NOTTINGHAM INVESTMENT TRUST II, 485BPOS, 1998-07-31

NOTTINGHAM INVESTMENT TRUST II
485BPOS, 1998-07-31

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As filed with the Securities and Exchange Commission on July 31, 1998
Securities Act File No. 33-37458
Investment Company Act File No. 811-6199
________________________________________________________________________________

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Post-Effective Amendment No. 34

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 35

THE NOTTINGHAM INVESTMENT TRUST II
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922

AGENT FOR SERVICE:

C. Frank Watson III
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069
Telephone (919) 972-9922 Ext. 212
______________________________________

It is proposed that this filing will become effective:

|X| Immediately upon filing pursuant |_| on ___________, 1998 pursuant
to Rule 485(b), or to Rule 485(b), or

|_| 60 days after filing pursuant |_| on ___________, 1998 pursuant
to Rule 485(a)(1), or to Rule 485(a)(1), or

|_| 75 days after filing pursuant |_| on ___________, 1998 pursuant
to Rule 485(a)(2), or to Rule 485(a)(2)

________________________________________________________________________________

This filing includes the Prospectus and Statement of Additional Information of
The CarolinasFund, which is incorporated herein by reference to Post-Effective
Amendment No. 33 to the Registrant's Registration Statement on Form N-1A
previously filed with the Commission on June 5, 1998.

<PAGE>

PART A
======

PROSPECTUS Cusip Number 66976M839

- --------------------------------------------------------------------------------
WST GROWTH & INCOME FUND
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------

The investment objective of the WST Growth & Income Fund (the "Fund") is to
provide its shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized, and income.
The Fund will seek to achieve this objective by investing primarily in a
flexible portfolio of equity securities, fixed income securities, and money
market instruments. While there is no assurance that the Fund will achieve its
investment objective, it endeavors to do so by following the investment policies
described herein.

This Prospectus relates to shares ("Institutional Shares") representing
interests in the Fund. The Institutional Shares are offered to the general
public. See "Prospectus Summary - Offering Price."

INVESTMENT ADVISOR

Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

The Fund is a diversified series of The Nottingham Investment Trust II (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge. You may request the Statement of Additional
Information, as amended from time to time, which is incorporated in this
Prospectus by reference, by writing the Fund at 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by calling
1-800-525-3863. The SEC also maintains an Internet Web site (http://www.sec.gov)
that contains the Statement of Additional Information, material incorporated by
reference, and other information regarding the Fund.

Investment in the Fund involves risks, including the possible loss of principal.
Shares of the Fund are not deposits or obligations of, or guaranteed or endorsed
by, any financial institution, and such shares are not federally insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency.

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

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY........................................................... 2

FEE TABLE.................................................................... 3

FINANCIAL HIGHLIGHTS..........................................................4

INVESTMENT OBJECTIVE AND POLICIES............................................ 5

RISK FACTORS................................................................ 10

INVESTMENT LIMITATIONS...................................................... 12

FEDERAL INCOME TAXES........................................................ 12

DIVIDENDS AND DISTRIBUTIONS................................................. 13

HOW SHARES ARE VALUED....................................................... 14

HOW SHARES MAY BE PURCHASED................................................. 14

HOW SHARES MAY BE REDEEMED.................................................. 17

MANAGEMENT OF THE FUND...................................................... 19

OTHER INFORMATION........................................................... 21

This Prospectus is not an offering of the securities herein described in any
state in which the offering is unauthorized. No sales representative, dealer or
other person is authorized to give any information or make any representations
other than those contained in this Prospectus.

The Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by this Prospectus or to reject purchase orders. All orders
to purchase shares are subject to acceptance by the Fund and are not binding
until confirmed or accepted in writing.

<PAGE>

PROSPECTUS SUMMARY

The Fund. The WST Growth & Income Fund (the "Fund") is a diversified series of
The Nottingham Investment Trust II (the "Trust"), a registered open-end
management investment company organized as a Massachusetts business trust. This
Prospectus relates to Institutional Shares of the Fund. See "Other Information -
Description of Shares."

Offering Price. The Institutional Shares of the Fund are offered to the general
public at net asset value. The minimum initial investment is $25,000 ($2,000 for
IRAs and Keogh Plans). The minimum subsequent investment is $500 ($100 for those
participating in the Automatic Investment Plan). See "How Shares May be
Purchased."

Risk Considerations. The Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund will achieve its investment
objective. While the Fund will invest primarily in common stocks traded in U.S.
securities markets, some of the Fund's investments may include foreign
securities generally traded domestically in U.S. securities markets, real estate
securities, illiquid securities, and securities purchased subject to a
repurchase agreement or on a "when-issued" basis, which involve certain risks.
The Fund may also engage in options transactions, which present special risks. A
portion of the Fund will be invested in fixed income securities, which will be
subject to risks associated with movements in interest rates. Up to 15% of the
Fund may be invested in fixed income securities rated below "investment grade."
The Fund may borrow only under certain limited conditions (included to meet
redemption requests) and not to purchase securities. It is not the intent of the
Fund to borrow except for temporary cash requirements. Borrowing, if done, would
tend to exaggerate the effects of market and interest rate fluctuations on the
Fund's net asset value until repaid. See "Risk Factors."

Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Wilbanks, Smith & Thomas
Asset Management, Inc. of Norfolk, Virginia (the "Advisor"), manages the Fund's
investments. The Advisor currently manages approximately $650 million in assets.
For its advisory services, the Advisor receives a monthly fee, based on the
Fund's daily net assets, at the annual rate of 0.75% of the first $250 million
of net assets and 0.65% of all assets over $250 million. See "Management of the
Fund - The Advisor."

Dividends. Income dividends, if any, are generally paid quarterly; capital
gains, if any, are generally distributed at least once each year. Dividends and
capital gains distributions are automatically reinvested in additional shares of
the same Class at net asset value unless the shareholder elects to receive cash.
See "Dividends and Distributions."

Distributor. Capital Investment Group, Inc. (the "Distributor") serves as
distributor of shares of the Fund. See "How Shares May Be Purchased -
Distributor."

Redemption of Shares. There is no charge for redemptions other than possible
charges for wiring redemption proceeds. Shares may be redeemed at any time at
the net asset value next determined after receipt of a redemption request by a
Fund. A shareholder that submits appropriate written authorization may redeem
shares by telephone. See "How Shares May Be Redeemed."

<PAGE>

FEE TABLE

The following table sets forth certain information in connection with the
expenses of the Institutional Shares of the Fund anticipated for the current
fiscal year. The information is intended to assist the investor in understanding
the various costs and expenses borne by the Institutional Shares of the Fund,
and therefore indirectly by its investors, the payment of which will reduce an
investor's return on an annual basis.

Shareholder Transaction Expenses for Institutional Shares

Maximum sales load imposed on purchases
(as a percentage of offering price)..................................None
Maximum sales load imposed on reinvested dividends.....................None
Maximum deferred sales load............................................None
Redemption fees*.......................................................None
Exchange fee...........................................................None

* The Fund in its discretion may choose to pass through to
redeeming shareholders any charges imposed by the Custodian
for wiring redemption proceeds. The Custodian currently
charges the Fund $10.00 per transaction for wiring
redemption proceeds.

Annual Fund Operating Expenses
for Institutional Shares After Fee
Waivers and Expense Reimbursements1
(as a percentage of average net assets)

Management Fees........................................................0.00%1
12b-1 Fees..............................................................None
Total Other Expenses...................................................1.75%1
Total Fund Operating Expenses..........................................1.75%1

EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, and assuming a 5% annual return:

1 year 3 years 5 years 10 years
------ -------- ------- --------
$18 $55 $95 $206

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

1 The "Total Fund Operating Expenses" shown above are based upon actual
operating expenses incurred by the Fund for the fiscal year ended March 31,
1998, which after fee waivers and expense reimbursements, were 1.75% of the
average daily net assets of the Institutional Shares of the Fund. Absent
such waivers and reimbursements, the percentages would have been 0.75% for
"Management Fees" and 3.15% for "Total Fund Operating Expenses" for the
fiscal year ended March 31, 1998. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits Total Fund Operating Expenses
(exclusive of interest, taxes, brokerage fees and commissions, sales
charges, and extraordinary expenses) to not more than 1.75% of the
Institutional Shares' average daily net assets. There can be no assurance
that the Advisor's voluntary fee waivers and expense reimbursements will
continue in the future.

See "How Shares May Be Purchased" and "Management of the Fund" below for more
information about the fees and costs of operating the Fund. The assumed 5%
annual return in the example is required by the Securities and Exchange
Commission. The hypothetical rate of return is not intended to be representative
of past or future performance of the Fund; the actual rate of return for the
Fund may be greater or less than 5%.

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided in Multiple Classes representing interests in
the Fund. This Prospectus relates to Institutional Shares of the Fund. See
"Other Information - Description of Shares." The financial data included in the
table below has been derived from audited financial statements of the Fund. The
financial data for the fiscal period ended March 31, 1998, has been audited by
Deloitte & Touche LLP, independent auditors, whose report covering such period
is included in the Statement of Additional Information. This information should
be read in conjunction with the Fund's latest audited annual financial
statements and notes thereto, which are also included in the Statement of
Additional Information, a copy of which may be obtained at no charge by calling
the Fund. Further information about the performance of the Fund is contained in
the Annual Report of the Fund, a copy of which may be obtained at no charge by
calling the Fund.

(For a Share Outstanding Throughout the Period)

Period Ended
March 31,
1998*
------------
Net Asset Value, Beginning of Period $10.02
=====
Income (loss) from investment operations
Net investment loss 0.00
Net realized and unrealized gain
on investments 1.27
-----
Total from investment operations 1.27

Distributions to shareholders
Distributions in excess of net investment income 0.00
-----

Net Asset Value, End of Period $11.29
======

Total return (a) 12.72%

Ratios/supplemental data

Net Assets, End of Period $6,376,193
=========
Ratio of expenses to average net assets
Before expense reimbursements and
waived fees 3.15%(b)
After expense reimbursements and
waived fees 1.75%(b)

Ratio of net investment loss to average net assets
Before expense reimbursements and
waived fees (1.31)%(b)
After expense reimbursements and
waived fees 0.09%(b)

Portfolio turnover rate 23.64%

Average commission rate paid (c) $0.0778

* For the period from September 30, 1997 (date of initial public investment)
to March 31, 1998.

(a) Aggregate total return for the fiscal period.

(b) Annualized.

(c) Represents total commissions paid on portfolio securities divided by
total portfolio shares purchased or sold on which commissions were
charged.

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.

Investment Policies. The Fund will seek to achieve its investment objective by
investing primarily in a flexible The Advisor will vary the percentage of Fund
assets invested in equities, fixed income securities, and money market
instruments according to the Advisor's judgment of market and economic
conditions, and based on the Advisor's view of which asset class can best
achieve the Fund's objectives. The percentage invested in fixed income
securities and money market instruments, in the aggregate, will generally
comprise not less than 10% and not more than 30% of the portfolio.

Selection of equity securities will be based primarily on the expected capital
appreciation potential. The expected income potential of those equity securities
is of secondary importance. Selection of fixed income securities will be
primarily for income. The capital appreciation potential of those fixed income
securities is of secondary importance.

The Advisor is considered a "core" bond manager, allocating approximately 50% of
the fixed income portion of the Fund to duration strategies using U.S. Treasury
securities. The remaining 50% of fixed income securities are selected based upon
investment analysis by the Advisor, attempting to identify securities that are
undervalued. Fixed income securities are identified as undervalued in
circumstances, for instance, where the Advisor believes the credit rating of the
company is subject to an increase, which has the potential to reduce the price
spread to a comparable maturity U.S. Treasury security, and in turn increase in
price. Fixed income securities may also be identified as undervalued if the
spread for a particular security is too large relative to similar fixed income
securities within similar maturities and similar credit quality.

The strategy of attempting to identify undervalued fixed income securities may
result, if successful, in a larger component of total return being the result of
capital gains than may be typical for fixed income investment strategies.

The Advisor will continually review the macroeconomic environment and
alternative expected rates of return between fixed income securities and equity
securities in determining the asset allocation of the Fund. In structuring the
fixed income portion of the Fund, the Advisor examines spread relationships
between quality grades in determining the quality distribution, and assesses the
expected trends in inflation and interest rates in structuring the maturity
distribution. Not more than 50% of the total fixed income portion of the
portfolio (not more than 15% of the entire Fund) will be invested in fixed
income securities rated below BBB or Baa by the nationally recognized
statistical rating organizations described in the Statement of Additional
Information (or if not rated, deemed by the Advisor to be of equivalent
quality). Securities rated below these ratings (or comparable unrated
securities) are commonly called "junk bonds" and are considered speculative. See
"Risk Factors - Lower Rated Debt Securities and Associated Risk Factors."

The equity portion of the Fund's portfolio will be generally comprised of common
stocks, convertible preferred stocks, participating preferred stocks, preferred
equity redemption cumulative stocks, preferred stocks and convertible bonds
traded on domestic securities exchanges or on the over-the-counter markets.
Foreign equity securities will be limited to those available on domestic U.S.
exchanges and denominated in U.S. currency.

The Advisor utilizes a 'top down' approach to equity selection. Macroeconomic
analysis and projected trends of four primary areas (market interest rates,
Federal Reserve policy, inflation, and economic growth, as typically measured by
gross domestic product), sector analysis of those sectors within the Russell
1000, and industry analysis within each sector, are all performed in narrowing
the security research universe. From an initial research universe of
approximately 5,400 companies, a 'screen' is performed to identify securities
with a projected earnings per share growth rate of 12% or more, market
capitalization of not less than $750 million, price earnings' ratios within
appropriate relative ranges compared to comparable sector and industry
companies, and a projection of increasing earnings estimates.

The Advisor utilizes a philosophy known as "GARP," growth at reasonable price,
as its underlying equity investment selection philosophy. The screens referred
to in the paragraph above results in approximately 400 companies, which then
receive active research by the Advisor's Investment Committee. From this group
the Advisor reduces the equity universe to approximately 75 companies which,
depending upon the then current price in the equities markets for that company,
are eligible for inclusion in the Fund. The Advisor will base security selection
on the following factors: financial history of the firm, consistency of
earnings, return on equity, cash flow, strength of management, ratios such as
price/earnings, price/book value, price/sales, and price/cash flow, all compared
to historical valuations and future prospects of the company as judged by the
Advisor. Depending upon the timing of cash flows into the Fund and the relative
attractiveness of each company as that attractiveness may vary (given daily
fluctuations in market prices), a portfolio of 25-45 companies will generally be
included in the Fund portfolio at any given point in time.

The Advisor performs rigorous research on individual companies in the final
equity universe through direct contact with senior management in addition to
Wall Street research analysis. The Advisor's research analysts construct
financial models based upon the data gathered from various sources, to assist in
each securities' qualification under the Advisor's security selection criteria.

While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
(a) the anticipated price appreciation has been achieved or is no longer
probable; (b) alternative investments offer superior total return prospects; or
(c) fundamentals change adversely.

Money market instruments will typically represent a portion of the Fund's
portfolio, as funds awaiting investment, to accumulate cash for anticipated
purchases of portfolio securities and to provide for shareholder redemptions and
operating expenses of the Fund.

Under normal market conditions the portfolio allocation range for the Fund will
generally be:

% of Total Assets
=================

Equity securities 70 - 90%
Money market instruments
and fixed income securities 10 - 30%

Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents, investment grade bonds,
U.S. Government Securities, repurchase agreements, or money market instruments
as a temporary defensive position, when the Advisor determines that market
conditions warrant such investments. When the Fund invests in these investments
as a temporary defensive measure, it is not pursuing its stated investment
objective.

Options Transactions. The Fund may invest up to 10% of its total assets in
options on equity securities, options on equity indices, and options on equity
industry sector indices. These options may be utilized to hedge certain market
risks which the Advisor may determine, from time to time, exist in the equity
markets or in individual equity issues, or may be used to provide a viable
substitute for direct investment in, and/or short sales of, specific equity
securities. Investments in call and put options are considered speculative, due
to the time premium imputed in the daily value of options, a premium which
declines with time, independent of the change and/or stability of the underlying
equity security, market index or industry sector index.

A call option gives the holder (buyer) the right to purchase a security at a
specified price (the exercise price) at any time before a certain date (the
expiration date). The writer receives a premium (less a commission) for writing
the option. This premium would partially or completely offset any decline in
price. A put gives the holder (buyer) the right to sell a security to the writer
(seller) at a predetermined price (the exercise price) on or before a set date
(the expiration date). The buyer pays a premium to the writer for the right to
sell the underlying shares at the exercise price instead of at the then
prevailing market price. A stock index option generally operates like an option
covering specific securities, except that delivery of cash rather than the
underlying securities is made. A stock index option obligates the seller
(writer) to deliver, and gives the holder (buyer) the right to take delivery of,
cash upon exercise of the option in an amount equal to the difference between
the exercise settlement value of the underlying index on the day the option is
exercised and the exercise price of the option, multiplied by the specified
index "multiplier". The stock index will fluctuate based on changes in the
market values of the stocks included in the index. The Fund will set aside
permissible liquid assets in a segregated account to secure its potential
obligations under its options positions, and such account will include only
cash, U.S. Government Securities, and other liquid high-grade debt securities.

The Fund's ability to use options transactions successfully depends upon the
degree of correlation between the equity security or index on which the option
is written and the securities that the Fund owns or the market position that it
intends to acquire; the liquidity of the market for options, which cannot be
assured; and the Advisor's skill in predicting the movement of equity securities
and stock indices and implementing options transactions in furtherance of the
Fund's investment objectives. Successful use by the Fund of stock or stock index
options will depend primarily on the Advisor's ability to correctly predict
movements in the direction of an individual stock or the stock markets. For
stock index options, this skill is different from the skills and expertise
needed to predict changes in the prices of individual stocks. If the Advisor
forecasts incorrectly the movement of interest rates, market values and other
economic factors, the Fund would be better off without using this hedging
technique. The Fund will write (sell) stock or stock index options for hedging
purposes or to close out positions in stock or stock index options that the Fund
has purchased. The Fund may only write (sell) "covered" options. Risks
associated with options transactions generally include possible loss of the
entire premium and the inability to effect closing transactions at favorable
prices. Brokerage commissions associated with buying and selling options are
proportionately higher than those associated with general securities
transactions. Additional information on the permitted options transactions of
the Fund and the associated risks is contained in the Statement of Additional
Information.

Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the "yield curve" favors short term fixed income
instruments versus longer term fixed income instruments. Money market
instruments may be purchased for temporary defensive purposes, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of the Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities, corporate debt securities (including those
subject to repurchase agreements), bankers acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes). In addition, such securities must be rated
in one of the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion.

U.S. Government Securities. The Fund may invest a portion of its portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank "FFCB"), Federal Home Loan Bank
("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee Valley
Authority. U.S. Government Securities may be acquired subject to repurchase
agreements. While obligations of some U.S. Government sponsored entities are
supported by the full faith and credit of the U.S. Government (e.g. GNMA),
several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.

Custodial Receipts and Components. Securities issued by the U.S. Government may
be acquired by the Fund in the form of custodial receipts that evidence
ownership of future interest payments, principal payments or both on certain
U.S. Treasury notes or bonds. Such notes and bonds are held in custody by a bank
on behalf of the owners. These custodial receipts are known by various names,
including "Treasury Receipts," "Treasury Investment Growth Receipts" ("TIGRs"),
and "Certificates of Accrual on Treasury Securities" ("CATS"). The Fund may also
invest in separately traded principal and interest components of securities
issued or guaranteed by the U.S. Treasury. The principal and interest components
of selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS"). Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.
Custodian receipts and components are not guaranteed by the U.S. Treasury.

Corporate Debt Securities. The Fund may invest in U.S. dollar denominated
corporate debt securities of domestic issuers limited to corporate debt
securities (corporate bonds, debentures, notes and other similar corporate debt
instruments) that meet the minimum ratings criteria set forth for the Fund, or,
if unrated, are in the Advisor's opinion comparable in quality to corporate debt
securities in that the Fund may invest. The Fund may invest in convertible bonds
of domestic issuers meeting such quality requirements and other corporate debt
securities generally in the form of money market instruments as described above.
Up to 15% of the Fund could be invested in fixed income securities rated below
"investment grade." See "Risk Factors - Lowered Rated Debt Securities and
Associated Risk Factors."

Foreign Debt Securities. The Fund may invest in foreign denominated debt traded
on domestic U.S. exchanges, or traded over-the-counter by U.S.-based securities
dealers. In some cases these debt securities may be denominated in the native
currency of the issuer. If such securities are denominated in foreign currency,
those securities will not only be subject to the risks associated with companies
domiciled in foreign countries (as described herein under "Foreign Securities"),
but will also be subject to the volatility and risk associated with changes in
currency exchange rates. Because of this additional risk and volatility, the
Advisor does not anticipate holding more than 5% of the Fund in foreign
denominated debt securities.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement that will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. Securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.

The Fund will limit foreign equity investments to those traded domestically on
U.S. securities exchanges and denominated in U.S. currency. The prices of such
securities are denominated in U.S. dollars while the underlying company may
maintains its records in a foreign currency. Such a disparity may result in
greater volatility than would be expected with equities of domestic U.S.
companies. The Fund may also acquire foreign denominated debt traded on domestic
U.S. exchanges, or traded over-the-counter by U.S.-based securities dealers. See
"Foreign Debt Securities."

Although the Fund is not limited in the amount of these types of foreign
securities it may acquire, it is not presently expected that within the next 12
months the Fund will have in excess of 10% of its assets in foreign securities.

Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent a Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.

Real Estate Securities. The Fund will not invest in real estate (including
mortgage loans and limited partnership interests), but may invest in readily
marketable securities issued by companies that invest in real estate or
interests therein. The Fund may also invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are generally publicly traded on
the national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Fund is not limited in the amount of these
types of real estate securities it may acquire, it is not presently expected
that within the next 12 months the Fund will have in excess of 10% of its assets
in real estate securities.

RISK FACTORS

Fluctuations in Value. To the extent that the major portion of the Fund's
portfolio consists of common stocks, it may be expected that its net asset value
will be subject to greater fluctuation than a portfolio containing mostly fixed
income securities. The fixed income securities in which the Fund will invest are
also subject to fluctuation in value. Such fluctuations may be based on
movements in interest rates or from changes in the creditworthiness of the
issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Fund's fixed income securities will generally
vary inversely with the direction of prevailing interest rate movements. Should
interest rates increase or the creditworthiness of an issuer deteriorates the
value of the Fund's fixed income securities would decrease in value, which would
have a depressing influence on the Fund's net asset value. The Fund may also
invest up to 15% of its total assets in fixed income securities rated below BBB
or Baa by the nationally recognized statistical rating organizations described
in the Statement of Additional Information. See "Lower-Rated Debt Securities and
Associated Risk Factors" below. Although certain of the U.S. Government
Securities in which the Fund may invest are guaranteed as to timely payment of
principal and interest, the market value of the securities, upon which the
Fund's net asset value is based, will fluctuate due to the interest rate risks
described above. Additionally, not all U.S. Government Securities are backed by
the full faith and credit of the U.S. Government. Because there is risk in any
investment, there can be no assurance that the Fund will achieve its investment
objective.

Lower-Rated Debt Securities and Associated Risk Factors. The Fund may invest up
to 15% of its total assets in debt securities which may be rated below Baa by
Moody's Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings
Groups ("Standard & Poor's") or Fitch Investors Service, Inc. ("Fitch") or
which, if unrated, are of comparable quality as determined by the Advisor. Debt
securities rated Ba or below by Moody's or BB or below by Standard & Poor's or
Fitch (or comparable unrated securities), commonly called "junk bonds," are
considered speculative, and payment of principal and interest thereon may be
questionable. In some cases, such securities may be highly speculative, have
poor prospects for reaching investment grade standing, and be in default. As a
result, investment in such bonds will entail greater speculative risks than
those associated with investment in investment-grade debt securities (i.e., debt
securities rated Baa or higher by Moody's or BBB or higher by Standard & Poor's
or Fitch). The Fund will not invest in debt securities rated lower than Caa by
Moody's or CCC by Standard & Poor's or Fitch or equivalent unrated securities.
Debt securities rated Caa by Moody's or CCC by Standard & Poor's or Fitch, and
equivalent unrated securities, are speculative and may be in default. These
securities may present significant elements of danger with respect to the
repayment of principal or interest. A description of the corporate debt ratings
assigned by Moody's, Standard & Poor's, and Fitch is contained in the Statement
of Additional Information.

Corporate debt securities are subject to the risk of an issuer's inability to
meet principal and interest payments on the obligations (credit risk) and may
also be subject to price volatility due to such factors as interest rate
sensitivity, market perception of the creditworthiness of the issuer and general
market liquidity (market risk). Lower rated or unrated (i.e., junk bond)
securities are more likely to react to developments affecting market and credit
risk than are more highly rated securities, which react primarily to movements
in the general level of interest rates. The Advisor considers both credit risk
and market risk in making investment decisions for the Fund.

Portfolio Turnover. The Fund may sell portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Portfolio turnover generally involves some expense to the Fund,
including brokerage commissions or dealer mark-ups and other transaction costs
on the sale of securities and the reinvestment in other securities. Portfolio
turnover may also have capital gains tax consequences. Portfolio turnover is not
expected to exceed 100% per year. See "Portfolio turnover rate" in the Financial
Highlights section for the Fund's portfolio turnover for the last fiscal period.

Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary or emergency purposes and 15% of its total assets to meet
redemption requests, which might otherwise require untimely disposition of
portfolio holdings. To the extent the Fund borrows for these purposes, the
effects of market price fluctuations on the portfolio's net asset value will be
exaggerated. If, while such borrowing is in effect, the value of the Fund's
assets declines, the Fund could be forced to liquidate portfolio securities when
it is disadvantageous to do so. The Fund would incur interest and other
transaction costs in connection with borrowing. The Fund will borrow only from a
bank. The Fund will not make any further investments if the borrowing exceeds 5%
of its total assets until such time as repayment has been made to bring the
total borrowing below 5% of its total assets.

Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although a Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.

Advisor Experience. The Fund, organized in 1997, has no prior operating history.
The assets of the Fund are managed by the Advisor, a Virginia corporation
established in 1990. While the Advisor has no previous experience managing a
mutual fund, it has been rendering investment counsel, utilizing investment
strategies similar to that of the Fund, to other individuals, banks and thrift
institutions, pension and profit sharing plans, trusts, estates, charitable
organizations, and corporations since its formation.

INVESTMENT LIMITATIONS

To limit the Fund's exposure to risk, the Fund has adopted certain investment
limitations. Some of these restrictions are that the Fund will not: (1) issue
senior securities, borrow money or pledge its assets, except that it may borrow
from banks as a temporary measure (a) for extraordinary or emergency purposes,
in amounts not exceeding 5% of the Fund's total assets, or (b) to meet
redemption requests, in amounts not exceeding 15% of its total assets (the Fund
will not make any investments if borrowing exceeds 5% of its total assets); (2)
make loans of money or securities, except that the Fund may invest in repurchase
agreements (but repurchase agreements having a maturity of longer than seven
days, together with other not readily marketable securities, are limited to 10%
of the Fund's net assets), money market instruments and other debt securities;
(3) invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (4) purchase foreign securities, except that the Fund may purchase
foreign securities traded on domestic U.S. exchanges and other foreign debt
securities as described in this Prospectus, all without limit; and (5) with
respect to 75% of its total assets, invest more than 5% of its total assets at
cost in the securities of any one issuer nor hold more than 10% of the voting
stock of any issuer. Investment restrictions (1), (2), and (5) are fundamental
investment limitations that cannot be altered without the prior approval of a
majority of the Fund's shareholders. The other investment restrictions listed
above are non-fundamental and can be changed without shareholder approval. See
"Investment Limitations" in the Fund's Statement of Additional Information for a
complete list of investment limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities generally will not
constitute a violation of such limitation. If the limitation on illiquid
securities is exceeded, however, through a change in values, net assets, or
other circumstances, the Fund would take appropriate steps to protect liquidity
by changing its portfolio.

FEDERAL INCOME TAXES

Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust as a separate regulated investment
company. Each series of the Trust (including the Fund) intends to qualify or
remain qualified as a regulated investment company under the Code by
distributing substantially all of its "net investment income" to shareholders
and meeting other requirements of the Code. For the purpose of calculating
dividends, net investment income consists of income accrued on portfolio assets,
less accrued expenses. Upon qualification, the Fund will not be liable for
federal income taxes to the extent earnings are distributed. The Board of
Trustees retains the right for any series of the Trust to determine for any
particular year if it is advantageous not to qualify as a regulated investment
company. Regulated investment companies, such as each series of the Trust, are
subject to a non-deductible 4% excise tax to the extent they do not distribute
the statutorily required amount of investment income, determined on a calendar
year basis, and capital gain net income, using an October 31 year end measuring
period. The intends to declare or distribute dividends during the calendar year
in an amount sufficient to prevent imposition of the 4% excise tax.

Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Fund or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.

Distributions paid by the Fund from long-term capital gains, whether received in
cash or reinvested in additional shares, are taxable as long-term capital gains,
regardless of the length of time an investor has owned shares in the Fund.
Capital gain distributions are made when the Fund realizes net capital gains on
sales of portfolio securities during the year. Dividends and capital gain
distributions paid by the Fund shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.

The sale of shares of the Fund is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual funds).

The Trust will inform shareholders of the Fund of the source of its dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.

Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Fund is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Fund has not complied with the applicable statutory and IRS
requirements, the Fund is generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. The Fund will generally pay income dividends,
if any, quarterly, and will generally distribute net realized capital gains, if
any, at least annually.

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Reinvested
dividends and capital gains are exempt from any sales load. Shareholders wishing
to receive their dividends or capital gains in cash may make their request in
writing to the Fund at 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. That request must be received by the Fund
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
last day of each quarter or the Fund's fiscal year end, as applicable. Each
shareholder of the Fund will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.

In order to satisfy certain requirements of the Code, the Fund may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Fund and received by shareholders on December 31 of the prior
year.

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Institutional Shares will be
reduced by the amount of any expenses allocated to the Institutional Shares.

HOW SHARES ARE VALUED

Net asset value for each Class of Shares of the Fund is determined at the time
trading closes on the New York Stock Exchange (currently, 4:00 p.m., New York
time, Monday through Friday), except on business holidays when the New York
Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments and other assets, less all of its liabilities, divided by the
number of its outstanding shares. Net asset value is determined separately for
each Class of Shares of a Fund and reflects any liabilities allocated to a
particular Class as well as the general liabilities of the Fund.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the latest quoted bid price. Unlisted
securities for which market quotations are readily available are valued at the
latest quoted sales price, if available, at the time of valuation, otherwise, at
the latest quoted bid price. Temporary cash investments with maturities of 60
days or less will be valued at amortized cost, which approximates market value.
Securities for which no current quotations are readily available are valued at
fair value as determined in good faith using methods approved by the Board of
Trustees of the Trust. Securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities.

Fixed income securities will ordinarily be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued based on prices provided by a pricing service. The
prices provided by the pricing service are generally determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities, and developments related
to specific securities. Such fixed income securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations described above used by
other pricing services and information obtained by the pricing agent from the
Advisor and other pricing sources deemed relevant by the pricing agent.

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-3863, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's public offering price next determined after your order is received by
the Fund in proper form as indicated herein.

The minimum initial investment is $25,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500 ($100 for those participating in the
Automatic Investment Plan). The Fund may, in the Advisor's sole discretion,
accept certain accounts with less than the stated minimum initial investment.
You may invest in the following ways:

Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:

WST Growth & Income Fund
Institutional Shares
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Applications must contain social security and Taxpayer Identification Numbers
("TINs"). If you have applied for a social security or TIN at the time of
completing your account application, the application should so indicate. Taxes
are not withheld from distributions to U.S. investors if certain IRS
requirements regarding TINs are met.

Bank Wire Orders. Investments can be made directly by bank wire. To establish a
new account or to add to an existing account by wire, please call the Fund at
1-800-525-3863, before wiring funds, to advise it of the investment, the dollar
amount of the investment, and the account identification number. This
notification will ensure prompt and accurate handling of your investment. Please
have your bank use the following wire instructions to purchase by wire:

First Union National Bank of North Carolina
ABA # 053000219
Further Credit Acct # 2000001068081
For the WST Growth & Income Fund - Institutional Shares
For further credit to (shareholder's name and SS# or EIN#)

It is important that the wire message contain all the relevant information and
that the Fund receive prior telephone notification to ensure proper credit. Upon
opening an account by wire order, you must, as soon as possible, complete and
mail your Fund Shares Application to the Fund as described under "Regular Mail
Orders" above. Investors should be aware that some banks might impose a wire
service fee.

General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders received by the Fund and effective prior to the time trading
closes on the New York Stock Exchange (currently 4:00 p.m., New York time,
Monday through Friday, exclusive of business holidays) will purchase shares at
the net asset value determined at that time. Orders received by the Fund and
effective after the close of trading, or on a day when the New York Stock
Exchange is not open for business, will purchase shares at the net asset value
next determined. For orders placed through a qualified broker-dealer, such firm
is responsible for promptly transmitting purchase orders to the Fund. Investors
may be charged a fee if they effect transactions in the Fund shares through a
broker or agent.

The Fund may enter into agreements with one or more brokers or other agents,
including discount brokers and other brokers associated with investment
programs, including mutual fund "supermarkets," and agents for qualified
employee benefit plans, pursuant to which such brokers or other agents may be
authorized to accept on the Fund's behalf purchase and redemption orders that
are in "good form." Such brokers or other agents may be authorized to designate
other intermediaries to accept purchase and redemption orders on the Fund's
behalf. Under such circumstances, the Fund will be deemed to have received a
purchase or redemption order when an authorized broker, agent, or, if
applicable, other designee, accepts the order. Such orders will be priced at the
Fund's net asset value next determined after they are accepted by an authorized
broker, agent, or other designee. The Fund may pay fees to such brokers or other
agents for their services, including without limitation, administrative,
accounting, and recordkeeping services.

If checks are returned unpaid due to insufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Fund, at its sole discretion, may
allow payment in kind for Fund shares purchased by accepting securities in lieu
of cash. Any securities so accepted would be valued on the date received and
included in the calculation of the net asset value of the Fund. See the
Statement of Additional Information for additional information on purchases in
kind.

The Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Fund, that your taxpayer identification number is correct and
that you are not currently subject to backup withholding or you are exempt from
backup withholding. For individuals, your taxpayer identification number is your
social security number.

The Distributor, at its expense, may provide additional compensation to dealers
in connection with sales of shares of the Fund. 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 Fund, and/or other dealer-sponsored special events. In
some instances, this compensation may be made available only to certain dealers
whose representatives have sold or are expected to sell a significant amount of
such shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Fund shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-regulatory agency, such
as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Fund or its shareholders.

Exchange Feature. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by the Advisor. An
exchange is a taxable transaction that involves the simultaneous redemption of
shares of one series and purchase of shares of another series at the respective
closing net asset value next determined after a request for redemption has been
received plus applicable sales charge. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of another series of the
Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge, if any, and any sales charge, if
any, previously paid in connection with the shares being exchanged. For example,
if a 2% sales charge were paid on shares that are exchanged into a series with a
3% sales charge, there would be an additional sales charge of 1% on the
exchange. Exchanges may only be made by investors in states where shares of the
other series are qualified for sale. An investor may direct the Fund to exchange
his shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
other series to which the exchange will take place and a statement as to whether
the exchange is a full or partial redemption of existing shares. Notwithstanding
the foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Institutional Shares may not be exchanged
for any other Class of Shares of the Fund.

A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Fund. Such a pattern may, at the discretion of the Advisor, be limited by the
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of a Fund or its other shareholders.

A shareholder should consider the investment objectives and policies of any
other series into which the shareholder will be making an exchange, as described
in the prospectus for that other series. The Board of Trustees of the Trust
reserves the right to suspend or terminate, or amend the terms of, the exchange
privilege upon 60 days written notice to the shareholders.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($100 minimum), which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

Shares of the Fund may be redeemed (the Fund will repurchase them from
shareholders) by mail or telephone. Any redemption may be more or less than the
purchase price of your shares depending on the market value of the Fund's
portfolio securities. Redemption orders received in proper form, as indicated
herein, by the Fund, whether by mail or telephone, prior to the time trading
closes on the New York Stock Exchange (currently 4:00 p.m. New York time, Monday
through Friday), will redeem shares at the net asset value determined at that
time. Redemption orders received in proper form by the Fund after the close of
trading, or on a day when the New York Stock Exchange is not open for business,
will redeem shares at the net asset value next determined. There is no charge
for redemptions from the Fund other than possible charges for wiring redemption
proceeds. You may also redeem your shares through a broker-dealer or other
institution, who may charge you a fee for its services.

The Board of Trustees reserves the right to involuntarily redeem any account
having a net asset value of less than $1,000 (due to redemptions, exchanges or
transfers, and not due to market action) upon 30 days written notice. If the
shareholder brings his account net asset value up to $1,000 or more during the
notice period, the account will not be redeemed. Redemptions from retirement
plans may be subject to tax withholding.

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to the WST Growth &
Income Fund, Institutional Shares, 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. Your request for redemption must
include:

1) Your letter of instruction specifying the Fund, the account number, and
the number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they are
registered;

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. A Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.

A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Designation of the Fund name;

2) Shareholder names and account number;

3) Number of shares or dollar amount to be redeemed;

4) Instructions for transmittal of redemption funds to the shareholder; and 5)
Shareholder signature as it appears on the application then on file with
the Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank is not open for business. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Fund. (See "Signature Guarantees" below). The Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market conditions, telephone redemption privileges may be difficult to
implement.

The Fund in its discretion may choose to pass through to redeeming shareholders
any charges by the Custodian for wire redemptions. The Custodian currently
charges $10.00 per transaction for wiring redemption proceeds. If this cost is
passed through to redeeming shareholders by the Fund, the charge will be
deducted automatically from the shareholder's account by redemption of shares in
the account. The shareholder's bank or brokerage firm may also impose a charge
for processing the wire. If wire transfer of funds is impossible or impractical,
the redemption proceeds will be sent by mail to the designated address of
record.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing him or herself to be the investor and
reasonably believed by the Fund to be genuine. The Fund will employ reasonable
procedures, such as requiring a form of personal identification, to confirm that
instructions are genuine, and, if it does not follow such procedures, the Fund
will be liable for any losses due to fraudulent or unauthorized instructions.
The Fund will not be liable for following telephone instructions reasonably
believed to be genuine.

Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$25,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.

Signature Guarantees. To protect your account and the Fund from fraud, signature
guarantees are required to be sure that you are the person who has authorized a
change in registration, or standing instructions, for your account. Signature
guarantees are required for (1) change of registration requests, (2) requests to
establish or change exchange privileges or telephone redemption service other
than through your initial account application, and (3) requests for redemptions
in excess of $50,000. Signature guarantees are acceptable from a member bank of
the Federal Reserve System, a savings and loan institution, credit union (if
authorized under state law), registered broker-dealer, securities exchange or
association clearing agency, and must appear on the written request for
redemption, establishment or change in exchange privileges, or change of
registration.

MANAGEMENT OF THE FUND

Trustees and Officers. The Fund is a diversified series of The Nottingham
Investment Trust II (the "Trust"), an investment company organized as a
Massachusetts business trust on October 25, 1990. The Board of Trustees of the
Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Fund - Trustees and Officers." The Board of
Trustees of the Trust is primarily responsible for overseeing the conduct of the
Trust's business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.

The Advisor. Subject to the authority of the Board of Trustees, Wilbanks, Smith
& Thomas Asset Management, Inc. (the "Advisor") provides the Fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations with
respect to investments, investment policies and the purchase and sale of
securities, pursuant to an Investment Advisory Agreement (the "Advisory
Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Virginia corporation in 1990, is controlled by Wayne
F. Wilbanks, CFA; L. Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. The Advisor
currently serves as investment advisor to approximately $650 million in assets.
The Advisor has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Fund, to individuals, banks and
thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations and corporations since its formation. The Advisor's
address is One Commercial Place, Suite 1450, and Norfolk, Virginia 23510.

Compensation of the Advisor with regard to the Fund, based upon the Fund's daily
average net assets, is at the annual rate of 0.75% of the first $250 million of
net assets and 0.65% of all assets over $250 million. The Advisor may
periodically voluntarily waive or reduce its advisory fee to increase the net
income of each Class of the Fund. For the fiscal period ended March 31, 1998 the
Advisor waived $18,741 of its $19,204 advisory fee and reimbursed $5,047 of the
Fund's operating expenses.

The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies Investment Transactions" in the Statement of
Additional Information.

The Executive Committee of the Advisor, composed of Wayne F. Wilbanks, CFA; L.
Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. (all control persons of the
Advisor), is responsible for day-to-day management of the Fund's portfolio. Mr.
Wilbanks has been with the Advisor since its formation in 1990. Messrs. Smith
and Thomas have been with the Advisor since 1992. Messrs. Wilbanks and Thomas
serve as executive officers of the Trust and will represent the Advisor at Board
of Trustee meetings.

Administrator. The Nottingham Company (the "Administrator") serves as the Fund's
administrator. The Administrator, subject to the authority of the Board of
Trustees, provides administrative services to and is generally responsible for
the overall management and day-to-day administrative operations of the Fund,
pursuant to an administration agreement with the Trust.

The Administrator, which was established as a North Carolina corporation in
1988, has been operating (with affiliates) as a financial services firm since
1985. Frank P. Meadows III is the firm's Managing Director and controlling
shareholder.

The Administrator's address is 105 North Washington Street, Post Office Drawer
69, Rocky Mount, North Carolina 27802-0069.

Subject to the authority of the Board of Trustees, the services the
Administrator provides to the Fund include coordinating and monitoring any third
parties furnishing services to the Fund; providing the necessary office space,
equipment and personnel to perform administrative and clerical functions for the
Fund; and preparing, filing and distributing proxy materials, periodic reports
to shareholders, registration statements and other documents. For its
administrative services, the Administrator is entitled to receive from the Fund
a fee based on the average daily net assets of the Fund, in addition to a base
monthly fee for accounting and recordkeeping services. The Administrator also
performs certain accounting and pricing services for the Fund as pricing agent,
including the daily calculation of the Fund's net asset value, for which it
receives certain charges and is reimbursed for out-of-pocket expenses.

Transfer Agent. NC Shareholder Services, LLC (the "Transfer Agent") serves as
the Fund's transfer, dividend paying, and shareholder servicing agent. The
Transfer Agent, subject to the authority of the Board of Trustees, provides
transfer agency services pursuant to an agreement with the Administrator, which
has been approved by the Trust.

The Transfer Agent, whose address is 107 North Washington Street, Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365, was established as a North
Carolina limited liability company in 1997. John D. Marriott, Jr., is the firm's
controlling member.

The Transfer Agent maintains the records of each shareholder's account, answers
shareholder inquiries concerning accounts, processes purchases and redemptions
of the Fund's shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions. The Fund is charged a
recordkeeping fee based on the number of shareholders of the Fund and an annual
fee for shareholder administration services.

Custodian. The custodian of the Fund's assets is First Union National Bank of
North Carolina (the "Custodian"). The Custodian's mailing address is Two First
Union Center, Charlotte, North Carolina 28288-1151. The Advisor, Administrator,
Transfer Agent, Distributor, or interested persons thereof, may have banking
relationships with the Custodian.

Other Expenses. The Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, Administrator, and Transfer
Agent, the fees and expenses of Trustees, outside auditing and legal expenses,
all taxes and corporate fees payable by the Fund, Securities and Exchange
Commission fees, state securities qualification fees, costs of preparing and
printing prospectuses for regulatory purposes and for distribution to
shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. The Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
the Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Fund will be borne solely by such Class.

OTHER INFORMATION

Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990 under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Investor Shares" and "Institutional Shares") representing equal pro rata
interests in the Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares are sold
with a sale charge and bear potential distribution expenses and service fees.
Institutional Shares are sold without a sales charge and bear no shareholder
servicing or distribution fees. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional Shares.
Standardized total return quotations will be computed separately for each Class
of Shares of the Fund.

THIS PROSPECTUS RELATES TO THE FUND'S INSTITUTIONAL SHARES AND DESCRIBES ONLY
THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE
INSTITUTIONAL SHARES. THE FUND ALSO ISSUES A CLASS OF INVESTOR SHARES. SUCH
OTHER CLASS MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT
PERFORMANCE. INVESTORS MAY CALL THE FUND AT 1-800-525-3863 TO OBTAIN MORE
INFORMATION CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES
REPRESENTATIVE. INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM
THEIR SALES REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH
IS OFFERING OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS
PROSPECTUS.

When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of a least 10% of the outstanding shares of the Trust. The
term of office of each Trustee is of unlimited duration. The holders of at least
two-thirds of the outstanding shares of the Trust may remove a Trustee from that
position either by declaration in writing filed with the Custodian or by votes
cast in person or by proxy at a meeting called for that purpose.

The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as the Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the aggregate number of shares of all series of the Trust may elect all
the Trustees.

Under Massachusetts's law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions that are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.

Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund will
send to each shareholder having an account directly with the Fund a quarterly
statement showing transactions in the account, the total number of shares owned
and any dividends or distributions paid. Inquiries regarding the Fund may be
directed in writing to 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365 or by calling 1-800-525-3863.

Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1-, 5- and
10- year periods that would equate an initial amount invested at the beginning
of a stated period to the ending redeemable value of the investment. The
calculation assumes the reinvestment of all dividends and distributions,
includes all recurring fees that are charged to all shareholder accounts and
deducts all nonrecurring charges at the end of each period. The calculation
further assumes the maximum sales load is deducted from the initial payment. If
a Fund has been operating less than 1, 5 or 10 years, the time period during
which the Fund has been operating is substituted.

In addition, the Fund may advertise other total return performance data other
than average annual total return for each Class of Shares. This data shows as a
percentage rate of return encompassing all elements of return (i.e. income and
capital appreciation or depreciation); it assumes reinvestment of all dividends
and capital gain distributions. Such other total return data may be quoted for
the same or different periods as those for which average annual total return is
quoted. This data may consist of a cumulative percentage rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in a Fund for various
periods.

The total return of a Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. The Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.

<PAGE>

PROSPECTUS

August 1, 1998

WST Growth & Income Fund
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

Investment Advisor
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151

Distributor
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

Independent Auditors
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

PROSPECTUS Cusip Number 66976M821

- --------------------------------------------------------------------------------
WST GROWTH & INCOME FUND
INVESTOR CLASS
- --------------------------------------------------------------------------------

This Prospectus relates to shares ("Investor Shares") representing interests in
the Fund. The Investor Shares are offered to the general public. See "Prospectus
Summary - Offering Price."

INVESTMENT ADVISOR

Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY........................................................... 2

FEE TABLE.................................................................... 3

FINANCIAL HIGHLIGHTS..........................................................4

INVESTMENT OBJECTIVE AND POLICIES............................................ 5

RISK FACTORS.................................................................10

INVESTMENT LIMITATIONS.......................................................12

FEDERAL INCOME TAXES........................................................ 13

DIVIDENDS AND DISTRIBUTIONS................................................. 13

HOW SHARES ARE VALUED....................................................... 14

HOW SHARES MAY BE PURCHASED................................................. 15

HOW SHARES MAY BE REDEEMED.................................................. 20

MANAGEMENT OF THE FUND...................................................... 22

OTHER INFORMATION........................................................... 24

<PAGE>

PROSPECTUS SUMMARY

The Fund. The WST Growth & Income Fund (the "Fund") is a diversified series of
The Nottingham Investment Trust II (the "Trust"), a registered open-end
management investment company organized as a Massachusetts business trust. This
Prospectus relates to Investor Shares of the Fund. See "Other Information -
Description of Shares."

Offering Price. The Investor Shares of the Fund are offered to the general
public at net asset value plus a 3.75% sales charge, which is reduced on
purchases involving larger amounts. The Investor Shares are also subject to a
12b-1 distribution fee of up to 0.50% of the Investor Shares' average net assets
annually. See "Distributor and Distribution Fee" below. The minimum initial
investment is $5,000 ($2,000 for IRAs and Keogh Plans). The minimum subsequent
investment is $500 ($100 for those participating in the Automatic Investment
Plan). See "How Shares May be Purchased."

Distributor and Distribution Fee. Capital Investment Group, Inc. (the
"Distributor") serves as distributor of shares of the Fund. For its services,
which include payments to qualified securities dealers for sales of Fund shares,
the Distributor receives commissions consisting of the portion of the sales
charge remaining after the discounts it allows to securities dealers. See "How
Shares May Be Purchased - Sales Charges." Under the Fund's Distribution Plan
with respect to the Investor Shares, expenditures by the Fund for distribution
activities and service fees may not exceed 0.50% of the Investor Shares' average
net assets annually. See "How Shares May Be Purchased - Distribution Plan."

FEE TABLE

The following table set forth certain information in connection with the
expenses of the Investor Shares of the Fund anticipated for the current fiscal
year. The information is intended to assist the investor in understanding the
various costs and expenses borne by the Investor Shares of the Fund, and
therefore indirectly by its investors, the payment of which will reduce an
investor's return on an annual basis.

Shareholder Transaction Expenses for Investor Shares

Maximum sales load imposed on purchases
(as a percentage of offering price)..................................3.75%1
Maximum sales load imposed on reinvested dividends.......................None
Maximum deferred sales load..............................................None
Redemption fees*.........................................................None
Exchange fee.............................................................None

* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $10.00 per transaction
for wiring redemption proceeds.

Annual Fund Operating Expenses
for Investor Shares After Fee Waivers
and Expense Reimbursements3
(as a percentage of average net assets)

Management Fees.........................................................0.00%3
12b-1 Fees..............................................................0.50%2
Total Other Expenses....................................................1.75%3
Total Fund Operating Expenses...........................................2.25%3

EXAMPLE: You would pay the following expenses (including the maximum initial
sales charge) on a $1,000 investment in Investor Shares of the Fund, whether or
not you redeem at the end of the period, and assuming a 5% annual return:

1 year 3 years 5 years 10 years
-------- --------- --------- ---------
$59 $105 $153 $286

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

1 Reduced for larger purchases. See "How Shares May Be Purchased - Sales
Charges."

2 The Fund, with respect to the Investor Shares, has adopted a Distribution
Plan pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act"), which provides that the Investor Shares may pay
distribution and service fees up to 0.50% of average net assets of the
Investor Shares annually. See "How Shares May Be Purchased - Distribution
Plan" below. Long-term shareholders may pay more than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers.

3 The "Total Fund Operating Expenses" shown above are based upon actual
operating expenses incurred by the Fund for the fiscal year ended March 31,
1998, which after fee waivers and expense reimbursements, were 2.25% of the
average daily net assets of the Investor Shares of the Fund. Absent such
waivers and reimbursements, the percentages would have been 0.75% for
"Management Fees" and 3.63% for "Total Fund Operating Expenses" for the
fiscal year ended March 31, 1998. The Advisor has voluntarily agreed to a
reduction in the fees payable to it and to reimburse expenses of the Fund,
if necessary, in an amount that limits Total Fund Operating Expenses
(exclusive of interest, taxes, brokerage fees and commissions, sales
charges, and extraordinary expenses) to not more than 2.25% of the Investor
Shares' average daily net assets. There can be no assurance that the
Advisor's voluntary fee waivers and expense reimbursements will continue in
the future.

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided in Multiple Classes representing interests in
the Fund. This Prospectus relates to Investor Shares of the Fund. See "Other
Information - Description of Shares." The financial data included in the table
below has been derived from audited financial statements of the Fund. The
financial data for the fiscal period ended March 31, 1998, has been audited by
Deloitte & Touche LLP, independent auditors, whose report covering such period
is included in the Statement of Additional Information. This information should
be read in conjunction with the Fund's latest audited annual financial
statements and notes thereto, which are also included in the Statement of
Additional Information, a copy of which may be obtained at no charge by calling
the Fund. Further information about the performance of the Fund is contained in
the Annual Report of the Fund, a copy of which may be obtained at no charge by
calling the Fund.

(For a Share Outstanding Throughout the Period)

Period Ended
March 31,
1998*
------------
Net Asset Value, Beginning of Period $10.22
=====
Income (loss) from investment operations
Net investment loss (0.01)
Net realized and unrealized gain
on investments 1.05
----
Total from investment operations 1.04

Distributions to shareholders
Distributions in excess of net investment income (0.00)
-----

Net Asset Value, End of Period $11.26
======

Total return (a) 10.52%

Ratios/supplemental data

Net Assets, End of Period $763,186

Ratio of expenses to average net assets
Before expense reimbursements and
waived fees 3.63%(b)
After expense reimbursements and
waived fees 2.25%(b)

Ratio of net investment loss to average net assets
Before expense reimbursements and
waived fees (1.70)%(b)
After expense reimbursements and
waived fees (0.31)%(b)

Portfolio turnover rate 23.64%

Average commission rate paid (c) $0.0778

* For the period from October 3, 1997 (date of initial public investment) to
March 31, 1998.

(a) Aggregate total return for the fiscal period.

(b) Annualized.

(c) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.

Under normal market conditions the portfolio allocation range for the Fund will
generally be:

% of Total Assets
=================

Equity securities 70 - 90%
Money market instruments
and fixed income securities 10 - 30%

RISK FACTORS

INVESTMENT LIMITATIONS

FEDERAL INCOME TAXES

DIVIDENDS AND DISTRIBUTIONS

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Investor Shares will be reduced
by the amount of any expenses allocated to the Investor Shares including
distribution and service fees under the Fund's Distribution Plan.

HOW SHARES ARE VALUED

HOW SHARES MAY BE PURCHASED

The minimum initial investment is $5,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500 ($100 for those participating in the
Automatic Investment Plan). The Fund may, in the Advisor's sole discretion,
accept certain accounts with less than the stated minimum initial investment.
You may invest in the following ways:

Regular Mail Orders. Please complete and sign the Fund Shares Application
accompanying this Prospectus and mail it, with your check made payable to the
Fund, to:

WST Growth & Income Fund
Investor Shares
c/o NC Shareholder Services
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

First Union National Bank of North Carolina
ABA # 053000219
Further Credit Acct # 2000001068081
For the WST Growth & Income Fund - Investor Shares
For further credit to (shareholder's name and SS# or EIN#)

General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders received by the Fund and effective prior to the time trading
closes on the New York Stock Exchange (currently 4:00 p.m., New York time,
Monday through Friday, exclusive of business holidays) will purchase shares at
the public offering price determined at that time. Orders received by the Fund
and effective after the close of trading, or on a day when the New York Stock
Exchange is not open for business, will purchase shares at the public offering
price next determined. For orders placed through a qualified broker-dealer, such
firm is responsible for promptly transmitting purchase orders to the Fund.
Investors may be charged a fee if they effect transactions in the Fund shares
through a broker or agent.

The Fund may enter into agreements with one or more brokers or other agents,
including discount brokers and other brokers associated with investment
programs, including mutual fund "supermarkets," and agents for qualified
employee benefit plans, pursuant to which such brokers or other agents may be
authorized to accept on the Fund's behalf purchase and redemption orders that
are in "good form." Such brokers or other agents may be authorized to designate
other intermediaries to accept purchase and redemption orders on the Fund's
behalf. Under such circumstances, the Fund will be deemed to have received a
purchase or redemption order when an authorized broker, agent, or, if
applicable, other designee, accepts the order. Such orders will be priced at the
Fund's public offering price next determined after they are accepted by an
authorized broker, agent, or other designee. The Fund may pay fees to such
brokers or other agents for their services, including without limitation,
administrative, accounting, and recordkeeping services.

Sales Charges. The public offering price of Investor Shares of the Fund equals
net asset value plus a sales charge. Capital Investment Group, Inc. (the
"Distributor") receives this sales charge as Distributor and may reallow it in
the form of dealer discounts and brokerage commissions as follows:

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sales Sales
Charge As Charge As Dealers Discounts
% of Net % of Public and Brokerage
Amount of Transaction Amount Offering Commissions as % of
At Public Offering Price Invested Price Public Offering Price

Less than $250,000........................... 3.93% 3.75% 3.65%
$250,000 but less than $500,000.............. 2.04% 2.00% 1.90%
$500,000 or more............................. 1.01% 1.00% 0.90%

</TABLE>

At times the Distributor may reallow the entire sales charge to dealers. From
time to time dealers who receive dealer discounts and brokerage commissions from
the Distributor may reallow all or a portion of such dealer discounts and
brokerage commissions to other dealers or brokers. Pursuant to the terms of the
Distribution Agreement, the sales charge payable to the Distributor and the
dealer discounts may be suspended, terminated or amended. Dealers who receive
90% or more of the sales charge may be deemed to be "underwriters" under the
federal securities laws.

The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. Compensation may include financial assistance to
dealers in connection with conferences, sales or training programs for its
employees, seminars for the public, advertising campaigns regarding the Fund,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

Reduced Sales Charges

Rights of Accumulation. Pursuant to the right of accumulation,
investors are permitted to purchase shares at the public offering price
applicable to the total of (a) the total public offering price of the Investor
Shares of the Fund then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's combined holdings of the shares of
the Fund and any other series of the Trust affiliated with the Advisor and sold
with a sales charge. To receive the applicable public offering price pursuant to
the right of accumulation, investors must, at the time of purchase, provide
sufficient information to permit confirmation of qualification, and confirmation
of the purchase is subject to such verification. This right of accumulation may
be modified or eliminated at any time or from time to time by the Trust without
notice.

Letters of Intent. Investors may qualify for a lower sales charge for
Investor Shares by executing a letter of intent. A letter of intent allows an
investor to purchase Investor Shares of the Fund over a 13-month period at
reduced sales charges based on the total amount intended to be purchased plus an
amount equal to the then current net asset value of the purchaser's combined
holdings of the shares of the Fund and any other series of the Trust affiliated
with the Advisor and sold with a sales charge. Thus, a letter of intent permits
an investor to establish a total investment goal to be achieved by any number of
purchases over a 13-month period. Each investment made during the period
receives the reduced sales charge applicable to the total amount of the intended
investment.

The letter of intent does not obligate the investor to purchase, or the Fund to
sell, the indicated amount. If such amount is not invested within the period,
the investor must pay the difference between the sales charge applicable to the
purchases made and the charges previously paid. If such difference is not paid
by the investor, the Distributor is authorized by the investor to liquidate a
sufficient number of shares held by the investor to pay the amount due. On the
initial purchase of shares, if required (or subsequent purchases, if necessary)
shares equal to at least five percent of the amount indicated in the letter of
intent will be held in escrow during the 13-month period (while remaining
registered in the name of the investor) for this purpose. The value of any
shares redeemed or otherwise disposed of by the investor prior to termination or
completion of the letter of intent will be deducted from the total purchases
made under such letter of intent.

A 90-day backdating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales charge);
the 13-month period would then begin on the date of the first purchase during
the 90-day period. No retroactive adjustment will be made if purchases exceed
the amount indicated in the letter of intent. Investors must notify the Fund or
the Distributor whenever a purchase is being made pursuant to a letter of
intent.

Investors electing to purchase shares pursuant to a letter of intent should
carefully read the letter of intent, which is included in the Fund Shares
Application accompanying this Prospectus or is otherwise available from the Fund
or the Distributor. This letter of intent option may be modified or eliminated
at any time or from time to time by the Trust without notice.

Reinvestments. Investors may reinvest, without a sales charge, proceeds
from a redemption of Investor Shares of the Fund in Investor Shares of the Fund
or in shares of another series of the Trust affiliated with the Advisor and sold
with a sales charge, within 90 days after the redemption. If the other class
charges a sales charge higher than the sales charge the investor paid in
connection with the shares redeemed, the investor must pay the difference. In
addition, the shares of the class to be acquired must be registered for sale in
the investor's state of residence. The amount that may be so reinvested may not
exceed the amount of the redemption proceeds, and the Fund or the Distributor
must receive a written order for the purchase of such shares within 90 days
after the effective date of the redemption.

If an investor realizes a gain on the redemption, the reinvestment will not
affect the amount of any federal capital gains tax payable on the gain. If an
investor realizes a loss on the redemption, the reinvestment may cause some or
all of the loss to be disallowed as a tax deduction, depending on the number of
shares purchased by reinvestment and the period of time that has elapsed after
the redemption, although for tax purposes, the amount disallowed is added to the
cost of the shares acquired upon the reinvestment.

Purchases by Related Parties and Groups. Reductions in sales charges
apply to purchases by a single "person," including an individual, members of a
family unit, consisting of a husband, wife and children under the age of 21
purchasing securities for their own account, or a trustee or other fiduciary
purchasing for a single fiduciary account or single trust estate.

Reductions in sales charges also apply to purchases by individual members of a
"qualified group." The reductions are based on the aggregate dollar value of
shares purchased by all members of the qualified group and still owned by the
group plus the shares currently being purchased. For purposes of this paragraph,
a qualified group consists of a "company," as defined in the 1940 Act, which has
been in existence for more than six months and which has a primary purpose other
than acquiring shares of the Fund at a reduced sales charge, and the "related
parties" of such company. For purposes of this paragraph, a "related party" of a
company is: (i) any individual or other company who directly or indirectly owns,
controls, or has the power to vote five percent or more of the outstanding
voting securities of such company; (ii) any other company of which such company
directly or indirectly owns, controls, or has the power to vote five percent of
more of its outstanding voting securities; (iii) any other company under common
control with such company; (iv) any executive officer, director or partner of
such company or of a related party; and (v) any partnership of which such
company is a partner.

Sales at Net Asset Value. The Fund may sell shares at a purchase price
equal to the net asset value of such shares, without a sales charge, to
Trustees, officers, and employees of the Trust, the Fund, Administrator,
Transfer Agent, Distributor, and the Advisor, and to employees and principals of
related organizations and their families and certain parties related thereto,
including clients and related accounts of the Advisor and other investment
advisors and financial planners. The public offering price of shares of the Fund
may also be reduced to net asset value per share in connection with the
acquisition of the assets of or merger or consolidation with a personal holding
company or a public or private investment company.

Distribution Plan. Capital Investment Group, Inc., Post Office Box 32249,
Raleigh, North Carolina 27622 (the "Distributor"), is the national distributor
for the Fund under a Distribution Agreement with the Trust. The Distributor may
sell Fund shares to or through qualified securities dealers or others. Richard
K. Bryant, a Trustee of the Trust and an officer of another series of the Trust,
and Elmer O. Edgerton, Jr., an officer of another series of the Trust, control
the Distributor. Messrs. Bryant and Edgerton are not officers of the Fund.

The Trust has adopted a Distribution Plan (the "Plan") for the Investor Shares
of the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan the Fund
may reimburse any expenditures to finance any activity primarily intended to
result in sale of the Investor Shares of the Fund or the servicing of
shareholder accounts, including, but not limited to, the following: (i) payments
to the Distributor, securities dealers, and others for the sale of Investor
Shares of the Fund; (ii) payment of compensation to and expenses of personnel
who engage in or support distribution of Investor Shares of the Fund or who
render shareholder support services not otherwise provided by the Administrator,
Transfer Agent, or Custodian; and (iii) formulation and implementation of
marketing and promotional activities. The Board of Trustees of the Trust
approves the categories of expenses for which reimbursement is made.
Expenditures by the Fund pursuant to the Plan are accrued based on the Investor
Shares' average daily net assets and may not exceed 0.50% of the Investor
Shares' average net assets for each year elapsed subsequent to adoption of the
Plan. Such expenditures paid as service fees to any person who sells Fund shares
may not exceed 0.25% of the Investor Shares' average annual net asset value of
such shares. The Fund incurred $847 in distribution and services fees under the
Plan for the Investor Shares of the Fund for the fiscal period ended March 31,
1998.

The Plan for the Fund may not be amended to increase materially the amount to be
spent under the Plan without shareholder approval of the Investor Shares. The
Board of Trustees must approve the continuation of the Plan annually. At least
quarterly the Board of Trustees must review a written report of amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.

Exchange Feature. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by the Advisor. An
exchange is a taxable transaction that involves the simultaneous redemption of
shares of one series and purchase of shares of another series at the respective
closing net asset value next determined after a request for redemption has been
received plus applicable sales charge. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of another series of the
Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge, if any, and any sales charge, if
any, previously paid in connection with the shares being exchanged. For example,
if a 2% sales charge were paid on shares that are exchanged into a series with a
3% sales charge, there would be an additional sales charge of 1% on the
exchange. Exchanges may only be made by investors in states where shares of the
other series are qualified for sale. An investor may direct the Fund to exchange
his shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
other series to which the exchange will take place and a statement as to whether
the exchange is a full or partial redemption of existing shares. Notwithstanding
the foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Investor Shares may not be exchanged for
any other Class of Shares of the Fund.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to the WST Growth &
Income Fund, Investor Shares, 107 North Washington Street, Post Office Box 4365,
Rocky Mount, North Carolina 27803-0365. Your request for redemption must
include:

1) Your letter of instruction specifying the Fund, the account number, and the
number of shares or dollar amount to be redeemed. This request must be
signed by all registered shareholders in the exact names in which they are
registered;

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Designation of the Fund name;

2) Shareholder names and account number;

3) Number of shares or dollar amount to be redeemed;

4) Instructions for transmittal of redemption funds to the shareholder; and

5) Shareholder signature as it appears on the application then on file with
the Fund.

Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$5,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.

MANAGEMENT OF THE FUND

The Executive Committee of the Advisor, composed of Wayne F. Wilbanks, CFA; L.
Norfleet Smith, Jr.; and Norwood A. Thomas, Jr. (all control persons of the
Advisor) is responsible for day-to-day management of the Fund's portfolio. Mr.
Wilbanks has been with the Advisor since its formation in 1990. Messrs. Smith
and Thomas have been with the Advisor since 1992. Messrs. Wilbanks and Thomas
serve as executive officers of the Trust and will represent the Advisor at Board
of Trustee meetings.

The Administrator's address is 105 North Washington Street, Post Office Drawer
69, Rocky Mount, North Carolina 27802-0069.

OTHER INFORMATION

Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990, under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Investor Shares" and "Institutional Shares") representing equal pro rata
interests in the Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares are sold
with a sale charge and bear potential distribution expenses and service fees.
Institutional Shares are sold without a sales charge and bear no shareholder
servicing or distribution fees. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional Shares.
Standardized total return quotations will be computed separately for each Class
of Shares of the Fund.

THIS PROSPECTUS RELATES TO THE FUND'S INVESTOR SHARES AND DESCRIBES ONLY THE
POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE INVESTOR
SHARES. THE FUND ALSO ISSUES A CLASS OF INSTITUTIONAL SHARES. SUCH OTHER CLASS
MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT PERFORMANCE.
INVESTORS MAY CALL THE FUND AT 1-800-525-3863 TO OBTAIN MORE INFORMATION
CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES REPRESENTATIVE.
INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM THEIR SALES
REPRESENTATIVE, THE DISTRIBUTOR, THE FUND, OR ANY OTHER PERSON WHICH IS OFFERING
OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS PROSPECTUS.

Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund, as
transfer agent, will send to each shareholder having an account directly with
the Fund a quarterly statement showing transactions in the account, the total
number of shares owned and any dividends or distributions paid. Inquiries
regarding the Fund may be directed in writing to 107 North Washington Street,
Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by calling
1-800-525-3863.

<PAGE>
- --------------------------------------------------------------------------------
WST GROWTH & INCOME FUND
INVESTOR CLASS
- --------------------------------------------------------------------------------

PROSPECTUS

August 1, 1998

WST Growth & Income Fund
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

Investment Advisor
Wilbanks, Smith & Thomas Asset Management, Inc.
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151

Distributor
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

Independent Auditors
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

PROSPECTUS Cusip Number 66976M102
NASDAQ Symbol CAPVX
- --------------------------------------------------------------------------------
CAPITAL VALUE FUND
INVESTOR CLASS
- --------------------------------------------------------------------------------
The investment objective of the Capital Value Fund (the "Fund") is to provide
its shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income under the
constantly varying market conditions. The Fund will seek to achieve this
objective by investing in a flexible portfolio of equity securities, fixed
income securities, and money market instruments. While there is no assurance
that the Fund will achieve its investment objective, it endeavors to do so by
following the investment policies described in this Prospectus. The Fund has a
net asset value that will fluctuate in accordance with the value of its
portfolio securities. This Prospectus relates to shares ("Investor Shares")
representing interests in the Fund. The Investor Shares are offered to the
general public. See "Prospectus Summary - Offering Price."

INVESTMENT ADVISOR

Capital Investment Counsel, Inc.
Raleigh, North Carolina

The Fund is a diversified series of The Nottingham Investment Trust II (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge. You may request the Statement of Additional
Information, which is incorporated in this Prospectus by reference, by writing
the Fund at Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by
calling 1-800-525-3863. The SEC also maintains an Internet Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY......................................................... 2

FEE TABLE.................................................................. 3

FINANCIAL HIGHLIGHTS....................................................... 4

INVESTMENT OBJECTIVE AND POLICIES.......................................... 5

RISK FACTORS............................................................... 8

INVESTMENT LIMITATIONS.................................................... 10

FEDERAL INCOME TAXES....................................................... 10

DIVIDENDS AND DISTRIBUTIONS................................................ 11

HOW SHARES ARE VALUED...................................................... 12

HOW SHARES MAY BE PURCHASED................................................ 12

HOW SHARES MAY BE REDEEMED................................................. 18

MANAGEMENT OF THE FUND..................................................... 20

OTHER INFORMATION.......................................................... 22

<PAGE>

PROSPECTUS SUMMARY

The Fund. The Capital Value Fund (the "Fund") is a diversified series of The
Nottingham Investment Trust II (the "Trust"), a registered open-end management
investment company organized as a Massachusetts business trust. The Fund is
commonly known as a "mutual fund." This Prospectus relates to Investor Shares of
the Fund. See "Other Information - Description of Shares."

Offering Price. The Investor Shares of the Fund are offered to the general
public at net asset value plus a 3.5% sales charge, which is reduced or
eliminated on purchases involving larger amounts. The Investor Shares are also
subject to a 12b-1 distribution and shareholder servicing fee of up to 0.50% of
the Investor Shares' average net assets annually. See "Distributor and
Distribution Fee" below. The minimum initial investment is $5,000 ($1,000 for
IRAs and Keogh Plans).
The minimum subsequent investment is $500. See "How Shares May Be Purchased."

Investment Objective and Policies. The investment objective of the Fund is to
provide its shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized, and income
under the constantly varying market conditions. In order to achieve the Fund's
investment objective, the percentage of Fund assets invested in equity
securities, fixed income securities, and money market instruments will vary
according to the Advisor's judgment of market and economic conditions, including
trends in yields and interest rates, and changes in fiscal or monetary policies.
When the Advisor believes that capital appreciation can be achieved without high
levels of market risk, equity securities will be emphasized. Equity selection
will emphasize those securities selling at or near the low end of their 2- to 5-
year historical trading range. Particular emphasis will be placed on those
companies with strong asset holdings in cash, current market value of real
estate versus book value of that same real estate, a favorable debt/asset and
debt/equity ratio, and a consistent management history of the company. See
"Investment Objective and Policies." The Fund is not intended to be a complete
investment program, and there can be no assurance that the Fund will achieve its
investment objective.

Special Risk Considerations. While the Fund will invest primarily in common
stocks and bonds traded in U.S. securities markets, some of the Fund's
investments may include foreign securities, illiquid securities, and securities
purchased subject to a repurchase agreement or on a "when-issued" basis, which
involve certain risks. To the extent that equity securities may comprise a major
portion of its portfolio, the Fund's net asset value will be subject to stock
market fluctuation. The Fund's net asset value may also fluctuate due to
fluctuation in the value of the fixed income securities in the portfolio as a
result of changes in the market interest rate, downgrading of the rating of a
particular debt instrument, or other changes in the interest rate and fixed
income market environment. The Fund may borrow only under certain limited
conditions (including to meet redemption requests) and not to purchase
securities. It is not the intent of the Fund to borrow except for temporary cash
requirements. Borrowing, if done, would tend to exaggerate the effects of market
and interest rate fluctuations on the Fund's net asset value until repaid. See
"Risk Factors."

Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Capital Investment Counsel,
Inc. of Raleigh, North Carolina (the "Advisor"), manages the Fund's investments.
The Advisor currently manages over $130 million in assets. For its advisory
services, the Advisor receives a monthly fee based on the Fund's daily net
assets at the annual rate of 0.60%. The fee is reduced on assets over $250
million. See "Management of the Fund - The Advisor."

Dividends. Income dividends, if any, are generally paid quarterly; capital
gains, if any, are generally distributed at least once each year. Dividends and
capital gains distributions are automatically reinvested in additional shares of
the same Class of the Fund at net asset value unless the shareholder elects to
receive cash. See "Dividends and Distributions."

Distributor and Distribution Fee. Capital Investment Group, Inc. (the
"Distributor"), an affiliate of the Advisor, serves as distributor of shares of
the Fund. For its services, which include payments to qualified securities
dealers for sales of Fund shares, the Distributor receives commissions
consisting of the portion of the sales charge remaining after the discounts it
allows to securities dealers. Under the Fund's Distribution Plan with respect to
the Investor Shares, expenditures by the Fund for distribution activities and
service fees may not exceed 0.50% of the Investor Shares' average net assets
annually. See "How Shares May Be Purchased - Sales Charges" and "- Distribution
Plan."

Redemption of Shares. There is no charge for redemptions other than possible
charges associated with wire transfers of redemption proceeds. Shares may be
redeemed at any time at the net asset value next determined after receipt of a
redemption request by the Fund. A shareholder who submits appropriate written
authorization may redeem shares by telephone. See "How Shares May Be Redeemed."

FEE TABLE

The following table sets forth certain information in connection with the
expenses of the Investor Shares of the Fund for the current fiscal year. The
information is intended to assist the investor in understanding the various
costs and expenses borne by the Investor Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.

Shareholder Transaction Expenses for Investor Shares

Maximum sales load imposed on purchases
(as a percentage of offering price)....................................3.50%1
Maximum sales load imposed on reinvested dividends.........................None
Maximum deferred sales load................................................None
Redemption fees*...........................................................None
Exchange fee...............................................................None

* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $10.00 per transaction
for wiring redemption proceeds.

Annual Fund Operating Expenses for Investor Shares2
(as a percentage of average net assets)

Investment advisory fees..................................................0.60%
12b-1 fees................................................................0.50%3
Other expenses............................................................1.02%
-----
Total operating expenses...............................................2.12%2
=====

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$56 $99 $145 $272

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

1 Reduced or eliminated for larger purchases. See "How Shares May Be
Purchased - Sales Charges."

2 The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Investor Shares of the Fund for the fiscal year
ended March 31, 1998, which were 2.12% of average daily net assets of the
Investor Shares. The Advisor has voluntarily agreed to a reduction in the
fees payable to it and to reimburse expenses of the Fund, if necessary, in
an amount that limits "Total operating expenses" (exclusive of interest,
taxes, brokerage fees and commissions, sales charges, and extraordinary
expenses) to not more than 2.50% of the Investor Shares' average daily net
assets. There can be no assurance that the Advisor's voluntary fee waivers
and expense reimbursements in the past will continue in the future.

3 The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides
that the Fund may pay certain distribution expenses and service fees with
respect to the Investor Shares up to 0.50% of the Investor Shares' average
net assets annually. See "How Shares May Be Purchased - Distribution Plan."
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charge permitted by the National Association of
Securities Dealers.

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided into multiple Classes representing interests
in the Fund. This Prospectus relates to Investor Shares of the Fund. See "Other
Information - Description of Shares." The financial data included in the table
below for the fiscal years ended March 31, 1998 and 1997, has been audited by
Deloitte & Touche LLP, independent accountants, whose report covering such
periods is included in the Statement of Additional Information. The financial
data for the prior fiscal years was audited by other independent auditors. The
information in the table below should be read in conjunction with the Fund's
latest audited financial statements and notes thereto, which are also included
in the Statement of Additional Information, a copy of which may be obtained at
no charge by calling the Fund. Further information about the performance of the
Fund is contained in the Annual Report of the Fund, a copy of which may be
obtained at no charge by calling the Fund.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Investor Class
(For a Share Outstanding Throughout each Period Represented)

Years ended March 31,
1998 1997 1996 1995 1994 1993 1992 1991 (a)
---- ---- ---- ---- ---- ---- ---- --------
Net Asset Value, Beginning of Period $12.50 $11.92 $10.75 $10.42 $10.59 $10.05 $10.09 $10.00
Income from investment operations
Net investment income 0.13 0.15 0.19 0.17 0.15 0.20 0.19 0.03
Net realized and unrealized
gain on investments 3.93 0.70 1.53 0.73 0.41 0.88 0.00 0.21
---- ---- ---- ---- ---- ---- ---- ----
Total from investment
operations 4.06 0.85 1.72 0.90 0.56 1.08 0.19 0.24
---- ---- ---- ---- ---- ---- ---- ----
Less distributions from
Net investment income (0.13) (0.15) (0.20) (0.21) (0.11) (0.20) (0.19) (0.03)
Tax return of capital 0.00 (0.01) 0.00 0.00 0.00 0.00 0.00 (0.12)
Net realized gain from
investment transactions (1.92) (0.11) (0.35) (0.36) (0.62) (0.34) (0.04) 0.00
----- ----- ----- ----- ----- ----- ---- ----

Total distributions (2.05) (0.27) (0.55) (0.57) (0.73) (0.54) (0.23) (0.15)
----- ------ ----- ----- ----- ----- ----- ------
Net Asset Value, End of Period $14.51 $12.50 $11.92 $10.75 $10.42 $10.59 $10.05 $10.09
===== ====== ====== ====== ====== ====== ====== ======

Total return (c) 32.89% 7.08% 16.16% 8.66% 5.21% 11.23% 1.44% 7.09%

Ratios/supplemental data
Net assets, end of period $9,888 $7,738 $7,552 $6,776 $6,257 $6,042 $5,384 $1,715
====== ====== ====== ====== ====== ====== ====== ======
(in thousands)
Ratio of expenses to average net assets
Before expense reimbursements and
waived fees 2.12% 2.38% 2.56% 2.58% 2.64% 2.48% 2.96% 5.16%(b)
After expense reimbursements and
waived fees 2.12% 2.38% 2.33% 2.47% 2.43% 2.48% 2.73% 4.21%(b)
Ratio of net investment income
to average net assets
Before expense reimbursements and
waived fees 0.91% 1.12% 1.44% 1.55% 1.22% 1.87% 1.81% (0.09)%(b)
After expense reimbursements and
waived fees 0.91% 1.12% 1.66% 1.66% 1.43% 1.87% 2.04% 0.86%(b)
Portfolio turnover rate 33.50% 7.31% 12.33% 24.67% 32.99% 24.79% 14.89% 0.00%
Average commission rate paid (d) $0.10000 $0.1000
</TABLE>

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

(a) For the period from November 16, 1990 (commencement of operations) to March
31, 1991.

(b) Annualized.

(d) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged. This
disclosure was not required for fiscal years of the Fund ended prior to
March 31, 1997.

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any combination of
capital appreciation, both realized and unrealized, and income under the
constantly varying market conditions. The percentage of assets invested in
equity securities, fixed income securities, and money market instruments will
vary from time to time depending upon the Advisor's judgment of general market
and economic conditions, trends in yields and interest rates, and changes in
fiscal or monetary policies. While there is no guarantee that the Fund will meet
its investment objective, it seeks to achieve its objective through the
investment policies and techniques described in this Prospectus. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.

Investment Policies. In seeking to achieve the Fund's investment objective, the
Advisor invests in a portfolio of equity securities for growth, or a combination
of growth and income, and fixed income securities for income, or a combination
of income and growth. Investments may also be made in money market instruments
under circumstances when the Advisor believes the short-term, stable nature of
money market instruments is the best means of achieving the Fund's goal of
maximum total return. Each category of securities, and the investment approach
to be used by the Fund, is described below.

The Fund will generally invest in securities traded on national securities
exchanges and on the over-the-counter market. In addition to investing in
various types of securities, the Advisor also invests in various companies,
industries, and economic sectors. When the Advisor believes the equity markets
are capable of providing capital appreciation, equity securities will be
emphasized. When equities are believed by the Advisor to be subject to high
levels of market risk, or when the Advisor believes there is a likelihood that
interest rates will decline (in which case capital appreciation would be
expected from fixed income securities), fixed income instruments will be
emphasized. The Fund may invest up to 100% of the Fund's assets in any of the
three categories of equity securities, fixed income securities, and money market
instruments. By adjusting the portfolio allocation in this manner, the Advisor
attempts to achieve the best opportunity for maximum total return.

The Fund will vary its investment allocation between equity securities, fixed
income securities, and money market instruments depending upon the Advisor's
view of the economic environment, trend in business environment, trend in
interest rates, and prospects for particular industries within the overall
market environment. In the selection of equity securities for investment in the
Fund's portfolio, the Advisor seeks to identify equities that are undervalued in
the securities markets. Candidates for such investment will usually include the
equity securities of domestic, established companies whose underlying value of
assets owned by the company, or "break up value" is close to or greater than the
market valuation of those same assets.

No assurance can be given that the Advisor will be correct in its expectations
of increased market recognition of value for the securities selected for the
Fund's portfolio. While portfolio securities are generally acquired for the long
term, they will be sold when the Advisor believes that: (a) the anticipated
price appreciation has been achieved or is no longer probable; (b) alternate
investments offer superior total return prospects; or (c) the risk of decline in
market value is increased. When a portfolio security is sold due to (a) above,
the Advisor prefers to reinvest the proceeds of the sale into two, three, or
more new securities to provide additional diversity to the portfolio. Conversely
when a portfolio security is sold due to (b) above, the Advisor prefers to
reinvest those proceeds to consolidate the diversity of the portfolio into a
larger position. In an attempt to reduce overall portfolio risk, provide
stability, generate income, and to meet the operational and cash needs of the
Fund, the Advisor allocates a portion of the Fund's assets to fixed income
securities and money market instruments.

The equity portion of the Fund's portfolio will generally be comprised of common
stocks traded on domestic securities exchanges or on the over-the-counter
market. In determining whether a common stock is a strong candidate for
inclusion in the portfolio, the Advisor considers, among other things, such
factors as: research material generated by the brokerage community; investment
and business publications and general investor attitudes as perceived by the
Advisor; valuation with respect to price-to-book value, price-to-sales,
price-to-cash flow, price-to-earnings ratios, and dividend yield, all compared
to historical valuations and future prospects for the company as judged by the
Advisor. In addition to common stocks, the equity portion of the Fund's
portfolio may also include preferred stock, convertible preferred stock, and
convertible bonds.

The Fund may invest in the securities of foreign private issuers. The Fund may
invest up to 10% of its total assets in foreign securities in order to take
advantage of opportunities for growth where, as with domestic securities, they
are depressed in price because they are out of favor with most of the investment
community. The same factors would be considered in selecting foreign securities
as with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial or social instability or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.

Because of the inherent risk of foreign securities over domestic issues, the
Fund will generally limit foreign investments to those traded domestically as
American Depository Receipts ("ADRs"). ADRs are receipts issued by a U.S. bank
or trust company evidencing ownership of securities of a foreign issuer. ADRs
may be listed on a national securities exchange or may trade in the
over-the-counter market. The prices of ADRs are denominated in U.S. dollars
while the underlying security may be denominated in a foreign currency. To the
extent the Fund invests in other foreign securities, it will generally limit
such investments to foreign securities traded on foreign securities exchanges.

The Fund's fixed income investments will include corporate debt obligations and
U.S. Government Securities. The maturity of the fixed income securities
purchased and held by the Fund will depend upon, among other reasons, the
current and expected trend in interest rates, credit quality of the fixed income
securities, relative attractiveness of fixed income securities versus equity
securities, and the overall economic situation, current and expected. The
Advisor will consider a number of factors in determining when to purchase and
sell the investments of the Fund and when to invest for long, intermediate, or
short maturities. Such factors may include money supply growth, the rate of
unemployment, changes in consumer, wholesale and producer prices, as well as raw
materials, commodities, and industrial prices, capital spending, the Gross
National Product ("GNP") and industrial production. The Advisor will also
consider the impact of inflation and the attitudes and concerns of key officials
in the Federal Reserve and U.S. Government.

Corporate debt obligations purchased by the Fund will consist of "investment
grade" securities -- those rated at least Baa by Moody's Investors Service, Inc.
("Moody's"), BBB by Standard & Poor's Ratings Group ("S&P"), Fitch Investors
Service, Inc. ("Fitch"), or Duff & Phelps ("D&P") or, if not rated, of
equivalent quality in the Advisor's opinion. Debt obligations rated Baa by
Moody's or BBB by S&P, Fitch, or D&P may be considered speculative. Descriptions
of the quality ratings of Moody's, S&P, Fitch, and D&P are contained in the
Statement of Additional Information. While the Advisor utilizes the ratings of
various credit rating services as one factor in establishing creditworthiness,
it relies primarily upon its own analysis of factors establishing
creditworthiness. For as long as the Fund holds a fixed income issue, the
Advisor monitors the issuer's credit standing. If following investment, a
corporate debt obligation held by the Fund is no longer considered to be
"investment grade," or is considered to be "investment grade" by one rating
agency but not by another, the Advisor will re-evaluate the issuer's credit
standing and may retain the investment if it is still determined to be
creditworthy.

Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the Advisor's secular view of interest rates favors
short-term fixed income instruments versus longer term fixed income instruments.
Money market instruments will typically represent a portion of the Fund
portfolio, as funds awaiting investment, to accumulate cash for anticipated
purchases of portfolio securities, and to provide for shareholder redemptions
and operating expenses of the Fund. Money market instruments mature in thirteen
months or less from the date of purchase and may include U.S. Government
Securities, corporate debt securities (including those subject to repurchase
agreements), bankers acceptances and certificates of deposit of domestic
branches of U.S. banks, and commercial paper (including variable amount demand
master notes) rated in one of the two highest rating categories by any of the
nationally recognized statistical rating organizations or if not rated, of
equivalent quality in the Advisor's opinion. The Advisor may, when it believes
that unusually volatile or unstable economic and market conditions exist, depart
from the Fund's investment approach and assume temporarily a defensive portfolio
posture, increasing the Fund's percentage investment in money market
instruments, even to the extent that 100% of the Fund's assets may be so
invested.

U.S. Government Securities. The Fund may invest a portion of the portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Housing
Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan
Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee
Valley Authority. U.S. Government Securities may be acquired subject to
repurchase agreements. While obligations of some U.S. Government sponsored
entities are supported by the full faith and credit of the U.S. Government (e.g.
GNMA), several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent the Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.

RISK FACTORS

Fluctuations in Value. Because there is risk in any investment, there can be no
assurance that the Fund will meet its investment objective. To the extent that
the Fund's equity portfolio consists principally of common stocks, it may be
expected that its net asset value will be subject to greater fluctuation than a
portfolio containing mostly fixed income securities. The fixed income securities
in which the Fund will invest are subject to fluctuation in value. Such
fluctuations may be based on movements in interest rates or from changes in the
creditworthiness of the issuers, which may result from adverse business and
economic developments or proposed corporate transactions, such as a leveraged
buy-out or recapitalization of the issuer. The value of the Fund's fixed income
securities will generally vary inversely with the direction of prevailing
interest rate movements. Should interest rates increase or the creditworthiness
of an issuer deteriorate, the value of the Fund's fixed income securities would
decrease in value, which would have a depressing influence on the Fund's net
asset value. Although certain of the U.S. Government Securities in which the
Fund may invest are guaranteed as to timely payment of principal and interest,
the market value of the securities, upon which the Fund's net asset value is
based, will fluctuate due to the interest rate risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government.

Portfolio Turnover. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 75% in any one year. Portfolio turnover generally involves some expense
to the Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover may also have capital gains tax consequences. The
Fund's turnover ratio for prior fiscal years is indicated under "Financial
Highlights" above.

Borrowing. The Fund may borrow, temporarily, a portion of its total assets for
extraordinary purposes and to meet redemption requests which might otherwise
require untimely disposition of portfolio holdings. See "Investment Limitations"
below. To the extent the Fund borrows for these purposes, the effects of market
price fluctuations on portfolio net asset value will be exaggerated. If, while
such borrowing is in effect, the value of the Fund's assets declines, the Fund
could be forced to liquidate portfolio securities when it is disadvantageous to
do so. The Fund would incur interest and other transaction costs in connection
with borrowing. The Fund will borrow only from a bank. The Fund will not make
any investments if the borrowing exceeds 5% of its assets until such time as
repayment has been made to bring the total borrowing below 5% of its assets.

Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. The Fund may not invest in restricted securities, which are securities
that cannot be sold to the public without registration under the federal
securities laws.

Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

To limit the Fund's exposure to risk, the Fund has adopted certain fundamental
investment limitations. Some of these restrictions are that the Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure: (a) for extraordinary or emergency
purposes, in amounts not exceeding 5% of the Fund's total assets or, (b) in
order to meet redemption requests which might otherwise require untimely
disposition of portfolio securities if, immediately after such borrowing, the
value of the Fund's assets, including all borrowings then outstanding, less its
liabilities (excluding all borrowings), is equal to at least 300% of the
aggregate amount of borrowings then outstanding, and the Fund may pledge its
assets to secure all such borrowings; (2) make loans of money or securities,
except that the Fund may invest in repurchase agreements (but repurchase
agreements having a maturity of longer than seven days, together with other
illiquid securities, are limited to 10% of the Fund's net assets), money market
instruments, and other debt securities; (3) invest in securities of issuers
which have a record of less than three years' continuous operation (including
predecessors and, in the case of bonds, guarantors), if more than 5% of its
total assets would be invested in such securities; (4) write, purchase or sell
puts, calls, warrants or combinations thereof, or purchase or sell commodities,
commodities contracts, futures contracts or related options; (5) invest in oil,
gas or mineral leases or exploration programs, or real estate (except the Fund
may invest in readily marketable securities of companies that own or deal in
such things); (6) invest more than 5% of its assets at cost in the securities of
any one issuer nor hold more than 10% of the voting stock of any issuer (except
that U.S. Government Securities are not subject to these limitations); (7)
invest in restricted securities; and (8) invest more than 10% of the Fund's
total assets in foreign securities, including sponsored ADRs. See "Investment
Limitations" in the Fund's Statement of Additional Information for a complete
list of investment limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities generally will not
constitute a violation of such limitation. If the limitation on illiquid
securities is exceeded, however, through a change in values, net assets, or
other circumstances, the Fund would take appropriate steps to protect liquidity
by changing its portfolio.

FEDERAL INCOME TAXES

Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust, including the Fund, as a separate
regulated investment company. Each series of the Trust, including the Fund,
intends to qualify or remain qualified as a regulated investment company under
the Code by distributing substantially all of its "net investment income" to
shareholders and meeting other requirements of the Code. For the purpose of
calculating dividends, net investment income consists of income accrued on
portfolio assets, less accrued expenses. Upon qualification, the Fund will not
be liable for federal income taxes to the extent earnings are distributed. The
Board of Trustees retains the right for any series of the Trust, including the
Fund, to determine for any particular year if it is advantageous not to qualify
as a regulated investment company. Regulated investment companies, such as each
series of the Trust, including the Fund, are subject to a non-deductible 4%
excise tax to the extent they do not distribute the statutorily required amount
of investment income, determined on a calendar-year basis, and capital gain net
income, using an October 31 year-end measuring period. The Fund intends to
declare or distribute dividends during the calendar year in an amount sufficient
to prevent imposition of the 4% excise tax.

For the fiscal year ended March 31, 1998, the Fund was considered a "personal
holding company" under the Code since 50% of the value of the Fund's share were
owned directly or indirectly by five or fewer individuals at certain times
during the last half of the year. As a result, the Fund was unable to meet the
requirements for taxation as a regulated investment company and will be unable
to meet such requirements as long as it is classified as a personal holding
company. As a personal holding company, the Fund is subject to federal income
taxes on undistributed personal holding company income at the maximum individual
income tax rate. For the fiscal year ended March 31, 1998, however, no provision
was made for federal income taxes since substantially all taxable income was
distributed to shareholders. For the current fiscal year, the Fund anticipates
that either it will qualify as a regulated investment company under the Code or,
if still considered a personal holding company, it will distribute substantially
all of its taxable income for the current fiscal year to shareholders in order
to avoid individual income taxes.

The Trust will inform shareholders of the Fund of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.

DIVIDENDS AND DISTRIBUTIONS

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. The Fund's net investment
income available for distribution to holders of Investor Shares will be reduced
by the amount of any expenses allocated to the Investor Shares, including the
distribution and service fees under the Fund's Distribution Plan.

HOW SHARES ARE VALUED

Net asset value for each Class of Shares of the Fund is determined at the time
trading closes on the New York Stock Exchange (currently 4:00 p.m., New York
time, Monday through Friday), except on business holidays when the New York
Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments and other assets, less all of its liabilities, divided by the
number of its outstanding shares. Net asset value is determined separately for
each Class of Shares of the Fund and reflects any liabilities allocated to a
particular Class as well as the general liabilities of the Fund.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the last quoted bid price. Unlisted
securities traded over-the-counter for which market quotations are readily
available are valued at the latest quoted sales price, if available, at the time
of valuation, otherwise, at the latest quoted bid price. Temporary cash
investments with maturities of 60 days or less will be valued at amortized cost,
which approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.

HOW SHARES MAY BE PURCHASED

The minimum initial investment is $5,000 ($1,000 for Individual Retirement
Accounts ("IRAs") and Keogh Plans). The minimum subsequent investment is $500.
The Fund may, in the Advisor's sole discretion, accept certain accounts with
less than the stated minimum initial investment. You may invest in the following
ways:

Purchases by Mail. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to the Capital Value Fund, Investor Shares, 107 North
Washington Street, Post Office Box 4365, Rocky Mount, North Carolina 27803-0365.
Subsequent investments in an existing account in the Fund may be made at any
time by sending a check payable to the Fund, to the address stated above. Please
enclose the stub of your account statement and include the amount of the
investment, the name of the account for which the investment is to be made and
the account number. Please remember to add a reference to "Investor Shares" to
your check to ensure proper credit to your account.

Purchases by Wire. To purchase shares by wiring federal funds, the Fund must
first be notified by calling 1-800-525-3863 to request an account number and
furnish the Fund with your tax identification number. Following notification to
the Fund, federal funds and registration instructions should be wired through
the Federal Reserve System to:

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Capital Value Fund
Acct #2000000862110
For further credit to (shareholder's name and SS# or EIN#)

It is important that the wire contain all the information and that the Fund
receive prior telephone notification to ensure proper credit. A completed
application with signature(s) of registrant(s) must be mailed to the Fund
immediately after the initial wire as described under "Purchases by Mail" above.
Investors should be aware that some banks may impose a wire service fee.

General. All purchases of shares are subject to acceptance and are not binding
until accepted. The Fund reserves the right to reject any application or
investment. Orders received by the Fund and effective prior to the time trading
closes on the New York Stock Exchange (currently 4:00 p.m., New York time,
Monday through Friday, exclusive of business holidays) will purchase shares at
the public offering price determined at that time. Orders received by the Fund
and effective after the close of trading, or on a day when the New York Stock
Exchange is not open for business, will purchase shares at the public offering
price next determined. For orders placed through a qualified broker-dealer, such
firm is responsible for promptly transmitting purchase orders to the Fund.
Investors may be charged a fee if they effect transactions in the Fund shares
through a broker or agent.

The Fund may enter into agreements with one or more brokers or other agents,
including discount brokers and other brokers associated with investment
programs, including mutual fund "supermarkets," and agents for qualified
employee benefit plans, pursuant to which such brokers or other agents may be
authorized to accept on the Fund's behalf purchase and redemption orders that
are in "good form." Such brokers or other agents may be authorized to designate
other intermediaries to accept purchase and redemption orders on the Fund's
behalf. Under such circumstances, the Fund will be deemed to have received a
purchase or redemption order when an authorized broker, agent, or, if
applicable, other designee, accepts the order. Such orders will be priced at the
Fund's public offering price next determined after they are accepted by an
authorized broker, agent, or other designee. The Fund may pay fees to such
brokers or other agents for their services, including without limitation,
administrative, accounting, and recordkeeping services.

If checks are returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is canceled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

Sales Sales
Charge As Charge As Dealers Discounts
% of Net % of Public and Brokerage
Amount of Transaction Amount Offering Commissions as % of
At Public Offering Price Invested Price Public Offering Price

Less than $100,000........................... 3.63% 3.50% 3.00%
$100,000 but less than $250,000.............. 3.09% 3.00% 2.50%
$250,000 but less than $500,000.............. 2.56% 2.50% 2.00%
$500,000 or more............................. 0.00% 0.00% 0.00%
</TABLE>

The dealer discounts and brokerage commissions schedule above applies to all
dealers who have agreements with the Distributor. The Distributor, at its
expense, may also provide additional compensation to dealers in connection with
sales of shares of the Fund. 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 Fund,
and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

Reduced Sales Charges

Concurrent Purchases. For purposes of qualifying for a lower sales
charge for Investor Shares, investors have the privilege of combining concurrent
purchases of the Fund and any other series of the Trust affiliated with the
Advisor and sold with a sales charge. For example, if a shareholder concurrently
purchases shares in another series of the Trust affiliated with the Advisor and
sold with a sales charge at the total public offering price of $50,000, and
Investor Shares in the Fund at the total public offering price of $50,000, the
sales charge would be that applicable to a $100,000 purchase as shown in the
appropriate table above. This privilege may be modified or eliminated at any
time or from time to time by the Trust without notice thereof.

Rights of Accumulation. Pursuant to the right of accumulation,
investors are permitted to purchase shares at the public offering price
applicable to the total of (a) the total public offering price of the Investor
Shares of the Fund then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's combined holdings of the shares of
all of the series of the Trust affiliated with the Advisor and sold with a sales
charge. To receive the applicable public offering price pursuant to the right of
accumulation, investors must, at the time of purchase, provide sufficient
information to permit confirmation of qualification, and confirmation of the
purchase is subject to such verification. This right of accumulation may be
modified or eliminated at any time or from time to time by the Trust without
notice.

Letters of Intent. Investors may qualify for a lower sales charge for
Investor Shares by executing a letter of intent. A letter of intent allows an
investor to purchase Investor Shares of the Fund over a 13-month period at
reduced sales charges based on the total amount intended to be purchased plus an
amount equal to the then current net asset value of the purchaser's combined
holdings of the shares of all of the series of the Trust affiliated with the
Advisor and sold with a sales charge. Thus, a letter of intent permits an
investor to establish a total investment goal to be achieved by any number of
purchases over a 13-month period. Each investment made during the period
receives the reduced sales charge applicable to the total amount of the intended
investment.

A 90-day back-dating period can be used to include earlier purchases at the
investor's cost (without a retroactive downward adjustment of the sales charge);
the 13-month period would then begin on the date of the first purchase during
the 90-day period. No retroactive adjustment will be made if purchases exceed
the amount indicated in the letter of intent. Investors must notify the Fund or
the Distributor whenever a purchase is being made pursuant to a letter of
intent.

Reinvestments. Investors may reinvest, without a sales charge, proceeds
from a redemption of Investor Shares of the Fund either in Investor Shares of
the Fund or in shares of another series of the Trust affiliated with the Advisor
and sold with a sales charge, within 90 days after the redemption. If the other
class charges a sales charge higher than the sales charge the investor paid in
connection with the shares redeemed, the investor must pay the difference. In
addition, the shares of the class to be acquired must be registered for sale in
the investor's state of residence. The amount that may be so reinvested may not
exceed the amount of the redemption proceeds, and a written order for the
purchase of such shares must be received by the Fund or the Distributor within
90 days after the effective date of the redemption.

Sales at Net Asset Value. Shares of the Fund may be sold at net asset
value per share without a sales charge to: (a) current or former Trustees and
officers of the Trust; (b) current or former directors, officers, employees or
sales representatives of the Advisor, the Administrator, the Transfer Agent, or
the Distributor or their respective subsidiaries or affiliates; (c) current or
former officers, partners, employees or registered representatives of
broker-dealers which have entered into sales agreements with the Distributor;
(d) members of the immediate families of any of the foregoing persons; (e) any
trust, custodian, pension, profit-sharing or other benefit plan for any of the
foregoing persons; (f) investment advisory clients of the Advisor or of any of
its affiliates; (g) clients of fee-based financial planners; (h) clients of a
bank or registered investment adviser as to which the bank or adviser exercises
exclusive discretionary investment authority or accounts held by a bank in a
fiduciary, agency, custodial or similar capacity; (i) governmental agencies and
authorities; (j) employee benefit plans qualified under Section 401 or 403 of
the Internal Revenue Code, including salary reduction plans qualified under
Section 401(k) of the Code, subject to minimum requirements with respect to
number of participants or plan assets established by the Trust; (k) tax-exempt
organizations under Section 501(c)(3-13) of the Code; and (l) those investors
who purchase shares without the services of a commissioned broker or agent.
However, if purchased through various so-called "Fund Supermarkets" using the
services of a broker or agent, investors may be subject to various fees and
charges. Shares of the Fund so purchased are purchased for investment purposes
and may not be resold except through redemption or repurchase by or on behalf of
the Fund. Elimination of a sales charge is conditioned on the receipt by the
Distributor of written notification of eligibility. Shares of the Fund may also
be sold at net asset value without a sales charge in connection with certain
reorganization, liquidation or acquisition transactions involving other
investment companies or personal holding companies.

Distribution Plan. Capital Investment Group, Inc., Post Office Box 32249,
Raleigh, North Carolina 27622 (the "Distributor"), an affiliate of the Advisor,
is the national distributor for the Fund under a Distribution Agreement with the
Trust. The Distributor may sell Fund shares to or through qualified securities
dealers or others. Richard K. Bryant, a Trustee of the Trust and an officer of
the Fund, and Elmer O. Edgerton, Jr., an officer of the Fund, control the
Distributor and the Advisor.

The Trust has adopted a Distribution Plan (the "Plan") for the Investor Shares
of the Fund pursuant to Rule 12b-1 under the 1940 Act. Under the Plan the Fund
may reimburse any expenditures to finance any activity primarily intended to
result in sale of the Investor Shares of the Fund or the servicing of
shareholder accounts, including, but not limited to, the following: (i) payments
to the Distributor, securities dealers, and others for the sale of Investor
Shares of the Fund; (ii) payment of compensation to and expenses of personnel
who engage in or support distribution of Investor Shares of the Fund or who
render shareholder support services not otherwise provided by the Transfer
Agent, Administrator, or Custodian; and (iii) formulation and implementation of
marketing and promotional activities. The categories of expenses for which
reimbursement is made are approved by the Board of Trustees of the Trust.
Expenditures by the Fund pursuant to the Plan are accrued based on the Investor
Shares' average daily net assets and may not exceed 0.50% of the Investor
Shares' average net assets for each year elapsed subsequent to adoption of the
Plan. Such expenditures paid as service fees to any person who sells Investor
Shares may not exceed 0.25% of the average annual net asset value of such
shares.

The Plan may not be amended to increase materially the amount to be spent under
the Plan without shareholder approval of the Investor Shares. The continuation
of the Plan must be approved by the Board of Trustees annually. At least
quarterly the Board of Trustees must review a written report of amounts expended
pursuant to the Plan and the purposes for which such expenditures were made. For
the fiscal year ended March 31, 1998, the Fund incurred $44,611 pursuant to the
Plan, all of which the Distributor received. In addition, the Distributor
retained sales charges in the amount of $2,316 for the fiscal year ended March
31, 1998.

Exchange Feature. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by the Advisor. An
exchange involves the simultaneous redemption of shares of one series and
purchase of shares of another series at the respective closing net asset value
next determined after a request for redemption has been received plus applicable
sales charge, and is a taxable transaction. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of any other series of
the Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge and any sales charge previously
paid in connection with the shares being exchanged. For example, if a 2% sales
charge was paid on shares that are exchanged into a series with a 3% sales
charge, there would be an additional sales charge of 1% on the exchange.
Exchanges may only be made by investors in states where shares of the other
series are qualified for sale. An investor may direct the Fund to exchange his
shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
series to which the exchange will take place and a statement as to whether the
exchange is a full or partial redemption of existing shares. Notwithstanding the
foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Investor Shares may not be exchanged for
Institutional Shares.

A shareholder should consider the investment objectives and policies of any
series into which the shareholder will be making an exchange, as described in
the prospectus for that other series. The Board of Trustees of the Trust
reserves the right to suspend or terminate, or amend the terms of, the exchange
privilege upon 60 days written notice to the shareholders.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to the Capital Value
Fund, Investor Shares, 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. Your request for redemption must include:

1) Your letter of instruction specifying the account number, and the number of
shares or dollar amount to be redeemed. This request must be signed by all
registered shareholders in the exact names in which they are registered;

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

Telephone and Bank Wire Redemptions. The Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. The Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Shareholder name and account number;

2) Number of shares or dollar amount to be redeemed;

3) Instructions for transmittal of redemption funds to the shareholder; and 4)
Shareholder signature as it appears on the application then on file with
the Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank or the Fund's Custodian is not open for business. You
can change your redemption instructions anytime you wish by filing a letter
including your new redemption instructions with the Fund. See "Signature
Guarantees" below. The Fund reserves the right to restrict or cancel telephone
and bank wire redemption privileges for shareholders, without notice, if the
Fund believes it to be in the best interest of the shareholders to do so. During
drastic economic and market conditions, telephone redemption privileges may be
difficult to implement.

The Fund in its discretion may choose to pass through to redeeming shareholders
any charges by the Custodian for wire redemptions. The Custodian currently
charges $10.00 per transaction for wiring redemption proceeds. If this cost is
passed through to redeeming shareholders by the Fund, the charge will be
deducted automatically from the shareholder's account by redemption of shares in
the account. The shareholder's bank or brokerage firm may also impose a charge
for processing the wire. The shareholder's bank or brokerage firm may also
impose a charge for processing the wire. If wire transfer of funds is impossible
or impractical, the redemption proceeds will be sent by mail to the designated
account.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$10,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.

MANAGEMENT OF THE FUND

The Advisor. Subject to the authority of the Board of Trustees, Capital
Investment Counsel, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition of its
portfolio, and furnishes advice and recommendations with respect to investments,
investment policies and the purchase and sale of securities, pursuant to an
Investment Advisory Agreement (the "Advisory Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a North Carolina corporation in 1984, is controlled by
Richard K. Bryant and E.O. Edgerton, Jr. They also control the Distributor. The
Advisor currently serves as investment advisor to over $130 million in assets.
The Advisor has been rendering investment counsel, utilizing investment
strategies substantially similar to that of the Fund, to individuals, banks and
thrift institutions, pension and profit sharing plans, trusts, estates,
charitable organizations, corporations, and other business and individual
accounts since its formation. The Advisor's address is 17 Glenwood Avenue, Post
Office Box 32249, Raleigh, North Carolina 27622.

Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 0.60% of the first $250 million of the
average daily net assets of the Fund and 0.50% on assets over $250 million. For
the fiscal year ended March 31, 1998, the Advisor received $53,764 as investment
advisory fees for the year (0.60% of the average daily net assets of the Fund).

E.O. Edgerton, Jr., a principal of the Advisor and an officer of the Fund, and
W. Harold Eddins, a Portfolio Manager of the Advisor, are responsible for
day-to-day management of the Fund's portfolio. Mr. Edgerton has served in this
capacity since the inception of the Fund in 1990, while Mr. Eddins has served in
such capacity since May, 1997. Messrs. Edgerton and Eddins have been with the
Advisor since 1984 and 1987, respectively.

The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor (including the Distributor, an affiliate of the
Advisor) if it believes it can obtain the best execution of transactions from
such broker. Research services obtained through Fund brokerage transactions may
be used by the Advisor for its other clients and, conversely, the Fund may
benefit from research services obtained through the brokerage transactions of
the Advisor's other clients. For further information, see "Investment Objective
and Policies - Investment Transactions" in the Statement of Additional
Information.

During the fiscal year ended March 31, 1998, the total brokerage commissions
paid by the Fund were $27,164, of which $27,164 was paid during such period to
the Distributor. Transactions in which the Fund used the Distributor as broker
involved 100% of the aggregate dollar amount of transactions involving the
payment of commissions and 100% of the aggregate broker commissions paid by the
Fund for the fiscal year ended March 31, 1998.

The Administrator. The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069. Subject to the
authority of the Board of Trustees, the services the Administrator provides to
the Fund include coordinating and monitoring any third parties furnishing
services to the Fund; providing the necessary office space, equipment and
personnel to perform administrative and clerical functions for the Fund; and
preparing, filing and distributing proxy materials, periodic reports to
shareholders, registration statements and other documents. For its
administrative services, the Administrator is entitled to receive from the Fund
a fee based on the average daily net assets of the Fund, in addition to a base
monthly fee for accounting and recordkeeping services. The Administrator also
performs certain accounting and pricing services for the Fund as pricing agent,
including the daily calculation of the Fund's net asset value, for which it
receives certain charges and is reimbursed for out-of-pocket expenses.

The Administrator was formed as a North Carolina corporation in 1988. Together
with its affiliates and predecessors, the Administrator has been operating as a
financial services firm since 1985. Frank P. Meadows III is the firm's Managing
Director and controlling shareholder.

The Transfer Agent. North Carolina Shareholder Services, LLC (the "Transfer
Agent") serves as the Fund's transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent, subject to the authority of the Board of
Trustees, provides transfer agency services pursuant to an agreement with the
Administrator, which has been approved by the Trust. The Transfer Agent
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and performs other
shareholder servicing functions. The Fund is charged a recordkeeping fee based
on the number of shareholders in the Fund and an annual fee for shareholder
administration services.

The Custodian. First Union National Bank of North Carolina, Two First Union
Center, Charlotte, North Carolina 28288-1151, serves as Custodian of the Fund's
assets. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties.

OTHER INFORMATION

Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990, under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Fund, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Investor Shares" and "Institutional Shares") representing equal pro rata
interests in the Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares are sold
with a sales charge and bear potential distribution expenses and service fees.
Institutional Shares are sold without a sales charge and bear no shareholder
servicing or distribution fees. As a result of different charges, fees, and
expenses between the Classes, the total return on the Fund's Investor Shares
will generally be lower than the total return on the Institutional Shares.
Standardized total return quotations will be computed separately for each Class
of Shares of the Fund.

On July 8, 1998, Bryant Supply Company, Inc. (605 East Franklin Boulevard,
Gastonia, North Carolina) and its employee benefit plans owned 51.16% of the
outstanding shares of the Fund and are therefore deemed to control the Fund.

Under Massachusetts law, shareholders of a business trust may, under certain
circumstances, be held personally liable as partners for the obligations of the
trust. The Declaration of Trust, therefore, contains provisions which are
intended to mitigate such liability. See "Description of the Trust" in the
Statement of Additional Information for further information about the Trust and
its shares.

Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1-, 5- and
10-year periods that would equate an initial amount invested at the beginning of
a stated period to the ending redeemable value of the investment. The
calculation assumes the reinvestment of all dividends and distributions,
includes all recurring fees that are charged to all shareholder accounts and
deducts all nonrecurring charges at the end of each period. The calculation
further assumes the maximum sales load is deducted from the initial payment. If
the Fund has been operating less than 1, 5 or 10 years, the time period during
which the Fund has been operating is substituted.

<PAGE>

No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Fund or the Advisor. This
Prospectus does not constitute an offering in any state in which an offering may
not lawfully be made.

CAPITAL VALUE FUND
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

INVESTMENT ADVISOR
Capital Investment Counsel, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151

INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

- -----------------------------------------------------
CAPITAL VALUE FUND
INVESTOR CLASS
- -----------------------------------------------------

PROSPECTUS

August 1, 1998

<PAGE>

PROSPECTUS Cusip Number 66976M508
NASDAQ Symbol IVFTX

INVESTEK FIXED INCOME TRUST
INSTITUTIONAL CLASS

The investment objective of the Investek Fixed Income Trust (the "Fund") is to
preserve capital and maximize total returns through active management of
investment grade fixed income securities. The Fund is designed primarily for
institutional investors and high net worth individuals who wish to take
advantage of the professional investment management expertise of Investek
Capital Management, Inc. (the "Advisor"), which serves as investment advisor to
the Fund. While there is no assurance that the Fund will achieve its investment
objective, it endeavors to do so by following the investment policies described
in this Prospectus. The Fund has a net asset value that will fluctuate in
accordance with the value of its portfolio securities. This Prospectus relates
to shares ("Institutional Shares") representing interests in the Fund. The
Institutional Shares are offered to institutions and certain other investors
described herein without any sales or redemption charges or shareholder
servicing or distribution fees. See "Prospectus Summary - Offering Price."

INVESTMENT ADVISOR

logo placed here

317 East Capitol Street, Post Office Box 2840
Jackson, Mississippi 39207
(601) 949-3105

The Fund is a diversified series of The Nottingham Investment Trust II (the
"Trust"), a registered open-end management investment company. This Prospectus
sets forth concisely the information about the Fund that a prospective investor
should know before investing. Investors should read this Prospectus and retain
it for future reference. Additional information about the Fund has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge. You may request the Statement of Additional
Information, which is incorporated in this Prospectus by reference, by writing
the Fund at Post Office Box 4365, Rocky Mount, North Carolina 27803-0365, or by
calling 1-800-525-3863. The SEC also maintains an Internet Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>

TABLE OF CONTENTS

PROSPECTUS SUMMARY.......................................................... 2

FEE TABLE................................................................... 3

FINANCIAL HIGHLIGHTS........................................................ 4

INVESTMENT OBJECTIVE AND POLICIES........................................... 5

RISK FACTORS................................................................. 8

INVESTMENT LIMITATIONS....................................................... 9

FEDERAL INCOME TAXES........................................................ 10

DIVIDENDS AND DISTRIBUTIONS................................................. 11

HOW SHARES ARE VALUED....................................................... 11

HOW SHARES MAY BE PURCHASED................................................. 12

HOW SHARES MAY BE REDEEMED.................................................. 14

MANAGEMENT OF THE FUND...................................................... 16

OTHER INFORMATION........................................................... 18

<PAGE>
PROSPECTUS SUMMARY

The Fund. The Investek Fixed Income Trust (the "Fund") is a diversified series
of The Nottingham Investment Trust II (the "Trust"), a registered open-end
management investment company organized as a Massachusetts business trust. This
Prospectus relates to Institutional Shares of the Fund. See "Other Information -
Description of Shares."

Offering Price. The Institutional Shares are offered to clients of the Advisor,
and any other institutional investor, at net asset value without a sales charge
and without any shareholder servicing or distribution fees. The minimum initial
investment is $50,000. The minimum subsequent investment is $1,000. See "How
Shares May be Purchased."

Investment Objective and Policies. The investment objective of the Fund is to
preserve capital and maximize total returns through active management of
investment grade fixed income securities. The Advisor does not engage in "market
timing." To the extent practicable, the Fund generally will remain fully
invested in fixed income securities. The Fund intends to invest generally in
investment grade bonds to maintain a portfolio duration between 2 and 7 years,
which is currently approximately equivalent to a 3- to 12-year effective
maturity. Due to its duration and high quality standards, the Fund expects its
portfolio to exhibit less volatility than would longer duration and lower
quality portfolios. In addition, the Fund intends to concentrate its investments
in "high quality" investment grade bonds by maintaining at least 90% of the
portfolio in bonds rated A or better as described in "Investment Limitations -
Investment Grade Securities" below (or if not rated, of equivalent quality as
determined by the Advisor). See "Investment Objective and Policies." The Fund is
not intended to be a complete investment program, and there can be no assurance
that the Fund will achieve its investment objective.

Special Risk Considerations. While the Fund will invest primarily in "high
quality" investment grade bonds, some of the Fund's investments may include
mortgage and asset-backed securities, collateralized mortgage obligations, other
mortgage derivative products, foreign securities, and securities purchased
subject to a repurchase agreement or on a "when-issued" basis, which involve
certain risks. The Fund may borrow only under certain limited conditions
(including to meet redemption requests) and not to purchase securities. It is
not the intent of the Fund to borrow except for temporary cash requirements.
Borrowing, if done, would tend to exaggerate the effects of market and interest
rate fluctuations on the Fund's net asset value until repaid. See "Risk
Factors."

Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Investek Capital Management,
Inc. of Jackson, Mississippi (the "Advisor"), manages the Fund's investments.
The Advisor currently manages over $900 million in assets. For its advisory
services, the Advisor receives a monthly fee based on the Fund's daily net
assets at the annual rate of 0.45%. See "Management of the Fund - The Advisor."

Dividends. Income dividends, if any, are generally paid monthly; capital gains,
if any, are generally distributed at least once each year. Dividends and capital
gains distributions are automatically reinvested in additional shares of the
same Class at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor. Capital Investment Group, Inc. (the "Distributor") serves as
distributor of shares of the Fund. See "How Shares May Be Purchased -
Distributor."

<PAGE>

FEE TABLE

The following table sets forth certain information in connection with the
expenses of the Institutional Shares of the Fund for the current fiscal year.
The information is intended to assist the investor in understanding the various
costs and expenses borne by the Institutional Shares of the Fund, and therefore
indirectly by its investors, the payment of which will reduce an investor's
return on an annual basis.

Shareholder Transaction Expenses for Institutional Shares

Maximum sales load imposed on purchases
(as a percentage of offering price)...................................None
Maximum sales load imposed on reinvested dividends.......................None
Maximum deferred sales load..............................................None
Redemption fees*.........................................................None
Exchange fee.............................................................None

* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $10.00 per transaction
for wiring redemption proceeds.

Annual Fund Operating Expenses for Institutional Shares - After Fee Waivers1
(as a percentage of average net assets)

Investment advisory fees..................................................0.25%1
12b-1 fees.................................................................None
Other expenses............................................................0.65%1

Total operating expenses...............................................0.90%1

EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Fund, whether or not you redeem at the end of the
period, assuming a 5% annual return:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$9 $29 $50 $111

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

1 The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Institutional Shares of the Fund for the fiscal
year ended March 31, 1998, which, after fee waivers, were 0.90% of average
daily net assets of the Institutional Shares. Absent such waivers, the
percentages would have been 0.45% for "Investment advisory fees" and 1.10%
for "Total operating expenses" for the Institutional Shares for the fiscal
year ended March 31, 1998. The Advisor has voluntarily agreed to a reduction
in the fees payable to it and to reimburse expenses of the Fund, if
necessary, in an amount that limits "Total operating expenses" (exclusive of
interest, taxes, brokerage fees and commissions, sales charges, and
extraordinary expenses) to not more than 0.90% of the Institutional Shares'
average daily net assets. There can be no assurance that the Advisor's
voluntary fee waivers and expense reimbursements in the past will continue
in the future.

See "Management of the Fund" below for more information about the fees and costs
of operating the Fund. The assumed 5% annual return in the example is required
by the Securities and Exchange Commission. The hypothetical rate of return is
not intended to be representative of past or future performance of the Fund; the
actual rate of return for the Fund may be greater or less than 5%.

FINANCIAL HIGHLIGHTS

The shares of the Fund are divided into multiple Classes representing interests
in the Fund. This Prospectus relates to Institutional Shares of the Fund. See
"Other Information -Description of Shares." The financial data included in the
table below for the fiscal years ended March 31, 1998 and 1997, has been derived
from financial statements audited by Deloitte & Touche LLP, independent
auditors, whose report covering such periods is included in the Statement of
Additional Information. The financial data for the prior fiscal years was
audited by other independent auditors. The information in the table below should
be read in conjunction with the Fund's latest audited financial statements and
notes thereto, which are also included in the Statement of Additional
Information, a copy of which may be obtained at no charge by calling the Fund.
Further information about the performance of the Fund is contained in the Annual
Report of the Fund, a copy of which may be obtained at no charge by calling the
Fund.

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Institutional Class
(For a Share Outstanding Throughout each Period Represented)

Years ended March 31,

1998 1997 1996 1995 1994 1993 1992(a)
---- ---- ---- ---- ---- ---- -----

Net Asset Value, Beginning of Period $9.98 $10.11 $9.74 $9.93 $10.48 $9.92 $10.00

Income (loss) from investment operations
Net investment income 0.64 0.65 0.66 0.63 0.61 0.65 0.20
Net realized and unrealized
gain (loss) on investments 0.33 (0.13) 0.37 (0.19) (0.43) 0.56 (0.08)
---- ---- ---- ---- ---- ---- ----
Total from investment operations 0.97 0.52 1.03 0.44 0.18 1.21 0.12
---- ---- ---- ---- ---- ---- ----

Less distributions from
Net investment income (0.64) (0.65) (0.66) (0.63) (0.60) (0.64) (0.20)
Net realized gain from
investment transactions 0.00 0.00 0.00 0.00 (0.13) (0.01) 0.00
---- ---- ---- ---- ----- ----- ----
Total distributions (0.64) (0.65) (0.66) (0.63) (0.73) (0.65) (0.20)
---- ---- ---- ---- ----- ----- ----

Net Asset Value, End of Period $10.31 $9.98 $10.11 $9.74 $9.93 $10.48 $9.92
===== ===== ====== ===== ===== ====== =====

Total return 9.91% 5.38% 10.70% 4.73% 1.43% 12.49% 1.22%
===== ===== ====== ===== ===== ====== =====

Ratios/supplemental data
Net assets, end of period (000's) $13,899 $11,227 $12,261 $14,983 $17,642 $5,268 $2,037
======= ======= ======= ======= ======= ====== ======

Ratio of expenses to average net assets
Before expense reimbursements
and waived fees 1.10% 1.20% 1.08% 1.08% 1.41% 1.69% 1.71%(b)
After expense reimbursements
and waived fees 0.90% 0.90% 0.87% 0.77% 0.77% 0.95% 0.95%(b)

Ratio of net investment income
to average net assets
Before expense reimbursements
and waived fees 6.01% 6.07% 6.20% 6.15% 5.45% 5.50% 5.41%(b)
After expense reimbursements
and waived fees 6.21% 6.37% 6.41% 6.45% 5.82% 6.24% 6.17%(b)

Portfolio turnover rate 38.46% 32.94% 16.57% 19.64% 34.42% 59.78% 0.00%

</TABLE>

(a) For the period from November 15, 1991 (commencement of operations) to March
31, 1992.

(b) Annualized.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of the Fund is to preserve
capital and maximize total returns through a portfolio of investment grade fixed
income securities. While there is no guarantee that the Fund will meet its
investment objective, it seeks to achieve its objective through the investment
policies and techniques described in this Prospectus. The Fund's investment
objective and fundamental investment limitations described herein may not be
altered without the prior approval of a majority of the Fund's shareholders.

Corporations and individual investors may invest in the Fund, although
investment decisions of the Fund will not be influenced by any federal tax
considerations, other than those considerations that apply to the Fund itself.

Investment Policies. The Advisor's philosophy in managing fixed income
portfolios focuses on assigning an intrinsic value to various securities/sectors
of the fixed income markets and compares these intrinsic values to actual market
yield levels for each security/sector. A difference between the Advisor's view
of intrinsic value and the market's assessment of this value, in terms of market
yields, is exploited. The Fund endeavors to invest in securities and market
sectors that the Advisor believes are undervalued due to market inefficiencies.
The selection of such undervalued securities by the Advisor is based on, among
other things, historical yield relationships, credit risk, market volatility,
absolute levels of interest rates, as well as supply and demand factors.

The Fund is designed primarily to allow investors to take advantage of the
professional investment management expertise of the Advisor. Given this purpose,
the Fund will be managed in a manner that closely resembles that of other
portfolios managed by the Advisor. The Advisor uses a wide variety of products
and techniques in managing fixed income portfolios. As the fixed income markets
evolve, the Advisor may invest in types of securities other than those
specifically identified in this Prospectus if the Advisor views these
investments to be consistent with the overall investment objective and policies
of the Fund. Some of the securities and techniques the Advisor currently expects
to utilize are described below. The Fund will invest in a broad range of
investment grade bonds and other fixed income securities in order to achieve its
investment objective.

Duration. Duration is an important concept in the Advisor's fixed income
management philosophy. `Duration' and `maturity' are different concepts and
should not be substituted for one another for purposes of understanding the
investment philosophy and limitations of the Fund. The Advisor believes that for
most fixed income securities `duration' provides a better measure of interest
rate sensitivity than maturity. Whereas maturity takes into account only the
final principal payments to determine the risk of a particular fixed income
security, duration weights all potential cash flows - principal, interest and
reinvestment income - on an expected present value basis, to determine the
`effective life' of the security.

For some securities the standard duration calculation does not accurately
reflect interest rate sensitivity. For example, mortgage pass-through
securities, collateralized mortgage obligations and asset-backed securities
require estimates of principal prepayments which are critical in determining
interest rate sensitivity. Floating rate securities, because of the interest
rate adjustment feature, are not appropriate for the standard duration
calculation. In these and other similar situations the Advisor will use more
sophisticated techniques to determine interest rate sensitivity of securities in
the Fund.

Corporate Bonds. The Fund's investments in corporate debt securities will be
based on credit analysis and value determination by the Advisor. The Advisor's
selection of bonds or industries within the corporate bond sector is determined
by, among other factors, historical yield relationships between bonds or
industries, the current and anticipated credit of the borrower, and call
features as well as supply and demand factors. All corporate securities will be
of investment grade quality as determined by Moody's Investors Service, Inc.
("Moodys"), Standard & Poor's Ratings Group ("S&P"), Fitch Investors Service,
Inc. ("Fitch"), or Duff & Phelps ("D&P"), or if no rating exists, of equivalent
quality in the determination of the Advisor. In addition, the Fund intends to
maintain at least 90% of its assets in bonds rated A or better (or if not rated,
of equivalent quality as determined by the Advisor). This limitation is
described in greater detail in "Investment Limitations Investment Grade
Securities." The Advisor will monitor continuously the ratings of securities
held by the Fund and the creditworthiness of their issuers. For a more complete
description of the various bond ratings for Moody's, S&P, Fitch and D&P, see
Appendix A to the Statement of Additional Information.

Mortgage Pass-Through Certificates. Obligations of GNMA, FNMA and FHLMC include
direct pass-through certificates representing undivided ownership interests in
pools of mortgages. Such certificates are guaranteed as to payment of principal
and interest (but not as to price and yield) by the issuer. For securities
issued by GNMA, the payment of principal and interest is backed by the full
faith and credit of the U.S. Government. Mortgage pass-through certificates
issued by FNMA or FHLMC are guaranteed as to payment of principal and interest
by the credit of the issuing U.S. Government agency. Securities issued by other
non-governmental entities (such as commercial banks or mortgage bankers) may
offer credit enhancement such as guarantees, insurance, or letters of credit.
Mortgage pass-through certificates are subject to more rapid prepayment than
their stated maturity date would indicate; their rate of prepayment tends to
accelerate during periods of declining interest rates or increased property
transfers and, as a result, the proceeds from such prepayments may be reinvested
in instruments which have lower yields.

Collateralized Mortgage Obligations. The Fund intends to invest in
collateralized mortgage obligations ("CMO's"), which are generally backed by
mortgage pass-through securities or whole mortgage loans. CMO's are usually
structured into classes of varying maturities and principal payment priorities.
The prepayment sensitivity of each class may or may not resemble that of the
CMO's collateral depending on the maturity and structure of that class. CMO's
pay interest and principal (including prepayments) monthly, quarterly or
semi-annually. Most CMO's are AAA rated, reflecting the credit quality of the
underlying collateral; however, some classes carry greater price risk than that
of their underlying collateral. The Advisor will invest in CMO classes only if
their characteristics and interest rate sensitivity fit the investment objective
and policies of the Fund.

Other Mortgage Related Securities. In addition to the mortgage pass-through
securities and the CMO's mentioned above, the Fund may also invest in other
mortgage derivative products if the Advisor views them to be consistent with the
overall policies and objective of the Fund.

The Advisor expects that governmental, government-related and private entities
may create other mortgage-related securities offering mortgage pass-through and
mortgage collateralized instruments in addition to those described herein. As
new types of mortgage-related securities are developed and offered to the
investment community, the Advisor will, consistent with the Fund's investment
objective, policies and quality standards, consider making investments in such
new types of mortgage-related securities.

Asset-Backed Securities. In addition to CMO's, other asset-backed securities
have been offered to investors backed by loans such as automobile loans, credit
card receivables, marine loans, recreational vehicle loans and manufactured
housing loans. Typically asset-backed securities represent undivided fractional
interests in a trust whose assets consist of a pool of loans and security
interests in the collateral securing the loans. Payments of principal and
interest on asset-backed securities are passed through monthly to certificate
holders and are usually guaranteed up to a certain amount and time period by a
letter of credit issued by a financial institution. In some cases asset-backed
securities are divided into senior and subordinated classes so as to enhance the
quality of the senior class. Underlying loans are subject to prepayment, which
may reduce the overall return to certificate holders.

If the letter of credit is exhausted and the full amounts due on underlying
loans are not received because of unanticipated costs, depreciation, damage or
loss of the collateral securing the contracts, or other factors, certificate
holders may experience delays in payment or losses on asset-backed securities.
The Fund may invest in other asset-backed securities that may be developed in
the future. The Fund will invest only in asset-backed securities rated A or
better by Moody's, S&P, Fitch, or D&P, or if not rated, of equivalent quality as
determined by the Advisor.

Floating Rate Securities. The Fund may invest in variable or floating rate
securities that adjust the interest rate paid at periodic intervals based on an
interest rate index. Typically floating rate securities use as their benchmark
an index such as the 1-, 3- or 6-month LIBOR, 3-, 6- or 12-month Treasury bills,
or the Federal Funds rate. Resets of the rates can occur at predetermined
intervals or whenever changes in the benchmark index occur.

Money Market Instruments. Money market instruments may be purchased for
temporary defensive purposes, to accumulate cash for anticipated purchases of
portfolio securities and to provide for shareholder redemptions and operating
expenses of the Fund. Money market instruments mature in thirteen months or less
from the date of purchase and may include U.S. Government Securities, corporate
debt securities (including those subject to repurchase agreements), bankers
acceptances and certificates of deposit of domestic branches of U.S. banks, and
commercial paper (including variable amount demand master notes) rated in one of
the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion. The Advisor may, when it believes that unusually volatile or
unstable economic and market conditions exist, depart from the Fund's investment
approach and assume temporarily a defensive portfolio posture, increasing the
Fund's percentage investment in money market instruments, even to the extent
that 100% of the Fund's assets may be so invested.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.

Because of the inherent risk of foreign securities over domestic issues, the
Fund will limit foreign investments to those traded domestically as American
Depository Receipts ("ADRs"). ADRs are receipts issued by a U.S. bank or trust
company evidencing ownership of securities of a foreign issuer. ADRs may be
listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency. Although the Fund is not
limited in the amount of ADRs it may acquire, it is not presently anticipated
that within the next 12 months the Fund will have in excess of 5% of its assets
in ADRs.

Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent the Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.

Real Estate Securities. The Fund will not invest in real estate (including real
estate mortgage loans or real estate limited partnerships), but may invest in
certain mortgage-backed securities described above, securities composed of
mortgages against real estate, and readily marketable securities secured by real
estate or interests therein or issued by companies that invest in real estate or
interests therein.

RISK FACTORS

Investment Policies and Techniques. Reference should be made to "Investment
Objective and Policies" above for a description of special risks presented by
the investment policies of the Fund and the specific securities and investment
techniques that may be employed by the Fund, including the risks associated with
mortgage and asset-backed securities, collateralized mortgage obligations, other
mortgage derivative products, repurchase agreements, and foreign securities.
Some of these investment products are commonly known as types of "derivative"
securities, which present certain risks. A more complete discussion of certain
of these securities and investment techniques and their associated risks is
contained in the Statement of Additional Information. The Advisor intends to
control risks, however, by investing at least 90% of the Fund's portfolio in
"high quality" investment grade bonds as described in "Investment Limitations -
Investment Grade Securities" below.

Fluctuations in Value. Because there is risk in any investment, there can be no
assurance that the Fund will meet its investment objective. The fixed income
securities in which the Fund will invest are subject to fluctuation in value.
Such fluctuations may be based on movements in interest rates or from changes in
the creditworthiness of the issuers, which may result from adverse business and
economic developments or proposed corporate transactions, such as a leveraged
buy-out or recapitalization of the issuer. The value of the Fund's fixed income
securities will generally vary inversely with the direction of prevailing
interest rate movements. Should interest rates increase or the creditworthiness
of an issuer deteriorate, the value of the Fund's fixed income securities would
decrease in value, which would have a depressing influence on the Fund's net
asset value. Although certain of the U.S. Government Securities in which the
Fund may invest are guaranteed as to timely payment of principal and interest,
the market value of the securities, upon which the Fund's net asset value is
based, will fluctuate due to the interest rate risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government. Moreover, principal on the mortgages
underlying certain of the Fund's investments may be prepaid in advance of
maturity, which prepayments tend to increase when interest rates decline,
presenting the Fund with more principal to invest at lower rates.

Portfolio Turnover. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 75% in any one year. Portfolio turnover generally involves some expense
to the Fund, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover may also have capital gains tax consequences. See
"portfolio turnover rate" in the Financial Highlights section above for the
Fund's portfolio turnover rate for prior fiscal years.

Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 33% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of the Fund's assets declines, the Fund could
be forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Fund will borrow only from a bank. The Fund will not make any
investments if the borrowing exceeds 5% of its assets until such time as
repayment has been made to bring the total borrowing below 5% of its assets.

Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

Investment Grade Securities. The Fund intends to limit its investment purchases
to high quality investment grade securities. The Fund defines investment grade
securities as obligations which, in the Advisor's opinion, have the
characteristics described by S&P, Fitch, Moody's, D&P or other recognized rating
services in their four highest rating grades. For S&P, Fitch and D&P those
ratings are AAA, AA, A and BBB. For Moody's those ratings are Aaa, Aa, A and
Baa. For a description of each rating grade, see Appendix A to the Statement of
Additional Information. The Fund requires that 90% of its assets must be rated
at least A by Moody's, S&P, Fitch or D&P, or if not rated, of equivalent quality
as determined by the Advisor. There may also be instances in which the Advisor
purchases bonds that are rated A by one rating agency and not rated or rated
lower than A by other rating agencies. The final determination of quality and
value will remain with the Advisor. Bonds rated BBB by D&P, S&P, or Fitch or Baa
by Moody's, although considered investment grade, have speculative
characteristics and may be subject to greater fluctuations in value that
higher-rated bonds. The Fund intends to purchase bonds rated BBB by D&P, S&P or
Fitch, or Baa by Moody's, only if in the Advisor's opinion these bonds have some
potential to improve in value or credit rating, and such purchase would be
within the bounds of the 90% limitation previously stated.

Other Investment Limitations. To limit the Fund's exposure to risk, the Fund has
adopted certain fundamental investment limitations. Some of these restrictions
are that the Fund will not: (1) issue senior securities, borrow money or pledge
its assets, except that it may borrow from banks as a temporary measure (a) for
extraordinary or emergency purposes, in amounts not exceeding 5% of the Fund's
total assets, or (b) in order to meet redemption requests which might otherwise
require untimely disposition of portfolio securities, in amounts not exceeding
33% of the Fund's total assets; and the Fund may pledge its assets to secure all
such borrowings; (2) make loans of money or securities, except that the Fund may
invest in repurchase agreements (but repurchase agreements having a maturity of
longer than seven days are limited to 10% of the Fund's net assets); (3) invest
in securities of issuers which have a record of less than three years'
continuous operation (including predecessors and, in the case of bonds,
guarantors), if more than 5% of its total assets would be invested in such
securities; (4) purchase foreign securities, except that the Fund may purchase
foreign securities sold as American Depository Receipts without limit; (5)
write, purchase or sell puts, calls, warrants or combinations thereof, or
purchase or sell commodities, commodities contracts, futures contracts or
related options, or invest in oil, gas or mineral leases or exploration
programs, or real estate (except the Fund may invest in certain mortgage-backed
securities described above, securities composed of mortgages against real
estate, and securities that themselves have investment in real estate or
interests in real estate); (6) invest more than 5% of its assets in the
securities of any one issuer or hold more than 10% of the voting stock of any
issuer; and (7) invest in securities other than securities which are readily
marketable. See "Investment Limitations" in the Fund's Statement of Additional
Information for a complete list of investment limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will generally not
constitute a violation of such limitation. If the limitation on illiquid
securities is exceeded, however, through a change in values, net assets, or
other circumstances, the Fund would take appropriate steps to protect liquidity
by changing its portfolio.

FEDERAL INCOME TAXES

DIVIDENDS AND DISTRIBUTIONS

The Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. The Fund will generally pay income dividends,
if any, monthly, and will generally distribute net realized capital gains, if
any, at least annually.

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Fund at the net asset value per share next determined. Shareholders
wishing to receive their dividends or capital gains in cash may make their
request in writing to the Fund at 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. That request must be received by
the Fund prior to the record date to be effective as to the next dividend. If
cash payment is requested, checks will be mailed within five business days after
the last day of each month or the Fund's fiscal year end, as applicable. Each
shareholder of the Fund will receive a monthly summary of his or her account,
including information as to reinvested dividends from the Fund. Tax consequences
to shareholders of dividends and distributions are the same if received in cash
or in additional shares of the Fund.

HOW SHARES ARE VALUED

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the last quoted bid price. Unlisted
securities traded over-the-counter for which market quotations are readily
available are valued at the latest quoted sales price, if available, at the time
of valuation, otherwise, at the latest quoted bid price. Temporary cash
investments with maturities of 60 days or less will be valued at amortized cost,
which approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.

Fixed income securities will ordinarily be traded on the over-the-counter
market. When market quotations are not readily available, fixed income
securities may be valued based on prices provided by a pricing service. The
prices provided by the pricing service are generally determined with
consideration given to institutional bid and last sale prices and take into
account securities prices, yields, maturities, call features, ratings,
institutional trading in similar groups of securities, and developments related
to specific securities. Such fixed income securities may also be priced based
upon a matrix system of pricing similar bonds and other fixed income securities.
Such matrix system may be based upon the considerations described above used by
other pricing services, including particularly the spread between yields on the
securities being valued and yields on U.S. Treasury securities with similar
remaining years to maturity, and information obtained by the pricing agent from
the Advisor and other pricing sources deemed relevant by the pricing agent.

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-3863, or by writing to the Fund at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Fund. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
the Fund's net asset value next determined after your order is received by the
Fund in proper form as indicated herein.

The minimum initial investment is $50,000. The minimum subsequent investment is
$1,000. The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the stated minimum initial investment. You may invest in the
following ways:

Purchases by Mail. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to the Investek Fixed Income Trust, Institutional Shares,
107 North Washington Street, Post Office Box 4365, Rocky Mount, North Carolina
27803-0365. Subsequent investments in an existing account in the Fund may be
made at any time by sending a check payable to the Fund, to the address stated
above. Please enclose the stub of your account statement and include the amount
of the investment, the name of the account for which the investment is to be
made and the account number. Please remember to add a reference to
"Institutional Shares" to your check to ensure proper credit to your account.

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the Investek Fixed Income Trust
Institutional Shares
Acct #2000000862107
For further credit to (shareholder's name and SS# or EIN#)

Distributor. Capital Investment Group, Inc., Post Office Box 32249, Raleigh,
North Carolina 27622 (the "Distributor"), is the national distributor for the
Fund under a Distribution Agreement with the Trust. The Distributor may sell
Fund shares to or through qualified securities dealers or others. Richard K.
Bryant, a Trustee of the Trust and an officer of another series of the Trust,
and Elmer O. Edgerton, Jr., an officer of another series of the Trust, control
the Distributor. Messrs. Bryant and Edgerton are not officers of the Fund.

The Distributor, at its expense, may provide compensation to dealers in
connection with sales of shares of the Fund. 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 Fund, and/or other dealer-sponsored special events. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Fund or its shareholders.

Exchange Feature. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by Advisor. An
exchange involves the simultaneous redemption of shares of one series and
purchase of shares of another series at the respective closing net asset value
next determined after a request for redemption has been received plus applicable
sales charge, and is a taxable transaction. Each series of the Trust will have a
different investment objective, which may be of interest to investors in each
series. Shares of the Fund may be exchanged for shares of any other series of
the Trust affiliated with the Advisor at the net asset value plus the percentage
difference between that series' sales charge and any sales charge previously
paid in connection with the shares being exchanged. For example, if a 2% sales
charge was paid on shares that are exchanged into a series with a 3% sales
charge, there would be an additional sales charge of 1% on the exchange.
Exchanges may only be made by investors in states where shares of the other
series are qualified for sale. An investor may direct the Fund to exchange his
shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
series to which the exchange will take place and a statement as to whether the
exchange is a full or partial redemption of existing shares. Notwithstanding the
foregoing, exchanges of shares may only be within the same class or type of
class of shares involved. For example, Investor Shares may not be exchanged for
Institutional Shares.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

Redemptions from retirement plans may be subject to tax withholding. If you are
uncertain of the requirements for redemption, please contact the Fund, at
1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to the Investek Fixed
Income Trust, Institutional Shares, 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365. Your request for redemption must
include:

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Shareholder name, account number and designation of Class (Institutional); 2)
Number of shares or dollar amount to be redeemed; 3) Instructions for
transmittal of redemption funds to the shareholder; and 4) Shareholder signature
as it appears on the application then on file with the Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days in which your bank or the Fund's Custodian is not open for business. You
can change your redemption instructions anytime you wish by filing a letter
including your new redemption instructions with the Fund. (See "Signature
Guarantees" below.) The Fund reserves the right to restrict or cancel telephone
and bank wire redemption privileges for shareholders, without notice, if the
Fund believes it to be in the best interest of the shareholders to do so. During
drastic economic and market changes, telephone redemption privileges may be
difficult to implement.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

Systematic Withdrawal Plan. A shareholder who owns shares of the Fund valued at
$30,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Fund for an application form. See the Statement of Additional
Information for further details.

MANAGEMENT OF THE FUND

The Advisor. Subject to the authority of the Board of Trustees, Investek Capital
Management, Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Mississippi corporation in 1989, is controlled by
Michael T. McRee. The Advisor currently serves as investment advisor to over
$900 million in assets. The Advisor has been rendering investment counsel,
utilizing investment strategies substantially similar to that of the Fund, to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since its formation.
The Advisor's address is 317 East Capitol Street, Post Office Box 2840, Jackson,
Mississippi 39207.

Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 0.45% of the average daily net asset
value of the Fund. The Advisor may periodically voluntarily waive or reduce its
advisory fee to increase the net income of the Fund. The Advisor voluntarily
waived a portion of its advisory fee for the fiscal year ended March 31, 1998.
Of the $55,540 the Advisor was entitled to receive, the Advisor voluntarily
waived $25,063 of its investment advisory fees. The Advisor received $30,477 of
such advisory fee for the year.

The Advisor supervises and implements the investment activities of the Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in the Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Fund may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies - Investment Transactions" in the Statement
of Additional Information.

Michael T. McRee, a principal and controlling shareholder of the Advisor and
executive officer of the Fund, has been responsible for day-to-day management of
the Fund's portfolio since its inception in 1991. He has been with the Advisor
since its inception. In 1998, Douglas S. Folk, CFA, also became a portfolio
manager of the Fund. He has been with the Advisor since 1996.

The Administrator was incorporated as a North Carolina corporation in 1988.
Together with its affiliates and predecessors, the Administrator has been
operating as a financial services firm since 1985. Frank P. Meadows, III is the
firm's Managing Director and controlling shareholder.

The Custodian. Trustmark National Bank (the "Custodian"), Post Office Box 291,
Jackson, Mississippi 39205-0291, serves as Custodian of the Fund's assets. The
Custodian acts as the depository for the Fund, safekeeps its portfolio
securities, collects all income and other payments with respect to portfolio
securities, disburses monies at the Fund's request and maintains records in
connection with its duties.

OTHER INFORMATION

When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of at least 10% of the outstanding shares of the Trust.
The term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian or
by votes cast in person or by proxy at a meeting called for that purpose.

Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent accountants. In addition, the Fund will
send to each shareholder having an account directly with the Fund a statement
not less than quarterly showing transactions in the account, the total number of
shares owned and any dividends or distributions paid. Inquiries regarding the
Fund may be directed in writing to 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365 or by calling 1-800-525-3863.

Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return and yield for each Class of Shares. The "average
annual total return" refers to the average annual compounded rates of return
over 1-, 5-, and 10-year periods that would equate an initial amount invested at
the beginning of a stated period to the ending redeemable value of the
investment. The calculation assumes the reinvestment of all dividends and
distributions, includes all recurring fees that are charged to all shareholder
accounts and deducts all nonrecurring charges at the end of each period. The
calculation further assumes the maximum sales load is deducted from the initial
payment. If the Fund has been operating less than 1, 5 or 10 years, the time
period during which the Fund has been operating is substituted.

The "yield" of the Fund is computed by dividing the net investment income per
share earned during the most recent practicable period stated in the
advertisement by the maximum offering price per share on the last day of the
period (using the average number of shares entitled to receive dividends). For
the purpose of determining net investment income, the calculation includes among
expenses of the Fund all recurring fees that are charged to all shareholder
accounts and any nonrecurring charges for the period stated.

The total return and yield of the Fund could be increased to the extent the
Advisor may waive all or a portion of its fees or may reimburse all or a portion
of the Fund's expenses. Total return and yield figures are based on the
historical performance of the Fund, show the performance of a hypothetical
investment, and are not intended to indicate future performance. The Fund's
quotations may from time to time be used in advertisements, sales literature,
shareholder reports, or other communications. For further information, see
"Additional Information on Performance" in the Statement of Additional
Information.

<PAGE>

INVESTEK FIXED INCOME TRUST

INSTITUTIONAL CLASS

PROSPECTUS

August 1, 1998

INVESTEK FIXED INCOME TRUST
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

INVESTMENT ADVISOR
Investek Capital Management, Inc.
317 East Capitol Street
Post Office Box 2840
Jackson, Mississippi 39207

DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
Trustmark National Bank
Post Office Box 291
Jackson, Mississippi 39205-0291

INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

PROSPECTUS

August 1, 1998

<PAGE>

PROSPECTUS Cusip Number 66976M805
NASDAQ Symbol ZSAAX

ZSA ASSET ALLOCATION FUND
A No Load Fund

The investment objective of the ZSA Asset Allocation Fund (the "Fund") is to
seek total return consisting of a combination of capital appreciation, both
realized and unrealized, and current income. The Fund will seek to achieve this
objective by investing in a flexible portfolio of equity securities, real estate
equity securities, fixed income securities, and money market instruments. While
there is no assurance that the Fund will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
Prospectus. The Fund has a net asset value that will fluctuate in accordance
with the value of its portfolio securities.

INVESTMENT ADVISOR

Zaske, Sarafa & Associates, Inc.
355 South Woodward Avenue, Suite 200
Birmingham, Michigan 48009
(810) 647-5990

The Fund is a no load diversified series of The Nottingham Investment Trust II
(the "Trust"), a registered open-end management investment company. This
Prospectus sets forth concisely the information about the Fund that a
prospective investor should know before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Fund has been filed with the Securities and Exchange Commission (the "SEC") and
is available upon request and without charge. You may request the Statement of
Additional Information, which is incorporated in this Prospectus by reference,
by writing the Fund at Post Office Box 4365, Rocky Mount, North Carolina
27803-0365, or by calling 1-800-525-3863. The SEC also maintains an Internet Web
site (http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference, and other information regarding the Fund.

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

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>
TABLE OF CONTENTS

PROSPECTUS SUMMARY........................................................ 2

FEE TABLE................................................................. 3

FINANCIAL HIGHLIGHTS...................................................... 4

INVESTMENT OBJECTIVE AND POLICIES......................................... 5

RISK FACTORS.............................................................. 11

INVESTMENT LIMITATIONS.................................................... 12

FEDERAL INCOME TAXES...................................................... 13

DIVIDENDS AND DISTRIBUTIONS............................................... 13

HOW SHARES ARE VALUED..................................................... 14

HOW SHARES MAY BE PURCHASED............................................... 15

HOW SHARES MAY BE REDEEMED................................................ 17

MANAGEMENT OF THE FUND.................................................... 19

OTHER INFORMATION......................................................... 21

<PAGE>

PROSPECTUS SUMMARY

The Fund. The ZSA Asset Allocation Fund (the "Fund") is a no load diversified
series of The Nottingham Investment Trust II (the "Trust"), a registered
open-end management investment company organized as a Massachusetts business
trust. See "Other Information - Description of Shares."

Offering Price. Shares of the Fund are offered at net asset value without a
sales charge. The minimum initial investment is $10,000 ($2,000 for IRAs, Keogh
Plans, 401(k) Plans, and UTMAs). The minimum subsequent investment is $500. See
"How Shares May Be Purchased."

Investment Objective and Policies. The investment objective of the Fund is to
seek total return consisting of a combination of capital appreciation, both
realized and unrealized, and current income. To achieve the Fund's objectives,
the Fund will be governed by an investment philosophy which focuses on the
management of portfolio risk. Current income is expected to be greater than the
stock market as a whole (as measured by the S&P 500 Index). See "Investment
Objective and Policies." The Fund is not intended to be a complete investment
program, and there can be no assurance that the Fund will achieve its investment
objective.

Special Risk Considerations. While the Fund will invest primarily in common
stocks and bonds traded in U.S. securities markets, some of the Fund's
investments may include foreign securities, illiquid securities, real estate
securities, mortgage and asset-backed securities, collateralized mortgage
obligations, derivative securities for hedging purposes (and not speculation),
and securities purchased subject to a repurchase agreement or on a "when-issued"
basis, which involve certain risks. The Fund may borrow only under certain
limited conditions (including to meet redemption requests) and not to purchase
securities. It is not the intent of the Fund to borrow except for temporary cash
requirements. Borrowing, if done, would tend to exaggerate the effects of market
and interest rate fluctuations on the Fund's net asset value until repaid. See
"Risk Factors."

Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Fund's investment policies, Zaske, Sarafa & Associates,
Inc. of Birmingham, Michigan (the "Advisor"), manages the Fund's investments.
The Advisor currently manages over $350 million in assets. For its advisory
services, the Advisor receives a monthly fee based on the Fund's daily net
assets at the annual rate of 1.00%. See "Management of the Fund - The Advisor."

Dividends. Income dividends, if any, are generally paid quarterly; capital
gains, if any, are generally distributed at least once each year. Dividends and
capital gains distributions are automatically reinvested in additional shares of
the Fund at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor and Distribution Fee. Capital Investment Group, Inc. (the
"Distributor") serves as distributor of shares of the Fund. Under the Fund's
Distribution Plan, expenditures by the Fund for distribution activities and
service fees may not exceed 0.25% of the Fund's average net assets annually. See
"How Shares May Be Purchased - Distribution Plan."

<PAGE>

FEE TABLE

The following table sets forth certain information in connection with the
expenses of the Fund for the current fiscal year. The information is intended to
assist the investor in understanding the various costs and expenses borne by the
Fund, and therefore indirectly by its investors, the payment of which will
reduce an investor's return on an annual basis.

Shareholder Transaction Expenses

Maximum sales load imposed on purchases
(as a percentage of offering price)....................................None
Maximum sales load imposed on reinvested dividends........................None
Maximum deferred sales load...............................................None
Redemption fees*..........................................................None
Exchange fee..............................................................None

* The Fund in its discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Fund $10.00 per transaction
for wiring redemption proceeds.

Annual Fund Operating Expenses - After Fee Waivers1
(as a percentage of average net assets)

Investment advisory fees...............................................0.35% 1
12b-1 fees.............................................................0.25% 2
Other expenses.........................................................1.35% 1
-----
Total operating expenses..............................................1.95% 1

EXAMPLE: You would pay the following expenses on a $1,000 investment in shares
of the Fund, whether or not you redeem at the end of the period, assuming a 5%
annual return:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$20 $61 $105 $227

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

1 The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Fund for the fiscal year ended March 31, 1998,
which, after fee waivers, were 1.95% of average daily net assets of the
Fund. Absent such waivers and reimbursements, the percentages would have
been 1.00% for "Investment advisory fees" and 2.60% for "Total operating
expenses" for the fiscal year ended March 31, 1998. The Advisor has
voluntarily agreed to a reduction in the fees payable to it and to reimburse
expenses of the Fund, if necessary, in an amount that limits "Total
operating expenses" (exclusive of interest, taxes, brokerage fees and
commissions, and extraordinary expenses) to not more than 1.95% of the
Fund's average daily net assets. There can be no assurance that the
Advisor's voluntary fee waivers and expense reimbursements in the past will
continue in the future.

2 The Fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "1940 Act"), which provides
that the Fund may pay certain distribution expenses and service fees to
0.25% of the Fund's average net assets annually. See "How Shares May Be
Purchased - Distribution Plan." Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charge permitted by the
National Association of Securities Dealers.

FINANCIAL HIGHLIGHTS

The financial data included in the table below for the fiscal years ended March
31, 1998 and 1997, has been audited by Deloitte & Touche, LLP, independent
auditors, whose report covering such periods is included in the Statement of
Additional Information. The financial data for the prior fiscal years was
audited by other independent auditors. The information in the table below should
be read in conjunction with the Fund's latest audited financial statements and
notes thereto, which are also included in the Statement of Additional
Information, a copy of which may be obtained at no charge by calling the Fund.
Further information about the performance of the Fund is contained in the Annual
Report of the Fund, a copy of which may be obtained at no charge by calling the
Fund.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

(For a Share Outstanding Throughout each Period Represented)

Years Ended March 31,

1998 1997 1996 1995 1994 1993 (a)
-------- -------- -------- ------- -------- --------

Net Asset Value, Beginning of Period $13.45 $12.37 $10.76 $10.92 $10.77 $10.00
Income (loss) from investment operation
Net investment income (loss) 0.25 0.29 0.30 0.15 (0.01) 0.04
Net realized and unrealized gain (loss) on
investments 2.39 1.08 1.61 (0.17) 0.31 0.77
---- ---- ---- ------ ------ ------
Total from investment operations 2.64 1.37 1.91 (0.02) 0.30 0.81
---- ---- ---- ------ ------ ------
Less distributions from
Net investment income (0.25) (0.29) (0.30) (0.14) (0.01) (0.04)
Net realized gain from investment transactions (0.70) 0.00 0.00 0.00 (0.14) 0.00
------ ---- ----- ----- ------ ------
Total distributions (0.95) (0.29) (0.30) (0.14) (0.15) (0.04)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period $15.14 $13.45 $12.37 $10.76 $10.92 $10.77
====== ====== ======= ====== ====== ======

Total return 20.09% 11.20% 17.80% (0.62)% 2.67% 7.93%

Ratios/supplemental data
Net assets, end of period (000's) $5,582 $8,172 $9,626 $10,565 $13,555 $ 2,034
====== ====== ======= ======= ======= =======
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.60% 2.37% 2.30% 2.03% 2.75% 4.11% (b)
After expense reimbursements and waived fees 1.95% 1.95% 1.91% 1.95% 1.92% 1.72% (b)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 1.00% 1.77% 2.06% 1.18% (0.88)% (1.66)% (b)
After expense reimbursements and waived fees 1.65% 2.18% 2.45% 1.27% (0.05)% 0.73% (b)

Portfolio turnover rate 53.54% 9.57% 67.89% 130.53% 53.66% 22.26%
Average commission rate paid (c) $0.1006 $0.0969

</TABLE>

(a) For the period from August 10, 1992 (commencement of operations) to March
31, 1993.

(b) Annualized.

(c) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged. This
disclosure was not required for fiscal years of the Fund ended prior to
March 31, 1997.

INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of the Fund is to seek total
return consisting of a combination of capital appreciation, both realized and
unrealized, and current income. While there is no guarantee that the Fund will
meet its investment objective, it seeks to achieve its objective through the
investment policies and techniques described in this Prospectus. The Fund's
investment objective and fundamental investment limitations described herein may
not be altered without the prior approval of a majority of the Fund's
shareholders.

Investment Policies. The Fund attempts to combine the preservation of capital
and current income with moderate risk assumption in order to seek long term
total return. The Advisor recognizes that risk (i.e., the uncertainty of future
events), volatility (i.e., the potential for variability of asset values), and
the potential of loss in purchasing power (due to inflation) are present to some
degree with all types of investment vehicles. While high levels of risk are to
be avoided, the assumption of a moderate level of risk is warranted and
encouraged in order to provide the Fund the opportunity to achieve satisfactory
results consistent with the objectives and policies of the Fund.

In seeking to maximize total return, the Advisor will generally invest the Fund
in a portfolio of equity securities, real estate equity securities, and fixed
income securities. Investments may also be made in money market instruments
under circumstances when the Advisor believes the short term, stable nature of
money market instruments is the best means of achieving the Fund's goal of
maximum total return.

Total return consists of current income (including dividends, interest and, in
the case of discounted instruments, discount accruals) and capital appreciation
(including realized and unrealized capital gains and losses). There can be no
assurance that the investment objective of the Fund will be achieved.

The categories of securities, and the investment approaches to be used by the
Fund, are described below.

As dynamic capital markets cause fluctuating risk/return opportunities over a
three to five year period (market cycle), the following guidelines will be used
to determine the Advisor's asset allocation mix.

In making the determination of how to allocate the Fund's portfolio between
equities, fixed income securities, real estate equity securities, and money
market instruments, the Advisor uses a disciplined, statistically driven,
investment strategy designed to quantify the potential returns and inherent
risks in each asset class.

Probability theory is then utilized to determine the optimal exposure that the
Fund's portfolio should have in equities, fixed income securities, real estate
equity securities, and money market instruments. Then, incremental shifts in
those assets are implemented in order to avoid excessive risk and capture
returns. However, to avoid high volatility, asset allocation extremes are
avoided.

The Advisor believes that total return can best be enhanced over the long term
through flexibility of investment strategies. The percentage of the Fund's
assets that may be invested at a particular time in equities, fixed income
securities, real estate equity securities, and money market instruments will
depend on management's judgment regarding economic trends and market risks.

1. Equities may be represented in the portfolio up to a net exposure of
approximately 65% of the Fund's market value, with a net exposure of
generally not less than 25%. Under market conditions when the Advisor feels
additional avoidance of risk is warranted, the equity exposure may be
reduced below 25%.

2. Fixed income securities (including preferred stocks and convertible bonds)
will generally have a minimum exposure of 20% and will not generally exceed
a maximum exposure of 60% of the Fund's total assets.

3. Real estate equity securities (primarily real estate investment trusts -
"REITs") will generally have a minimum exposure of 5% and will not
generally exceed a maximum exposure of 20% of the Fund's total assets.

4. Money market instruments will generally comprise 0%-40% of the Fund's total
assets, although net exposure greater than 20% is unlikely; however, under
extreme conditions the 40% constraint could be altered.

In addition to investing in various types of securities, the Advisor also
invests in various companies and industries involving all ten major economic
sectors. When the Advisor believes the equity markets are capable of providing
capital appreciation without subjecting the Fund to an undue level of risk,
equities will be emphasized. When equities are believed by the Advisor to be
subject to high levels of market risk, fixed income instruments or money market
instruments will be emphasized. By adjusting the portfolio allocation in this
manner, the Advisor attempts to achieve the best opportunity for total return
with risk exposure less than the market as a whole (as measured by the S&P 500
Index). Such allocation policies may mean that over certain short periods of
time, the Fund may experience lower returns than if its assets were concentrated
in fewer investment categories.

Equities. The Fund may invest in common stock, preferred or convertible
preferred stock, convertible bonds and other equity equivalents, and derivatives
and products of corporations principally headquartered in the United States. The
underlying issuers must, in the opinion of the Advisor, have a strong financial
profile. The Fund may also invest in foreign securities (in the form of ADRs
only as described below) of companies that do not have significant operations in
North America. The equity portion of the Fund is expected to exhibit
approximately the same risk level of the equity market as a whole (S&P 500
Index). The Fund will invest principally in companies that have a total market
capitalization (total common shares multiplied by current market price) of $100
million or more at the time of purchase.

The Fund may also invest in equity equivalents of U.S. corporations such as
warrants, rights, and other securities including derivative securities, which
represent ownership, are exchangeable for common shares, or which reflect or may
reflect the full or partial economic benefit of equity ownership. The Fund may
invest up to 5% of its net assets in warrants or other rights to acquire equity
securities (other than those acquired in units or attached to other securities).

The Fund may invest in preferred or convertible preferred stock and convertible
bonds with a minimum rating of A by Standard & Poor's Ratings Services ("S&P"),
Moody's Investors Service, Inc. ("Moody's"), Fitch Investor's Service, Inc.
("Fitch"), or Duff & Phelps ("D&P") (or, if not rated, of equivalent quality in
the Advisor's opinion). For a complete description of bond ratings, see the
Statement of Additional Information.

Within the above guidelines, the Advisor has full responsibility for security
selection and diversification, subject to a maximum commitment of 5% of the
Fund's total assets to the equity securities of one issuer and 25% in any one
industry group.

In managing the equity portion of the Fund the Advisor tries to utilize strict
buy and sell disciplines. The Advisor attempts to select high quality securities
that have passed a rigorous set of screens. The Advisor screens a database of
large and medium capitalization stocks, which are assigned to one of ten
industry groups. The stocks are then ranked within each industry group based on
quantitative analysis and expected return rankings. The Advisor then conducts a
fundamental and technical analysis of the stocks within the top tier of each
industry group, seeking four primary characteristics, niche products and
services, an excellent management team, above average financial strength, and
relative price strength. Then the Advisor selects the best value and growth
stocks, on a fully diversified basis across all the industry groups, for
possible purchase by the Fund. In selling stocks of the Fund, the Advisor also
tries to look for objective, quantifiable reasons for selling stock. The Advisor
will generally sell a stock when the stock's industry group becomes overweighted
in the Fund, the stock significantly underperforms its industry group on a price
basis, or the stock's expected return drops due to rapid price appreciation or
changes in fundamentals. In addition, the Advisor may sell a stock in the Fund
if the Fund's allocation mix changes.

Money Market Instruments. Money market instruments may be purchased when the
Advisor believes the prospect for capital appreciation in the equity and longer
term fixed income securities' markets are not attractive, or when the Advisor's
secular view of interest rates favors short-term fixed income instruments versus
longer term fixed income instruments. Money market instruments may be purchased
for temporary defensive purposes, to accumulate cash for anticipated purchases
of portfolio securities and to provide for shareholder redemptions and operating
expenses of the Fund. Money market instruments mature in thirteen months or less
from the date of purchase and may include U.S. Government Securities, corporate
debt securities (including those subject to repurchase agreements), bankers
acceptances and certificates of deposit of domestic branches of U.S. banks, and
commercial paper (including variable amount demand master notes) rated in one of
the two highest rating categories by any of the nationally recognized
statistical rating organizations or if not rated, of equivalent quality in the
Advisor's opinion. The Advisor may, when it believes that unusually volatile or
unstable economic and market conditions exist, depart from the Fund's investment
approach and assume temporarily a defensive portfolio posture, increasing the
Fund's percentage investment in money market instruments, even to the extent
that 100% of the Fund's total assets may be so invested.

Securities issued or guaranteed as to principal and interest by the U.S.
Government may be acquired by the Fund in the form of custodial receipts that
evidence ownership of future interest payments, principal payments or both on
certain U.S. Treasury notes or bonds. Such notes and bonds are held in custody
by a bank on behalf of the owners. These custodial receipts are known by various
names, including "Treasury Receipts," "Treasury Investment Growth Receipts"
("TIGRs"), and "Certificates of Accrual on Treasury Securities" ("CATS"). The
Fund may also invest in separately traded principal and interest components of
securities issued or guaranteed by the U.S. Treasury. The principal and interest
components of selected securities are traded independently under the Separate
Trading of Registered Interest and Principal of Securities program ("STRIPS").
Under the STRIPS program, the principal and interest components are individually
numbered and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.

Real Estate Equity Securities. The Fund may invest in securities that represent
an equity interest in real estate properties. It is anticipated that these will
be predominantly domestic equity real estate investment trusts ("REITs"). The
REITs used will represent four major types of investable properties: apartments,
office, retail/commercial and industrial/warehouse. The Fund may also invest in
real estate development companies, which are large corporate property holders
that issue common stock tradable on national securities exchanges and which own
real estate for investment or development purposes. REITs are similar to closed
end investment companies. The REIT owns real estate assets and the investor,
such as the Fund, owns shares in the REIT. REITs are publicly traded on the
national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. As long as the REIT distributes at least 95% of its
ordinary income as dividends, it is not liable for federal income taxes. REITs
also pass through the taxable character of their income. Dividends paid from
earnings are taxable as investment income; dividends attributable to capital
gains are taxable as capital gains. Dividends paid from funds obtained through
depreciation are not taxable currently but reduce the original cost basis of the
REIT shares. Some REITs invest in mortgages, some in real estate development
loans, some in collateralized mortgage obligations, and some in actual
properties. The Fund may only invest in those REITs that invest in actual
properties.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Fund will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

Securities which when purchased are rated at least A by Moody's, S&P, Fitch or
D&P (generally regarded as having 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) or higher may be used (or, if
unrated, of equivalent quality in the Advisor's opinion). If the rating for any
security held in the Fund's portfolio drops below the minimum acceptable rating
applicable to the Fund, such change will be considered by the Advisor as reason
to sell that security.

Mortgage-Related and Other Asset-Backed Securities. The Fund may invest in
mortgage pass-though securities, which are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are made monthly, in effect, "passing through" monthly payments made
by the individual borrowers on the residential mortgage loans that underlie the
securities (net of fees paid to the issuer or guarantor of the securities). The
total return on mortgage-related securities varies with changes in the general
level of interest rates. The maturities of mortgage-related securities are
variable and unknown when issued because their maturities depend on pre-payment
rates. Early repayment of principal on mortgage pass-though securities (arising
from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose the Fund to a lower rate of return upon reinvestment of principal. Also,
if a security subject to prepayment has been purchased at a premium, in the
event of prepayment, the value of the premium would be lost. Mortgage repayments
generally increase with falling interest rates and decrease with rising interest
rates. Like other fixed income securities, when interest rates rise the value of
a mortgage-related security generally will decline; however, when interest rates
are declining, the value of mortgage-related securities with prepayment features
may not increase as much as that of other fixed income securities.

Payment of principal and interest on some mortgage pass-through securities (but
not the market value of the securities themselves) may be guaranteed by the full
faith and credit of the U.S. Government (in the case of securities guaranteed by
GNMA); or guaranteed by agencies or instrumentalities of the U.S. Government. In
the case of securities guaranteed by FNMA or FHLMC, these are supported only by
the discretionary authority of the U.S. Government to purchase the agency's
obligations. Mortgage pass-through securities created by non-governmental
issuers (such as commercial banks, savings and loan institutions, private
mortgage insurance companies, mortgage bankers and other secondary market
issuers) may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit, which
may be issued by governmental entities, private issuers or the mortgage poolers.
The Fund may also invest in stripped mortgage-backed securities ("SMBS"), which
are derivative multi-class mortgage securities, usually structured with two
classes that receive different proportions of the interest and principal
distributions from an underlying pool of mortgage assets.

Collateralized Mortgage Obligations ("CMOs") are hybrid instruments with
characteristics of both mortgage-backed bonds and mortgage pass-through
securities. Similar to a bond, interest and pre-paid principal on a CMO are
paid, in most cases, semi-annually. CMOs are usually collateralized by
portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or
FNMA but may be collateralized by whole mortgage loans or private mortgage
pass-through securities. CMOs are structured into multiple classes, with each
class bearing a different stated maturity. Under a common structure, monthly
payments of principal, including prepayments, are first returned to investors
holding the shortest maturity class; investors holding the longer maturity
classes receive principal only after the first class has been retired. The Fund
may also invest in parallel pay CMOs and Planned Amortization Class CMOs ("PAC
Bonds"). Parallel pay CMOs are structured to provide payments of principal on
each payment date to more than one class. PAC Bonds generally require payments
of a specified amount of principal on each payment date.

Real Estate Mortgage Investment Conduits ("REMICs") are CMO vehicles that
qualify for special tax treatment under the Internal Revenue Code and invest in
mortgages principally secured by interest in real property and other investments
permitted by the Internal Revenue Code. The Fund will not invest in residual
interests in REMICs or residual interests in CMOs.

The Advisor expects that governmental, government-related or private entities
may devise mortgage loan pools and other mortgage-related securities offering
mortgage pass-through and mortgage-collateralized investments in addition to
those described above. As new types of mortgage-related securities are developed
and offered to investors, the Advisor will, consistent with the Fund's
investment objective, policies and quality standards, consider making
investments in such new types of mortgage-related securities.

Other asset-based securities (unrelated to mortgage loans) have been offered to
investors, such as Certificates for Automobile ReceivablesSM ("CARSSM") and
interests in pools of credit card receivables. CARSSM represent undivided
fractional interests in a trust whose assets consist of a pool of motor vehicle
retail installment sales contracts and security interest in the vehicles
securing the contracts. Payments of principal and interest on CARSSM are
"passed-through" monthly to certificate holders and are guaranteed up to certain
amounts and for a certain time period by a letter of credit issued by a
financial institution unaffiliated with the trustee or originator of the trust.
Underlying sales contracts are subject to prepayment, which may reduce the
overall return to certificate holders. If the letter of credit is exhausted,
certificate holders may also experience delays in payment or losses on CARSSM if
the full amounts due on underlying sales contracts are not realized by the trust
because of unanticipated legal or administrative costs of enforcing the
contracts or because of depreciation, damage or loss of the vehicles securing
the contracts, or other factors. Certificates representing pools of credit card
receivables have similar characteristics although the underlying loans are
unsecured. CARSSM, for the purposes of the Fund, will be deemed to be illiquid
securities, and subject to the limitations on investments in illiquid
securities. If consistent with its investment objective and policies, the Fund
may invest in CARSSM interests in pools of consumer credit receivables and in
other asset-backed securities that may be developed in the future. Asset-backed
securities and mortgage-related securities, other than GNMAs, are relatively new
forms of investments. Thus, the market experience in these securities is
limited, and the market's ability to sustain liquidity through all phases of the
market cycle has not been tested.

The Fund may invest only in high quality mortgage-related (or other
asset-backed) securities either (i) issued by U.S. Government sponsored
corporations (currently GNMA, FHLMC and FNMA) or (ii) rated in one of the top
two categories by an NRSRO (Nationally Recognized Securities Rating
Organization) or, if not rated, of equivalent investment quality as determined
by the Advisor. The Advisor will monitor continuously the ratings of securities
held by the Fund and the creditworthiness of their issuers.

Variable and Floating Rate Securities. Variable and floating rate securities
provide for a periodic adjustment in the interest rate paid on the obligations.
The terms of such obligations must provide that interest rates are adjusted
periodically based upon some appropriate interest rate adjustment index as
provided in the respective obligations. The adjustment intervals may be regular,
with intervals ranging from daily to annually, or may be event based, such as a
change in the prime rate, indices of U.S. Treasury securities or LIBOR (London
Interbank Ordinary Rate). Variable and floating rate securities that cannot be
disposed of promptly within seven days and in the usual course of business
without taking a reduced price will be treated as illiquid and subject to the
limitation on investments in illiquid securities.

Foreign Securities. The Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.

Investment Companies. In order to achieve its investment objective, the Fund may
invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's total assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's total assets. To the extent the Fund invests in other investment
companies, the shareholders of the Fund would indirectly pay a portion of the
operating costs of the underlying investment companies. These costs include
management, brokerage, shareholder servicing and other operational expenses.
Shareholders of the Fund would then indirectly pay higher operational costs than
if they owned shares of the underlying investment companies directly.

Derivative Securities Used in Hedging Techniques. The Fund may, as it reaches a
level of total net assets that warrants defensive strategies to maintain
portfolio unrealized gains, employ strategies which include futures on
securities and securities indices, options on securities and securities indices,
the writing of puts and calls on individual securities, and the purchase of puts
or calls on individual securities or securities indices. Such hedging techniques
are not contemplated currently by the Advisor, but may be employed in the
future. Such techniques, if used, will be for hedging purposes only and not for
speculation. For further information regarding these hedging techniques and
their risks, see the Statement of Additional Information.

RISK FACTORS

Portfolio Turnover. The Fund sells portfolio securities without regard to the
length of time they have been held in order to take advantage of new investment
opportunities. Nevertheless, the Fund's portfolio turnover generally will not
exceed 150% in any one year. When the Fund reaches the appropriate size to
utilize the more involved hedging strategies outlined above, average portfolio
turnover is likely to increase. Portfolio turnover generally involves some
expense to the Fund, including brokerage commissions or dealer mark-ups and
other transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover may also have capital gains tax consequences. The
Fund's portfolio turnover rate for prior fiscal years is set forth under
"Financial Highlights" above.

Borrowing. The Fund may borrow, temporarily, up to 5% of its total assets for
extraordinary purposes and 15% of its total assets to meet redemption requests
which might otherwise require untimely disposition of portfolio holdings. To the
extent the Fund borrows for these purposes, the effects of market price
fluctuations on portfolio net asset value will be exaggerated. If, while such
borrowing is in effect, the value of the Fund's assets declines, the Fund could
be forced to liquidate portfolio securities when it is disadvantageous to do so.
The Fund would incur interest and other transaction costs in connection with
borrowing. The Fund will borrow only from a bank. The Fund will not make any
investments if the borrowing exceeds 5% of its total assets until such time as
repayment has been made to bring the total borrowing below 5% of its total
assets.

Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of the Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Fund to sell illiquid investments promptly at an acceptable
price. Included within the category of illiquid securities will also be
restricted securities, which cannot be sold to the public without registration
under the federal securities laws. Unless registered for sale, these securities
can only be sold in privately negotiated transactions or pursuant to an
exemption from registration.

Forward Commitments and When-Issued Securities. The Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. The Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although the Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

To limit the Fund's exposure to risk, the Fund has adopted certain fundamental
investment limitations. Some of these restrictions are that the Fund will not:
(1) issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or emergency
purposes, in amounts not exceeding 5% of the Fund's total assets, or (b) in
order to meet redemption requests which might otherwise require untimely
disposition of portfolio securities, in amounts not exceeding 15% of the Fund's
total assets; and the Fund may pledge its assets to secure all such borrowings;
(2) make loans of money or securities, except that the Fund may invest in
repurchase agreements (but repurchase agreements having a maturity of longer
than seven days, together with other not readily marketable securities, are
limited to 10% of the Fund's net assets), money market instruments, and other
debt securities; (3) invest in securities of issuers which have a record of less
than three years' continuous operation (including predecessors and, in the case
of bonds, guarantors), if more than 5% of its total assets would be invested in
such securities; (4) purchase foreign securities, except that the Fund may
purchase foreign securities sold as ADRs without limit; (5) write, purchase or
sell commodities or commodities contracts, or invest in oil, gas or mineral
leases or exploration programs, or real estate (except the Fund may invest in
readily marketable securities of companies that own or deal in such things and
may invest in mortgage-related securities as described above); and (6) invest
more than 5% of its total assets in the securities of any one issuer or hold
more than 10% of the voting stock of any issuer. See "Investment Limitations" in
the Fund's Statement of Additional Information for a complete list of investment
limitations.

If the Board of Trustees of the Trust determines that the Fund's investment
objective can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Fund's Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Fund's portfolio securities will generally not
constitute a violation of such limitation. If the limitation on illiquid
securities is exceeded, however, through a change in values, net assets, or
other circumstances, the Fund would take appropriate steps to protect liquidity
by changing its portfolio.

FEDERAL INCOME TAXES

Taxation of the Fund. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust, including the Fund, as a separate
regulated investment company. Each series of the Trust, including the Fund,
intends to qualify or remain qualified as a regulated investment company under
the Code by distributing substantially all of its "net investment income" to
shareholders and meeting other requirements of the Code. For the purpose of
calculating dividends, net investment income consists of income accrued on
portfolio assets, less accrued expenses. Upon qualification, the Fund will not
be liable for federal income taxes to the extent earnings are distributed. The
Board of Trustees retains the right for any series of the Trust, including the
Fund, to determine for any particular year if it is advantageous not to qualify
as a regulated investment company. Regulated investment companies, such as each
series of the Trust, including the Fund, are subject to a non-deductible 4%
excise tax to the extent they do not distribute the statutorily required amount
of investment income, determined on a calendar year basis, and capital gain net
income, using an October 31 year-end measuring period. The Fund intends to
declare or distribute dividends during the calendar year in an amount sufficient
to prevent imposition of the 4% excise tax.

DIVIDENDS AND DISTRIBUTIONS

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the Fund at
the net asset value per share next determined. Shareholders wishing to receive
their dividends or capital gains in cash may make their request in writing to
the Fund at 107 North Washington Street, Post Office Box 4365, Rocky Mount,
North Carolina 27803-0365. That request must be received by the Fund prior to
the record date to be effective as to the next dividend. If cash payment is
requested, checks will be mailed within five business days after the last day of
each quarter or the Fund's fiscal year-end, as applicable. Each shareholder of
the Fund will receive a quarterly summary of his or her account, including
information as to reinvested dividends from the Fund. Tax consequences to
shareholders of dividends and distributions are the same if received in cash or
in additional shares of the Fund.

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains.

HOW SHARES ARE VALUED

Net asset value for each Class of Shares of the Fund is determined at the time
trading closes on the New York Stock Exchange (currently 4:00 p.m., New York
time, Monday through Friday), except on business holidays when the New York
Stock Exchange is closed. The net asset value of the shares of the Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments, less all of its liabilities, divided by the number of its
outstanding shares.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Fund. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the mean of the bid and asked prices.
Unlisted securities traded over-the-counter for which market quotations are
readily available are valued at the latest quoted sales price, if available, at
the time of valuation, otherwise, at the latest quoted bid price. Temporary cash
investments with maturities of 60 days or less will be valued at amortized cost,
which approximates market value. Securities for which no current quotations are
readily available are valued at fair value as determined in good faith using
methods approved by the Board of Trustees of the Trust. Securities may be valued
on the basis of prices provided by a pricing service when such prices are
believed to reflect the fair market value of such securities.

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Fund by calling 1-800-525-3863 or from the Advisor by calling
1-800-526-6639, or by writing to the Fund at the address shown below for
purchases by mail. Assistance is also available through any broker-dealer
authorized to sell shares in the Fund. Payment for shares purchased may also be
made through your account at the broker-dealer processing your application and
order to purchase. Your investment will purchase shares at the Fund's net asset
value next determined after your order is received by the Fund in proper form as
indicated herein.

The minimum initial investment is $10,000. The minimum for Individual Retirement
Accounts ("IRAs"), Keogh Plans, 401(k) Plans or purchases under the Uniform
Transfers to Minors Act ("UTMAs") is $2,000. The minimum subsequent investment
is $500. The Fund may, in the Advisor's sole discretion, accept certain accounts
with less than the stated minimum initial investment. You may invest in the
following ways:

Purchases by Mail. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the Fund, to the ZSA Asset Allocation Fund, 107 North Washington
Street, Post Office Box 4365, Rocky Mount, North Carolina 27803-0365. Subsequent
investments in an existing account in the Fund may be made at any time by
sending a check payable to the Fund, to the address stated above. Please enclose
the stub of your account statement and include the amount of the investment, the
name of the account for which the investment is to be made and the account
number.

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219
For the ZSA Asset Allocation Fund
Acct #2000000861771
For further credit to (shareholder's name and SS# or EIN#)

If checks are returned unpaid due to nonsufficient funds, stop payment or other
reasons, the Trust will charge $20. To recover any such loss or charge, the
Trust reserves the right, without further notice, to redeem shares of any fund
of the Trust already owned by any purchaser whose order is cancelled, and such a
purchaser may be prohibited from placing further orders unless investments are
accompanied by full payment by wire or cashier's check.

The Trust has adopted a Distribution Plan (the "Plan") for the Fund pursuant to
Rule 12b-1 under the 1940 Act. Under the Plan the Fund may reimburse any
expenditures to finance any activity primarily intended to result in sale of the
shares of the Fund or the servicing of shareholder accounts, including, but not
limited to, the following: (i) payments to the Distributor, securities dealers,
and others for the sale of shares of the Fund; (ii) payment of compensation to
and expenses of personnel who engage in or support distribution of shares of the
Fund or who render shareholder support services not otherwise provided by the
Transfer Agent, Administrator, or Custodian; and (iii) formulation and
implementation of marketing and promotional activities. The categories of
expenses for which reimbursement is made are approved by the Board of Trustees
of the Trust. Expenditures by the Fund pursuant to the Plan are accrued based on
the Fund's average daily net assets and may not exceed 0.25% of the Fund's
average net assets for each year elapsed subsequent to adoption of the Plan.
Such expenditures paid as service fees to any person who sells Fund shares may
not exceed 0.25% of the average annual net asset value of such shares.

The Plan may not be amended to increase materially the amount to be spent under
the Plan without shareholder approval. The continuation of the Plan must be
approved by the Board of Trustees annually. At least quarterly the Board of
Trustees must review a written report of amounts expended pursuant to the Plan
and the purposes for which such expenditures were made. For the fiscal year
ended March 31, 1998, the Fund incurred $17,879 pursuant to the Plan.

The Distributor, at its expense, may also provide additional compensation to
dealers in connection with sales of shares of the Fund. 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 Fund, and/or other dealer-sponsored special events. In
some instances, this compensation may be made available only to certain dealers
whose representatives have sold or are expected to sell a significant amount of
such shares. Compensation may include payment for travel expenses, including
lodging, incurred in connection with trips taken by invited registered
representatives and members of their families to locations within or outside of
the United States for meetings or seminars of a business nature. Dealers may not
use sales of the Fund shares to qualify for this compensation to the extent such
may be prohibited by the laws of any state or any self-regulatory agency, such
as the National Association of Securities Dealers, Inc. None of the
aforementioned compensation is paid for by the Fund or its shareholders.

Exchange Feature. Investors will have the privilege of exchanging shares of the
Fund for shares of any other series of the Trust established by the Advisor. An
exchange involves the simultaneous redemption of shares of one series and
purchase of shares of another series at the respective closing net asset value
next determined after a request for redemption has been received plus applicable
sales charge, if any, and is a taxable transaction. Each series of the Trust
will have a different investment objective, which may be of interest to
investors in each series. Shares of the Fund may be exchanged for shares of any
other series of the Trust affiliated with the Advisor at net asset value.
Exchanges may only be made by investors in states where shares of the other
series are qualified for sale. An investor may direct the Fund to exchange his
shares by writing to the Fund at its principal office. The request must be
signed exactly as the investor's name appears on the account, and it must also
provide the account number, number of shares to be exchanged, the name of the
series to which the exchange will take place and a statement as to whether the
exchange is a full or partial redemption of existing shares.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Fund will automatically charge the checking account for the amount
specified ($100 minimum), which will be automatically invested in shares at the
net asset value on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

If you are uncertain of the requirements for redemption, please contact the
Fund, at 1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to the ZSA Asset
Allocation Fund, 107 North Washington Street, Post Office Box 4365, Rocky Mount,
North Carolina 27803-0365. Your request for redemption must include:

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, the Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. The Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for the Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

The Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Shareholder name and account number;

2) Number of shares or dollar amount to be redeemed;

3) Instructions for transmittal of redemption funds to the shareholder; and 4)
Shareholder signature as it appears on the application then on file with
the Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Fund may not be redeemed by wire on
days on which your bank or the Fund's Custodian is not open for business. You
can change your redemption instructions anytime you wish by filing a letter
including your new redemption instructions with the Fund. (See "Signature
Guarantees" below.) The Fund reserves the right to restrict or cancel telephone
and bank wire redemption privileges for shareholders, without notice, if the
Fund believes it to be in the best interest of the shareholders to do so. During
drastic economic and market conditions, telephone redemption privileges may be
difficult to implement.

You may redeem shares, subject to the procedures outlined above, by calling the
Fund at 1-800-525-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Fund. Telephone redemption privileges authorize the Fund to act on telephone
instructions from any person representing himself or herself to be the investor
and reasonably believed by the Fund to be genuine. The Fund will employ
reasonable procedures, such as requiring a form of personal identification, to
confirm that instructions are genuine, and, if it does not follow such
procedures, the Fund will be liable for any losses due to fraudulent or
unauthorized instructions. The Fund will not be liable for following telephone
instructions reasonably believed to be genuine.

MANAGEMENT OF THE FUND

Trustees and Officers. The Fund is a no load diversified series of The
Nottingham Investment Trust II (the "Trust"), an investment company organized as
a Massachusetts business trust on October 25, 1990. The Board of Trustees of the
Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Fund - Trustees and Officers." The Board of
Trustees of the Trust is primarily responsible for overseeing the conduct of the
Trust's business. The Board of Trustees elects the officers of the Trust who are
responsible for its and the Fund's day-to-day operations.

The Advisor. Subject to the authority of the Board of Trustees, Zaske, Sarafa &
Associates, Inc. (the "Advisor") provides the Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Michigan corporation in 1988, is controlled by Arthur
E. Zaske and Anmar K. Sarafa. The Advisor currently serves as investment advisor
to over $350 million in assets. The Advisor has been rendering investment
counsel, utilizing investment strategies substantially similar to that of the
Fund, to individuals, banks and thrift institutions, pension and profit sharing
plans, trusts, estates, charitable organizations, corporations, and other
business and individual accounts since its formation. The Advisor's address is
355 South Woodward Avenue, Suite 200, Birmingham, Michigan 48009.

Under the Advisory Agreement with the Fund, the Advisor receives a monthly
management fee equal to an annual rate of 1.00% of the average daily net asset
value of the Fund. The Advisor voluntarily waived a portion of its advisory fee
for the fiscal year ended March 31, 1998. Of the $71,560 the Advisor was
entitled to receive, the Advisor voluntarily waived $46,413 of its investment
advisory fees. The Advisor received $25,147 of such advisory fee for the year
(0.35% of average net assets).

Arthur E. Zaske, a principal and a controlling shareholder of the Advisor, and a
Trustee of the Trust and executive officer of the Fund, has been responsible for
day-to-day management of the Fund's portfolio since its inception in 1992.
He has been with the Advisor since its inception.

In addition to managing the Fund, the Advisor and/or its principals have been
rendering investment counsel, utilizing investment strategies substantially
similar to that of the Fund, since 1981.

The Administrator. The Trust has entered into an Administration Agreement with
The Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Box 69, Rocky Mount, North Carolina 27802-0069.

The Administrator was formed as a North Carolina corporation in 1988. With its
affiliates and predecessors, the Administrator has been operating as a financial
services firm since 1985. Frank P. Meadows III is the firm's Managing Director
and controlling shareholder.

OTHER INFORMATION

When issued, the shares of each series of the Trust, including the Fund, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of at least 10% of the outstanding shares of the Trust.
The term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian or
by votes cast in person or by proxy at a meeting called for that purpose.

Reporting to Shareholders. The Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
the Fund will be audited by independent auditors. In addition, the
Administrator, as transfer agent, will send to each shareholder having an
account directly with the Fund a quarterly statement showing transactions in the
account, the total number of shares owned and any dividends or distributions
paid. Inquiries regarding the Fund may be directed in writing to 107 North
Washington Street, Post Office Box 4365, Rocky Mount, North Carolina 27803-0365
or by calling 1-800-525-3863.

Calculation of Performance Data. From time to time the Fund may advertise its
average annual total return. The "average annual total return" refers to the
average annual compounded rates of return over 1-, 5- and 10-year periods that
would equate an initial amount invested at the beginning of a stated period to
the ending redeemable value of the investment. The calculation assumes the
reinvestment of all dividends and distributions, includes all recurring fees
that are charged to all shareholder accounts and deducts all nonrecurring
charges at the end of each period. If the Fund has been operating less than 1, 5
or 10 years, the time period during which the Fund has been operating is
substituted.

In addition, the Fund may advertise other total return performance data other
than average annual total return. This data shows as a percentage rate of return
encompassing all elements of return (i.e. income and capital appreciation or
depreciation); it assumes reinvestment of all dividends and capital gain
distributions. Such other total return data may be quoted for the same or
different periods as those for which average annual total return is quoted. This
data may consist of a cumulative percentage rate of return, actual year-by-year
rates or any combination thereof. Cumulative total return represents the
cumulative change in value of an investment in the Fund for various periods.

The total return of the Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. The Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.
<PAGE>
No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Fund or the Advisor. This
Prospectus does not constitute an offering in any state in which an offering may
not lawfully be made.

ZSA ASSET ALLOCATION FUND
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

INVESTMENT ADVISOR
Zaske, Sarafa & Associates, Inc.
355 South Woodward Avenue, Suite 200
Birmingham, Michigan 48009

DISTRIBUTOR
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

CUSTODIAN
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151

INDEPENDENT AUDITORS
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

ZSA ASSET ALLOCATION FUND

A No Load Fund

PROSPECTUS

August 1, 1998

<PAGE>

PROSPECTUS
THE BROWN CAPITAL MANAGEMENT FUNDS

INSTITUTIONAL CLASS

The investment objective of The Brown Capital Management Equity Fund is to seek
capital appreciation principally through investments in equity securities, such
as common and preferred stocks and securities convertible into common stocks.
Current income will be of secondary importance. The investment objective of The
Brown Capital Management Balanced Fund is to provide its shareholders with a
maximum total return consisting of any combination of capital appreciation, both
realized and unrealized, and income. The Fund will seek to achieve this
objective by investing in a flexible portfolio of equity securities, fixed
income securities, and money market instruments. The investment objective of The
Brown Capital Management Small Company Fund is to seek capital appreciation
principally through investment in the equity securities of those companies with
operating revenues of $250 million or less at the time of the initial
investment. Current income will be of secondary importance. While there is no
assurance that any of the Funds will achieve their particular investment
objective, they endeavor to do so by following the investment policies described
herein.

This Prospectus relates to shares ("Institutional Shares") representing
interests in the Funds. The Institutional Shares are offered to institutions and
certain other investors described herein without any sales or redemption charges
or shareholder servicing or distribution fees. See "Prospectus Summary -
Offering Price."

INVESTMENT ADVISOR
Brown Capital Management, Inc.
809 Cathedral Street
Baltimore, Maryland 21201

The Brown Capital Management Funds (the "Funds") are diversified series of The
Nottingham Investment Trust II (the "Trust"), a registered open-end management
investment company. This Prospectus sets forth concisely the information about
the Funds that a prospective investor should know before investing. Investors
should read this Prospectus and retain it for future reference. Additional
information about the Funds has been filed with the Securities and Exchange
Commission (the "SEC") and is available upon request and without charge. You may
request the Statement of Additional Information, which is incorporated in this
Prospectus by reference, by writing the Funds at Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365, or by calling 1-800-525-3863. The SEC also
maintains an Internet Web site (http://www.sec.gov) that contains the Statement
of Additional Information, material incorporated by reference, and other
information regarding the Funds.

Investment in the Funds involves risks, including the possible loss of
principal. Shares of the Funds are not deposits or obligations of, or guaranteed
or endorsed by, any financial institution, and such shares are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency.

The date of this Prospectus and the Statement of Additional Information is
August 1, 1998.

<PAGE>
TABLE OF CONTENTS

PROSPECTUS SUMMARY........................................................... 2

FEE TABLE.................................................................... 3

FINANCIAL HIGHLIGHTS......................................................... 4

INVESTMENT OBJECTIVE AND POLICIES............................................ 6

RISK FACTORS................................................................. 11

INVESTMENT LIMITATIONS....................................................... 12

FEDERAL INCOME TAXES......................................................... 13

DIVIDENDS AND DISTRIBUTIONS.................................................. 14

HOW SHARES ARE VALUED........................................................ 15

HOW SHARES MAY BE PURCHASED.................................................. 15

HOW SHARES MAY BE REDEEMED................................................... 18

MANAGEMENT OF THE FUNDS...................................................... 20

OTHER INFORMATION............................................................ 22

<PAGE>

PROSPECTUS SUMMARY

The Funds. The Brown Capital Management Funds (the "Funds") are diversified
series of The Nottingham Investment Trust II (the "Trust"), a registered
open-end management investment company organized as a Massachusetts business
trust. This Prospectus relates to Institutional Shares of the Funds. See "Other
Information -Description of Shares."

Offering Price. The Institutional Shares of each Fund are offered at net asset
value without a sales charge and are not subject to any shareholder servicing or
distribution fees. The Institutional Shares are available only to the following
classes of investors: clients of the Advisor, and any other institutional
investor. The minimum initial investment is $10,000 ($2,000 for IRAs and Keogh
Plans). The minimum subsequent investment is $500. See "How Shares May be
Purchased."

Investment Objective and Special Risk Considerations. The investment objective
of The Brown Capital Management Equity Fund (the "Equity Fund") is to seek
capital appreciation principally through investments in equity securities, such
as common and preferred stocks and securities convertible into common stocks.
Current income will be of secondary importance. In most instances the Equity
Fund will be at least 90% invested in equity securities. The investment
objective of The Brown Capital Management Balanced Fund (the "Balanced Fund") is
to provide its shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized, and income.
The Fund will seek to achieve this objective by investing in a flexible
portfolio of equity securities, fixed income securities, and money market
instruments. Fixed income securities and money market instruments will generally
comprise not less than 25% and not more than 75% of the portfolio. The
investment objective of The Brown Capital Management Small Company Fund (the
"Small Company Fund") is to seek capital appreciation principally through
investment in the equity securities of those companies with operating revenues
of $250 million or less at the time of the initial investment ("small
companies"). Current income will be of secondary importance. In most instances
the Small Company Fund will be at least 90% invested in equity securities and at
least 65% invested in equity securities of small companies. See "Investment
Objective and Policies."

The Funds are not intended to be a complete investment program, and there can be
no assurance that any Fund will achieve its investment objective. While the
Funds will invest primarily in common stocks traded in U.S. securities markets,
some of each Fund's investments may include foreign securities (in the form
traded domestically as American Depository Receipts), illiquid securities, and
securities purchased subject to a repurchase agreement or on a "when-issued"
basis, which involve certain risks. A portion of the Balanced Fund will be
invested in fixed income securities, which will be subject to risks associated
with movements in interest rates. Since the Small Company Fund will invest
principally in small companies, it will be subject to the greater volatility and
risks associated with such investments. See "Risk Factors."

Manager. Subject to the general supervision of the Trust's Board of Trustees and
in accordance with the Funds' investment policies, Brown Capital Management,
Inc. of Baltimore, Maryland (the "Advisor"), manages the Funds' investments. The
Advisor currently manages approximately $4.0 billion in assets. For its advisory
services, the Advisor receives a monthly fee, based on each Fund's average daily
net assets, at the annual rate of 0.65% of the first $25 million of net assets
and 0.50% of all assets over $25 million for the Equity and Balanced Funds, and
at the annual rate of 1.00% for the Small Company Fund. See "Management of the
Funds - The Advisor."

Dividends. Income dividends, if any, are generally paid quarterly; capital
gains, if any, are generally paid at least once each year. Dividends and capital
gains distributions are automatically reinvested in additional shares of the
same Class at net asset value unless the shareholder elects to receive cash. See
"Dividends and Distributions."

Distributor. Capital Investment Group, Inc. (the "Distributor") serves as
distributor of shares of each Fund. See "How Shares May Be Purchased -
Distributor."

Redemption of Shares. There is no charge for redemptions other than possible
charges associated with wire transfers of redemption proceeds. Shares may be
redeemed at any time at the net asset value next determined after receipt of a
redemption request by a Fund. A shareholder who submits appropriate written
authorization may redeem shares by telephone. See "How Shares May Be Redeemed."

FEE TABLE

The following table sets forth certain information in connection with the
expenses of the Institutional Shares of the Funds for the current fiscal year.
The information is intended to assist the investor in understanding the various
costs and expenses borne by the Institutional Shares of the Funds, and therefore
indirectly by their investors, the payment of which will reduce an investor's
return on an annual basis.

Shareholder Transaction Expenses for Institutional Shares

Maximum sales load imposed on purchases
(as a percentage of offering price)..................................None
Maximum sales load imposed on reinvested dividends......................None
Maximum deferred sales load.............................................None
Redemption fees*........................................................None
Exchange fee............................................................None

* The Funds in their discretion may choose to pass through to redeeming
shareholders any charges imposed by the Custodian for wiring redemption
proceeds. The Custodian currently charges the Funds $10.00 per transaction
for wiring redemption proceeds.

Annual Fund Operating Expenses for Institutional Shares - After Fee Waivers
and Expense Reimbursements1
(as a percentage of average net assets)

Small
Equity Balanced Company
Investment advisory fees..........................................0.00% 1 0.00% 1 0.45% 1
12b-1 fees.........................................................None None None
Other expenses....................................................1.20% 1 1.20% 1 1.05% 1
----- ----- -----
Total operating expenses.......................................1.20% 1 1.20% 1 1.50% 1
===== ===== =====

</TABLE>

EXAMPLE: You would pay the following expenses on a $1,000 investment in
Institutional Shares of the Funds, whether or not you redeem at the end of the
period, assuming a 5% annual return:

1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------

Equity $12 $38 $66 $145
Balanced $12 $38 $66 $145
Small Company $15 $47 $82 $179

</TABLE>

THE FOREGOING SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.

1 The "Total operating expenses" shown above are based upon actual operating
expenses incurred by the Institutional Shares of each Fund for the fiscal
year ended March 31, 1998, which, after fee waivers and expense
reimbursements, were 1.20%, 1.20%, and 1.50% of average daily net assets of
the Institutional Shares of the Equity, Balanced, and Small Company Funds,
respectively. Absent such waivers and reimbursements, the percentages for
"Investment advisory fees" and "Total operating expenses" for the
Institutional Shares for the fiscal year ended March 31, 1998 would have
been 0.65% and 1.98%, respectively, for the Equity Fund, 0.65% and 2.22%,
respectively, for the Balanced Fund, and 1.00% and 2.05%, respectively, for
the Small Company Fund. The Advisor has voluntarily agreed to a reduction in
the fees payable to it and to reimburse expenses of each Fund, if necessary,
in an amount that limits "Total operating expenses" (exclusive of interest,
taxes, brokerage fees and commissions, sales charges, and extraordinary
expenses) to not more than 1.20%, 1.20%, and 1.50%, respectively, of the
Institutional Shares' average daily net assets for the Equity, Balanced, and
Small Company Funds, respectively. There can be no assurance that the
Advisor's voluntary fee waivers and expense reimbursements will continue in
the future.

See "Management of the Funds" below for more information about the fees and
costs of operating the Funds. The assumed 5% annual return in the example is
required by the Securities and Exchange Commission. The hypothetical rate of
return is not intended to be representative of past or future performance of the
Funds; the actual rate of return for the Funds may be greater or less than 5%.

FINANCIAL HIGHLIGHTS

The shares of each Fund are divided into multiple Classes representing interests
in the Funds. This Prospectus relates to Institutional Shares. See "Other
Information - Description of Shares." The financial data included in the tables
below for the fiscal years ended March 31, 1998 and 1997, has been audited by
Deloitte & Touche LLP, independent auditors, whose reports covering such periods
are included in the Statement of Additional Information. The financial data for
the prior fiscal years was audited by other independent auditors. The
information in the tables below should be read in conjunction with each Fund's
latest audited financial statements and notes thereto, which are included in the
Statement of Additional Information, a copy of which may be obtained at no
charge by calling the Funds. Further information about the performance of the
Funds is contained in the Annual Report of the Funds, a copy of which may be
obtained at no charge by calling the Funds.

<PAGE>

Institutional Class
(For a Share Outstanding Throughout each Period Represented)

EQUITY FUND

Years ended March 31,
1998 1997 1996 1995 1994 1993(a)
---- ---- ---- ---- ---- -------

Net Asset Value, Beginning of Period $16.61 $15.81 $12.36 $11.48 $11.05 $10.00
Income (loss) from investment operations
Net investment income (loss) (0.03) 0.05 0.00 0.00 (0.02) (0.02)
Net realized and unrealized gain on investments 7.31 1.36 3.72 1.01 0.52 1.07
---- ---- ---- ---- ---- ----
Total from investment operations 7.28 1.41 3.72 1.01 0.50 1.05
---- ---- ---- ---- ---- ----

Distributions to shareholders from
Net investment income 0.00 (0.05) 0.00 0.00 0.00 0.00
Net realized gain from investment transactions (1.98) (0.56) (0.27) (0.13) (0.07) 0.00
Distributions in excess of net realized gains (0.04) 0.00 0.00 0.00 0.00 0.00
------ ---- ---- ---- ---- ----
Total distributions (2.02) (0.61) (0.27) (0.13) (0.07) 0.00
------ ---- ---- ---- ---- ----

Net Asset Value, End of Period $21.87 $16.61 $15.81 $12.36 $11.48 $11.05
====== ===== ===== ===== ===== =====

Total return 44.68% 8.91% 30.25% 8.90% 4.51% 10.51%

Ratios/supplemental data
Net Assets, End of Period (in thousands) $8,150 $4,405 $1,966 $1,130 $718 $264
===== ===== ===== ===== ==== =====
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 1.98% 3.37% 5.58% 8.32% 11.86% 17.97%(d)
After expense reimbursements and waived fees 1.20% 1.20% 1.56% 2.00% 2.00% 1.91%(d)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees (0.94)% (1.85)% (4.20)% (6.41)% (10.19)% (16.47)%(d)
After expense reimbursements and waived fees (0.16)% 0.32% 0.01% (0.11)% (0.36)% (0.51)%(d)
Portfolio turnover rate 38.42% 34.21% 48.06% 7.29 % 48.05% 3.26 %
Average commission rate paid (a) $0.0507 $0.0505

</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Institutional Class
(For a Share Outstanding Throughout each Period Represented)

BALANCED FUND

Years ended March 31,
1998 1997 1996 1995 1994 1993(b)
---- ---- ---- ---- ---- -------

Net Asset Value, Beginning of Period $13.60 $13.76 $11.56 $11.02 $10.62 $10.00
Income from investment operations
Net investment income 0.17 0.21 0.12 0.10 0.08 0.04
Net realized and unrealized gain on investments 4.65 0.76 2.98 0.77 0.43 0.62
---- ---- ---- ---- ---- ----
Total from investment operations 4.82 0.97 3.10 0.87 0.51 0.66
---- ---- ---- ---- ---- ----

Distributions to shareholders from
Net investment income (0.17) (0.21) (0.12) (0.11) (0.08) (0.04)
Net realized gain from investment transactions (1.42) (0.92) (0.78) (0.22) (0.03) 0.00
------ ------ ------ ----- ----- ----
Total distributions (1.59) (1.13) (0.90) (0.33) (0.11) (0.04)
------ ------ ------ ------ ------ ------

Net Asset Value, End of Period $16.83 $13.60 $13.76 $11.56 $11.02 $10.62
====== ====== ====== ====== ====== ======

Total return 36.19% 7.01% 27.04% 8.04% 4.78% 6.60%
Ratios/supplemental data
Net Assets, End of Period (in thousands) $6,078 $3,875 $3,319 $2,296 $1,188 $762
===== ===== ===== ===== ===== ====
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.22% 2.85% 3.50% 5.43% 6.44% 9.56%(d)
After expense reimbursements and waived fees 1.20% 1.20% 1.59% 2.00% 2.00% 1.58%(d)
Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees 0.05% (0.13)% (0.97)% (2.44)% (3.69)% (7.13)%(d)
After expense reimbursements and waived fees 1.08% 1.51 % 0.94% 1.00 % 0.74% 0.85 %(d)
Portfolio turnover rate 33.54% 45.58 % 43.59% 9.51 % 28.56% 20.90 %
Average commission rate paid (a) $0.0509 $0.0506

</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Institutional Class
(For a Share Outstanding Throughout each Period Represented)

SMALL COMPANY FUND

Years ended March 31,
1998 1997 1996 1995 1994 1993(c)
---- ---- ---- ---- ---- -------

Net Asset Value, Beginning of Period $15.01 $15.13 $12.24 $10.69 $10.67 $10.00
Income (loss) from investment operations
Net investment loss (0.11) (0.03) (0.06) (0.06) (0.11) (0.03)
Net realized and unrealized gain on investments 6.36 0.27 4.00 1.86 0.59 0.70
---- ---- ---- ---- ---- ----
Total from investment operations 6.25 0.24 3.94 1.80 0.48 0.67
---- ---- ---- ---- ---- ----

Distributions to shareholders from
Net realized gain from investment transactions (0.24) (0.36) (1.05) (0.25) (0.46) 0.00
----- ----- ----- ----- ----- ----

Net Asset Value, End of Period $21.02 $15.01 $15.13 $12.24 $10.69 $10.67
===== ===== ===== ====== ====== ======

Total return 41.84% 1.56% 33.00% 16.95% 4.39% 6.70%

Ratios/supplemental data
Net Assets, End of Period (in thousands) $11,566 $6,519 $3,740 $2,609 $1,831 $1,226
====== ===== ===== ===== ===== =====
Ratio of expenses to average net assets
Before expense reimbursements and waived fees 2.05% 2.70% 3.49% 4.49% 4.73% 5.45%(d)
After expense reimbursements and waived fees 1.50% 1.50% 1.69% 2.00% 2.00% 1.89%(d)
Ratio of net investment loss to average net assets
Before expense reimbursements and waived fees (1.23)% (1.50)% (2.29)% (3.38)% (4.03)% (4.42)%(d)
After expense reimbursements and waived fees (0.68)% (0.30)% (0.50)% (0.90)% (1.34)% (0.86)%(d)
Portfolio turnover rate 11.64 % 13.39% 23.43 % 32.79% 23.47% 4.14%
Average commission rate paid (e) $0.0520 $0.0482

</TABLE>

(a) For the period from August 4, 1992 (commencement of operations) to March
31, 1993.

(b) For the period from August 11, 1992 (commencement of operations) to March
31, 1993.

(d) Annualized.

(e) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged. This
disclosure was not required for fiscal years of the Funds ended prior to
March 31, 1997.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES

Investment Objective. The investment objective of The Brown Capital Management
Equity Fund (the "Equity Fund") is to seek capital appreciation principally
through investments in equity securities, such as common and preferred stocks
and securities convertible into common stocks. Current income will be of
secondary importance. The investment objective of The Brown Capital Management
Balanced Fund (the "Balanced Fund") is to provide its shareholders with a
maximum total return consisting of any combination of capital appreciation, both
realized and unrealized, and income. The Fund will seek to achieve this
objective by investing in a flexible portfolio of equity securities, fixed
income securities, and money market instruments. The investment objective of The
Brown Capital Management Small Company Fund (the "Small Company Fund") is to
seek capital appreciation principally through investment in the common stock of
those companies with operating revenues of $250 million or less at the time of
the initial investment. Current income will be of secondary importance. Each
Fund's investment objective and fundamental investment limitations described
herein may not be altered without the prior approval of a majority of the Fund's
shareholders.

Investment Selection

The Advisor will seek to achieve capital appreciation through an opportunistic
stock investment strategy with a growth bias. The Advisor will seek to purchase
equity securities of those companies that the Advisor feels are undervalued
relative to their growth potential in the securities markets, because the
companies are presently out of favor, not well known or possess value that is
not currently recognized by the investment community. The Advisor will generally
utilize the equity securities of large and medium capitalization companies.

The Advisor uses a "bottom up" approach to select specific securities, while
remaining cognizant of specific economic and industry outlooks. The Advisor
employs analysis that contains elements of traditional dividend discount and
earnings yield models, establishes predicted relative valuation for equity and
fixed income markets, and determines the attractiveness of individual securities
through evaluation of growth and risk characteristics of the underlying company
relative to the overall equity market.

While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
a) the anticipated price appreciation has been achieved or is no longer
probable; b) alternative investments offer superior total return prospects; or
c) fundamentals change adversely.

The equity portion of the Fund's portfolio will be comprised of common stocks,
convertible preferred stocks, participating preferred stocks, preferred equity
redemption cumulative stocks, preferred stocks and convertible bonds traded on
domestic securities exchanges or on the over-the-counter markets. Foreign
securities, if held, will be held in the form of American Depository Receipts
("ADRs"). ADRs are foreign securities denominated in U.S. dollars and traded on
U.S. securities markets.

The Fund will invest in a variety of companies and industries as well as
economic sectors. For purposes of temporary investment of cash, and defensive
investment in certain situations, the percentage of assets invested in equities
and money market instruments will be determined by the valuation of securities
relative to alternative investments.

Under normal market conditions the portfolio allocation range for the Equity
Fund will be:

% of Total Assets
=================

Equity securities 70 - 99%
Money market instruments 1 - 30%

Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents as a temporary defensive
position.

The Advisor will vary the percentage of Fund assets invested in equities, fixed
income securities, and money market instruments according to the Advisor's
judgment of market and economic conditions, and based on the Advisor's view of
which asset class can best achieve the Fund's objectives. The percentage
invested in fixed income securities and money market instruments will comprise
not less than 25% and not more than 75% of the portfolio. The investment
objective will be to achieve the maximum total return, consisting of a
combination of capital appreciation, both realized and unrealized, and income.

The Advisor will continually review the macroeconomic environment and
alternative expected rates of return between fixed income securities and equity
securities in determining the asset allocation of the Fund. In structuring the
fixed income portion of the Fund, the Advisor examines spread relationships
between quality grades in determining the quality distribution, and assesses the
expected trends in inflation and interest rates in structuring the maturity
distribution. Not more than 20% of the total fixed income portion of the
portfolio (not more than 15% of the entire Fund) will be invested in bonds rated
below A by the nationally recognized securities rating organizations described
in the Statement of Additional Information.

With regards to the equity portion of the Fund, the Advisor will seek
diversification across a broad spectrum of economic sectors and industries. The
security selection approach will have an earnings growth bias, but will remain
flexible and opportunistic. The Advisor will continuously examine the portfolio,
seeking to replace those securities that may have become relatively overvalued
with securities which, in the view of the Advisor, are currently undervalued.
The Advisor uses a "bottom up" approach to select specific securities, while
remaining cognizant of specific economic and industry outlooks. The Advisor
employs analysis that contains elements of traditional dividend discount and
earnings yield models, establishes predicted relative valuation for equity and
fixed income markets, and determines the attractiveness of individual securities
through evaluation of growth and risk characteristics of the underlying company
relative to the overall equity market.

Under normal market conditions the portfolio allocation range for the Balanced
Fund will be:

% of Total Assets
=================

Equity securities 25 - 75%
Money market instruments
and fixed income securities 25 - 75%

Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents as a temporary defensive
position.

The Advisor will invest primarily in the equity securities of those companies
with total operating revenues of $250 million or less at the time of the initial
investment ("small companies"). The Advisor employs an analysis that seeks to
identify those small companies whose current price to earnings ratio is below
the Advisor's projection of that company's prospective growth rate. The
Advisor's analysis includes many factors that, in the Advisor's view, are
critical to the small company sector. These factors include the assumptions that
a sustained commitment to a portfolio of exceptional small companies will, over
time, produce a significant investment return and that an investment analysis
which identifies and evaluates successfully those few small companies with the
legitimate potential to become large companies can be a very rewarding
investment strategy.

The Advisor identifies small companies with the potential to become successful
large companies by analyzing the potential for: a) sustainable revenue stream;
b) adequate resources to establish and defend a viable product or service
market, and market share; c) sufficient profitability to support long term
growth; and d) management skills and resources necessary to plan and execute a
long-term growth plan.

While portfolio securities are generally acquired for the long term, they may be
sold under some of the following circumstances when the Advisor believes that:
a) the anticipated price appreciation has been achieved or is no longer
probable; b) alternate investments offer superior total return prospects; or c)
fundamentals change adversely.

The equity portion of the Fund's portfolio will be comprised of common stocks,
convertible preferred stocks, participating preferred stocks, preferred equity
redemption cumulative stocks, preferred stocks and convertible bonds traded on
domestic securities exchanges or on the over-the-counter markets. Foreign
securities, if held, will be held in the form of ADRs. In most instances the
Fund will be at least 90% invested in equity securities and at least 65%
invested in equity securities of small companies. Under normal market
conditions, the Fund's investment in small companies will exceed the 65% minimum
threshold and will range between 80% and 90% of the Fund's total assets.

Under normal market conditions the portfolio allocation range for the Small
Company Fund will be:

% of Total Assets
=================

Equity securities 70 - 99%
Money market instruments 1 - 30%

Under certain conditions, the Advisor may choose to temporarily invest up to
100% of the Fund's assets in cash and cash equivalents as a temporary defensive
position.

Money Market Instruments. Money market instruments may be purchased when the
Advisor believes interest rates are rising, the prospect for capital
appreciation in the equity and longer term fixed income securities' markets are
not attractive, or when the "yield curve" favors short-term fixed income
instruments versus longer term fixed income instruments. Money market
instruments may be purchased for temporary defensive purposes, to accumulate
cash for anticipated purchases of portfolio securities and to provide for
shareholder redemptions and operating expenses of each Fund. Money market
instruments mature in thirteen months or less from the date of purchase and may
include U.S. Government Securities, corporate debt securities (including those
subject to repurchase agreements), bankers acceptances and certificates of
deposit of domestic branches of U.S. banks, and commercial paper (including
variable amount demand master notes) rated in one of the two highest rating
categories by any of the nationally recognized statistical rating organizations
or if not rated, of equivalent quality in the Advisor's opinion. The Advisor
may, when it believes that unusually volatile or unstable economic and market
conditions exist, depart from each Fund's investment approach and assume
temporarily a defensive portfolio posture, increasing the Fund's percentage
investment in money market instruments, even to the extent that 100% of the
Fund's assets may be so invested.

U.S. Government Securities. Each Fund may invest a portion of its portfolio in
U.S. Government Securities, defined to be U.S. Government obligations such as
U.S. Treasury notes, U.S. Treasury bonds, and U.S. Treasury bills, obligations
guaranteed by the U.S. Government such as Government National Mortgage
Association ("GNMA") as well as obligations of U.S. Government authorities,
agencies and instrumentalities such as Federal National Mortgage Association
("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), Federal Home
Administration ("FHA"), Federal Farm Credit Bank ("FFCB"), Federal Home Loan
Bank ("FHLB"), Student Loan Marketing Association ("SLMA"), and The Tennessee
Valley Authority. U.S. Government Securities may be acquired subject to
repurchase agreements. While obligations of some U.S. Government sponsored
entities are supported by the full faith and credit of the U.S. Government (e.g.
GNMA), several are supported by the right of the issuer to borrow from the U.S.
Government (e.g. FNMA, FHLMC), and still others are supported only by the credit
of the issuer itself (e.g. SLMA, FFCB). No assurance can be given that the U.S.
Government will provide financial support to U.S. Government agencies or
instrumentalities in the future, other than as set forth above, since it is not
obligated to do so by law. The guarantee of the U.S. Government does not extend
to the yield or value of the Fund's shares. Investment by the Equity and Small
Company Funds in U.S. Government Securities will generally be limited to money
market instruments as described above.

Securities issued by the U.S. Government may be acquired by the Balanced Fund in
the form of custodial receipts that evidence ownership of future interest
payments, principal payments or both on certain U.S. Treasury notes or bonds.
Such notes and bonds are held in custody by a bank on behalf of the owners.
These custodial receipts are known by various names, including "Treasury
Receipts," "Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). The Balanced Fund may also invest in
separately traded principal and interest components of securities issued or
guaranteed by the U.S. Treasury. The principal and interest components of
selected securities are traded independently under the Separate Trading of
Registered Interest and Principal of Securities program ("STRIPS"). Under the
STRIPS program, the principal and interest components are individually numbered
and separately issued by the U.S. Treasury at the request of depository
financial institutions, which then trade the component parts independently.

Corporate Debt Securities. The Balanced Fund may invest in U.S. dollar
denominated corporate debt securities of domestic issuers limited to corporate
debt securities (corporate bonds, debentures, notes and other similar corporate
debt instruments) that meet the minimum ratings criteria set forth for the
Balanced Fund, or, if unrated, are in the Advisor's opinion comparable in
quality to corporate debt securities in that the Fund may invest. The Equity and
Small Company Funds may invest in convertible bonds of domestic issuers meeting
such quality requirements and other corporate debt securities generally in the
form of money market instruments as described above.

Repurchase Agreements. Each Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
agreement transaction occurs when the Fund acquires a security and
simultaneously resells it to the vendor (normally a member bank of the Federal
Reserve or a registered Government Securities dealer) for delivery on an agreed
upon future date. The repurchase price exceeds the purchase price by an amount
that reflects an agreed upon market interest rate earned by the Fund effective
for the period of time during which the repurchase agreement is in effect.
Delivery pursuant to the resale typically will occur within one to seven days of
the purchase. The Funds will not enter into any repurchase agreement that will
cause more than 10% of their net assets to be invested in repurchase agreements
that extend beyond seven days. In the event of the bankruptcy of the other party
to a repurchase agreement, the Fund could experience delays in recovering its
cash or the securities lent. To the extent that in the interim the value of the
securities purchased may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a transaction is reviewed and
found satisfactory by the Advisor. Repurchase agreements are, in effect, loans
of Fund assets. The Funds will not engage in reverse repurchase transactions,
which are considered to be borrowings under the 1940 Act.

Foreign Securities. Each Fund may invest in the securities of foreign private
issuers. The same factors would be considered in selecting foreign securities as
with domestic securities. Foreign securities investment presents special
consideration not typically associated with investment in domestic securities.
Foreign taxes may reduce income. Currency exchange rates and regulations may
cause fluctuations in the value of foreign securities. Foreign securities are
subject to different regulatory environments than in the United States and,
compared to the United States, there may be a lack of uniform accounting,
auditing and financial reporting standards, less volume and liquidity and more
volatility, less public information, and less regulation of foreign issuers.
Countries have been known to expropriate or nationalize assets, and foreign
investments may be subject to political, financial, or social instability, or
adverse diplomatic developments. There may be difficulties in obtaining service
of process on foreign issuers and difficulties in enforcing judgments with
respect to claims under the U.S. securities laws against such issuers. Favorable
or unfavorable differences between U.S. and foreign economies could affect
foreign securities values. The U.S. Government has, in the past, discouraged
certain foreign investments by U.S. investors through taxation or other
restrictions and it is possible that such restrictions could be imposed again.

Because of the inherent risk of foreign securities over domestic issues, the
Funds will limit foreign investments to those traded domestically as American
Depository Receipts (ADRs). ADRs are receipts issued by a U.S. bank or trust
company evidencing ownership of securities of a foreign issuer. ADRs may be
listed on a national securities exchange or may trade in the over-the-counter
market. The prices of ADRs are denominated in U.S. dollars while the underlying
security may be denominated in a foreign currency.

Investment Companies. In order to achieve its investment objective, each Fund
may invest up to 10% of the value of its total assets in securities of other
investment companies whose investment objectives are consistent with the Fund's
investment objective. The Fund will not acquire securities of any one investment
company if, immediately thereafter, the Fund would own more than 3% of such
company's total outstanding voting securities, securities issued by such company
would have an aggregate value in excess of 5% of the Fund's assets, or
securities issued by such company and securities held by the Fund issued by
other investment companies would have an aggregate value in excess of 10% of the
Fund's assets. To the extent a Fund invests in other investment companies, the
shareholders of the Fund would indirectly pay a portion of the operating costs
of the underlying investment companies. These costs include management,
brokerage, shareholder servicing and other operational expenses. Shareholders of
the Fund would then indirectly pay higher operational costs than if they owned
shares of the underlying investment companies directly.

Real Estate Securities. The Funds will not invest in real estate (including
mortgage loans and limited partnership interests), but may invest in readily
marketable securities issued by companies that invest in real estate or
interests therein. The Funds may also invest in readily marketable interests in
real estate investment trusts ("REITs"). REITs are generally publicly traded on
the national stock exchanges and in the over-the-counter market and have varying
degrees of liquidity. Although the Funds are not limited in the amount of these
types of real estate securities they may acquire, it is not presently expected
that within the next 12 months the Funds will have in excess of 10% of their
assets in real estate securities.

RISK FACTORS

Fluctuations in Value. To the extent that the major portion of the Funds'
portfolios consists of common stocks, it may be expected that their net asset
value will be subject to greater fluctuation than a portfolio containing mostly
fixed income securities. The fixed income securities in which the Balanced Fund
will invest are also subject to fluctuation in value. Such fluctuations may be
based on movements in interest rates or from changes in the creditworthiness of
the issuers, which may result from adverse business and economic developments or
proposed corporate transactions, such as a leveraged buy-out or recapitalization
of the issuer. The value of the Balanced Fund's fixed income securities will
generally vary inversely with the direction of prevailing interest rate
movements. Should interest rates increase or the creditworthiness of an issuer
deteriorate, the value of the Balanced Fund's fixed income securities would
decrease in value, which would have a depressing influence on the Balanced
Fund's net asset value. Although certain of the U.S. Government Securities in
which the Funds may invest are guaranteed as to timely payment of principal and
interest, the market value of the securities, upon which the Funds' net asset
value is based, will fluctuate due to the interest rate risks described above.
Additionally, not all U.S. Government Securities are backed by the full faith
and credit of the U.S. Government. Because there is risk in any investment,
there can be no assurance that the Funds will achieve their investment
objective.

Small Company Securities. To the extent that the Small Company Fund will consist
principally of companies with a smaller market capitalization, shorter operating
history, and smaller level of annual gross revenues than would be common in a
typical large capitalization growth fund, and given that such companies have
historically exhibited greater volatility of share price, the Small Company Fund
may be subject to greater fluctuation than a portfolio of larger companies or a
portfolio containing mostly fixed income securities.

Portfolio Turnover. Each Fund may sell portfolio securities without regard to
the length of time they have been held in order to take advantage of new
investment opportunities. Portfolio turnover generally involves some expense to
the Funds, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and the reinvestment in other
securities. Portfolio turnover may also have capital gains tax consequences. The
portfolio turnover rate for each Fund since inception is set forth under
"Financial Highlights" above.

Illiquid Investments. Each Fund may invest up to 10% of its net assets in
illiquid securities. Illiquid securities are those that may not be sold or
disposed of in the ordinary course of business within seven days at
approximately the price at which they are valued. Under the supervision of the
Board of Trustees, the Advisor determines the liquidity of each Fund's
investments. The absence of a trading market can make it difficult to ascertain
a market value for illiquid investments. Disposing of illiquid securities before
maturity may be time consuming and expensive, and it may be difficult or
impossible for the Funds to sell illiquid investments promptly at an acceptable
price. The Funds may not invest in restricted securities, which are securities
that cannot be sold to the public without registration under the federal
securities laws.

Forward Commitments and When-Issued Securities. Each Fund may purchase
when-issued securities and commit to purchase securities for a fixed price at a
future date beyond customary settlement time. Each Fund is required to hold and
maintain in a segregated account until the settlement date, cash, U.S.
Government Securities or high-grade debt obligations in an amount sufficient to
meet the purchase price. Purchasing securities on a when-issued or forward
commitment basis involves a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Fund's other assets. In addition, no income
accrues to the purchaser of when-issued securities during the period prior to
issuance. Although a Fund would generally purchase securities on a when-issued
or forward commitment basis with the intention of acquiring securities for its
portfolio, the Fund may dispose of a when-issued security or forward commitment
prior to settlement if the Advisor deems it appropriate to do so. The Fund may
realize short-term gains or losses upon such sales.

INVESTMENT LIMITATIONS

To limit each Fund's exposure to risk, the Funds have adopted certain
fundamental investment limitations. Some of these restrictions are that the
Funds will not: (1) issue senior securities, borrow money or pledge their
assets; (2) make loans of money or securities, except that the Funds may invest
in repurchase agreements (but repurchase agreements having a maturity of longer
than seven days, together with other not readily marketable securities, are
limited to 10% of the Funds' net assets); (3) invest in securities of issuers
which have a record of less than three years' continuous operation (including
predecessors and, in the case of bonds, guarantors), if more than 5% of their
total assets would be invested in such securities; (4) purchase foreign
securities, except that the Funds may purchase foreign securities sold as ADRs
without limit; (5) write, purchase, or sell puts, calls, warrants or
combinations thereof, or purchase or sell commodities, commodities contracts,
futures contracts or related options, or invest in oil, gas, or mineral leases
or exploration programs, or real estate (but the Funds may invest in readily
marketable securities of REITs or other companies that own or deal in real
estate or oil, gas, or mineral leases or exploration programs); (6) invest more
than 5% of their total assets at cost in the securities of any one issuer nor
hold more than 10% of the voting stock of any issuer; and (7) invest in
restricted securities. See "Investment Limitations" in the Fund's Statement of
Additional Information for a complete list of investment limitations.

If the Board of Trustees of the Trust determines that the Funds' investment
objectives can best be achieved by a substantive change in a non-fundamental
investment limitation, the Board can make such change without shareholder
approval and will disclose any such material changes in the then current
Prospectus. Any limitation that is not specified in the Funds' Prospectus, or in
the Statement of Additional Information, as being fundamental, is
non-fundamental. If a percentage limitation is satisfied at the time of
investment, a later increase or decrease in such percentage resulting from a
change in the value of the Funds' portfolio securities will generally not
constitute a violation of such limitation. If the limitation on illiquid
securities is exceeded, however, through a change in values, net assets, or
other circumstances, the Funds would take appropriate steps to protect liquidity
by changing their portfolio.

FEDERAL INCOME TAXES

Taxation of the Funds. The Internal Revenue Code of 1986, as amended (the
"Code"), treats each series in the Trust, including the Funds, as a separate
regulated investment company. Each series of the Trust, including the Funds,
intends to qualify or remain qualified as a regulated investment company under
the Code by distributing substantially all of its "net investment income" to
shareholders and meeting other requirements of the Code. For the purpose of
calculating dividends, net investment income consists of income accrued on
portfolio assets, less accrued expenses. Upon qualification, the Funds will not
be liable for federal income taxes to the extent earnings are distributed. The
Board of Trustees retains the right for any series of the Trust, including the
Funds, to determine for any particular year if it is advantageous not to qualify
as a regulated investment company. Regulated investment companies, such as each
series of the Trust, including the Funds, are subject to a non-deductible 4%
excise tax to the extent they do not distribute the statutorily required amount
of investment income, determined on a calendar year basis, and capital gain net
income, using an October 31 year-end measuring period. The Funds intend to
declare or distribute dividends during the calendar year in an amount sufficient
to prevent imposition of the 4% excise tax.

For the fiscal year ended March 31, 1998, the Equity Fund and the Balanced Fund
were each considered a "personal holding company" under the Code since 50% of
the value of each Fund's shares were owned directly or indirectly by five or
fewer individuals at certain times during the last half of the year. As a
result, each Fund was unable to meet the requirements for taxation as a
regulated investment company and will be unable to meet such requirements as
long as it is classified as a personal holding company. As a personal holding
company, each Fund is subject to federal income taxes on undistributed personal
holding company income at the maximum individual income tax rate. For the fiscal
year ended March 31, 1998, however, no provision was made for federal income
taxes since substantially all taxable income was distributed to shareholders.
For the current fiscal year, each Fund anticipates that either it will qualify
as a regulated investment company under the Code or, if still considered a
personal holding company, it will distribute substantially all of its taxable
income for the current fiscal year to shareholders in order to avoid individual
income taxes.

Taxation of Shareholders. For federal income tax purposes, any dividends and
distributions from short-term capital gains that a shareholder receives in cash
from the Funds or which are re-invested in additional shares will be taxable
ordinary income. If a shareholder is not required to pay a tax on income, he
will not be required to pay federal income taxes on the amounts distributed to
him. A dividend declared in October, November or December of a year and paid in
January of the following year will be considered to be paid on December 31 of
the year of declaration.

Distributions paid by the Funds from long-term capital gains, whether received
in cash or reinvested in additional shares, are taxable as long-term capital
gains, regardless of the length of time an investor has owned shares in the
Funds. Capital gain distributions are made when the Funds realize net capital
gains on sales of portfolio securities during the year. Dividends and capital
gain distributions paid by the Funds shortly after shares have been purchased,
although in effect a return of investment, are subject to federal income
taxation.

The sale of shares of the Funds is a taxable event and may result in a capital
gain or loss. Capital gain or loss may be realized from an ordinary redemption
of shares or an exchange of shares between two mutual funds (or two series of a
mutual fund).

The Trust will inform shareholders of the Funds of the source of their dividends
and capital gains distributions at the time they are paid and, promptly after
the close of each calendar year, will issue an information return to advise
shareholders of the federal tax status of such distributions and dividends.
Dividends and distributions may also be subject to state and local taxes.
Shareholders should consult their tax advisors regarding specific questions as
to federal, state or local taxes.

Federal income tax law requires investors to certify that the social security
number or taxpayer identification number provided to the Funds is correct and
that the investor is not subject to 31% withholding for previous under-reporting
to the Internal Revenue Service (the "IRS"). Investors will be asked to make the
appropriate certification on their application to purchase shares. If a
shareholder of the Funds has not complied with the applicable statutory and IRS
requirements, the Funds are generally required by federal law to withhold and
remit to the IRS 31% of reportable payments (which may include dividends and
redemption amounts).

DIVIDENDS AND DISTRIBUTIONS

Each Fund intends to distribute substantially all of its net investment income,
if any, in the form of dividends. Each Fund will generally pay income dividends,
if any, quarterly, and will generally distribute net realized capital gains, if
any, at least annually.

Unless a shareholder elects to receive cash, dividends and capital gains will be
automatically reinvested in additional full and fractional shares of the same
Class of the Funds at the net asset value per share next determined. Reinvested
dividends and capital gains are exempt from any sales load. Shareholders wishing
to receive their dividends or capital gains in cash may make their request in
writing to the Funds at 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. That request must be received by the Funds
prior to the record date to be effective as to the next dividend. If cash
payment is requested, checks will be mailed within five business days after the
last day of each quarter or each Fund's fiscal year end, as applicable. Each
shareholder of the Funds will receive a quarterly summary of his or her account,
including information as to reinvested dividends from the Funds. Tax
consequences to shareholders of dividends and distributions are the same if
received in cash or in additional shares of the Funds.

In order to satisfy certain requirements of the Code, the Funds may declare
special year-end dividend and capital gains distribution during December. Such
distributions, if received by shareholders by January 31, are deemed to have
been paid by the Funds and received by shareholders on December 31 of the prior
year.

There is no fixed dividend rate, and there can be no assurance as to the payment
of any dividends or the realization of any gains. Each Fund's net investment
income available for distribution to holders of Institutional Shares will be
reduced by the amount of any expenses allocated to the Institutional Shares.

HOW SHARES ARE VALUED

Net asset value for each Class of Shares of the Funds is determined at the time
trading closes on the New York Stock Exchange (currently 4:00 p.m., New York
time), Monday through Friday, except on business holidays when the New York
Stock Exchange is closed. The net asset value of the shares of each Fund for
purposes of pricing sales and redemptions is equal to the total market value of
its investments and other assets, less all of its liabilities, divided by the
number of its outstanding shares. Net asset value is determined separately for
each Class of Shares of a Fund and reflects any liabilities allocated to a
particular Class as well as the general liabilities of the Fund.

Securities that are listed on a securities exchange are valued at the last
quoted sales price at the time the valuation is made. Price information on
listed securities is taken from the exchange where the security is primarily
traded by the Funds. Securities that are listed on an exchange and which are not
traded on the valuation date are valued at the last quoted bid price. Unlisted
securities for which market quotations are readily available are valued at the
latest quoted sales price, if available, at the time of valuation, otherwise, at
the latest quoted bid price. Temporary cash investments with maturities of 60
days or less will be valued at amortized cost, which approximates market value.
Securities for which no current quotations are readily available are valued at
fair value as determined in good faith using methods approved by the Board of
Trustees of the Trust. Securities may be valued on the basis of prices provided
by a pricing service when such prices are believed to reflect the fair market
value of such securities.

HOW SHARES MAY BE PURCHASED

Assistance in opening accounts and a purchase application may be obtained from
the Funds by calling 1-800-525-3863, or by writing to the Funds at the address
shown below for purchases by mail. Assistance is also available through any
broker-dealer authorized to sell shares in the Funds. Payment for shares
purchased may also be made through your account at the broker-dealer processing
your application and order to purchase. Your investment will purchase shares at
each Fund's net asset value next determined after your order is received by the
Fund in proper form as indicated herein.

The minimum initial investment is $10,000 ($2,000 for IRAs and Keogh Plans). The
minimum subsequent investment is $500. The Funds may, in the Advisor's sole
discretion, accept certain accounts with less than the stated minimum initial
investment. You may invest in the following ways:

Purchases by Mail. Shares may be purchased initially by completing the
application accompanying this Prospectus and mailing it, together with a check
payable to the applicable Fund, to the Brown Capital Management Funds,
Institutional Shares, 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365. Subsequent investments in an existing account
in the Funds may be made at any time by sending a check payable to the
applicable Fund, to the address stated above. Please enclose the stub of your
account statement and include the amount of the investment, the name of the
account for which the investment is to be made and the account number. Please
remember to add a reference to the applicable Fund and to "Institutional Shares"
to your check to ensure proper credit to your account.

Purchases by Wire. To purchase shares by wiring federal funds, each Fund must
first be notified by calling 1-800-525-3863 to request an account number and
furnish the Fund with your tax identification number. Following notification to
a Fund, federal funds and registration instructions should be wired through the
Federal Reserve System to:

First Union National Bank of North Carolina
Charlotte, North Carolina
ABA # 053000219 For credit to either:
The Brown Capital Management Equity Fund
Acct #2000000861768
OR
The Brown Capital Management Balanced Fund
Acct #2000000861917
OR
The Brown Capital Management Small Company Fund
Acct #2000000861904
For further credit to (shareholder's name and SS# or EIN#)

It is important that the wire contain all the information and that the Funds
receive prior telephone notification to ensure proper credit. A completed
application with signature(s) of registrant(s) must be mailed to the applicable
Fund immediately after the initial wire as described under "Purchases by Mail"
above. Investors should be aware that some banks may impose a wire service fee.

General. All purchases of shares are subject to acceptance and are not binding
until accepted. Each Fund reserves the right to reject any application or
investment. Orders received by the Fund and effective prior to the time trading
closes on the New York Stock Exchange (currently 4:00 p.m., New York time,
Monday through Friday, exclusive of business holidays) will purchase shares at
the net asset value determined at that time. Orders received by the Fund and
effective after the close of trading, or on a day when the New York Stock
Exchange is not open for business, will purchase shares at the net asset value
next determined. For orders placed through a qualified broker-dealer, such firm
is responsible for promptly transmitting purchase orders to the Fund. Investors
may be charged a fee if they effect transactions in the Fund shares through a
broker or agent.

Payment must be made by check or money order drawn on a U.S. bank and payable in
U.S. dollars. Under certain circumstances the Funds, at their sole discretion,
may allow payment in kind for Fund shares purchased by accepting securities in
lieu of cash. Any securities so accepted would be valued on the date received
and included in the calculation of the net asset value of the applicable Fund.
See the Statement of Additional Information for additional information on
purchases in kind.

Each Fund is required by federal law to withhold and remit to the IRS 31% of the
dividends, capital gains distributions and, in certain cases, proceeds of
redemptions paid to any shareholder who fails to furnish the Fund with a correct
taxpayer identification number, who under-reports dividend or interest income or
who fails to provide certification of tax identification number. Instructions to
exchange or transfer shares held in established accounts will be refused until
the certification has been provided. In order to avoid this withholding
requirement, you must certify on your application, or on a separate W-9 Form
supplied by the Funds, that your taxpayer identification number is correct and
that you are not currently subject to backup withholding or you are exempt from
backup withholding. For individuals, your taxpayer identification number is your
social security number.

Distributor. Capital Investment Group, Inc., Post Office Box 32249, Raleigh,
North Carolina 27622 (the "Distributor"), is the national distributor for the
Funds under a Distribution Agreement with the Trust. The Distributor may sell
Fund shares to or through qualified securities dealers or others. Richard K.
Bryant, a Trustee of the Trust and an officer of another series of the Trust,
and Elmer O. Edgerton, Jr., an officer of another series of the Trust, control
the Distributor. Messrs. Bryant and Edgerton are not officers of the Funds.

The Distributor, at its expense, may provide compensation to dealers in
connection with sales of shares of the Funds. 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. In some instances, this
compensation may be made available only to certain dealers whose representatives
have sold or are expected to sell a significant amount of such shares.
Compensation may include payment for travel expenses, including lodging,
incurred in connection with trips taken by invited registered representatives
and members of their families to locations within or outside of the United
States for meetings or seminars of a business nature. Dealers may not use sales
of the Fund shares to qualify for this compensation to the extent such may be
prohibited by the laws of any state or any self-regulatory agency, such as the
National Association of Securities Dealers, Inc. None of the aforementioned
compensation is paid for by the Funds or their shareholders.

Exchange Feature. Investors will have the privilege of exchanging shares of a
Fund for shares of another Fund or shares of any other series of the Trust
established by the Advisor. An exchange is a taxable transaction that involves
the simultaneous redemption of shares of one series and purchase of shares of
another series at the respective closing net asset value next determined after a
request for redemption has been received plus applicable sales charge. Each
series of the Trust will have a different investment objective, which may be of
interest to investors in each series. Shares of a Fund may be exchanged for
shares of another Fund or shares of any other series of the Trust affiliated
with the Advisor at the net asset value plus the percentage difference between
that series' sales charge and any sales charge previously paid in connection
with the shares being exchanged. For example, if a 2% sales charge was paid on
shares that are exchanged into a series with a 3% sales charge, there would be
an additional sales charge of 1% on the exchange. Exchanges may only be made by
investors in states where shares of the other series are qualified for sale. An
investor may direct a Fund to exchange his shares by writing to the Fund at its
principal office. The request must be signed exactly as the investor's name
appears on the account, and it must also provide the account number, number of
shares to be exchanged, the name of the Fund or other series to which the
exchange will take place and a statement as to whether the exchange is a full or
partial redemption of existing shares. Notwithstanding the foregoing, exchanges
of shares may only be within the same class or type of class of shares involved.
For example, Investor Shares may not be exchanged for any other Class of Shares
of the Funds.

A pattern of frequent exchange transactions may be deemed by the Advisor to be
an abusive practice that is not in the best interests of the shareholders of the
Funds. Such a pattern may, at the discretion of the Advisor, be limited by a
Fund's refusal to accept further purchase and/or exchange orders from an
investor, after providing the investor with 60 days prior notice. The Advisor
will consider all factors it deems relevant in determining whether a pattern of
frequent purchases, redemptions and/or exchanges by a particular investor is
abusive and not in the best interests of a Fund or its other shareholders.

A shareholder should consider the investment objectives and policies of any
other Fund or series into which the shareholder will be making an exchange, as
described in the prospectus for that other Fund or series. The Board of Trustees
of the Trust reserves the right to suspend or terminate, or amend the terms of,
the exchange privilege upon 60 days written notice to the shareholders.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investments in shares through automatic
charges to their checking account. With shareholder authorization and bank
approval, the Funds will automatically charge the checking account for the
amount specified ($100 minimum), which will be automatically invested in shares
at the public offering price on or about the 21st day of the month. The
shareholder may change the amount of the investment or discontinue the plan at
any time by writing to the Funds.

Stock Certificates. Stock certificates will not be issued for your shares.
Evidence of ownership will be given by issuance of periodic account statements
that will show the number of shares owned.

HOW SHARES MAY BE REDEEMED

If you are uncertain of the requirements for redemption, please contact the
Funds, at 1-800-525-3863, or write to the address shown below.

Regular Mail Redemptions. Your request should be addressed to The Brown Capital
Management Funds, Institutional Shares, 107 North Washington Street, Post Office
Box 4365, Rocky Mount, North Carolina 27803-0365. Your request for redemption
must include:

1) Your letter of instruction specifying the applicable Fund, the account
number, and the number of shares or dollar amount to be redeemed. This
request must be signed by all registered shareholders in the exact names in
which they are registered;

2) Any required signature guarantees (see "Signature Guarantees" below); and

3) Other supporting legal documents, if required in the case of estates,
trusts, guardianships, custodianships, corporations, partnerships, pension
or profit sharing plans, and other organizations.

Your redemption proceeds will be sent to you within seven days after receipt of
your redemption request. However, each Fund may delay forwarding a redemption
check for recently purchased shares while it determines whether the purchase
payment will be honored. Such delay (which may take up to 15 days from the date
of purchase) may be reduced or avoided if the purchase is made by certified
check or wire transfer. In all cases the net asset value next determined after
the receipt of the request for redemption will be used in processing the
redemption. Each Fund may suspend redemption privileges or postpone the date of
payment (i) during any period that the New York Stock Exchange is closed, or
trading on the New York Stock Exchange is restricted as determined by the
Securities and Exchange Commission (the "Commission"), (ii) during any period
when an emergency exists as defined by the rules of the Commission as a result
of which it is not reasonably practicable for a Fund to dispose of securities
owned by it, or to fairly determine the value of its assets, and (iii) for such
other periods as the Commission may permit.

Telephone and Bank Wire Redemptions. Each Fund offers shareholders the option of
redeeming shares by telephone under certain limited conditions. A Fund will
redeem shares when requested by the shareholder if, and only if, the shareholder
confirms redemption instructions in writing.

A Fund may rely upon confirmation of redemption requests transmitted via
facsimile (FAX# 919-972-1908). The confirmation instructions must include:

1) Designation of the Equity, Balanced, or Small Company Fund;

2) Shareholder name and account number;

3) Number of shares or dollar amount to be redeemed;

4) Instructions for transmittal of redemption funds to the shareholder; and

5) Shareholder signature as it appears on the application then on file with
the applicable Fund.

The net asset value used in processing the redemption will be the net asset
value next determined after the telephone request is received. Redemption
proceeds will not be distributed until written confirmation of the redemption
request is received, per the instructions above. You can choose to have
redemption proceeds mailed to you at your address of record, your bank, or to
any other authorized person, or you can have the proceeds sent by bank wire to
your bank ($5,000 minimum). Shares of the Funds may not be redeemed by wire on
days on which your bank is not open for business. You can change your redemption
instructions anytime you wish by filing a letter including your new redemption
instructions with the Funds. (See "Signature Guarantees" below.) Each Fund
reserves the right to restrict or cancel telephone and bank wire redemption
privileges for shareholders, without notice, if the Fund believes it to be in
the best interest of the shareholders to do so. During drastic economic and
market conditions, telephone redemption privileges may be difficult to
implement.

The Funds in their discretion may choose to pass through to redeeming
shareholders any charges by the Custodian for wire redemptions. The Custodian
currently charges $10.00 per transaction for wiring redemption proceeds. If this
cost is passed through to redeeming shareholders by the Funds, the charge will
be deducted automatically from the shareholder's account by redemption of shares
in the account. The shareholder's bank or brokerage firm may also impose a
charge for processing the wire. If wire transfer of funds is impossible or
impractical, the redemption proceeds will be sent by mail to the designated
account.

You may redeem shares, subject to the procedures outlined above, by calling the
Funds at 1-800-525-3863. Redemption proceeds will only be sent to the bank
account or person named in your Fund Shares Application currently on file with
the Funds. Telephone redemption privileges authorize the applicable Fund to act
on telephone instructions from any person representing himself or herself to be
the investor and reasonably believed by the Fund to be genuine. Each Fund will
employ reasonable procedures, such as requiring a form of personal
identification, to confirm that instructions are genuine, and, if it does not
follow such procedures, the Fund will be liable for any losses due to fraudulent
or unauthorized instructions. The Fund will not be liable for following
telephone instructions reasonably believed to be genuine.

Systematic Withdrawal Plan. A shareholder who owns shares of a Fund valued at
$10,000 or more at current net asset value may establish a Systematic Withdrawal
Plan to receive a monthly or quarterly check in a stated amount not less than
$100. Each month or quarter as specified, the Fund will automatically redeem
sufficient shares from your account to meet the specified withdrawal amount.
Call or write the Funds for an application form. See the Statement of Additional
Information for further details.

Signature Guarantees. To protect your account and the Funds from fraud,
signature guarantees are required to be sure that you are the person who has
authorized a change in registration, or standing instructions, for your account.
Signature guarantees are required for (1) change of registration requests, (2)
requests to establish or change exchange privileges or telephone redemption
service other than through your initial account application, and (3) requests
for redemptions in excess of $50,000. Signature guarantees are acceptable from a
member bank of the Federal Reserve System, a savings and loan institution,
credit union (if authorized under state law), registered broker-dealer,
securities exchange or association clearing agency, and must appear on the
written request for redemption, establishment or change in exchange privileges,
or change of registration.

MANAGEMENT OF THE FUNDS

Trustees and Officers. Each Fund is a diversified series of The Nottingham
Investment Trust II (the "Trust"), an investment company organized as a
Massachusetts business trust on October 25, 1990. The Board of Trustees of the
Trust is responsible for the management of the business and affairs of the
Trust. The Trustees and executive officers of the Trust and their principal
occupations for the last five years are set forth in the Statement of Additional
Information under "Management of the Funds - Trustees and Officers." The Board
of Trustees of the Trust is primarily responsible for overseeing the conduct of
the Trust's business. The Board of Trustees elects the officers of the Trust who
are responsible for its and the Funds' day-to-day operations.

The Advisor. Subject to the authority of the Board of Trustees, Brown Capital
Management, Inc. (the "Advisor") provides each Fund with a continuous program of
supervision of the Fund's assets, including the composition of its portfolio,
and furnishes advice and recommendations with respect to investments, investment
policies and the purchase and sale of securities, pursuant to an Investment
Advisory Agreement (the "Advisory Agreement") with the Trust.

The Advisor is registered under the Investment Advisors Act of 1940, as amended.
Registration of the Advisor does not involve any supervision of management or
investment practices or policies by the Securities and Exchange Commission. The
Advisor, established as a Maryland corporation in 1983, is controlled by Eddie
C. Brown. The Advisor currently serves as investment advisor to approximately
$4.0 billion in assets. The Advisor has been rendering investment counsel,
utilizing investment strategies substantially similar to that of the Funds, to
individuals, banks and thrift institutions, pension and profit sharing plans,
trusts, estates, charitable organizations and corporations since its formation.
The Advisor's address is 809 Cathedral Street, Baltimore, Maryland 21201.

Compensation of the Advisor with regard to the Equity Fund, based upon the
Fund's daily average net assets, is at the annual rate of 0.65% of the first $25
million of net assets and 0.50% of all assets over $25 million. The Advisor has
voluntarily waived substantially all of its fee and reimbursed a portion of the
Fund's operating expenses for the fiscal year ended March 31, 1998. The total
fees waived amounted to $41,375 (the Advisor received $251) and expenses
reimbursed amounted to $8,549.

Compensation of the Advisor with regards to the Balanced Fund, based upon the
Fund's daily average net assets, is at the annual rate of 0.65% of the first $25
million of net assets and 0.50% of all assets over $25 million. The Advisor has
voluntarily waived its fee and reimbursed a portion of the Fund's operating
expenses for the fiscal year ended March 31, 1998. The total fees waived
amounted to $32,686 and expenses reimbursed amounted to $18,899.

Compensation of the Advisor with regards to the Small Company Fund, based upon
the Fund's daily average net assets, is at the annual rate of 1.00%. The Advisor
has voluntarily waived a portion of its fee for the fiscal year ended March 31,
1998. The total fees waived amounted to $51,594 (the Advisor received $41,776 of
its fee).

The Advisor supervises and implements the investment activities of each Fund,
including the making of specific decisions as to the purchase and sale of
portfolio investments. Among the responsibilities of the Advisor under the
Advisory Agreement is the selection of brokers and dealers through whom
transactions in each Fund's portfolio investments will be effected. The Advisor
attempts to obtain the best execution for all such transactions. If it is
believed that more than one broker is able to provide the best execution, the
Advisor will consider the receipt of quotations and other market services and of
research, statistical and other data and the sale of shares of the Fund in
selecting a broker. The Advisor may also utilize a brokerage firm affiliated
with the Trust or the Advisor if it believes it can obtain the best execution of
transactions from such broker. Research services obtained through Fund brokerage
transactions may be used by the Advisor for its other clients and, conversely,
the Funds may benefit from research services obtained through the brokerage
transactions of the Advisor's other clients. For further information, see
"Investment Objective and Policies Investment Transactions" in the Statement of
Additional Information.

Eddie C. Brown, a director, executive officer, and controlling shareholder of
the Advisor and Trustee and executive officer of the Trust, has been responsible
for day-to-day management of each Fund's portfolio since its inception in 1992.
He has been with the Advisor since its inception.

The Administrator was incorporated as a North Carolina corporation in 1988. With
its predecessors and affiliates, the Administrator has been operating as a
financial services firm since 1985. Frank P. Meadows III is the firm's Managing
Director and controlling shareholder.

The Transfer Agent. North Carolina Shareholder Services, LLC (the "Transfer
Agent") serves as the Funds' transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent, subject to the authority of the Board of
Trustees, provides transfer agency services pursuant to an agreement with the
Administrator, which has been approved by the Trust. The Transfer Agent
maintains the records of each shareholder's account, answers shareholder
inquiries concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and performs other
shareholder servicing functions. The Fund is charged a recordkeeping fee based
on the number of shareholders in the Fund and an annual fee for shareholder
administration services.

The Custodian. First Union National Bank of North Carolina (the "Custodian"),
Two First Union Center, Charlotte, North Carolina 28288-1151, serves as
Custodian of each Fund's assets. The Custodian acts as the depository for each
Fund, safekeeps its portfolio securities, collects all income and other payments
with respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties.

Other Expenses. Each Fund is responsible for the payment of its expenses. These
include, for example, the fees payable to the Advisor, or expenses otherwise
incurred in connection with the management of the investment of the Fund's
assets, the fees and expenses of the Custodian, Administrator, and Transfer
Agent, the fees and expenses of Trustees, outside auditing and legal expenses,
all taxes and corporate fees payable by the Fund, Securities and Exchange
Commission fees, state securities qualification fees, costs of preparing and
printing prospectuses for regulatory purposes and for distribution to
shareholders, costs of shareholder reports and shareholder meetings, and any
extraordinary expenses. Each Fund also pays for brokerage commissions and
transfer taxes (if any) in connection with the purchase and sale of portfolio
securities. Expenses attributable to a particular series of the Trust, including
each Fund, will be charged to that series, and expenses not readily identifiable
as belonging to a particular series will be allocated by or under procedures
approved by the Board of Trustees among one or more series in such a manner as
it deems fair and equitable. Any expenses relating only to a particular Class of
Shares of the Funds will be borne solely by such Class. Each Fund's expense
ratio for prior fiscal years, calculated both before and after fee waivers and
expense reimbursements, if any, is indicated under "Financial Highlights" above.

OTHER INFORMATION

Description of Shares. The Trust was organized as a Massachusetts business trust
on October 25, 1990, under a Declaration of Trust. The Declaration of Trust
permits the Board of Trustees to issue an unlimited number of full and
fractional shares and to create an unlimited number of series of shares. The
Board of Trustees may also classify and reclassify any unissued shares into one
or more classes of shares. The Trust currently has the number of authorized
series of shares, including the Funds, and classes of shares, described in the
Statement of Additional Information under "Description of the Trust." Pursuant
to its authority under the Declaration of Trust, the Board of Trustees has
authorized the issuance of an unlimited number of shares in each of two Classes
("Investor Shares" and "Institutional Shares") representing equal pro rata
interests in each Fund, except that the Classes bear different expenses that
reflect the differences in services provided to them. Investor Shares bear
potential distribution expenses and service fees. Institutional Shares bear no
shareholder servicing or distribution fees. As a result of different charges,
fees, and expenses between the Classes, the total return on each Fund's Investor
Shares will generally be lower than the total return on the Institutional
Shares. Standardized total return quotations will be computed separately for
each Class of Shares of the Funds.

THIS PROSPECTUS RELATES TO EACH FUND'S INSTITUTIONAL SHARES AND DESCRIBES ONLY
THE POLICIES, OPERATIONS, CONTRACTS, AND OTHER MATTERS PERTAINING TO THE
INSTITUTIONAL SHARES. EACH FUND ALSO ISSUES A CLASS OF INVESTOR SHARES. SUCH
OTHER CLASS MAY HAVE DIFFERENT SALES CHARGES AND EXPENSES, WHICH MAY AFFECT
PERFORMANCE. INVESTORS MAY CALL THE FUNDS AT 1-800-525-3863 TO OBTAIN MORE
INFORMATION CONCERNING OTHER CLASSES AVAILABLE TO THEM THROUGH THEIR SALES
REPRESENTATIVE. INVESTORS MAY OBTAIN INFORMATION CONCERNING THOSE CLASSES FROM
THEIR SALES REPRESENTATIVE, THE DISTRIBUTOR, THE FUNDS, OR ANY OTHER PERSON
WHICH IS OFFERING OR MAKING AVAILABLE TO THEM THE SECURITIES OFFERED IN THIS
PROSPECTUS.

When issued, the shares of each series of the Trust, including the Funds, and
each class of shares, will be fully paid, nonassessable and redeemable. The
Trust does not intend to hold annual shareholder meetings; it may, however, hold
special shareholder meetings for purposes such as changing fundamental policies
or electing Trustees. The Board of Trustees shall promptly call a meeting for
the purpose of electing or removing Trustees when requested in writing to do so
by the record holders of at least 10% of the outstanding shares of the Trust.
The term of office of each Trustee is of unlimited duration. The holders of at
least two-thirds of the outstanding shares of the Trust may remove a Trustee
from that position either by declaration in writing filed with the Custodian or
by votes cast in person or by proxy at a meeting called for that purpose.

The Trust's shareholders will vote in the aggregate and not by series (fund) or
class, except where otherwise required by law or when the Board of Trustees
determines that the matter to be voted on affects only the interests of the
shareholders of a particular series or class. Matters affecting an individual
series, such as each Fund, include, but are not limited to, the investment
objectives, policies and restrictions of that series. Shares have no
subscription, preemptive or conversion rights. Share certificates will not be
issued. Each share is entitled to one vote (and fractional shares are entitled
to proportionate fractional votes) on all matters submitted for a vote, and
shares have equal voting rights except that only shares of a particular series
or class are entitled to vote on matters affecting only that series or class.
Shares do not have cumulative voting rights. Therefore, the holders of more than
50% of the aggregate number of shares of all series of the Trust may elect all
the Trustees.

Reporting to Shareholders. Each Fund will send to its shareholders Annual and
Semi-Annual Reports; the financial statements appearing in Annual Reports for
each Fund will be audited by independent accountants. In addition, the Funds
will send to each shareholder having an account directly with the Funds a
quarterly statement showing transactions in the account, the total number of
shares owned and any dividends or distributions paid. Inquiries regarding the
Funds may be directed in writing to 107 North Washington Street, Post Office Box
4365, Rocky Mount, North Carolina 27803-0365 or by calling 1-800-525-3863.

Calculation of Performance Data. From time to time each Fund may advertise its
average annual total return for each Class of Shares. The "average annual total
return" refers to the average annual compounded rates of return over 1-, 5- and
10-year periods that would equate an initial amount invested at the beginning of
a stated period to the ending redeemable value of the investment. The
calculation assumes the reinvestment of all dividends and distributions,
includes all recurring fees that are charged to all shareholder accounts and
deducts all nonrecurring charges at the end of each period. If a Fund has been
operating less than 1, 5 or 10 years, the time period during which the Fund has
been operating is substituted.

In addition, each Fund may advertise other total return performance data other
than average annual total return for each Class of Shares. This data shows as a
percentage rate of return encompassing all elements of return (i.e. income and
capital appreciation or depreciation); it assumes reinvestment of all dividends
and capital gain distributions. Such other total return data may be quoted for
the same or different periods as those for which average annual total return is
quoted. This data may consist of a cumulative percentage rate of return, actual
year-by-year rates or any combination thereof. Cumulative total return
represents the cumulative change in value of an investment in a Fund for various
periods.

The total return of a Fund could be increased to the extent the Advisor may
waive all or a portion of its fees or may reimburse all or a portion of the
Fund's expenses. Total return figures are based on the historical performance of
the Fund, show the performance of a hypothetical investment, and are not
intended to indicate future performance. Each Fund's quotations may from time to
time be used in advertisements, sales literature, shareholder reports, or other
communications. For further information, see "Additional Information on
Performance" in the Statement of Additional Information.

<PAGE>
No dealer, salesman, or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
and, if given or made, such other information or representations must not be
relied upon as having been authorized by the Funds or the Advisor. This
Prospectus does not constitute an offering in any state in which an offering may
not lawfully be made.

Each Fund reserves the right in its sole discretion to withdraw all or any part
of the offering made by this Prospectus or to reject purchase orders. All orders
to purchase shares are subject to acceptance by each Fund and are not binding
until confirmed or accepted in writing.

The Brown Capital Management Funds
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
1-800-525-3863

Investment Advisor
Brown Capital Management, Inc.
809 Cathedral Street
Baltimore, Maryland 21201

Distributor
Capital Investment Group, Inc.
Post Office Box 32249
Raleigh, North Carolina 27622

Custodian
First Union National Bank of North Carolina
Two First Union Center
Charlotte, North Carolina 28288-1151

Independent Auditors
Deloitte & Touche LLP
2500 One PPG Place
Pittsburgh, Pennsylvania 15222-5401

<PAGE>

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

THE BROWN CAPITAL
MANAGEMENT FUNDS

INSTITUTIONAL CLASS

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

PROSPECTUS

August 1, 1998

<PAGE>

PART B
======

STATEMENT OF ADDITIONAL INFORMATION

WST GROWTH & INCOME FUND

August 1, 1998

A Series of
THE NOTTINGHAM INVESTMENT TRUST II
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-525-3863

Table of Contents

INVESTMENT OBJECTIVE AND POLICIES....................................................................................... 2
INVESTMENT LIMITATIONS.................................................................................................. 6
NET ASSET VALUE......................................................................................................... 7
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.......................................................................... 8
DESCRIPTION OF THE TRUST................................................................................................ 9
ADDITIONAL INFORMATION CONCERNING TAXES................................................................................ 10
MANAGEMENT OF THE FUND.................................................................................................. 11
SPECIAL SHAREHOLDER SERVICES............................................................................................ 17
ADDITIONAL INFORMATION ON PERFORMANCE................................................................................... 18
APPENDIX A - DESCRIPTION OF RATINGS..................................................................................... 20
ANNUAL REPORT OF THE FUND FOR THE FISCAL PERIOD ENDED MARCH 31, 1998...............................................ATTACHED

</TABLE>

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus, dated the same date as this
Additional Statement, for the WST Growth & Income Fund (the "Fund") relating to
the Fund's Investor Shares and Institutional Shares, as each Prospectus may be
amended or supplemented from time to time, and is incorporated by reference in
its entirety into each Prospectus. Because this Additional Statement is not
itself a prospectus, no investment in shares of the Fund should be made solely
upon the information contained herein. Copies of the Fund's Prospectus may be
obtained at no charge by writing or calling the Fund at the address and phone
number shown above. This Additional Statement is not a prospectus but is
incorporated by reference in each Prospectus in its entirety. Capitalized terms
used but not defined herein have the same meanings as in the Prospectus.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectus for each Class of Shares of the Fund. The Fund
has no prior operating history.

Additional Information on Fund Instruments. Attached to this Additional
Statement is Appendix A, which contains descriptions of the rating symbols used
by Rating Agencies for securities in which the Fund may invest.

Investment Transactions. Subject to the general supervision of the Trust's Board
of Trustees, the Advisor is responsible for, makes decisions with respect to,
and places orders for all purchases and sales of portfolio securities for the
Fund.

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

Purchases of money market instruments by the Fund are made from dealers,
underwriters and issuers. The Fund currently does not expect to incur any
brokerage commission expense on such transactions because money market
instruments are generally traded on a "net" basis by a dealer acting as
principal for its own account without a stated commission. The price of the
security, however, usually includes a profit to the dealer. Securities purchased
in underwritten offerings include a fixed amount of compensation to the
underwriter, generally referred to as the underwriter's concession or discount.
When securities are purchased directly from or sold directly to an issuer, no
commissions or discounts are paid.

Transactions on U.S. stock exchanges involve the payment of negotiated brokerage
commissions. On exchanges on which commissions are negotiated, the cost of
transactions may vary among different brokers. Transactions in the
over-the-counter market are generally on a net basis (i.e., without commission)
through dealers, or otherwise involve transactions directly with the issuer of
an instrument. The Fund's fixed income portfolio transactions will normally be
principal transactions executed in over-the-counter markets and will be executed
on a "net" basis, which may include a dealer markup. With respect to securities
traded only in the over-the-counter market, orders will be executed on a
principal basis with primary market makers in such securities except where
better prices or executions may be obtained on an agency basis or by dealing
with other than a primary market maker.

The Fund may participate, if and when practicable, in bidding for the purchase
of Fund securities directly from an issuer in order to take advantage of the
lower purchase price available to members of a bidding group. The Fund will
engage in this practice, however, only when the Advisor, in its sole discretion,
believes such practice to be otherwise in the Fund's interest.

In executing Fund transactions and selecting brokers or dealers, the Advisor
will seek to obtain the best overall terms available for the Fund. In assessing
the best overall terms available for any transaction, the Advisor shall consider
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the spread or commission, if
any, both for the specific transaction and on a continuing basis. The sale of
Fund shares may be considered when determining the firms that are to execute
brokerage transactions for the Fund. In addition, the Advisor is authorized to
cause the Fund to pay a broker-dealer which furnishes brokerage and research
services a higher spread or commission than that which might be charged by
another broker-dealer for effecting the same transaction, provided that the
Advisor determines in good faith that such spread or commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either the particular transaction or the
overall responsibilities of the Advisor to the Fund. Such brokerage and research
services might consist of reports and statistics relating to specific companies
or industries, general summaries of groups of stocks or bonds and their
comparative earnings and yields, or broad overviews of the stock, bond and
government securities markets and the economy. Supplementary research
information so received is in addition to, and not in lieu of, services required
to be performed by the Advisor and does not reduce the advisory fees payable by
the Fund. The Trustees will periodically review any spread or commissions paid
by the Fund to consider whether the spread or commissions paid over
representative periods of time appear to be reasonable in relation to the
benefits inuring to the Fund. It is possible that certain of the supplementary
research or other services received will primarily benefit one or more other
investment companies or other accounts for which the Advisor exercises
investment discretion. Conversely, the Fund may be the primary beneficiary of
the research or services received as a result of securities transactions
effected for such other account or investment company.

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor (including the Distributor), if it believes it can obtain the best
execution of transactions from such broker. The Fund will not execute portfolio
transactions through, acquire securities issued by, make savings deposits in or
enter into repurchase agreements with the Advisor or an affiliated person of the
Advisor (as such term is defined in the 1940 Act) acting as principal, except to
the extent permitted by the Securities and Exchange Commission ("SEC"). In
addition, the Fund will not purchase securities during the existence of any
underwriting or selling group relating thereto of which the Advisor, or an
affiliated person of the Advisor, is a member, except to the extent permitted by
the SEC. Under certain circumstances, the Fund may be at a disadvantage because
of these limitations in comparison with other investment companies that have
similar investment objectives but are not subject to such limitations.

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

For the fiscal period ended March 31, 1998, the Fund paid brokerage commissions
of $15,215.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resell it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to five days of the purchase.

Repurchase agreements are considered "loans" under the Investment Company Act of
1940, as amended (the "1940 Act"), collateralized by the underlying security.
The Trust will implement procedures to monitor on a continuous basis the value
of the collateral serving as security for repurchase obligations. Additionally,
the Advisor to the Fund will consider the creditworthiness of the vendor. If the
vendor fails to pay the agreed upon resale price on the delivery date, the Fund
will retain or attempt to dispose of the collateral. The Fund's risk is that
such default may include any decline in value of the collateral to an amount
which is less than 100% of the repurchase price, any costs of disposing of such
collateral, and any loss resulting from any delay in foreclosing on the
collateral. The Fund will not enter into any repurchase agreement which will
cause more than 10% of its net assets to be invested in repurchase agreements
which extend beyond seven days.

Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest bearing debt obligation of a bank. Commercial Paper is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.

Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days. If through a change in values, net
assets or other circumstances, the Fund were in a position where more than 10%
of its net assets were invested in illiquid securities, it would seek to take
appropriate steps to protect liquidity.

Restricted Securities. Within its limitation on investment in illiquid
securities, the Fund may purchase restricted securities that generally can be
sold in privately negotiated transactions, pursuant to an exemption from
registration under the federal securities laws, or in a registered public
offering. Where registration is required, the Fund may be obligated to pay all
or part of the registration expense and a considerable period may elapse between
the time it decides to seek registration and the time the Fund may be permitted
to sell a security under an effective registration statement. If during such a
period, adverse market conditions were to develop, the Fund might obtain a less
favorable price than prevailed when it decided to seek registration of the
security.

Options Trading. The Fund may also purchase or sell certain put and call options
for hedging purposes. This is a highly specialized activity that entails greater
than ordinary investment risks. Regardless of how much the market price of the
underlying security increases or decreases, the option buyer's risk is limited
to the amount of the original investment for the purchase of the option.
However, options may be more volatile than the underlying securities, and
therefore, on a percentage basis, an investment in options may be subject to
greater fluctuation than an investment in the underlying securities. A listed
call option gives the purchaser of the option the right to buy from a clearing
corporation, and a writer has the obligation to sell to the clearing
corporation, the underlying security at the stated exercise price at any time
prior to the expiration of the option, regardless of the market price of the
security. The premium paid to the writer is in consideration for undertaking the
obligations under the option contract. A listed put option gives the purchaser
the right to sell to a clearing corporation the underlying security at the
stated exercise price at any time prior to the expiration date of the option,
regardless of the market price of the security. Put and call options purchased
by the Fund will be valued at the last sale price or, in the absence of such a
price, at the mean between bid and asked prices.

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

When the Fund writes a covered call option, an amount equal to the net premium
(the premium less the commission) received by the Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently
marked-to-market to reflect the current value of the option written. The current
value of the traded option is the last sale price or, in the absence of a sale,
the average of the closing bid and asked prices. If an option expires on the
stipulated expiration date or if the Fund enters into a closing purchase
transaction, it will realize a gain (or loss if the cost of a closing purchase
transaction exceeds the net premium received when the option is sold), and the
deferred credit related to such option will be eliminated. Any gain on a covered
call option may be offset by a decline in the market price of the underlying
security during the option period. If a covered call option is exercised, the
Fund may deliver the underlying security held by it or purchase the underlying
security in the open market. In either event, the proceeds of the sale will be
increased by the net premium originally received, and the Fund will realize a
gain or loss. If a secured put option is exercised, the amount paid by the Fund
for the underlying security will be partially offset by the amount of the
premium previously paid to the Fund. Premiums from expired options written by
the Fund and net gains from closing purchase transactions are treated as
short-term capital gains for federal income tax purposes, and losses on closing
purchase transactions are short-term capital losses.

Stock Index Options. The Fund may purchase or sell put and call stock index
options for hedging purposes. Stock index options are put options and call
options on various stock indexes. In most respects, they are identical to listed
options on common stocks. The primary difference between stock options and index
options occurs when index options are exercised. In the case of stock options,
the underlying security, common stock, is delivered. However, upon the exercise
of an index option, settlement does not occur by delivery of the securities
comprising the index. The option holder who exercises the index option receives
an amount of cash if the closing level of the stock index upon which the option
is based is greater than, in the case of a call, or less than, in the case of a
put, the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the stock index and the exercise price
of the option expressed in dollars times a specified multiple. A stock index
fluctuates with changes in the market values of the stocks included in the
index.

The Fund may purchase call and put stock index options in an attempt to either
hedge against the risk of unfavorable price movements adversely affecting the
value of the Fund's securities, or securities the Fund intends to buy, or
otherwise in furtherance of the Fund's investment objectives. The Fund will sell
(write) stock index options for hedging purposes or in order to close out
positions in stock index options which the Fund has purchased.

The Fund's use of stock index options is subject to certain risks. Successful
use by the Fund of options on stock indexes will be subject to the ability of
the Advisor to correctly predict movements in the directions of the stock
market. This requires different skills and techniques than predicting changes in
the prices of individual securities. In addition, the Fund's ability to
effectively hedge all or a portion of the securities in its portfolio, in
anticipation of or during a market decline through transactions in put options
on stock indexes, depends on the degree to which price movements in the
underlying index correlate with the price movements in the Fund's portfolio
securities. Inasmuch as the Fund's portfolio securities will not duplicate the
components of an index, the correlation will not be perfect. Consequently, the
Fund will bear the risk that the prices of its portfolio securities being hedged
will not move in the same amount as the prices of the Fund's put options on the
stock indexes. It is also possible that there may be a negative correlation
between the index and the Fund's portfolio securities that would result in a
loss on both such portfolio securities and the options on stock indexes acquired
by the Fund.

Lower Rated Debt Securities. The Fund may invest in debt securities which are
rated Caa or higher by Moody's or CCC or higher by S&P or Fitch or equivalent
unrated securities. However, the Fund may not invest more than 15% of its assets
in debt securities rated lower than Baa by Moody's or BBB by S&P or Fitch or
securities not rated by Moody's, S&P or Fitch which the Advisor deems to be of
equivalent quality. Bonds rated BB or Ba or below (or comparable unrated
securities) are commonly referred to as "junk bonds" and are considered
speculative and may be questionable as to principal and interest payments. In
some cases, such bonds may be highly speculative, have poor prospects for
reaching investment standing, and be in default. As a result, investment in such
bonds will entail greater risks than those associated with investment in
investment-grade bonds (i.e., bonds rated BBB or better by S&P or Fitch or Baa
or better by Moody's).

An economic downturn could severely affect the ability of highly leveraged
issuers to service their debt obligations or to repay their obligations upon
maturity. Factors having an adverse impact on the market value of lower rated
securities will have an adverse effect on the Fund's net asset value to the
extent it invests in such securities. In addition, the Fund may incur additional
expenses to the extent it is required to seek recovery upon a default in payment
of principal or interest on its portfolio holdings.

The secondary market for junk bond securities, which is concentrated in
relatively few market makers, may not be as liquid as the secondary market for
more highly rated securities, a factor which may have an adverse effect on the
Fund's ability to dispose of a particular security when necessary to meet its
liquidity needs. Under adverse market or economic conditions, the secondary
market for junk bond securities could contract further, independent of any
specific adverse changes in the condition of a particular issuer. As a result,
the Advisor could find it more difficult to sell these securities or may be able
to sell the securities only at prices lower than if such securities were widely
traded. Prices realized upon the sale of such lower rated or unrated securities,
under these circumstances, may be less than the prices used in calculating the
Fund's net asset value.

Since investors generally perceive that there are greater risks associated with
the medium to lower rated securities of the type in which the Fund may invest,
the yields and prices of such securities may tend to fluctuate more than those
for higher rated securities. In the lower quality segments of the fixed-income
securities market, changes in perceptions of issuers' creditworthiness tend to
occur more frequently and in a more pronounced manner than do changes in higher
quality segments of the fixed-income securities market resulting in greater
yield and price volatility.

Another factor which causes fluctuations in the prices of fixed-income
securities is the supply and demand for similarly rated securities. In addition,
the prices of fixed-income securities fluctuate in response to the general level
of interest rates. Fluctuations in the prices of portfolio securities subsequent
to their acquisition will not affect cash income from such securities but will
be reflected in a Fund's net asset value.

Medium to lower rated and comparable non-rated securities tend to offer higher
yields than higher rated securities with the same maturities because the
historical financial condition of the issuers of such securities may not have
been as strong as that of other issuers. In addition to the risk of default,
there are the related costs of recovery on defaulted issues. The Advisor will
attempt to reduce these risks through diversification of the Fund's portfolio
and by analysis of each issuer and its ability to make timely payments of income
and principal, as well as broad economic trends in corporate developments.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose means the lesser of (i)
67% of the Fund's outstanding shares represented in person or by proxy at a
meeting at which more than 50% of its outstanding shares are represented, or
(ii) more than 50% of its outstanding shares. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

1. Issue senior securities, borrow money, or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of its total assets or (b)
to meet redemption requests, in amounts not exceeding 15% of its total
assets. The Fund will not make any investments if borrowing exceeds 5% of
its total assets until such time as total borrowing represents less than 5%
of Fund assets;

2. With respect to 75% of its total assets, invest more than 5% of the value
of its total assets in the securities of any one issuer or purchase more
than 10% of the outstanding voting securities of any class of securities of
any one issuer (except that securities of the U.S. government, its
agencies, and instrumentalities are not subject to this limitation);

3. Invest 25% or more of the value of its total assets in any one industry
(except that securities of the U.S. Government, its agencies, and
instrumentalities are not subject to this limitation);

4. Invest for the purpose of exercising control or management of another
issuer;

5. Purchase or sell commodities or commodities contracts; real estate
(including limited partnership interests, but excluding readily marketable
interests in real estate investment trusts or other securities secured by
real estate or interests therein or readily marketable securities issued by
companies that invest in real estate or interests therein); or interests in
oil, gas, or other mineral exploration or development programs or leases
(although it may invest in readily marketable securities of issuers that
invest in or sponsor such programs or leases);

6. Underwrite securities issued by others except to the extent that the
disposition of portfolio securities, either directly from an issuer or from
an underwriter for an issuer, may be deemed to be an underwriting under the
federal securities laws;

7. Participate on a joint or joint and several basis in any trading account in
securities;

8. Invest its assets in the securities of one or more investment companies
except to the extent permitted by the 1940 Act; or

9. Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt securities.

The following investment limitations are not fundamental and may be changed
without shareholder approval. As a matter of non-fundamental policy, the Fund
may not:

1. Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors) if more than 5% of its total assets would be invested in
such securities;

2. Invest more than 10% of its net assets in illiquid securities. For this
purpose, illiquid securities include, among others, (a) securities for
which no readily available market exists or which have legal or contractual
restrictions on resale, (b) fixed-time deposits that are subject to
withdrawal penalties and have maturities of more than seven days, and (c)
repurchase agreements not terminable within seven days;

3. Invest in the securities of any issuer if those officers or Trustees of the
Trust and those officers and directors of the Advisor who individually own
more than 1/2 of 1% of the outstanding securities of such issuer together
own more than 5% of such issuer's securities;

4. Write, purchase, or sell puts, calls, straddles, spreads, or combinations
thereof or futures contracts or related options (except that the Fund may
engage in options transactions to the extent described in the Prospectus);

5. Make short sales of securities or maintain a short position, except short
sales "against the box." (A short sale is made by selling a security the
Fund does not own. A short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no additional
cost securities identical to those sold short.) While the Fund has reserved
the right to make short sales "against the box," the Advisor has no present
intention of engaging in such transactions at this time or during the
coming year; or

6. Purchase foreign securities other than those traded on domestic U.S.
exchanges and other foreign debt securities as described in the Prospectus.

NET ASSET VALUE

The net asset value per share of each Class of Shares of the Fund is determined
at the time trading closes on the New York Stock Exchange (currently 4:00 p.m.,
New York time, Monday through Friday), except on business holidays when the New
York Stock Exchange is closed. The New York Stock Exchange recognizes the
following holidays: New Year's Day, President's Day, Martin Luther King, Jr.
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and
Christmas Day. Any other holiday recognized by the New York Stock Exchange will
be considered a business holiday on which the net asset value of each Class of
Shares of the Fund will not be calculated.

The net asset value per share of each Class of the Fund is calculated separately
by adding the value of the Fund's securities and other assets belonging to the
Fund and attributable to that Class, subtracting the liabilities charged to the
Fund and to that Class, and dividing the result by the number of outstanding
shares of such Class. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Income, realized and unrealized capital gains and losses, and
any expenses of the Fund not allocated to a particular Class of the Fund will be
allocated to each Class of the Fund on the basis of the net asset value of that
Class in relation to the net asset value of the Fund. Assets belonging to the
Fund are charged with the direct liabilities of the Fund and with a share of the
general liabilities of the Trust, which are normally allocated in proportion to
the number of or the relative net asset values of all of the Trust's series at
the time of allocation or in accordance with other allocation methods approved
by the Board of Trustees. Certain expenses attributable to a particular Class of
shares (such as the distribution and service fees attributable to Investor
Shares) will be charged against that Class of shares. Certain other expenses
attributable to a particular Class of shares (such as registration fees,
professional fees, and certain printing and postage expenses) may be charged
against that Class of shares if such expenses are actually incurred in a
different amount by that Class or if the Class receives services of a different
kind or to a different degree than other Classes, and the Board of Trustees
approves such allocation. Subject to the provisions of the Declaration of Trust,
determinations by the Board of Trustees as to the direct and allocable
liabilities, and the allocable portion of any general assets, with respect to
the Fund and the Classes of the Fund are conclusive.

For the fiscal period ended March 31, 1998, the total expenses of the Fund,
after fee waivers and expense reimbursements, were $45,193.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Purchases. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized investment dealers or directly by contacting the
Distributor or the Fund. Selling dealers have the responsibility of transmitting
orders promptly to the Fund. The public offering price of shares of the Fund
equals net asset value, plus a sales charge for Investor Shares of the Fund.
Capital Investment Group, Inc. (the "Distributor"), receives this sales charge
as Distributor and may reallow it in the form of dealer discounts and brokerage
commissions. The current schedule of sales charges and related dealer discounts
and brokerage commissions is set forth in the Prospectus for the Investor
Shares, along with the information on rights of accumulation and letters of
intent. See "How Shares May Be Purchased" in the Prospectus.

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for the Investor Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act
(see "How Shares May Be Purchased Distribution Plan" in the Prospectus). Under
the Plan the Fund may expend up to 0.50% of the Investor Shares' average net
assets annually to finance any activity which is primarily intended to result in
the sale of Investor Shares of the Fund and the servicing of shareholder
accounts, provided the Trust's Board of Trustees has approved the category of
expenses for which payment is being made. Such expenditures paid as service fees
to any person who sells Investor Shares of the Fund may not exceed 0.25% of the
average annual net asset value of such shares. Potential benefits of the Plan to
the Fund include improved shareholder servicing, savings to the Fund in transfer
agency costs, benefits to the investment process from growth and stability of
assets and maintenance of a financially healthy management organization.

All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Fund will be borne by such
persons without any reimbursement from the Fund. Subject to seeking best price
and execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms, which receive payments under the Plan.

From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

The Plan and the Distribution Agreement with the Distributor have been approved
by the Board of Trustees of the Trust, including a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act) of the Trust and who
have no direct or indirect financial interest in the Plan or any related
agreements, by vote cast in person or at a meeting duly called for the purpose
of voting on the Plan and such Agreement. Continuation of the Plan and the
Distribution Agreement must be approved annually by the Board of Trustees in the
same manner as specified above.

Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan and the Distribution Agreement may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the Fund's outstanding Investor Shares. Any amendment
materially increasing the maximum percentage payable under the Plan must
likewise be approved by a majority vote of the Investor Shares' outstanding
voting stock, as well as by a majority vote of those trustees who are not
"interested persons." Also, any other material amendment to the Plan must be
approved by a majority vote of the trustees including a majority of the
independent Trustees of the Trust having no interest in the Plan. In addition,
in order for the Plan to remain effective, the selection and nomination of
Trustees who are not "interested persons" of the Trust must be effected by the
Trustees who themselves are not "interested persons" and who have no direct or
indirect financial interest in the Plan. Persons authorized to make payments
under the Plan must provide written reports at least quarterly to the Board of
Trustees for their review.

For the fiscal period ended March 31, 1998, the Fund expended $847 under the
Plan. Such costs were spent primarily on compensation to sales personnel for
sale of Investor Shares.

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

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

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust organized under Massachusetts's
law on October 25, 1990. The Trust's Declaration of Trust authorizes the Board
of Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of eight series, as follows: WST Growth &
Income Fund managed by Wilbanks, Smith & Thomas Asset Management, Inc. of
Norfolk, Virginia; Capital Value Fund managed by Capital Investment Counsel,
Inc. of Raleigh, North Carolina; ZSA Asset Allocation Fund managed by Zaske,
Sarafa & Associates, Inc. of Birmingham, Michigan; Investek Fixed Income Trust
managed by Investek Capital Management, Inc. of Jackson, Mississippi; The Brown
Capital Management Equity Fund, The Brown Capital Management Balanced Fund and
The Brown Capital Management Small Company Fund managed by Brown Capital
Management, Inc. of Baltimore, Maryland, and The CarolinasFund managed by
Morehead Capital Advisors, L.L.C. of Charlotte, North Carolina. The number of
shares of each series shall be unlimited. The Trust does not intend to issue
share certificates.

In the event of a liquidation or dissolution of the Trust or an individual
series, such as the Fund, shareholders of a particular series would be entitled
to receive the assets available for distribution belonging to such series.
Shareholders of a series are entitled to participate equally in the net
distributable assets of the particular series involved on liquidation, based on
the number of shares of the series that are held by each shareholder. If there
are any assets, income, earnings, proceeds, funds or payments, that are not
readily identifiable as belonging to any particular series, the Trustees shall
allocate them among any one or more of the series as they, in their sole
discretion, deem fair and equitable.

Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A matter
affects a series or class unless it is clear that the interests of each series
or class in the matter are substantially identical or that the matter does not
affect any interest of the series or class. Under Rule 18f-2, the approval of an
investment advisory agreement or any change in a fundamental investment policy
would be effectively acted upon with respect to a series only if approved by a
majority of the outstanding shares of such series. However, the Rule also
provides that the ratification of the appointment of independent accountants,
the approval of principal underwriting contracts and the election of Trustees
may be effectively acted upon by shareholders of the Trust voting together,
without regard to a particular series or class.

When used in the Prospectus or this Additional Statement, a "majority" of
shareholders means the vote of the lesser of (1) 67% of the shares of the Trust
or the applicable series or class present at a meeting if the holders of more
than 50% of the outstanding shares are present in person or by proxy, or (2)
more than 50% of the outstanding shares of the Trust or the applicable series or
class.

When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.

The Declaration of Trust provides that the Trustees of the Trust will not be
liable in any event in connection with the affairs of the Trust, except as such
liability may arise from his or her own bad faith, willful misfeasance, gross
negligence, or reckless disregard of duties. It also provides that all third
parties shall look solely to the Trust property for satisfaction of claims
arising in connection with the affairs of the Trust. With the exceptions stated,
the Declaration of Trust provides that a Trustee or officer is entitled to be
indemnified against all liability in connection with the affairs of the Trust.

ADDITIONAL INFORMATION CONCERNING TAXES

The following summarizes certain additional tax considerations generally
affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion here and in the
Prospectus is not intended as a substitute for careful tax planning and is based
on tax laws and regulations that are in effect on the date hereof; such laws and
regulations may be changed by legislative, judicial, or administrative action.
Investors are advised to consult their tax advisors with specific reference to
their own tax situations.

Each series of the Trust, including the Fund, will be treated as a separate
corporate entity under the Code and intends to qualify or remain qualified as a
regulated investment company. In order to so qualify, each series must elect to
be a regulated investment company or have made such an election for a previous
year and must satisfy, in addition to the distribution requirement described in
the Prospectus, certain requirements with respect to the source of its income
for a taxable year. At least 90% of the gross income of each series must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income derived with respect to the series' business of
investing in such stock, securities or currencies. Any income derived by a
series from a partnership or trust is treated as derived with respect to the
series' business of investing in stock, securities or currencies only to the
extent that such income is attributable to items of income that would have been
qualifying income if realized by the series in the same manner as by the
partnership or trust.

An investment company may not qualify as a regulated investment company for any
taxable year unless it satisfies certain requirements with respect to the
diversification of its investments at the close of each quarter of the taxable
year. In general, at least 50% of the value of its total assets must be
represented by cash, cash items, government securities, securities of other
regulated investment companies and other securities which, with respect to any
one issuer, do not represent more than 5% of the total assets of the investment
company nor more than 10% of the outstanding voting securities of such issuer.
In addition, not more than 25% of the value of the investment company's total
assets may be invested in the securities (other than government securities or
the securities of other regulated investment companies) of any one issuer. The
Fund intends to satisfy all requirements on an ongoing basis for continued
qualification as a regulated investment company.

Each series of the Trust, including the Fund, will designate any distribution of
long term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long term capital loss
to the extent of the capital gain dividends received with respect to the shares.

A 4% nondeductible excise tax is imposed on regulated investment companies that
fail to currently distribute an amount equal to specified percentages of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses). Each series of the Trust, including the Fund, intends to
make sufficient distributions or deemed distributions of its ordinary taxable
income and any capital gain net income prior to the end of each calendar year to
avoid liability for this excise tax.

If for any taxable year a series does not qualify for the special federal income
tax treatment afforded regulated investment companies, all of its taxable income
will be subject to federal income tax at regular corporate rates (without any
deduction for distributions to its shareholders). In such event, dividend
distributions (whether or not derived from interest on tax-exempt securities)
would be taxable as ordinary income to shareholders to the extent of the series'
current and accumulated earnings and profits, and would be eligible for the
dividends received deduction for corporations.

Each series of the Trust, including the Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure properly to
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."

Depending upon the extent of the Fund's activities in states and localities in
which its offices are maintained, in which its agents or independent contractors
are located or in which it is otherwise deemed to be conducting business, the
Fund may be subject to the tax laws of such states or localities. In addition,
in those states and localities that have income tax laws, the treatment of the
Fund and its shareholders under such laws may differ from their treatment under
federal income tax laws.

MANAGEMENT OF THE FUND

Trustees and Officers. The Trustees and executive officers of the Trust, their
ages, and their principal occupations for the last five years are as follows:

Name, Age, Position(s) Principal Occupation(s)
and Address During Past 5 Years

Jack E. Brinson, 65 President, Brinson Investment Co.
Trustee and Chairman President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886

Eddie C. Brown, 56 President
Trustee* Brown Capital Management, Inc.
President Baltimore, Maryland
The Brown Capital Management Funds
809 Cathedral Street
Baltimore, Maryland 21201

Richard K. Bryant, 38 President
Trustee* Capital Investment Group, Inc.
President Raleigh, North Carolina
Capital Value Fund Vice President
Vice President Capital Investment Counsel, Inc.
CarolinasFund Raleigh, North Carolina
Post Office Box 32249
Raleigh, North Carolina 27622

Elmer O. Edgerton, Jr., 56 President
Vice President Capital Investment Counsel, Inc.
Capital Value Fund Raleigh, North Carolina
Post Office Box 32249 Vice President
Raleigh, North Carolina 27622 Capital Investment Group, Inc.
Raleigh, North Carolina

Douglas S. Folk, 37 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi, since 1996; previously
317 East Capitol Portfolio Manager, Southern Farm Bureau Life Insurance Company
Jackson, Mississippi 39201 Jackson, Mississippi

R. Mark Fields, 45 Vice President
Vice President Investek Capital Management
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

John M. Friedman, 54 Vice President
Vice President Investek Capital Management
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

Keith A. Lee, 37 Vice President
Vice President Brown Capital Management, Inc.
The Brown Capital Management Funds Baltimore, Maryland
309 Cathedral Street
Baltimore, Maryland 21201

Michael T. McRee, 54 President
President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

Anmar K. Sarafa, 37 President
Vice President Zaske, Sarafa & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009

Thomas W. Steed, 40 Senior Corporate Attorney
Trustee Hardee's Food Systems
101 Bristol Court Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

J. Buckley Strandberg, 38 Vice President
Trustee Standard Insurance and Realty
Post Office Box 1375 Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

Norwood A. Thomas, Jr. 65 Executive Vice President
Executive Vice President Wilbanks, Smith & Thomas Asset Management
WST Growth & Income Fund Norfolk, Virginia
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

C. Frank Watson III, 27 Vice President
Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

Wayne F. Wilbanks, 38 President
President Wilbanks, Smith & Thomas Asset Management
WST Growth & Income Fund Norfolk, Virginia
One Commercial Place, Suite 1450
Norfolk, Virginia 23510

Julian G. Winters, 29 Legal and Compliance Director
Treasurer and Assistant Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina,
Rocky Mount, North Carolina 27802 since 1996; previously Operations Manager, Tar
Heel Medical, Nashville, North Carolina

Arthur E. Zaske, 50 Chairman and Chief Investment Officer
President Zaske, Sarafa, & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009
- -------------------------------
</TABLE>

* Indicates that Trustee is an "interested person" of the Trust for purposes
of the 1940 Act because of his position with one of the investment advisors
to the Trust.

Compensation. The officers of the Trust will not receive compensation from the
Trust for performing the duties of their offices. Each Trustee who is not an
"interested person" of the Trust receives a fee of $2,000 each year plus $250
per series of the Trust per meeting attended in person and $100 per series of
the Trust per meeting attended by telephone. All Trustees are reimbursed for any
out-of-pocket expenses incurred in connection with attendance at meetings.

Compensation Table*

Pension
Retirement Total
Aggregate Benefits Estimated Compensation
Name of Person, Compensation Accrued As Annual from the Trust
Position from the Part of Fund Benefits Upon Paid to
Trust Expenses Retirement Trustees

Jack E. Brinson $8,500 None None $8,500
Trustee

Eddie C. Brown None None None None
Trustee

Richard K. Bryant None None None None
Trustee

Thomas W. Steed $8,500 None None $8,500
Trustee

J. Buckley Strandberg $7,600 None None $7,600
Trustee

</TABLE>

*Figures are for the fiscal year ended March 31, 1998.

Principal Holders of Voting Securities. As of July 9, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 2% of the then outstanding shares of each Class of
the Fund. On the same date the following shareholders owned of record more than
5% of the outstanding shares of beneficial interest of a Class of the Fund.
Except as provided below, no person is known by the Trust to be the beneficial
owner of more than 5% of the outstanding shares of a Class of the Fund as of
July 9, 1998.

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class

INSTITUTIONAL SHARES

Koochekzadeh Consolidated Trusts 135,607.748 shares 20.090%
Partnerships
5600 Wisconsin Ave., Apt. 19C
Chevy Chase, MD 20815

Charles Schwab & Co., Inc. 40,417.822 shares 5.988%
fbo Our Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104

Wheat First Securities, Inc. 35,994.241 shares 5.332%
A/C 1549-6562NC
Birdsong Charitable Foundation, Inc.
Attn: George Y. Birdsong
612 Madison Ave.
Suffolk, VA 23434

INVESTOR SHARES

Frank J. Spence, Jr. & William J. Blackley 8,124.697 shares 7.353%
Trustees for Elkin Family Practice, PA
657 W. Main St.
Elkin, NC 28621

Interstate/Johnson Lane 6,881.356 shares 6.227%
fbo 215-81124-13
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220

Interstate/Johnson Lane 6,881.356 shares 6.227%
fbo 215-81124-14
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220

Interstate/Johnson Lane 6,881.356 shares 6.227%
fbo 215-81124-15
Interstate Tower
P.O. Box 1220
Charlotte, NC 28201-1220

Scott & Stringfellow, Inc. 6,442.124 shares 5.830%
fbo Wallace F. Hawkins, IRA
122 Dominion Blvd.
Chesapeake, VA 23320

----------------------
</TABLE>

Investment Advisor. Information about Wilbanks, Smith & Thomas Asset Management,
Inc. (the "Advisor") and its duties and compensation as Advisor are contained in
the Prospectus.

The Advisor will receive a monthly management fee equal to an annual rate of
0.75% of the first $500 million of the average daily net assets of the Fund and
0.65% on assets over $500 million. For the fiscal period ended March 31, 1998,
the Advisor waived $18,741 of its $19,204 advisory fee and reimbursed $5,047 of
the Fund's operating expenses.

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

Administrator and Transfer Agent. The Trust has entered into a Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement with The
Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.175% of the average daily
net assets of the Fund on the first $50 million; 0.15% of the next $50 million;
0.125% on the next $50 million; and 0.10% of its average daily net assets in
excess of $150 million. In addition, the Administrator currently receives a base
monthly fee of $2,000 for accounting and recordkeeping services for the Fund and
$750 for each Class of Shares beyond the initial Class. The Administrator also
charges the Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses. The
Administrator charges a minimum fee of $3,000 per month for all of its fees
taken in the aggregate, analyzed monthly. For the fiscal period ended March 31,
1998, the Administrator received Fund administration fees of $4,299 (waiving
$182), Fund accounting fees of $8,000 (waiving $9,861), and registration and
filing administration fees of $1,484.

The Administrator will perform the following services for the Fund: (1)
coordinate with the Custodian and monitor the services it provides to the Fund;
(2) coordinate with and monitor any other third parties furnishing services to
the Fund; (3) provide the Fund with necessary office space, telephones and other
communications facilities and personnel competent to perform administrative and
clerical functions for the Fund; (4) supervise the maintenance by third parties
of such books and records of the Fund as may be required by applicable federal
or state law; (5) prepare or supervise the preparation by third parties of all
federal, state and local tax returns and reports of the Fund required by
applicable law; (6) prepare and, after approval by the Trust, file and arrange
for the distribution of proxy materials and periodic reports to shareholders of
the Fund as required by applicable law; (7) prepare and, after approval by the
Trust, arrange for the filing of such registration statements and other
documents with the Securities and Exchange Commission and other federal and
state regulatory authorities as may be required by applicable law; (8) review
and submit to the officers of the Trust for their approval invoices or other
requests for payment of Fund expenses and instruct the Custodian to issue checks
in payment thereof; and (9) take such other action with respect to the Fund as
may be necessary in the opinion of the Administrator to perform its duties under
the agreement. The Administrator will also provide certain accounting and
pricing services for the Fund. For the fiscal period ended March 31, 1998, the
Fund paid shareholder recordkeeping fees of $2,000 (after $1,031 was waived).

With the approval of the Trust, the Administrator has contracted with NC
Shareholder Services, LLC (the "Transfer Agent"), a North Carolina limited
liability company, to serve as transfer, dividend paying, and shareholder
servicing agent for the Fund. The Transfer Agent is compensated for its services
by the Administrator and not directly by the Fund. The address of the Transfer
Agent is 107 North Washington Street, Post Office Box 4365, Rocky Mount, North
Carolina 27803-0365.

Distributor. Capital Investment Group, Inc. (the "Distributor"), Post Office Box
32249, Raleigh, North Carolina 27622, acts as an underwriter and distributor of
the Fund's shares for the purpose of facilitating the registration of shares of
the Fund under state securities laws and to assist in sales of Fund shares
pursuant to a Distribution Agreement (the "Distribution Agreement") approved by
the Board of Trustees of the Trust.

In this regard, the Distributor has agreed at its own expense to qualify as a
broker-dealer under all applicable federal or state laws in those states which
the Fund shall from time to time identify to the Distributor as states in which
it wishes to offer its shares for sale, in order that state registrations may be
maintained for the Fund.

The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.

Either party upon 60 days prior written notice to the other party may terminate
the Distribution Agreement.

For the fiscal period ended March 31, 1998, the aggregate dollar amount of sales
charges on the sale of Investor Shares of the Fund was $16,467, of which the
Distributor retained sales charges of $434.

Custodian. First Union National Bank of North Carolina (the "Custodian") serves
as custodian for the Fund's assets. The Custodian's mailing address is Two First
Union Center, Charlotte, North Carolina 28288. The Custodian acts as the
depository for the Fund, safekeeps its portfolio securities, collects all income
and other payments with respect to portfolio securities, disburses monies at the
Fund's request and maintains records in connection with its duties as Custodian.
For its services as Custodian, the Custodian is entitled to receive from the
Fund an annual fee based on the average net assets of the Fund held by the
Custodian.

Independent Auditors. The firm of Deloitte & Touche, LLP, 2500 One PPG Place,
Pittsburgh, Pennsylvania 15222-5401, serves as independent auditors for the
Fund, and will audit the annual financial statements of the Fund and prepare the
Fund's federal and state tax returns.

SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year to date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Administrator will automatically charge the checking account for the amount
specified ($100 minimum) which will be automatically invested in shares at the
public offering price on or about the 21st day of the month. The shareholder may
change the amount of the investment or discontinue the plan at any time by
writing to the Fund.

Systematic Withdrawal Plan. Shareholders owning shares with a value of $5,000 or
more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested. The Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Fund. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon sixty days written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-525-3863, or by writing to:

WST Growth & Income Fund
[Investor Shares] or [Institutional Shares]
105 North Washington Street
Post Office Drawer 69
Rocky Mount, North Carolina 27802-0069

Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus

Redemptions in Kind. The Fund does not intend, under normal circumstances, to
redeem its securities by payment in kind. It is possible, however, that
conditions may arise in the future which would, in the opinion of the Trustees,
make it undesirable for the Fund to pay for all redemptions in cash. In such
case, the Board of Trustees may authorize payment to be made in readily
marketable portfolio securities of the Fund. Securities delivered in payment of
redemptions would be valued at the same value assigned to them in computing the
net asset value per share. Shareholders receiving them would incur brokerage
costs when these securities are sold. An irrevocable election has been filed
under Rule 18f-1 of the 1940 Act, wherein the Fund committed itself to pay
redemptions in cash, rather than in kind, to any shareholder of record of the
Fund who redeems during any ninety-day period, the lesser of (a) $250,000 or (b)
one percent (1%) of the Fund's net asset value at the beginning of such period.

Transfer of Registration. To transfer shares to another owner, send a written
request to the Fund at the address shown herein. Your request should include the
following: (1) the Fund name and existing account registration; (2) signature(s)
of the registered owner(s) exactly as the signature(s) appear(s) on the account
registration; (3) the new account registration, address, social security or
taxpayer identification number and how dividends and capital gains are to be
distributed; (4) signature guarantees (See the Prospectus under the heading
"Signature Guarantees"); and (5) any additional documents which are required for
transfer by corporations, administrators, executors, trustees, guardians, etc.
If you have any questions about transferring shares, call or write the Fund.

ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return of each Class of the Fund may be quoted in
advertisements, sales literature, shareholder reports or other communications to
shareholders. The Fund computes the "average annual total return" of each Class
of the Fund by determining the average annual compounded rates of return during
specified periods that equate the initial amount invested to the ending
redeemable value of such investment. This is done by determining the ending
redeemable value of a hypothetical $1,000 initial payment. This calculation is
as follows:

P(1+T)n = ERV

Where: T = average annual total return.
ERV = ending redeemable value at the end of the period
covered by the computation of a hypothetical $1,000
payment made at the beginning of the period.
P = hypothetical initial payment of $1,000 from which
the maximum sales load is deducted.
n = period covered by the computation, expressed in terms
of years.

The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.

The calculation of average annual total return and aggregate total return assume
that the maximum sales load is deducted from the initial $1,000 investment at
the time it is made and that there is a reinvestment of all dividends and
capital gain distributions on the reinvestment dates during the period. The
ending redeemable value is determined by assuming complete redemption of the
hypothetical investment and the deduction of all nonrecurring charges at the end
of the period covered by the computations. The Fund may also quote other total
return information that does not reflect the effects of the sales load.

The aggregate total return of the Institutional Shares of the Fund for the
period from September 30, 1997 (date of initial public investment) through March
31, 1998 was 12.72%. The aggregate total return of the Investor Shares of the
Fund for the period from October 3, 1997 (date of initial public investment)
through March 31, 1998 was 10.52% without reflecting the maximum 3.75% sales
load and 6.37% after reflecting such sales load.

The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the S&P 500 Index, the Lehman Aggregate Bond Index, or a combination of such
indices. Comparative performance may also be expressed by reference to a ranking
prepared by a mutual fund monitoring service or by one or more newspapers,
newsletters or financial periodicals. The Fund may also occasionally cite
statistics to reflect its volatility and risk.

The Fund's performance fluctuates on a daily basis largely because net earnings
and net asset value per share fluctuate daily. Both net earnings and net asset
value per share are factors in the computation of total return as described
above.

As indicated, from time to time, the Fund may advertise its performance compared
to similar funds or portfolios using certain indices, reporting services, and
financial publications. These may include the following:

o Lipper Analytical Services, Inc. ranks funds in various fund categories
by making comparative calculations using total return. Total return
assumes the reinvestment of all capital gains distributions and income
dividends and takes into account any change in net asset value over a
specific period of time.

o Morningstar, Inc., an independent rating service, is the publisher of the
bi-weekly Mutual Fund Values. Mutual Fund Values rates more than 1,000
NASDAQ-listed mutual funds of all types, according to their risk-adjusted
returns. The maximum rating is five stars, and ratings are effective for
two weeks.

Investors may use such indices in addition to the Fund's Prospectus to obtain a
more complete view of the Fund's performance before investing. Of course, when
comparing the Fund's performance to any index, factors such as composition of
the index and prevailing market conditions should be considered in assessing the
significance of such comparisons. When comparing funds using reporting services,
or total return, investors should take into consideration any relevant
differences in funds such as permitted portfolio compositions and methods used
to value portfolio securities and compute offering price. Advertisements and
other sales literature for the Fund may quote total returns that are calculated
on non-standardized base periods. The total returns represent the historic
change in the value of an investment in the Fund based on monthly reinvestment
of dividends over a specified period of time.

From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the effects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.

<PAGE>

APPENDIX A

DESCRIPTION OF RATINGS

The Fund may acquire from time to time fixed income securities that meet the
following minimum rating criteria ("Investment-Grade Debt Securities") (or if
not rated, of equivalent quality as determined by the Advisor). Not more than
50% of the total fixed income portion of the portfolio (not more than 15% of the
entire Fund) will be invested in fixed income securities that are not
Investment-Grade Debt Securities. The various ratings used by the nationally
recognized securities rating services are described below.

A rating by a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Advisor believes that the quality of fixed income
securities in which the Fund may invest should be continuously reviewed and that
individual analysts give different weightings to the various factors involved in
credit analysis. A rating is not a recommendation to purchase, sell or hold a
security, because it does not take into account market value or suitability for
a particular investor. When a security has received a rating from more than one
service, each rating is evaluated independently. Ratings are based on current
information furnished by the issuer or obtained by the rating services from
other sources that they consider reliable. Ratings may be changed, suspended or
withdrawn as a result of changes in or unavailability of such information, or
for other reasons.

Standard & Poor's Ratings Group. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Group ("S&P") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay
principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in a small
degree.

A - Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than debt in higher
rated categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits 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 debt in
higher rated categories.

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

Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
bonds may have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

Commercial paper rated A-1 by S&P indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating SP-1 is the highest rating assigned by S&P to municipal notes and
indicates very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics are given a
plus (+) designation.

Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds that are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

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

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
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.

A - Debt that is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. 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 - Debt, which is rated Baa, is considered as a medium grade
obligation, i.e., it is 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 debt
lacks outstanding investment characteristics and in fact has speculative
characteristics as well.

Bonds, which are rated Ba, B, Caa, Ca or C by Moody's, are not considered
"Investment-Grade Debt Securities" by the Advisor. Bonds rated Ba are judged to
have speculative elements because their future cannot be considered as well
assured. Uncertainty of position characterizes bonds in this class, because the
protection of interest and principal payments often may be very moderate and not
well safeguarded.

Bonds, which are rated B generally, lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds,
which are rated Caa, are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds, which are rated Ca, represent obligations, which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Issuers rated Prime-1 (or related supporting institutions) are considered to
have a superior capacity for repayment of short-term promissory obligations.
Issuers rated Prime-2 (or related supporting institutions) are considered to
have a strong capacity for repayment of short-term promissory obligations. This
will normally be evidenced by many of the characteristics of issuers rated
Prime-1 but to a lesser degree. Earnings trends and coverage ratios, while
sound, will be more subject to variation. Capitalization characteristics, while
still appropriated may be more affected by external conditions. Ample alternate
liquidity is maintained.

The following summarizes the highest rating used by Moody's for short-term notes
and variable rate demand obligations:

MIG-l; VMIG-l - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds, which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

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

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

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

BBB - Bonds rated BBB have below average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.

Bonds rated BB, B and CCC by D&P are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.

The rating Duff l is the highest rating assigned by D&P for short-term debt,
including commercial paper. D&P employs three designations, Duff l+, Duff 1 and
Duff 1- within the highest rating category. Duff l+ indicates highest certainty
of timely payment. Short-term liquidity, including internal operating factors
and/or access to alternative sources of funds, is judged to be "outstanding, and
safety is just below risk-free U.S. Treasury short-term obligations." Duff 1
indicates very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
considered to be minor. Duff 1- indicates high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors.
Risk factors are very small.

Fitch Investors Service, Inc. The following summarizes the highest four ratings
used by Fitch Investors Service, Inc. ("Fitch") for bonds which are deemed to be
"Investment-Grade Debt Securities" by the Advisor:

AAA - Bonds 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.

AA - Bonds 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+.

A - Bonds that are 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 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.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category.

Bonds rated BB, B and CCC by Fitch are not considered "Investment-Grade Debt
Securities" and are regarded, on balance, as predominantly speculative with
respect to the issuer's ability to pay interest and make principal payments in
accordance with the terms of the obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation.

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.

<PAGE>
May 20, 1998

Dear Shareholder:

It is our pleasure to report the results of the WST Growth & Income Fund for the
fiscal year ending March 31, 1998. This is the Fund's first annual report, and
we hope you have received the quarterly portfolio reviews. The Fund is off to a
successful start with a total return since inception of 12.72% versus the 12.58%
return of the Lipper Growth & Income Fund Index. We are especially pleased with
these returns as the Fund held an above average level of money market funds. The
average equity exposure was approximately 80% over this period versus the index
of 91%, so risk adjusted performance was quite strong.

The Fund ended the quarter with approximately $7 million in assets. Interest in
the Fund has increased as word has spread regarding its availability. The Fund
is designed to produce long term appreciation with lower volatility using the
firm's "Growth at a Reasonable Price" investment philosophy. Security selection
is driven by the firm's exhaustive research efforts which have been strengthened
recently with the addition of several new analysts. Research will drive returns
during the future. Intelligent decisions allow the Fund's managers to purchase
great businesses and sell companies which do not meet expectations.

Wilbanks, Smith & Thomas Asset Management Inc.'s view towards the financial
markets remains positive although our internal indicators suggest a market
correction is possible during the next several months. Rumors of a pending Fed
rate increase is the "raison du jour" for a concern, but the Fund holds a stable
of great businesses bought at reasonable prices with the majority of these
companies posting record profits. We remain very positive about the outlook for
your holdings for the next several years.

Interest rates will follow inflation and oil prices as they have historically.
Both of these indicators remain at levels which suggest that no change in Fed
policy is required. We continue to focus on our research efforts and will use
market weakness to add to our favorite positions.

We would like to thank our shareholders for their support and confidence in the
Fund. The principals of Wilbanks, Smith & Thomas remain among the largest
shareholders of the Fund, so our interests are truly aligned with yours. The
firm continues to invest in both personnel and technology so that we can
maintain our edge in the research process. We anticipate a gradual shift in
market leadership and managers will have an opportunity to more easily
outperform the indices as the market becomes more selective. Again, performance
will still be driven by strong research, and we are excited about the
opportunities that lay ahead.

Please visit our website at wstam.com as you are "surfing the net". We welcome
your comments and suggestions.

Wayne F. Wilbanks
L. Norfleet Smith, Jr.
Norwood A. Thomas, Jr.
T. Carl Turnage
Lawrence A. Bernert, III

<PAGE>
May 20, 1998

Dear Shareholder:

It is our pleasure to report the results of the WST Growth & Income Fund for the
fiscal year ending March 31, 1998. This is the Fund's first annual report, and
we hope you have received the quarterly portfolio reviews. The Fund is off to a
successful start with a total return since inception of 6.37% (net after 3.75%
sales charge). Without the deduction of the maximum sales load, the total return
of the Fund was 10.52%. We are especially pleased with these returns as the Fund
held an above average level of money market funds. The average equity exposure
was approximately 80% over this period versus the index of 91%, so risk adjusted
performance was quite strong.

Please visit our website at wstam.com as you are "surfing the net". We welcome
your comments and suggestions.

Wayne F. Wilbanks
L. Norfleet Smith, Jr.
Norwood A. Thomas, Jr.
T. Carl Turnage
Lawrence A. Bernert, III

<PAGE>

WST GROWTH & INCOME FUND
Institutional Shares

Performance Update - $25,000 Investment
For the period from September 30, 1997 to March 31, 1998

WST Growth & 70% S&P 500 Index
Income Fund 20% Lehman Inter Gov/Corp Bond Lipper Growth &
Inst. Shares 10% Russell 2000 Index Income Fund Index

9/30/97 25,000 25,000 25,000

10/31/97 24,202 24,367 24,170

11/30/97 24,775 25,147 24,844

12/31/97 25,502 25,539 25,264

1/31/98 25,428 25,778 25,312

2/28/98 27,000 27,264 26,899

3/31/98 28,180 28,390 28,145

This graph depicts the performance of the WST Growth & Income Fund Institutional
Shares versus the Lipper Growth and Income Fund Index and a combined index of
70% S&P 500 Index, 20% Lehman Intermediate Government/Corporate Bond Index, and
10% Russell 2000 Index. It is important to note that the WST Growth & Income
Fund is a professionally managed mutual fund while the indexes are not available
for investment and are unmanaged. The comparison is shown for illustrative
purposes only.

Cumulative Total Return

- -----------------------
Since Inception
- -----------------------
12.72%
- -----------------------

The graph assumes an initial $25,000 investment at September 30, 1997. All
dividends and distributions are reinvested.

At March 31, 1998, the WST Growth & Income Fund Institutional Shares would have
grown to $28,180 - total investment return of 12.72% since September 30, 1997.

At March 31, 1998, a similar investment in the Lipper Growth and Income Fund
Index would have grown to $28,145 - total investment return of 12.58%; a
combined index of 70% S&P 500 Index, 20% Lehman Intermediate
Government/Corporate Bond Index, and 10% Russell 2000 Index would have grown to
$28,390 - total investment return of 13.56%; since September 30, 1997.

Past performance is not a guarantee of future results. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.

<PAGE>
WST GROWTH & INCOME FUND
Investor Shares

Performance Update - $10,000 Investment
For the period from October 3, 1997 to March 31, 1998

WST Growth & 70% S&P 500 Index
Income Fund 20% Lehman Inter Gov/Corp Bond Lipper Growth &
Inv. Shares 10% Russell 2000 Index Income Fund Index

10/3/97 9,625 10,000 10,000

10/31/97 9,153 9,610 9,507

11/30/97 9,370 9,916 9,772

12/31/97 9,636 10,070 9,937

1/31/98 9,607 10,164 9,956

2/28/98 10,193 10,748 10,580

3/31/98 10,637 11,191 11,070

This graph depicts the performance of the WST Growth & Income Fund Investor
Shares versus the Lipper Growth and Income Fund Index and a combined index of
70% S&P 500 Index, 20% Lehman Intermediate Government/Corporate Bond Index, and
10% Russell 2000 Index. It is important to note that the WST Growth & Income
Fund is a professionally managed mutual fund while the indexes are not available
for investment and are unmanaged. The comparison is shown for illustrative
purposes only.

Cumulative Total Return

- -------------------------------------------------
Since Inception
- -------------------------------------------------
No Sales Load 10.52%
- -------------------------------------------------
Maximum 3.75% Sales Load 6.37%
- -------------------------------------------------

The graph assumes an initial $10,000 investment at October 3, 1997 ($9,625 after
maximum sales load of 3.75%). All dividends and distributions are reinvested.

At March 31, 1998, the WST Growth & Income Fund Investor Shares would have grown
to $10,637 - total investment return of 6.37% since October 3, 1997. Without the
deduction of the 3.75% maximum sales load, the WST Growth & Income Fund Investor
Shares would have grown to $11,052 - total investment return of 10.52% since
October 3, 1997.

At March 31, 1998, a similar investment in the Lipper Growth and Income Fund
Index would have grown to $11,070 - total investment return of 10.70%; a
combined index of 70% S&P 500 Index, 20% Lehman Intermediate
Government/Corporate Bond Index, and 10% Russell 2000 Index would have grown to
$11,191 - total investment return of 11.91%; since October 3, 1997.

<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

- ------------------------------------------------------------------------------------------------------------------------------------
Value
Shares (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS - 77.35%

Aerospace & Defense - 4.43%
AlliedSignal, Inc. ................................................... 4,300 $ 180,600
The Boeing Company ................................................... 2,600 135,525
----------
316,125
----------
Beverages - 2.99%
PepsiCo, Inc. ........................................................ 5,000 213,437
----------

Chemicals - Specialty - 1.93%
Morton International ................................................. 4,200 137,812
----------

Computers - 2.22%
Hewlett-Packard Co. .................................................. 2,500 158,437
----------

Computer Software & Services - 0.66%
(a) Oracle Corporation ................................................... 1,500 47,344
----------

Cosmetics & Personal Care - 2.07%
(a) Playtex Products, Inc. ............................................... 10,000 147,500
----------

Direct Marketing - 2.53%
(a) TeleSpectrum Worldwide Inc. .......................................... 25,000 181,250
----------

Diversified Manufacturing - 0.60%
General Electric Company ............................................. 500 43,000
----------

Electronics - Semiconductor - 2.72%
Motorola, Inc. ....................................................... 3,200 194,000
----------

Financial - Banks, Commercial - 6.42%
NationsBank Corporation .............................................. 2,600 189,637
Resource Bank ........................................................ 6,400 268,800
----------
458,437
----------
Financial - Banks, Money Center - 2.12%
CCB Financial Corporation ............................................ 1,000 110,625
Chase Manhattan Corporation .......................................... 300 40,462
----------
151,087
----------
Financial Services - 3.02%
Equifax, Inc. ........................................................ 3,300 120,450
Fannie Mae ........................................................... 1,500 94,875
----------
215,325
----------
Holding Companies - Diversified - 3.23%
Mobil Corporation .................................................... 1,600 122,700
Travelers Group, Inc. ................................................ 1,800 108,000
----------
230,700
----------
Insurance - Life & Health - 1.87%
Jefferson-Pilot Corporation .......................................... 1,500 133,406
----------
(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

WST GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Insurance - Multiline - 2.29%
American International Group, Inc. ................................... 1,300 $ 163,719
-----------

Manufactured Housing - 2.26%
Oakwood Homes Corporation ............................................ 4,400 161,150
-----------

Manufacturing - Miscellaneous - 2.83%
Tyco International Ltd. .............................................. 3,700 202,112
-----------

Medical Supplies - 2.05%
Johnson & Johnson .................................................... 2,000 146,125
-----------

Multimedia - 7.31%
The Walt Disney Company .............................................. 1,500 160,125
(a) Tele-Communications, Inc. ............................................ 7,000 217,657
Time Warner, Inc. .................................................... 2,000 144,000
-----------
521,782
-----------
Oil & Gas - Equipment & Services - 4.21%
Baker Hughes, Incorporated ........................................... 2,200 88,550
ENSCO International, Incorporated .................................... 4,000 111,500
Halliburton Company .................................................. 2,000 100,250
-----------
300,300
-----------
Pharmaceuticals - 5.22%
American Home Products Corporation ................................... 2,300 218,788
Merck & Co., Inc. .................................................... 1,200 154,050
-----------
372,838
-----------
Retail - Specialty Line - 2.46%
Lowe's Companies, Inc. ............................................... 2,500 175,469
-----------

Telecommunications - 6.23%
(a) 3Com Corporation ..................................................... 2,000 71,875
(a) LCI International, Inc. .............................................. 4,100 157,850
(a) WorldCom, Inc. ....................................................... 5,000 215,313
-----------
445,038
-----------
Tobacco - 3.31%
Philip Morris Companies, Inc. ........................................ 3,000 125,063
(a) Standard Commercial Corporation ...................................... 7,000 111,563
-----------
236,626
-----------
Utilities - Electric - 2.37%
(a) CalEnergy Company, Inc. .............................................. 6,000 169,500
-----------

Total Common Stocks (Cost $4,787,719) ................................ 5,522,519
-----------

(Continued)

</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

WST GROWTH & INCOME FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Insurance - Multiline - 1.96%
AICI CAPITAL TRUST, 9.00% ............................................ 5,500 $ 140,250
----------

Telecommunications - 1.96%
TCI Communications, 8.72% ............................................ 5,500 139,563
----------

Total Preferred Stocks (Cost $281,974) 279,813
----------
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE OBLIGATION - 2.04%

Macsaver Financial Services ................... $150,000 7.875% 8/01/03 145,500
----------
(Cost $145,941)

US GOVERNMENT OBLIGATION - 3.63%

US Government National Strip ................... 400,000 0.000% 11/15/05 258,996
----------
(Cost $261,215)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 7.48%

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares ............................. 318,762 318,762

Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares ............................. 215,583 215,583
----------
Total Investment Companies (Cost $534,345) ........................... 534,345
----------

Total Value of Investments (Cost $6,011,194 (b)) ................................. 94.42% $6,741,173
Other Assets Less Liabilities .................................................... 5.58% 398,206
------ ----------
Net Assets ................................................................ 100.00% $7,139,379
====== ==========

(a) Non-income producing investment.

(b) Aggregate cost for financial reporting and federal income tax
purposes is the same. Unrealized appreciation (depreciation) of
investments for financial reporting and federal income taxes
purposes is as follows:

Unrealized appreciation $ 847,634
Unrealized depreciation (117,655)
----------

Net unrealized appreciation $ 729,979
==========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1998

ASSETS
Investments, at value (cost $6,011,194) ...................................................... $6,741,173
Cash ......................................................................................... 17,801
Income receivable ............................................................................ 8,610
Receivable for investments sold .............................................................. 197,638
Receivable for fund shares sold .............................................................. 144,854
Due from advisor (note 2) .................................................................... 1,006
Deferred organization expense (note 4) ....................................................... 37,002
Other assets ................................................................................. 3,309
----------

Total assets ............................................................................ 7,151,393
----------

LIABILITIES
Accrued expenses ............................................................................. 12,014
----------

NET ASSETS $7,139,379
==========

NET ASSETS CONSIST OF
Paid-in capital .............................................................................. $ 6,451,586
Accumulated net realized loss on investments ................................................. (42,186)
Net unrealized appreciation on investments ................................................... 729,979
-----------
$ 7,139,379
===========

INSTITUTIONAL CLASS
Net asset value, redemption and maximum offering price per share
($6,376,193 / 564,801 shares outstanding) ............................................... $ 11.29
===========

INVESTOR CLASS
Net asset value, redemption and offering price per share ..................................... $ 11.26
===========
($763,186 / 67,770 shares outstanding)
Maximum offering price per share (100 / 96.25% of $11.26) .................................... $ 11.70
===========

See accompanying notes to financial statements
</TABLE>

WST GROWTH & INCOME FUND

STATEMENT OF OPERATIONS

For the period from September 9, 1997
(commencement of operations) to March 31, 1998

INVESTMENT INCOME
Income
Interest ........................................................................................... $ 7,087
Dividends .......................................................................................... 39,673
---------

Total income .................................................................................. 46,760
---------

Expenses
Investment advisory fees (note 2) .................................................................. 19,204
Fund administration fees (note 2) .................................................................. 4,481
Distribution fees and service fees - Investor Class (note 3) ....................................... 847
Custody fees ....................................................................................... 3,073
Registration and filing administration fees (note 2) ............................................... 1,484
Fund accounting fees (note 2) ...................................................................... 17,861
Audit fees ......................................................................................... 8,552
Legal fees ......................................................................................... 3,470
Securities pricing fees ............................................................................ 1,274
Shareholder recordkeeping fees ..................................................................... 3,031
Other fees ......................................................................................... 682
Shareholder servicing expenses ..................................................................... 1,148
Registration and filing expenses ................................................................... 6,135
Printing expenses .................................................................................. 1,889
Amortization of deferred organization expenses (note 4) ............................................ 2,998
Trustee fees and meeting expenses .................................................................. 2,424
Other operating expenses ........................................................................... 2,184
---------

Total expenses ................................................................................ 80,737
---------

Less:
Expense reimbursements (note 2) ......................................................... (5,047)
Investment advisory fees waived (note 2) ................................................ (18,741)
Fund administration fees waived (note 2) ................................................ (182)
Fund accounting fees waived (note 2) .................................................... (9,861)
Shareholder recordkeeping fees waived (note 2) .......................................... (1,031)
Other fees waived (note 2) .............................................................. (682)
---------

Net expenses .................................................................................. 45,193
---------

Net investment income ................................................................... 1,567
---------

REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS

Net realized loss from investment transactions .......................................................... (42,186)
Increase in unrealized appreciation on investments ...................................................... 729,979
---------

Net realized and unrealized gain on investments .................................................... 687,793
---------

Net increase in net assets resulting from operations .......................................... $ 689,360
=========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND

STATEMENTS OF CHANGES IN NET ASSETS

For the period from September 9, 1997
(commencement of operations) to March 31, 1998

INCREASE IN NET ASSETS

Operations
Net investment income ............................................................................ $ 1,567
Net realized loss from investment transactions ................................................... (42,186)
Increase in unrealized appreciation on investments ............................................... 729,979
-----------

Net increase in net assets resulting from operations ........................................ 689,360
-----------

Distributions to shareholders from
Net investment income - Institutional Class ...................................................... (2,096)
Net investment income - Investor Class ........................................................... (40)
-----------

Decrease in net assets resulting from distributions ......................................... (2,136)
-----------

Capital share transactions
Increase in net assets resulting from capital share transactions (a) ............................. 6,452,155
-----------

Total increase in net assets ........................................................... 7,139,379

NET ASSETS

Beginning of period .................................................................................. 0
-----------

End of period ........................................................................................ $ 7,139,379
============

----------------------------------
(a) A summary of capital share activity follows: Shares Value
----------------------------------
- ------------------------------------------------------------
INSTITUTIONAL CLASS
- ------------------------------------------------------------
Shares sold ....................................................................... 564,741 $ 5,750,088
Shares issued for reinvestment of distributions ................................... 191 2,096
----------- -----------
564,932 5,752,184
Shares redeemed ................................................................... (131) (1,395)
----------- -----------
Net increase ................................................................. 564,801 $ 5,750,789
=========== ===========

- ------------------------------------------------------------
INVESTOR CLASS
- ------------------------------------------------------------
Shares sold ....................................................................... 67,766 $701,326
Shares issued for reinvestment of distributions ................................... 4 40
----------- -----------
67,770 701,366
Shares redeemed ................................................................... 0 0
----------- -----------
Net increase ................................................................. 67,770 $ 701,366
=========== ===========

- ------------------------------------------------------------
FUND SUMMARY
- ------------------------------------------------------------
Shares sold ....................................................................... 632,507 $ 6,451,414
Shares issued for reinvestment of distributions ................................... 195 2,136
----------- -----------
632,702 6,453,550
Shares redeemed ................................................................... (131) (1,395)
----------- -----------
Net increase ................................................................. 632,571 $ 6,452,155
=========== ===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WST GROWTH & INCOME FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

----------------------- -----------------------
INSTITUTIONAL INVESTOR
CLASS CLASS
----------------------- -----------------------

For the For the
period from period from
September 30, 1997 October 3, 1997
(date of initial public (date of initial public
investment) to investment) to
March 31, March 31,
1998 1998
----------------------- -----------------------

Net asset value, beginning of period .................................. $ 10.02 $ 10.22

Income from investment operations
Net investment income (loss) .................................. 0.00 (0.01)
Net realized and unrealized gain on investments ............... 1.27 1.05
----------------------- -----------------------
Total from investment operations ........................ 1.27 1.04
----------------------- -----------------------

Distributions to shareholders from
Net investment income ......................................... (0.00) (0.00)
----------------------- -----------------------

Net asset value, end of period ........................................ $ 11.29 $ 11.26
======================= =======================

Total return (a) ...................................................... 12.72 % 10.52 %
======================= =======================

Ratios/supplemental data
Net assets, end of period ........................................ $6,376,193 $ 763,186
======================= =======================

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ................. 3.15 %(b) 3.63 %(b)
After expense reimbursements and waived fees .................. 1.75 %(b) 2.25 %(b)

Ratio of net investment income (loss) to average net assets
Before expense reimbursements and waived fees ................. (1.31)%(b) (1.70)%(b)
After expense reimbursements and waived fees .................. 0.09 %(b) (0.31)%(b)

Portfolio turnover rate .......................................... 23.64 % 23.64 %

Average broker commission per share (c) .......................... $ 0.0778 $ 0.0778

(a) Total return does not reflect payment of a sales charge

(b) Annualized.

(c) Represents total commission paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged.

See accompanying notes to financial statements
</TABLE>
<PAGE>

WST GROWTH & INCOME FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The WST Growth & Income Fund (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust II
(the "Trust"). The Trust, an open-end investment company, was organized
on October 18, 1990 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, as amended. The Fund began
operations on September 9, 1997. The investment objective of the fund
is to provide its shareholders with a maximum total return consisting
of any combination of capital appreciation, both realized and
unrealized, and income. The Fund has an unlimited number of authorized
shares, which are divided into two classes - Institutional Shares and
Investor Shares.

Each class of shares has equal rights as to assets of the Fund, and the
classes are identical except for differences in their sales charge
structures and ongoing distribution and service fees. Income, expenses
(other than distribution and service fees, which are only attributable
to the Investor Class), and realized and unrealized gains or losses on
investments are allocated to each class of shares based upon its
relative net assets. Investor Shares purchased are subject to a maximum
sales charge of three and three-quarters percent. Both classes have
equal voting privileges, except where otherwise required by law or when
the Board of Trustees determines that the matter to be voted on affects
only the interests of the shareholders of a particular class. The
following is a summary of significant accounting policies followed by
the Fund.

A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted
on a national market system are valued at 4:00 p.m., New York
time. Other securities traded in the over-the-counter market
and listed securities for which no sale was reported on that
date are valued at the most recent bid price. Securities for
which market quotations are not readily available, if any, are
valued by using an independent pricing service or by following
procedures approved by the Board of Trustees. Short-term
investments are valued at cost which approximates value.

B. Federal Income Taxes - No provision has been made for federal
income taxes since it is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all federal
income taxes.

The Fund has capital loss carryforwards for federal income tax
purposes of $42,186, which expire in the year 2006. It is the
intention of the Board of Trustees of the Trust not to
distribute any realized gains until the carryforwards have
been offset or expire.

Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October 31,
which are deferred for income tax purposes. The character of
distributions to shareholders made during the year from net
investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes.
Also, due to the timing of dividend distributions, the fiscal
year in which amounts are distributed may differ from the year
that the income or realized gains were recorded by the Fund.

C. Investment Transactions - Investment transactions are recorded
on trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis. Dividend income is
recorded on the ex-dividend date.

(Continued)
<PAGE>

WST GROWTH & INCOME FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

D. Distributions to Shareholders - The Fund may declare dividends
quarterly, payable in March, June, September, and December on
a date selected by the Trust's Trustees. Distributions to
shareholders are recorded on the ex-dividend date. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year. The
Fund may make a supplemental distribution subsequent to the
end of its fiscal year ending March 31.

E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and
revenues reported in the financial statements. Actual results
could differ from those estimated.

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Wilbanks, Smith & Thomas
Asset Management, Inc. (the "Advisor"), provides the fund with a
continuous program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and recommendations
with respect to investments, investment policies, and the purchase and
sale of securities. As compensation for its services, the Advisor
receives a fee at the annual rate of 0.75% of the first $250 million of
the Fund's average daily net assets and 0.65% of all assets over $250
million.

The Advisor currently intends to voluntarily waive all or a portion of
its fee and to reimburse expenses of the Fund to limit total Fund
operating expenses to a maximum of 1.75% of the average daily net
assets of the Fund's Institutional Class and a maximum of 2.25% of the
average daily net assets of the Fund's Investor Class. There can be no
assurance that the foregoing voluntary fee waivers or reimbursements
will continue. The Advisor has voluntarily waived a portion of its fee
amounting to $18,741 ($0.04 per share) and reimbursed $5,047 of the
operating expenses incurred by the Fund for the period ended March 31,
1998.

The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.175% of the Fund's first $50 million of average daily
net assets, 0.15% of the next $50 million, 0.125% of the next $50
million, and 0.10% of average daily net assets over $150 million. The
Administrator also receives a monthly fee of $2,000 for accounting and
record-keeping services for the initial class of shares and $750 per
month for each additional class of shares. Additionally, the
Administrator charges the Fund for servicing of shareholder accounts
and registration of the Fund's shares. The contract with the
Administrator provides that the aggregate fees for the aforementioned
administration, accounting, and recordkeeping services shall not be
less than $3,000 per month. The Administrator also charges the Fund for
certain expenses involved with the daily valuation of portfolio
securities.

North Carolina Shareholder Services, LLC (the "Transfer Agent") serves
as the Fund's transfer, dividend paying, and shareholder servicing
agent. The Transfer Agent maintains the records of each shareholder's
account, answers shareholder inquiries concerning accounts, processes
purchases and redemptions of the Fund's shares, acts as dividend and
distribution disbursing agent, and performs other shareholder servicing
functions. The Transfer Agent is compensated for its services by the
Administrator and not directly by the Fund.

(Continued)
<PAGE>

WST GROWTH & INCOME FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

Certain Trustees and officers of the Trust are also officers or
directors of the Advisor, the Distributor, or the Administrator.

NOTE 3 - DISTRIBUTION AND SERVICE FEES

The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust as defined in the Investment Company Act of 1940
(the "Act"), adopted a distribution and service plan pursuant to Rule
12b-1 of the Act (the "Plan") applicable to the Investor Shares. The
Act regulates the manner in which a regulated investment company may
assume costs of distributing and promoting the sales of its shares and
servicing of its shareholder accounts.

The Plan provides that the Fund may incur certain costs, which may not
exceed 0.50% per annum of the Investor Shares' average daily net assets
for each year elapsed subsequent to adoption of the Plan, for payment
to the Distributor and others for items such as advertising expenses,
selling expenses, commissions, travel, or other expenses reasonably
intended to result in sales of Investor Shares in the Fund or support
servicing of Investor Share shareholder accounts. Such expenditures
incurred as service fees may not exceed 0.25% per annum of the Investor
Shares' average daily net assets. The Fund incurred $847 of such
expenses under the Plan for the period ended March 31, 1998.

NOTE 4 - DEFERRED ORGANIZATION EXPENSES

All expenses of the Fund incurred in connection with its organization
and the registration of its shares have been assumed by the Fund. The
organization expenses are being amortized over a period of sixty
months. Investors purchasing shares of the Fund bear such expenses only
as they are amortized against the Fund's investment income.

NOTE 5 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $6,507,371 and $991,675, respectively, for the period ended
March 31, 1998.

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Trustees of The Nottingham Investment Trust II and Shareholders
of WST Growth & Income Fund:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of WST Growth & Income Fund (a portfolio of The
Nottingham Investment Trust II) as of March 31, 1998, and the related statements
of operations and changes in net assets, for the period from September 9, 1997
(commencement of operations) to March 31, 1998 and financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned as of March 31, 1998 by
correspondence with the custodian and brokers; where replies were not received,
we performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of WST Growth & Income
Fund as of March 31, 1998, the results of its operations, the changes in its net
assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Pittsburgh, Pennsylvania
April 24, 1998

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

CAPITAL VALUE FUND

August 1, 1998

A Series of
THE NOTTINGHAM INVESTMENT TRUST II
107 North Washington Street, Post Office
Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-525-3863

Table of Contents

INVESTMENT OBJECTIVE AND POLICIES................................................................ 2
INVESTMENT LIMITATIONS........................................................................... 4
NET ASSET VALUE.................................................................................. 6
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................................... 6
DESCRIPTION OF THE TRUST......................................................................... 7
ADDITIONAL INFORMATION CONCERNING TAXES.......................................................... 8
MANAGEMENT OF THE FUND............................................................................ 9
SPECIAL SHAREHOLDER SERVICES..................................................................... 15
ADDITIONAL INFORMATION ON PERFORMANCE............................................................ 16
APPENDIX A - DESCRIPTION OF RATINGS.............................................................. 18
ANNUAL REPORT OF THE FUND FOR THE YEAR ENDED MARCH 31, 1998................................ ATTACHED

</TABLE>

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus, dated the same date as this
Additional Statement, for the Capital Value Fund (the "Fund") relating to the
Fund's Investor Shares and Institutional Shares, as each Prospectus may be
amended or supplemented from time to time, and is incorporated by reference in
its entirety into each Prospectus. Because this Additional Statement is not
itself a prospectus, no investment in shares of the Fund should be made solely
upon the information contained herein. Copies of the Fund's Prospectus may be
obtained at no charge by writing or calling the Fund at the address and phone
number shown above. This Additional Statement is not a prospectus but is
incorporated by reference in each Prospectus in its entirety. Capitalized terms
used but not defined herein have the same meanings as in the Prospectus.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectus for each Class of Shares of the Fund. The Fund,
organized in 1990, has no prior operating history.

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

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

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor (including the Distributor, an affiliate of the Advisor) if it believes
it can obtain the best execution of transactions from such broker. The Fund will
not execute portfolio transactions through, acquire securities issued by, make
savings deposits in or enter into repurchase agreements with the Advisor or an
affiliated person of the Advisor (as such term is defined in the 1940 Act)
acting as principal, except to the extent permitted by the Securities and
Exchange Commission ("SEC"). In addition, the Fund will not purchase securities
during the existence of any underwriting or selling group relating thereto of
which the Advisor, or an affiliated person of the Advisor, is a member, except
to the extent permitted by the SEC. Under certain circumstances, the Fund may be
at a disadvantage because of these limitations in comparison with other
investment companies that have similar investment objectives but are not subject
to such limitations.

For the fiscal years ended March 31, 1996, 1997, and 1998, the total dollar
amounts of brokerage commissions paid by the Fund were $7,225, $5,560, and
$27,164, respectively, of which all was paid during such respective periods to
the Distributor. Transactions in which the Fund used the Distributor as broker
involved 100% of the aggregate dollar amount of transactions involving the
payment of commissions and 100% of the aggregate broker commissions paid by the
Fund for the fiscal year ended March 31, 1998.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to seven days of the purchase.

Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured,
interest-bearing debt obligation of a bank. Commercial Paper is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means the lesser of
(i) 67% of the Fund's outstanding shares represented in person or by proxy at a
meeting at which more than 50% of its outstanding shares are represented, or
(ii) more than 50% of its outstanding shares. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

(1) Invest more than 5% of the value of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer (except that
securities of the U.S. Government, its agencies and instrumentalities are
not subject to these limitations);

(2) Invest 25% or more of the value of its total assets in any one industry or
group of industries (except that securities of the U.S. Government, its
agencies and instrumentalities are not subject to these limitations);

(3) Invest in the securities of any issuer if any of the officers or trustees
of the Trust or the Advisor who own beneficially more than 1/2 of 1% of the
outstanding securities of such issuer together own more than 5% of the
outstanding securities of such issuer;

(4) Invest for the purpose of exercising control or management of another
issuer;

(5) Invest in interests in real estate, real estate mortgage loans, real estate
limited partnerships, oil, gas or other mineral exploration or development
programs or leases, except that the Fund may invest in the readily
marketable securities of companies which own or deal in such things;

(6) Underwrite securities issued by others except to the extent the Fund may be
deemed to be an underwriter under the federal securities laws, in
connection with the disposition of portfolio securities;

(7) Purchase securities on margin (but the Fund may obtain such short term
credits as may be necessary for the clearance of transactions);

(8) Make short sales of securities or maintain a short position, except short
sales "against the box" (A short sale is made by selling a security the
Fund does not own, a short sale is "against the box" to the extent that the
Fund contemporaneously owns or has the right to obtain at no added cost
securities identical to those sold short.);

(9) Write, purchase or sell puts, calls or combinations thereof, or purchase or
sell commodities, warrants, commodities contracts, futures contracts or
related options;

(10) Participate on a joint or joint and several basis in any trading account in
securities;

(11) Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt securities;

(12) Invest more than 10% of the value of its net assets in repurchase
agreements having a maturity of longer than seven days or other not readily
marketable securities;

(13) Invest in restricted securities;

(14) Issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities, if, immediately after such
borrowing, the value of the Fund's assets, including all borrowings then
outstanding, less its liabilities (excluding all borrowings), is equal to
at least 300% of the aggregate amount of borrowings then outstanding, and
the Fund may pledge its assets to secure all such borrowings;

(15) Invest in securities of issuers which have a record of less than three
years' continuous operation (including predecessors and, in the case of
bonds, guarantors), if more than 5% of its total assets would be invested
in such securities; or

(16) Invest more than 10% of the Fund's total assets in foreign securities,
including sponsored American Depository Receipts.

Percentage restrictions stated as an investment policy or investment limitation
apply at the time of investment; if a later increase or decrease in percentage
beyond the specified limits results from a change in securities values or total
assets, it will not be considered a violation. However, in the case of the
borrowing limitation (restriction (14) above), the Fund will, to the extent
necessary, reduce its existing borrowings to comply with the limitation.

While the Fund has reserved the right to make short sales "against the box"
(restriction (8) above), the Advisor has no present intention of engaging in
such transactions at this time or during the coming year.

NET ASSET VALUE

The net asset value per share of each Class of Shares of the Fund is determined
at the time trading closes on the New York Stock Exchange (currently 4:00 p.m.,
New York time), Monday through Friday, except on business holidays when the New
York Stock Exchange is closed. The New York Stock Exchange recognizes the
following holidays: New Year's Day, President's Day, Martin Luther King, Jr.
Day, Good Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and
Christmas Day. Any other holiday recognized by the New York Stock Exchange will
be considered a business holiday on which the net asset value of each Class of
Shares of the Fund will not be calculated.

For the fiscal years ended March 31, 1996, 1997, and 1998, the total expenses of
the Investor Shares of the Fund after fee waivers and expense reimbursements (if
applicable) were $172,707, $186,235, and $190,073, respectively. Institutional
Shares of the Fund were not authorized for issuance during such period and
fiscal years.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Purchases. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized investment dealers or directly by contacting the
Distributor or the Fund. Selling dealers have the responsibility of transmitting
orders promptly to the Fund. The public offering price of shares of the Fund
equals net asset value, plus a sales charge for Investor Shares of the Fund.
Capital Investment Group, Inc. (the "Distributor"), an affiliate of the Advisor,
receives this sales charge as Distributor and may reallow it in the form of
dealer discounts and brokerage commissions. The current schedule of sales
charges and related dealer discounts and brokerage commissions is set forth in
the Prospectus for the Investor Shares, along with the information on current
purchases, rights of accumulation, and letters of intent. See "How Shares May Be
Purchased" in the Prospectus.

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for the Investor Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act
(see "How Shares May Be Purchased - Distribution Plan" in the Prospectus). Under
the Plan the Fund may expend up to 0.50% of the Investor Shares' average net
assets annually to finance any activity which is primarily intended to result in
the sale of Investor Shares of the Fund and the servicing of shareholder
accounts, provided the Trust's Board of Trustees has approved the category of
expenses for which payment is being made. Such expenditures paid as service fees
to any person who sells Investor Shares of the Fund may not exceed 0.25% of the
average annual net asset value of such shares. Potential benefits of the Plan to
the Fund include improved shareholder servicing, savings to the Fund in transfer
agency costs, benefits to the investment process from growth and stability of
assets and maintenance of a financially healthy management organization.

All of the distribution expenses incurred by the Distributor and others, such as
broker-dealers, in excess of the amount paid by the Fund will be borne by such
persons without any reimbursement from the Fund. Subject to seeking best
execution, the Fund may, from time to time, buy or sell portfolio securities
from or to firms which receive payments under the Plan.

From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan and the Distribution Agreement may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the Fund's outstanding Investor Shares. Any amendment
materially increasing the maximum percentage payable under the Plan must
likewise be approved by a majority vote of the Investor Shares' outstanding
voting stock, as well as by a majority vote of those trustees who are not
"interested persons." Also, any other material amendment to the Plan must be
approved by a majority vote of the trustees including a majority of the
noninterested Trustees of the Trust having no interest in the Plan. In addition,
in order for the Plan to remain effective, the selection and nomination of
Trustees who are not "interested persons" of the Trust must be effected by the
Trustees who themselves are not "interested persons" and who have no direct or
indirect financial interest in the Plan. Persons authorized to make payments
under the Plan must provide written reports at least quarterly to the Board of
Trustees for their review.

For the fiscal year ended March 31, 1998, the Fund incurred $44,611 for costs in
connection with the Plan under Rule 12b-1. Such costs were spent on compensation
to sales personnel for sale of Investor Shares and servicing of shareholder
accounts and advertising costs.

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust organized under Massachusetts law
on October 25, 1990. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of eight series, as follows: Capital Value
Fund managed by Capital Investment Counsel, Inc. of Raleigh, North Carolina; ZSA
Asset Allocation Fund managed by Zaske, Sarafa & Associates, Inc. of Birmingham,
Michigan; Investek Fixed Income Trust managed by Investek Capital Management,
Inc. of Jackson, Mississippi; The Brown Capital Management Equity Fund, The
Brown Capital Management Balanced Fund and The Brown Capital Management Small
Company Fund managed by Brown Capital Management, Inc. of Baltimore, Maryland;
The WST Growth & Income Fund managed by Wilbanks, Smith & Thomas Asset
Management, Inc. of Norfolk, Virginia; and The CarolinasFund managed by Morehead
Capital Advisors, LLC of Charlotte, North Carolina. The number of shares of each
series shall be unlimited. The Trust does not intend to issue share
certificates.

Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A series
or class is affected by a matter unless it is clear that the interests of each
series or class in the matter are substantially identical or that the matter
does not affect any interest of the series or class. Under Rule 18f-2, the
approval of an investment advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a series only
if approved by a majority of the outstanding shares of such series. However, the
Rule also provides that the ratification of the appointment of independent
accountants, the approval of principal underwriting contracts and the election
of Trustees may be effectively acted upon by shareholders of the Trust voting
together, without regard to a particular series or class.

When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.

ADDITIONAL INFORMATION CONCERNING TAXES

Each series of the Trust, including the Fund, will designate any distribution of
long term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long-term capital loss
to the extent of the capital gain dividends received with respect to the shares.

Each series of the Trust, including the Fund, will be required in certain cases
to withhold and remit to the U.S. Treasury 31% of taxable dividends or 31% of
gross proceeds realized upon sale paid to shareholders who have failed to
provide a correct tax identification number in the manner required, or who are
subject to withholding by the Internal Revenue Service for failure to properly
include on their return payments of taxable interest or dividends, or who have
failed to certify to the Fund that they are not subject to backup withholding
when required to do so or that they are "exempt recipients."

MANAGEMENT OF THE FUND

Trustees and Officers. The Trustees and executive officers of the Trust, their
addresses and ages, and their principal occupations for the last five years are
as follows:

Name, Age, Position(s) Principal Occupation(s)
and Address During Past 5 Years

Jack E. Brinson, 65 President, Brinson Investment Co.
Trustee and Chairman President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886

Eddie C. Brown, 56 President
Trustee* Brown Capital Management, Inc.
President Baltimore, Maryland
The Brown Capital Management Funds
809 Cathedral Street
Baltimore, Maryland 21201

Richard K. Bryant, 39 President
Trustee* Capital Investment Group
President Raleigh, North Carolina
Capital Value Fund Vice President
Vice President Capital Investment Counsel
The CarolinasFund Raleigh, North Carolina
Post Office Box 32249
Raleigh, North Carolina 27622

Elmer O. Edgerton, Jr., 56 President
Vice President Capital Investment Counsel
Capital Value Fund Raleigh, North Carolina
Post Office Box 32249 Vice President
Raleigh, North Carolina 27622 Capital Investment Group
Raleigh, North Carolina

Doug S. Folk, 37 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi, since 1996; previously
317 East Capitol Portfolio Manager, Southern Farm Bureau Life Insurance Company
Jackson, Mississippi 39201 Jackson, Mississippi

R. Mark Fields, 45 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

John M. Friedman, 54 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

Keith A. Lee, 37 Vice President
Vice President Brown Capital Management, Inc.
The Brown Capital Management Funds Baltimore, Maryland
309 Cathedral Street
Baltimore, Maryland 21201

Michael T. McRee, 54 President
President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

Anmar K. Sarafa, 37 President
Vice President Zaske, Sarafa & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009

Thomas W. Steed, 40 Senior Corporate Attorney
Trustee Hardees Food Systems
101 Bristol Court Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

J. Buckley Strandberg, 38 Vice President
Trustee Standard Insurance and Realty
Post Office Box 1375 Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

C. Frank Watson III, 27 Vice President
Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

Wayne F. Wilbanks, 37 President
President Wilbanks, Smith & Thomas
The WST Growth & Income Fund Asset Management, Inc.
One Commercial Place, Suite 1150 Norfolk, Virginia
Norfolk, Virginia 25510

Julian G. Winters, 29 Legal and Compliance Director
Treasurer and Assistant Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina, since 1996; previously
Rocky Mount, North Carolina 27802 Operations Manager, Tar Heel Medical, Nashville, North Carolina

Arthur E. Zaske, 50 Chairman/ Chief Investment Officer
President Zaske, Sarafa, & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009
- -------------------------------

</TABLE>

* Indicates that Trustee is an "interested person" of the Trust for purposes
of the 1940 Act because of his position with one of the investment advisors
or the Administrator to the Trust.

Compensation Table*

Pension
Retirement Total
Aggregate Benefits Estimated Compensation
Compensation Accrued As Annual from the Trust
Name of Person, from the Part of Fund Benefits Upon Paid to
Position Trust Expenses Retirement Trustees
-------- ----- -------- ---------- --------
Jack E. Brinson $8,500 None None $8,500
Trustee
Eddie C. Brown None None None None
Trustee
Richard K. Bryant None None None None
Trustee
Thomas W. Steed $8,500 None None $8,500
Trustee
J. Buckley Strandberg $7,600 None None $7,600
Trustee

*Figures are for the fiscal year ended March 31, 1998.

</TABLE>

Principal Holders of Voting Securities. As of July 8, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) less than 2% of the then outstanding shares of the Fund. On
the same date the following shareholders owned of record more than 5% of the
outstanding shares of beneficial interest of the Fund. Except as provided below,
no person is known by the Trust to be the beneficial owner of more than 5% of
the outstanding shares of the Fund as of July 8, 1998.

Investor Shares

Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership* Percent

Bryant Electric Supply, Inc. 122,951.099 shares 18.058%**
Post Office Box 1000
Lowell, North Carolina 28098-1000

Bryant Supply Company, Inc. 158,554.927 shares 23.288%**
401(k) Profit Sharing Trust
Post Office Box 1000
Lowell, North Carolina 28098-1000

Bryant Supply Company, Inc. 66,796.987 shares 9.811%**
Rock Hill - Profit Sharing Trust
Post Office Box 1000
Lowell, North Carolina 28098-1000

</TABLE>
* The Fund believes the shares indicated are owned both of record and
beneficially.

** Pursuant to applicable SEC regulations, these affiliated shareholders are
deemed to control the Fund.

Investment Advisor. Information about Capital Investment Counsel, Inc. (the
"Advisor") and its duties and compensation as Advisor is contained in the
Prospectus.

The Advisor will receive a monthly management fee equal to an annual rate of
0.60% of the first $250 million of the average daily net assets of the Fund and
0.50% on assets over $250 million. For the fiscal year ended March 31, 1998, the
Fund paid the Advisor its advisory fee of $53,764. For the fiscal year ended
March 31, 1997, the Fund paid the Advisor its advisory fee of $47,054. For the
fiscal year ended March 31, 1996, the Fund paid the Advisor $34,200 of its
advisory fee, while the Advisor voluntarily waived the remaining portion of its
fee in the amount of $14,012.

Administrator and Transfer Agent. The Trust has entered into a Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement with The
Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.25% of the average daily
net assets of the Fund on the first $10 million; 0.20% of the next $40 million;
0.175% on the next $50 million; and 0.15% of its average daily net assets in
excess of $100 million. In addition, the Administrator currently receives a base
monthly fee of $1,750 for accounting and recordkeeping services for the Fund and
$750 for each Class of Shares beyond the initial Class. The Administrator also
charges the Fund for certain costs involved with the daily valuation of
investment securities and is reimbursed for out-of-pocket expenses. The
Administrator charges a minimum fee of $3,000 per month for all of its fees
taken in the aggregate, analyzed monthly.

For services to the Fund for the fiscal years ended March 31, 1996, 1997, and
1998, the Administrator received fees of $18,574, $21,974, and $25,103,
respectively. For the fiscal years ended March 31, 1996, 1997, and 1998, the
Administrator received $21,000 each year for accounting and recordkeeping
services.

With the approval of the Trust, the Administrator has contracted with North
Carolina Shareholder Services, LLC (the "Transfer Agent"), a North Carolina
limited liability company, to serve as transfer, dividend paying, and
shareholder servicing agent for the Funds. The Transfer Agent is compensated for
its services by the Administrator and not directly by the Funds. The address of
the Transfer Agent is 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365.

The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.

The Distribution Agreement may be terminated by either party upon 60 days prior
written notice to the other party.

For the fiscal years ended March 31, 1996, 1997, and 1998, the Distributor
received aggregate commissions for the sale of Fund shares in the amounts of
$6,580, $4,464, and $16,129, respectively, of which the Distributor retained
$401, $597, and $2,316, respectively, after reallowance to broker-dealers and
sales representatives.

Custodian. First Union National Bank of North Carolina (the "Custodian"), Two
First Union Center, Charlotte, North Carolina 28288-1151, serves as custodian
for the Fund's assets. The Custodian acts as the depository for the Fund,
safekeeps its portfolio securities, collects all income and other payments with
respect to portfolio securities, disburses monies at the Fund's request and
maintains records in connection with its duties as Custodian. For its services
as Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.

Independent Auditors. The firm of Deloitte & Touche LLP, 2500 One PPG Place,
Pittsburgh, Pennsylvania 15222-5401, serves as independent auditors for the
Fund, and will audit the annual financial statements of the Fund, prepare the
Fund's federal and state tax returns, and consult with the Fund on matters of
accounting and federal and state income taxation.

SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Fund will automatically charge the checking account for the amount specified
($100 minimum) which will be automatically invested in shares at the public
offering price on or about the 21st day of the month. The shareholder may change
the amount of the investment or discontinue the plan at any time by writing to
the Fund.

Systematic Withdrawal Plan. Shareholders owning shares with a value of $10,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested. The Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Fund. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon sixty days written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-525-3863, or by writing to:

Capital Value Fund
[Investor Shares] or [Institutional Shares]
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long-term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus.

ADDITIONAL INFORMATION ON PERFORMANCE

P(1+T)n = ERV

Where: T = average annual total return.

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

P = hypothetical initial payment of $1,000 from which the
maximum sales load is deducted.

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

The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.

The average annual total return quotations for the Investor Shares of the Fund
for the year ended March 31, 1998, the five years ended March 31, 1998, and
since inception (December 31, 1991, to March 31, 1998) are 28.23%, 12.66%, and
11.70%, respectively. The cumulative total return quotation for the Investor
Shares of the Fund since inception through March 31, 1998, is 99.75%. These
performance quotations assume the maximum 3.5% sales load for the Fund was
deducted from the initial investment. The total return of the Investor Shares of
the Fund for the year ended March 31, 1998, the five years ended March 31, 1998,
and since inception through March 31, 1998, without deducting the maximum 3.5%
sales load, are 32.89%, 13.47%, and 12.34%, respectively. The cumulative total
return quotation for the Investor Shares of the Fund since inception through
March 31, 1998, without deducting the maximum 3.5% sales load, is 106.99%. These
performance quotations should not be considered as representative of the Fund's
performance for any specified period in the future. The Institutional Shares of
the Fund were not offered during the period of such performance quotations.

From time to time the Fund may include in advertisements and other
communications information, charts, and illustrations relating to inflation and
the reflects of inflation on the dollar, including the purchasing power of the
dollar at various rates of inflation. The Fund may also disclose from time to
time information about its portfolio allocation and holdings at a particular
date (including ratings of securities assigned by independent rating services
such as S&P and Moody's). The Fund may also depict the historical performance of
the securities in which the Fund may invest over periods reflecting a variety of
market or economic conditions either alone or in comparison with alternative
investments, performance indices of those investments, or economic indicators.
The Fund may also include in advertisements and in materials furnished to
present and prospective shareholders statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds that may be employed
to meet specific financial goals, such as saving for retirement, children's
education, or other future needs.

<PAGE>

APPENDIX A

DESCRIPTION OF RATINGS

The Fund may acquire from time to time fixed income securities that meet the
following minimum rating criteria ("Investment-Grade Debt Securities") (or if
not rated, of equivalent quality as determined by the Advisor). The various
ratings used by the nationally recognized securities rating services are
described below.

Standard & Poor's Ratings Services. The following summarizes the highest four
ratings used by Standard & Poor's Ratings Services ("S&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity of the obligor to meet its financial
commitment on the obligation.

AA - Debt rated AA differs from AAA issues only in a small degree. The
obligor's capacity to meet its financial commitment on the obligation is
very strong.

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

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

Bonds rated BB, B, CCC, CC and C are not considered by the Advisor to be
"Investment-Grade Debt Securities" and are regarded, on balance, as having
significant speculative characteristics with respect to the obligor's capacity
to meet its financial commitment on the obligation. BB indicates the lowest
degree of speculation and C the highest degree of speculation. While such bonds
may have some quality and protective characteristics, these may be outweighed by
large uncertainties or major risk exposures to adverse conditions.

The rating SP-1 is the highest rating assigned by S&P to short term notes and
indicates strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a plus (+)
designation. The rating SP-2 indicates a satisfactory capacity to pay principal
and interest, with some vulnerability to adverse financial and economic changes
over the term of the notes.

Moody's Investors Service, Inc. The following summarizes the highest four
ratings used by Moody's Investors Service, Inc. ("Moody's") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

Aaa - Bonds that 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 an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
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.

A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. 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 - Debt which is rated Baa is considered as a medium grade obligation,
i.e., it is 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 debt lacks outstanding investment
characteristics and in fact has speculative characteristics as well.

Moody's applies numerical modifiers (l, 2 and 3) with respect to bonds rated Aa,
A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates that the bond ranks in the lower end of
its generic rating category. Bonds which are rated Ba, B, Caa, Ca or C by
Moody's are not considered "Investment-Grade Debt Securities" by the Advisor.
Bonds rated Ba are judged to have speculative elements because their future
cannot be considered as well assured. Uncertainty of position characterizes
bonds in this class, because the protection of interest and principal payments
often may be very moderate and not well safeguarded.

Bonds which are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the security over any long period for time may be small. Bonds
which are rated Caa are of poor standing. Such securities may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated C are the lowest rated class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

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

The following summarizes the two highest ratings used by Moody's for short-term
notes and variable rate demand obligations:

MIG-2; VMIG-2 - Obligations bearing these designations are of a high
quality with ample margins of protection.

Duff & Phelps Credit Rating Co. The following summarizes the highest four
ratings used by Duff & Phelps Credit Rating Co. ("D&P") for bonds which are
deemed to be "Investment-Grade Debt Securities" by the Advisor:

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

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

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

BBB - Bonds rated BBB have below-average protection factors but are still
considered sufficient for prudent investment. There is considerable
variability in risk during economic cycles.

AAA - Bonds 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.

AA - Bonds 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+.

A - Bonds that are 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 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.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category. A "ratings outlook" is used to describe the
most likely direction of any rating change over the intermediate term. It is
described as "Positive" or "Negative." The absence of a designation indicates a
stable outlook.

The following summarizes the two highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.

The term symbol "LOC" indicates that the rating is based on a letter of credit
issued by a commercial bank.

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as
for issues assigned F-1+ and F-1 ratings.

<PAGE>
Capital Value Fund

MANAGER'S COMMENTS

The Capital Value Fund thrived in the first quarter of 1998. Fourth quarter 1997
was a difficult one, and the market looked set to continue its losing ways
during the first weeks of January. However, a decline in interest rates coupled
with less than expected damage from Asia have allowed the market to resume an
upward path.

Several of our purchases from late 1997 have been stellar performers for 1998.
They include Nationsbank, First Union, Brooktrout Technology, JB Hunt, and
Ascend Communications. Being contrarians, we took advantage of the market's
rapid descent in October and November. We were able to buy many of our favorite
companies at a steep discount. Many companies that do a majority of their
business in Asia have been hurt, but the damage has been limited to those
sectors. The widespread panic feared in December has simply not occurred.
Recently, I have heard the comment that the market is overvalued. This is true
to some extent. Excite, the Internet search engine had sales of $34 million last
year, but is being valued by the stock market at $1.39 billion. That valuation
is a cool 40 times sales. If we owned that type of company we too would be
worried. We are still able to find quality companies with strong balance sheets,
and our latest buy list looks to be one of the most promising yet. After double
digit gains in the first quarter, the stock market is due for a rest. However,
look for the market to move higher until rising interest rates rain on the
parade.

<PAGE>
Capital Value Fund

Performance Update - $10,000 Investment
For the period from December 31, 1991 to
March 31, 1998

60% S&P 500 Index
Capital Value 40% Lehman Aggregate
Fund Bond Index

12/31/91 9,650 10,000
3/31/92 9,541 9,797
6/30/92 9,729 10,068
9/30/92 9,929 10,432
12/31/92 10,159 10,753
3/31/93 10,616 11,213
6/30/93 10,739 11,364
9/30/93 10,898 11,659
12/31/93 11,255 11,823
3/31/94 11,099 11,418
6/30/94 10,927 11,400
9/30/94 11,395 11,763
12/31/94 11,363 11,779
3/31/95 12,084 12,711
6/30/95 13,050 13,759
9/30/95 13,474 14,547
12/31/95 13,802 15,331
3/31/96 14,037 15,767
6/30/96 14,438 16,266
9/30/96 14,473 16,702
12/31/96 15,164 17,803
3/31/97 15,031 18,098
6/30/97 16,691 20,487
9/30/97 18,987 21,780
12/31/97 18,415 22,410
3/31/98 19,975 24,773

This graph depicts the performance of the Capital Value Fund versus a combined
index of 60% S&P 500 Index and 40% Lehman Brothers Aggregate Bond Index. It is
important to note that the Capital Value Fund is a professionally managed mutual
fund while the indexes are not available for investment and are unmanaged. The
comparison is shown for illustrative purposes only.

Average Annual Total Return

- --------------------------------------------------------------------------------
Since Inception One Year Five Years
- --------------------------------------------------------------------------------
No Sales Load 12.34% 32.89% 13.47%
- --------------------------------------------------------------------------------
Maximum 3.5% Sales Load 11.70% 28.23% 12.66%
- --------------------------------------------------------------------------------

The graph assumes an initial $10,000 investment at December 31, 1991 ($9,650
after maximum sales load of 3.5%). All dividends and distributions are
reinvested.

At March 31, 1998, the Fund would have grown to $19,975 - total investment
return of 99.75% since December 31, 1991. Without the deduction of the 3.5%
maximum sales load, the Fund would have grown to $20,699 - total investment
return of 106.99% since December 31, 1991. The sales load is reduced or
eliminated for larger purchases.

At March 31, 1998, a similar investment in a combined index of 60% S&P 500 and
40% Lehman Brothers Aggregate Bond Index would have grown to $24,773 - total
investment return of 147.73% since December 31, 1991.

Past performance is not a guarantee of future performance. A mutual fund's share
price and investment return will vary with market conditions, and the principal
value of shares, when redeemed, may be worth more or less than the original
cost. Average annual returns are historical in nature and measure net investment
income and capital gain or loss from portfolio investments assuming
reinvestments of dividends.

<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Aerospace & Defense - 1.05%
The Boeing Company .................................................... 2,000 $104,250
--------

Auto Parts - Replacement Equipment - 0.34%
(a) AutoZone, Inc. ........................................................ 1,000 33,875
--------

Auto & Trucks - 0.55%
Chrysler Corporation .................................................. 1,300 54,031
--------

Beverages - 0.86%
PepsiCo, Inc. ......................................................... 2,000 85,375
--------

Brewery - 0.71%
Adolph Coors Company .................................................. 2,000 70,000
--------

Broadcast - Radio & Television - 0.70%
(a) U S WEST Media Group .................................................. 2,000 69,500
--------

Building Materials - 1.29%
Louisiana-Pacific Corporation ......................................... 5,500 127,875
--------

Commercial Services - 0.35%
(a) Pinkerton's, Inc. ..................................................... 1,500 34,594
--------

Computers - 4.53%
Compaq Computer Corporation ........................................... 8,000 207,500
(a) EMC Corporation ....................................................... 6,000 226,875
(a) Silicon Graphics, Inc. ................................................ 1,000 13,937
--------
448,312
--------
Computer Software & Services - 14.70%
(a) 3Com Corporation ...................................................... 2,500 89,687
Adobe Systems, Incorporated ........................................... 1,000 45,187
(a) Ascend Communications, Inc. ........................................... 3,500 132,562
(a) Automatic Data Processing, Inc. ....................................... 1,000 68,062
(a) Brooktrout Technology, Inc. ........................................... 3,000 56,625
(a) Cadence Design Systems, Inc. .......................................... 2,000 69,250
(a) Cisco Systems, Inc. ................................................... 6,000 410,250
Hewlett-Packard Company ............................................... 3,000 190,125
(a) Intuit Inc. ........................................................... 1,700 82,237
(a) Novell, Inc. .......................................................... 8,000 85,750
(a) ObjectShare, Inc. ..................................................... 1,000 2,718

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Computer Software & Services - (Continued)
(a) Parametric Technology Company ......................................... 4,000 $ 133,250
(a) Pomeroy Computer Resources, Inc. ...................................... 2,475 58,317
(a) Shiva Corporation ..................................................... 3,000 30,000
----------
1,454,020
----------
Electronics - Semiconductor - 1.54%
(a) Cree Research, Inc. ................................................... 3,000 49,875
(a) Integrated Device Technology, Inc. .................................... 5,500 77,344
(a) LSI Logic Corporation ................................................. 1,000 25,250
----------
152,469
----------
Emerging Technology - 1.35%
(a) FORE Systems, Inc. .................................................... 8,500 133,875
----------

Engineering & Construction - 0.75%
Fluor Corporation ..................................................... 1,500 74,625
----------

Entertainment - 1.40%
The Walt Disney Company ............................................... 1,300 138,775
----------

Financial - Banks, Commercial - 3.75%
First Union Corporation ............................................... 2,000 113,500
NationsBank Corporation ............................................... 1,200 87,525
Wachovia Corporation .................................................. 2,000 169,625
----------
370,650
----------
Foreign Securities - 3.44% (b)
Alcatel Alsthom - ADR ................................................. 2,000 76,000
(a) Business Objects S.A. - ADR ........................................... 5,400 81,675
Imperial Oil Ltd. ..................................................... 1,000 56,563
Norsk Hydro A.S.A. - ADR .............................................. 2,500 125,000
----------
339,238
----------
Forest Products & Paper - 0.51%
St. Joe Paper Company ................................................. 1,500 50,438
----------

Household Products & Housewares - 0.58%
Rubbermaid, Inc. ...................................................... 2,000 56,875
----------

Machine - Diversified - 0.49%
Stewart & Stevenson Services, Inc. .................................... 2,000 48,125
----------

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Medical Supplies - 2.93%
Crawford & Company .................................................... 3,000 $ 57,188
(a) Datascope Corporation ................................................. 6,000 156,000
(a) ThermoTrex Corporation ................................................ 3,600 76,050
--------
289,238
--------
Miscellaneous - Manufacturing - 0.48%
(a) ACX Technologies, Inc. ................................................ 2,000 47,875
--------

Pharmaceuticals - 5.86%
Bristol-Myers Squibb Company .......................................... 2,000 208,625
Merck & Co., Inc. ..................................................... 1,000 128,375
Mylan Laboratories Inc. ............................................... 7,500 172,500
(a) Roberts Pharmaceutical Corporation .................................... 5,000 70,000
--------
579,500
--------
Retail - Apparel - 2.60%
(a) AnnTaylor Stores Corporation .......................................... 2,000 32,875
DEB Shops, Inc. ....................................................... 2,000 14,000
Liz Claiborne, Inc. ................................................... 2,000 99,625
The Cato Corporation .................................................. 2,000 23,750
The Limited, Inc. ..................................................... 3,000 86,063
--------
256,313
--------
Retail - Department Stores - 2.57%
Wal-Mart Stores, Inc. ................................................. 5,000 254,063
--------

Retail - Grocery - 1.80%
Food Lion, Inc. ....................................................... 10,000 106,875
Weis Markets, Inc. .................................................... 2,000 71,375
--------
178,250
--------
Shoes - Leather - 0.45%
Nike, Inc. ............................................................ 1,000 44,250
--------

Telecommunications - 0.96%
SBC Communications Inc. ............................................... 2,194 95,156
--------

Telecommunications Equipment - 1.21%
(a) Premisys Communications, Inc. ......................................... 1,000 28,688
(a) Westell Technologies, Inc. ............................................ 2,000 25,500
Wireless Telecom Group, Inc. .......................................... 9,000 65,250
--------
119,438
--------
Tire & Rubber - 0.77%
The Goodyear Tire & Rubber Company .................................... 1,000 75,750
--------

(Continued)

</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

Transportation - Freight - 1.65%
(a) FDX Corporation ....................................................... 2,300 $163,588
--------

Utilities - Electric - 2.53%
Duke Energy Corporation ............................................... 2,000 119,250
Potomac Electric Power Company ........................................ 3,000 75,188
Southern Company ...................................................... 2,000 55,250
--------
249,688
--------
Utilities - Telecommunications - 3.27%
BellSouth Corporation ................................................. 2,000 135,125
GTE Corporation ....................................................... 2,000 119,750
Sprint Corporation .................................................... 1,000 67,813
--------
322,688
--------

Total Common Stocks (Cost $3,991,477) ................................. 6,522,699
----------

- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity
Principal Rate Date
- ------------------------------------------------------------------------------------------------------------------------------------

CORPORATE OBLIGATIONS - 21.35%

A T & T Corporation .................................. $ 50,000 7.500% 06/01/06 53,875
A T & T Corporation .................................. 50,000 8.125% 01/15/22 53,875
A T & T Corporation .................................. 50,000 8.125% 07/15/24 53,500
A T & T Corporation .................................. 100,000 8.625% 12/01/31 109,875
American Express Company ............................. 50,000 8.625% 05/15/22 54,200
Anheuser-Busch Companies, Inc. ....................... 13,000 8.625% 12/01/16 13,488
Anheuser-Busch Companies, Inc. ....................... 25,000 9.000% 12/01/09 30,433
Archer Daniels Midland Corporation ................... 100,000 6.250% 05/15/03 100,835
Archer Daniels Midland Corporation ................... 25,000 8.875% 04/15/11 30,579
BellSouth Telecommunications ......................... 50,000 6.250% 05/15/03 50,375
BellSouth Telecommunications ......................... 125,000 6.750% 10/15/33 122,656
BellSouth Telecommunications ......................... 50,000 7.000% 02/01/05 52,000
BellSouth Telecommunications ......................... 25,000 7.875% 08/01/32 26,469
Du Pont (E.I.) De Nemours & Company .................. 60,000 6.000% 12/01/01 59,700
Du Pont (E.I.) De Nemours & Company .................. 50,000 7.950% 01/15/23 53,429
Du Pont (E.I.) De Nemours & Company .................. 50,000 8.125% 03/15/04 54,852
Duke Power Company ................................... 20,000 6.375% 03/01/08 19,825
Duke Power Company ................................... 100,000 6.750% 08/01/25 98,125
General Electric Capital Corporation ................. 100,000 8.750% 05/21/07 117,613
International Business Machines ...................... 50,000 8.375% 11/01/19 58,688
Morgan Stanley Group, Inc. ........................... 75,000 7.500% 02/01/24 76,780

(Continued)
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

CAPITAL VALUE FUND

PORTFOLIO OF INVESTMENTS

March 31, 1998

- ------------------------------------------------------------------------------------------------------------------------------------
Interest Maturity Value
Principal Rate Date (note 1)
- ------------------------------------------------------------------------------------------------------------------------------------

CORPORATE OBLIGATIONS - (Continued)

Pacific Bell ......................................... $100,000 6.250% 03/01/05 $100,500
Sears, Roebuck and Company ........................... 50,000 9.250% 04/15/98 50,055
The Boeing Company ................................... 150,000 8.750% 09/15/31 191,045
The Coca-Cola Company ................................ 70,000 8.500% 02/01/22 83,990
United Parcel Service of America ..................... 50,000 8.375% 04/01/20 60,813
U S West Communications Group ........................ 50,000 6.875% 09/15/33 48,305
Wachovia Corporation ................................. 75,000 6.375% 04/15/03 75,577
Wal-Mart Stores, Inc. ................................ 25,000 6.500% 06/01/03 25,514
Wal-Mart Stores, Inc. ................................ 25,000 8.500% 09/15/24 28,280
Wal-Mart Stores, Inc. ................................ 150,000 8.875% 06/29/11 156,477
--------

Total Corporate Obligations (Cost $1,912,391) ........ 2,111,728
---------

- ------------------------------------------------------------------------------------------------------------------------------------
Shares
- ------------------------------------------------------------------------------------------------------------------------------------
INVESTMENT COMPANIES - 9.00%

Evergreen Money Market Treasury Institutional Money
Market Fund Institutional Service Shares .............................. 443,954 443,954
Evergreen Money Market Treasury Institutional Treasury Money
Market Fund Institutional Service Shares .............................. 446,195 446,195
-------

Total Investment Companies (Cost $890,149) ............................ 890,149
-------

Total Value of Investments (Cost $6,794,017 (c)) ................................ 96.32% $9,524,576
Other Assets Less Liabilities ................................................... 3.68% 363,492
-------- ------------
Net Assets ................................................................. 100.00% $9,888,068
======== =============

(a) Non-income producing investment.

(b) Foreign securities represent securities issued in the United States
markets by non-domestic companies.

(c) Aggregate cost for financial reporting and federal income tax purposes
is the same. Unrealized appreciation (depreciation) of investments for
financial reporting and federal income tax purposes is as follows:

Unrealized appreciation $2,806,785
Unrealized depreciation (76,226)
----------

Net unrealized appreciation $2,730,559
==========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
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CAPITAL VALUE FUND

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1998

ASSETS
Investments, at value (cost $6,794,017) ..................................................... $ 9,524,576
Cash ........................................................................................ 447,853
Income receivable ........................................................................... 48,957
Other assets ................................................................................ 1,355
-----------

Total assets ........................................................................... 10,022,741
-----------

LIABILITIES
Accrued expenses ............................................................................ 16,939
Payable for investment purchases ............................................................ 117,734
-----------

Total liabilities ...................................................................... 134,673
-----------

NET ASSETS
(applicable to 681,586 Investor Class Shares outstanding; unlimited
shares of no par value beneficial interest authorized) ..................................... $ 9,888,068
===========

NET ASSET VALUE AND REDEMPTION PRICE PER INVESTOR CLASS SHARE
($9,888,068 / 681,586 shares) ............................................................... $ 14.51
===========

OFFERING PRICE PER INVESTOR CLASS SHARE
(100 / 96.5% of $14.51) ..................................................................... $ 15.04
===========

NET ASSETS CONSIST OF
Paid-in capital ............................................................................. $ 7,157,506
Undistributed net realized gain on investments .............................................. 3
Net unrealized appreciation on investments .................................................. 2,730,559
-----------
$ 9,888,068
===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
CAPITAL VALUE FUND

STATEMENT OF OPERATIONS

Year ended March 31, 1998

INVESTMENT INCOME

Income
Interest ................................................................................... $ 154,801
Dividends .................................................................................. 116,814
Miscellaneous .............................................................................. 189
-----------

Total income .......................................................................... 271,804
-----------

Expenses
Investment advisory fees (note 2) .......................................................... 53,764
Fund administration fees (note 2) .......................................................... 22,402
Distribution and service fees - Investor Class Shares (note 3) ............................. 44,611
Custody fees ............................................................................... 4,280
Registration and filing administration fees (note 2) ....................................... 2,701
Fund accounting fees (note 2) .............................................................. 21,000
Audit fees ................................................................................. 9,749
Legal fees ................................................................................. 4,929
Securities pricing fees .................................................................... 6,982
Shareholder recordkeeping fees ............................................................. 2,053
Shareholder servicing expenses ............................................................. 4,633
Registration and filing expenses ........................................................... 1,536
Printing expenses .......................................................................... 3,199
Trustee fees and meeting expenses .......................................................... 4,193
Other operating expenses ................................................................... 4,041
-----------

Total expenses ........................................................................ 190,073
-----------

Net investment income ........................................................... 81,731
-----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS

Net realized gain from investment transactions .................................................. 1,175,258
Increase in unrealized appreciation on investments .............................................. 1,240,206
-----------

Net realized and unrealized gain on investments ............................................ 2,415,464
-----------

Net increase in net assets resulting from operations .................................. $ 2,497,195
===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
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CAPITAL VALUE FUND

STATEMENTS OF CHANGES IN NET ASSETS

- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended
March 31, March 31,
1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS

Operations
Net investment income ......................................................... $ 81,731 $ 87,910
Net realized gain from investment transactions ................................ 1,175,258 98,880
Increase in unrealized appreciation on investments ............................ 1,240,206 356,911
------------ ------------

Net increase in net assets resulting from operations ................... 2,497,195 543,701
------------ ------------

Distributions to shareholders from
Net investment income ......................................................... (81,731) (87,910)
Tax return of capital ......................................................... 0 (8,006)
Net realized gain from investment transactions ................................ (1,175,255) (69,095)
------------ ------------

Decrease in net assets resulting from distributions ...................... (1,256,986) (165,011)
------------ ------------

Capital share transactions
Increase (decrease) in net assets resulting from capital share transactions (a) 909,604 (192,238)
------------ ------------

Total increase in net assets ..................................... 2,149,813 186,452

NET ASSETS

Beginning of year ............................................................... 7,738,255 7,551,803
------------ ------------

End of year ..................................................................... $ 9,888,068 $ 7,738,255
============ ============

(a) A summary of capital share activity follows:
---------------------------------------------------------------------------------
Year ended Year ended
March 31, 1998 March 31, 1997

Shares Value Shares Value
---------------------------------------------------------------------------------

Shares sold ..................................... 59,404 $ 887,599 44,461 $ 551,414
Shares issued for reinvestment
of distributions ........................... 86,177 1,254,982 13,109 163,984
---------- ---------- ---------- ----------

145,581 2,142,581 57,570 715,398

Shares redeemed ................................. (82,958) (1,232,977) (72,371) (907,636)
---------- ---------- ---------- ----------

Net increase (decrease) .................... 62,623 $ 909,604 (14,801) $ (192,238)
========== ========== ========== ==========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

CAPITAL VALUE FUND

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Year)

- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31, March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of year ............................... $12.50 $11.92 $10.75 $10.42 $10.59

Income from investment operations
Net investment income .......................... 0.13 0.15 0.19 0.17 0.15
Net realized and unrealized gain on investments 3.93 0.70 1.53 0.73 0.41
----------- ----------- ----------- ----------- -----------

Total from investment operations 4.06 0.85 1.72 0.90 0.56
----------- ----------- ----------- ----------- -----------

Distributions to shareholders from
Net investment income .......................... (0.13) (0.15) (0.20) (0.21) (0.11)
Tax return of capital .......................... 0.00 (0.01) 0.00 0.00 0.00
Net realized gain from investment transactions (1.92) (0.11) (0.35) (0.36) (0.62)
----------- ----------- ----------- ----------- -----------

Total distributions ............. (2.05) (0.27) (0.55) (0.57) (0.73)
----------- ----------- ----------- ----------- -----------

Net asset value, end of year ..................................... $ 14.51 $ 12.50 $ 11.92 $ 10.75 $ 10.42
=========== =========== =========== =========== ===========

Total return (b) ................................................. 32.89 % 7.08 % 16.16 % 8.66 % 5.21 %
=========== =========== =========== =========== ===========

Ratios/supplemental data
Net assets, end of year .................................... $9,888,068 $7,738,255 $7,551,803 $6,775,562 $6,257,240
=========== =========== =========== =========== ===========

Ratio of expenses to average net assets
Before expense reimbursements and waived fees .. 2.12 % 2.38 % 2.56 % 2.58 % 2.64 %
After expense reimbursements and waived fees ... 2.12 % 2.38 % 2.33 % 2.47 % 2.43 %

Ratio of net investment income to average net assets
Before expense reimbursements and waived fees .. 0.91 % 1.12 % 1.44 % 1.55 % 1.22 %
After expense reimbursements and waived fees ... 0.91 % 1.12 % 1.66 % 1.66 % 1.43 %

Portfolio turnover rate .................................... 33.50 % 7.31 % 12.33 % 24.67 % 32.99 %
Average broker commissions per share (a) ................... $0.1000 $0.1000 - - -

(a) Represents total commissions paid on portfolio securities divided by total portfolio shares purchased or sold on
which commissions were charged.
(b) Total return does not reflect payment of a sales charge.

See accompanying notes to financial statements
</TABLE>
<PAGE>
CAPITAL VALUE FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Capital Value Fund (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust
II (the "Trust"). The Trust, an open-ended investment company, was
organized on October 18, 1990 as a Massachusetts Business Trust
and is registered under the Investment Company Act of 1940, as
amended. The investment objective of the Fund is to provide its
shareholders with a maximum total return consisting of any
combination of capital appreciation, both realized and unrealized,
and income under the constantly varying market conditions by
investing in a flexible portfolio of equity securities, fixed
income securities, and money market instruments. The Fund began
operations on November 16, 1990.

Pursuant to a plan approved by the Board of Trustees of the Trust,
the existing single class of shares of the Fund was redesignated
as the Investor Class of shares of the Fund on June 15, 1995 and
an additional class of shares, the Institutional shares, was
authorized. To date, only Investor Class shares have been issued
by the Fund. The Institutional Class shares will be sold without a
sales charge and will bear no distribution and service fees. The
Investor Class shares are subject to a maximum 3.50% sales charge
and bear distribution and service fees which may not exceed 0.50%
of the Investor Class shares' average net assets annually. The
following is a summary of significant accounting policies followed
by the Fund.

A. Security Valuation - The Fund's investments in securities
are carried at value. Securities listed on an exchange or
quoted on a national market system are valued at the last
sales price as of 4:00 p.m. New York time on the day of
valuation. Other securities traded in the over-the-counter
market and listed securities for which no sale was reported
on that date are valued at the most recent bid price.
Securities for which market quotations are not readily
available, if any, are valued by using an independent
pricing service or by following procedures approved by the
Board of Trustees. Short-term investments are valued at cost
which approximates value.

B. Federal Income Taxes - The Fund is considered a personal
holding company as defined under Section 542 of the Internal
Revenue Code since 50% of the value of the Fund's shares
were owned directly or indirectly by five or fewer
individuals at certain times during the last half of the
year. As a personal holding company, the Fund is subject to
federal income taxes on undistributed personal holding
company income at the maximum individual income tax rate. No
provision has been made for federal income taxes since
substantially all taxable income has been distributed to
shareholders. It is the policy of the Fund to comply with
the provisions of the Internal Revenue Code applicable to
regulated investment companies and to make sufficient
distributions of taxable income to relieve it from all
federal income taxes.

Net investment income (loss) and net realized gains (losses)
may differ for financial statement and income tax purposes
primarily because of losses incurred subsequent to October
31, which are deferred for income tax purposes. The
character of distributions made during the year from net
investment income or net realized gains may differ from
their ultimate characterization for federal income tax
purposes. Also, due to the timing of dividend distributions,
the fiscal year in which amounts are distributed may differ
from the year that the income or realized gains were
recorded by the Fund.

(Continued)
<PAGE>

CAPITAL VALUE FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

C. Investment Transactions - Investment transactions are
recorded on the trade date. Realized gains and losses are
determined using the specific identification cost method.
Interest income is recorded daily on the accrual basis.
Dividend income is recorded on the ex-dividend date.

D. Distributions to Shareholders - The Fund generally declares
dividends quarterly, payable in March, June, September and
December, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out
of net realized gains through October 31 of that year.
Distributions to shareholders are recorded on the
ex-dividend date. The Fund may make a supplemental
distribution subsequent to the end of its fiscal year ending
March 31.

E. Use of Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amount of assets, liabilities, expenses and
revenues reported in the financial statements. Actual
results could differ from those estimated.

F. Repurchase Agreements - The Fund may acquire U. S.
Government Securities or corporate debt securities subject
to repurchase agreements. A repurchase agreement transaction
occurs when the Fund acquires a security and simultaneously
resells it to the vendor (normally a member bank of the
Federal Reserve or a registered Government Securities
dealer) for delivery on an agreed upon future date. The
repurchase price exceeds the purchase price by an amount
which reflects an agreed upon market interest rate earned by
the Fund effective for the period of time during which the
repurchase agreement is in effect. Delivery pursuant to the
resale typically will occur within one to five days of the
purchase. The Fund will not enter into repurchase agreement
which will cause more than 10% of its net assets to be
invested in repurchase agreements which extend beyond seven
days. In the event of the bankruptcy of the other party to a
repurchase agreement, the Fund could experience delays in
recovering its cash or the securities lent. To the extent
that in the interim the value of the securities purchased
may have declined, the Fund could experience a loss. In all
cases, the creditworthiness of the other party to a
transaction is reviewed and found satisfactory by the
Advisor. Repurchase agreements are, in effect, loans of Fund
assets. The Fund will not engage in reverse repurchase
transactions, which are considered to be borrowings under
the Investment Company Act of 1940, as amended.

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Capital Investment
Counsel, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the
composition of its portfolio, and furnishes advice and
recommendations with respect to investments, investment policies
and the purchase and sale of securities. As compensation for its
services, the Advisor receives a fee at the annual rate of 0.60%
of the first $250 million of the average daily net assets of the
Fund and 0.50% of average daily net assets over $250 million. The
Advisor currently intends to voluntarily waive all or a portion of
its fee to limit total Fund operating expenses to 2.50% of the
average daily net assets of the Fund. There can be no assurance
that the foregoing voluntary fee waiver will continue.

(Continued)
<PAGE>

CAPITAL VALUE FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

The Fund's administrator, The Nottingham Company (the
"Administrator"), provides administrative services to and is
generally responsible for the overall management and day-to-day
operations of the Fund pursuant to an accounting and
administrative agreement with the Trust. As compensation for its
services, the Administrator receives a fee at the annual rate of
0.25% of the Fund's first $10 million of average daily net assets,
0.20% of the next $40 million of average daily net assets, 0.175%
of the next $50 million of average daily net assets, and 0.15% of
average daily net assets over $100 million. The Administrator also
receives a monthly fee of $1,750 for accounting and recordkeeping
services. Additionally, the Administrator charges the Fund for
servicing of shareholder accounts and registration of the Fund's
shares. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting
and recordkeeping services shall not be less than $3,000 per
month. The Administrator also charges the Fund for certain
expenses involved with the daily valuation of investment
securities.

North Carolina Shareholder Services, LLC (the "Transfer Agent")
serves as the Funds' transfer, dividend paying, and shareholder
servicing agent. The Transfer Agent, subject to the authority of
the Board of Trustees, provides transfer agency services pursuant
to an agreement with the Administrator, which has been approved by
the Trust. The Transfer Agent maintains the records of each
shareholder's account, answers shareholder inquiries concerning
accounts, processes purchases and redemptions of the Fund shares,
acts as dividend and distribution disbursing agent, and performs
other shareholder servicing functions. The Transfer Agent is
compensated for its services by the Administrator and not directly
by the Funds.

Capital Investment Group, Inc. (the "Distributor"), an affiliate
of the Advisor, serves as the Fund's principal underwriter and
distributor. The Distributor receives any sales charges imposed on
purchases of shares and re-allocates a portion of such charges to
dealers through whom the sale was made, if any. For the year ended
March 31, 1998, the Distributor retained sales charges in the
amount of $2,316.

Certain Trustees and officers of the Trust are also officers of
the Advisor, the Distributor or the Administrator.

NOTE 3 - DISTRIBUTION AND SERVICE FEES

The Board of Trustees, including a majority of the Trustees who
are not "interested persons" of the Trust as defined in the
Investment Company Act of 1940 (the "Act"), as amended, adopted a
distribution plan pursuant to Rule 12b-1 of the Act (the "Plan").
The Act regulates the manner in which a regulated investment
company may assume expenses of distributing and promoting the
sales of its shares and servicing of its shareholder accounts.

The Plan provides that the Fund may incur certain expenses, which
may not exceed 0.50% per annum of the Investor Class shares'
average daily net assets for each year elapsed subsequent to
adoption of the Plan, for payment to the Distributor and others
for items such as advertising expenses, selling expenses,
commissions, travel or other expenses reasonably intended to
result in sales of Investor shares of the Fund or support
servicing of shareholder accounts. Expenditures incurred as
service fees may not exceed 0.25% per annum of the Investor Class
shares' average daily net assets. The Fund incurred $44,611 of
such expenses under the Plan for the year ended March 31, 1998.

(Continued)
<PAGE>

CAPITAL VALUE FUND

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

NOTE 4 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term
investments, aggregated $2,676,113 and $3,755,245, respectively,
for the year ended March 31, 1998.

The Fund's prospectus provides that the Fund will generally limit
foreign investments to those traded domestically as sponsored
American Depository Receipts (ADR's). At March 31, 1998, Fund
investments included non-ADR foreign securities valued at $56,563
or 0.59% of total investments at value

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Trustees of The Nottingham Investment Trust II and Shareholders
of Capital Value Fund:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Capital Value Fund (a portfolio of The
Nottingham Investment Trust II) as of March 31, 1998 and the related statement
of operations for the year then ended, the statement of changes in net assets
for the years ended March 31, 1998 and 1997, and financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
March 31, 1998 by correspondence with the custodian and brokers; where replies
were not received, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Capital Value Fund
as of March 31, 1998, the results of its operations, the changes in its net
assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Pittsburgh, Pennsylvania
April 24, 1998

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

INVESTEK FIXED INCOME TRUST

August 1, 1998

A Series of
THE NOTTINGHAM INVESTMENT TRUST II
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-525-3863

Table of Contents

INVESTMENT OBJECTIVE AND POLICIES............................................................. 2
INVESTMENT LIMITATIONS........................................................................ 4
NET ASSET VALUE............................................................................... 5
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION................................................ 6
DESCRIPTION OF THE TRUST...................................................................... 7
ADDITIONAL INFORMATION CONCERNING TAXES....................................................... 8
MANAGEMENT OF THE FUND........................................................................ 9
SPECIAL SHAREHOLDER SERVICES.................................................................. 13
ADDITIONAL INFORMATION ON PERFORMANCE......................................................... 14
APPENDIX A - DESCRIPTION OF RATINGS........................................................... 17
ANNUAL REPORT OF THE FUND FOR THE YEAR ENDED MARCH 31, 1998............................. ATTACHED
</TABLE>

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus, dated the same date as this
Additional Statement, for the Investek Fixed Income Trust (the "Fund") relating
to the Fund's Institutional Shares and Investor Shares, as each Prospectus may
be amended or supplemented from time to time, and is incorporated by reference
in its entirety into each Prospectus. Because this Additional Statement is not
itself a prospectus, no investment in shares of the Fund should be made solely
upon the information contained herein. Copies of the Fund's Prospectus may be
obtained at no charge by writing or calling the Fund at the address and phone
number shown above. This Additional Statement is not a prospectus but is
incorporated by reference in each Prospectus in its entirety. Capitalized terms
used but not defined herein have the same meanings as in the Prospectus.

INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectus for each Class of Shares of the Fund. The Fund,
organized in 1991, has no prior operating history.

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

The Advisor may also utilize a brokerage firm affiliated with the Trust or the
Advisor if it believes it can obtain the best execution of transactions from
such broker. The Fund will not execute portfolio transactions through, acquire
securities issued by, make savings deposits in or enter into repurchase
agreements with the Advisor or an affiliated person of the Advisor (as such term
is defined in the 1940 Act) acting as principal, except to the extent permitted
by the Securities and Exchange Commission ("SEC"). In addition, the Fund will
not purchase securities during the existence of any underwriting or selling
group relating thereto of which the Advisor, or an affiliated person of the
Advisor, is a member, except to the extent permitted by the SEC. Under certain
circumstances, the Fund may be at a disadvantage because of these limitations in
comparison with other investment companies that have similar investment
objectives but are not subject to such limitations.

For the fiscal years ended March 31, 1996, 1997, and 1998, all transactions in
the Trust were handled as principal transactions.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to seven days of the purchase.

Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest- bearing debt obligation of a bank. Commercial Paper is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means the lesser of
(i) 67% of the Fund's outstanding shares represented in person or by proxy at a
meeting at which more than 50% of its outstanding shares are represented, or
(ii) more than 50% of its outstanding shares. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

(1) Invest more than 5% of the value of its total assets in the securities
of any one issuer or purchase more than 10% of the outstanding voting
securities or of any class of securities of any one issuer (except that
securities of the U.S. Government, its agencies and instrumentalities
are not subject to these limitations);

(2) Invest 25% or more of the value of its total assets in any one industry
or group of industries (except that securities of the U.S. Government,
its agencies and instrumentalities are not subject to these
limitations);

(3) Invest in the securities of any issuer if any of the officers or
trustees of the Trust or the Advisor who own beneficially more than 1/2
of 1% of the outstanding securities of such issuer together own more
than 5% of the outstanding securities of such issuer;

(4) Invest for the purpose of exercising control or management of another
issuer;

(5) Invest in interests in real estate, real estate mortgage loans, real
estate limited partnerships, oil, gas or other mineral exploration, or
development programs or leases, except that the Fund may invest in the
readily marketable securities of companies, which own or deal in such
things, and the Fund may invest in certain mortgage-backed securities
as described in the Prospectus;

(6) Underwrite securities issued by others except to the extent the Fund
may be deemed to be an underwriter under the federal securities laws,
in connection with the disposition of portfolio securities;

(7) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions);

(8) Make short sales of securities or maintain a short position, except
short sales "against the box" (A short sale is made by selling a
security the Fund does not own, a short sale is "against the box" to
the extent that the Fund contemporaneously owns or has the right to
obtain at no added cost securities identical to those sold short.);

(9) Participate on a joint or joint and several basis in any trading
account in securities;

(10) Make loans of money or securities, except that the Fund may invest in
repurchase agreements (but repurchase agreements having a maturity of
longer than seven days are limited to 10% of the Fund's net assets);

(11) Purchase real estate or interests in real estate, except that
securities in which the Fund invests may themselves have investment in
real estate or interests in real estate; and the Fund may invest in
securities composed of mortgages against real estate as described in
the Prospectus;

(12) Invest in securities other than securities which are readily marketable
either through trading on a national securities exchange, or securities
for which an active market is made in the over-the-counter trading
markets;

(13) Write, purchase or sell puts, calls or combinations thereof, or
purchase or sell commodities, commodities contracts, futures contracts
or related options, or purchase, sell or write warrants;

(14) Issue senior securities, borrow money or pledge its assets, except that
it may borrow from banks as a temporary measure (a) for extraordinary
or emergency purposes, in amounts not exceeding 5% of the Fund's total
assets, or (b) in order to meet redemption requests which might
otherwise require untimely disposition of portfolio securities, in
amounts not exceeding 33% of the Fund's total assets; and the Fund may
pledge its assets to secure all such borrowings;

(16) Purchase foreign securities, except that the Fund may purchase foreign
securities sold as American Depository Receipts without limit.

NET ASSET VALUE

The net asset value per share of each Class of the Fund is determined at the
time trading closes on the New York Stock Exchange (currently 4:00 p.m., New
York time, Monday through Friday), except on business holidays when the New York
Stock Exchange is closed. The New York Stock Exchange recognizes the following
holidays: New Year's Day, President's Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas
Day. Any other holiday recognized by the New York Stock Exchange will be deemed
a business holiday on which the net asset value of each Class of the Fund will
not be calculated.

For the fiscal years ended March 31, 1996, 1997, and 1998, the net expenses of
the Fund after fee waivers and expense reimbursements were $122,981 (0.87% of
the average daily net assets of the Institutional Shares), $105,082 (0.90% of
the average daily net assets of the Institutional Shares), and $111,015 (0.90%
of the average daily net assets of the Institutional Shares). Investor Shares of
the Fund were not authorized for issuance during such period and fiscal years.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Purchases. Shares of the Fund are offered and sold on a continuous basis and may
be purchased through authorized investment dealers or directly by contacting the
Distributor or the Fund. Selling dealers have the responsibility of transmitting
orders promptly to the Fund. The public offering price of shares of the Fund
equals net asset value, plus a sales charge for the Investor Shares. Capital
Investment Group, Inc. (the "Distributor") receives this sales charge as
Distributor and may reallow it in the form of dealer discounts and brokerage
commissions. The current schedule of sales charges and related dealer discounts
and brokerage commissions is set forth in the Prospectus for the Investor
Shares, along with the information on current purchases, rights of accumulation,
and letters of intent. See "How Shares May Be Purchased" in the Prospectus.

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for the Investor Shares of the Fund pursuant to Rule 12b-1 under the 1940 Act
(see "How Shares May Be Purchased - Distribution Plan" in the Prospectus). Under
the Plan the Fund may expend up to 0.25% of the Investor Shares' average net
assets annually to finance any activity which is primarily intended to result in
the sale of shares of the Investor Shares of the Fund and the servicing of
shareholder accounts, provided the Trust's Board of Trustees has approved the
category of expenses for which payment is being made. Such expenditures paid as
service fees to any person who sells shares of the Fund may not exceed 0.25% of
the average annual net asset value of such shares. Potential benefits of the
Plan to the Fund include improved shareholder servicing, savings to the Fund in
transfer agency costs, benefits to the investment process from growth and
stability of assets and maintenance of a financially healthy management
organization.

From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan and the Distribution Agreement may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the Investor Shares' outstanding voting stock. Any amendment
materially increasing the maximum percentage payable under the Plan must
likewise be approved by a majority vote of the Investor Shares' outstanding
voting stock, as well as by a majority vote of those trustees who are not
"interested persons." Also, any other material amendment to the Plan must be
approved by a majority vote of the trustees including a majority of the
noninterested Trustees of the Trust having no interest in the Plan. In addition,
in order for the Plan to remain effective, the selection and nomination of
Trustees who are not "interested persons" of the Trust must be effected by the
Trustees who themselves are not "interested persons" and who have no direct or
indirect financial interest in the Plan. Persons authorized to make payments
under the Plan must provide written reports at least quarterly to the Board of
Trustees for their review.

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust organized under Massachusetts law
on October 25, 1990. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of eight series, as follows: the Investek
Fixed Income Trust managed by Investek Capital Management, Inc. of Jackson,
Mississippi; Capital Value Fund managed by Capital Investment Counsel, Inc. of
Raleigh, North Carolina; ZSA Asset Allocation Fund managed by Zaske, Sarafa &
Associates, Inc. of Birmingham, Michigan; The Brown Capital Management Equity
Fund; The Brown Capital Management Balanced Fund; The Brown Capital Management
Small Company Fund managed by Brown Capital Management, Inc. of Baltimore,
Maryland; The WST Growth & Income Fund managed by Wilbanks, Smith & Thomas Asset
Management, Inc. of Norfolk, Virginia, and The CarolinasFund managed by Morehead
Capital Advisors, LLC, of Charlotte, North Carolina. The number of shares of
each series shall be unlimited. The Trust does not intend to issue share
certificates.

Shareholders of all of the series of the Trust, including the Fund, will vote
together and not separately on a series-by-series or class-by-class basis,
except as otherwise required by law or when the Board of Trustees determines
that the matter to be voted upon affects only the interests of the shareholders
of a particular series or class. Rule 18f-2 under the 1940 Act provides that any
matter required to be submitted to the holders of the outstanding voting
securities of an investment company such as the Trust shall not be deemed to
have been effectively acted upon unless approved by the holders of a majority of
the outstanding shares of each series or class affected by the matter. A series
or class is affected by a matter unless it is clear that the interests of each
series or class in the matter are substantially identical or that the matter
does not affect any interest of the series or class. Under Rule 18f-2, the
approval of an investment advisory agreement or any change in a fundamental
investment policy would be effectively acted upon with respect to a series only
if approved by a majority of the outstanding shares of such series. However, the
Rule also provides that the ratification of the appointment of independent
accountants, the approval of principal underwriting contracts and the election
of Trustees may be effectively acted upon by shareholders of the Trust voting
together, without regard to a particular series or class.

When issued for payment as described in the Prospectus and this Additional
Statement, shares of the Fund will be fully paid and non-assessable.

ADDITIONAL INFORMATION CONCERNING TAXES

Each series of the Trust, including the Fund, will designate any distribution of
long-term capital gains as a capital gain dividend in a written notice mailed to
shareholders within 60 days after the close of the series' taxable year.
Shareholders should note that, upon the sale or exchange of series shares, if
the shareholder has not held such shares for at least six months, any loss on
the sale or exchange of those shares will be treated as long-term capital loss
to the extent of the capital gain dividends received with respect to the shares.

MANAGEMENT OF THE FUND

Trustees and Officers. The Trustees and executive officers of the Trust, their
addresses and ages, and their principal occupations for the last five years are
as follows:

Name, Age, Position(s) Principal Occupation(s)
and Address During Past 5 Years

Jack E. Brinson, 65 President, Brinson Investment Co.
Trustee President, Brinson Chevrolet, Inc.
1105 Panola Street Tarboro, North Carolina
Tarboro, North Carolina 27886

Eddie C. Brown, 57 President
Trustee* Brown Capital Management, Inc.
President Baltimore, Maryland
The Brown Capital Management Funds
809 Cathedral Street
Baltimore, Maryland 21201

Richard K. Bryant, 38 President
Trustee* Capital Investment Group
President Raleigh, North Carolina
Vice President Vice President
The CarolinasFund Capital Investment Counsel
Capital Value Fund Raleigh, North Carolina
Post Office Box 32249
Raleigh, North Carolina 27622

R. Mark Fields, 45 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

John M. Friedman, 54 Vice President
Vice President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201
Keith A. Lee, 37 Portfolio Manager/Analyst
Vice President Brown Capital Management, Inc.
The Brown Capital Management Funds Baltimore, Maryland
309 Cathedral Street
Baltimore, Maryland 21201

Michael T. McRee, 54 President
President Investek Capital Management, Inc.
Investek Fixed Income Trust Jackson, Mississippi
317 East Capitol
Jackson, Mississippi 39201

Anmar K. Sarafa, 36 President
Vice President Zaske, Sarafa & Associates, Inc.
The ZSA Funds Birmingham, Michigan
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009

Thomas W. Steed, 40 Senior Corporate Attorney
Trustee Hardees Food Systems
101 Bristol Court Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

J. Buckley Strandberg, 38 Vice President
Trustee Standard Insurance and Realty
Post Office Box 1375 Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

C. Frank Watson, III, 27 Vice President
Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802

Wayne F. Wilbanks, 37 President
President Wilbanks, Smith & Thomas
The WST Growth & Income Fund Asset Management, Inc.
One Commercial Place, Suite 1150 Norfolk, Virginia
Norfolk, VA 25510

Julian G. Winters, 29 Legal and Compliance Director
Treasurer and Assistant Secretary The Nottingham Company
105 North Washington Street Rocky Mount, North Carolina
Rocky Mount, North Carolina 27802 since 1996; previously Operations Manager, Tar Heel Medical,
Nashville, North Carolina

Arthur E. Zaske, 50 Chairman and Chief Investment Officer
Trustee* Zaske, Sarafa, & Associates, Inc.
President Birmingham, Michigan
The ZSA Funds
Suite 200
355 South Woodward Avenue
Birmingham, Michigan 48009

</TABLE>

* Indicates that Trustee is an "interested person" of the Trust for
purposes of the 1940 Act because of his position with one of the
investment advisors or the Administrator to the Trust.

Compensation Table*

<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Pension
Retirement Total
Aggregate Benefits Estimated Compensation
Compensation Accrued As Annual from the Trust
Name of Person, from the Part of Fund Benefits Upon Paid to
Position Trust Expenses Retirement Trustees
-------- ----- -------- ---------- --------
Jack E. Brinson $8,500 None None $8,500
Trustee
Eddie C. Brown None None None None
Trustee
Richard K. Bryant None None None None
Trustee
Thomas W. Steed $8,500 None None $8,500
Trustee
J. Buckley Strandberg $7,600 None None $7,600
Trustee

</TABLE>

*Figures are for the fiscal year ended March 31, 1998.

Principal Holders of Voting Securities. As of July 8, 1998, the Trustees and
Officers of the Trust as a group owned beneficially (i.e., had voting and/or
investment power) 4.943% of the then outstanding shares of each Class of the
Fund. On the same date the following shareholders owned of record more than 5%
of the outstanding shares of beneficial interest of a Class of the Fund. Except
as provided below, no person is known by the Trust to be the beneficial owner of
more than 5% of the outstanding shares of any class of the Fund as of July 8,
1998.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Ownership* of Class

Mississippi College 192,472.218 Shares 14.304%
Box 4085
Clinton, MS 39058

Trustmark National Bank, Trustee 142,420.504 Shares 10.584%
for RIMOR, Inc. Profit Sharing Plan
P.O. Box 291
Jackson, MS 39205-0291

Deposit Guaranty National Bank, Trustee 114,628.198 Shares 8.519%
for Butler, Snow, O'Mara, Stevens & Cannada
PLLC Profit Sharing Plan
210 East Capitol St., Ste. 1700
Jackson, MS 39201-3100

1st Presbyterian Church 78,957.997 Shares 5.868%
Lolla Boyd Parish Religious
and Educational Memorial Fund
P.O. Box 485
Greenwood, MS 38935-0485

Trustmark National Bank, Trustee 77,751.787 Shares 5.778%
for Puckett Machinery
P.O. Box 291
Jackson, MS 39205-0291

</TABLE>

* The Fund believes the shares indicated are owned both of record and
beneficially.

Investment Advisor. Information about Investek Capital Management, Inc., (the
"Advisor") and its duties and compensation as Advisor is contained in the
Prospectus.

The Advisor will receive a monthly management fee equal to an annual rate of
0.45% of the average daily net asset value of the Fund. For the fiscal year
ended March 31, 1996, the Fund paid the Advisor $33,857 of its advisory fee,
while the Advisor voluntarily waived the remaining portion of its fee in the
amount of $29,700. For the fiscal year ended March 31, 1997, the Fund paid the
Advisor $17,503 of its advisory fee, while the Advisor voluntarily waived the
remaining portion of its fee in the amount of $35,023. For the fiscal year ended
March 31, 1998, the Fund paid the Advisor $30,477 of its advisory fee, while the
Advisor voluntarily waived the remaining portion of its fee in the amount of
$25,063.

Administrator and Transfer Agent. The Trust has entered into a Fund Accounting,
Dividend Disbursing & Transfer Agent and Administration Agreement with The
Nottingham Company (the "Administrator"), 105 North Washington Street, Post
Office Drawer 69, Rocky Mount, North Carolina 27802-0069, pursuant to which the
Administrator receives a fee at the annual rate of 0.15% of the average daily
net assets of the Fund. In addition, the Administrator currently receives a base
monthly fee of $1,750 for accounting and recordkeeping services for the Fund and
$750 for each Class of Shares beyond the initial Class of Shares of the Fund.
The Administrator also charges the Fund for certain costs involved with the
daily valuation of investment securities and is reimbursed for out-of-pocket
expenses. The Administrator charges a minimum fee of $3,000 per month for all of
its fees taken in the aggregate, analyzed monthly.

For services to the Fund for the fiscal years ended March 31, 1996, 1997, and
1998, the Administrator received fees of $21,199, $19,763, and $21,082
respectively. For the fiscal years ended March 31, 1996, 1997, and 1998, the
Administrator received $21,000 each year for accounting and recordkeeping
services.

With the approval of the Trust, the Administrator has contracted with North
Carolina Shareholder Services, LLC (the "Transfer Agent"), a North Carolina
limited liability company, to serve as transfer, dividend paying, and
shareholder servicing agent for the Fund. The Transfer Agent is compensated for
its services by the Administrator and not directly by the Fund. The address of
the Transfer Agent is 107 North Washington Street, Post Office Box 4365, Rocky
Mount, North Carolina 27803-0365.

The Distributor is a broker-dealer registered with the Securities and Exchange
Commission and a member in good standing of the National Association of
Securities Dealers, Inc.

The Distribution Agreement may be terminated by either party upon 60 days prior
written notice to the other party.

Custodian. Trustmark National Bank (the "Custodian"), 248 E. Capitol Street,
Post Office Box 291, Jackson, Mississippi 39205-0291 serves as custodian for the
Fund's assets. The Custodian acts as the depository for the Fund, safekeeps its
portfolio securities, collects all income and other payments with respect to
portfolio securities, disburses monies at the Fund's request and maintains
records in connection with its duties as Custodian. For its services as
Custodian, the Custodian is entitled to receive from the Fund an annual fee
based on the average net assets of the Fund held by the Custodian.

SPECIAL SHAREHOLDER SERVICES

The Fund offers the following shareholder services:

Regular Account. The regular account allows for voluntary investments to be made
at any time. Available to individuals, custodians, corporations, trusts,
estates, corporate retirement plans and others, investors are free to make
additions and withdrawals to or from their account as often as they wish. When
an investor makes an initial investment in the Fund, a shareholder account is
opened in accordance with the investor's registration instructions. Each time
there is a transaction in a shareholder account, such as an additional
investment or the reinvestment of a dividend or distribution, the shareholder
will receive a confirmation statement showing the current transaction and all
prior transactions in the shareholder account during the calendar year-to-date,
along with a summary of the status of the account as of the transaction date. As
stated in the Prospectus, share certificates are not issued.

Automatic Investment Plan. The automatic investment plan enables shareholders to
make regular monthly or quarterly investment in shares through automatic charges
to their checking account. With shareholder authorization and bank approval, the
Fund will automatically charge the checking account for the amount specified
($100 minimum) which will be automatically invested in shares at the public
offering price on or about the 21st day of the month. The shareholder may change
the amount of the investment or discontinue the plan at any time by writing to
the Fund.

Systematic Withdrawal Plan. Shareholders owning shares with a value of $50,000
or more may establish a Systematic Withdrawal Plan. A shareholder may receive
monthly or quarterly payments, in amounts of not less than $100 per payment, by
authorizing the Fund to redeem the necessary number of shares periodically (each
month, or quarterly in the months of March, June, September and December) in
order to make the payments requested. The Fund has the capacity of
electronically depositing the proceeds of the systematic withdrawal directly to
the shareholder's personal bank account ($5,000 minimum per bank wire).
Instructions for establishing this service are included in the Fund Shares
Application, enclosed in the Prospectus, or available by calling the Fund. If
the shareholder prefers to receive his systematic withdrawal proceeds in cash,
or if such proceeds are less than the $5,000 minimum for a bank wire, checks
will be made payable to the designated recipient and mailed within 7 days of the
valuation date. If the designated recipient is other than the registered
shareholder, the signature of each shareholder must be guaranteed on the
application (see "Signature Guarantees" in the Prospectus). A corporation (or
partnership) must also submit a "Corporate Resolution" (or "Certification of
Partnership") indicating the names, titles and required number of signatures
authorized to act on its behalf. The application must be signed by a duly
authorized officer(s) and the corporate seal affixed. No redemption fees are
charged to shareholders under this plan. Costs in conjunction with the
administration of the plan are borne by the Fund. Shareholders should be aware
that such systematic withdrawals may deplete or use up entirely their initial
investment and may result in realized long-term or short-term capital gains or
losses. The Systematic Withdrawal Plan may be terminated at any time by the Fund
upon sixty days written notice or by a shareholder upon written notice to the
Fund. Applications and further details may be obtained by calling the Fund at
1-800-525-3863, or by writing to:

Investek Fixed Income Trust
[Investor Shares] or [Institutional Shares]
107 North Washington Street
Post Office Box 4365
Rocky Mount, North Carolina 27803-0365

Purchases in Kind. The Fund may accept securities in lieu of cash in payment for
the purchase of shares in the Fund. The acceptance of such securities is at the
sole discretion of the Advisor based upon the suitability of the securities
accepted for inclusion as a long-term investment of the Fund, the marketability
of such securities, and other factors which the Advisor may deem appropriate. If
accepted, the securities will be valued using the same criteria and methods as
described in "How Shares are Valued" in the Prospectus.

ADDITIONAL INFORMATION ON PERFORMANCE

From time to time, the total return and yield of the each Class of the Fund may
be quoted in advertisements, sales literature, shareholder reports or other
communications to shareholders. The Fund computes the "average annual total
return" of each Class of the Fund by determining the average annual compounded
rates of return during specified periods that equate the initial amount invested
to the ending redeemable value of such investment. This is done by determining
the ending redeemable value of a hypothetical $1,000 initial payment. This
calculation is as follows:

P(1+T)n = ERV

Where: T = average annual total return.

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

P = hypothetical initial payment of $1,000 from which
the maximum sales load is deducted.

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

The Fund may also compute the aggregate total return of each Class of the Fund,
which is calculated in a similar manner, except that the results are not
annualized.

The average annual total return quotations for the Institutional Shares of the
Fund for the year ended March 31, 1998, five years ended March 31, 1998, and
since inception (November 15, 1991 to March 31, 1998) are 9.91%, 6.37%, and
7.11%, respectively. The cumulative total return quotation for the Institutional
Shares since inception through March 31, 1998 is 54.95%. These performance
quotations should not be considered as representative of the Fund's performance
for any specified period in the future. The Investor Shares of the Fund were not
offered during the period of such performance quotations.

The yield of the Fund is computed by dividing the net investment income per
share earned during the period stated in the advertisement by the maximum
offering price per share on the last day of the period. For the purpose of
determining net investment income, the calculation includes, among expenses of
the Fund, all recurring fees that are charged to all shareholder accounts and
any nonrecurring charges for the period stated. In particular, yield is
determined according to the following formula:

Yield =2[(A - B + 1)6-1]
_____
CD

Where: A equals dividends and interest earned during the period; B equals
expenses accrued for the period (net of reimbursements); C equals average daily
number of shares outstanding during the period that were entitled to receive
dividends; D equals the maximum offering price per share on the last day of the
period. For the thirty-day period ended March 31, 1998, the yield for the
Institutional Shares of the Fund was 6.07%. The Investor Shares of the Fund were
not offered during such period.

The Fund's performance may be compared in advertisements, sales literature,
shareholder reports, and other communications to the performance of other mutual
funds having similar objectives or to standardized indices or other measures of
investment performance. In particular, the Fund may compare its performance to
the Lehman Aggregate Bond Index. Comparative performance may also be expressed
by reference to a ranking prepared by a mutual fund monitoring service or by one
or more newspapers, newsletters or financial periodicals. The Fund may also
occasionally cite statistics to reflect its volatility and risk.

Comparative information about the yield of the Fund and about average rates of
return on certificates of deposits, bank money market deposit accounts, money
market mutual funds, and other similar types of investments may be included in
Fund communications. A bank certificate of deposit, unlike the Fund's shares,
pays a fixed rate of interest and entitles the depositor to receive the face
amount of the certificate at maturity. A bank money market deposit account is a
form of savings account which pays a variable rate of interest. Unlike the
Fund's shares, bank certificates of deposit and bank money market deposit
accounts are insured by the Federal Deposit Insurance Corporation. A money
market mutual fund is designed to maintain a constant value of $1.00 per share
and, thus, a money market fund's shares are subject to less price fluctuation
than the Fund's shares.

<PAGE>
APPENDIX A

DESCRIPTION OF RATINGS

The Fund intends to limit its investments to investment grade fixed income
securities ("Investment-Grade Debt Securities"). At least 90% of the Fund's
assets will be invested in Investment-Grade Debt Securities rated A or better as
described below (or if not rated, of equivalent quality as determined by the
Advisor). The various ratings used by the nationally recognized securities
rating services are described below.

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity of the obligor to meet its
financial commitment on the obligation.

AA - Debt rated AA differs from AAA issues only in a small degree. The
obligor's capacity to meet its financial commitment on the obligation is
very strong.

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

Aaa - Bonds that 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 an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in Aaa securities or
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.

A - Debt which is rated A possesses many favorable investment attributes
and is to be considered as an upper medium grade obligation. 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 - Debt which is rated Baa is considered as a medium grade obligation,
i.e., it is 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 debt lacks outstanding
investment characteristics and in fact has speculative characteristics as
well.

The following summarizes the two highest ratings used by Moody's for short-term
notes and variable rate demand obligations:

MIG-2; VMIG-2 - Obligations bearing these designations are of a high
quality with ample margins of protection.

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

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

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

BBB - Bonds rated BBB have below-average protection factors but are
still considered sufficient for prudent investment. There is
considerable variability in risk during economic cycles.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within a rating category. A "ratings outlook" is used to describe the
most likely direction of any rating change over the intermediate term. It is
described as "Positive" or "Negative". The absence of a designation indicates a
stable outlook.

The following summarizes the two highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+.

The term symbol "LOC" indicates that the rating is based on a letter of credit
issued by a commercial bank.

The following summarizes the three highest ratings used by Fitch for short-term
notes, municipal notes, variable rate demand instruments and commercial paper:

F-1+ - Instruments assigned this rating are regarded as having the
strongest degree of assurance for timely payment.

F-1 - Instruments assigned this rating reflect an assurance of timely
payment only slightly less in degree than issues rated F-1+

F-2 - Instruments assigned this rating have satisfactory degree of
assurance for timely payment, but the margin of safety is not as great
as for issues assigned F-1+ and F-1 ratings.

<PAGE>
Dear Shareholders of Investek Fixed Income Trust:

Enclosed for your review is the annual report for the fiscal year ended
31 March 1998, including a report entitled "Portfolio of Investments." In what
was a strong year for the bond market, caused by a decline in yields from 61
basis points at the one-year Treasury to 116 basis points at 30-year, the fund
returned 9.91% versus the Lipper Intermediate Investment Grade Index at 10.72%.
This is the Lipper category in which the fund is categorized. Over the trailing
3-year period, annualized returns were 8.64% respectively. For the trailing
5-year period, annualized returns were 6.38% versus 6.28% respectively.

As the bond market rallied this fiscal year, we were in a defensive
position with the fund's effective duration shorter than the target duration of
the Lehman Brothers Aggregate Index. Consequently, we did not participate fully
in terms of price appreciation as rates fell. In the last quarter of the fiscal
year, we re-balanced the portfolio to bring the effective duration to 4.33 years
compared to the Aggregate's 4.55 years. We will maintain this match carefully in
order that our philosophy of buying high quality issues with incremental yield
can bear fruit as it has in the past.

We have maintained the portfolio's overall AAA rating. United States
Government and Agency guaranteed and insured obligations make up 75% of the
portfolio, with another 14% in AAA-rated issues. Thank you for your continued
confidence in the Investek Fixed Income Trust. Please call us if we can be of
further service to you.

Very truly yours.

INVESTEK CAPITAL MANAGEMENT
Douglas Folk, CFA
Vice President

<PAGE>
INVESTEK FIXED INCOME TRUST

Performance Update - $50,000 Investment

For the period from November 15, 1991 (commencement of operations)
to March 31, 1998

Investek Fixed Lehman Aggregate Lipper Intermediate
Income Trust Bond Index Grade Debt Fund Index

11/15/91 50,000 50,000 50,000
12/31/91 50,355 51,720 51,713
3/31/92 50,612 51,059 51,108
6/30/92 55,345 53,119 53,135
9/30/92 53,918 55,401 55,567
12/31/92 54,275 55,548 55,446
3/31/93 56,875 57,844 57,912
6/30/93 58,672 59,378 59,394
9/30/93 60,027 60,928 60,941
12/31/93 60,004 60,964 60,990
3/31/94 57,698 59,216 59,307
6/30/94 57,065 58,606 58,608
9/30/94 57,281 58,963 58,974
12/31/94 57,736 59,186 59,035
3/31/95 60,426 62,171 61,709
6/30/95 64,300 65,959 65,120
9/30/95 64,918 67,254 66,360
12/31/95 67,446 70,120 69,140
3/31/96 66,892 68,877 67,915
6/30/96 67,836 69,268 68,179
9/30/96 68,958 70,549 69,371
12/31/96 70,199 72,665 71,341
3/31/97 70,487 72,259 70,914
6/30/97 73,040 74,913 73,353
9/30/97 74,765 77,402 75,618
12/31/97 76,634 79,681 76,730
3/31/98 77,474 80,920 78,518

This graph depicts the performance of the Investek Fixed Income Trust versus the
Lehman Brothers Aggregate Bond Index and the Lipper Intermediate Investment
Grade Debt Fund Index. It is important to note that the Investek Fixed Income
Trust is a professionally managed mutual fund while the index is not available
for investment and is unmanaged. The comparison is shown for illustrative
purposes only.

Average Annual Total Return

- -------------------------------------------------
Since Inception One Year Five Years
- -------------------------------------------------
7.11% 9.91% 6.37%
- -------------------------------------------------

The graph assumes an initial $50,000 investment at November 15, 1991. All
dividends and distributions are reinvested.

At March 31, 1998, the Fund would have grown to $77,474 - total investment
return of 54.95% since November 15, 1991.

At March 31, 1998, a similar investment in the Lehman Brothers Aggregate Bond
Index would have grown to $80,920 - total investment return of 61.84% and the
Lipper Intermediate Investment Grade Debt Fund Index would have grown to $78,518
- - total investment return of 57.04%, since November 15, 1991.

<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST

PORTFOLIO OF INVESTMENTS

March 31, 1998

U. S. GOVERNMENT AND AGENCY OBLIGATIONS - 64.54%

United States Treasury Note .............................................. $800,000 5.500% 02/15/08 $ 790,875
A.I.D. - Equador ......................................................... 85,366 7.050% 05/01/15 89,259
A.I.D. - Ivory Coast ..................................................... 280,105 8.100% 12/01/06 282,262
A.I.D. - Peru ............................................................ 174,335 8.350% 01/01/07 174,771
B.A.L.T. Conway Partnership Title XI ..................................... 145,616 10.750% 11/15/03 147,437
Chilbar Ship Co. Title XI ................................................ 63,894 6.980% 07/15/01 64,028
Federal Agricultural Mortgage Corporation
Series AM-1003 ....................................................... 672,835 6.822% 04/25/13 696,530
Series AM-1002 ....................................................... 248,602 6.922% 12/25/12 256,025
Federal Home Loan Mortgage Corporation
REMIC Series 1545 Class H ............................................ 200,000 6.000% 06/15/23 194,188
Pool #W10001 ......................................................... 64,000 6.420% 12/01/05 65,263
REMIC Series 1311 Class J ........................................... 500,000 7.500% 09/15/21 517,344
Federal National Mortgage Association
Pool #73401 .......................................................... 490,451 6.440% 03/01/06 498,172
REMIC Series 1993-117 Class K ........................................ 478,939 6.500% 07/25/08 473,402
Federal National Mortgage Association Strip
Series 66 Class 1 .................................................... 184,399 7.500% 01/01/20 187,657
Global Industries Ltd. Title XI .......................................... 1,204,000 8.300% 07/15/20 1,263,856
Government National Mortgage Association
Pool #16402 .......................................................... 258,975 8.500% 04/15/12 271,761
Pool #383137 ......................................................... 398,289 7.750% 03/15/11 408,495
Lawrence Steamship Company Title XI ...................................... 337,357 7.270% 09/01/03 343,801
Moore McCormack Leasing - Series B - Title XI ............................ 163,000 8.875% 07/15/01 163,815
Small Business Administration 98-B ....................................... 1,000,000 6.150% 02/01/18 985,278
Small Business Administration 97-E ....................................... 240,292 6.600% 09/01/07 242,900
Small Business Administration 97-H ....................................... 246,433 6.800% 08/01/17 250,397
Small Business Administration 97-F ....................................... 295,737 7.200% 06/01/17 306,732
Small Business Administration 92-A ....................................... 285,647 7.600% 01/01/12 295,645
-----------

Total U. S. Government and Agency Obligations (Cost $8,795,409) ...... 8,969,893
-----------

(Continued)

</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

INVESTEK FIXED INCOME TRUST

PORTFOLIO OF INVESTMENTS

March 31, 1998

U. S. GOVERNMENT INSURED OBLIGATIONS - 9.56%

Federal Housing Authority Project Loan
Crystal City ........................................................... $57,786 2.900% 01/01/06 $49,906
Downtowner Apartments .................................................. 163,978 8.375% 11/01/11 171,977
GMAC 32 ................................................................ 86,553 7.430% 12/01/21 88,542
Kinswood Apartments .................................................... 595,426 6.875% 10/01/14 589,323
USGI #87 ............................................................... 418,316 7.430% 08/01/23 428,543
-----------

Total U. S. Government Insured Obligations (Cost $1,316,762) ........... 1,328,291
-----------

CORPORATE OBLIGATIONS - 11.18%

California Infrastructure SDG&E Series 1997-1 .............................. 500,000 6.370% 12/26/09 504,219
GG1B Funding Corporation ................................................... 449,181 7.430% 01/15/11 459,849
Great Northern Railroad Series Q ........................................... 616,000 2.625% 01/01/10 420,420
Monon Railroad ............................................................. 175,000 6.000% 01/01/07 170,060
-----------

Total Corporate Obligations (Cost $1,543,033) .......................... 1,554,548
-----------

CONVENTIONAL MORTGAGE BACKED SECURITIES - 8.28%

GE Capital Mortgage Services, Inc.
REMIC Series 1993-17 Class A6 .......................................... 650,000 6.500% 12/25/23 652,031
Prudential Home Mortgage Securities
REMIC Series 1994-2 Class A8 ........................................... 500,000 6.750% 02/25/24 499,219
-----------

Total Conventional Mortgage Backed Securities (Cost $1,117,681) ........ 1,151,250
-----------

PRIVATE MORTGAGE BACKED SECURITIES - 1.61%

Krauss/Schwartz Properties, Ltd. ........................................... 136,431 7.740% 02/18/04 137,440
National Housing Partnership ............................................... 86,590 9.500% 05/01/03 85,950
-----------

Total Private Mortgage Backed Securities (Cost $223,020) ............... 223,390
-----------

PRIVATE PLACEMENT CORPORATE SECURITIES - 1.86%

Rosewood Care Center Capital Funding Corporation
First Mortgage Bonds (Cost $268,926).................................... 275,541 7.250% 11/01/13 258,320
-----------

(Continued)

</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>

INVESTEK FIXED INCOME TRUST

PORTFOLIO OF INVESTMENTS

March 31, 1998

INVESTMENT COMPANY - 1.52%

AIM Short Term Prime Fund A (Cost $211,854)................................. 211,854 $ 211,854
-----------

Total Value of Investments (Cost $13,476,685 (a)) ............................... 98.55 % $13,697,546
Other Assets in Excess of Liabilities ........................................... 1.45 % 201,683
------ -----------
Net Assets ................................................................. 100.00 % $13,899,229
====== ===========

(a) Aggregate cost for federal income tax purposes is $13,477,731. Unrealized appreciation (depreciation) of investments for
federal income tax purposes is as follows:

Unrealized appreciation $270,508
Unrealized depreciation (50,693)
--------
Net unrealized appreciation $219,815
========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST

STATEMENT OF ASSETS AND LIABILITIES

March 31, 1998

ASSETS
Investments, at value (cost $13,476,685) ..................................................... $13,697,546
Cash ......................................................................................... 64,011
Income receivable ............................................................................ 143,622
Other asset .................................................................................. 7
-----------

Total assets ............................................................................ 13,905,186
-----------

LIABILITIES
Accrued expenses ............................................................................. 5,957
-----------

NET ASSETS
(applicable to 1,347,703 shares outstanding; unlimited
shares of no par value beneficial interest authorized) ...................................... $13,899,229
===========

NET ASSET VALUE, REDEMPTION AND OFFERING PRICE PER SHARE
($13,899,229 / 1,347,703 shares) ............................................................. $ 10.31
===========

NET ASSETS CONSIST OF
Paid-in capital .............................................................................. $14,190,014
Accumulated net realized loss on investments ................................................. (511,646)
Net unrealized appreciation on investments ................................................... 220,861
-----------
$13,899,229
===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST

STATEMENT OF OPERATIONS

Year ended March 31, 1998

INVESTMENT INCOME

Income
Interest ..................................................................................... $ 860,343
Dividends .................................................................................... 17,502
----------

Total income ............................................................................ 877,845
----------

Expenses
Investment advisory fees (note 2) ............................................................ 55,540
Fund administration fees (note 2) ............................................................ 18,513
Custody fees ................................................................................. 3,552
Registration and filing administration fees (note 2) ......................................... 2,569
Fund accounting fees (note 2) ................................................................ 21,000
Audit fees ................................................................................... 11,139
Legal fees ................................................................................... 4,336
Securities pricing fees ...................................................................... 2,088
Shareholder recordkeeping fees ............................................................... 587
Shareholder servicing expenses ............................................................... 3,218
Registration and filing expenses ............................................................. 2,969
Printing expenses ............................................................................ 1,661
Trustee fees and meeting expenses ............................................................ 4,244
Other operating expenses ..................................................................... 4,662
----------

Total expenses .......................................................................... 136,078
----------

Less investment advisory fees waived (note 2) ........................................... (25,063)
----------

Net expenses ............................................................................ 111,015
----------

Net investment income ............................................................. 766,830
----------

REALIZED AND UNREALIZED GAIN ON INVESTMENTS

Net realized gain from investment transactions .................................................... 10,958
Decrease in unrealized depreciation on investments ................................................ 346,682
----------

Net realized and unrealized gain on investments .............................................. 357,640
----------

Net increase in net assets resulting from operations .................................... $1,124,470
==========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST

STATEMENTS OF CHANGES IN NET ASSETS

Operations
Net investment income ................................................................... $ 766,830 $ 743,943
Net realized gain from investment transactions .......................................... 10,958 40,347
Increase (decrease) in unrealized appreciation (depreciation) on investments ............ 346,682 (171,926)
----------- -----------

Net increase in net assets resulting from operations ........... 1,124,470 612,364
----------- -----------

Distributions to shareholders from
Net investment income ................................................................... (767,000) (748,208)
----------- -----------

Capital share transactions
Increase (decrease) in net assets resulting from capital share transactions (a) ......... 2,314,618 (898,136)
----------- -----------

Total increase (decrease) in net assets ................... 2,672,088 (1,033,980)

NET ASSETS

Beginning of year ........................................................................... 11,227,141 12,261,121
---------- ----------

End of year (including undistributed net investment income
of $170 in 1997) ............................................................. $13,899,229 $11,227,141
=========== ===========

(a) A summary of capital share activity follows:
----------------------------------------------------------------------
Year ended Year ended
March 31, 1998 March 31, 1997

Shares Value Shares Value
----------------------------------------------------------------------

Shares sold .............................................. 282,314 $ 2,930,727 90,260 $ 912,132
Shares issued for reinvestment
of distributions .................................... 51,625 530,895 46,737 470,441
----------- ----------- ----------- -----------

333,939 3,461,622 136,997 1,382,573

Shares redeemed .......................................... (110,904) (1,147,004) (225,604) (2,280,709)
----------- ----------- ----------- -----------

Net increase (decrease) ............................. 223,035 $ 2,314,618 (88,607) $ (898,136)
=========== =========== =========== ===========

See accompanying notes to financial statements
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
INVESTEK FIXED INCOME TRUST

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Year)

- ------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended Year ended Year ended
March 31, March 31, March 31, March 31, March 31,
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------------

Net asset value, beginning of year ............................. $9.98 $10.11 $9.74 $9.93 $10.48

Income from investment operations
Net investment income ............................. 0.64 0.65 0.66 0.63 0.61
Net realized and unrealized gain (loss) on investments 0.33 (0.13) 0.37 (0.19) (0.43)
----------- ----------- ----------- ----------- -----------

Total from investment operations ......... 0.97 0.52 1.03 0.44 0.18
----------- ----------- ----------- ----------- -----------

Distributions to shareholders from
Net investment income ............................. (0.64) (0.65) (0.66) (0.63) (0.60)
Net realized gain from investment transactions .... (0.00) 0.00 0.00 0.00 (0.13)
----------- ----------- ----------- ----------- -----------

Total distributions ...................... (0.64) (0.65) (0.66) (0.63) (0.73)
----------- ----------- ----------- ----------- -----------

Net asset value, end of year ................................... $10.31 $9.98 $10.11 $9.74 $9.93
=========== =========== =========== =========== ===========

Total return ................................................... 9.91% 5.38% 10.70% 4.73% 1.43%
=========== =========== =========== =========== ===========

Ratios/supplemental data

Net assets, end of year .................................. $13,899,229 $11,227,141 $12,261,121 $14,983,474 $17,641,814
=========== =========== =========== =========== ===========

Ratio of expenses to average net assets
Before expense reimbursements and waived fees ..... 1.10% 1.20% 1.08% 1.08% 1.41%
After expense reimbursements and waived fees ...... 0.90% 0.90% 0.87% 0.77% 0.77%

Ratio of net investment income to average net assets
Before expense reimbursements and waived fees ..... 6.01% 6.07% 6.20% 6.15% 5.45%
After expense reimbursements and waived fees ...... 6.21% 6.37% 6.41% 6.45% 5.82%

Portfolio turnover rate .................................. 38.46% 32.94% 16.57% 19.64% 34.42%

See accompanying notes to financial statements
</TABLE>
<PAGE>
INVESTEK FIXED INCOME TRUST

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER INFORMATION

The Investek Fixed Income Trust (the "Fund") is a diversified series of
shares of beneficial interest of The Nottingham Investment Trust II
(the "Trust"). The Trust, an open-end investment company, was organized
on October 18, 1990 as a Massachusetts Business Trust and is registered
under the Investment Company Act of 1940, as amended. The investment
objective of the Fund is to preserve capital and maximize total returns
through active management of investment grade fixed income securities.
The Fund began operations on November 15, 1991.

Pursuant to a plan approved by the Board of Trustees of the Trust, the
existing single class of shares of the Fund was redesignated as the
Institutional Shares of the Fund on August 1, 1996, and an additional
class of shares, the Investor Shares, was authorized. To date, only
Institutional Shares have been issued by the Fund. The Investor Shares
will be sold with a sales charge and will bear potential distribution
expenses and service fees. The Institutional Shares are sold without a
sales charge and bears no shareholder servicing or distribution fees.
The following is a summary of significant accounting policies followed
by the Fund.

A. Security Valuation - The Fund's investments in securities are
carried at value. Securities listed on an exchange or quoted on a
national market system are valued at the last sales price as of
4:00 p.m., New York time. Securities for which market quotations
are not readily available are valued in good faith using a method
approved by the Trust's Board of Trustees, taking into
consideration institutional bid and last sale prices, and
securities prices, yields, estimated maturities, call features,
ratings, institutional trading in similar groups of securities
and developments related to specific securities. Short-term
investments are valued at cost which approximates value.

The financial statements include securities valued at $8,083,608
(58% of net assets) whose values have been estimated using a
method approved by the Trust's Board of Trustees. Such securities
are valued by using a matrix system, which is based upon the
factors described above and particularly the spread between
yields on the securities being valued and yields on U.S. Treasury
securities with similar remaining years to maturity. Those
estimated values may differ from the values that would have
resulted from actual purchase and sale transactions.

B. Federal Income Taxes - The Fund is considered a personal holding
company as defined under Section 542 of the Internal Revenue Code
since 50% of the value of the Fund's shares were owned directly
or indirectly by five or fewer individuals at certain times
during the last half of the year. As a personal holding company,
the Fund is subject to federal income taxes on undistributed
personal holding company income at the maximum individual income
tax rate. No provision has been made for federal income taxes
since substantially all taxable income has been distributed to
shareholders. It is the policy of the Fund to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to make sufficient distributions of
taxable income to relieve it from all federal income taxes.

The Fund has capital loss carryforwards for federal income tax
purposes of $510,600, $492,567 of which expires in the year 2003
and $18,033 of which expires in the year 2004. It is the
intention of the Board of Trustees of the Trust not to distribute
any realized gains until the carryforwards have been offset or
expire.

(Continued)
<PAGE>

INVESTEK FIXED INCOME TRUST

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

Net investment income (loss) and net realized gains (losses) may
differ for financial statement and income tax purposes primarily
because of losses incurred subsequent to October 31, which are
deferred for income tax purposes. The character of distributions
made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to the timing of dividend
distributions, the fiscal year in which amounts are distributed
may differ from the year that the income or realized gains were
recorded by the Fund.

C. Investment Transactions - Investment transactions are recorded on
the trade date. Realized gains and losses are determined using
the specific identification cost method. Interest income is
recorded daily on an accrual basis.

D. Distributions to Shareholders - The Fund generally declares
dividends monthly, on a date selected by the Trust's Trustees. In
addition, distributions may be made annually in December out of
net realized gains through October 31 of that year. Distributions
to shareholders are recorded on the ex-dividend date. The Fund
may make a supplemental distribution subsequent to the end of its
fiscal year ending March 31.

E. Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts of assets, liabilities, expenses and revenues reported in
the financial statements. Actual results could differ from those
estimated.

NOTE 2 - INVESTMENT ADVISORY FEE AND OTHER RELATED PARTY TRANSACTIONS

Pursuant to an investment advisory agreement, Investek Capital
Management, Inc. (the "Advisor") provides the Fund with a continuous
program of supervision of the Fund's assets, including the composition
of its portfolio, and furnishes advice and recommendations with respect
to investments, investment policies, and the purchase and sale of
securities. As compensation for its services, the Advisor receives a
fee at the annual rate of 0.45% of the Fund's average daily net assets.

The Advisor currently intends to voluntarily waive all or a portion of
its fee and reimburse expenses of the Fund to limit total Fund
operating expenses to 0.90% of the average daily net assets of the
Fund. There can be no assurance that the foregoing voluntary fee
waivers or reimbursements will continue. The Advisor has voluntarily
waived a portion of its fee amounting to $25,063 ($0.02 per share) for
the year ended March 31, 1998.

The Fund's administrator, The Nottingham Company (the "Administrator"),
provides administrative services to and is generally responsible for
the overall management and day-to-day operations of the Fund pursuant
to an accounting and administrative agreement with the Trust. As
compensation for its services, the Administrator receives a fee at the
annual rate of 0.15% of the Fund's average daily net assets. The
Administrator also receives a monthly fee of $1,750 for accounting and
recordkeeping services. Additionally, the Administrator charges the
Fund for servicing of shareholder accounts and registration of the
Fund's shares. The contract with the Administrator provides that the
aggregate fees for the aforementioned administration, accounting and
recordkeeping services shall not be less than $3,000 per month. The
Administrator also charges the Fund for certain expenses involved with
the daily valuation of portfolio securities.

(Continued)
<PAGE>

INVESTEK FIXED INCOME TRUST

NOTES TO FINANCIAL STATEMENTS

March 31, 1998

NC Shareholder Services, LLC (the "Transfer Agent") has been retained
by the Administrator to serve as the Fund's transfer, dividend paying,
and shareholder servicing agent. The Transfer Agent maintains the
records of each shareholder's account, answers shareholder inquiries
concerning accounts, processes purchases and redemptions of Fund
shares, acts as dividend and distribution disbursing agent, and
performs other shareholder servicing functions. The Transfer Agent is
compensated for its services by the Administrator and not directly by
the Fund.

Certain Trustees and officers of the Trust are also officers of the
Advisor, the Distributor or the Administrator.

NOTE 3 - PURCHASES AND SALES OF INVESTMENTS

Purchases and sales of investments, other than short-term investments,
aggregated $6,716,183 and $4,592,770, respectively, for the year ended
March 31, 1998.
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Trustees of The Nottingham Investment Trust II and Shareholders
of Investek Fixed Income Fund:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Investek Fixed Income Fund (a portfolio of The
Nottingham Investment Trust II) as of March 31, 1998 and the related statement
of operations for the year then ended, the statement of changes in net assets
for the years ended March 31, 1998 and 1997, and financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Investek Fixed
Income Fund as of March 31, 1998, the results of its operations, the changes in
its net assets and its financial highlights for the respective stated periods in
conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Pittsburgh, Pennsylvania
April 24, 1998

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

ZSA ASSET ALLOCATION FUND

August 1, 1998

A Series of
THE NOTTINGHAM INVESTMENT TRUST II
107 North Washington Street, Post Office Box 4365
Rocky Mount, North Carolina 27803-0365
Telephone 1-800-525-3863

Table of Contents

INVESTMENT OBJECTIVE AND POLICIES....................................................................................... 2
INVESTMENT VEHICLES THAT MAY BE USED IN FUTURE YEARS.................................................................... 4
INVESTMENT LIMITATIONS.................................................................................................. 7
NET ASSET VALUE......................................................................................................... 9
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION.......................................................................... 9
DESCRIPTION OF THE TRUST................................................................................................ 10
ADDITIONAL INFORMATION CONCERNING TAXES................................................................................. 11
MANAGEMENT OF THE FUND.................................................................................................. 12
SPECIAL SHAREHOLDER SERVICES............................................................................................ 17
ADDITIONAL INFORMATION ON PERFORMANCE................................................................................... 18
APPENDIX A - DESCRIPTION OF RATINGS..................................................................................... 21
ANNUAL REPORT OF THE FUND FOR THE FISCAL YEAR ENDED MARCH 31, 1998.................................................ATTACHED

</TABLE>

This Statement of Additional Information (the "Additional Statement") is meant
to be read in conjunction with the Prospectus, dated the same date as this
Additional Statement, for the ZSA Asset Allocation Fund (the "Fund"), as the
Prospectus may be amended or supplemented from time to time, and is incorporated
by reference in its entirety into the Prospectus. Because this Additional
Statement is not itself a prospectus, no investment in shares of the Fund should
be made solely upon the information contained herein. Copies of the Fund's
Prospectus may be obtained at no charge by writing or calling the Fund at the
address and phone number shown above. This Additional Statement is not a
prospectus but is incorporated by reference in the Prospectus in its entirety.
Capitalized terms used but not defined herein have the same meanings as in the
Prospectus.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

The following policies supplement the Fund's investment objective and policies
as set forth in the Prospectus of the Fund. The Fund, organized in 1992, has no
prior operating history.

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

For the fiscal years ended March 31, 1996, 1997, and 1998, the Fund paid
brokerage commissions of $28,832, $10,307, and $12,512, respectively.

Repurchase Agreements. The Fund may acquire U.S. Government Securities or
corporate debt securities subject to repurchase agreements. A repurchase
transaction occurs when, at the time the Fund purchases a security (normally a
U.S. Treasury obligation), it also resells it to the vendor (normally a member
bank of the Federal Reserve or a registered Government Securities dealer) and
must deliver the security (and/or securities substituted for them under the
repurchase agreement) to the vendor on an agreed upon date in the future. The
repurchase price exceeds the purchase price by an amount which reflects an
agreed upon market interest rate effective for the period of time during which
the repurchase agreement is in effect. Delivery pursuant to the resale will
occur within one to seven days of the purchase.

Description of Money Market Instruments. Money market instruments may include
U.S. Government Securities or corporate debt securities (including those subject
to repurchase agreements), provided that they mature in thirteen months or less
from the date of acquisition and are otherwise eligible for purchase by the
Fund. Money market instruments also may include Banker's Acceptances and
Certificates of Deposit of domestic branches of U.S. banks, Commercial Paper and
Variable Amount Demand Master Notes ("Master Notes"). Banker's Acceptances are
time drafts drawn on and "accepted" by a bank. When a bank "accepts" such a time
draft, it assumes liability for its payment. When the Fund acquires a Banker's
Acceptance the bank which "accepted" the time draft is liable for payment of
interest and principal when due. The Banker's Acceptance carries the full faith
and credit of such bank. A Certificate of Deposit ("CD") is an unsecured
interest-bearing debt obligation of a bank. Commercial Paper is an unsecured,
short-term debt obligation of a bank, corporation or other borrower. Commercial
Paper maturity generally ranges from two to 270 days and is usually sold on a
discounted basis rather than as an interest-bearing instrument. The Fund will
invest in Commercial Paper only if it is rated one of the top two rating
categories by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's
Ratings Group ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps
("D&P") or, if not rated, of equivalent quality in the Advisor's opinion.
Commercial Paper may include Master Notes of the same quality. Master Notes are
unsecured obligations which are redeemable upon demand of the holder and which
permit the investment of fluctuating amounts at varying rates of interest.
Master Notes are acquired by the Fund only through the Master Note program of
the Fund's custodian bank, acting as administrator thereof. The Advisor will
monitor, on a continuous basis, the earnings power, cash flow and other
liquidity ratios of the issuer of a Master Note held by the Fund.

Illiquid Investments. The Fund may invest up to 10% of its net assets in
illiquid securities, which are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued. Under the supervision of the Board of Trustees, the
Advisor determines the liquidity of the Fund's investments and, through reports
from the Advisor, the Board monitors investments in illiquid instruments. In
determining the liquidity of the Fund's investments, the Advisor may consider
various factors including (1) the frequency of trades and quotations, (2) the
number of dealers and prospective purchasers in the marketplace, (3) dealer
undertakings to make a market, (4) the nature of the security (including any
demand or tender features) and (5) the nature of the marketplace for trades
(including the ability to assign or offset the Fund's rights and obligations
relating to the investment). Investments currently considered by the Fund to be
illiquid include repurchase agreements not entitling the holder to payment of
principal and interest within seven days and restricted securities. If through a
change in values, net assets or other circumstances, the Fund were in a position
where more than 10% of its net assets were invested in illiquid securities, it
would seek to take appropriate steps to protect liquidity.

INVESTMENT VEHICLES THAT MAY BE USED IN FUTURE YEARS

When the Fund has reached a size in total net assets when hedging techniques may
be reasonably expected to add value, and preserve unrealized gains in the
portfolio, some or all of the following techniques may be used. If these
techniques become applicable, the Fund will amend the Prospectus to include a
complete description of these techniques, and forward the revised prospectus to
all shareholders of the Fund.

Options on Securities and Securities Indices. To realize greater income than
would be realized on portfolio securities transactions alone, the Fund may write
(sell) covered call and put options. A call option written by the Fund obligates
the Fund to sell specified securities to the holder of the option at a specified
price, upon exercise of the option, at any time before the expiration date. All
call options written by the Fund are covered, which means that the Fund will own
the securities subject to the option so long as the option is outstanding. By
writing covered call options, however, the Fund may forego the opportunity to
profit from an increase in the market price of the underlying security.

The purpose of writing put options is to generate additional income. A put
option written by the Fund would obligate the Fund to purchase specified
securities from the option holder at a specified price, upon exercise of the
option, at any time before the expiration date. All put options written by the
Fund will be covered, which means that the Fund will have deposited with its
custodian cash, U.S. Government Securities, or other high-grade debt liquid
securities with a value at least equal to the exercise price of the put option.
In return for the option premium, the Fund accepts the risk that it will be
required to purchase the underlying securities at a price in excess of the
securities' market value at the time of purchase.

The Fund may terminate its obligations under a call or put option by purchasing
an option identical to the one it has written. Such purchases are referred to as
"closing purchase transactions."

The Fund may write and purchase put and call options on any securities in which
it may invest in options on any securities index based on securities in which
the Fund may invest. The Fund is also authorized to enter into closing sale
transactions in order to realize gains or minimize losses on options purchased
by the Fund.

The Fund would normally purchase call options to hedge against an increase in
the market value of securities of the type in which the Fund may invest. The
Fund will not engage in such transactions for speculation. The purchase of a
call option would entitle the Fund, in return for the premium paid, to purchase
specified securities at a specified price, upon exercise of the option, during
the option period. The Fund would ordinarily realize a gain if during the option
period, the value of such securities exceeds the sum of the exercise price, the
premium paid and transaction costs; otherwise, the Fund would realize a loss on
the purchase of the call option.

The Fund would normally purchase put options to hedge against a decline in the
market value of securities in its portfolio ("protective puts"). The Fund will
not engage in such transactions for speculation. The purchase of a put option
would entitle the Fund, in exchange for the premium paid, to sell specified
securities at a specified price, upon exercise of the option, during the option
period. The purchase of protective puts is designed to offset or hedge against a
decline in the market value of the Fund's securities. Gains and losses on the
purchase of protective put options would tend to be offset by countervailing
changes in the value of underlying portfolio securities. The Fund would
ordinarily realize a gain if, during the option period, the value of the
underlying securities decreases below the exercise price sufficiently to cover
the premium and transaction costs; otherwise, the Fund would realize a loss on
the purchase of the put option.

The Fund may purchase put and call options on securities indices for the same
purposes as the purchase of options on securities. Currently, only options on
stock indices are traded and only on national exchanges. Options on securities
indices are similar to options on securities, except that the exercise of
securities index options requires cash payments and does not involve the actual
purchase or sale of securities. In addition, securities index options are
designed to reflect price fluctuations in a group of securities or segment of
the securities market rather than price fluctuations in a single security. A
purchase of securities index options is subject to the risk that the value of
the Fund's portfolio securities may not change as much as an index because a
Fund's investments generally cannot exactly match the composition of an index.

There is no assurance that a liquid secondary market on a domestic options
exchange will exist for any particular exchange-traded option, or at any
particular time. If the Fund is unable to effect a closing purchase transaction
with respect to covered options it has written, the Fund will not be able to
sell the underlying securities or dispose of assets held in a segregated account
until the options expire or are exercised. Similarly, if the Fund is unable to
effect a closing sale transaction with respect to options it has purchased, the
Fund would have to exercise the options in order to realize any profit and may
incur transaction costs upon the purchase or sale of underlying securities. The
Fund expects to purchase and write only exchange traded options until such time
as the Advisor determines that the over-the-counter market in options is
sufficiently developed and appropriate disclosure is furnished to prospective
and existing shareholders.

The Fund may purchase and sell both options that are traded on United States
exchanges, and certain options traded in the over-the-counter market, including
options on GNMAs and short-term intermediate and long-term Treasury securities.
The Fund may engage in over-the-counter options transactions with broker-dealers
who make markets in these options.

The ability to terminate over-the-counter option positions is more limited than
with exchange-traded option positions because the predominant market is the
issuing broker rather than an exchange, and may involve the risk that
broker-dealers participating in such transactions will not fulfill their
obligations. To reduce this risk, the Fund will purchase such options only from
broker-dealers whose debt securities are considered investment grade by the
Advisor. Moreover, until such time as the staff of the Securities and Exchange
Commission changes its position, the Fund will adhere to the staff's informal
position that purchased over-the-counter options and assets used to cover
written over-the-counter options constitute illiquid securities.

The writing and purchase of options is a highly specialized activity that
involves investment techniques and risks different from those associated with
ordinary portfolio securities transactions. The Fund will pay brokerage
commissions or spreads in connection with its options transactions, as well as
for purchases and sales of underlying securities. The writing of options could
result in significant increases in the Fund's turnover rate. The Fund's
transactions in options may be limited by the requirements of the Internal
Revenue Code for qualification as a regulated investment company.

Futures Contracts and Related Options. To hedge against changes in securities
prices, the Fund may purchase and sell various kinds of futures contracts, and
purchase and write (sell) call and put options on any of such futures contracts.
The futures contracts may be based on various securities (such as U.S.
Government securities), securities indices and other financial instruments and
indices. The Fund may engage in futures and related options transactions for
bona fide hedging purposes as described below. All futures contracts entered
into by the Fund are traded on U.S. exchanges or boards of trade that are
licensed and regulated by the Commodity Futures Trading Commission (the "CFTC").

A futures contract may generally be described as an agreement between two
parties to buy and sell particular financial instruments for an agreed price
during a designated month (or to deliver the final cash settlement price, in the
case of a contract relating to an index or otherwise not calling for physical
delivery at the end of trading in the contract).

When interest rates are rising or securities prices are falling, the Fund can
seek to offset a decline in the value of its current portfolio securities
through the sale of futures contracts. When interest rates are falling or
securities prices are rising, the Fund, through the purchase of futures
contracts, can attempt to secure better rates or prices than might later be
available in the market when it effects anticipated purchases.

Positions taken in the futures markets are not normally held to maturity but are
instead liquidated through offsetting transactions that may result in a profit
or a loss. A clearing corporation associated with the exchange on which futures
on securities are traded guarantees that, if still open, the sale or purchase
will be performed on the settlement date.

Hedging, by use of futures contracts, seeks to establish with more certainty the
effective price and rate of return on portfolio securities and securities that
the Fund owns or proposes to acquire. The Fund may, for example, take a "short"
position in the futures market by selling futures contracts in order to hedge
against an anticipated rise in interest rates that would adversely affect the
value of the Fund's portfolio securities. Such futures contracts may include
contracts for the future delivery of securities held by the Fund or securities
with characteristics similar to those of the Fund's portfolio securities. If, in
the opinion of the Advisor, there is a sufficient degree of correlation between
price trends for the Fund's portfolio securities and futures contracts based on
securities indices, the Fund may also enter into such futures contracts as part
of its hedging strategy. Although under some circumstances prices of securities
in the Fund's portfolio may be more or less volatile than prices of such futures
contacts, the Advisor will attempt to estimate the extent of this volatility
difference based on historical patterns and compensate for any such differential
by having the Fund enter into a greater or lesser number of futures contracts or
by attempting to achieve only a partial hedge against price changes affecting
the Fund's securities portfolio. When hedging of this character is successful,
any depreciation in the value of portfolio securities will be substantially
offset by appreciation in the value of the futures position. On the other hand,
any unanticipated appreciation in the value of the Fund's portfolio securities
would be substantially offset by a decline in the value of the futures position.

On other occasions, the Fund may take a "long" position by purchasing futures
contracts. This would be done, for example, when the Fund anticipates the
subsequent purchase of particular securities when it has the necessary cash, but
expects the prices or currency exchange rates then available in the applicable
market to be less favorable than prices or rates that are currently available.

The acquisition of put and call options on futures contracts will give a Fund
the right (but not the obligation) for a specified price to sell or to purchase,
respectively, the underlying futures contract at any time during the option
period. As the purchaser of an option on a futures contract, the Fund obtains
the benefit of the futures position if prices move in a favorable direction but
limits its risk of loss in the event of an unfavorable price movement to the
loss of the premium and transaction costs.

The writing of a call option on a futures contract generates a premium that may
partially offset a decline in the value of the Fund's assets. By writing a call
option, the Fund becomes obligated, in exchange for the premium, to sell a
futures contract, which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium that may partially offset an increase in the price of securities that
the Fund intends to purchase. However, the Fund becomes obligated to purchase a
futures contract that may have a value lower than the exercise price. Thus, the
loss incurred by the Fund in writing options on futures is potentially unlimited
and may exceed the amount of the premium received. The Fund will incur
transaction costs in connection with the writing of options on futures.

The holder or writer of an option on a futures contract may terminate its
position by selling or purchasing an offsetting option on the same series. There
is no guarantee that such closing transactions can be affected. The Fund's
ability to establish and close out positions on such options will be subject to
the development and maintenance of a liquid market.

The Fund will engage in futures and related options transactions only for bona
fide hedging purposes in accordance with CFTC regulations, which permit
investment companies registered under the 1940 Act to engage in such
transactions without requiring their sponsors to be registered as commodity pool
operators. The Fund is not permitted to engage in speculative futures trading.
The Fund will determine that the price fluctuations in the futures contracts and
options on futures used for hedging purposes are substantially related to price
fluctuations in securities held by the Fund or in securities which it expects to
purchase. The Fund's futures transactions will be entered into for traditional
hedging purposes -- i.e., futures contracts will be sold to protect against a
decline in the price of securities that the Fund owns, or futures contracts will
be purchased to protect the Fund against an increase in the price of securities
it intends to purchase. In particular cases, when it is economically
advantageous for the Fund to do so, a long futures position may be terminated or
an option may expire without the corresponding purchase of securities or other
assets.

Transaction costs associated with futures contracts and related options involve
brokerage costs, require margin deposits and, in the case of contracts and
options obligating the Fund to purchase securities or currencies, require the
Fund to segregate assets to cover such contracts and options.

While transactions in futures contracts and options on futures may reduce
certain risks, such transactions themselves entail certain other risks. Thus,
while the Fund may benefit from the use of futures and options on futures,
unanticipated changes in interest rates or securities prices may result in a
poorer overall performance for the Fund than if it had not entered into any
futures contacts or options transactions. In the event of an imperfect
correlation between a futures position and a portfolio position that is intended
to be protected, the desired protection may not be obtained, and the Fund may be
exposed to risk of loss.

INVESTMENT LIMITATIONS

The Fund has adopted the following fundamental investment limitations, which
cannot be changed without approval by holders of a majority of the outstanding
voting shares of the Fund. A "majority" for this purpose, means the lesser of
(i) 67% of the Fund's outstanding shares represented in person or by proxy at a
meeting at which more than 50% of its outstanding shares are represented, or
(ii) more than 50% of its outstanding shares. Unless otherwise indicated,
percentage limitations apply at the time of purchase.

As a matter of fundamental policy, the Fund may not:

(4) Invest for the purpose of exercising control or management of another
issuer;

(7) Purchase securities on margin (but the Fund may purchase or sell futures
contracts for hedging purposes and may obtain such short term credits as
may be necessary for the clearance of transactions);

(9) Invest in warrants, valued at the lower of cost or market, exceeding more
than 5% of the value of the Fund's net assets. Included within this amount,
but not to exceed 2% of the value of the Fund's net assets, may be warrants
which are not listed on the New York or American Stock Exchange.

(10) Participate on a joint or joint and several basis in any trading account in
securities;

(11) Make loans of money or securities, except that the Fund may invest in
repurchase agreements, money market instruments, and other debt securities;

(12) Invest more than 10% of the value of its net assets in repurchase
agreements having a maturity of longer than seven days or other not readily
marketable securities; included in this category are "restricted"
securities and any other assets for which an active and substantial market
does not exist at the time of purchase or subsequent valuation;

(13) Purchase or sell commodities or commodities contracts;

(14) Issue senior securities, borrow money or pledge its assets, except that it
may borrow from banks as a temporary measure (a) for extraordinary or
emergency purposes, in amounts not exceeding 5% of the Fund's total assets,
or (b) in order to meet redemption requests which might otherwise require
untimely disposition of portfolio securities, in amounts not exceeding 15%
of the Fund's total assets; and the Fund may pledge its assets to secure
all such borrowings;

(16) Purchase foreign securities, except that the Fund may purchase foreign
securities sold as American Depository Receipts without limit.

NET ASSET VALUE

The net asset value per share of the Fund is determined at the time trading
closes on the New York Stock Exchange (currently 4:00 p.m., New York time),
Monday through Friday, except on business holidays when the New York Stock
Exchange is closed. The New York Stock Exchange recognizes the following
holidays: New Year's Day, President's Day, Martin Luther King, Jr. Day, Good
Friday, Memorial Day, Fourth of July, Labor Day, Thanksgiving Day, and Christmas
Day. Any other holiday recognized by the New York Stock Exchange will be deemed
a business holiday on which the net asset value of the Fund will not be
calculated.

The net asset value per share of the Fund is calculated separately by adding the
value of the Fund's securities and other assets belonging to the Fund,
subtracting the liabilities charged to the Fund, and dividing the result by the
number of outstanding shares. "Assets belonging to" the Fund consist of the
consideration received upon the issuance of shares of the Fund together with all
net investment income, realized gains/losses and proceeds derived from the
investment thereof, including any proceeds from the sale of such investments,
any funds or payments derived from any reinvestment of such proceeds, and a
portion of any general assets of the Trust not belonging to a particular
investment Fund. Assets belonging to the Fund are charged with the direct
liabilities of the Fund and with a share of the general liabilities of the
Trust, which are normally allocated in proportion to the number of or the
relative net asset values of all of the Trust's series at the time of allocation
or in accordance with other allocation methods approved by the Board of
Trustees. Subject to the provisions of the Declaration of Trust, determinations
by the Board of Trustees as to the direct and allocable liabilities, and the
allocable portion of any general assets, with respect to the Fund are
conclusive.

For the fiscal years ended March 31, 1996, 1997, and 1998, the total expenses of
the Fund after fee waivers and expense reimbursements were $195,347 (1.91% of
the average daily net assets of the Fund) $175,296 (1.95% of the average daily
net assets of the Fund), and $139,451 (1.95% of the average daily net assets of
the Fund).

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Plan Under Rule 12b-1. The Trust has adopted a Plan of Distribution (the "Plan")
for the Fund pursuant to Rule 12b-1 under the 1940 Act (see "How Shares May Be
Purchased - Distribution Plan" in the Prospectus). Under the Plan the Fund may
expend up to 0.25% of the Fund's average net assets annually to finance any
activity which is primarily intended to result in the sale of shares of the Fund
and the servicing of shareholder accounts, provided the Trust's Board of
Trustees has approved the category of expenses for which payment is being made.
Such expenditures paid as service fees to any person who sells shares of the
Fund may not exceed 0.25% of the average annual net asset value of such shares.
Potential benefits of the Plan to the Fund include improved shareholder
servicing, savings to the Fund in transfer agency costs, benefits to the
investment process from growth and stability of assets and maintenance of a
financially healthy management organization.

From time to time the Distributor may pay additional amounts from its own
resources to dealers for aid in distribution or for aid in providing
administrative services to shareholders.

Each year the Trustees must determine whether continuation of the Plan is in the
best interest of shareholders of the Fund and that there is a reasonable
likelihood of its providing a benefit to the Fund, and the Board of Trustees has
made such a determination for the current year of operations under the Plan. The
Plan and the Distribution Agreement may be terminated at any time without
penalty by a majority of those trustees who are not "interested persons" or by a
majority vote of the Fund's outstanding voting stock. Any amendment materially
increasing the maximum percentage payable under the Plan must likewise be
approved by a majority vote of the Fund's outstanding voting stock, as well as
by a majority vote of those trustees who are not "interested persons." Also, any
other material amendment to the Plan must be approved by a majority vote of the
trustees including a majority of the noninterested Trustees of the Trust having
no interest in the Plan. In addition, in order for the Plan to remain effective,
the selection and nomination of Trustees who are not "interested persons" of the
Trust must be effected by the Trustees who themselves are not "interested
persons" and who have no direct or indirect financial interest in the Plan.
Persons authorized to make payments under the Plan must provide written reports
at least quarterly to the Board of Trustees for their review.

For the fiscal year ended March 31, 1998 the Fund incurred $17,879 for costs in
connection with the Plan under Rule 12b-1. Such costs were spent on compensation
to sales personnel for sale of Fund shares and servicing of shareholder
accounts.

DESCRIPTION OF THE TRUST

The Trust is an unincorporated business trust organized under Massachusetts law
on October 25, 1990. The Trust's Declaration of Trust authorizes the Board of
Trustees to divide shares into series, each series relating to a separate
portfolio of investments, and to classify and reclassify any unissued shares
into one or more classes of shares of each such series. The Declaration of Trust
currently provides for the shares of eight series, as follows: ZSA Asset
Allocation Fund managed by Zaske, Sarafa & Associates, Inc. of Birmingham,
Michigan; Capital Value Fund managed by Capital Investment Counsel, Inc. of
Raleigh, North Carolina; Investek Fixed Income Trust managed by Investek Capital
Management, Inc. of Jackson, Mississippi; The Brown Capital Management Equity
Fund, The Brown Capital Management Balanced Fund; The Brown Capital Management
Small Company Fund managed by Brown Capital Management, Inc. of Baltimore,
Maryland; The WST Growth & Income Fund managed by Wilbanks, Smith & Thomas Asset
Management, Inc. of Norfolk, Virginia, and The CarolinasFund managed by Morehead
Capital Advisors, LLC, of Charlotte, North Carolina. The number of shares of
each series shall be unlimited. The Trust does not intend to issue share
certificates.