those companies that furnish services to the Funds. These companies are as
follows:

First American National Bank...................... Investment Adviser and
Custodian
Womack Asset Management, Inc...................... Sub-Investment Adviser
BISYS Fund Services Limited Partnership........... Distributor
BISYS Fund Services Ohio, Inc..................... Administrator and
Transfer Agent
The Bank of New York.............................. Sub-Custodian

Directors and officers of the Company, 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 Company, as
defined in the 1940 Act, is indicated by an asterisk.

NAME, ADDRESS POSITION(S) HELD PRINCIPAL OCCUPATION(S)
AND AGE WITH COMPANY DURING PAST 5 YEARS
- ------------- ----------------- -------------------

WILLIAM B. BLUNDIN* President and An employee of BISYS
90 Park Avenue Chairman of the Fund Services, Inc.,
New York, New York 10016 Board of Directors general partner of
Age 60 the Distributor.
Mr. Blundin also is an
officer of other
investment companies
administered by the
Administrator or its
affiliates.

NORMA A. COLDWELL Director International Economist
3330 Southwestern Boulevard and Consultant; Executive
Dallas, Texas 75225 Vice President of Coldwell
Age 72 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

RICHARD H. FRANCIS Director Former Executive Vice
40 Grosvenor Road President and Chief
Short Hills, New Jersey 07078 Financial Officer of
Age 66 an 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.

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

ROBERT A. ROBERTSON Director Private investor.
2 Hathaway Common Since 1991, President
New Canaan, Connecticut 06840 Emeritus, and from
Age 71 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.

JEFFREY C. CUSICK Vice President An employee of BISYS
3435 Stelzer Road and Assistant Fund Services, Inc.
Columbus, Ohio 43219 Secretary since July 1995, and
Age 38 an officer of other
investment companies
administered by the
Administrator or its
affiliates. From
September 1993 to July
1995, he was Assistant
Vice President of
Federated
Administrative Services.

WILLIAM TOMKO Vice President An employee of BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219 and an officer of
Age 38 other investment
companies administered
by the Administrator or
its affiliates.

GARY R. TENKMAN Treasurer An employee of BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219 since April 1998, and
Age 34 an officer of other
investment companies
administered by the
Administrator or its
affiliates. For more
than five years prior
thereto, he was an
audit manager with
Ernst & Young LLP.

ROBERT L. TUCH Assistant Secretary An employee of BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219 and an officer of
Age 45 other investment
companies administered
by the Administrator or
its affiliates.

ALAINA METZ Assistant Secretary An employee of BISYS
3435 Stelzer Road Fund Services, Inc.
Columbus, Ohio 43219 and an officer of
Age 29 other investment
companies administered
by the Administrator or
its affiliates.

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

Directors and officers of the Company, as a group, owned less than 1% of
any Fund's shares of common stock outstanding on April 1, 1999.

The Company 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 the Administrator or any of their affiliates. The
aggregate amount of compensation paid to each such Director by the Company for
year ended December 31, 1998 was as follows:

TOTAL COMPENSATION
AGGREGATE FROM COMPANY
NAME OF BOARD COMPENSATION FROM AND FUND COMPLEX PAID
MEMBER COMPANY* 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 $________for all Directors as a group.

MANAGEMENT ARRANGEMENTS

INVESTMENT ADVISERS. First American National Bank serves as each Fund's
investment adviser. The Adviser is a wholly-owned subsidiary of First American
Corporation, a registered bank holding company. The Adviser and its affiliates
deal, trade and invest for their own accounts and for the accounts of their
clients, in the types of securities in which the Funds may invest, and may have
deposit, loan and commercial banking relationships with the issuers of
securities purchased by a Fund. The Adviser has informed the Company that in
making its investment decisions it does not obtain or use material inside
information in its or its affiliates' possession. The Adviser also provides
research services for the Funds through a professional staff of portfolio
managers and securities analysts. All activities of the Adviser are conducted by
persons who are also officers of one or more of the Adviser's affiliates.

The Adviser also is responsible for the selection of brokers to effect
securities transactions and the negotiation of brokerage commissions, if any.
Purchases and sale of securities on a securities exchange are effected through
brokers who charge a negotiated commission for their services. Brokerage
commissions may be paid to affiliates of the Adviser for executing securities
transactions if the use of such affiliates is likely to result in price and
execution at least as favorable as those of other qualified brokers.

The Adviser provides investment advisory services pursuant to the
Investment Advisory Agreement (the "Agreement") dated February 15, 1994 with the
Company. As to each Fund, the Agreement is subject to annual approval by (i) the
Company's Board of Directors or (ii) vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of such Fund, 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 Company 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 Company'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 25, 1999.
As to each Fund, the Agreement is terminable without penalty, on 60 days'
notice, by the Company's Board of Directors or by vote of the holders of a
majority of such Fund's shares, or, on not less than 90 days' notice, by the
Adviser. The Agreement will terminate automatically, as to the relevant Fund, in
the event of its assignment (as defined in the 1940 Act).

Under the terms of the Agreement, the Company has agreed to pay the Adviser
a monthly fee at the annual rate set forth below as a percentage of the relevant
Fund's average daily net assets.

<PAGE>

ANNUAL RATE OF
INVESTMENT
NAME OF FUND ADVISORY FEE PAYABLE
- ------------ --------------------

Large-Cap Equity Fund .75%
Small-Cap Equity Fund .95%
Mid-Cap Equity Fund 1.00%

From time to time, the Adviser may waive receipt of its fees and/or
voluntarily assume certain expenses of a Fund, which would have the effect of
lowering the overall expense ratio of that Fund and increasing yield to its
investors. The Fund will not pay the Adviser at a later time for any amounts it
may waive, nor will the Fund reimburse the Adviser for any amounts it may
assume.

With respect to Small-Cap Equity Fund, the Adviser has entered into a
Sub-Investment Advisory Agreement (the "Womack Sub-Advisory Agreement") with
Womack Asset Management, Inc. ("Womack") dated May 14, 1998, as revised February
25, 1999. As to such Fund, the Womack Sub-Advisory Agreement is subject to
annual approval by (i) the Board or (ii) vote of a majority (as defined in the
1940 Act) of the Fund's outstanding voting securities, provided that in either
event the continuance also is approved by a majority of the Board members who
are not "interested persons" (as defined in the 1940 Act) of the Fund or Womack,
by vote cast in person at a meeting called for the purpose of voting on such
approval. The Womack Sub-Advisory Agreement is terminable without penalty, (i)
by the Adviser on 60 days' notice, (ii) by the Fund's Board or by vote of the
holders of a majority of the Fund's outstanding voting securities on 60 days'
notice, or (iii) upon not less than 90 days' notice, by Womack. The Womack
Sub-Advisory Agreement will terminate automatically in the event of its
assignment (as defined in the 1940 Act). Under the terms of the Womack
Sub-Advisory Agreement, the Adviser has agreed to pay Womack a monthly fee at
the annual rate of .35% of the value of the Small-Cap Equity Fund's average
daily net assets.

ADMINISTRATOR. BISYS Fund Services Ohio, Inc., a wholly-owned subsidiary of
The BISYS Group, Inc., provides certain administrative services pursuant to the
Administration Agreement (the "Administration Agreement") dated October 29, 1998
with the Company. Under the Administration Agreement with the Company, the
Administrator generally assists in all aspects of the Funds' operations, other
than providing investment advice, subject to the overall authority of the
Company's Board of Directors in accordance with Maryland law. In connection
therewith, the Administrator provides the Funds 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
Funds' custodian. As to each Fund, the Administration Agreement will continue
until December 31, 2003 and thereafter is subject to annual approval by (i) the
Company's Board of Directors or (ii) vote of a majority (as defined in the 1940
Act) of the outstanding voting securities of such Fund, 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 Company or the
Administrator, by vote cast in person at a meeting called for the purpose of
voting such approval. The Administration Agreement was last approved by the
Company'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 25, 1999. As to each Fund, the Administration Agreement is
terminable without penalty, at any time if for cause, by the Company's Board of
Directors or by vote of the holders of a majority of such Fund's outstanding
voting securities, or, on not less than 90 days' notice, by the Administrator.
The Administration Agreement will terminate automatically, as to the relevant
Fund, in the event of its assignment (as defined in the 1940 Act).

As compensation for the Administrator's services, the Company has agreed to
pay the Administrator a monthly administration fee at the annual rate of .15% of
the value of each Fund's average daily net assets.

DISTRIBUTOR. BISYS Fund Services Limited Partnership, a wholly-owned
subsidiary of The BISYS Group, Inc., acts as the exclusive distributor of each
Fund's shares on a best efforts basis pursuant to a Distribution Agreement (the
"Distribution Agreement") dated November 11, 1997, with the Company. Shares are
sold on a continuous basis by the Distributor as agent, although the Distributor
is not obliged to sell any particular amount of shares. No compensation is
payable by the Company to the Distributor pursuant to the Distribution Agreement
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. The Company's Directors have adopted
such a plan (the "Distribution Plan") with respect to Class A Shares and Class B
Shares pursuant to which each Fund pays the Distributor for advertising,
marketing and distributing Class A Shares and Class B Shares at an annual rate
of .25% and .75% of the value of the average daily net assets represented by
Class A Shares and Class B Shares, respectively. Under the Distribution Plan,
the Distributor may make payments to certain financial institutions, securities
dealers and other industry professionals that have entered into agreements with
the Distributor ("Service Organizations") in respect of these services. The
Distributor determines the amounts to be paid to Service Organizations. Service
Organizations receive such fees in respect of the average daily value of Class A
Shares or Class B Shares owned by their clients. From time to time, the
Distributor may defer or waive receipt of fees under the Distribution Plan while
retaining the ability to be paid by the Fund under the Distribution Plan
thereafter. The fees payable to the Distributor under the Distribution Plan for
advertising, marketing and distributing are payable without regard to actual
expenses incurred. The Company's Directors believe that there is a reasonable
likelihood that the Distribution Plan will benefit each Fund and the holders of
its Class A Shares and Class B Shares.

A quarterly report of the amounts expended under the Distribution Plan, and
the purposes for which such expenditures were incurred, must be made to the
Directors for their review. In addition, the Distribution Plan provides that it
may not be amended to increase materially the costs which holders of the Class A
Shares and Class B Shares may bear for distribution pursuant to the Distribution
Plan without approval of such shareholders and that other material amendments of
the Distribution 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 Company nor have any direct or indirect financial interest in the operation
of the Distribution Plan or in the related Distribution Plan agreements, by vote
cast in person at a meeting called for the purpose of considering such
amendments. The Distribution 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 Distribution Plan. The Distribution Plan was last
so approved on February 25, 1999. As to each Class, the Distribution 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 Distribution Plan or in the Distribution Plan agreements or
by vote of the holders of a majority of Class A Shares or Class B Shares, as the
case may be, voting separately as a Class. A Distribution Plan agreement is
terminable without penalty, at any time, by such vote of the Directors, upon not
more than 60 days' written notice to the parties to such agreement or by vote of
the holders of a majority of the Fund's Class A Shares or Class B Shares, as the
case may be, voting separately as a Class. A Distribution Plan agreement will
terminate automatically, as to the relevant Class, in the event of its
assignment (as defined in the 1940 Act).

SHAREHOLDER SERVICES PLAN. The Company's Directors have adopted a
shareholder services plan (the "Shareholder Services Plan") pursuant to which
each Fund pays the Distributor for the provision of certain services to the
holders of its shares at an annual rate of .15% and .25% of the value of the
average daily net assets represented by Class A Shares and Class B Shares,
respectively. The services provided may include personal services relating to
shareholder accounts, such as answering shareholder inquiries regarding a Fund
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
Shareholder Services Plan, the Distributor may make payments to certain Service
Organizations in respect of these services. The Distributor determines the
amounts to be paid to Service Organizations. Service Organizations receive such
fees in respect of the average daily value of the relevant Class of shares owned
by their clients. From time to time, the Distributor may defer or waive receipt
of fees under the Shareholder Services Plan while retaining the ability to be
paid by the Fund under the Shareholder Services Plan thereafter. The fees
payable to the Distributor under the Shareholder Services Plan are payable
without regard to actual expenses incurred. The Company's Directors believe that
there is a reasonable likelihood that the Shareholder Services Plan will benefit
each Fund and its shareholders.

A quarterly report of the amounts expended under the Shareholder Services
Plan, and the purposes for which such expenditures were incurred, must be made
to the Directors for their review. In addition, the Shareholder Services 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 Company nor have any direct or indirect financial
interest in the operation of the Shareholder Services Plan or in the related
Shareholder Services Plan agreements, by vote cast in person at a meeting called
for the purpose of considering such amendments. The Shareholder Services 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
Shareholder Services Plan. The Shareholder Services Plan was last so approved on
February 25, 1999. The Shareholder Services 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
Shareholder Services Plan or in the Shareholder Services Plan agreements. A
Shareholder Services Plan agreement is terminable without penalty, at any time,
by such vote of the Directors. A Shareholder Services Plan agreement will
terminate automatically in the event of its assignment (as defined in the 1940
Act).

TRANSFER AND DIVIDEND DISBURSING AGENT AND CUSTODIAN. BISYS Fund Services
Ohio, Inc. (the "Transfer Agent"), a wholly-owned subsidiary of The BISYS Group
Inc., located at 3435 Stelzer Road, Columbus, Ohio 43219-3035, is the Company's
transfer and dividend disbursing agent. Under a transfer agency agreement with
the Company, the Transfer Agent arranges for the maintenance of shareholder
account records for each Fund, the handling of certain communications between
shareholders and the Fund and the payment of dividends and distributions payable
by the Fund. For these services, the Transfer Agent receives a monthly fee
computed on the basis of the number of shareholder accounts it maintains for
each Fund during the month, and is reimbursed for certain out-of-pocket
expenses.

First American National Bank acts as custodian of the investments of each
Fund. Under a custody agreement with the Company, First American National Bank
provides for the holding of each Fund's securities and the retention of all
necessary accounts and records. For its custody services, First American
National Bank receives a monthly fee based on the market value of the Funds'
assets held in custody and receives certain securities transactions charges. The
Bank of New York, 90 Washington Street, New York, New York 10286, is the Funds'
sub-custodian.

EXPENSES. All expenses incurred in the operation of the Company are borne
by the Company, except to the extent specifically assumed by others. The
expenses borne by the Company include: 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 the Administrator 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 Fund'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 Fund are charged against the assets of that Fund; other expenses of the
Company are allocated among the Funds on the basis determined by the Board of
Directors, including, but not limited to, proportionately in relation to the net
assets of each Fund.

PURCHASE AND REDEMPTION OF SHARES

ALTERNATIVE PURCHASE METHODS. An investor may choose from Class A Shares
and Class B Shares the Class of shares that best suits the investor's needs,
given the amount of purchase, the length of time the investor expects to hold
the shares and any other relevant circumstances. Each Class A and Class B Share
represents an identical pro-rata interest in a Fund's investment portfolio.

Class A Shares are sold at net asset value per share plus an initial sales
charge imposed at the time of purchase, which may be reduced or waived for
certain purchases, as described below.

Class B Shares are sold at net asset value per share with no initial sales
charge at the time of purchase; as a result, the entire purchase price is
immediately invested in the Fund. Class B Shares are subject to a contingent
deferred sales charge ("CDSC"), which is assessed only if Class B Shares are
redeemed within six years of purchase. Approximately seven years after the date
of purchase, Class B Shares automatically will convert to Class A Shares, based
on the relative net asset values for shares of each such Class.

Class B Shares will receive lower per share dividends and at any given time
the performance of Class B should be expected to be lower than for Class A
Shares because of the higher expenses borne by Class B.

An investor should consider whether, during the anticipated life of the
investor's investment in the Fund, the accumulated distribution and service fees
and CDSC on Class B Shares prior to conversion would be less than the initial
sales charge, if any, on Class A Shares purchased at the same time, and to what
extent, if any, such differential would be offset by the return of Class A.
Additionally, investors qualifying for reduced initial sales charges who expect
to maintain their investment for an extended period of time might consider
purchasing Class A Shares because the accumulated continuing distribution fees
on Class B Shares may exceed the initial sales charge on Class A Shares during
the life of the investment.

GENERAL PURCHASE INFORMATION. Class A Shares and Class B Shares may be
purchased through a number of institutions, including the Adviser and its
affiliates, Service Organizations, and directly from the Distributor. When
purchasing Fund shares, you must specify the Fund and Class of shares being
purchased. The Adviser, its affiliates and Service Organizations may receive
different levels of compensation for selling different Classes of Fund shares.
Stock certificates will not be issued. The Company reserves the right to reject
any purchase order 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.

The minimum initial investment for Class A Shares or Class B Shares of each
Fund is $1,000, and subsequent investments must be at least $100. The minimum
initial investment is $100 for IRAs, and subsequent investments for IRAs must be
at least $50. For full-time or part-time employees of the Adviser or any of its
affiliates, the minimum initial investment is $500, and subsequent investments
must be at least $50. For full-time or part-time employees of the Adviser or any
of its affiliates who elect to have a portion of their pay directly deposited
into their Stewardship Fund accounts, the minimum initial or subsequent
investment must be at least $25. 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 of
shares made in connection with certain shareholder privileges may have different
minimum investment requirements.

You may purchase Class A Shares or Class B Shares by check or wire, or
through TeleTrade 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.

For written orders for Class A Shares or Class B Shares, you may send your
initial or subsequent purchase order, together with the Funds' Account
Application for initial orders and your check or money order, payable to
"Stewardship Funds," to Stewardship Funds, P.O. Box 182207, Columbus, Ohio
43218-2207. 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.

For wire orders for Class A Shares or Class B Shares, you must call the
Transfer Agent at 1-800-___-____. 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 Automated Clearing House, you must call the Transfer Agent at 1-
800-___-_____.

Management understands that the Adviser, its affiliates and some Service
Organizations may impose certain conditions on their clients which are different
from those described herein or in the Funds' Prospectus, and, to the extent
permitted by applicable regulatory authority, may charge their clients a direct
fee for effecting transactions in Fund shares. You should consult the Adviser,
its affiliates or your Service Organization in this regard.

SALES LOADS. (Applicable to Class A Shares of each Fund). The public
offering price of Class A Shares of each Fund is the net asset value per share
of that Class, plus a sales load as shown below:

TOTAL SALES LOAD
-------------------------------

AS A % OF DEALERS' REALLOWANCE
AS A % OF NET ASSET AS A % OF OFFERING
AMOUNT OF TRANSACTION OFFERING PRICE VALUE PRICE
- --------------------- -------------- ---------- ---------------------

A CDSC of 1% will be assessed at the time of redemption of Class A Shares
purchased without an initial sales charge as part of an investment of at least
$1,000,000 and redeemed within one year after purchase. The Distributor may pay
Service Organizations an amount up to 1% of the net asset value of Class A
Shares purchased by their clients that are subject to a CDSC. Letter of Intent
and Right of Accumulation apply to such purchases of Class A Shares.

The scale of sales loads applies to purchases of Class A Shares of each
Fund made by any "purchaser," which term includes an individual and/or spouse
purchasing securities for his, her or their own account or for the account of
any minor children, or a trustee or other fiduciary purchasing securities for a
single trust estate or a single fiduciary account trust estate or a single
fiduciary account (including a pension, profit-sharing or other employee benefit
trust created pursuant to a plan qualified under Section 401 of the Code)
although more than one beneficiary is involved; or a group of accounts
established by or on behalf of the employees of an employer or affiliated
employers pursuant to an employee benefit plan or other program (including
accounts established pursuant to Sections 403(b), 408(k) and 457 of the Code);
or an organized group which has been in existence for more than six months,
provided that it is not organized for the purpose of buying redeemable
securities of a registered investment company and provided that the purchases
are made through a central administration or a single dealer, or by other means
which result in economy of sales effort or expense.

Set forth below is an example of the method of computing the offering price
of Class A Shares. The example assumes a purchase of Class A Shares of a Fund
aggregating less than $50,000 subject to the current schedule of sales charges
set forth above for Class A Shares at a price based upon a net asset value of
$____ per share:

Net Asset Value per Share $

Per Share Sales Charge - 4.75%
of offering price (4.99% of
net asset value per share) $________

Per Share Offering Price to
the Public $________

Class A Shares will be offered at net asset value without a sales load to
registered representatives of NASD member firms which have entered into an
agreement with the Distributor pertaining to the sale of Fund shares, full-time
employees of the Adviser or the Distributor, their spouses and minor children,
current and retired directors of the Adviser or any of its affiliates, and
accounts opened by a bank, trust company or thrift institution which is acting
as a fiduciary and has entered into an agreement with the Distributor pertaining
to the sale of Fund shares, provided that they have furnished the Distributor
appropriate notification of such status at the time of the investment and with
such information as the Distributor may request from time to time in order to
verify eligibility for this privilege. This privilege also applies to the
Company's Directors, fee-based financial planners and registered investment
advisers not affiliated with or clearing purchases through full service
broker/dealers, investment advisers regulated by Federal or state governmental
authority when such investment advisers purchase shares for their own accounts
or for accounts for which they are authorized to make investment decisions
(i.e., discretionary accounts), asset allocation programs offered by the Adviser
for its clients, and corporate/business retirement plans (such as 401(k),
403(b)(7), 457 and Keogh plans) sponsored by the Adviser, the Distributor or
their affiliates or subsidiaries or pursuant to a payroll deduction system which
makes direct investments in a Fund by means of electronic data transmission in a
form acceptable to the Fund. The sales load is not charged on shares acquired
through the reinvestment of dividends or distributions or pursuant to the
Directed Distribution Plan or Reinstatement Privilege.

Class A Shares also may be purchased at net asset value or at a reduced
sales load, subject to appropriate documentation, through a broker-dealer or
other financial institution with the proceeds from the redemption of shares of a
registered open-end management investment company not managed by the Adviser or
its affiliates. The purchase of Class A Shares of a Fund must be made within 90
days of such redemption and the shares redeemed must have been subject to an
initial sales charge or a contingent deferred sales charge to have the Fund's
sales load waived or reduced to the extent of such sales charge.

The dealer reallowance may be changed from time to time but will remain the
same for all dealers. From time to time, the Distributor may make or allow
additional payments or promotional incentives in the form of cash or other
compensation to dealers that sell Fund shares. Such compensation may include
financial assistance to dealers in connection with conferences, sales or
training programs for their employees, seminars for the public, advertising
campaigns regarding the Funds, and/or other dealer-sponsored special events.
Compensation may include payment for travel expenses, including lodging, to
various locations for meetings or seminars of a business nature. Compensation
also may include the following types of non-cash compensation offered through
promotional contests: travel and lodging at vacation locations; tickets for
entertainment events; and merchandise. In some instances, these incentives may
be offered only to certain dealers who have sold or may sell significant amounts
of Fund shares. None of the aforementioned compensation is paid for by the
Company, any Fund or its shareholders.

RIGHT OF ACCUMULATION--CLASS A SHARES. Reduced sales loads apply to any
purchase of Class A Shares by you and any related "purchaser," where the
aggregate investment in Class A Shares among any of the Funds offered with a
sales load, including such purchase, is $50,000 or more. If, for example, you
previously purchased and still hold Class A Shares of the Large-Cap Equity Fund,
with an aggregate current market value of $40,000 and subsequently purchase
Class A Shares of the Large-Cap Equity Fund having a current value of $20,000,
the sales load applicable to the subsequent purchase would be reduced to 4.00%
of the offering price (4.17% of the net asset value). All present holdings of
Class A Shares may be combined to determine the current offering price of the
aggregate investment in ascertaining the sales load applicable to each
subsequent purchase. To qualify for reduced sales loads, at the time of a
purchase an investor or the investor's Service Organization must notify the
Transfer Agent. The reduced sales load is subject to confirmation of an
investor's holdings through a check of appropriate records.

CONTINGENT DEFERRED SALES CHARGE. If a shareholder redeems Class B Shares
prior to the sixth anniversary of purchase, the shareholder will pay a CDSC at
the rates set forth below. The CDSC is assessed on an amount equal to the lesser
of the then-current market value or the cost of the Class B Shares being
redeemed. Accordingly, no sales charge is imposed on increases in net asset
value above the initial purchase price. In addition, no charge is assessed on
Class B Shares derived from reinvestment of dividends or capital gain
distributions.

The amount of CDSC, if any, varies depending on the number of years from
the time of payment for the purchase of Class B Shares until the time of
redemption of such shares. Solely for purposes of determining the number of
years from the time of any payment for the purchase of Class B Shares, all
payments during a month are aggregated and deemed to have been made on the first
day of the month.

The following table sets forth the rates of the CDSC for Class B Shares:

CDSC AS A % OF AMOUNT
INVESTED OR REDEMPTION
YEAR SINCE PURCHASE PAYMENT WAS MADE PROCEEDS
- ------------------------------------ -----------------------

First............................................ 4.00
Second........................................... 3.00
Third............................................ 3.00
Fourth........................................... 2.00
Fifth............................................ 2.00
Sixth............................................ 1.00
Seventh.......................................... 0.00

When an investor redeems his or her Class B Shares, the redemption order is
processed so as to minimize the amount of the CDSC that will be charged. Class B
Shares that are not subject to the CDSC (i.e., Class B Shares that were acquired
through reinvestment of dividends or capital gain distributions) are redeemed
first and after that Class B Shares that have been held the longest are
redeemed.

To provide an example, assume you purchased 100 Class B Shares at $10 per
share (a total cost of $1,000) and prior to the second anniversary after
purchase, the net asset value per share is $12 and during such time you have
acquired 10 additional Class B Shares through dividends reinvested in Class B
Shares. If you then make your first redemption of 50 Class B Shares (proceeds of
$600), the first 10 Class B Shares will not be subject to the CDSC because you
received them as dividends. With respect to the remaining 40 Class B Shares, the
CDSC is applied only to the original cost of $10 per share and not to the
increase in net asset value of $2 per share. Therefore, $400 of the $600
redemption proceeds is subject to a CDSC at a rate of 3.00% (the applicable rate
prior to the second anniversary after purchase).

The Distributor compensates certain Service Organizations for selling Class
B Shares at the time of purchase from the Distributor's own assets. The proceeds
of the CDSC and distribution fee, in part, are used to defray these expenses.

WAIVER OF CDSC. The CDSC may be waived in connection with (a) redemptions
made within one year after the death or disability, as defined in Section
72(m)(7) of the Code, of the shareholder, (b) redemptions by participants in
qualified or non-qualified employee benefit plans or other programs (such as
401(k), 403(b)(7), 457 and Keogh plans) sponsored by the Adviser, the
Administrator or their affiliates or subsidiaries or which make direct
investments in the Fund by means of electronic data transmission, (c)
redemptions as a result of a combination of any investment company with the Fund
by merger, acquisition of assets or otherwise, (d) a distribution following
retirement under a tax-deferred retirement plan or upon attaining age 70-1/2 in
the case of an IRA or Keogh plan or custodial account pursuant to Section 403(b)
of the Code, and (e) redemptions pursuant to the Automatic Withdrawal Plan, as
described in the Funds' Prospectus and this Statement of Additional Information.
Any Fund shares subject to a CDSC which were purchased prior to the termination
of such waiver will have the CDSC waived as provided in the Funds' Prospectus at
the time of the purchase of such shares.

CONVERSION OF CLASS B SHARES. Approximately seven years after the date of
purchase, Class B Shares automatically will convert to Class A Shares, based on
the relative net asset values for shares of each such Class, and will no longer
be subject to the distribution fee and shareholder services fee charged Class B
Shares, but will be subject to the distribution fee and shareholder services fee
charged Class A Shares. At that time, Class B Shares that have been acquired
through the reinvestment of dividends and distributions ("Dividend Shares") will
be converted in the proportion that a shareholder's Class B Shares (other than
Dividend Shares) converting to Class A Shares bears to the total Class B Shares
then held by the shareholder which were not acquired through the reinvestment of
dividends and distributions.

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.

SIGNATURE-GUARANTIES. Written redemption requests must be signed by each
shareholder, including each holder of a joint account, and each signature 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-guaranties 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. 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.

REDEMPTION COMMITMENT. Each Fund 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 Fund'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 Fund to the detriment of the existing shareholders. In this
event, the securities would be valued in the same manner as the Fund 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 Fund normally utilizes is restricted, or when an emergency
exists as determined by the Securities and Exchange Commission so that disposal
of the Fund'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 Fund's shareholders.

DETERMINATION OF NET ASSET VALUE

Each Fund's securities, including covered call options written by the Fund,
are valued at the last sale price on the securities exchange or national
securities market on which such securities primarily are traded. Securities not
listed on an exchange or national securities market, or securities in which
there were no transactions, are valued at the average of the most recent bid and
asked prices, except in the case of open short positions where the asked price
is used for valuation purposes. Bid price is used when no asked price is
available. Any assets or liabilities initially expressed in terms of foreign
currency will be translated into dollars at the midpoint of the New York
interbank market spot exchange rate as quoted on the day of such translation by
the Federal Reserve Bank of New York or if no such rate is quoted on such date,
at the exchange rate previously quoted by the Federal Reserve Bank of New York
or at such other quoted market exchange rate as may be determined to be
appropriate by the Adviser. Debt securities maturing in 60 days or less
generally are carried at amortized cost, which approximates value, except where
to do so would not reflect accurately their fair value, in which case such
securities would be valued at their fair value as determined under the
supervision of the Board of Directors. Any securities or other assets for which
recent market quotations are not readily available are valued at fair value as
determined in good faith by the Company's Board of Directors.

Restricted securities, as well as securities or other assets for which
market quotations are not readily available, or are not valued by a pricing
service approved by the Board of Directors, are valued at fair value as
determined in good faith by the Board of Directors. The Board of Directors will
review the method of valuation on a current basis. In making their good faith
valuation of restricted securities, the Directors generally will take the
following factors into consideration: restricted securities which are, or are
convertible into, securities of the same class of securities for which a public
market exists usually will be valued at market value less the same percentage
discount at which purchased. This discount will be revised periodically by the
Board of Directors if the Directors believe that it no longer reflects the value
of the restricted securities. Restricted securities not of the same class as
securities for which a public market exists usually will be valued initially at
cost. Any subsequent adjustment from cost will be based upon considerations
deemed relevant by the Board of Directors.

Expenses and fees, including the advisory fee and fees paid pursuant to the
Distribution Plan and Shareholder Services Plan, are accrued daily and taken
into account for the purpose of determining the net asset value of the relevant
Class of Fund shares.

SHAREHOLDER SERVICES AND 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 the Prospectus or this Statement of Additional Information. 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 Fund, shares of the same Class of another Fund, 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,
your Service Organization or the Administrator to determine if it is available
and whether any conditions are imposed on its use.

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 Fund into which the exchange is being made.

Shares will be exchanged at the next determined net asset value; however, a
sales load, which may be waived or reduced as described below, may be charged
with respect to exchanges of Class A Shares. No CDSC will be imposed on Class B
Shares at the time of an exchange; however, shares acquired through an exchange
will be subject to the CDSC applicable to the exchanged or acquired shares. The
CDSC applicable on redemption of the acquired shares will be calculated from the
date of the initial purchase of the Class B Shares exchanged. If you are
exchanging Class A Shares into a Fund 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 Company
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 Company 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 Fund 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 Class A or Class B 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, Class A or Class B 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 Class A or Class
B 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
obtain the necessary applications from the Administrator. You may cancel your
participation in the Automatic Investment Plan or change the amount of purchase
at any time by mailing written notification to Stewardship Funds, P.O. Box
182207, Columbus, Ohio 43218-2207, and such notification will be effective three
business days following receipt. The Company may modify or terminate the
Automatic Investment Plan at any time or charge a service fee. No such fee
currently is contemplated.

DIRECTED DISTRIBUTION PLAN. The Directed Distribution Plan enables you to
invest automatically dividends and capital gain distributions, if any, paid by a
Fund in Class A or Class B Shares of another Fund of which you are a
shareholder. Class A or Class B Shares of the other Fund will be purchased at
the then-current net asset value. Minimum subsequent investments do not apply.
Investors desiring to participate in the Directed Distribution Plan should check
the appropriate box and supply the necessary information on the Account
Application. The Plan is available only for existing accounts and may not be
used to open new accounts. The Company may modify or terminate the Directed
Distribution 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), with respect
to Class A or Class B Shares, 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 Company
or the Transfer Agent.

No CDSC with respect to Class B Shares will be imposed on withdrawals made
under the Automatic Withdrawal Plan, provided that the amounts withdrawn under
the plan do not exceed on an annual basis 10% of the account value at the time
the shareholder elects to participate in the Automatic Withdrawal Plan.
Withdrawals with respect to Class B Shares under the Automatic Withdrawal Plan
that exceed on an annual basis 10% of the value of the shareholder's account
will be subject to a CDSC on the amounts exceeding 10% of the initial account
value. Purchases of additional Class A Shares where the sales load is imposed
concurrently with withdrawals of Class A Shares generally are undesirable.

REINSTATEMENT PRIVILEGE. The Reinstatement Privilege enables investors who
have redeemed Class A or Class B Shares to repurchase, within 90 days of such
redemption, Class A or Class B Shares of a Fund in an amount not to exceed the
redemption proceeds received at a purchase price equal to the then-current net
asset value determined after a reinstatement request and payment are received by
the Transfer Agent. This privilege also enables such investors to reinstate
their account for the purpose of exercising the Exchange Privilege. Upon
reinstatement for Class B Shares, the investor's account will be credited with
an amount equal to the CDSC previously paid upon redemption of the Class B
Shares reinvested. To use the Reinstatement Privilege, you must submit a written
reinstatement request to the Transfer Agent. The reinstatement request and
payment must be received within 90 days of the trade date of the redemption.
There currently are no restrictions on the number of times an investor may use
this privilege.

LETTER OF INTENT. By signing a Letter of Intent form, available from the
Administrator or certain Service Organizations, you become eligible for the
reduced sales load applicable to the total number of Class A Shares purchased in
a 13-month period (beginning up to 90 days prior to the date of execution of the
Letter of Intent) pursuant to the terms and conditions set forth in the Letter
of Intent. A minimum initial purchase of $5,000 is required. To compute the
applicable sales load, the offering price of shares you hold (on the date of
submission of the Letter of Intent) in any Fund that may be used toward "Right
of Accumulation" benefits described above may be used as a credit toward
completion of the Letter of Intent.

The Transfer Agent will hold in escrow 5% of the amount indicated in the
Letter of Intent for payment of a higher sales load if the investor does not
purchase the full amount indicated in the Letter of Intent. The escrow will be
released when the investor fulfills the terms of the Letter of Intent by
purchasing the specified amount. Assuming completion of the total minimum
investment specified under a Letter of Intent, an adjustment will be made to
reflect any reduced sales load applicable to shares purchased during the 90-day
period prior to the submission of the Letter of Intent. In addition, if the
investor's purchases qualify for a further sales load reduction, the sales load
will be adjusted to reflect the investor's total purchase at the end of 13
months.

If total purchases are less than the amount specified, the investor will be
requested to remit an amount equal to the difference between the sales load
actually paid and the sales load applicable to the aggregate purchases actually
made. If such remittance is not received within 20 days, the Transfer Agent, as
attorney-in-fact pursuant to the terms of the Letter of Intent, will redeem an
appropriate number of Class A Shares held in escrow to realize the difference.
Signing a Letter of Intent does not bind the investor to purchase, or the
Company to sell, the full amount indicated at the sales load in effect at the
time of signing, but the investor must complete the intended purchase to obtain
the reduced sales load. At the time you purchase Class A Shares, you must
indicate your intention to do so under a Letter of Intent. Purchases pursuant to
a Letter of Intent will be made at the then-current net asset value plus the
applicable sales load in effect at the time such Letter of Intent was executed.

PERFORMANCE INFORMATION

Average annual total return is calculated by determining the ending
redeemable value of an investment purchased with a hypothetical $1,000 payment
made at the beginning of the period (assuming the reinvestment of dividends and
distributions), dividing by the amount of the initial investment, taking the
"n"th root of the quotient (where "n" is the number of years in the period) and
subtracting 1 from the result. A Class's average annual total return figures
calculated in accordance with such formula assume that in the case of Class A
the maximum sales load has been deducted from the hypothetical initial
investment at the time of purchase or, in the case of Class B, the maximum
applicable CDSC has been paid upon redemption at the end of the period.

Total return is calculated by subtracting the amount of the maximum
offering price per share at the beginning of a stated period from the net asset
value per share at the end of the period (after giving effect to the
reinvestment of dividends and distributions during the period and any applicable
CDSC), and dividing the result by the maximum offering price per share at the
beginning of the period. Total return also may be calculated based on the net
asset value per share at the beginning of the period for Class A Shares or
without giving effect to any applicable CDSC at the end of the period for Class
B Shares. In such cases, the calculation would not reflect the deduction of the
sales load with respect to Class A Shares or any applicable CDSC with respect to
Class B Shares, which, if reflected, would reduce the performance quoted.

From time to time, advertising materials for a Fund 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 Fund may include
information concerning retirement and investing for retirement, average life
expectancy and pension and social security benefits. Comparative performance
information may be used from time to time in advertising or marketing each
Fund's shares, including data from Lipper Analytical Services, Inc.,
Morningstar, Inc., S&P 500 Index, the Russell 2000 Index, the Dow Jones
Industrial Average, CDA/Wiesenberger Investment Companies Service, Mutual Fund
Values; Mutual Fund Forecaster, Mutual Fund Investing and other industry
publications.

DIVIDENDS, DISTRIBUTION AND TAXES

Each Fund intends to qualify as a "regulated investment company" under the
Code, if such qualification is in the best interests of its shareholders. To
qualify as a regulated investment company, the Fund must pay out to its
shareholders at least 90% of its net income (consisting of net investment income
from tax exempt obligations and net short-term capital gain), and must meet
certain asset diversification and other requirements. Qualification as a
regulated investment company relieves the Fund from any liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
applicable provisions of the Code. If a Fund did not qualify as a regulated
investment company, it would be treated for tax purposes as an ordinary
corporation subject to Federal income tax. The term "regulated investment
company" does not imply the supervision of management or investment practices or
policies by any government agency.

Any dividend or distribution paid shortly after an investor's purchase may
have the effect of reducing the aggregate net asset value of his shares below
the cost of his investment. Such a distribution would be a return on investment
in an economic sense although taxable as stated in the Prospectus. In addition,
the Code provides that if a shareholder holds shares for six months or less and
has received a capital gain dividend with respect to such shares, any loss
incurred on the sale of such shares will be treated as a long-term capital loss
to the extent of the capital gain dividend received.

Depending upon the composition of a Fund's income, the entire amount or a
portion of the dividends paid by the Fund from net investment income may qualify
for the dividends received deduction allowable to qualifying U.S. corporate
shareholders ("dividends received deduction"). In general, dividend income from
a Fund distributed to qualifying corporate shareholders will be eligible for the
dividends received deduction only to the extent that such Fund's income consists
of dividends paid by U.S. corporations. However, Section 246(c) of the Code
generally provides that if a qualifying corporate shareholder has disposed of
Fund shares held for less than 46 days, which 46 days generally must be during
the 90-day period commencing 45 days before the shares become ex-dividend, and
has received a dividend from net investment income with respect to such shares,
the portion designated by the Fund as qualifying for the dividends received
deduction will not be eligible for such shareholder's dividends received
deduction. In addition, the Code provides other limitations with respect to the
ability of a qualifying corporate shareholder to claim the dividends received
deduction in connection with holding Fund shares.

Ordinarily, gains and losses realized from portfolio transactions will be
treated as capital gains and losses. However, a portion of the gain or loss
realized from the disposition of non-U.S. dollar denominated securities
(including debt instruments, certain financial futures and options, and certain
preferred stock) may be treated as ordinary income or loss under Section 988 of
the Code. In addition, all or a portion of the gain realized from the
disposition of market discount bonds will be treated as ordinary income under
Section 1276 of the Code. A market discount bond is defined as any bond
purchased by a Fund after April 30, 1993, and after its original issuance, at a
price below its face or accredited value. Finally, all or a portion of the gain
realized from engaging in "conversion transactions" may be treated as ordinary
income under Section 1258. "Conversion transactions" are defined to include
certain forward, futures, option and "straddle" transactions, transactions
marketed or sold to produce capital gains, or transactions described in Treasury
regulations to be issued in the future.

Under Section 1256 of the Code, any gain or loss realized by the Fund from
certain financial futures and options transactions (other than those taxed under
Section 988 of the Code) will be treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss. Gain or loss will arise upon the
exercise or lapse of such futures and options as well as from closing
transactions. In addition, any such futures or options remaining unexercised at
the end of the Fund's taxable year will be treated as sold for their then fair
market value, resulting in additional gain or loss to the Fund characterized in
the manner described above.

Offsetting positions held by a Fund involving financial futures and options
may constitute "straddles." Straddles are defined to include "offsetting
positions" in actively traded personal property. The tax treatment of straddles
is governed by Sections 1092 and 1258 of the Code, which, in certain
circumstances, override or modify the provisions of Sections 988 and 1256 of the
Code. If the Fund was treated as entering into straddles by reason of its
futures or options transactions, such straddles could be characterized as "mixed
straddles" if the futures or options transactions comprising such straddles were
governed by Section 1256. The Fund may make one or more elections with respect
to "mixed straddles." Depending upon which election is made, if any, the results
to the Fund may differ. If no election is made, to the extent the straddle rules
apply to positions established by the Fund, losses realized by the Fund will be
deferred to the extent of unrealized gain in any offsetting positions. Moreover,
as a result of the straddle rules, short-term capital loss on straddle positions
may be recharacterized as long-term capital loss, and long-term capital gain on
straddle positions may be treated as short-term capital gain or ordinary income.

The Taxpayer Relief Act of 1997 included constructive sale provisions that
generally will apply if a Fund either (1) holds an appreciated financial
position with respect to stock, certain debt obligations, or partnership
interests ("appreciated financial position") and then enters into a short sale,
futures, forward, or offsetting notional principal contract (collectively, a
"Contract") respecting the same or substantially identical property or (2) holds
an appreciated financial position that is a Contract and then acquires property
that is the same as or substantially identical to the underlying property. In
each instance, with certain exceptions, the Fund generally will be taxed as if
the appreciated financial position were sold at its fair market value on the
date the Fund enters into the financial position or acquires the property,
respectively. Transactions that are identified hedging or straddle transactions
under other provisions of the Code can be subject to the constructive sale
provisions.

Investment by a Fund in securities issued or acquired at a discount, or
providing for deferred interest or for payment of interest in the form of
additional obligations could under special tax rules affect the amount, timing
and character of distributions to shareholders by causing such Fund to recognize
income prior to the receipt of cash payments. For example, the Fund could be
required to accrue a portion of the discount (or deemed discount) at which the
securities were issued each year and to distribute such income in order to
maintain its qualifica tion as a regulated investment company. In such case, the
Fund may have to dispose of securities which it might otherwise have continued
to hold in order to generate cash to satisfy these distribution requirements.

PORTFOLIO TRANSACTIONS

Transactions are allocated to various dealers by the Funds' 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. The allocation of brokerage transactions also may take into account a
broker's sales of Fund shares.

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

Brokers also are selected because of their ability to handle special
executions such as are involved in large block trades or broad distributions,
provided the primary consideration is met. Large block trades may, in certain
cases, result from two or more clients the Adviser might advise being engaged
simultaneously in the purchase or sale of the same security. Portfolio turnover
may vary from year to year, as well as within a year. It is anticipated that in
any fiscal year, the turnover rate for each of these Funds generally should be
less than 100%. Higher turnover rates are likely to result in comparatively
greater brokerage expenses.

The overall reasonableness of brokerage commissions paid is evaluated by
the Adviser based upon its knowledge of available information as to the general
level of commissions paid by other institutional investors for comparable
services. The Fund may pay commission rates in excess of those another broker or
dealer would have charged for effecting the same transaction, if the Adviser
determines in good faith that the commission paid is reasonable in relation to
the value of the brokerage and research services provided.

When transactions are executed in the over-the-counter market, the Adviser
will deal with the primary market makers unless a more favorable price or
execution otherwise is obtainable.

The Company's Board of Directors has determined, in accordance with Section
17(e) of the 1940 Act and Rule 17e-1 thereunder, that any portfolio transaction
for the Fund may be executed by certain brokers that are affiliates of the
Adviser when such broker's charge for the transaction does not exceed the usual
and customary level.

INFORMATION ABOUT THE COMPANY AND THE FUNDS

The Fund is authorized to issue 28 billion 500 million shares of Common
Stock (with 500 million shares allocated to each Fund), par value $.001 per
share. Each Fund's shares are classified into Class A Shares (250 million) and
Class B Shares (250 million). Each share has one vote and shareholders will vote
in the aggregate and not by Class except as otherwise required by law. Each Fund
share, when issued and paid for in accordance with the terms of the offering, is
fully paid and non-assessable. Shares have no preemptive or subscription rights
and are freely transferable.

Unless otherwise required by the 1940 Act, ordinarily it will not be
necessary for the Company 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, the holders of at least 10% of the shares
outstanding and entitled to vote may require the Company to hold a special
meeting of shareholders for purposes of removing a Director from office.
Shareholders may remove a Director by the affirmative vote of a majority of the
Company'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 Company 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 shareholders vote together as a group; as to others they vote separately
by portfolio. From time to time, other portfolios may be established and sold
pursuant to other offering documents.

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 Company, 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.

To date, 28 portfolios have been authorized. All consideration received by
the Company 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 Company) and will be subject to the liabilities related
thereto. The income attributable to, and expenses of, one portfolio are treated
separately from those of the other portfolios.

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

COUNSEL AND INDEPENDENT AUDITORS

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

_________________________________, independent auditors, have been selected
as each Fund's auditors.

FINANCIAL STATEMENTS

The Funds' Annual Report to Shareholders for the fiscal year ending
December 31, 1999 will be available in March 2000.

<PAGE>

APPENDIX

Description of certain ratings assigned by Standard & Poor's Ratings Group
("S&P"), Moody's Investors Service, Inc. ("Moody's"), Fitch IBCA, Inc.
("Fitch"), and Duff & Phelps Credit Rating Co. ("Duff"):

S&P

BOND RATINGS

AAA

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

Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degree.

Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rated
categories.

BBB

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

S&P's letter ratings may be modified by the addition of a plus (+) or minus
(-) sign designation, which is used to show relative standing within the major
rating categories, except in the AAA (Prime Grade) category.

COMMERCIAL PAPER RATING

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.

Moody's

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.

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

Baa

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

Moody's applies the numerical modifiers 1, 2 and 3 to show relative
standing within the major rating categories, except in the Aaa category. The
modifier 1 indicates a ranking for the security in the higher end of a rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates a ranking in the lower end of a rating category.

COMMERCIAL PAPER RATING

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 on funds
employed, conservative capitalization structures with moderate reliance on debt
and ample asset protection, broad margins in earnings coverage of fixed
financial charges and high internal cash generation, and well established access
to a range of financial markets and assured sources of alternate liquidity.

Issuers (or relating supporting institutions) 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.

Fitch

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+.

Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.

BBB

Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these bonds
and, therefore, impair timely payment. The likelihood that the ratings of these
bonds will fall below investment grade is higher than for bonds with higher
ratings.

Plus (+) and minus (-) signs are used with a rating symbol 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.

Duff

BOND RATINGS

AAA

Bonds rated AAA are considered highest credit quality. The risk factors are
negligible, being only slightly more than for risk-free U.S. Treasury debt.

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

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Bonds rated A have protection factors which are average but adequate.
However, risk factors are more variable and greater in periods of economic
stress.

BBB

Bonds rated BBB are considered to have below average protection factors but
still considered sufficient for prudent investment. Considerable variability in
risk exists during economic cycles.

Plus (+) and minus (-) signs are used with a rating symbol (except AAA) to
indicate the relative position of a credit within the rating category.

COMMERCIAL PAPER RATING

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.