ARBOR FUND, 485APOS, 1999-04-01

ARBOR FUND
485APOS, 1999-04-01

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 1, 1999

FILE NO. 33-50718
FILE NO. 811-7102
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933 / /

POST-EFFECTIVE AMENDMENT NO. 23 /X/

AND

REGISTRATION STATEMENT UNDER THE

INVESTMENT COMPANY ACT OF 1940 / /

AMENDMENT NO. 25 /X/

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

THE ARBOR FUND

(Exact Name of Registrant as Specified in Charter)

2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109

(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code (800) 342-5734

MARK E. NAGLE
C/O SEI CORPORATION
OAKS, PENNSYLVANIA 19456

(Name and Address of Agent for Service)

COPIES TO:

RICHARD W. GRANT, ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP
1701 MARKET STREET
PHILADELPHIA, PA 19103

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

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

/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/x/ 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

THE ARBOR FUND

PROSPECTUS
MAY 31, 1999

U.S. GOVERNMENT SECURITIES MONEY FUND
PRIME OBLIGATIONS FUND

INVESTMENT ADVISER
CRESTAR ASSET MANAGEMENT COMPANY

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 16
<PAGE>

HOW TO READ THIS PROSPECTUS

The U.S. Government Securities Money Fund and the Prime Obligations Fund (Funds)
are separate series of the Arbor Funds, a mutual fund family that offers shares
in separate investment portfolios with investment goals and strategies. This
prospectus gives you important information about the U.S. Government Securities
Money Fund and the Prime Obligations Fund that you should know before investing.
Please read this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE FUNDS. FOR MORE DETAILED INFORMATION
ABOUT EACH FUND, PLEASE SEE:

Page
<S> <C>
U.S. GOVERNMENT SECURITIES MONEY FUND XXX
PRIME OBLIGATIONS FUND XXX
MORE INFORMATION ABOUT RISK XXX
EACH FUND'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISER XXX
PURCHASING AND SELLING FUND SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT THE
FUNDS Back Cover
</TABLE>

Page 2 of 16
<PAGE>

INTRODUCTION - INFORMATION COMMON TO BOTH FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
The investment managers invest Fund assets in a way that they believe will help
each Fund achieve its goal. Still, investing in each Fund involves risk and
there is no guarantee that a Fund will achieve its goal. An investment
manager's judgments about the markets, the economy, or companies may not
anticipate actual market movements, economic conditions or company performance,
and these judgments may affect the return on your investment. In fact, no
matter how good a job an investment manager does, you could lose money on your
investment in a Fund, just as you could with other investments.

RISKS OF INVESTING IN THE FUNDS

MONEY MARKET FUND RISK - An investment in either Fund is subject to income risk,
which is the possibility that a Fund's yield will decline due to falling
interest rates. A Fund share is not a bank deposit and is not insured or
guaranteed by the FDIC or any government agency. In addition, a money market
fund seeks to keep a constant price per share of $1.00, but there is no
guarantee that either Fund will achieve this goal and you may lose money by
investing in either Fund.

YEAR 2000 RISK - The Funds depend on the smooth functioning of computer systems
in almost every aspect of their business. Like other mutual funds, businesses
and individuals around the world, the Funds could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000, and distinguish between the year 2000 and the year
1900. The Funds have asked their service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and is seeking
assurances from each service provider that they are devoting significant
resources to prevent material adverse consequences to the Funds. While it is
likely that such assurances will be obtained, the Funds and their shareholders
may experience losses if these assurances prove to be incorrect or as a result
of year 2000 computer difficulties experienced by issuers of portfolio
securities or third parties, such as custodians, banks, broker-dealers or others
with which the Funds do business.

Page 3 of 16
<PAGE>

U.S. GOVERNMENT SECURITIES MONEY FUND

FUND SUMMARY

Investment Goal Provide high current income while
preserving capital and maintaining
liquidity

Investment Focus Money market instruments issued by the
U.S. Treasury and U.S. government
agencies and instrumentalities

Share Price Volatility Very Low

Principal Investment Strategy Investing in short-term U.S.
dollar-denominated obligations of the
U.S. Treasury and U.S. government
agencies and instrumentalities and in
repurchase agreements

Investor Profile Conservative investors who want to
receive income through a liquid
investment

INVESTMENT STRATEGY OF THE U.S. GOVERNMENT SECURITIES MONEY FUND

The Fund invests exclusively in short-term U.S. dollar-denominated money market
instruments issued by the U.S. Treasury and U.S. government agencies and
instrumentalities and in repurchase agreements that are fully collateralized by
securities of those issuers. The Fund will maintain an average dollar weighted
maturity of 90 days or less, and will only acquire securities that have a
remaining maturity of 397 days or less. The Adviser's investment selection
process seeks to add value through yield analysis and positioning on the yield
curve. The Adviser actively manages the maturity of the Fund based on current
market interest rates and its outlook on the market and future interest rate
predictions.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Fund. Of course, the Fund's past performance
does not necessarily indicate how the Fund will perform in the future.

This bar chart shows changes in the performance of the Fund from year to year.*

Page 4 of 16
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<TABLE>

BEST QUARTER WORST QUARTER

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

Call 1-800-342-5734 for the Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

SINCE
1 YEAR INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Government Securities Money Fund X.XX% X.XX%*
</TABLE>

* Since 8/1/94

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>

- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .20%
Distribution and Service (12b-1) Fees None
Other Expenses .XX%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS WAIVING
A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

U.S. GOVERNMENT SECURITIES MONEY FUND ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

Page 5 of 16
<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated and that you sell your
shares at the end of the period.

The Example also assumes that each year your investment has a 5% return and Fund
operating expenses remain the same. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$____ $____ $____ $____
</TABLE>

Page 6 of 16
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PRIME OBLIGATIONS FUND

FUND SUMMARY

Investment Goal Provide high current income while
preserving capital and maintaining
liquidity

Investment Focus Money market instruments

Share Price Volatility Very Low

Principal Investment Strategy Investing in a broad range of short-
term high quality U.S. dollar-
denominated debt securities

Investor Profile Conservative investors who want to
receive current income through a
liquid investment

INVESTMENT STRATEGY OF THE PRIME OBLIGATIONS FUND

The Fund invests in a broad range of short-term high quality U.S.
dollar-denominated money market instruments, such as obligations of the U.S.
Treasury, agencies and instrumentalities of the U.S. government, domestic and
foreign banks, domestic and foreign corporations, supranational entities, and
foreign governments. The Fund may also enter into fully collateralized
repurchase agreements. The Fund's portfolio is comprised only of short-term
debt securities that are rated in the two highest categories by nationally
recognized ratings organizations or securities that the Adviser determines are
of equal quality. The Fund will maintain an average dollar weighted maturity of
90 days or less, and will only acquire securities that have a remaining maturity
of 397 days or less.

The Adviser's investment selection process seeks to add value through security
selection, sector rotation and positioning on the yield curve. Securities are
chosen based on the issuer's financial condition, the financial condition of any
person or company which guarantees the credit of the issuer, liquidity and
competitive yield. The Fund attempts to avoid purchasing or holding securities
that are subject to a decline in credit quality of the issue through careful
credit screening, as well as ongoing monitoring of each issuer and any person or
company providing credit support.

Page 7 of 16
<PAGE>

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

Call 1-800-342-5734 for the Fund's most current 7-day yield.

THIS TABLE SHOWS THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING
DECEMBER 31, 1998.

SINCE
1 YEAR INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
Prime Obligations Fund X.XX% X.XX%*
</TABLE>

* Since 10/25/95

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees .20%
Distribution and Service (12b-1) Fees None
Other Expenses .XX%
- --------------------------------------------------------------------------------
Total Annual Fund Operating Expenses X.XX%
</TABLE>

Page 8 of 16
<PAGE>

ALL OR PART OF THESE WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S
ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

PRIME OBLIGATIONS FUND ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER."

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C>
$____ $____ $____ $____
</TABLE>

Page 9 of 16
<PAGE>

EACH FUND'S OTHER INVESTMENTS

In addition to the investments and strategies described in this prospectus, each
Fund also may invest in other securities, use other strategies and engage in
other investment practices. These investments and strategies, as well as those
described in this prospectus, are described in detail in our Statement of
Additional Information. Of course, we cannot guarantee that any Fund will
achieve its investment goal.

INVESTMENT ADVISER

The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers the Funds' respective investment programs.
The Board of Trustees of The Arbor Fund supervises the Adviser and establishes
policies that the Adviser must follow in its management activities.

Crestar Asset Management Company (CAMCO) serves as the Adviser to the Funds. As
of January 31, 1999, CAMCO had approximately $16 billion in assets under
management. For the fiscal year ended January 31, 1999, CAMCO received advisory
fees (after waivers) as a percentage of average daily net assets of:

U.S. GOVERNMENT SECURITIES MONEY FUND [VAR:ADVISOR1.PORTFOLIO1.FEES]%
PRIME OBLIGATIONS FUND [VAR:ADVISOR1.PORTFOLIO2.FEES]%

PURCHASING AND SELLING FUND SHARES

THIS SECTION TELLS YOU HOW TO BUY AND SELL (SOMETIMES CALLED "REDEEM") SHARES OF
THE FUNDS.

The shares are for individual and institutional investors that have a Cash
Advantage Portfolio or Liquid Asset Manager account with the Adviser or Crestar
Bank or other authorized institutions.

HOW TO PURCHASE FUND SHARES

You may purchase shares directly by:
- - Mail
- - Telephone
- - Wire
- - Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-342-5734. For initial
purchases of Fund shares you must complete and send in an application which may
be requested by calling 1-800-

Page 10 of 16
<PAGE>

342-5734. Unless you arrange to pay by wire or through ACH, write your check,
payable in U.S. dollars to the appropriate Fund(s). A Fund cannot accept
third-party checks, credit cards, credit card checks or cash.

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Fund shares for their customers. If you
invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing directly.
Your institution may charge a fee for its services, in addition to the fees
charged by the Fund. You will also generally have to address your
correspondence or questions regarding a Fund to your institution.

GENERAL INFORMATION

You may purchase shares on any day that the New York Stock Exchange and the
Federal Reserve are open for business (a Business Day).

A Fund may reject any purchase order if it determines that accepting the order
would not be in the best interests of the Fund or its shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Fund receives your purchase order.

The Fund calculates its NAV once each Business Day at 3:00 p.m. Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, generally the Fund must receive your order before 3:00 p.m.
Eastern time and federal funds (readily available funds) before 4:00 p.m.
Eastern time.

HOW WE CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.

In calculating NAV for the Funds, we generally value each Fund's investment
portfolio using the amortized cost valuation method, which is described in
detail in our Statement of Additional Information. If this method is determined
to be unreliable during certain market conditions or for other reasons, a Fund
may value its portfolio at market price or fair value prices may be determined
in good faith using methods approved by the Board of Trustees.

MINIMUM PURCHASES

To purchase shares for the first time, you must invest at least $10,000,000 in
either Fund.

A Fund may accept investments of smaller amounts at its discretion.

Page 11 of 16
<PAGE>

HOW TO SELL YOUR FUND SHARES

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

If you own your shares directly, you may sell your shares on any Business Day by
contacting a Fund directly by mail or telephone at 1-800-342-5734.

The sale price of each share will be the next NAV determined after the Fund
receives your request.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds on the same Business Day if we receive
your request by 3:00 p.m. Eastern time or within one Business Day if we receive
your request after 3:00 p.m. Eastern time. Your proceeds can be wired to your
bank account or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK
HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).

REDEMPTIONS IN KIND

We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

INVOLUNTARY REDEMPTIONS OF YOUR SHARES

If your account balance drops below $10,000,000 because of redemptions you may
be required to sell your shares. But, the Fund will always give you at least 60
days' written notice to give you time to add to your account and avoid the
involuntary redemption of your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in our Statement of Additional Information.

TELEPHONE TRANSACTIONS

Page 12 of 16
<PAGE>

Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although the Fund has certain safeguards and procedures
to confirm the identity of callers and the authenticity of instructions, the
Fund is not responsible for any losses or costs incurred by following telephone
instructions we reasonably believe to be genuine. If you or your financial
institution transact with the Fund over the telephone, you will generally bear
the risk of any loss.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund declares dividends daily, distributes its income monthly and makes
distributions of capital gains, if any, at least annually. If you own Fund
shares on a Fund's record date, you will be entitled to receive the
distribution.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Distributions you
receive from a Fund may be taxable whether or not you reinvest them. Each sale
of Fund shares is a taxable event.

MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.

Page 13 of 16
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about each Fund. This
information is intended to help you understand each Fund's financial performance
for the past five years, or, if shorter, the period of the Fund's operations.
Some of this information reflects financial information for a single Fund share.
The total returns in the tables represent the rate that you would have earned
(or lost) on an investment in a Fund, assuming you reinvested all of your
dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent public accountants. Their report, along
with each Fund's financial statements, appears in the annual report that
accompanies our Statement of Additional Information. You can obtain the annual
report, which contains more performance information, at no charge by calling
1-800-342-5734.

Page 14 of 16
<PAGE>

THE ARBOR FUND

INVESTMENT ADVISER
Crestar Asset Management Company
919 East Main Street
Richmond, Virginia 23219

DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI dated May 31, 1999, includes detailed information about the Funds. The
SAI is on file with the SEC and is incorporated by reference into this
prospectus. This means that the SAI, for legal purposes, is a part of this
prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS
These reports list each Fund's holdings and contain information from the Fund's
managers about strategies, and recent market conditions and trends. The reports
also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
BY TELEPHONE: CALL 1-800-342-5734

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as other information about the Funds, from the SEC's website
("http://www.sec.gov"). You may review and copy documents at the SEC Public
Reference Room in Washington, DC (for

Page 15 of 16
<PAGE>

information call 1-800-SEC-0330). You may request documents by mail from the
SEC, upon payment of a duplicating fee, by writing to: Securities and Exchange
Commission, Public Reference Section, Washington, DC 20549-6009. The Fund's
Investment Company Act registration number is 811-7102.

Page 16 of 16
<PAGE>

Trust: THE ARBOR FUND
Funds: U.S. GOVERNMENT SECURITIES MONEY FUND
PRIME OBLIGATIONS FUND

Investment Adviser: CRESTAR ASSET MANAGEMENT COMPANY

STATEMENT OF ADDITIONAL INFORMATION

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. It is intended to
provide additional information about the activities and operations of the U.S.
Government Securities Money Fund and the Prime Obligations Fund (each a "Fund"),
separate series of The Arbor Fund (the "Trust"). This Statement of Additional
Information should be read in conjunction with the Fund's Prospectus dated
May 31, 1999. The Prospectus may be obtained by calling 1-800-342-5734.

TABLE OF CONTENTS

THE FUNDS AND THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . .
GENERAL INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . .
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . .
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
THE TRANSFER AGENT AND CUSTODIAN . . . . . . . . . . . . . . . . . . . . .
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . .
LEGAL COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . .
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .
COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . .
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . .
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . .
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FUND TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . .
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . .
5% AND 25% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . .
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . .
DESCRIPTION OF RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

May 31, 1999

S-1

<PAGE>

THE FUNDS AND THE TRUST

The Funds are a separate series of The Arbor Fund (the "Trust"). The Trust is
an open-end management investment company established under Massachusetts law as
a "Massachusetts business trust" under an Agreement and Declaration of Trust
dated as of July 24, 1992 (the "Declaration of Trust"). The Declaration of
Trust permits the Trust to offer separate series of units of beneficial interest
("shares") and different classes of shares of each series. Each share of each
portfolio represents an equal proportionate interest in that portfolio. See
"Description of Shares." This Statement of Additional Information relates only
to the U.S. Government Securities Money Fund and the Prime Obligations Fund
(each a "Fund," and collectively, the "Funds").

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to Shareholders, costs of custodial services and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.

The management and affairs of the Trust are supervised by the Trustees under the
laws of the Commonwealth of Massachusetts. The Trustees have approved contracts
under which, as described above, certain companies provide essential management
services to the Trust.

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of each Fund is to provide high current income to the
extent consistent with the preservation of capital and the maintenance of
liquidity. Each Fund seeks to maintain a constant net asset value of $1.00 per
share. There is no assurance that either Fund will achieve its investment
objective or be able to maintain a stable net asset value.

The investment objectives are fundamental policies of each Fund. Fundmemental
policies cannot be changed with respect to a Fund without the consent of the
holders of a majority of that Fund's outstanding shares.

Each Fund intends to comply with regulations of the Securities and Exchange
Commission (the "SEC") applicable to money market funds using the amortized cost
method for calculating net asset value. These regulations impose certain
quality, maturity and diversification restraints on each Fund's investments.
Under these regulations, each Fund will invest only in U.S. dollar denominated
securities, will maintain an average maturity on a dollar-weighted basis of 90
days or less, and will acquire only "eligible securities" that present minimal
credit risks and have maturities of 397 days or less.

U.S. GOVERNMENT SECURITIES MONEY FUND

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The U.S. Government Securities Money Fund will invest solely in: (i) U.S.
Treasury Obligations; (ii) obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. Government; (iii)
repurchase agreements involving any of the foregoing obligations; and (iv)
shares of registered money market funds that invest in the foregoing.

PRIME OBLIGATIONS FUND

The Prime Obligations Fund will invest in: (i) U.S. Treasury Obligations;
(ii) obligations issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government; (iii) repurchase
agreements involving any of the foregoing obligations; (iv) commercial paper
of U.S. or foreign issuers; (v) short-term corporate obligations of U.S. or
foreign issuers; (vi) certificates of deposit, time deposits and bankers'
acceptances of U.S. commercial banks, foreign branches of such banks and
domestic and foreign branches of foreign banks; (vii) obligations of foreign
governments and their agencies; (viii) obligations of supranational entities;
and (ix) custodial receipts representing investments in component parts of
U.S. Treasury Obligations. The Fund also may purchase the securities of
other registered money market funds, and may purchase bank investment
contracts and guaranteed investment contracts.

The Fund will invest only in those obligations of U.S. and foreign banks that
meet the following quality standards: (i) investments in the obligations of
U.S. banks (including their foreign branches) are limited to those banks
having total assets in excess of $1 billion and subject to regulation by the
U.S. Government, provided, however, that the Fund may invest in certificates
of deposit issued by banks insured by the Federal Deposit Insurance
Corporation ("FDIC") having total assets of less than $1 billion, if the Fund
at no time owns more than an aggregate of $100,000 in principal and interest
obligations (or any higher principal amount or principal and interest that in
the future may be fully covered by FDIC insurance) of any one such issuer;
and (ii) investments in obligations of U.S. or foreign branches of foreign
banks are limited to U.S. dollar denominated obligations of foreign banks
that, at the time of investment, have more than $5 billion (or the equivalent
in other currencies) in total assets and have branches or agencies in the
United States; provided further that these obligations are limited to banks
headquartered in, and to those branches located in, the United Kingdom,
France, Germany, Belgium, the Netherlands, Italy, Switzerland, Denmark,
Norway, Sweden, Australia, Japan and Canada. The Fund's investments in
foreign government obligations will be limited to those of the governments of
the foregoing countries and their respective agencies.

GENERAL INVESTMENT POLICIES

Each Fund may borrow money in amounts up to 33 1/3% of total assets for
temporary or

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emergency purposes; lend portfolio securities or enter into reverse repurchase
agreements, in either case up to 33 1/3% of total assets; purchase securities
subject to standby commitments or puts, or on a when-issued or delayed delivery
basis; and invest up to 10% of net assets in illiquid securities.

For additional information regarding permitted investments for the Funds, see
"Description of Permitted Investments."

DESCRIPTION OF PERMITTED INVESTMENTS

BANK INVESTMENT CONTRACTS (BICs)

BICs are contracts issued by U.S. banks and savings and loans institutions.
Pursuant to such contracts, the Prime Obligations Fund makes cash contributions
to a deposit fund of the general account of the bank or savings and loan
institution. The bank or savings and loan institution then credits to the Fund
on a monthly basis guaranteed interest at either a fixed, variable or floating
rate. A BIC provides that this guaranteed interest will not be less than a
certain minimum rate. A BIC is a general obligation of the issuing bank or
savings and loan institution and not a separate account. The purchase price paid
for a BIC becomes part of the general assets of the issuer, and the contract is
paid at maturity from the general assets of the issuer.

BICs are generally not assignable or transferable without the permission of the
issuing bank or savings and loan institution. For this reason, an active
secondary market in BICs currently does not exist. Therefore, BICs are
considered to be illiquid investments. The Fund may invest up to an aggregate
amount of 5% of its total assets in BICs.

BANK OBLIGATIONS

The Prime Obligations Fund is not prohibited from investing in obligations of
banks that are clients of SEI Investments Company ("SEI"). However, the
purchase of shares of the Fund by such banks or by their customers will not be a
consideration in determining which bank obligations the Fund will purchase. The
Funds will not purchase obligations of the Adviser.

BANKERS' ACCEPTANCES

Bankers' acceptances are bills of exchange or time drafts drawn on and accepted
by a commercial bank. Bankers' acceptances are used by corporations to finance
the shipment and storage of goods. Maturities are generally six months or less.

CERTIFICATES OF DEPOSIT

Certificates of deposit are interest bearing instruments with a specific
maturity. They are issued by banks and savings and loan institutions in exchange
for the deposit of funds and normally can

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be traded in the secondary market prior to maturity. Certificates of deposit
with penalties for early withdrawal will be considered illiquid.

COMMERCIAL PAPER

Commercial paper is a term used to describe unsecured short-term promissory
notes issued by banks, municipalities, corporations and other entities.
Maturities on these issues vary from a few to 270 days.

DEMAND INSTRUMENTS

Certain instruments may entail a demand feature that permits the holder to
demand payment of the principal amount of the instrument. Demand instruments
include variable rate demand notes. Each Fund may invest in demand instruments.

EURODOLLAR AND YANKEE DOLLAR OBLIGATIONS

Eurodollar bank obligations are U.S. dollar denominated certificates of deposit
or time deposits issued outside the United States by foreign branches of U.S.
banks or by foreign banks. Yankee dollar obligations are U.S. dollar denominated
obligations issued in the United States by foreign banks.

FOREIGN SECURITIES

The Prime Obligations Fund may invest in certain U.S. dollar denominated
obligations or securities of foreign issuers. Permissible investments for
the Fund may consist of obligations of foreign branches of U.S. banks and
U.S. or foreign branches of foreign banks; provided further that these
obligations are limited to banks headquartered in, and to those branches
located in, the United Kingdom, France, Germany, Belgium, the Netherlands,
Italy, Switzerland, Denmark, Norway, Sweden, Australia, Japan and Canada.

Foreign securities may subject the Fund to investment risks that differ in some
respects from those related to investments in obligations of U.S. domestic
issuers. Such risks include future adverse political and economic developments,
the possible imposition of withholding taxes on interest or other income,
possible seizure, nationalization, or expropriation of foreign deposits, the
possible establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions which might adversely affect the payment of
principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks
and foreign banks may be subject to less stringent reserve requirements than
those applicable to domestic branches of U.S.

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banks.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES

Each Fund may invest in securities issued by GNMA, a wholly-owned U.S.
Government corporation that guarantees the timely payment of principal and
interest. The market value and interest yield of these instruments can vary
due to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally
insured mortgage loans. GNMA certificates consist of underlying mortgages
with a maximum maturity of 30 years. However, due to scheduled and
unscheduled principal payments, GNMA certificates have a shorter average
maturity and, therefore, less principal volatility than a comparable 30-year
bond. Since prepayment rates vary widely, it is not possible to predict
accurately the average maturity of a particular GNMA pool. The scheduled
monthly interest and principal payments relating to mortgages in the pool
will be "passed through" to investors. GNMA securities differ from
conventional bonds in that principal is paid back to the certificate holders
over the life of the loan rather than at maturity. As a result, there will
be monthly scheduled payments of principal and interest. In addition, there
may be unscheduled principal payments representing prepayments on the
underlying mortgages. Although GNMA certificates may offer yields higher
than those available from other types of U.S. Government securities, GNMA
certificates may be less effective than other types of securities as a means
of "locking in" attractive long-term rates because of the prepayment feature.
For instance, when interest rates decline, the value of a GNMA certificate
likely will not rise as much as comparable debt securities due to the
prepayment feature. In addition, these prepayments can cause the price of a
GNMA certificate originally purchased at a premium to decline in price to its
par value, which may result in a loss.

GUARANTEED INVESTMENT CONTRACTS ("GICs")

GICs are contracts issued by U.S. insurance companies. Pursuant to such
contracts, the Prime Obligations Fund makes cash contributions to a deposit fund
of the insurance company's general account. The insurance company then credits
to the Fund on a monthly basis guaranteed interest at either a fixed, variable
or floating rate. A GIC provides that this guaranteed interest will not be less
than a certain minimum rate. A GIC is a general obligation of the issuing
insurance company and not a separate account. The purchase price paid for a GIC
becomes part of the general assets of the issuer, and the contract is paid at
maturity from the general assets of the issuer.

Generally, GICs are not assignable or transferable without the permission of the
issuing insurance company. For this reason, an active secondary market in GICs
does not currently exist and GICs are generally considered to be illiquid
investments. However, the Fund will treat GICs with seven-day unconditional
demand features as liquid investments.

ILLIQUID SECURITIES

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Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the price at which they are being carried on a
Fund's books. An illiquid security includes a demand instrument with a demand
notice period exceeding seven days, where there is no secondary market for such
security, and repurchase agreements with maturities over seven
days in length.

INVESTMENT COMPANY SHARES

Each Fund may invest in shares of other money market mutual funds, to the
extent permitted by applicable law and subject to certain restrictions.
These investment companies typically incur fees that are separate from those
fees incurred directly by the Fund. The Fund's purchase of such investment
company securities results in a layering of expenses, such that shareholders
would indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees, in addition to paying Fund
expenses. Under applicable regulations, the Fund is prohibited from
acquiring the securities of another investment company if, as a result of
such acquisition: (i) the Fund owns more than 3% of the total voting stock
of the other company; (ii) securities issued by any one investment company
represent more than 5% of the Fund's total assets; or (iii) securities (other
than treasury stock) issued by all investment companies represent more than
10% of the total assets of the Fund. See also "Investment Limitations."

OBLIGATIONS OF SUPRANATIONAL ENTITIES

Supranational entities are entities established through the joint participation
of several governments, and include the Asian Development Bank, the
Inter-American Development Bank, International Bank for Reconstruction and
Development (World Bank), African Development Bank, European Economic Community,
European Investment Bank and the Nordic Investment Bank.

PUT TRANSACTIONS (STANDBY COMMITMENTS)

Each Fund reserves the right to engage in put transactions. The Adviser has the
authority to purchase securities at a price that would result in a yield to
maturity lower than that generally offered by the seller at the time of purchase
when the Funds can simultaneously acquire the right to sell the securities back
to the seller, the issuer, or a third party (the "writer") at an agreed-upon
price at any time during a stated period or on a certain date. Such a right is
generally denoted as a "put" or "standby commitment." The Funds' ability to put
the securities depends on the writer's ability to pay for the securities at the
time the Funds exercise the put. The Funds will engage in put transactions only
with institutions that the Adviser believes present minimal credit risks, and
the Adviser will use its best efforts to determine initially and continue to
monitor the financial strength of the sellers of the options in accordance with
credit guidelines adopted by the Trust's Board of Trustees. In the event that
any writer is unable to honor a put for financial reasons, the Funds would be
general creditors (i.e., on a parity with all other unsecured creditors) of the

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writer. Furthermore, particular provisions of the contract between the Fund and
the writer may excuse the writer from repurchasing the securities; for example,
a change in the published rating of the underlying securities or any similar
event that has an adverse effect on the issuer's credit or a provision in the
contract that the put will not be exercised except in certain special cases, for
example, to maintain portfolio liquidity. The Funds could, however, at any time
sell the underlying portfolio security in the open market or wait until the
portfolio security matures, at which time it should realize the full par value
of the security.

The securities purchased subject to a put may be sold to third persons at
anytime, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Funds.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Funds could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Funds, the Funds could, of course, sell the security. The
maturity of the underlying security will generally be different from that of the
put. There will be no limit to the percentage of portfolio securities that the
Funds may purchase subject to a put or a standby commitment but the amount paid
directly or indirectly for premiums on all puts and standby commitments
outstanding will not exceed 0.5% of a Fund's total assets calculated immediately
after any such put is acquired.

The Funds will consider the maturity of a security subject to a put to be the
first date on which the Funds have the right to demand payment from the writer,
even though the final maturity of the security will ordinarily be later than
such date.

RECEIPTS

Receipts are sold as zero coupon securities which means that they are sold at a
substantial discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. This discount is accreted over
the life of the security, and such accretion will constitute the income earned
on the security for both accounting and tax purposes. Because of these
features, such securities may be subject to greater interest rate volatility
than interest paying investments.

REPURCHASE AGREEMENTS

Each Fund may enter into repurchase agreements with primary securities dealers
recognized by the Federal Reserve Bank of New York or with national member banks
as defined in Section 3(d)(1) of the Federal Deposit Insurance Act, as amended.
The repurchase agreement will have an agreed-upon price (including principal and
interest) and an agreed-upon repurchase date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated to

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the coupon rate or maturity of the underlying security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security.

The repurchase agreements entered into by the Funds will provide that the
underlying security at all times shall have a value at least equal to 102% of
the resale price stated in the agreement; the Adviser, or its designated agent,
monitors compliance with this requirement. Under all repurchase agreements
entered into by the Funds, the Custodian or its agent must take possession of
the underlying collateral. However, if the seller defaults, the Funds could
realize a loss on the sale of the underlying security to the extent that the
proceeds of sale including accrued interest are less than the resale price
provided in the agreement including interest. In addition, even though the
Bankruptcy Code provides protection for proceedings, the Funds may incur delay
and costs in selling the underlying security or may suffer a loss of principal
and interest if the Funds are treated as unsecured creditors and required to
return the underlying security to the seller's estate.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS

Investments by a money market fund are subject to limitations imposed under
regulations adopted by the SEC. Under these regulations, money market funds may
only acquire obligations that present minimal credit risk and that are "eligible
securities," which means they are (i) rated, at the time of investment, by at
least two NRSROs (one if it is the only organization rating such obligation) in
the highest rating category or, if unrated, determined to be of comparable
quality (a "first tier security"); or (ii) rated according to the foregoing
criteria in the second highest rating category or, if unrated, determined to be
of comparable quality ("second tier security"). A security is not considered to
be unrated if its issuer has outstanding obligations of comparable priority and
security that have a short-term rating. A money market fund may invest up to
25% of its assets in "first tier" securities of a single issuer for a period of
up to three business days. The securities that money market funds may acquire
may be supported by credit enhancements, such as demand features or guarantees.
The SEC regulations limit the percentage of securities that a money market fund
may hold for which a single issuer provides credit enhancements.

RESTRICTED AND ILLIQUID SECURITIES

Each Fund may, to the extent consistent with its investment policies, invest in
restricted securities that are securities in which the Funds may otherwise
invest as provided in the Prospectus or this Statement of Additional
Information. Each Fund may invest up to 10% of its net assets in illiquid
securities, including restricted securities. The Funds may invest in Section
4(2) commercial paper. Section 4(2) commercial paper is issued in reliance on an
exemption from registration under Section 4(2) of the Act and is generally sold
to institutional investors who purchase for investment. Any resale of such
commercial paper must be in an exempt transaction, usually to

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an institutional investor through the issuer or investment dealers who make a
market in such commercial paper. The Trust believes that Section 4(2)
commercial paper is liquid to the extent it meets the criteria established by
the Board of Trustees of the Trust. The Trust intends to treat such commercial
paper as not subject to the investment limitations applicable to illiquid
securities.

REVERSE REPURCHASE AGREEMENTS

Reverse repurchase agreements are agreements by which a Fund sells securities to
financial institutions and simultaneously agrees to repurchase those securities
at a mutually agreed-upon date and price. At the time a Fund enters into a
reverse repurchase agreement, the Fund will place liquid assets having a value
equal to the repurchase price in a segregated custodial account and monitor this
account to ensure equivalent value is maintained. Reverse repurchase agreements
involve the risk that the market value of the securities sold by a Fund may
decline below the price at which the Fund is obligated to repurchase the
securities. Reverse repurchase are considered to be borrowings by a Fund under
the Investment Company Act of 1940, as amended (the "1940 Act").

SECURITIES LENDING

Each Fund will normally pay lending fees to broker/dealers in connection with
securities loans, and related expenses from the interest earned on invested
collateral. Investments made with this collateral are considered to be assets
of the Funds and must comply with the Funds' investment limitations. Any
securities loan may be terminated by either party upon reasonable notice to the
other party. The Funds may use the Distributor or a broker/dealer affiliate of
the Adviser as a broker in these transactions. Each Fund may lend securities in
an amount up to 33 1/3% of its total assets.

SEPARATELY TRADED INTEREST AND PRINCIPAL SECURITIES ("STRIPS")

Each Fund may invest in STRIPS, which are component parts of U.S. Treasury
Securities traded through the Federal Book-Entry System. The Adviser will
purchase only STRIPS that it determines are liquid or, if illiquid, do not
violate the Funds' investment policy concerning investments in illiquid
securities. Consistent with Rule 2a-7, the Adviser will purchase for the Funds
only those STRIPS that have a remaining maturity of 397 days or less; therefore,
the Funds currently may purchase only interest component parts of U.S. Treasury
securities. While there is no limitation on the percentage of a Fund's assets
that may be comprised of STRIPS, the Adviser will monitor the level of such
holdings to avoid the risk of impairing shareholders' redemption rights and of
deviations in the value of shares of the Funds.

TIME DEPOSITS

Time deposits are non-negotiable receipts issued by a bank in exchange for the
deposit of funds.

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Like a certificate of deposit, it earns a specified rate of interest over a
definite period of time; however, it cannot be traded in the secondary market.
Time Deposits with a withdrawal penalty or that mature in more than seven days
are considered to be illiquid securities.

U.S. GOVERNMENT AGENCIES

Certain of the investments of the Funds may include obligations issued or
guaranteed by agencies of the U.S. Government and obligations issued or
guaranteed by instrumentalities of the U.S. Government. Some of these
securities are supported by the full faith and credit of the U.S. Treasury,
others are supported by the right of the issuer to borrow from the Treasury,
while still others are supported only by the credit of the instrumentality.
Guarantees of principal by agencies or instrumentalities of the U.S.
Government may be a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might not be a market
and thus no means of realizing on the obligation prior to maturity.
Guarantees as to the timely payment of principal and interest do not extend
to the value or yield of these securities nor to the value of a Fund's shares.

U.S. TREASURY OBLIGATIONS

U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S.
Treasury and STRIPS.

VARIABLE AND FLOATING RATE OBLIGATIONS

The Funds may invest in variable rate obligations and floating rate
obligations (together, "adjustable interest rate obligations"). A VARIABLE
RATE OBLIGATION is one whose term provides for the adjustment of its interest
rate on set dates and which, upon such adjustment, can reasonably be expected
to have a market value that approximates its par value; the degree to which a
variable rate obligation's market value approximates its par value will
depend on the frequency of the readjustment of the obligation's interest rate
and the length of time that must elapse before the next readjustment. A
FLOATING RATE OBLIGATION is one whose term provides for the adjustment of its
interest rate whenever a specified interest rate changes and which, at any
time, can reasonably be expected to have a market value that approximates its
par value. Although there may be no active secondary market with respect to a
particular variable or floating rate obligation purchased by a Fund, the
Funds may seek to resell the obligation at any time to a third party. The
absence of an active secondary market, however, could make it difficult for
the Funds to dispose of a variable or floating rate obligation in the event
the issuer of the obligation defaulted on its payment obligations, and the
Funds could, as a result or for other reasons, suffer a loss to the extent of
the default. In addition, a variable or floating rate demand obligation with
a demand notice exceeding seven days may be considered illiquid if there is
no secondary market for such securities. Variable or floating rate
obligations may be secured by bank letters of credit.

For the Funds, variable and floating rate obligations will be deemed to have
maturities as follows:

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1. A variable rate obligation, the principal amount of which is scheduled on
the face of the instrument to be paid in thirteen months or less, will be
deemed by the Funds to have a maturity equal to the period remaining until
the next readjustment of the interest rate.

2. A variable rate obligation that is subject to a demand feature will be
deemed by the Funds to have a maturity equal to the longer of the period
remaining until the next readjustment of the interest rate or the period
remaining until the principal amount can be recovered through demand.

3. A floating rate obligation that is subject to a demand feature will be
deemed by the Funds to have a maturity equal to the period remaining until
the principal amount can be recovered through demand.

As used above, an obligation is "subject to a demand feature" where the Funds
are entitled to receive the principal amount of the obligation either at any
time on no more than thirty days' notice or at specified intervals not exceeding
thirteen months and upon no more than thirty days' notice.

Each Fund may invest in variable rate master demand notes, which may or may not
be backed by bank letters of credit. These variable rate obligations permit the
investment of fluctuating amounts at varying market rates of interest pursuant
to direct arrangements between the Trust, as lender, and the borrower. Such
notes provide that the interest rate on the amount outstanding varies on a
daily, weekly or monthly basis depending upon a stated short-term interest rate
index. Both the lender and the borrower have the right to reduce the amount of
outstanding indebtedness at any time. There is no secondary market for the
notes. It is not generally contemplated that such instruments will be traded.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

When-issued or delayed delivery basis transactions involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of
and payment for these securities may occur a month or more after the date of the
purchase commitment. A Fund will maintain with the custodian a separate account
with liquid assets in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of the purchase date and
no interest accrues to a Fund before settlement. These securities are subject
to market fluctuation due to changes in market interest rates and it is possible
that the market value at the time of settlement could be higher or lower than
the purchase price if the general level of interest rates has changed. Although
a Fund generally purchases securities on a when-issued or forward commitment
basis with the intention of actually acquiring securities for its portfolio, a
Fund may dispose of a when-issued security or forward commitment prior to
settlement if it deems appropriate.

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ZERO COUPON OBLIGATIONS

Zero coupon obligations are debt securities that do not bear any interest, but
instead are issued at a deep discount from par. The value of a zero coupon
obligation increases over time to reflect the interest accreted. Such
obligations will not result in the payment of interest until maturity, and will
have greater price volatility than similar securities that are issued at par and
pay interest periodically. Each Fund currently intends to invest no more than
5% of its net assets in zero coupon obligations.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

Each Fund is subject to a number of fundamental investment restrictions that may
be changed only by a vote of a majority of the outstanding shares of the Funds.
A "majority of the outstanding shares" of the Funds means the affirmative vote,
at a meeting of shareholders duly called, of the lesser of (a) 67% or more of
the votes of shareholders of the Funds present at a meeting at which the holders
of more than 50% of the votes attributable to shareholders of record of the
Funds are represented in person or by proxy, or (b) the holders of more than 50%
of the outstanding votes of shareholders of the Funds. The following investment
limitations are in addition to those set forth in the Funds' Prospectus.

Pursuant to these investment restrictions, a Fund may not:

1. Purchase securities of any issuer (except securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if, as a result, more than 5% of the
total assets of the Fund would be invested in the securities of such
issuer; provided, however, that the Fund may invest up to 25% of its total
assets without regard to this restriction as permitted by applicable law.

2. Purchase any securities which would cause more than 25% of the total assets
of the Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the U.S. Government or its agencies and
instrumentalities, repurchase agreements involving such securities and
obligations issued by domestic branches of U.S. banks or U.S. branches of
foreign banks subject to the same regulations as U.S. banks. For purposes
of this limitation, supranational entities will be considered to be a
separate industry.

3. Make loans, except that each Fund may (i) purchase or hold debt instruments
in accordance with its investment objective and policies; (ii) enter into
repurchase agreements; and (iii) engage in securities lending.

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

5. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be done from a bank and to the extent that such borrowing exceeds 5%
of the value of the Fund's assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall
below 300%, the Funds shall, within three days thereafter or such longer
period as the Securities and Exchange Commission may prescribe by rules
and regulations, reduce the amount of its borrowings to such an extent
that the asset coverage of such borrowings shall be at least 300%. This
borrowing provision is included solely to facilitate the orderly sale of
portfolio securities to accommodate heavy redemption requests if they
should occur and is not for investment purposes. All borrowings will be
repaid before making additional investments and any interest paid on such
borrowings will reduce income.

6. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (2) above in aggregate amounts not to exceed 10% of
total assets taken at current value at the time of the incurrence of such
loan, except as permitted with respect to securities lending or reverse
repurchase agreements.

7. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts. However, subject to its permitted
investments, the Funds may invest in companies that invest in real estate,
commodities or commodities contracts and the Prime Obligations Fund may
purchase commodities contracts relating to financial futures contracts and
options on such contracts.

8. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Funds may obtain short-term credits
as necessary for the clearance of security transactions; this limitation
shall not prohibit short sales "against the box."

9. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under federal securities laws in selling a Fund
security.

10. Purchase securities of other investment companies, except as permitted by
the 1940 Act, and the rules and regulations thereunder.

11. Issue senior securities (as defined in the 1940 Act), except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the Securities and Exchange Commission.

NON-FUNDAMENTAL POLICIES

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The following investment limitations of the Funds are non-fundamental and may be
changed by the Trust's Board of Trustees without shareholder approval.

1. Each Fund may not invest in illiquid securities in an amount exceeding, in
the aggregate, 10% of its net assets.

2. The Funds may not invest in interests in oil, gas or other mineral
exploration or development programs and oil, gas or mineral leases.

Except as specifically noted above, the foregoing percentages will apply at the
time of the purchase of a security and shall not be considered violated unless
an excess occurs or exists immediately after and as a result of a purchase of
such security.

THE ADVISER

The Trust and Crestar Asset Management Company (the "Adviser") have entered into
an advisory agreement (the "Advisory Agreement"). The Adviser sets investment
policies, and continuously reviews, supervises and administers each Fund's
investment program. The Adviser discharges its responsibilities subject to the
supervision of, and policies established by, the Trustees of the Trust.

The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Trust or its shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of its
duties or from reckless disregard of its obligations or duties thereunder. The
Advisory Agreement also provides that if, for any fiscal year, the ratio of
expenses of any Fund (including amounts payable to the Adviser but excluding
interest, taxes, brokerage, litigation, and other extraordinary expenses)
exceeds limitations established by any jurisdiction in which shares of the Fund
are qualified for offer and sale, the Adviser will bear the amount of such
excess.

The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees; and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Funds by a majority of the outstanding shares of each Fund, on
not less than 30 days' nor more than 60 days' written notice to the Adviser, or
by the Adviser on 60 days' written notice to the Trust.

The Adviser, 919 East Main Street, Richmond, Virginia 23219, was established in
1973. As of January 31, 1999, the Adviser's total assets under management were
approximately $____ billion, including approximately $___ billion in open-end
investment companies.

S-15
<PAGE>

The Adviser is a wholly-owned subsidiary of SunTrust Banks ("SunTrust").
SunTrust is a bank holding company operating in the mid-Atlantic region that had
over $____ billion in assets as of January 31, 1998.

The Adviser is entitled to a fee, which is calculated daily and paid monthly, at
an annual rate of .20% of the average daily net assets of the U.S. Government
Securities Money Fund and at an annual rate of .20% of the average daily net
assets of the Prime Obligations Fund. The Adviser and the Administrator have
voluntarily agreed to waive a portion of their respective fees to the extent
necessary so that the total operating expenses of each Fund do not exceed .25%
of its respective average daily net assets. The Adviser and the Administrator
each reserves the right to terminate its voluntary fee waivers at any time.

For the fiscal year ended January 31, 1999, the U.S. Government Securities Money
Fund and Prime Obligations Fund paid the Adviser an advisory fee of ___% and
___%, respectively, of its average daily net assets.

The Glass-Steagall Act restricts the securities activities of banks and banks'
affiliates, such as the Adviser, but federal regulatory authorities permit such
banks to provide investment advisory and other services to mutual funds. Should
this position be challenged successfully in court or reversed by legislation,
the Funds might have to make other investment advisory arrangements.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Funds paid the following advisory fees:

<TABLE>
<CAPTION>
FEES PAID (000) FEES WAIVED (000)
-------------------------- -------------------------
FUND 1997 1998 1999 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities Money Fund..................... $324 $476 $____ $626 $906 $____
Prime Obligations Fund.................................... $209 $444 $____ $629 $704 $____
</TABLE>

THE ADMINISTRATOR

SEI Investments Mutual Funds Services (the "Administrator") serves as
administrator to the Funds pursuant to an Administration Agreement (the
"Administration Agreement") with the Trust. The Administration Agreement
provides that the Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by a Fund in connection with the matters
to which the Administration Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard by it
of its duties and obligations thereunder. The Administrator provides the Funds
with administrative services, including fund accounting, all regulatory
reporting, necessary office space, equipment, personnel and facilities.

S-16
<PAGE>

The Administrator is entitled to a fee, which is calculated daily and paid
monthly, at an annual rate of .08% of the average daily net assets of each of
the Funds. For the fiscal year ended January 31, 1999, the U.S. Government
Securities Money Fund and the Prime Obligations Fund paid the Administrator an
administration fee of ___% and ___%, respectively, of its average daily net
assets.

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator.
SEI Investments and its subsidiaries and affiliates, including the
Administrator, are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors, and money managers. The Administrator
and its affiliates also serve as administrator or sub-administrator to the
following other mutual funds: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, Alpha Select Funds, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc., HighMark Funds, Huntington
Funds, The Nevis Fund, Inc., Oak Associates Funds, The PBHG Funds, Inc., PBHG
Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional International Trust, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds, STI Classic Variable Trust and TIP Funds.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Funds paid the following administrative fees:

<TABLE>
<CAPTION>
FEES PAID (000) FEES WAIVED (000)
-------------------------- -------------------------
FUND 1997 1998 1999 1997 1998 1999
- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Securities Money Fund.................... $212 $310 $____ $168 $243 $____
Prime Obligations Fund................................... $209 $251 $____ $126 $210 $____
</TABLE>

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor" or "SIDC") serves as
distributor to the Trust pursuant to a distribution agreement (the "Distribution
Agreement"). The Distribution Agreement shall be reviewed and ratified at least
annually (i) by the Trust's Trustees or by the

S-17
<PAGE>

vote of a majority of the outstanding shares of the Trust; and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the
Distribution Agreement or interested persons (as defined in the 1940 Act) of any
party to the Distribution Agreement, cast in person at a meeting called for the
purpose of voting on such approval. The Distribution Agreement will terminate
in the event of any assignment, as defined in the 1940 Act, and is terminable
with respect to a particular Fund on not less than 60 days' notice by the
Trust's Trustees, by vote of a majority of the outstanding shares of such Fund
or by the Distributor.

Although banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion issued
to the staff of the SEC by the Office of the Comptroller of the Currency,
financial institutions are not prohibited from acting in other capacities for
investment companies, such as providing shareholder services. Should future
legislative, judicial or administrative action prohibit or restrict the
activities of financial institutions in connection with providing shareholder
services, the Trust may be required to alter materially or discontinue its
arrangements with such financial institutions.

THE TRANSFER AGENT AND CUSTODIAN

Crestar Bank, 919 East Main Street, Richmond, Virginia 23219 ("Crestar Bank" or
the "Transfer Agent"), serves as the transfer agent and dividend disburding
agent for the Funds. The Transfer Agent also acts as the shareholder servicing
agent and custodian of the Funds. As custodian, Crestar Bank holds cash,
securities and other assets of the Funds as required by the 1940 Act.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP serves as the independent accountants of the Trust.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

TRUSTEES AND OFFICERS OF THE TRUST

S-18
<PAGE>

Funds, First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Group of Funds, The PBHG Funds, Inc.,
PBHG Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The Pillar Funds,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional International Trust, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI
Classic Funds, STI Classic Variable Trust and TIP Funds, each of which is an
open-end management investment company managed by SEI Investments Mutual Funds
Services or its affiliates and, except for PBHG Advisor Funds, Inc., distributed
by SEI Investments Distribution Co.

ROBERT A. NESHER (DOB 08/17/46) -- Chairman of the Board of Trustees* --
Currently performs various services on behalf of SEI Investments for which
Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Administrator and
the Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund,
Boston 1784 Funds-Registered Trademark-, The Expedition Funds, Oak Associates
Funds, Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Investments Trust, SEI Institutional Managed
Trust, SEI Institutional International Trust, SEI Liquid Asset Trust and SEI
Tax Exempt Trust.

JOHN T. COONEY (DOB 01/20/27) -- Trustee** -- Vice Chairman of Ameritrust
Texas N.A., 1989-1992, and MTrust Corp., 1985-1989. Trustee of The Advisors'
Inner Circle Fund, The Expedition Funds and Oak Associates Funds.

WILLIAM M. DORAN (DOB 05/26/40) -- Trustee* -- 1701 Market Street,
Philadelphia, PA 19103-2921. Partner, Morgan, Lewis & Bockius LLP (law
firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor. Director and Secretary of SEI Investments and Secretary of the
Administrator and the Distributor. Trustee of The Advisors' Inner Circle
Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments Trust,
SEI Institutional Managed Trust, SEI Institutional International Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust.

ROBERT A. PATTERSON (DOB 11/05/27) -- Trustee** -- Pennsylvania State
University, Senior Vice President, Treasurer (Emeritus). Financial and
Investment Consultant, Professor of Transportation (1984-present). Vice
President-Investments, Treasurer, Senior Vice President (Emeritus)
(1982-1984). Director, Pennsylvania Research Corp.; Member and Treasurer,
Board of Trustees of Grove City College. Trustee of The Advisors' Inner
Circle Fund, The Expedition Funds and Oak Associates Funds.

S-19
<PAGE>

(1978-1980). President and Chief Executive Officer of Jos. Schlitz Brewing
Company before 1978. Trustee of The Advisors' Inner Circle Fund, The Expedition
Funds and Oak Associates Funds.

JAMES M. STOREY (DOB 04/12/31) -- Trustee** -- Partner, Dechert Price &
Rhoads, from September 1987 - December 1993; Trustee of The Advisors' Inner
Circle Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Institutional International
Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42) -- Trustee** -- Chief Executive
Officer, Newfound Consultants Inc. since April 1997. General Partner, Teton
Partners, L.P., June 1991-December 1996; Chief Financial Officer, Noble
Partners, L.P., March 1991-December 1996; Treasurer and Clerk, Peak Asset
Management, Inc., since 1991; Trustee, Navigator Securities Lending Trust,
since 1995. Trustee of The Advisors' Inner Circle Fund, The Expedition
Funds, Oak Associates Funds, SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Institutional International
Trust and SEI Tax Exempt Trust.

TODD B. CIPPERMAN (DOB 02/14/66) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of SEI Investments, the Administrator
and the Distributor since 1995. Associate, Dewey Ballantine (law firm),
1994-1995. Associate, Winston & Strawn (law firm) 1991-1994.

JAMES R. FOGGO (DOB 06/30/64) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Associate, Paul Weiss, Rifkind, Wharton & Garrison
(law firm), 1998. Associate, Baker & McKenzie (law firm), 1995-1998.
Associate, Battle Fowler L.L.P. (law firm), 1993-1995. Operations Manager,
The Shareholder Services Group, Inc., 1986-1990.

LYDIA A. GAVALIS (DOB 06/05/64) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of
Arbitration, Philadelphia Stock Exchange, 1989-1998.

KATHY HEILIG (DOB 12/21/58) -- Vice President and Assistant Secretary --
Treasurer of SEI Investments since 1997; Assistant Controller of SEI
Investments since 1995; Vice President of SEI Investments since 1991;
Director of Taxes of SEI Investments, 1987 to 1991. Tax Manager, Arthur
Andersen LLP prior to 1987.

JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary
- --Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services,
Inc., 1993-1997. Staff Counsel and Secretary,

S-20
<PAGE>

Provident Mutual Family of Funds, 1990-1993.

KEVIN P. ROBINS (DOB 04/15/61) -- Vice President and Assistant Secretary --
Senior Vice President and General Counsel of SEI Investments, the
Administrator and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Administrator since 1994. Vice
President, General Counsel and Assistant Secretary of the Administrator and
the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law
firm), 1988-1992.

LYNDA J. STRIEGEL (DOB 10/30/48) -- Vice President and Assistant Secretary --
Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks,
Inc., 1997-1998. Partner, Groom and Nordberg, Chartered, 1996-1997.
Associate General Counsel, Riggs Bank, N.A., 1991-1995.

MARK E. NAGLE (DOB 10/20/59) -- Controller and Chief Financial Officer --
Vice President of Fund Accounting and Administration for SEI Investments
Mutual Funds Services and Vice President of the Administrator since 1996.
Vice President of the Distributor since December 1997. Vice President, Fund
Accounting, BISYS Fund Services, September 1995 to November 1996. Senior
Vice President and Site Manager, Fidelity Investments 1981 to September 1995.

JOHN H. GRADY, JR. (DOB 06/01/61) -- Secretary -- 1701 Market Street,
Philadelphia, PA 19103-2921, Partner since 1995, Morgan, Lewis & Bockius LLP
(law firm), counsel to the Trust, SEI Investments, the Administrator and the
Distributor.

*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund as that term is defined in the 1940 Act.

**Messrs. Cooney, Patterson, Peters, Storey and Sullivan serve as members of the
Audit Committee of the Fund.

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees. For
the fiscal year ended January 31, 1999, the Trust paid the unaffiliated
Trustees aggregate fees of $______.

COMPENSATION TABLE

- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
Total Compensation
Pension or From Registrant and
Retirement Fund Complex Paid to
Aggregate Benefits Accrued Estimated Annual Trustees for the
Compensation as Part of Fund Benefits Upon Fiscal Year Ended
Name of Person, Position From Registrant Expenses Retirement January 31, 1999(1)
- ------------------------------------------------------------------------------------------------------------

S-21
<PAGE>

<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
John T. Cooney, Trustee $______ N/A N/A $______
- ------------------------------------------------------------------------------------------------------------
(2)Frank E. Morris, Trustee $______ N/A N/A $______
- ------------------------------------------------------------------------------------------------------------
Robert Patterson, Trustee $______ N/A N/A $______
- ------------------------------------------------------------------------------------------------------------
Eugene B. Peters, Trustee $______ N/A N/A $______
- ------------------------------------------------------------------------------------------------------------
James M. Storey, Trustee $______ N/A N/A $______
- ------------------------------------------------------------------------------------------------------------
William M. Doran, Trustee* $0 N/A N/A $0
- ------------------------------------------------------------------------------------------------------------
Robert A. Nesher, Trustee* $0 N/A N/A $0
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Total Compensation for service on one board.

(2) Mr. Morris retired from service effective 12/31/98. Mr. Sullivan was
elected as a trustee on 2/22/99.
* A Trustee who is an "interested person" as defined by the 1940 Act.

PERFORMANCE INFORMATION

The Funds may periodically compare its performance to other mutual funds tracked
by mutual fund rating services, to broad groups of comparable mutual funds, or
to unmanaged indices. These comparisons may assume reinvestment of dividends
but generally do not reflect deductions for administrative and management costs.

COMPUTATION OF YIELD

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

The current yield of a Fund will be calculated daily based upon the seven days
ending on the date of calculation ("base period"). The yield is computed by
determining the net change (exclusive of capital changes) in the value of a
hypothetical pre-existing shareholder account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing such net change by the value
of the account at the beginning of the same period to obtain the base period
return and multiplying the result by (365/7). Realized and unrealized gains and
losses are not included in the calculation of the yield. The effective compound
yield of a Fund is determined by computing the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one share at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from shareholder accounts, and dividing the difference by
the value of the account at the beginning of the base period to obtain the base
period return, and then compounding the base period return, according to the
following formula:

S-22
<PAGE>

Effective Yield = [(Base Period Return + 1)(365/7)] - 1.

The current and the effective yields reflect the reinvestment of net income
earned daily on portfolio assets.

For the seven-day period ended January 31, 1999, the U.S. Government Securities
Money Fund had a current yield of ____% and an effective yield of ____% and the
Prime Obligations Fund had a current yield of ____% and an effective yield of
____%.

The yield of a Fund fluctuates, and the annualization of a week's dividend
is not a representation by the Trust as to what an investment in the Fund will
actually yield in the future. Actual yields will depend on such variables as
asset quality, average asset maturity, the type of instruments the Fund invests
in, changes in interest rates on money market instruments, changes in the
expenses of the Fund and other factors.

Yields are one basis upon which shareholders may compare a Fund with other money
market funds; however, yields of other money market funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments. A Fund also
may compare its performance or the performance of securities in which it may
invest to IBC/Donoghue's MONEY FUND AVERAGES-TM-, which monitors the
performance of taxable and tax-free money market funds. This index, which
assumes reinvestment of distributions, is published by IBC/Donoghue's MONEY FUND
REPORT-Registered Trademark- of Ashland, Massachusetts 01721.

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Distributor on a day on which
the New York Stock Exchange is open for business. Shares of the Funds are
offered on a continuous basis. Currently, the holidays observed by the Trust
and the New York Stock Exchange are as follows: New Year's Day, Presidents'
Day, Martin Luther King Jr. Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas.

Each Fund intends to pay cash for all shares redeemed, but under abnormal
conditions that make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.

It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
a Fund in lieu of cash. Shareholders may incur brokerage charges on the sale of
any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
Funds of the Trust during any

S-23
<PAGE>

90-day period of up to the lesser of $250,000 or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the Securities and Exchange Commission by rule or
regulation) as a result of disposal or valuation of each Fund's securities is
not reasonably practicable, or for such other periods as the Securities and
Exchange Commission has by order permitted. The Trust also reserves the right
to suspend sales of shares of each Fund for any period during which the New York
Stock Exchange, the Adviser, the Administrator and/or the Custodian are not open
for business.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of a Fund is calculated by adding the value of
securities and other assets, subtracting liabilities and dividing by the number
of outstanding shares. Securities will be valued by the amortized cost method,
which involves valuing a security at its cost on the date of purchase and
thereafter (absent unusual circumstances) assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuations in
general market rates of interest on the value of the instrument. While this
method provides certainty in valuation, it may result in periods during which a
security's value, as determined by this method, is higher or lower than the
price a Fund would receive if it sold the instrument. During periods of
declining interest rates, the daily yield of a Fund may tend to be higher than a
like computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all of
its portfolio securities. Thus, if the use of amortized cost by the Fund
resulted in a lower aggregate portfolio value on a particular day, a prospective
investor in the Fund would be able to obtain a somewhat higher yield than would
result from investment in a company utilizing solely market values, and existing
investors in the Fund would experience a lower yield. The converse would apply
in a period of rising interest rates.

A Fund's use of amortized cost and the maintenance of a Fund's net asset value
at $1.00 are permitted by regulations promulgated by Rule 2a-7 under the 1940
Act, provided that certain conditions are met. The regulations also require the
Trustees to establish procedures which are reasonably designed to stabilize the
net asset value per share at $1.00 for each Fund. Such procedures include the
determination of the extent of deviation, if any, of a Fund's current net asset
value per share calculated using available market quotations from a Fund's
amortized cost price per share at such intervals as the Trustees deem
appropriate and reasonable in light of market conditions and periodic reviews of
the amount of the deviation and the methods used to calculate such deviation. In
the event that such deviation exceeds 0.5%, the Trustees are required to
consider promptly what action, if any, should be initiated, and, if the Trustees
believe that the extent of any deviation may result in material dilution or
other unfair results to shareholders, the Trustees are required to take such
corrective action as they deem appropriate to eliminate or reduce such dilution
or unfair results to the extent reasonably practicable. Such actions may

S-24
<PAGE>

include: the sale of portfolio instruments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing a net asset value per share by using
available market quotations. In addition, if a Fund incurs a significant loss or
liability, the Trustees have the authority to reduce pro rata the number of
shares of the Fund in each shareholder's account and to offset each
shareholder's pro rata portion of such loss or liability from the shareholder's
accrued but unpaid dividends or from future dividends.

TAXES

The following is only a summary of certain additional federal income tax
considerations generally affecting the Funds and their shareholders that are not
described in the Funds' prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Funds or their shareholders, and the
discussion here and in the Funds' prospectus is not intended as a substitute for
careful tax planning. Shareholders are urged to consult with their tax advisors
with specific reference to their own tax situation, including their state and
local tax liabilities.

FEDERAL INCOME TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS

The following general discussion of certain federal income tax consequences is
based on the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations issued thereunder as in effect on the date of this Statement of
Additional Information. New legislation, as well as administrative changes or
court decisions, may significantly change the conclusions expressed herein, and
may have a retroactive effect with respect to the transactions contemplated
herein.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

Each Fund intends to qualify and elect to be treated as a "regulated investment
company" ("RIC") as defined under Subchapter M of the Code. By following such a
policy, each Fund expects to eliminate or reduce to a nominal amount the federal
taxes to which they may be subject.

In order to qualify as a RIC, a Fund must distribute at least 90% of its net
investment income (that generally includes dividends, taxable interest, and the
excess of net short-term capital gains over net long-term capital losses less
operating expenses) and at least 90% of its net tax exempt interest income, for
each tax year, if any, to its shareholders and also must meet several additional
requirements. Included among these requirements are the following: (i) at
least 90% of the Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or certain other income;
(ii) at the close of each quarter of the Fund's taxable year, at least 50%

S-25
<PAGE>

of the value of its total assets must be represented by cash and cash items,
U.S. Government securities, securities of other RICs and other securities, with
such other securities limited, in respect to any one issuer, to an amount that
does not exceed 5% of the value of the Fund's assets and that does not represent
more than 10% of the outstanding voting securities of such issuer; and (iii) at
the close of each quarter of the Fund's taxable year, not more than 25% of the
value of its assets may be invested in securities (other than U.S. Government
securities or the securities of other RICs) of any one issuer or of two or more
issuers which the Fund controls and which are engaged in the same, similar or
related trades or businesses.

Each Fund may make investments in securities (such as STRIPS) that bear
"original issue discount" or "acquisition discount" (collectively, "OID
Securities"). The holder of such securities is deemed to have received interest
income even though no cash payments have been received. Accordingly, OID
Securities may not produce sufficient current cash receipts to match the amount
of distributable net investment income the Funds must distribute to satisfy the
Distribution Requirement. In some cases, the Funds may have to borrow money or
dispose of other investments in order to make sufficient cash distributions to
satisfy the Distribution Requirement.

Although each Fund intends to distribute substantially all of its net investment
income and may distribute its capital gains for any taxable year, each Fund will
be subject to federal income taxation to the extent any such income or gains are
not distributed.

If the Funds fail to qualify for any taxable year as a RIC, all of their taxable
income will be subject to tax at regular corporate income tax rates without any
deduction for distributions to shareholders and such distributions generally
will be taxable to shareholders as ordinary dividends to the extent of a Fund's
current and accumulated earnings and profits. In this event, distributions
generally will be eligible for the dividends-received deduction for corporate
shareholders.

FUND DISTRIBUTIONS

Distributions of investment company taxable income will be taxable to
shareholders as ordinary income, regardless of whether such distributions are
paid in cash or are reinvested in additional Shares, to the extent of a Fund's
earnings and profits. Each Fund anticipates that it will distribute
substantially all of its investment company taxable income for each taxable
year.

Each Fund intends to distribute to shareholders its excess of net long-term
capital gains over net short-term capital losses ("net capital gains"). Such
distributions are taxable to shareholders who are individuals at a maximum rate
of 20%, regardless of the length of time the shareholder has held the Fund
Shares. If any such gains are retained, however, a Fund will pay federal income

S-26
<PAGE>

tax thereon.

In the case of corporate shareholders, distributions (other than capital gains
distributions) from a RIC generally qualify for the dividends-received deduction
to the extent of the gross amount of qualifying dividends received by a Fund for
the year. Generally, and subject to certain limitations, a dividend will be
treated as a qualifying dividend if it has been received from a domestic
corporation. Accordingly, it is not expected that any U.S. Government
Securities Money Fund or Prime Obligation Fund distribution will qualify for the
corporate dividends-received deduction.

Ordinarily, investors should include all dividends as income in the year of
payment. However, dividends declared payable to shareholders of record in
October, November, or December of one year, but paid in January of the following
year, will be deemed for tax purposes to have been received by the shareholder
and paid by the Fund in the year in which the dividends were declared.

In certain cases, a Fund will be required to withhold, and remit to the
United States Treasury, 31% of any distributions paid to a shareholder who:
(i) has failed to provide a correct taxpayer identification number; (ii) is
subject to backup withholding by the Internal Revenue Service; or (iii) has
failed to certify to the Fund that such shareholder is not subject to backup
withholding.

Each Fund will provide a statement annually to shareholders as to the federal
tax status of distributions paid (or deemed to be paid) by the Fund during the
year, including the amount of dividends eligible for the corporate
dividends-received deduction.

SALE OR EXCHANGE OF FUND SHARES

Generally, gain or loss on the sale or exchange of a Fund Share will be capital
gain or loss that will be long-term if the Share has been held for more than
twelve months and otherwise will be short-term. For individuals, long-term
capital gains are currently taxed at a maximum rate of 20% and short-term
capital gains are currently taxed at ordinary income tax rates. However, if a
shareholder realizes a loss on the sale, exchange or redemption of a Share held
for six months or less and has previously received a capital gains distribution
with respect to the Share (or any undistributed net capital gains of a Fund with
respect to such Share are included in determining the shareholder's long-term
capital gains), the shareholder must treat the loss as a long-term capital loss
to the extent of the amount of the prior capital gains distribution (or any
undistributed net capital gains of a Fund that have been included in determining
such shareholder's long-term capital gains). In addition, any loss realized on
a sale or other disposition of Shares will be disallowed to the extent an
investor repurchases (or enters into a contract or option to repurchase) Shares
within a period of 61 days (beginning 30 days before and ending 30 days after
the disposition of the Shares). This loss disallowance rule will apply to
Shares received through the reinvestment of dividends during the 61-day period.

S-27
<PAGE>

FEDERAL EXCISE TAX

If a Fund fails to distribute in a calendar year at least 98% of its ordinary
income for the year and 98% of its capital gain net income (the excess of short
and long term capital gains over short and long term capital losses) for the
one-year period ending October 31 of that year (and any retained amount from the
prior calendar year), the Fund will be subject to a nondeductible 4% Federal
excise tax on the undistributed amounts. Each Fund intends to make sufficient
distributions to avoid imposition of this tax, or to retain, at most its net
capital gains and pay tax thereon.

STATE AND LOCAL TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Depending upon state and
local law, distributions by the Funds to shareholders and the ownership of
Shares may be subject to state and local taxes. Shareholders are urged to
consult their tax advisors as to the consequences of these and other state and
local tax rules affecting an investment in the Funds.

FUND TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser is responsible for placing the orders
to execute transactions for a Fund. In placing orders, it is the policy of the
Trust to seek to obtain the best net results taking into account such factors as
price (including the applicable dealer spread), the size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While
the Adviser generally seeks reasonably competitive spreads or commissions, the
Fund will not necessarily be paying the lowest spread or commission available.

The money market securities in which a Fund invests are traded primarily in the
over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities involved
except in those circumstances where better prices and execution are available
elsewhere. Such dealers usually are acting as principal for their own account.
On occasion, securities may be purchased directly from the issuer. Money market
securities are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of executing portfolio
securities transactions of a Fund will primarily consist of dealer spreads and
underwriting commissions.

TRADING PRACTICES AND BROKERAGE

Certain investments may be appropriate for the Funds and for other clients
advised by the Adviser. Investment decisions for the Funds and other clients are
made with a view to achieving

S-28
<PAGE>

their respective investment objectives and after consideration of such factors
as their current holdings, availability of cash for investment, and the size of
their investments generally. A particular security may be bought or sold for
only one client or in different amounts and at different times for more than one
but less than all clients. Likewise, a particular security may be bought for
one or more clients when one or more other clients are selling the security. In
addition, purchases or sales of the same security may be made for two or more
clients of the Adviser on the same day. In such event, such transactions will
be allocated among the clients in a manner believed by the Adviser to be
equitable to each. In some cases, this procedure could have an adverse effect on
the price or amount of the securities purchased or sold by the Funds. Purchase
and sale orders for the Funds may be combined with those of other clients of the
Adviser in the interest of achieving the most favorable net results for the
Funds.

Consistent with the Conduct of the National Association of Securities Dealers,
Inc., and subject to seeking best price and execution, a Fund may place orders
with broker/dealers which have agreed to defray certain Fund expenses such as
custodian fees.

It is expected that each Fund may execute brokerage or other agency transactions
through the Distributor or a registered broker/dealer affiliate of the Adviser
for a commission in conformity with the 1940 Act, the Securities Exchange Act of
1934 and rules promulgated by the Securities and Exchange Commission.

For the fiscal years ended January 31, 1998 and January 31, 1999, the U.S.
Government Securities Money Fund and the Prime Obligations Fund paid the
following brokerage commissions with respect to portfolio transactions:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
% of Total Total Brokerage
Brokerage Commissions Paid
Total $ Total $ Amount % of Total Transactions to SIDC in
Amount of of Brokerage Brokerage Effected Connection with Total $ Amount
Brokerage Commissions Commission Paid Through Repurchase of Brokerage
Commissions Paid to to Affiliated Affiliated Agreement Commissions
paid Affiliates Brokers Brokers Transaction Paid for research
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------
U.S. Government N/A $___ N/A $___ N/A $___ N/A $___ $142,350 $___ N/A $___
Securities Money
Fund
- ------------------------------------------------------------------------------------------------------------------------------
Prime Obligations N/A $___ N/A $___ N/A $___ N/A $___ 60,314 $___ N/A $___
Fund
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For the fiscal year ended January 31, 1997, the U.S. Government Securities Money
Fund and the Prime Obligations Fund did not pay any brokerage commissions with
respect to portfolio transactions.

S-29
<PAGE>

The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act) which the Trust has acquired
during its most recent fiscal year. As of January 31, 1998, the Funds held
securities of the Trust's "regular brokers or dealers" as follows:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
Dollar
Amount
Fund Name of Broker/Dealer Type of Security Held at FYE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Government First Boston Repurchase Agreement $_______
Securities Money Fund Greewich Repurchase Agreement $_______
J.P. Morgan Repurchase Agreement $_______
Merrill Lynch Repurchase Agreement $_______
Paine Webber Repurchase Agreement $_______
- --------------------------------------------------------------------------------------------------------
Prime Obligations Fund Goldman Sachs Commercial Paper $_______
GE Capital Commercial Paper $_______
Merrill Lynch, Pierce, Fenner & Smith Commercial Paper $_______
Bear Sterns Security Corp. Corporate Bond $_______
First Boston Corporate Bond $_______
Bankers Trust Certificate of Deposit $_______
First of American Bank Certificate of Deposit $_______
Nationsbanc Certificate of Deposit $_______
Greenwich Repurchase Agreement $_______
J.P. Morgan Repurchase Agreement $_______
Paine Webber Repurchase Agreement $_______
$_______
- --------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of shares of the Fund, and to divide or redivide any unissued shares of
the Trust into one or more additional series.

Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's shares will be fully paid and
non-assessable, subject only to the possibility of shareholder liability
described in the following section. All consideration received by the Trust for
shares of any additional series and all assets in which such consideration is
invested would belong to that series and would be subject to the liabilities
related thereto. In the event of a liquidation or dissolution of the Trust,
shareholders of a Fund are entitled to receive the assets available for
distribution belonging to that Fund, and a proportionate distribution, based
upon the relative asset values of the respective Funds, of any general assets
not belonging to any particular Fund which are available for distribution.

SHAREHOLDER LIABILITY

S-30
<PAGE>

The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or investment advisers, shall not be liable for
any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his willful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.

5% AND 25% SHAREHOLDERS

As of ______________, 1999, the following persons were the only persons who were
record owners (to the knowledge of the Trust, beneficial owners) of 5% and 25%
or more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the below persons in account for their fiduciary,
agency or custodial customers.

U.S. GOVERNMENT SECURITIES MONEY FUND: Hamac & Co., Attn: Barbara Holloway,
919 East Main Street, Richmond, VA 23219, ____%.

PRIME OBLIGATIONS FUND: Hamac & Co., Attn: Barbara Holloway, 919 East Main
Street, Richmond, VA 23219, ____%.

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information have been incorporated by reference in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

S-31
<PAGE>

FINANCIAL STATEMENTS

The audited financial statements of the Funds for the fiscal year ended January
31, 1999, and the Report of Independent Accountants of PricewaterhouseCoopers
LLP dated _________, 1999, relating to the financial statements, including the
financial highlights of the Fund are incorporated herein by reference.

S-32

<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

The following descriptions are summaries of published ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

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

A-2 Capacity for timely payment on issues with this designation is satisfactory
and the obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories.

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

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

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

S-33
<PAGE>

The rating Duff-1 is the highest commercial paper rating assigned by Duff &
Phelps, Inc. ("Duff"). Paper rated Duff-1 is regarded as having very high
certainty of timely payment with excellent liquidity factors which are supported
by ample asset protection. Risk factors are minor. Paper rated Duff-2 is
regarded as having good certainty of timely payment, good access to capital
markets and sound liquidity factors and company fundamentals. Risk factors are
small. The designation A1 by IBCA, Inc. ("IBCA") indicates that the obligation
is supported by a very strong capacity for timely repayment. Those obligations
rated A1+ are supported by the highest capacity for timely repayment.
Obligations rated A2 are supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic or financial conditions.

S-34

<PAGE>

THE ARBOR FUND

Class A Shares and Class B Shares

PROSPECTUS
MAY 31, 1999

OVB EQUITY INCOME PORTFOLIO
OVB CAPITAL APPRECIATION PORTFOLIO
OVB GOVERNMENT SECURITIES PORTFOLIO
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO
OVB PRIME OBLIGATIONS PORTFOLIO

INVESTMENT ADVISER
ONE VALLEY BANK

INVESTMENT SUB-ADVISER
WELLINGTON MANAGEMENT COMPANY, LLP
(OVB PRIME OBLIGATIONS PORTFOLIO)

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY PORTFOLIO SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 36

<PAGE>

HOW TO READ THIS PROSPECTUS

The OVB Family of Funds is a mutual fund family that offers different classes of
shares in separate investment portfolios (Portfolios). The Portfolios have
individual investment goals and strategies. This prospectus gives you important
information about the Class A Shares and Class B Shares of the Portfolios that
you should know before investing. Please read this prospectus and keep it for
future reference.

Class A Shares and Class B Shares have different expenses and other
characteristics, allowing you to choose the class that best suits your needs.
You should consider the amount you want to invest, how long you plan to have it
invested, and whether you plan to make additional investments.

CLASS A SHARES
* No sales charges
* No 12b-1 fees or shareholder fees
* $100,000 minimum initial investment

CLASS B SHARES
* No sales charges
* 12b-1 fees
* $1,000 minimum initial investment

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE PORTFOLIOS. FOR MORE DETAILED INFORMATION
ABOUT EACH PORTFOLIOS, PLEASE SEE:

<TABLE>
<CAPTION>
PAGE
<S> <C>
OVB EQUITY INCOME PORTFOLIO XXX
OVB CAPITAL APPRECIATION PORTFOLIO XXX
OVB GOVERNMENT SECURITIES PORTFOLIO XXX
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO XXX
OVB PRIME OBLIGATIONS PORTFOLIO XXX
MORE INFORMATION ABOUT RISK XXX
EACH PORTFOLIO'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISER, SUB-ADVISER
AND PORTFOLIO MANAGERS XXX
PURCHASING, SELLING AND EXCHANGING PORTFOLIO SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT THE
OVB FAMILY OF FUNDS Back Cover
</TABLE>

Page 2 of 36

<PAGE>

INTRODUCTION

Each Portfolio is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

Each Portfolio has its own investment goal and strategies for reaching that
goal. The investment managers invest Portfolio assets in a way that they
believe will help a Portfolio achieve its goal. Still, investing in each
Portfolio involves risk and there is no guarantee that a Portfolio will achieve
its goal. An investment manager's judgments about the markets, the economy, or
companies may not anticipate actual market movements, economic conditions or
company performance, and these judgments may affect the return on your
investment. In fact, no matter how good a job an investment manager does, you
could lose money on your investment in the Portfolio, just as you could with
other investments. A Portfolio share is not a bank deposit and it is not
insured or guaranteed by the FDIC or any government agency.

The value of your investment in a Portfolio (other than the OVB Prime Obligation
Portfolio) is based on the market value of the securities the Portfolio holds.
These prices change daily due to economic and other events that affect
particular companies and other issuers. These price movements, sometimes called
volatility, may be greater or lesser depending on the types of securities a
Portfolio owns and the markets in which they trade. The effect on a Portfolio
of a change in the value of a single security will depend on how widely the
Portfolio diversifies its holdings.

THE OVB PRIME OBLIGATION PORTFOLIO TRIES TO MAINTAIN A CONSTANT PRICE PER SHARE
OF $1.00, BUT THERE IS NO GUARANTEE THAT A PORTFOLIO WILL ACHIEVE THIS GOAL.

Page 3 of 36

<PAGE>

OVB EQUITY INCOME PORTFOLIO

PORTFOLIO SUMMARY

<TABLE>
<S> <C>
Investment Goal Current income, with a secondary goal of
moderate capital appreciation

Investment Focus Large capitalization U.S. common stocks which
pay dividends

Share Price Volatility Medium

Principal Investment Strategy Investing in a Portfolio which will provide
price movement similar to the Standard &
Poor's 500 Composite Index, but with less
volatility and a significantly higher dividend
stream

Investor Profile Investors seeking current income and moderate
capital appreciation who are willing to bear
the risk of modest share price volatility
</TABLE>

INVESTMENT STRATEGY OF THE OVB EQUITY INCOME PORTFOLIO

The Portfolio invests primarily (at least 65% of its assets) in common stocks
of U.S. companies with large market capitalizations (in excess of $5 billion)
that regularly pay dividends. The Portfolio invests in established companies
operating in a broad range of industries based on their ability to grow both
earnings and dividends. In selecting investments for the Portfolio, the
Adviser attempts to choose stocks of companies that are positioned to benefit
from competitive advantages that arise from ownership of valuable business
franchises, trademarks and brand names, control of distribution networks,
significant market shares in key products, or other company specific
attributes. The Adviser also considers the quality of management as evidenced
by an established track record of enhancing shareholder value. The Adviser
buys stocks with a long-term view and attempts to hold its positions and keep
portfolio turnover low.

PRINCIPAL RISKS OF INVESTING IN THE OVB EQUITY INCOME PORTFOLIO

Since it purchases common stocks, the Portfolio is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Portfolio's
equity securities may fluctuate drastically from day-to-day. Individual
companies may report poor results or be negatively affected by industry and/or
economic trends and developments. The prices of securities issued by such
companies may suffer a decline in response. These factors contribute to price
volatility, which is the principal risk of investing in the Portfolio.

Page 4 of 36

<PAGE>

The Portfolio is also subject to the risk that its market segment, large
capitalization dividend-paying common stocks, may underperform other equity
market segments or the equity markets as a whole.

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the Portfolio. Of course, the Portfolio's past
performance does not necessarily indicate how the Portfolio will perform in the
future.

This bar chart shows changes in the performance of the Portfolio's Class A
Shares from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year. The
Portfolio's performance from 1/1/99 to 3/31/99 was X.XX%.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500/BARRA VALUE INDEX AND
THE LIPPER EQUITY INCOME AVERAGE.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
OVB Equity Income Portfolio X.XX% X.XX%*
S&P 500/Barra Value Index X.XX% X.XX%**
Lipper Equity Income Average X.XX% X.XX%**
</TABLE>

* Since 8/2/96
** Since 7/31/96

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR INCEPTION
- ------------------------------------------------------------------------
<S> <C> <C>
OVB Equity Income Portfolio X.XX% X.XX%*
S&P 500/Barra Value Index X.XX% X.XX%**
Lipper Equity Income Average X.XX% X.XX%**
</TABLE>

* Since 8/2/96
** Since 7/31/96

WHAT IS AN INDEX?

Page 5 of 36

<PAGE>

widely-recognized, capitalization-weighted (companies with larger market
capitalizations have more influence than those with smaller market
capitalizations) index of the stocks in the S&P 500 Index. The index is
constructed by dividing the stocks in the S&P 500 Index by price-to-book
ratios, and includes securities of companies with lower price-to-book ratios.

WHAT IS AN AVERAGE?

An average is a composite of mutual funds with similar investment goals. The
Lipper Equity Income Average is a widely-recognized average of mutual funds
that seek relatively high current income and growth of income through investing
in dividend-paying equity securities.

PORTFOLIO FEES AND EXPENSES

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

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- -----------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- -----------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

* THE PORTFOLIO'S TOTAL ACTUAL ANNUAL PORTFOLIO OPERATING EXPENSES FOR THE
MOST RECENT FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE
ADVISER IS WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF
THESE WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE PORTFOLIO'S ACTUAL
TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

OVB EQUITY INCOME PORTFOLIO-CLASS A ____%
OVB EQUITY INCOME PORTFOLIO-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Portfolio for the time periods indicated
and that you sell your shares at the end of the period.

The Example also assumes that each year your investment has a 5% return and
Portfolio operating expenses remain the same. Although your actual costs and
returns might be different, your approximate costs of investing $10,000 in the
Portfolio would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
</TABLE>

Page 6 of 36

<PAGE>

<TABLE>
<S> <C> <C> <C> <C>
Class B Shares $____ $____ $____ $____
</TABLE>

Page 7 of 36
<PAGE>

OVB CAPITAL APPRECIATION PORTFOLIO

PORTFOLIO SUMMARY

<TABLE>
<S> <C>
Investment Goal Long-term growth of capital

Investment Focus Medium to large capitalization U.S. common
stocks

Share Price Volatility High

Principal Investment Strategy Investing in securities of medium to large
sized companies that have an established
record of growth and continue to present
significant growth potential

Investor Profile Investors seeking long-term growth of capital
who are willing to accept the volatility that
comes with an actively managed portfolio of
medium to large sized growth companies
</TABLE>

INVESTMENT STRATEGY OF THE OVB CAPITAL APPRECIATION PORTFOLIO

The Portfolio invests primarily (at least 65% of its assets) in common stocks
of U.S. companies with medium to large market capitalizations (in excess of $1
billion). In selecting investments for the Fund, the Adviser will consider
growth factors such as a company's new products, changes in management, and
business restructurings. The Adviser will also search for companies that have
established records of earnings and sales growth over a period of at least
three years that it believes are poised to meet or exceed these figures going
forward. These companies generally will have lower amounts of long-term debt
(representing less than 40% of the company's capitalization); have attractive
price/earnings ratios in relation to a company's 3 to 5-year earnings per share
growth rate; and have stock prices which have outperformed Standard & Poor's
500 Composite Index (S&P 500) over the previous six months. The Adviser will
attempt to avoid overweighting the Portfolio's position in any specific market
sector (such as technology, consumer staples, etc.) beyond 150% of the
weighting that sector has in the S&P 500.

The Adviser may sell a stock if a company fails to meet earnings or revenue
expectations or becomes overvalued (i.e., high price/earnings ratio relative to
its earnings growth). The Adviser may also sell a stock to change the
Portfolio's weighting in a particular company or industry sector, or if better
opportunities are available. Due to its investment strategy, the Portfolio may
buy and sell securities frequently. This may result in higher transaction
costs and additional capital gains tax liabilities.

PRINCIPAL RISKS OF INVESTING IN THE OVB CAPITAL APPRECIATION PORTFOLIO

Since it purchases common stocks, the Portfolio is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles,

Page 8 of 36

<PAGE>

and the value of the Portfolio's equity securities may fluctuate drastically
from day-to-day. Individual companies may report poor results or be negatively
affected by industry and/or economic trends and developments. The prices of
securities issued by such companies may suffer a decline in response. These
factors contribute to price volatility, which is the principal risk of
investing in the Portfolio.

The medium capitalization companies the Portfolio invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these medium-sized companies may have limited
product lines, markets and financial resources, and may depend on a relatively
small management group. Therefore, medium capitalization stocks may be more
volatile than those of larger companies.

The Portfolio is also subject to the risk that its market segment, large and
medium capitalization growth stocks, may underperform other equity market
segments or the equity markets as a whole.

PERFORMANCE INFORMATION

The periods prior to December 1, 1993 when the Portfolio began operating,
represent the performance of the Adviser's similarly managed predecessor common
trust fund. This past performance has been adjusted to reflect current
expenses for the Class A Shares of the Fund. The Adviser's common trust fund
was not a registered mutual fund so it was not subject to the same investment
and tax restrictions as the Portfolio. If it had been the common trust fund's
performance might have been lower.

This bar chart shows changes in the performance of the Portfolio's Class A
Shares from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year. The
Portfolio's performance from 1/1/99 to 3/3/99 was X.XX%.

Page 9 of 36

<PAGE>

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDING DECEMBER 31, 1998 TO THOSE OF THE S&P 500 INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OVB Capital Appreciation Portfolio X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since
** Since [calc. date for index]

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OVB Capital Appreciation Portfolio X.XX% X.XX% X.XX% X.XX%*
S&P 500 Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since
** Since [calc. date for index]

WHAT IS AN INDEX?

Page 10 of 36

<PAGE>

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE PORTFOLIO.

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- -----------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .95% .95%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- -----------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

* THE PORTFOLIO'S TOTAL ACTUAL ANNUAL PORTFOLIO OPERATING EXPENSES FOR THE MOST
RECENT FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT
ANY TIME. WITH THESE FEE WAIVERS, THE PORTFOLIO'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

OVB CAPITAL APPRECIATION PORTFOLIO-CLASS A ____%
OVB CAPITAL APPRECIATION PORTFOLIO-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 11 of 36

<PAGE>

OVB GOVERNMENT SECURITIES PORTFOLIO

PORTFOLIO SUMMARY

<TABLE>
<S> <C>
Investment Goal Current income consistent with the
preservation of capital

Investment Focus Fixed income obligations of the U.S. Treasury
and U.S. government agencies

Share Price Volatility Low

Principal Investment Strategy Investing in U.S. Treasury obligations and
U.S. government agency obligations to attempt
to maximize income

Investor Profile Fixed income investors who want to receive
strong current income while not sacrificing
liquidity
</TABLE>

INVESTMENT STRATEGY OF THE OVB GOVERNMENT SECURITIES PORTFOLIO

The Portfolio invests principally (at least 65% of its assets) in fixed income
obligations issued by the U.S. Treasury and U.S. government agencies, including
mortgage backed securities that are rated in one of the top two ratings
categories. In selecting investments for the Portfolio, the Adviser analyzes
current market conditions and anticipated changes in bond prices to attempt to
obtain the highest possible yield with minimal credit risk. The Adviser
actively manages the maturity of the Portfolio which ranges between three and
ten years. Under normal circumstances, the Adviser anticipates that the
Portfolio's dollar-weighted average maturity will be approximately five years;
however, the Adviser may vary this average maturity substantially in
anticipation of a change in the interest rate environment.

PRINCIPAL RISKS OF INVESTING IN THE OVB GOVERNMENT SECURITIES PORTFOLIO

The prices of the Portfolio's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers. Generally, the Portfolio's
fixed income securities will decrease in value if interest rates rise and vice
versa. Also, longer-term securities are generally more volatile, so the average
maturity or duration of these securities affects risk.

Page 12 of 36

<PAGE>

others are backed solely by the ability of the agency to borrow from the U.S.
Treasury or by the agency's own resources.

The mortgages underlying mortgage-backed securities may be paid off early, which
makes it difficult to determine their actual maturity and therefore calculate
how they will respond to changes in interest rates. The Portfolio may have to
reinvest prepaid amounts at lower interest rates. This risk of prepayment is an
additional risk of mortgage-backed securities.

The Portfolio is also subject to the risk that its investment strategy which
focuses on fixed income obligations of the U.S. government, may perform
differently from other mutual funds which target other fixed income market
segments or invest in other asset classes.

PERFORMANCE INFORMATION

The periods prior to December 1, 1993, when the Portfolio began operating,
represent the performance of the Adviser's similarly managed predecessor common
trust fund. This past performance has been adjusted to reflect current expenses
for the Class A Shares of the Fund. The Adviser's common trust fund was not a
registered mutual fund so it was not subject to the same investment and tax
restrictions as the Fund. If it had been, the common trust fund's performance
might have been lower.

This bar chart shows changes in the performance of the Portfolio's Class A
Shares from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year. The
Portfolio's performance from 1/1/99 to 3/3/99 was X.XX%.

Page 13 of 36

<PAGE>

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE BOND INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OVB Government Securities Portfolio X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers Intermediate
Government/Corporate Bond Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since [inception date]
** Since [calc. date for index]

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OVB Government Securities Portfolio X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers Intermediate
Government/Corporate Bond Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since [inception date]
** Since [calc. date for index]

WHAT IS AN INDEX?

An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Intermediate
Government/Corporate Bond Index is a widely-recognized, market value-weighted
(higher market value bonds have more influence than lower market value bonds)
index of U.S. Treasury securities, U.S. government agency obligations, corporate
debt backed by the U.S. government, fixed-rate nonconvertible corporate debt
securities, Yankee bonds, and nonconvertible debt securities issued by or
guaranteed by foreign governments and agencies. All securities in the Index are
rated investment grade (BBB) or higher, with maturities from 1 to 10 years.

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE PORTFOLIO.

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- -----------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .75% .75%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- -----------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

Page 14 of 36

<PAGE>

DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS,
THE PORTFOLIO'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

OVB GOVERNMENT SECURITIES PORTFOLIO-CLASS A ____%
OVB GOVERNMENT SECURITIES PORTFOLIO-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 15 of 36

<PAGE>

OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO

PORTFOLIO SUMMARY

<TABLE>
<S> <C>
Investment Goal Current income exempt from federal and West
Virginia income taxes consistent with
preservation of capital

Investment Focus Tax-exempt West Virginia municipal securities

Share Price Volatility Low

Principal Investment Strategy Invests in high quality municipal obligations
which produce interest that is exempt from
federal income tax and West Virginia income tax

Investor Profile Conservative taxable investors who want to
receive current income exempt from federal and
West Virginia state income tax and are willing
to bear the risk of investing in a portfolio
of securities affected by changes in economic
conditions and governmental policies within
West Virginia
</TABLE>

INVESTMENT STRATEGY OF THE OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO

The Portfolio invests substantially all of its assets in high quality municipal
securities that generate income exempt from federal and West Virginia state
income taxes. These securities include securities of municipal issuers located
in West Virginia, the District of Columbia and other U.S. territories and
possessions. The Portfolio will invest most of its assets in securities that
are not subject to federal taxes, including the alternative minimum tax, but it
can purchase a limited amount of taxable securities. The Portfolio's Adviser
will generally purchase municipal securities rated in one of the two highest
ratings categories and attempt to maintain an average weighted portfolio
maturity of 12 to 18 years. In selecting securities for the Fund, the Adviser
will consider each security's yield and total return potential relative to
other available municipal securities.

PRINCIPAL RISKS OF INVESTING IN THE OVB WEST VIRGINIA TAX-EXEMPT INCOME
PORTFOLIO

The prices of the Portfolio's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Portfolio's fixed income securities will decrease in value if
interest rates rise and vice versa. Also, longer-term securities are generally
more volatile, so the average maturity or duration of these securities affects
risk.

Page 16 of 36

<PAGE>

There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on municipal
securities. Changes in the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Portfolio's securities.

The Portfolio is non-diversified, which means that it may invest in the
securities of relatively few issuers. As a result, the Fund may be more
susceptible to a single adverse economic or political occurrence affecting one
or more of these issuers, and may experience increased volatility due to its
investments in those securities.

The Portfolio's concentration of investments in securities of issuers located
in West Virginia subjects the Portfolio to economic conditions and government
policies within that state. As a result, the Portfolio will be more
susceptible to factors which adversely affect issuers of West Virginia
obligations than a mutual fund which does not have as great a concentration in
West Virginia municipal obligations.

The Portfolio is also subject to the risk that its market segment, West
Virginia municipal debt securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

PERFORMANCE INFORMATION

The periods prior to December 1, 1993, when the Portfolio began operating,
represent the performance of the Adviser's similarly managed predecessor common
trust fund. This past performance has been adjusted to reflect current
expenses for the Class A Shares of the Portfolio. The Adviser's common trust
fund was not a registered mutual fund so it was not subject to the same
investment and tax restrictions as the Fund. If it had been, the common trust
fund's performance might have been lower.

This bar chart shows changes in the performance of the Portfolio's Class A
Shares from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

Page 17 of 36

<PAGE>

* The performance information shown above is based on a calendar year. The
Portfolio's performance from 1/1/99 to 3/31/99 was X.XX%

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE
PERIODS ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS MUNICIPAL BOND
INDEX.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OVB West Virginia Tax-Exempt Income Portfolio X.XX% X.XX% X.XX% X.XX%*
Lehman Brothers Municipal Bond Index X.XX% X.XX% X.XX% X.XX%**
</TABLE>

* Since [inception date]
** Since [calc. date for index]

WHAT IS AN INDEX?

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE PORTFOLIO.

Page 18 of 36

<PAGE>

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- -----------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .40% .40%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- -----------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

THE PORTFOLIO'S TOTAL ACTUAL ANNUAL PORTFOLIO OPERATING EXPENSES FOR THE MOST
RECENT FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT
ANY TIME. WITH THESE FEE WAIVERS, THE PORTFOLIO'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO-CLASS A ____%
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 19 of 36

<PAGE>

OVB PRIME OBLIGATIONS PORTFOLIO

PORTFOLIO SUMMARY

<TABLE>
<S> <C>
Investment Goal Preserve principal value and maintain a high
degree of liquidity while providing current
income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term high
quality U.S. dollar-denominated debt securities

Investor Profile Conservative investors who want to receive
current income through a liquid investment
</TABLE>

INVESTMENT STRATEGY OF THE OVB PRIME OBLIGATIONS PORTFOLIO

The Portfolio invests in a broad range of short-term U.S. dollar-denominated
securities that are rated in one of the two highest rating categories by
nationally recognized rating organizations, or unrated securities that
Wellington Management Company, LLP (Sub-Adviser) determines are of comparable
quality. The Portfolio invests in short-term securities, including: (i)
commercial paper and other short-term corporate obligations of U.S. and
foreign issuers (including asset-backed securities); (ii) certificates of
deposit, time deposits, bankers' acceptances, bank notes and other
obligations of U.S. and foreign savings and loan institutions and commercial
banks (including foreign branches of such banks) that meet certain asset
requirements; (iii) short-term obligations issued by state and local
governments; (iv) obligations of foreign governments (including Canadian and
Provincial Government and Crown Agency obligations); and (v) U.S. Treasury
obligations and obligations issued or guaranteed as to principal and interest
by agencies or instrumentalities of the U.S. government. The Portfolio may
also enter into fully-collateralized repurchase agreements.

The Adviser has engaged Wellington Management Company, LLP as sub-adviser to
manage the Portfolio on a day-to-day basis. Using top-down strategy setting
and bottom-up security selection, the Sub-Adviser seeks securities with an
acceptable maturity, that are marketable and liquid, that offer competitive
yields, and that are issued by issuers that are on a sound financial footing.
The Sub-Adviser also considers factors such as the anticipated level of
interest rates and the maturity of individual securities relative to the
maturity of the Portfolio as a whole. The Portfolio follows strict SEC rules
about credit quality, maturity and diversification of its investments.

Page 20 of 36

<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE OVB PRIME OBLIGATIONS PORTFOLIO

An investment in the Portfolio is subject to income risk, which is the
possibility that the Portfolio's yield will decline due to falling interest
rates. A Portfolio share is not a bank deposit and is not insured or guaranteed
by the FDIC or any government agency. In addition, although a money market fund
seeks to keep a constant price per share of $1.00, you may lose money by
investing in the Portfolio.

Although the Portfolio's U.S. government securities are considered to be among
the safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies
are backed by the U.S. Treasury, while others are backed solely by the ability
of the agency to borrow from the U.S. Treasury or by the agency's own resources.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Portfolio's Class A
Shares from year to year.*

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year. The
Portfolio's performance from 1/1/99 to 3/31/99 was X.XX%.

Call 1-800-808-4920 for the Fund's most current 7-day yield.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE IBC FIRST TIER AVERAGE.

<TABLE>
<CAPTION>
SINCE
CLASS A SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
OVB Prime Obligations Portfolio X.XX% X.XX% X.XX%*
IBC First Tier Average X.XX% X.XX% X.XX%**
</TABLE>

* Since 12/1/93
** Since 11/30/93

Page 21 of 36

<PAGE>

<TABLE>
<CAPTION>
SINCE
CLASS B SHARES 1 YEAR 5 YEARS INCEPTION
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
OVB Prime Obligations Portfolio X.XX% X.XX% X.XX%*
IBC First Tier Average X.XX% X.XX% X.XX%**
</TABLE>

* Since 12/29/93
** Since 12/31/93

WHAT IS AN AVERAGE?

An average is a composite of mutual funds with similar investment goals. The
IBC First Tier Average is a widely-recognized average of money market funds that
invest solely in securities rated Prime-1 by Moody's or A-1 by S&P.

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE PORTFOLIO.

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
CLASS A CLASS B
SHARES SHARES
- -----------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .25% .25%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- -----------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

* THE PORTFOLIO'S TOTAL ACTUAL ANNUAL PORTFOLIO OPERATING EXPENSES FOR THE MOST
RECENT FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT
ANY TIME. WITH THESE FEE WAIVERS, THE PORTFOLIO'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

OVB PRIME OBLIGATIONS PORTFOLIO-CLASS A ____%
OVB PRIME OBLIGATIONS PORTFOLIO-CLASS B ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

Page 22 of 36

<PAGE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares $____ $____ $____ $____
Class B Shares $____ $____ $____ $____
</TABLE>

Page 23 of 36

<PAGE>

MORE INFORMATION ABOUT RISK

EQUITY RISK - Equity securities OVB Equity Income Portfolio
include public and privately issued
equity securities, common and OVB Capital Appreciation Portfolio
preferred stocks, warrants, rights
to subscribe to common stock and
convertible securities, as well as
instruments that attempt to track
the price movement of equity
indices. Investments in equity
securities and equity derivatives
in general are subject to market
risks that may cause their prices
to fluctuate over time. The value
of securities convertible into
equity securities, such as warrants
or convertible debt, is also
affected by prevailing interest
rates, the credit quality of the
issuer and any call provision.
Fluctuations in the value of equity
securities in which a mutual fund
invests will cause a fund's net
asset value to fluctuate. An
investment in a portfolio of equity
securities may be more suitable for
long-term investors who can bear
the risk of these share price
fluctuations.

FIXED INCOME RISK - The market OVB Government Securities Portfolio
value of fixed income investments
change in response to interest rate OVB West Virginia Tax-Exempt Portfolio
changes and other factors. During
periods of falling interest rates,
the values of outstanding fixed
income securities generally rise.
Moreover, while securities with
longer maturities tend to produce
higher yields, the prices of longer
maturity securities are also
subject to greater market
fluctuations as a result of changes
in interest rates. In addition to
these fundamental risks, different
types of fixed income securities
may be subject to the following
additional risks:

CALL RISK - During periods of
falling interest rates, certain
debt obligations with high
interest rates may be prepaid
(or "called") by the issuer
prior to maturity. This may
cause a Portfolio's average
weighted maturity to fluctuate,
and may require a Portfolio to
invest the resulting proceeds
at lower interest rates.

CREDIT RISK - The possibility
that an issuer will be unable
to make timely payments of
either principal or interest.

Page 24 of 36

<PAGE>

EVENT RISK - Securities may
suffer declines in credit
quality and market value due to
issuer restructurings or other
factors. This risk should be
reduced because of the
Portfolio's multiple holdings.

MUNICIPAL ISSUER RISK - There OVB West Virginia Tax-Exempt Income
may be economic or political Portfolio
changes that impact the ability
of municipal issuers to repay
principal and to make interest
payments on municipal
securities. Changes to the
financial condition or credit
rating of municipal issuers may
also adversely affect the value
of the Fund's municipal
securities. Constitutional or
legislative limits on borrowing
by municipal issuers may result
in reduced supplies of
municipal securities.
Moreover, certain municipal
securities are backed only by a
municipal issuer's ability to
levy and collect taxes. In
addition, the Portfolio's
concentration of investments in
issuers located in a single
state makes the Portfolio more
susceptible to adverse
political or economic
developments affecting that
state. The Portfolio also may
be riskier than mutual funds
that buy securities of issuers
in numerous states.

YEAR 2000 RISK - The Portfolios
depend on the smooth
functioning of computer systems All Portfolios
in almost every aspect of their
business. Like other mutual
funds, businesses and
individuals around the world,
the Portfolios could be
adversely affected if the
computer systems used by their
service providers do not
properly process dates on and
after January 1, 2000, and
distinguish between the year
2000 and the year 1900. The
Portfolios have asked their
service providers whether they
expect to have their computer
systems adjusted for the year
2000 transition, and is seeking
assurances from each service
provider that they are devoting
significant resources to
prevent material adverse
consequences to the Portfolios.
While it is likely that such
assurances will be obtained,
the Portfolios and their
shareholders may experience
losses if these assurances
prove to be incorrect, or as a
result of year 2000 computer
difficulties experienced by
issuers of portfolio securities
or third parties, such as
custodians, banks,
broker-dealers or others with
which the Portfolios do
business.

Page 25 of 36

<PAGE>

EACH FUND'S OTHER INVESTMENTS

This prospectus describes the Portfolios' primary strategies, and the Portfolios
will normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Portfolio also may invest in other securities, use other
strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in our Statement of Additional Information. Of course, we cannot
guarantee that any Portfolio will achieve its investment goal.

The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Portfolio may invest up to
100% of its assets in cash or money market instruments that would not ordinarily
be consistent with a Portfolio's objectives (except the OVB Prime Obligation
Portfolio). A Portfolio will do so only if the Adviser or Sub-Adviser believes
that the risk of loss outweighs the opportunity for capital gains or higher
income.

INVESTMENT ADVISER

The Investment Adviser makes investment decisions for each of the Portfolios,
other than the OVB Prime Obligation Portfolio, and continuously reviews,
supervises and administers the Portfolios' respective investment programs. The
Investment Adviser oversees the Sub-Adviser for the OVB Prime Obligation
Portfolio to ensure compliance with the Fund's investment policies and
guidelines, and monitors the Sub-Adviser's adherence to its investment style.
The Adviser pays the Sub-Adviser out of the Investment Advisory fees it receives
(described below). The Board of Trustees of The Arbor Fund supervises the
Adviser and Sub-Adviser and establishes policies that the Adviser and Sub
Adviser must follow in their management activities.

One Valley Bank, serves as the Adviser to the Portfolios. One Valley Bank,
together with its predecessor institutions, has provided trust and asset
management services since the early 1920s and has managed common and collective
investment funds since 1968. As of January 31, 1999, One Valley Bank had
approximately [VAR:InvestmentAdvisor1.Assets.Amount] in assets under
management. For the fiscal year ended January 31, 1999, One Valley Bank
received advisory fees (after waivers) as a percentage of average daily net
assets of:

<TABLE>
<S> <C>
OVB EQUITY INCOME PORTFOLIO [VAR:Advisor1.Portfolio1.Fees] %
OVB CAPITAL APPRECIATION PORTFOLIO [VAR:Advisor1.Portfolio2.Fees] %
OVB GOVERNMENT SECURITIES PORTFOLIO [VAR:Advisor1.Portfolio3.Fees] %
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO [VAR:Advisor1.Portfolio4.Fees] %
OVB PRIME OBLIGATIONS PORTFOLIO [VAR:Advisor1.Portfolio5.Fees] %
</TABLE>

Wellington Management Company, LLP (WMC) manages the OVB Prime Obligations
Portfolio on a day-to-day basis. WMC selects, buys and sells securities for the
Portfolio under the supervision of the Adviser and the Board of Trustees. WMC
and its predecessor organizations have provided investment services to
investment companies, employee benefit plans, endowments, foundations, and other
institutions and individuals since 1933.

Page 26 of 36

<PAGE>

PORTFOLIO MANAGERS

J. Randy Valentine, Senior Vice President of the Adviser, has oversight
responsibilities of the portfolio managers of the Equity Income, Capital
Appreciation, Emerging Growth, Government and West Virginia Portfolios. Mr.
Valentine has managed various common trust and collective investment funds since
1976 prior to assuming his supervisory duties. He has extensive investment
management experience.

Buel S. Sears, CFA serves as a Vice President of One Valley Bank. He has
managed the Equity Income Portfolio since June, 1997. He has more than 15 years
of investment experience. Prior to joining One Valley Bank in 1996, Mr. Sears
managed Huntington Banks West Virginia Trust Investment Group for 12 years.

David P. Nolan serves as a Vice President of One Valley Bank. He has managed
the OVB Capital Appreciation Portfolio since December, 1993. He has more than
18 years of investment experience. Prior to joining One Valley Bank in 1984,
Mr. Nolan served as an account executive with Alex. Brown & Sons incorporated.

James R. Thomas, III, CPA serves as a Vice President of One Valley Bank. He has
managed the OVB Government Securities Portfolio and OVB West Virginia Tax-Exempt
Income Portfolio since December, 1993 He has more than 14 years of investment
experience. Prior to joining One Valley Bank in 1988, Mr. Thomas served as a
financial analyst for Republic Bank, Dallas, Texas.

Page 27 of 36

<PAGE>

PURCHASING, SELLING AND EXCHANGING PORTFOLIO SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
Class A Shares and Class B Shares of the Portfolios.

The classes have different expenses and other characteristics.

CLASS A SHARES
* No sales charges
* No 12b-1 fees or shareholder fees
* $100,000 minimum initial investment

CLASS B SHARES
* No sales charge
* 12b-1 fees
* $1,000 minimum initial investment

For some investors the minimum initial investment for Class A Shares and Class B
Shares may be lower.

Class A and Class B Shares are for individual and institutional investors.

HOW TO PURCHASE PORTFOLIO SHARES

Class A Shares may be purchased only by wire transfer. You may purchase Class B
Shares directly by:

* Mail
* Telephone
* Wire
* Direct Deposit, or
* Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-808-4920, or complete and
send in the enclosed application. Unless you arrange to pay by wire or through
direct deposit or ACH, write your check, payable in U.S. dollars, to "Arbor Fund
- - OVB ______________" and include the name of the appropriate Portfolio(s) on
the check. A Portfolio cannot accept third-party checks, credit cards, credit
card checks or cash.

You may also buy shares through accounts with brokers and other institutions
that are authorized to place trades in Portfolio shares for their customers. If
you invest through an authorized institution, you will have to follow its
procedures, which may be different from the procedures for investing directly.
Your institution may charge a fee for its services, in addition to the fees
charged by the Portfolio. You will also generally have to address your
correspondence or questions regarding a Portfolio to your institution.

Page 28 of 36

<PAGE>

GENERAL INFORMATION

You may purchase shares on any day that the New York Stock Exchange and, for the
OVB Prime Obligations Portfolio, the Federal Reserve are open for business (a
Business Day). Shares cannot be purchased by Federal Reserve Wire on days when
either the New York Stock Exchange or the Federal Reserve is closed.

A Portfolio may reject any purchase order if it determines that accepting the
order would not be in the best interests of the Portfolio or its shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Portfolio receives your purchase order.

Each Portfolio (except the OVB Prime Obligations Portfolio) calculates its NAV
once each Business Day at the regularly-scheduled close of normal trading on the
New York Stock Exchange (normally, 4:00 p.m. Eastern time). So, for you to
receive the current Business Day's NAV, generally a Portfolio must receive your
purchase order before 4:00 p.m. Eastern time.

The OVB Prime Obligations Portfolio calculates its NAV once each Business Day at
12:00 noon Eastern time. So, for you to be eligible to receive dividends
declared on the day you submit your purchase order, generally the Portfolio must
receive your order before 12:00 noon Eastern time.

HOW WE CALCULATE NAV

NAV for one Portfolio share is the value of that share's portion of all of the
assets in the Portfolio.

In calculating NAV, a Portfolio generally values its investment portfolio at
market price (except the OVB Prime Obligation Portfolio). If market prices are
unavailable or a Portfolio thinks that they are unreliable, fair value prices
may be determined in good faith using methods approved by the Board of Trustees.

In calculating NAV for the OVB Prime Obligation Portfolio, we generally value
the Portfolio's investment portfolio using the amortized cost valuation method,
which is described in detail in our Statement of Additional Information. If
this method is determined to be unreliable during certain market conditions or
for other reason, the Portfolio may value its securities at market price or fair
value prices may be determined in good faith using methods approved by the Board
of Trustees.

MINIMUM PURCHASES

To purchase shares for the first time, you must invest in any Portfolio at
least:

<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Class A Shares $100,000
Class B Shares $1,000
</TABLE>

Your subsequent investments in any Portfolio must be made in amounts of at least
$50, except purchases through the automatic investment plan which must be made
in amounts of at least $100.

A Fund may accept investments of smaller amounts for either class of shares at
our discretion.

Page 29 of 36

<PAGE>

AUTOMATIC INVESTMENT PLAN (CLASS B ONLY)

If you have a checking or savings account with a bank, you may purchase Class B
Shares automatically through regular deductions from your account in amounts of
at least $100 per month.

HOW TO SELL YOUR PORTFOLIO SHARES

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

If you own your shares directly, you may sell your shares on any Business Day
by contacting a Portfolio directly by mail or telephone at 1-800-808-4920.

If you would like to sell $50,000 or more of your shares, or have your sale
proceeds sent to a third party or an address other than your own, please notify
the Portfolio in writing and include a signature guarantee by a bank or other
financial institution (a notarized signature is not sufficient).

The sale price of each share will be the next NAV determined after the
Portfolio receives your request.

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly,
semi-annual or annual automatic withdrawals of at least $50 from any Portfolio.
The proceeds of each withdrawal will be mailed to you by check or, if you have
a checking or savings account with a bank, electronically transferred to your
account.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within seven days after we receive
your request. Your proceeds can be wired to your bank account (subject to a
$10 fee) or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY
CHECK OR THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK
HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).

REDEMPTIONS IN KIND

We generally pay sale (redemption) proceeds in cash. However, under unusual
conditions that make the payment of cash unwise (and for the protection of the
Fund's remaining shareholders) we might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). It is highly unlikely that your shares would ever be
redeemed in kind, but if they were you would probably have to pay transaction
costs to sell the securities distributed to you, as well as taxes on any
capital gains from the sale as with any redemption.

Page 30 of 36

<PAGE>

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum, the Fund may redeem
your shares. The account balance minimums are:

<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Class A Shares $100,000
Class B Shares $1,000
</TABLE>

But, the Fund will always give you at least 60 days' written notice to give you
time to add to your account and avoid the involuntary redemption of your
shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

A Portfolio may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in our Statement of Additional Information.

Page 31 of 36

<PAGE>

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.

You may also exchange shares through your financial institution by mail or
telephone.

IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE
TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15
DAYS FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or
canceled at any time upon 60 days' notice.

When you exchange shares, you are really selling your shares and buying other
Portfolio shares. So, your sale price and purchase price will be based on the
NAV next calculated after the Portfolio receives your exchange request.

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Portfolio shares over the telephone is
extremely convenient, but not without risk. Although the Portfolio has certain
safeguards and procedures to confirm the identity of callers and the
authenticity of instructions, the Portfolio is not responsible for any losses
or costs incurred by following telephone instructions we reasonably believe to
be genuine. If you or your financial institution transact with the Portfolio
over the telephone, you will generally bear the risk of any loss.

DISTRIBUTION OF PORTFOLIO SHARES

Each Portfolio has adopted a distribution plan that allows the Portfolio to pay
distribution and service fees for the sale and distribution of Class B Shares,
and for services provided to Class B shareholders. Because these fees are paid
out of a Portfolio's assets continuously, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.

Distribution fees, as a percentage of average daily net assets are .25% for
Class B Shares.

The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source
available to it. Under any such program, the Distributor may provide
incentives, in the form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to dealers selling shares of a
Portfolio.

Page 32 of 36

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio distributes its income as follows:

<TABLE>
<S> <C>
OVB Equity Income Portfolio Quarterly
OVB Capital Appreciation Portfolio Quarterly
OVB Government Securities Portfolio Monthly
OVB West Virginia Tax-Exempt Income Portfolio Monthly
OVB Prime Obligations Portfolio Monthly
</TABLE>

Each Portfolio makes distributions of capital gains, if any, at least annually.
If you own Portfolio shares on a Portfolio's record date, you will be entitled
to receive the distribution.

You will receive dividends and distributions in the form of additional
Portfolio shares unless you elect to receive payment in cash. To elect cash
payment, you must notify the Portfolio in writing prior to the date of the
distribution. Your election will be effective for dividends and distributions
paid after the Portfolio receives your written notice. To cancel your
election, simply send the Portfolio written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT
FEDERAL, STATE AND LOCAL INCOME TAXES. Below we have summarized some important
tax issues that affect the Funds and their shareholders. This summary is based
on current tax laws, which may change.

Each Portfolio will distribute substantially all of its income and capital
gains, if any. The dividends and distributions you receive may be subject to
federal, state and local taxation, depending upon your tax situation.
Distributions you receive from a Portfolio may be taxable whether or not you
reinvest them. EACH SALE OR EXCHANGE OF PORTFOLIO SHARES IS A TAXABLE EVENT.

The OVB West Virginia Tax-Exempt Income Portfolio intends to distribute income
that is exempt from both federal taxes and West Virginia state taxes. The
Portfolio may invest a portion of its assets in securities that generate
taxable income for federal or state income taxes. Any capital gains
distributed by the Portfolio may be taxable.

MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.

Page 33 of 36

<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A Shares and
Class B Shares of each Portfolio. This information is intended to help you
understand each Portfolio's financial performance for the past five years, or,
if shorter, the period of the Portfolio's operations. Some of this information
reflects financial information for a single Portfolio share. The total returns
in the tables represent the rate that you would have earned (or lost) on an
investment in a Portfolio, assuming you reinvested all of your dividends and
distributions. This information has been audited by PricewaterhouseCoopers
LLP, independent public accountants. Their report, along with each
Portfolio's financial statements, appears in the annual report that accompanies
our Statement of Additional Information. You can obtain the annual report,
which contains more performance information, at no charge by calling
1-800-808-4920.

Page 34 of 36

<PAGE>

THE ARBOR FUND
OVB FAMILY OF FUNDS

INVESTMENT ADVISER
One Valley Bank
One Valley Square
P.O. Box 1793
Charleston, West Virginia 25326

DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about the OVB Family of Funds is available without charge
through the following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated May 31, 1999, includes detailed information about the OVB Family
of Funds. The SAI is on file with the SEC and is incorporated by reference
into this prospectus. This means that the SAI, for legal purposes, is a part
of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

These reports list each Portfolio's holdings and contain information from the
Portfolio's managers about strategies, and recent market conditions and trends.
The reports also contain detailed financial information about the Portfolios.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE: Call 1-800-545-6331

BY MAIL: Write to us
The OVB Family of Funds
c/o The Arbor Fund
P.O. Box 419947
Kansas City, Missouri 64141-6947

Page 35 of 36

<PAGE>

BY INTERNET: www.onevalley.com

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual
reports, as well as other information about The Arbor Fund, from the SEC's
website ("http://www.sec.gov"). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009. The Arbor Fund's Investment Company Act
registration number is 811-7102.

Page 36 of 36

<PAGE>

OVB FAMILY OF FUNDS

Trust: THE ARBOR FUND

Portfolios: OVB EQUITY INCOME PORTFOLIO
OVB CAPITAL APPRECIATION PORTFOLIO
OVB GOVERNMENT SECURITIES PORTFOLIO
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO
OVB PRIME OBLIGATIONS PORTFOLIO

Investment Adviser: ONE VALLEY BANK, NATIONAL ASSOCIATION

STATEMENT OF ADDITIONAL INFORMATION

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus; it provides
information about the activities and operations of the OVB Family of Funds (the
"Funds"), a group of mutual funds consisting of separate series of The Arbor
Fund (the "Trust"). This Statement of Additional Information should be read in
conjunction with the Funds' Prospectus dated May 31, 1999. A Prospectus may be
obtained by calling 1-800-545-6331.

TABLE OF CONTENTS

THE FUNDS AND THE TRUST
INVESTMENT OBJECTIVES
INVESTMENT POLICIES AND INFORMATION
GENERAL INVESTMENT POLICIES AND RISK FACTORS
DESCRIPTION OF PERMITTED INVESTMENTS
INVESTMENT LIMITATIONS
THE ADVISER
THE SUB-ADVISER
THE ADMINISTRATOR
THE DISTRIBUTOR
THE TRANSFER AGENT
THE CUSTODIAN
INDEPENDENT ACCOUNTANTS
LEGAL COUNSEL
TRUSTEES AND OFFICERS OF THE TRUST
PERFORMANCE INFORMATION
COMPUTATION OF YIELD

S-1
<PAGE>

CALCULATION OF TOTAL RETURN
PURCHASE AND REDEMPTION OF SHARES
DETERMINATION OF NET ASSET VALUE
TAXES
PORTFOLIO TRANSACTIONS
TRADING PRACTICES AND BROKERAGE
DESCRIPTION OF SHARES
SHAREHOLDER LIABILITY
LIMITATION OF TRUSTEES' LIABILITY
5% AND 25% SHAREHOLDERS
EXPERTS
FINANCIAL STATEMENTS
DESCRIPTION OF RATINGS

May 31, 1999

[OVB-F-004-06]

S-2
<PAGE>

THE FUNDS AND THE TRUST

This Statement of Additional Information relates to the OVB Family of Funds
(the "Funds"), a group of mutual funds. The Funds consist of: the OVB Equity
Income Portfolio, the OVB Capital Appreciation Portfolio, the OVB Government
Securities Portfolio (the "Government Portfolio"), the OVB West Virginia
Tax-Exempt Income Portfolio (the "West Virginia Portfolio") and the OVB Prime
Obligations Portfolio (the "Prime Obligations Portfolio") (each, a
"Portfolio," and collectively the "Portfolios"). The Portfolios may also be
referred to as follows: the Equity Income and Capital Appreciation
Portfolios as the "Equity Portfolios," the Government and West Virginia
Portfolios as the "Fixed Income Portfolios" and the Prime Obligations
Portfolio as the "Money Market Portfolio." For ease of reference, the letters
"OVB" have been omitted from the Portfolios' names throughout this Statement
of Additional Information. Each Portfolio is a separate series of The Arbor
Fund (the "Trust"). The Trust is an open-end management investment company
established under Massachusetts law as a "Massachusetts business trust" under
an Agreement and Declaration of Trust dated as of July 24, 1992 (the
"Declaration of Trust"). The Declaration of Trust permits the Trust to offer
separate series of units of beneficial interest ("shares") and different
classes of shares of each series. Each series is a separate mutual fund.
Except for differences between the Class A and Class B shares of the
Portfolios pertaining to dividends, voting rights and distribution plans,
each share of each Portfolio represents an equal proportionate interest in
that Portfolio. See "Description of Shares." Capitalized terms not defined
herein are defined in the Prospectus. No investment in shares of a Portfolio
should be made without first reading the Prospectus.

Each Portfolio pays its operating expenses, including fees of its service
providers, audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services
and registering the shares under federal and state securities laws, pricing and
insurance expenses, and pays additional expenses including litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.

INVESTMENT OBJECTIVES

The EQUITY INCOME PORTFOLIO -- The investment objective of the Equity Income
Portfolio is current income, with the secondary goal of moderate capital
appreciation.

The CAPITAL APPRECIATION PORTFOLIO --The investment objective of each of the
Capital Appreciation Portfolio is long-term growth of capital.

The GOVERNMENT PORTFOLIO -- The investment objective of the Government Portfolio
is current income consistent with the preservation of capital.

S-3
<PAGE>

The WEST VIRGINIA PORTFOLIO -- The investment objective of the West Virginia
Portfolio is current income, exempt from both federal income taxes and West
Virginia personal income taxes, consistent with the preservation of capital.

The PRIME OBLIGATIONS PORTFOLIO -- The investment objective of the Prime
Obligations Portfolio is to preserve principal value and maintain a high degree
of liquidity while providing current income. The Portfolio also expects to
maintain a constant net asset value of $1.00 per share on a continuous basis.

Each Portfolio's investment objective is a fundamental policy of that Portfolio,
and it is a fundamental policy of the West Virginia Portfolio to invest at least
80% of its net assets in Municipal Securities the interest on which is not an
alternative minimum tax preference item. Fundamental policies of a Portfolio
cannot be changed with respect to that Portfolio without the consent of the
holders of a majority of the Portfolio's outstanding shares. There can be no
assurance that any Portfolio will be able to achieve its investment objective.

INVESTMENT POLICIES AND INFORMATION

OVB EQUITY INCOME PORTFOLIO

The EQUITY INCOME PORTFOLIO will, under normal market conditions, invest at
least 65% of its total assets in dividend-paying common stocks, preferred
stocks, and preferred stocks and debt securities convertible into common stock
of U.S. and foreign issuers. These equity securities may include American
Depositary Receipts ("ADRs") and interests of investment trusts, such as
"Diamonds" and "SPDRs."

Any remaining assets may be invested in the following securities, but only if,
at the time of purchase, the security either has the requisite rating from a
nationally recognized statistical rating organization (an "NRSRO") or is of
comparable quality as determined by the Adviser: (i) U.S. Government securities
(ii) mortgage-backed securities rated in one of the four highest rating
categories, (iii) asset-backed securities rated in one of the four highest
rating categories, (iv) corporate bonds and notes and bank obligations rated in
one of the four highest rating categories, (v) money market instruments, (vi)
warrants and rights to purchase common stocks and (vii) shares of other
investment companies.

The Portfolio may purchase securities that do not pay current dividends but
which offer prospects for growth of capital and future income. The Portfolio is
not subject to any maturity restrictions on its investment in non-money market
instruments.

The Adviser will generally select for the Portfolio, securities of companies
with market capitalizations in excess of $5 billion that provide a level of
income which is greater than the average income provided by the Standard &
Poor's 500 Composite Index (the "S&P 500 Index"). The Adviser also intends to
maintain for the Portfolio an aggregate beta (a measure of a stock's

S-4
<PAGE>

volatility in relation to the S&P 500 Index) and price/earnings ratio less than
the S&P 500 Index average.

All of the equity securities in which the Portfolio invests (including foreign
securities) are traded in the United States or Canada either on registered
exchanges or actively in the over-the-counter market.

OVB CAPITAL APPRECIATION PORTFOLIO

The CAPITAL APPRECIATION PORTFOLIO will, under normal market conditions, invest
at least 65% of its total assets in common stocks, warrants to purchase common
stocks, debt securities convertible to common stocks, preferred stocks
convertible to common stocks and interests in investment trusts, such as
Diamonds and SPDRs (together, "Equity Securities") of U.S. and foreign issuers.
Equity Securities of foreign issuers may include ADRs. Any assets not invested
in Equity Securities may be invested in money market instruments.

The Adviser will generally select for the Capital Appreciation Portfolio
securities of large- and medium-sized companies that have exhibited an
established record of growth and that, in the Adviser's opinion, will continue
to present significant growth potential. Such companies generally have market
capitalizations in excess of $1 billion, and annual revenues in excess of $500
million. The Adviser may also seek to increase potential returns by identifying
"niche" companies in diverse industries and by identifying demographic,
economic, and political trends that will provide future investment
opportunities. The Adviser may consider factors such as an issuer's development
(or potential for development) of new products, any new management, or any
business restructuring, and may also consider the potential for increased
institutional ownership. The Adviser may, but will not necessarily, consider
dividend income when selecting Equity Securities for the Portfolio.

All of the Equity Securities in which the Capital Appreciation Portfolio invests
(including foreign securities) are traded in the United States or Canada either
on registered exchanges or actively in the over-the-counter market.

For the fiscal year ended January 31, 1999, the Portfolio's annual turnover rate
was ____%. Such a turnover rate may result in higher transaction costs and may
result in additional taxes for shareholders. See "Taxes." (If turnover rate is
under 100% -- delete paragraph)

OVB GOVERNMENT SECURITIES PORTFOLIO

The GOVERNMENT PORTFOLIO will, under normal market conditions, invest at least
65% of its total assets in obligations issued or guaranteed as to principal and
interest by the United States Government, its agencies or instrumentalities
("U.S. Government securities"), including U.S. Treasury obligations, U.S.
Government agency obligations and repurchase agreements involving such
securities. For a more detailed description, see "Description of Permitted
Investments."

S-5
<PAGE>

The remainder of the Portfolio's assets may be invested in the following
securities but only if, at the time of purchase, the security either has the
requisite rating from an NRSRO or is of comparable quality as determined by the
Adviser: (i) corporate fixed income obligations rated in one of the four
highest rating categories by an NRSRO; (ii) privately issued mortgage-backed
securities rated in one of the two highest rating categories by an NRSRO; (iii)
asset-backed securities rated in one of the two highest rating categories by an
NRSRO; (iv) receipts evidencing separately traded interest and principal
component parts of U.S. Government securities, including STRIPs ("Receipts");
(v) repurchase agreements involving any of the foregoing securities; (vi)
investment quality guaranteed investment contracts; (vii) common stocks of
utility companies; (viii) preferred stocks; (ix) taxable municipal securities
rated in one of the two highest rating categories by an NRSRO; and (x) Money
Market Instruments.

The Government Portfolio will not invest more than 20% of its total assets in
common and preferred stocks of utility companies. In addition the Government
Portfolio may invest up to 5% of its total assets in preferred stocks of issuers
in other industries.

Normally, the Portfolio will maintain a dollar-weighted average portfolio
maturity of three to ten years, and the Adviser generally expects this maturity
to range from five to ten years; however, under certain circumstances this
weighted average maturity may fall below three years or rise above ten years.
In determining the maturity of mortgage-backed securities, the Adviser will use
the estimated average life of such securities. There are no restrictions on the
maturity of any single instrument.

OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO

The WEST VIRGINIA PORTFOLIO will, under normal market conditions, invest at
least 80% of its net assets in fixed income securities the interest on which, in
the opinion of bond counsel for the issuer, is exempt from federal income tax
and is not a preference item for purposes of the federal alternative minimum tax
("Municipal Securities"). Under normal conditions, the Portfolio will invest at
least 65% of its total assets in Municipal Securities the interest on which is
also exempt from West Virginia personal income tax ("West Virginia Municipal
Securities"). The Portfolio reserves the right to invest up to 20% of its net
assets in (i) Municipal Securities the interest on which is a preference item
for federal alternative minimum tax purposes and (ii) taxable investments
consisting of the types of securities in which the Government Portfolio may
invest. For temporary defensive purposes when, in the opinion of the Adviser,
West Virginia Municipal Securities are not readily available or of sufficient
quality, the Portfolio may invest up to 100% of its assets in securities the
interest on which is exempt only from federal income taxes; other permissible
temporary defensive investments, which are taxable, are discussed in
"Description of Permitted Investments -- Special Factors Relating to West
Virginia Municipal Securities" in this Statement of Additional Information.

The West Virginia Portfolio may purchase the following types of Municipal
Securities (including

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West Virginia Municipal Securities) only if such securities, at the time of
purchase, either have the requisite rating from an NRSRO or are of comparable
quality as determined by the Adviser: (i) municipal bonds in one of the four
highest rating categories; (ii) municipal notes and certificates of
participation in one of the two highest rating categories; and (iii) tax-exempt
commercial paper in one of the two highest rating categories. The Portfolio may
also purchase other types of tax-exempt instruments provided that, at the time
of their purchase, the Adviser determines that they are of quality comparable to
the ratings stated above.

The Portfolio reserves the right to engage in transactions involving "puts" or
standby commitments. There will be no limit to the percentage of portfolio
securities that the West Virginia Portfolio may purchase subject to a put but
the amount paid directly or indirectly for puts which are not integral parts of
the security as originally held in the Portfolio will not exceed 0.5% of the
value of the total assets of the Portfolio calculated immediately after such put
is acquired. When entering into standby commitments, the Portfolio will set
aside sufficient assets to pay for all standby commitments on their scheduled
delivery dates.

NON-DIVERSIFICATION -- Investment in the West Virginia Portfolio, a
non-diversified investment company, may entail greater risk than would
investment in a diversified investment company because the concentration in
securities of relatively few issuers could result in greater fluctuation in the
total market value of the Portfolio's holdings. Any economic, political, or
regulatory developments affecting the value of the securities that the Portfolio
holds could have a greater impact on the total value of the Portfolio's holdings
than would be the case if the portfolio securities were diversified among more
issuers.

The Portfolio intends to comply with the diversification requirements of
Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").

OVB PRIME OBLIGATIONS PORTFOLIO

The PRIME OBLIGATIONS PORTFOLIO intends to comply with regulations of the
Securities and Exchange Commission applicable to money market funds. These
regulations impose certain quality, maturity and diversification restraints on
investments by the Portfolio. Under these regulations, the Portfolio will
invest in only United States dollar denominated securities, will maintain a
dollar-weighted average portfolio maturity of 90 days or less, and will acquire
only "eligible securities" having a maturity of 397 days or less. As a money
market fund, the Portfolio is subject to additional diversification
requirements. See "Description of Permitted Investments-- Restraints on
Investments by Money Market Funds."

The Prime Obligations Portfolio intends to invest exclusively in (i) bills,
notes, and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
Federal Book-Entry System ("U.S. Treasury Obligations"); (ii) obligations issued
or guaranteed as to principal and interest by the agencies or instrumentalities
of the United States Government; (iii) receipts evidencing separately traded

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interest and principal component parts of the U.S. Government obligations;
(iv) commercial paper of United States or foreign issuers, including
asset-backed securities rated in the two highest short-term rating categories
at the time of investment or, if not rated, as determined by the sub-adviser
to be of comparable quality; (v) obligations (certificates of deposit, bank
notes, time deposits, bankers' acceptances, European certificates of deposit,
European time deposits, Canadian time deposits, Eurodollar obligations and
Yankee Bank obligations) of U.S. commercial banks, U.S. savings and loan
institutions and U.S. and London branches of foreign banks that have total
assets of $1 billion or more as shown on their most recently published
financial statements (the Portfolio may not invest more than 25% of its total
assets in obligations issued by foreign branches of U.S. banks and London
branches of foreign banks); (vi) U.S. dollar denominated obligations of
foreign governments including Canadian and Provincial Government and Crown
Agency obligations; (vii) short-term corporate obligations of United States
and foreign issuers with commercial paper of comparable quality and security
that meet the above ratings or, if not rated, determined by the sub-adviser
to be of comparable quality; (viii) repurchase agreements involving any of
the foregoing obligations; (ix) short-term obligations issued by state and
local governmental issuers, which are rated, at the time of investment, by at
least two NRSROs in one of the two highest municipal bond rating categories,
and carry yields that are competitive with those of other types of money
market instruments of comparable quality and security that meet the above
ratings or, if not rated, determined by the sub-adviser to be of comparable
quality; (x) obligations of supranational entities satisfying the credit
standards described above or, if not rated, determined by the Adviser to be
of comparable quality; and (xi) shares of other investment companies. Under
applicable law, the Portfolio may not invest more than 10% of its total
assets in shares of other investment companies, and investment in such shares
may result in layering of expenses.

The Portfolio may invest up to 10% of its net assets in illiquid securities,
including restricted securities. Restricted securities, including Rule 144A
Securities and Section 4(2) commercial paper, that meet the criteria established
by the Board of Trustees of the Trust will be considered liquid.

The Portfolio may also engage in forward commitments or purchase securities on a
when-issued basis.

GENERAL INVESTMENT POLICIES AND RISK FACTORS

The Equity Income Portfolio and the Government and West Virginia Portfolios
("Fixed Income Portfolios") may purchase mortgage-backed securities ("MBSs").
These Portfolios may purchase MBSs that are U.S. Government securities, and the
Government Portfolio may also invest in privately issued collateralized mortgage
obligations ("CMOs"), a type of MBS, and real estate mortgage investment
conduits ("REMICs"), a type of CMO, that are rated by an NRSRO in one of its two
highest rating categories. The Equity Income Portfolio may also invest in
privately

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issued CMOs and REMICs that are rated by an NRSRO in one of the four highest
rating categories. The principal governmental issuers or guarantors of MBSs are
the Government National Mortgage Association ("GNMA"), Federal National Mortgage
Association ("FNMA"), and Federal Home Loan Mortgage Corporation ("FHLMC").
Obligations of GNMA are backed by the full faith and credit of the United States
Government while obligations of FNMA or FHLMC are supported by the respective
issuer only. The Portfolios may purchase MBSs that are backed or collateralized
by fixed, adjustable or floating rate mortgages. For a further description of
mortgage-backed securities and the risks associated with investing in them, see
"Description of Permitted Investments."

The Fixed Income Portfolios may, in acquiring fixed income securities, seek
opportunities for capital gain as well as income in light of such Portfolios'
investment objectives. Investors in the West Virginia Portfolio should note
that capital gains are taxable income. Appreciation in the value of these
securities could arise from a number of market and economic factors, such as
changes in interest rates generally or in the yield curve, improvement in an
issuer's financial situation or perceptions in the market about the impact of
economic developments on particular issuers or industries. There is no
assurance that any Portfolio will, in fact, realize capital gains.

The Equity Income, Fixed Income and Money Market Portfolios may invest in
variable and floating rate obligations and may purchase securities on a
when-issued basis. The Equity Income Portfolio may also engage in forward
commitments. The Equity Portfolios and the Government Portfolio may engage in
options transactions, and the Equity Income and Government Portfolios may also
engage in futures transactions (including options on futures), in either case
for hedging purposes. The aggregate value of option positions may not exceed
10% of a Portfolio's net assets as of the time the Portfolio enters into such
options. Each Portfolio except the Money Market Portfolio may use short sales
"against the box" for hedging purposes.

Each Portfolio reserves the right to engage in securities lending, although no
Portfolio has the present intent of doing so.

Each Portfolio other than the Money Market Portfolio may invest a portion of its
assets in the following money market instruments ("Money Market Instruments"):
short-term U.S. Government securities; Receipts; time deposits, certificates of
deposit and bankers' acceptances issued by U.S. commercial banks or savings and
loan institutions having assets of at least $500 million as shown on their most
recently available audited financial statements; commercial paper that, at the
time of purchase, is either rated in one of the two highest rating categories by
an NRSRO or of comparable quality as determined by the Adviser; and repurchase
agreements involving the foregoing securities. In addition, each Portfolio may
invest in shares of other investment companies. Under applicable law, no
Portfolio may invest more than 10% of its total assets in shares of other
investment companies, and investments in such shares may result in layering of
expenses. Further discussion of a Portfolio's ability to invest in such shares
is set out in this Statement of Additional Information. In addition, for
temporary defensive purposes when the Adviser determines that market conditions

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warrant, each Portfolio except the Money Market Portfolio may invest up to 100%
of its assets in Money Market Instruments and cash. To the extent a Portfolio
is investing for temporary defensive purposes, the Portfolio will not be
pursuing its investment objective.

For a further description of these types of obligations or transactions, see
"Description of Permitted Investments" in this Statement of Additional
Information.

Debt rated in the fourth highest category by an NRSRO 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 debt in this category than in higher rated categories. Such
debt lacks outstanding investment characteristics and in fact has speculative
characteristics as well.

In the event that a security owned by a Portfolio is downgraded below the rating
categories discussed above, the Adviser will review the circumstances and take
action it deems appropriate with respect to such security.

RISK FACTORS

EQUITY SECURITIES--Investments in equity securities in general are subject to
market risks that may cause their prices to fluctuate over time. The value of
convertible equity securities is also affected by prevailing interest rates, the
credit quality of the issuer and any call provision. Fluctuations in the value
of equity securities in which the Equity Portfolios invest will cause the net
asset value of these Portfolios to fluctuate. An investment in any of these
Portfolios may be more suitable for long-term investors who can bear the risk of
short-term principal fluctuations.

The Capital Appreciation and Equity Income Portfolios will invest primarily in
securities of large- and medium-sized companies. While the Adviser intends to
invest each Portfolio's assets in companies that the Adviser's research
indicates should, over the long term, provide significant growth potential, any
investment in medium capitalization companies involves greater risk than that
customarily associated with investments in larger, more established companies.
This increased risk may be due to the greater business risks of smaller size,
limited markets and financial resources, narrow product lines and lack of depth
of management. The securities of medium-sized companies are often traded in the
over-the-counter market and if listed on a national securities exchange may not
be traded in volumes typical for that exchange. Thus, the securities of
medium-sized companies are likely to be less liquid, and subject to more abrupt
or erratic market movements, than securities of larger, more established
companies. As a result, the value of the shares of either of these Portfolios
can be expected to fluctuate more than the value of shares of an investment
company investing solely in larger, more established companies.

FIXED INCOME SECURITIES--The market value of the fixed income investments in
which the Fixed Income and Money Market Portfolios invest will change in
response to interest rate changes and

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other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Moreover, while securities with longer maturities tend to produce higher yields,
the prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal also affect the value of these
investments. Changes in the value of these securities will not necessarily
affect cash income derived from these securities but will affect a Portfolio's
net asset value. Each of the Fixed Income Portfolios may invest in securities
rated in the fourth highest category by an NRSRO; such securities, while still
investment grade, are considered to have speculative characteristics. See the
Appendix.

SECURITIES OF FOREIGN ISSUERS--Investments in the securities of foreign issuers
may subject an Equity Portfolio or the Money Market Portfolio to investment
risks that differ in some respects from those related to investments in
securities of U.S. issuers. Such risks include future adverse political and
economic developments, possible imposition of withholding taxes on income,
possible seizure, nationalization or expropriation of foreign deposits, possible
establishment of exchange controls or taxation at the source or greater
fluctuation in value due to changes in exchange rates. Foreign issuers of
securities often engage in business practices different from those of domestic
issuers of similar securities, and there may be less information publicly
available about foreign issuers. In addition, foreign issuers are, generally
speaking, subject to less government supervision and regulation and different
accounting treatment than are those in the United States. ADRs, typically
issued by a U.S. financial institution, evidence ownership of underlying
securities of a foreign issuer.

MORTGAGE-BACKED SECURITIES--The MBSs in which the Equity Income Portfolio and
the Fixed Income Portfolios may invest are subject to prepayment of the
underlying mortgages. During periods of declining interest rates, prepayment of
mortgages underlying MBSs can be expected to accelerate. When the MBSs held by
a Portfolio are prepaid, the Portfolio must reinvest the proceeds in securities
the yield of which reflects prevailing interest rates, which may be lower than
the yield on the prepaid MBSs.

GOVERNMENT SECURITIES--Any guarantee by the U.S. Government or its agencies or
instrumentalities of the securities in which any Portfolio invests guarantees
only the payment of principal and interest on the guaranteed security and does
not guarantee the yield or value of that security or the yield or value of
shares of that Portfolio.

DESCRIPTION OF PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

ADRs are securities, typically issued by a U.S. financial institution (a
"depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer and

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deposited with the depositary. ADRs may be available through "sponsored" or
"unsponsored" facilities. A sponsored facility is established jointly by the
issuer of the security underlying the receipt and a depositary, whereas an
unsponsored facility may be established by a depositary without participation by
the issuer of the receipt's underlying security. Holders of an unsponsored
depositary receipt generally bear all the costs of the unsponsored facility.
The depositary of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of the deposited
security or to pass through, to the holders of the receipts, voting rights with
respect to the deposited securities.

ASSET-BACKED SECURITIES

Asset-backed securities are securities secured by non-mortgage assets such as
company receivables, truck and auto loans, leases and credit card receivables.
Such securities are generally issued as passthrough certificates, which
represent undivided fractional ownership interests in the underlying pools of
assets. Such securities also may be debt instruments, which are also known as
collateralized obligations and are generally issued as the debt of a special
purpose entity, such as a trust, organized solely for the purpose of owning such
assets and issuing such debt.

Asset-backed securities are not issued or guaranteed by the United States
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the issuers
of such securities. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, there is a risk that another party could acquire an
interest in the obligations superior to that of the holders of the asset-backed
securities. There also is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on those
securities. Asset-backed securities entail prepayment risk, which may vary
depending on the type of asset, but is generally less than the prepayment risk
associated with mortgage-backed securities. In addition, credit card receivables
are unsecured obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANK OBLIGATIONS

The Portfolios are not prohibited from investing in obligations of banks that
are clients of SEI Corporation ("SEI"). However, the purchase of shares of the
Portfolios by such banks or by their customers will not be a consideration in
determining which bank obligations the Portfolios will purchase. The Portfolios
will not purchase obligations of the Adviser.

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BANKERS' ACCEPTANCE

CERTIFICATE OF DEPOSIT

Certificates of deposit are interest-bearing instruments with a specific
maturity. They are issued by banks and savings and loan institutions in
exchange for the deposit of funds and normally can be traded in the secondary
market prior to maturity. Certificates of deposit with penalties
for early withdrawal will be considered illiquid.

COMMERCIAL PAPER

Commercial paper is a term used to describe unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues
vary from a few to 270 days.

CONVERTIBLE SECURITIES

Convertible securities are corporate securities that are exchangeable for a set
number of another security at a prestated price. Convertible securities
typically have characteristics of both fixed-income and equity securities.
Because of the conversion feature, the market value of a convertible security
tends to move with the market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest rates, the credit
quality of the issuer, and any call provisions.

DERIVATIVES

Derivatives are securities that derive their value from other securities. The
following are considered derivative securities: options on futures, futures,
options (E.G., puts and calls), swap agreements, mortgage-backed securities
(CMOs, REMICs, IOs and POs), when-issued securities and forward commitments,
floating and variable rate securities, convertible securities, "stripped" U.S.
Treasury securities (E.G., Receipts and STRIPs), privately issued stripped
securities (E.G., TGRs, TRs and CATS). See elsewhere in this "Description of
Permitted Investments" and "General Investment Policies and Risk Factors" for
discussions of these various instruments.

FUTURES AND OPTIONS ON FUTURES

Futures contracts provide for the future sale by one party and purchase by
another party of a specified amount of a specific security at a specified future
time and at a specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a position in a
futures contract at a specified exercise price during the term of the option. A

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Portfolio may use futures contracts and related options for BONA FIDE hedging
purposes, to offset changes in the value of securities held or expected to be
acquired or be disposed of, to minimize fluctuations in foreign currencies, or
to gain exposure to a particular market or instrument. A Portfolio will
minimize the risk that it will be unable to close out a futures contract by only
entering into futures contracts which are traded on national futures exchanges.

Stock index futures are futures contracts for various stock indices that are
traded on registered securities exchanges. A stock index futures contract
obligates the seller to deliver (and the purchaser to take) an amount of cash
equal to a specific dollar amount times the difference between the value of a
specific stock index at the close of the last trading day of the contract and
the price at which the agreement is made.

There are risks associated with these activities, including the following: (1)
the success of a hedging strategy may depend on an ability to accurately predict
movements in the prices of individual securities, fluctuations in markets and
movements in interest rates, (2) there may be an imperfect or no correlation
between the changes in market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may not be a liquid
secondary market for a futures contract or option, (4) trading restrictions or
limitations may be imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and futures options.

A Portfolio may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission so
long as, to the extent that such transactions are not for "bona fide hedging
purposes," the aggregate initial margin and premiums on such positions
(excluding the amount by which such options are in the money) do not exceed 5%
of the Portfolio's net assets. A Portfolio may buy and sell futures contracts
and related options to manage its exposure to changing interest rates and
securities prices. Some strategies reduce a Portfolio's exposure to price
fluctuations, while others tend to increase its market exposure. Futures and
options on futures can be volatile instruments and involve certain risks that
could negatively impact a Portfolio's return.

GOVERNMENT NATIONAL MORTGAGE ASSOCIATION ("GNMA") CERTIFICATES

All Portfolios may invest in securities issued by GNMA, a wholly-owned U.S.
Government corporation that guarantees the timely payment of principal and
interest. The market value and interest yield of these instruments can vary due
to market interest rate fluctuations and early prepayments of underlying
mortgages. These securities represent ownership in a pool of federally insured
mortgage loans. GNMA certificates consist of underlying mortgages with a maximum
maturity of 30 years. However, due to scheduled and unscheduled principal
payments, GNMA certificates have a shorter average maturity and, therefore, less
principal volatility than a comparable 30-year bond. Since prepayment rates vary
widely, it is not possible to predict

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accurately the average maturity of a particular GNMA pool. The scheduled monthly
interest and principal payments relating to mortgages in the pool will be
"passed through" to investors. GNMA securities differ from conventional bonds in
that principal is paid back to the certificate holders over the life of the loan
rather than at maturity. As a result, there will be monthly scheduled payments
of principal and interest. In addition, there may be unscheduled principal
payments representing prepayments on the underlying mortgages. Although GNMA
certificates may offer yields higher than those available from other types of
U.S. Government securities, GNMA certificates may be less effective than other
types of securities as a means of "locking in" attractive long-term rates
because of the prepayment feature. For instance, when interest rates decline,
the value of a GNMA certificate likely will not rise as much as comparable debt
securities due to the prepayment feature. In addition, these prepayments can
cause the price of a GNMA certificate originally purchased at a premium to
decline in price to its par value, which may result in a loss.

GUARANTEED INVESTMENT CONTRACTS ("GICS")

GICs are contracts issued by U.S. insurance companies. Pursuant to such
contracts, a Portfolio makes cash contributions to a deposit fund of the
insurance company's general account. The insurance company then credits to the
Portfolio on a monthly basis guaranteed interest at either a fixed, variable or
floating rate. A GIC provides that this guaranteed interest will not be less
than a certain minimum rate. A GIC is a general obligation of the issuing
insurance company and not a separate account. The purchase price paid for a GIC
becomes part of the general assets of the issuer, and the contract is paid at
maturity from the general assets of the issuer.

Generally, GICs are not assignable or transferable without the permission of the
issuing insurance companies. For this reason, an active secondary market in GICs
does not currently exist and GICs are considered to be illiquid investments.

ILLIQUID SECURITIES

Illiquid securities are securities that a Portfolio cannot dispose of within 7
days at approximately the price at which they are being carried on the
Portfolio's books. An illiquid security includes a demand
instrument with a demand notice period exceeding seven days, where there is no
secondary market for such security, and repurchase agreements with maturities
over seven days in length.

INVESTMENT COMPANIES, INCLUDING DIAMONDS AND SPDRS

Because of restrictions on direct investment by U.S. entities in certain
countries, investment in other investment companies may be the most practical or
only manner in which a portfolio can invest in the securities markets of those
countries. A Portfolio does not intend to invest in other investment companies
unless, in the judgment of its advisers, the potential benefits of such
investments exceed the associated costs relative to the benefits and costs
associated with direct

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investments in the underlying securities.

Investments in closed-end investment companies may involve the payment of
substantial premiums above the net asset value of such issuer's portfolio
securities, and are subject to limitations under the 1940 Act. As a shareholder
in an investment company, a Portfolio would bear its ratable share of that
investment company's expenses, including its advisory and administration fees.
A Portfolio may also incur tax liability to the extent it invests in the stock
of a foreign issuer that constitutes a "passive foreign investment company."

A Portfolio may purchase Dow Jones Industrial Average Model New Depositary
Shares ("Diamonds") and Standard & Poor's Depositary Receipts ("SPDRs").
Diamonds and SPDRs are securities that represent ownership in long-term unit
investment trusts ("UITs") that hold a portfolio of common stocks designed to
track the performance of the Dow Jones Industrial Average and Standard & Poor's
500 Composite Stock Price Index, respectively. The Portfolios' investments in
Diamonds and SPDRs are subject to limitations on investment in other investment
companies.

The prices of Diamonds and SPDRs are derived and based upon the securities held
by the particular UIT. Accordingly, the level of risk involved in the purchase
or sale of an SPDR is similar to the risk involved in the purchase or sale of
traditional common stock, with the exception that the pricing mechanism for
Diamonds and SPDRs is based on a basket of stocks. Disruptions in the markets
for the securities underlying Diamonds and SPDRs purchased or sold by a
Portfolio could result in losses. Trading in Diamonds and SPDRs involves risks
similar to those risks, described above under "Options," involved in the writing
of options on securities.

MORTGAGE-BACKED SECURITIES

Mortgage-backed securities are instruments that entitle the holder to a share
of all interest and principal payments from mortgages underlying the
security. The mortgages backing these securities include conventional
thirty-year fixed-rate mortgages, graduated payment mortgages and adjustable
rate mortgages. During periods of declining interest rates, prepayment of
mortgages underlying mortgage-backed securities can be expected to
accelerate. Prepayment of mortgages which underlie securities purchased at a
premium often results in capital losses, while prepayment of mortgages
purchased at a discount often results in capital gains. Because of these
unpredictable prepayment characteristics, it is often not possible to predict
accurately the average life or realized yield of a particular issue.

GOVERNMENT PASS-THROUGH SECURITIES -- These securities that are issued or
guaranteed by a U.S. Government agency represent an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, Fannie Mae and FHLMC. Fannie Mae and FHLMC obligations are
not backed by the full faith and credit of the U.S. Government as GNMA
certificates are, but Fannie Mae and FHLMC securities are supported by the

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instrumentalities' right to borrow from the U.S. Treasury. GNMA, Fannie Mae and
FHLMC each guarantees timely distributions of interest to certificate holders.
GNMA and Fannie Mae also each guarantees timely distributions of scheduled
principal. FHLMC has in the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC now issues
mortgage-backed securities (FHLMC Gold PCs) which also guarantee timely payment
of monthly principal reductions. Government and private guarantees do not extend
to the securities' value, which is likely to vary inversely with fluctuations in
interest rates.

PRIVATE PASS-THROUGH SECURITIES -- These are mortgage-backed securities issued
by a nongovernmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs"). While they are generally structured with one or more types
of credit enhancement, private pass-through securities typically lack a
guarantee by an entity having the credit status of a governmental agency or
instrumentality.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS") -- CMOs are debt obligations or
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans.
In a CMO, series of bonds or certificates are usually issued in multiple
classes. Principal and interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in a variety of ways.
Each class of a CMO, often referred to as a "tranche," is issued with a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets may cause CMOs to be
retired substantially earlier than their stated maturities or final distribution
dates, resulting in a loss of all or part of any premium paid.

REMICS -- A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by
Fannie Mae, FHLMC or GNMA represent beneficial ownership interests in a REMIC
trust consisting principally of mortgage loans or Fannie Mae, FHLMC or
GNMA-guaranteed mortgage pass-through certificates. For FHLMC REMIC
Certificates, FHLMC guarantees the timely payment of interest, and also
guarantees the payment of principal as payments are required to be made on the
underlying mortgage participation certificates. Fannie Mae REMIC Certificates
are issued and guaranteed as to timely distribution of principal and interest by
Fannie Mae. GNMA REMIC Certificates are backed by the full faith and credit of
the U.S. Government.

PARALLEL PAY SECURITIES; PAC BONDS -- Parallel pay CMOs and REMICs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating
the stated maturity date or final distribution date of each class, which must be
retired by its stated maturity date or final distribution date, but may

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be retired earlier. Planned Amortization Class CMOs ("PAC Bonds") generally
require payments of a specified amount of principal on each payment date. PAC
Bonds are always parallel pay CMOs with the required principal payment on such
securities having the highest priority after interest has been paid to all
classes.

REITS -- REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. The value of interests in REITs may be affected by
the value of the property owned or the quality of the mortgages held by the
trust.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS") -- SMBs are usually structured with
two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-only class ("IO"),
while the other class may receive all of the principal payments and is thus
termed the principal-only class ("PO"). The value of IOs tends to increase as
rates rise and decrease as rates fall; the opposite is true of Pos. SMBs are
extremely sensitive to changes in interest rates because of the impact thereon
of prepayment of principal on the underlying mortgage securities can experience
wide swings in value in response to changes in interest rates and associated
mortgage prepayment rates. During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a consistent basis.
The market for SMBs is not as fully developed as other markets; SMBs therefore
may be illiquid.

MUNICIPAL SECURITIES

Municipal securities consists of (i) debt obligations issued by or on behalf of
public authorities to obtain funds to be used for various public facilities, for
refunding outstanding obligations, for general operating expenses, and for
lending such funds to other public institutions and facilities, and (ii) certain
private activity and industrial development bonds issued by or on behalf of
public authorities to obtain funds to provide for the construction, equipment,
repair, or improvement of privately operated facilities.

General obligation bonds are backed by the taxing power of the issuing
municipality. Revenue bonds are backed by the revenues of a project or facility
(tolls from a toll bridge, for example). Certificates of participation represent
an interest in an underlying obligation or commitment such as an obligation
issued in connection with a leasing arrangement. The payment of principal and
interest on private activity and industrial development bonds generally is
dependent solely on the ability of the facility's user to meet its financial
obligations and the pledge, if any, of real and personal property so financed as
security for such payment.

Municipal securities include both municipal notes and municipal bonds.
Municipal notes include general obligation notes, tax anticipation notes,
revenue anticipation notes, bond anticipation notes, certificates of
indebtedness, demand notes and construction loan notes. Municipal bonds include
general obligation bonds, revenue or special obligation bonds, private activity
and industrial development bonds, and participation interests in municipal
bonds.

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SPECIAL FACTORS RELATING TO WEST-VIRGINIA MUNICIPAL SECURITIES -- Because the
West Virginia Portfolio invests primarily in West Virginia Municipal Securities,
the Portfolio is more susceptible to factors adversely affecting issuers of West
Virginia Municipal Securities than a mutual fund that does not invest as heavily
in such securities. Investors should consider carefully the special risks
inherent in the Portfolio's investment in West Virginia Municipal Securities
including the risks of the West Virginia economy.

In 1994, the state established a rainy day reserve fund into which 50% of annual
surplus general fund revenues will be deposited until the reserve fund balance
reaches 5% of general fund appropriations. At June 30, 1998, the estimated
balance in the fund was $64.6 million. The state has upgraded its financial
management and reporting practices through its conversion to GAAP-based
accounting. The state also adopted policies to amortize large unfunded accrued
liabilities in its workers' compensation and teachers retirement funds over 40
years.

Based on a 1990 task force report indicating potential fiscal problems for the
state, the state took a number of actions designed to eliminate the projected
deficit, including revenue enhancement measures, such as changes to the Consumer
Sales and Service tax, and reductions in state spending. A General Fund
operating surplus of $53.4 million brought the ending fiscal year 1996 fund
balance to $393.7 million. The unreserved fund balance was $157.1 million.

The Business and Occupation Tax, the Personal Income Tax, the Consumer Sales and
Service Tax, the Minerals Severance Tax, the Corporate Net Income Tax and the
Business Franchise Tax together provided nearly 90% of the revenue for the
General Revenue Fund in the fiscal year ended June 30, 1996. The amounts
collected pursuant to the business registration, cigarette, insurance,
telecommunications, inheritance, other taxes, liquor profits and racing fees
constitute the remainder of the General Revenue Fund.

The federal programs administered in West Virginia are a substantial part of the
operation of state government. Historically, federal grants have either been
part of an ongoing program, limited to a specific project or structured to
institute immediate state action. In all cases, they become due either
temporarily or permanently and are a significant feature of state services and
the budget process.

Since September of 1997, the number of payroll jobs in West Virginia has
increased by 8,300, with the greatest number of new jobs in the service sector.
Small gains were made in manufacturing and construction, although these were not
enough to offset losses in the goods-producing sector and the beleaguered mining
industry. The unemployment rate remained steady at 6.8% in September 1998,
unchanged from a year earlier.

A controversial ballot question, which would have allowed local governments to
issue municipal bonds to help pay for economic development projects, was
defeated in the November elections. The proposal faced opposition from labor
groups, who claimed it would not benefit West

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Virginia's workforce.

Another controversial topic is strip mining, the hotly debated practice that
accounts for one-third of the state's coal production. Mine operators are doing
battle with both government regulators and environmental activists.

MUNICIPAL LEASES -- The West Virginia Portfolio may invest in instruments, or
participations in instruments, issued in connection with lease obligations or
installment purchase contract obligations of municipalities ("municipal lease
obligations"). Although municipal lease obligations do not constitute general
obligations of the issuing municipality, a lease obligation is ordinarily backed
by the municipality's covenant to budget for, appropriate funds for, and make
the payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses, which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose in the relevant years. Municipal lease
obligations are a relatively new form of financing, and the market for such
obligations is still developing. Municipal leases will be treated as liquid only
if they satisfy criteria set forth in guidelines established by the Board of
Trustees, and there can be no assurance that a market will exist or continue to
exist for any municipal lease obligation.

PUT TRANSACTIONS (STANDBY COMMITMENTS) -- The West Virginia Portfolio reserves
the right to engage in put transactions. The Adviser has the authority to
purchase securities at a price that would result in a yield to maturity lower
than that generally offered by the seller at the time of purchase when the
Portfolio can simultaneously acquire the right to sell the securities back to
the seller, the issuer, or a third party (the "writer") at an agreed-upon price
at any time during a stated period or on a certain date. Such a right is
generally denoted as a "put" or "standby commitment." The purpose of engaging
in transactions involving puts is to maintain flexibility and liquidity so as to
permit the Portfolio to meet redemptions and remain as fully invested as
possible in Municipal Securities. The Portfolio's ability to put the securities
depends on the writer's ability to pay for the securities at the time the
Portfolio exercises the put. The Portfolio will engage in put transactions only
with institutions that the Adviser believes present minimal credit risks, and
the Adviser will use its best efforts to determine initially and continue to
monitor the financial strength of the sellers of the options in accordance with
credit guidelines adopted by the Trust's Board of Trustees. In the event that
any writer is unable to honor a put for financial reasons, the Portfolio would
be a general creditor (i.e., on a parity with all other unsecured creditors) of
the writer. Furthermore, particular provisions of the contract between the
Portfolio and the writer may excuse the writer from repurchasing the securities;
for example, a change in the published rating of the underlying securities or
any similar event that has an adverse effect on the issuer's credit or a
provision in the contract that the put will not be exercised except in certain
special cases, for example, to maintain portfolio liquidity. The Portfolio
could, however, at any time sell the underlying portfolio security in the open
market or wait until the portfolio security matures, at which time it should
realize the full par value of the security.

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The securities purchased subject to a put may be sold to third persons at any
time, even though the put is outstanding, but the put itself, unless it is an
integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the
Portfolio. Sale of the securities to third parties or lapse of time with the
put unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Portfolio could seek to negotiate terms for
the extension of such an option. If such a renewal cannot be negotiated on
terms satisfactory to the Portfolio, the Portfolio could, of course, sell the
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of portfolio
securities that the Portfolio may purchase subject to a put or a standby
commitment but the amount paid directly or indirectly for premiums on all puts
and standby commitments outstanding will not exceed 0.5% of the Portfolio's
total assets calculated immediately after any such put is acquired.

The Portfolio will consider the maturity of a security subject to a put to be
the first date on which the Portfolio has the right to demand payment from the
writer, even though the final maturity of the security will ordinarily be later
than such date.

OPTIONS

A put option gives the purchaser of the option the right to sell, and the writer
the obligation to buy, the underlying security at the exercise price at any time
during the option period. A call option gives the purchaser of the option the
right to buy, and the writer of the option the obligation to sell, the
underlying security at the exercise price at any time during the option period.
The premium paid to the writer is the consideration for undertaking the
obligations under the option contract. The initial purchase (sale) of an option
contract is an "opening transaction." In order to close out an option position,
a Portfolio may enter into a "closing transaction"--the sale (purchase) of an
option contract on the same security with the same exercise price and expiration
date as the option contract originally opened.

A Portfolio may purchase put and call options to protect against a decline in
the market value of the securities in its portfolio or to anticipate an increase
in the market value of securities that the Portfolio may seek to purchase in the
future. A Portfolio purchasing put and call options pays a premium therefor.
If price movements in the underlying securities are such that exercise of the
options would not be profitable for the Portfolio, loss of the premium paid may
be offset by an increase in the value of the Portfolio's securities or by a
decrease in the cost of acquisition of securities by the Portfolio.

A Portfolio may write covered call options as a means of increasing the yield on
its portfolio and as a means of providing limited protection against decreases
in its market value. When a Portfolio sells an option, if the underlying
securities do not increase or decrease to a price level that would make the
exercise of the option profitable to the holder thereof, the option generally
will expire without being exercised and the Portfolio will realize as profit the
premium received

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for such option. When a call option of which a Portfolio is the writer is
exercised, the Portfolio will be required to sell the underlying securities to
the option holder at the strike price, and will not participate in any increase
in the price of such securities above the strike price. When a put option of
which a Portfolio is the writer is exercised, the Portfolio will be required to
purchase the underlying securities at the strike price, which may be in excess
of the market value of such securities.

Options purchased by a Portfolio will be listed on a national securities
exchange. In order to close out an option position, the Portfolio may enter
into a "closing purchase transaction," which involves the purchase of an option
on the same security at the same exercise price and expiration date. If the
Portfolio is unable to effect a closing purchase transaction with respect to an
option it has written, it will not be able to sell the underlying security until
the option expires or the Portfolio delivers the security upon exercise.

A Portfolio may purchase and write options on an exchange or over-the-counter.
Over-the-counter options ("OTC options") differ from exchange-traded options in
several respects. They are transacted directly with dealers and not with a
clearing corporation, and therefore entail the risk of non-performance by the
dealer. OTC options are available for a greater variety of securities and for a
wider range of expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded on an exchange,
pricing is done normally by reference to information from a market maker. It is
the position of the Securities and Exchange Commission that OTC options are
generally illiquid.

A Portfolio may purchase and write put and call options on foreign currencies
(traded on U.S. and foreign exchanges or over-the-counter markets) to manage its
exposure to exchange rates. Call options on foreign currency written by a
Portfolio will be "covered," which means that the Portfolio will own an equal
amount of the underlying foreign currency. With respect to put options on
foreign currency written by a Portfolio, the Portfolio will establish a
segregated account with its custodian bank consisting of liquid assets in an
amount equal to the amount the Portfolio would be required to pay upon exercise
of the put.

A Portfolio may purchase and write put and call options on indices and enter
into related closing transactions. Put and call options on indices are similar
to options on securities except that options on an index give the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of the underlying index is greater than (or less than, in the case of
puts) the exercise price of the option. This amount of cash is equal to the
difference between the closing price of the index and the exercise price of the
option, expressed in dollars multiplied by a specified number. Thus, unlike
options on individual securities, all settlements are in cash, and gain or loss
depends on price movements in the particular market represented by the index
generally, rather than the price movements in individual securities. A
Portfolio may choose to terminate an option position by entering into a closing
transaction. The ability of a Portfolio to enter into closing transactions
depends upon the existence of a liquid secondary market for such transactions.

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All options written on indices must be covered. When a Portfolio writes an
option on an index, it will establish a segregated account containing liquid
assets with its Custodian in an amount at least equal to the market value of the
option and will maintain the account while the option is open or will otherwise
cover the transaction.

RECEIPTS

Receipts are sold as zero coupon securities which means that they are sold at a
substantial discount and redeemed at face value at 34 their maturity date
without interim cash payments of interest or principal. This discount is
accreted over the life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax purposes. Because of
these features, such securities may be subject to greater interest rate
volatility than interest paying investments.

REPURCHASE AGREEMENTS

Repurchase agreements are agreements by which a Portfolio obtains a security and
simultaneously commits to return the security to the seller at an agreed upon
price on an agreed upon date within a number of days from the date of purchase.
A Portfolio will have actual or constructive possession of the security as
collateral for the repurchase agreement. A Portfolio bears a risk of loss in
the event the other party defaults on its obligations and the Portfolio is
delayed or prevented from its right to dispose of the collateral securities or
if the Portfolio realizes a loss on the sale of the collateral securities. A
Portfolio will enter into repurchase agreements only with financial institutions
deemed to present minimal risk of bankruptcy during the term of the agreement
based on established guidelines. Repurchase agreements are considered loans
under the 1940 Act.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS

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that a money market fund may hold for which a single issuer provides credit
enhancements.

RESTRICTED SECURITIES

The Prime Obligations Portfolio may invest in restricted securities. Restricted
securities are securities that may not be sold freely to the public absent
registration under the Securities Act of 1933, as amended (the "Act"), or an
exemption from registration. The Portfolio may invest up to 10% of its net
assets in illiquid securities, including restricted securities other than
Section 4(2) commercial paper. The Portfolio may invest in Section 4(2)
commercial paper. Section 4(2) commercial paper is issued in reliance on an
exemption from registration under Section 4(2) of the Act and is generally sold
to institutional investors who purchase for investment. Any resale of such
commercial paper must be in an exempt transaction, usually to an institutional
investor through the issuer or investment dealers who make a market in such
commercial paper. The Trust believes that Section 4(2) commercial paper is
liquid to the extent it meets the criteria established by the Board of Trustees
of the Trust. The Trust intends to treat such commercial paper as liquid and
not subject to the investment limitations applicable to illiquid securities or
restricted securities.

SECURITIES LENDING

In order to generate additional income, a Portfolio may lend the securities
in which it owns, pursuant to agreements requiring that the loan be
continuously secured by collateral consisting of cash, securities of the U.S.
Government or its agencies equal to at least 100% of the market value of the
securities lent. A Portfolio continues to receive interest on the securities
lent while simultaneously earning interest on the investment of cash
collateral. Collateral is marked to market daily. There may be risks of
delay in recovery of the securities or even loss of rights in the collateral
should the borrower of the securities fail financially or become insolvent.

SECURITIES OF FOREIGN ISSUERS

There are certain risks connected with investing in foreign securities. These
include risks of adverse political and economic developments (including possible
governmental seizure or nationalization of assets), the possible imposition of
exchange controls or other governmental restrictions, less uniformity in
accounting and reporting requirements, the possibility that there will be less
information on such securities and their issuers available to the public, the
difficulty of obtaining or enforcing court judgments abroad, restrictions on
foreign investments in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad, and difficulties in transaction
settlements and the effect of delay on shareholder equity. Foreign securities
may be subject to foreign taxes, and may be less marketable than comparable U.S.
securities. The value of a Portfolio's investments denominated in foreign
currencies will depend on the relative strengths of those currencies and the
U.S. dollar, and a Portfolio may be affected favorably or unfavorably by

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changes in the exchange rates or exchange control regulations between foreign
currencies and the U.S. dollar. Changes in foreign currency exchange rates also
may affect the value of dividends and interest earned, gains and losses realized
on the sale of securities and net investment income and gains if any, to be
distributed to shareholders by a Portfolio.

SEPARATELY TRADED INTEREST AND PRINCIPAL SECURITIES ("STRIPS")

Each Portfolio may invest in STRIPS, which are component parts of U.S. Treasury
Securities traded through the Federal Book-Entry System. The Adviser or the
Sub-Adviser will purchase only STRIPS that it determines are liquid or, if
illiquid, do not violate the Portfolio's investment policy concerning
investments in illiquid securities. Consistent with Rule 2a-7, the Adviser or
the Sub-Adviser will purchase for the Prime Obligations Portfolio only those
STRIPS that have a remaining maturity of 397 days or less; therefore, the Prime
Obligations Portfolio currently may purchase only interest component parts of
U.S. Treasury Securities. While there is no limitation on the percentage of a
Portfolio's assets that may be comprised of STRIPS, the Adviser or the
Sub-Adviser will monitor the level of such holdings to avoid the risk of
impairing shareholders' redemption rights and of deviations in the value of
shares of the Prime Obligations Portfolio.

SHORT-TERM OBLIGATIONS OF STATE AND LOCAL GOVERNMENT ISSUERS

The Prime Obligations Portfolio may, when deemed appropriate by the Adviser or
the Sub-Adviser in light of the Portfolio's investment objective, invest in high
quality, short-term obligations issued by state and local governmental issuers
which, as a result of the Tax Reform Act of 1986, carry yields that are
competitive with those of other types of money market instruments of comparable
quality.

STANDBY COMMITMENTS AND PUTS

Securities subject to standby commitments or puts permit the holder thereof to
sell the securities at a fixed price prior to maturity. Securities subject to a
standby commitment or put may be sold at any time at the current market price.
However, unless the standby commitment or put was an integral part of the
security as originally issued, it may not be marketable or assignable;
therefore, the standby commitment or put would only have value to the Portfolio
owning the security to which it relates. In certain cases, a premium may be
paid for a standby commitment or put, which premium will have the effect of
reducing the yield otherwise payable on the underlying security. A Portfolio
will limit standby commitment or put transactions to institutions believed to
present minimal credit risk.

TIME DEPOSITS

Time deposits are non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market. Time deposits with a withdrawal penalty

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are considered to be illiquid securities.

U.S. GOVERNMENT AGENCIES

Obligations issued or guaranteed by agencies of the U.S. Government,
including, among others, the Federal Farm Credit Bank, the Federal Housing
Administration and the Small Business Administration, and obligations issued
or guaranteed by instrumentalities of the U.S. Government, including, among
others, FHLMC, the Federal Land Banks and the U.S. Postal Service. Some of
these securities are supported by the full faith and credit of the U.S.
Treasury, others are supported by the right of the issuer to borrow from the
Treasury, while still others are supported only by the credit of the
instrumentality. Guarantees of principal by agencies or instrumentalities of
the U.S. Government may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the obligation prior to
maturity.

Guarantees as to the timely payment of principal and interest do not extend to
the value or yield of these securities nor to the value of a Portfolio's shares.

U.S. TREASURY OBLIGATIONS

U.S. Treasury obligations consist of bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").

VARIABLE AND FLOATING RATE INSTRUMENTS

Certain obligations may carry variable or floating rates of interest, and may
involve a conditional or unconditional demand feature. Such instruments bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices. The interest rate on these securities may be reset
daily, weekly, quarterly or by some other reset period, and may have a floor or
ceiling on interest rate changes. There is a risk that the current interest
rate on such obligations may not actually reflect existing market interest
rates. A demand instrument with a demand notice exceeding seven days may be
considered illiquid if there is no secondary market for such security.

WARRANTS

Warrants are instruments giving holders the right, but not the obligation, to
buy shares of a company at a given price during a specified period.

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WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

When-issued or delayed delivery basis transactions involve the purchase of an
instrument with payment and delivery taking place in the future. Delivery of
and payment for these securities may occur a month or more after the date of
the purchase commitment. A Portfolio will maintain with the Custodian a
separate account with liquid assets in an amount at least equal to these
commitments. The interest rate realized on these securities is fixed as of
the purchase date and no interest accrues to a Portfolio before settlement.
These securities are subject to market fluctuation due to changes in market
interest rates and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price if the general
level of interest rates has changed. Although a Portfolio generally
purchases securities on a when-issued or forward commitment basis with the
intention of actually acquiring securities, a Fund may dispose of a
when-issued security or forward commitment prior to settlement if it deems
appropriate.

ZERO COUPON SECURITIES

STRIPS and Receipts (TRs, TIGRs and CATS) are sold as zero coupon securities,
that is, fixed income securities that have been stripped of their unmatured
interest coupons. Zero coupon securities are sold at a (usually substantial)
discount and redeemed at face value at their maturity date
without interim cash payments of interest or principal. The amount of this
discount is accredited over the life of the security, and the accretion
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, these market prices of zero coupon
securities are generally more volatile than the market prices of securities that
have similar maturity but that pay interest periodically. Zero coupon
securities are likely to respond to a greater degree to interest rate changes
than are non-zero coupon securities with similar maturity and credit qualities.
See also "Taxes."

INVESTMENT LIMITATIONS

Each Portfolio is subject to a number of fundamental investment restrictions
that may be changed only by a vote of a majority of the outstanding shares of
that Portfolio. A "majority of the outstanding shares" of the Trust or a
particular Portfolio means the affirmative vote, at a meeting of shareholders
duly called, of the lesser of (a) 67% or more of the votes of shareholders of
the Trust or such Portfolio present at a meeting at which the holders of more
than 50% of the votes attributable to shareholders of record of the Trust or
such Portfolio are represented in person or by proxy, or (b) the holders of more
than 50% of the outstanding votes of shareholders of the Trust or such
Portfolio.

Pursuant to these investment restrictions, no Portfolio will:

1. Purchase securities of any issuer (except securities issued or guaranteed
by the United

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States Government, its agencies or instrumentalities and repurchase
agreements involving such securities) if, as a result, more than 5% of the
total assets of the Portfolio would be invested in the securities of such
issuer or the Portfolio would own more than 10% of the outstanding voting
securities of such issuer. This restriction applies to 75% of the assets
of the Equity Income, Capital Appreciation, Government and Prime
Obligations Portfolios, and does not apply to the West Virginia Portfolio.
For purposes of this limitation, a security is considered to be issued by
the government entity (or entities) whose assets and revenues back the
security; with respect to a private activity bond that is backed only by
the assets and revenues of a non-governmental user, a security is
considered to be issued by such non-governmental user. For purposes of
this limitation, all debt securities of an issuer are each considered as
one class.

2. Purchase any securities that would cause more than 25% of the total assets
of the Portfolio to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the United States Government or its agencies and
instrumentalities, repurchase agreements involving such securities, and
obligations issued by domestic branches of U.S. banks or U.S. branches of
foreign banks subject to the same regulations as U.S. banks. For purposes
of this limitation, (a) utility companies will be divided according to
their services, for example, gas, gas transmission, electric and telephone
will each be considered a separate industry; (b) financial service
companies will be classified according to the end users of their services,
for example, automobile finance, bank finance and diversified finance will
each be considered a separate industry; (c) supranational entities will be
considered to be a separate industry; and (d) asset-backed securities
secured by distinct types of assets, such as truck and auto loan leases,
credit card receivables and home equity loans, will each be considered a
separate industry.

3. Make loans, except that each Portfolio may (a) purchase or hold debt
instruments to the extent in accordance with its investment objective and
policies; (b) enter into repurchase agreements, and (c) engage in
securities lending.
.
4. Invest in companies for the purpose of exercising control.

5. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be done from a bank and to the extent that such borrowing exceeds 5%
of the value of the Portfolio's assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall
below 300%, the Portfolio shall, within three days thereafter or such
longer period as the Securities and Exchange Commission ("SEC") may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. This borrowing provision is included solely to facilitate the
orderly sale of portfolio securities to accommodate heavy

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<PAGE>

redemption requests if they should occur and is not for investment
purposes. All borrowings will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.

7. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts (except that the Fixed Income
Portfolios may invest in futures contracts and options on futures contracts
as disclosed in their Prospectus and this Statement of Additional
Information). However, subject to its permitted investments, any Portfolio
may invest in companies that invest in real estate, commodities or
commodities contracts.

8. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits
as necessary for the clearance of security transactions; this limitation
shall not prohibit short sales "against the box."

9. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under federal securities laws in selling a Portfolio
security.

10. Purchase securities of other investment companies except as permitted by
the 1940 Act, and the rules and regulations thereunder.

11. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

NON-FUNDAMENTAL POLICIES

The following investment limitations of the Portfolios are non-fundamental and
may be changed by the Trust's Board of Trustees without shareholder approval.

None of the Equity Income, Capital Appreciation, Government, or West Virginia
Portfolios may invest in illiquid securities in an amount exceeding, in the
aggregate, 15% of that Portfolio's net assets, and the Prime Obligations
Portfolio may not invest in illiquid securities in an amount exceeding, in the
aggregate, 10% of its net assets.

No Portfolio may invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.

No Portfolio may invest its assets in securities of any investment company,
except as permitted

S-29
<PAGE>

by the 1940 Act or pursuant to an order of exemption therefrom.

The foregoing percentages, except with respect to borrowings and illiquid
securities, will apply at the time of the purchase of a security and shall not
be considered violated unless an excess occurs or exists immediately after and
as a result of a purchase of such security.

THE ADVISER

One Valley Bank, National Association ("One Valley," or the "Adviser"),
serves as investment adviser to each Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement") with the Trust. Also, under
the Advisory Agreement, the Adviser is responsible for the investment
decisions for each Portfolio, and the Adviser continuously reviews,
supervises and administers each Portfolio's investment program. The Advisory
Agreement provides that the Adviser shall not be protected against any
liability to the Trust or its shareholders by reason of willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard of its obligations or duties thereunder. The Adviser
is independent of SEI Investments Mutual Funds Services (the "Administrator")
and discharges its responsibilities subject to the supervision of, and
policies established by, the Trustees of the Trust. In addition, the Trust
has employed Wellington Management Company, LLP as an investment sub-adviser
to manage the Prime Obligations Portfolio on a day-to-day basis, subject to
the supervision of the Adviser and the Trustees. See "The Sub-Adviser."

The Advisory Agreement provides that if, for any fiscal year, the ratio of
expenses of any Portfolio (including amounts payable to the Adviser but
excluding interest, taxes, brokerage, litigation, and other extraordinary
expenses) exceeds limitations established by any jurisdiction in which shares of
the Portfolios are qualified for offer and sale, the Adviser will bear the
amount of such excess.

The continuance of the Advisory Agreement, after the first two years, must be
specifically approved at least annually (i) by the vote of the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to the
Agreement or "interested persons" of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Advisory
Agreement will terminate automatically in the event of its assignment, and is
terminable at any time without penalty by the Trustees of the Trust or, with
respect to the Portfolios by a majority of the outstanding shares of the
Portfolios, on not less than 30 days' nor more than 60 days' written notice to
the Adviser, or by the Adviser on 90 days' written notice to the Trust.

One Valley, a national banking association, is the successor to Kanawha Valley
Bank, N.A., organized in 1867. One Valley has its principal offices at One
Valley Square, Charleston, West Virginia 25301. One Valley is a wholly-owned
subsidiary of One Valley Bancorp, Inc., a multi-bank holding company. One
Valley is the largest holding company headquartered in West

S-30
<PAGE>

Virginia, and provides a wide variety of financial services in multiple
locations throughout West Virginia and Virginia. The Adviser has provided
investment advisory services to investment companies since 1993.

One Valley, together with its predecessor institutions, has provided trust and
asset management services since the early 1920s and has managed common and
collective investment funds since 1968. One Valley's portfolio managers serve
investment management accounts, employee benefit funds and personal trust
accounts, managing assets in money market, equity, and fixed income portfolios.
As of ____________, 1999, One Valley's Investment Asset Management Group had
assets under management of approximately $____ billion, and currently manages
$______ million of assets in mutual funds with diverse investment objectives
ranging from stability of capital to aggressive growth.

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate based on the average daily net assets of
each Portfolio as follows: Equity Income Portfolio--.74%, Capital Appreciation
Portfolio--.95%, Government Portfolio--.75%, West Virginia Portfolio--.45% and
Prime Obligations Portfolio--.25%. The Adviser has voluntarily agreed to waive a
portion of its fees in order to limit the total operating expenses of Class A
and Class B shares of each Portfolio (exclusive of distribution expenses charged
to Class B shares) to not more than the following (as a percentage of average
daily net assets on an annualized basis): Equity Income Portfolio--1.20%,
Capital Appreciation Portfolio--1.02%, Government Portfolio--0.83%, West
Virginia Portfolio--0.75% and Prime Obligations Portfolio--.49%. The Adviser
reserves the right, in its sole discretion, to terminate its voluntary fee
waiver and reimbursement at any time. For the fiscal year ended January 31,
1999, the Portfolio paid the Adviser an advisory fee as a percentage of average
daily net assets of each Portfolio as follows: Equity Income Portfolio-- ___%,
Capital Appreciation Portfolio-- ___%, Government Portfolio-- ___%, West
Virginia Portfolio-- ___% and Prime Obligations Portfolio-- ___%.

The Glass-Steagall Act restricts the securities activities of banks such as the
Adviser, but federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds. Should this position be
challenged successfully in court or reversed by legislation, the Trust might
have to make other investment advisory arrangements.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Portfolios paid the following advisory fees:

Fees Paid (000) Fee Waivers (000)
--------------- -----------------
- --------------------------------------------------------------------------------
Portfolio 1997 1998 1999 1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity Income Portfolio $112 $346 $___ $ 8 $ 18 $___
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio $723 $806 $___ $270 $295 $___
- --------------------------------------------------------------------------------
Government Portfolio $243 $283 $___ $183 $119 $___
- --------------------------------------------------------------------------------
West Virginia Portfolio $200 $378 $___ $ 47 $ 43 $___
- --------------------------------------------------------------------------------
Prime Obligations Portfolio $ 82 $ 80 $___ $158 $142 $___
- --------------------------------------------------------------------------------
</TABLE>

S-31
<PAGE>

THE SUB-ADVISER

Wellington Management Company, LLP ("Wellington Management" or the
"Sub-Adviser") serves as the investment sub-adviser to the Prime Obligations
Portfolio pursuant to a sub-advisory agreement (the "Sub-Advisory Agreement")
with the Adviser and the Trust. Under the Sub-Advisory Agreement, the
Sub-Adviser manages the investments of the Portfolio, selects investments, and
places all orders for purchases and sales of the Portfolio's securities, subject
to the general supervision of the Trustees of the Trust and the Adviser.

Wellington Management is a professional investment counseling firm that provides
investment services to investment companies, employee benefit plans, endowments,
foundations, and other institutions and individuals. As of February 28, 1999,
Wellington Management had discretionary management authority with respect to
approximately $207 billion of assets. Wellington Management and its predecessor
organizations have provided investment advisory services to investment companies
since 1928 and to investment counseling clients since 1960. Wellington
Management, 75 State Street, Boston, MA 02109, is a Massachusetts limited
liability partnership, of which the following persons are managing partners:
Robert W. Doran, Duncan M. McFarland and John R. Ryan.

For the services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, the Sub-Adviser is entitled to receive a fee, computed daily and paid
monthly, at the annual rate of .075% of the first $500 million of "managed
assets" (defined below) and .02% of "managed assets" in excess of $500 million.
"Managed assets" are all of the money market fund assets that Wellington
Management manages for the Trust, including assets of funds other than the
Portfolio. The fee paid by the Portfolio is based on its proportionate share of
"managed assets." For the fiscal year ended January 31, 1999, the Portfolio paid
the Sub-Adviser an advisory fee, as a percentage of average daily net assets, of
.___%.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Portfolio paid the Sub-Adviser the following sub-advisory fees:

Fees Paid (000) Fee Waivers (000)
----------------------------- ---------------------------
Portfolio 1997 1998 1999 1997 1998 1999
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Prime Obligations Portfolio................. $72 $66 $___ $ 0 $ 0 $___
</TABLE>

THE ADMINISTRATOR

SEI Investments Mutual Funds Services (the "Administrator"), Oaks, Pennsylvania
19456, provides each Portfolio with administrative services, other than
investment advisory services, including all regulatory reporting, necessary
office space, equipment, personnel and facilities

S-32
<PAGE>

pursuant to an administration agreement with the Trust (the "Administration
Agreement"). The Administrator also serves as the shareholder servicing
agent of the Trust under the terms of the Administration Agreement.

The Administration Agreement provides that the Administrator shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations thereunder.

For its services, the Administrator is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of: (i) .20% of the average daily
net assets of the Portfolios' assets up to $500 million; (ii) .18% of the
average daily net assets of the Portfolios' assets from $500 million to $750
million; (iii) .16% of the average daily net assets of the Portfolios' assets
from $750 million to $1 billion; and .15% of the average daily net assets of
the Portfolios' assets above $1 billion. There is a minimum annual fee of
$75,000 payable to the Administrator by each Portfolio. For the fiscal year
ended January 31, 1999, the Portfolios paid the Administrator the following
administration fees (shown as a percentage of average daily net assets):
Equity Income Portfolio, ___%; Capital Appreciation Portfolio, ___%;
Government Portfolio, ___%; West Virginia Portfolio, ___%; and Prime
Obligations Portfolio, ___%.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Portfolios paid the following administrative fees:

S-33
<PAGE>

Fees Paid (000) Fee Waivers(000)
--------------- ----------------
- --------------------------------------------------------------------------------
Portfolio 1997 1998 1999 1997 1998 1999
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Equity Income Portfolio $ 33 $119 $___ $0 $0 $___
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio $209 $232 $___ $0 $0 $___
- --------------------------------------------------------------------------------
Government Portfolio $114 $107 $___ $0 $0 $___
- --------------------------------------------------------------------------------
West Virginia Portfolio $110 $187 $___ $0 $0 $___
- --------------------------------------------------------------------------------
Prime Obligations Portfolio $192 $177 $___ $0 $0 $___
- --------------------------------------------------------------------------------
</TABLE>

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor" OR "SIDC"), Oaks,
Pennsylvania 19456, a wholly-owned subsidiary of SEI Investments Company and an
affiliate of the Administrator, serves as the distributor of each Portfolio's
shares pursuant to a distribution agreement with the Trust (the "Distribution
Agreement"), which applies to Class A and Class B shares of the Portfolios.

The Distribution Agreement shall be reviewed and ratified at least annually (i)
by the Trust's Trustees or by the vote of a majority of the outstanding shares
of the Trust, and (ii) by the vote of a majority of the Trustees of the Trust
who are not parties to the Distribution Agreement or interested persons (as
defined in the 1940 Act) of any party to the Distribution Agreement, cast in
person at a meeting called for the purpose of voting on such approval. The
Distribution Agreement will terminate in the event of any assignment, as defined
in the 1940 Act, and is terminable with respect to a particular Portfolio on not
less than sixty days' notice by the Trust's Trustees, by vote of a majority of
the outstanding shares of such Portfolio or by the Distributor.

The Trust has adopted a distribution plan for the Class B shares of each
Portfolio (the "Class B Plan") in accordance with the provisions of Rule 12b-1
under the 1940 Act, which regulates circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares. Continuance of the Class B Plan must be approved annually by a
majority of the Trustees of the Trust and by a majority of the Trustees who are
not "interested persons" of the Trust or SEI Financial Services, as that term is
defined in the 1940 Act ("Disinterested Trustees"). The Class B Plan requires
that quarterly written reports of amounts spent under the Plan and the purposes
of such expenditures be furnished to and reviewed by the Trustees. In
accordance with Rule 12b-1 under the 1940 Act, the Class B Plan may be
terminated with respect to any Portfolio by a vote of a majority of the
Disinterested Trustees, or by a vote of a majority of the outstanding shares of
that Portfolio. The Class B Plan may be amended by vote of the Trust's Board of
Trustees, including a majority of the Disinterested Trustees, cast in person at
a meeting called for such purpose, except that any change that would effect a
material increase in any distribution fee with respect to a Portfolio requires
the approval of that Portfolio's shareholders.

The Class B Distribution Plan provides that the Class B shares of each Portfolio
will pay the

S-34
<PAGE>

Distributor a fee of .25% of its average daily net assets which the Distributor
can use to compensate broker/dealers and service providers, including the
Adviser and its affiliates which provide administrative and/or distribution
services to the Class B Shareholders or their customers who
beneficially own Class B Shares.

Each Portfolio may also execute brokerage or other agency transactions through
an affiliate of the Adviser or through the Distributor for which the affiliate
or the Distributor may receive "usual and customary" compensation.

The Class A shares of each Portfolio are offered without distribution fees to
institutional investors, including One Valley, its affiliates and correspondent
banks, for the investment of funds for which they act in a fiduciary, agency or
custodial capacity. It is possible that an institution may offer different
classes of shares to its customers and thus receive different compensation with
respect to different classes of shares. These financial institutions may also
charge separate fees to their customers.

Certain financial institutions offering shares to their customers may be
required to register as dealers pursuant to state laws.

The Distributor may, from time to time and at its own expense, provide
promotional incentives in the form of cash or other compensation to certain
financial institutions and intermediaries whose registered representatives have
sold or are expected to sell significant amounts of the shares of a Portfolio.
Such other compensation may take the form of payments for travel expenses,
including lodging, incurred in connection with trips taken by qualifying
registered representatives to places within or outside of the United States.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Class B Portfolios paid the Distributor the following distribution
fees:

Distribution Fees Paid
----------------------
- --------------------------------------------------------------------------------
Portfolio 1997 1998 1999
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Income Portfolio $ 1,020 $ 6,995 $_____
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio $ 8,170 $12,894 $_____
- --------------------------------------------------------------------------------
Government Portfolio $ 4,017 $ 3,838 $_____
- --------------------------------------------------------------------------------
West Virginia Portfolio $12,693 $17,212 $_____
- --------------------------------------------------------------------------------
Prime Obligations Portfolio $17,317 $16,933 $_____
- --------------------------------------------------------------------------------
</TABLE>

THE TRANSFER AGENT

DST Systems, Inc., 330 W. 9th Street, Kansas City, Missouri 64105 (the "Transfer
Agent") serves as the transfer agent and dividend disbursing agent for the
Portfolios under a transfer agency

S-35
<PAGE>

agreement with the Trust.

CUSTODIAN

First Union National Bank, Broad and Chestnut Streets, P.O. Box 7618,
Philadelphia, PA 19101 (the "Custodian"), acts as custodian of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the 1940 Act.

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP serves as the independent accountants of the Trust.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during
that period. Unless otherwise noted, the business address of each Trustee
and each Executive Officer is SEI Investments Company, Oaks, Pennsylvania
19456. Certain officers of the Trust also serve as officers of some or all
of the following: The Achievement Funds Trust, The Advisors' Inner Circle
Fund, Alpha Select Funds, ARK Funds, Armada Funds, Bishop Street Funds,
Boston 1784 Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment
Funds, Inc., First American Strategy Funds, Inc., HighMark Funds, Huntington
Funds, The Nevis Fund, Inc., Oak Associates Funds, The Parkstone Group of
Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series
Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic Variable
Trust and TIP Funds, each of which is an open-end management investment
company managed by SEI Investments Mutual Funds Services or its affiliates
and, except for PBHG Advisor Funds, Inc., distributed by SEI Investments
Distribution Co.

S-36
<PAGE>

Trust, SEI Institutional Managed Trust, SEI Institutional International
Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

EUGENE B. PETERS (DOB 06/03/29) -- Trustee** -- Private investor from 1987 to
present. Vice President and Chief Financial Officer, Western Company of
North America (petroleum service company) (1980-1986). President of Gene
Peters and Associates (import company) (1978-1980). President and Chief
Executive Officer of Jos. Schlitz Brewing Company before 1978. Trustee of
The Advisors' Inner Circle Fund, The Expedition Funds and Oak Associates
Funds.

S-37
<PAGE>

SEI Institutional International Trust, and SEI Tax Exempt Trust.

JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary
- -- Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services,
Inc., 1993-1997. Staff Counsel and Secretary, Provident Mutual Family of
Funds, 1990-1993.

S-38
<PAGE>

Vice President and Site Manager, Fidelity Investments 1981 to September 1995.

- --------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund as that term is defined in the 1940 Act.

**Messrs. Cooney, Patterson, Peters, Storey and Sullivan serve as members of the
Audit Committee of the Fund.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Total Compensation
From Registrant and
Pension or Fund Complex Paid to
Aggregate Retirement Benefits Estimated Annual Trustees for the Fiscal
Compensation From Accrued as Part of Benefits Upon Year Ended January 31,
Name of Person, Position Registrant Fund Expenses Retirement 1999(1)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John T. Cooney, Trustee $_______ N/A N/A $_______
- ------------------------------------------------------------------------------------------------------------------------------
(2) Frank E. Morris, Trustee $_______ N/A N/A $_______
- ------------------------------------------------------------------------------------------------------------------------------
Robert Patterson, Trustee $_______ N/A N/A $_______
- ------------------------------------------------------------------------------------------------------------------------------
Eugene B. Peters, Trustee $_______ N/A N/A $_______
- ------------------------------------------------------------------------------------------------------------------------------
James M. Storey, Trustee $_______ N/A N/A $_______
- ------------------------------------------------------------------------------------------------------------------------------
William M. Doran, Trustee* $0 N/A N/A $0
- ------------------------------------------------------------------------------------------------------------------------------
Robert A. Nesher, Trustee* $0 N/A N/A $0
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

- ------------------------------
(1) Total Compensation for service on one board.
(2) Mr. Morris retired from service effective 12/31/98. Mr. Sullivan was
elected as a trustee on 2/22/99.
* A Trustee who is an "interested person" as defined by the 1940 Act.

PERFORMANCE INFORMATION

The Portfolios may periodically compare its performance to other mutual funds
tracked by mutual fund rating services, to broad groups of comparable mutual
funds, or to unmanaged indices. These comparisons may assume reinvestment of
dividends but generally do not reflect deductions for administrative and
management costs.

COMPUTATION OF YIELD

S-39
<PAGE>

PRIME OBLIGATIONS PORTFOLIO -- From time to time the Prime Obligations Portfolio
may advertise its "current yield" and "effective yield." Both yield figures are
based on historical earnings and are not intended to indicate future
performance. The "yield" of the Portfolio refers to the income generated by an
investment in the Portfolio over a stated seven-day period. This income is then
"annualized," that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the
Portfolio is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment.

The current yield of the Prime Obligations Portfolio will be calculated daily
based upon the seven days ending on the date of calculation ("base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing such net change by the value of the account at the beginning of the
some period to obtain the base period return and multiplying the result by
(365/7). Realized and unrealized gains and losses are not included in the
calculation of the yield. The effective compound yield of the Portfolio is
determined by computing the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then compounding the base period return, according to the following
formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1.

The current and the effective yields reflect the reinvestment of net income
earned daily on portfolio assets.

The yield of the Prime Obligations Portfolio fluctuates, and the annualization
of a week's dividend is not a representation by the Trust as to what an
investment in the Portfolio will actually yield in the future. Actual yields
will depend on such variables as asset quality, average asset maturity, the type
of instruments the Portfolio invests in, changes in interest rates on money
market instruments, changes in the expenses of the Portfolio and other factors.

Yields are one basis upon which investors may compare the Prime Obligations
Portfolio with other money market funds; however, yields of other money market
funds and other investment vehicles may not be comparable because of the factors
set forth above and differences in the methods used in valuing portfolio
instruments.

For the seven-day period ended January 31, 1999, the Prime Obligations Portfolio
had a current yield of ____% and an effective yield of ____% for Class A and a
current yield of ____% and an

S-40
<PAGE>

effective yield of ____% for Class B.

EQUITY INCOME, CAPITAL APPRECIATION, GOVERNMENT AND WEST VIRGINIA PORTFOLIOS --
These Portfolios may advertise a 30-day yield. These figures will be based on
historical earnings and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income generated by an investment
in the Portfolio over a specified 30-day period. The yield is calculated by
assuming that the income generated by the investment during that 30-day period
is generated over one year and is shown as a percentage of the investment. In
particular, yield will be calculated according to the following formula:

6
Yield = 2([(a-b)/(cd) + 1] - 1)

where a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursement)
c = the current daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period.

For the 30-day period ended January 31, 1999, the Class A Portfolios' yields
were ____% for the Equity Income Portfolio, ____% for the Capital Appreciation
Portfolio, ____% for the Government Portfolio and ____% for the West Virginia
Portfolio.

For the same 30-day period, the Class B Portfolios' yields were ____% for the
Equity Income Portfolio, ____% for the Capital Appreciation Portfolio, ____% for
the Government Portfolio and ____% for the West Virginia Portfolio.

The West Virginia Portfolio may also advertise a "tax-equivalent yield," which
is calculated by determining the rate of return that would have to be achieved
on a fully taxable investment to produce the after-tax equivalent of the
Portfolio's yield, assuming certain tax brackets for a shareholder. The
tax-equivalent yield of the Portfolio will be calculated by adding (a) the
portion of the Portfolio's yield that is not tax-exempt and (b) the result
obtained by dividing the portion of the Portfolio's yield that is tax-exempt by
the difference of one minus a stated income tax rate.

For the 30-day period ended January 31, 1999, the West Virginia Portfolio's
tax-equivalent yield was ____% for Class A and ____% for Class B assuming a
combined West Virginia and federal income tax rate of ____%.

CALCULATION OF TOTAL RETURN

From time to time, the Equity Income, Capital Appreciation, Government and West
Virginia Portfolios may advertise total return. The total return of a Portfolio
refers to the average compounded rate of return to a hypothetical investment for
designated time periods (including

S-41
<PAGE>

but not limited to, the period from which the Portfolio commenced operations
through the specified date), assuming that the entire investment is redeemed at
the end of each period. In particular, total return will be calculated
according to the following formula:

n
P (1 + T) = ERV
where P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the designated time period as of
the end of such period.

Based on the foregoing, the average annual total return for the Portfolios from
inception through January 31, 1999 and for the one, five and ten year periods
ended January 31, 1999 were as follows:

Average Annual Total Return
---------------------------
One Five Ten Since
Portfolio Class Year Year Year Inception
- --------- ----- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Equity Income Portfolio Class A _____% N/A N/A _____%
Class B (with 12b-1) _____ N/A N/A _____
Capital Appreciation Portfolio Class A _____ _____ N/A _____
Class B (with 12b-1) _____ _____ N/A _____
Government Portfolio Class A _____ _____ N/A _____
Class B (with 12b-1) _____ _____ N/A _____
West Virginia Portfolio Class A _____ _____ N/A _____
Class B (with 12b-1) _____ _____ N/A _____
</TABLE>

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Distributor on a day on which
the New York Stock Exchange is open for business. Shares of the Funds are
offered on a continuous basis. Currently, the holidays observed by the Trust and
the New York Stock Exchange are as follows: New Year's Day, Presidents' Day,
Martin Luther King Jr. Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.

Each Portfolio intends to pay cash for all shares redeemed, but under abnormal
conditions that make payment in cash unwise, payment may be made wholly or
partly in portfolio securities with a market value equal to the redemption
price. In such cases, an investor may incur brokerage costs in converting such
securities to cash.

It is currently the Trust's policy to pay for all redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
the Portfolios in lieu of cash. Shareholders may incur brokerage charges on the
sale of any such securities so received in payment of redemptions. However, a

S-42
<PAGE>

shareholder will at all times be entitled to aggregate cash redemptions from all
Portfolios of the Trust during any 90-day period of up to the lesser of $250,000
or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of the Portfolio's securities is not reasonably
practicable, or for such other periods as the SEC has by order permitted. The
Trust also reserves the right to suspend sales of shares of the Portfolio for
any period during which the New York Stock Exchange, the Adviser, the
Administrator and/or the Custodian are not open for business.

DETERMINATION OF NET ASSET VALUE

PRIME OBLIGATIONS PORTFOLIO -- The net asset value per share of the Prime
Obligations Portfolio is calculated by adding the value of securities and other
assets, subtracting liabilities and dividing by the number of outstanding
shares. Securities will be valued by the amortized cost method, which involves
valuing a security at its cost on the date of purchase and thereafter (absent
unusual circumstances) assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuations in general market
rates of interest on the value of the instrument. While this method provides
certainty in valuation, it may result in periods during which a security's
value, as determined by this method, is higher or lower than the price the
Portfolio would receive if it sold the instrument. During periods of declining
interest rates, the daily yield of the Portfolio may tend to be higher than a
like computation made by a company with identical investments utilizing a method
of valuation based upon market prices and estimates of market prices for all of
its portfolio securities. Thus, if the use of amortized cost by the Portfolio
resulted in a lower aggregate portfolio value on a particular day, a prospective
investor in the Portfolio would be able to obtain a somewhat higher yield than
would result from investment in a company utilizing solely market values, and
existing investors in the Portfolio would experience a lower yield. The converse
would apply in a period of rising interest rates.

The Prime Obligations Portfolio's use of amortized cost and the maintenance of
the Portfolio's net asset value at $1.00 are permitted by regulations
promulgated by Rule 2a-7 under the 1940 Act, provided that certain conditions
are met. The regulations also require the Trustees to establish procedures
which are reasonably designed to stabilize the net asset value per share at
$1.00 for the Portfolio. Such procedures include the determination of the extent
of deviation, if any, of the Portfolio's current net asset value per share
calculated using available market quotations from the Portfolio's amortized cost
price per share at such intervals as the Trustees deem appropriate and
reasonable in light of market conditions and periodic reviews of the amount of
the deviation and the methods used to calculate such deviation. In the event
that such deviation exceeds 0.5%, the Trustees are required to consider promptly
what action, if any, should be initiated, and, if the Trustees believe that the
extent of any deviation may result in material dilution or other unfair results
to shareholders, the Trustees are required to take such corrective action as
they deem appropriate to eliminate or reduce such dilution or unfair results to

S-43
<PAGE>

the extent reasonably practicable. Such actions may include: the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity; withholding dividends; redeeming shares in
kind; or establishing a net asset value per share by using available market
quotations. In addition, if the Portfolio incurs a significant loss or
liability, the Trustees have the authority to reduce pro rata the number of
shares of the Portfolio in each shareholder's account and to offset each
shareholder's pro rata portion of such loss or liability from the shareholder's
accrued but unpaid dividends or from future dividends while each other Portfolio
must annually distribute at least 90% of its investment company taxable income.

EQUITY INCOME, CAPITAL APPRECIATION, GOVERNMENT AND WEST VIRGINIA PORTFOLIOS --
The securities of these Portfolios are valued by the Administrator pursuant to
valuations provided by independent pricing services. The pricing services rely
primarily on prices of actual market transactions as well as trader quotations.
However, a service may also use a matrix system to determine valuations of fixed
income securities, which system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of a pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

TAXES

The following is only a summary of certain additional federal income tax
considerations generally affecting the Portfolios and their shareholders that
are not described in the Portfolios' prospectus. No attempt is made to present
a detailed explanation of the tax treatment of the Portfolios or their
shareholders, and the discussion here and in the Portfolios' prospectus is not
intended as a substitute for careful tax planning. Shareholders are urged to
consult with their tax advisors with specific reference to their own tax
situation, including their state and local tax liabilities.

FEDERAL INCOME TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

Each Portfolio intends to qualify and elect to be treated as a "regulated
investment company" ("RIC") as defined under Subchapter M of the Code. By
following such a policy, each Portfolio expects to eliminate or reduce to a
nominal amount the federal taxes to which they may be subject.

S-44
<PAGE>

In order to qualify as a RIC, a Portfolio must distribute at least 90% of its
net investment income (that generally includes dividends, taxable interest, and
the excess of net short-term capital gains over net long-term capital losses
less operating expenses) and at least 90% of its net tax exempt interest income,
for each tax year, if any, to its shareholders and also must meet several
additional requirements. Included among these requirements are the following:
(i) at least 90% of the Portfolio's gross income each taxable year must be
derived from dividends, interest, payments with respect to securities loans, and
gains from the sale or other disposition of stock or securities, or certain
other income; (ii) at the close of each quarter of the Portfolio's taxable year,
at least 50% of the value of its total assets must be represented by cash and
cash items, U.S. Government securities, securities of other RICs and other
securities, with such other securities limited, in respect to any one issuer, to
an amount that does not exceed 5% of the value of the Portfolio's assets and
that does not represent more than 10% of the outstanding voting securities of
such issuer; and (iii) at the close of each quarter of the Portfolio's taxable
year, not more than 25% of the value of its assets may be invested in securities
(other than U.S. Government securities or the securities of other RICs) of any
one issuer or of two or more issuers which the Portfolio controls and which are
engaged in the same, similar or related trades or businesses.

Each Portfolio may make investments in securities (such as STRIPS) that bear
"original issue discount" or "acquisition discount" (collectively, "OID
Securities"). The holder of such securities is deemed to have received interest
income even though no cash payments have been received. Accordingly, OID
Securities may not produce sufficient current cash receipts to match the amount
of distributable net investment income the Portfolios must distribute to satisfy
the Distribution Requirement. In some cases, the Portfolios may have to borrow
money or dispose of other investments in order to make sufficient cash
distributions to satisfy the Distribution Requirement.

Although each Portfolio intends to distribute substantially all of its net
investment income and may distribute its capital gains for any taxable year,
each Portfolio will be subject to federal income taxation to the extent any such
income or gains are not distributed.

If the Portfolios fail to qualify for any taxable year as a RIC, all of their
taxable income will be subject to tax at regular corporate income tax rates
without any deduction for distributions to shareholders and such distributions
generally will be taxable to shareholders as ordinary dividends to the extent of
a Portfolio's current and accumulated earnings and profits. In this event,
distributions generally will be eligible for the dividends-received deduction
for corporate shareholders.

PORTFOLIO DISTRIBUTIONS

Distributions of investment company taxable income will be taxable to
shareholders as ordinary income, regardless of whether such distributions are
paid in cash or are reinvested in additional

S-45
<PAGE>

Shares, to the extent of a Portfolio's earnings and profits. Each Portfolio
anticipates that it will distribute substantially all of its investment company
taxable income for each taxable year.

Each Portfolio intends to distribute to shareholders its excess of net long-term
capital gains over net short-term capital losses ("net capital gains"). Such
distributions are taxable to shareholders who are individuals at a maximum rate
of 20%, regardless of the length of time the shareholder has held their
Portfolio Shares. If any such gains are retained, however, a Portfolio will pay
federal income tax thereon.

In the case of corporate shareholders, distributions (other than capital gains
distributions) from a RIC generally qualify for the dividends-received deduction
to the extent of the gross amount of qualifying dividends received by a
Portfolio for the year. Generally, and subject to certain limitations, a
dividend will be treated as a qualifying dividend if it has been received from a
domestic corporation. Accordingly, it is not expected that any OVB Government
Securities Portfolio, OVB West Virginia Tax-Exempt Income Portfolio or OVB Prime
Obligations Portfolio distribution will qualify for the corporate
dividends-received deduction. Conversely, distributions from the OVB Equity
Income Portfolio and the OVB Capital Appreciation Portfolio generally will
qualify for the corporate dividends-received deduction.

Ordinarily, investors should include all dividends as income in the year of
payment. However, dividends declared payable to shareholders of record in
October, November, or December of one year, but paid in January of the following
year, will be deemed for tax purposes to have been received by the shareholder
and paid by the Portfolio in the year in which the dividends were declared.

In certain cases, a Portfolio will be required to withhold, and remit to the
United States Treasury, 31% of any distributions paid to a shareholder who (1)
has failed to provide a correct taxpayer identification number, (2) is subject
to backup withholding by the Internal Revenue Service, or (3) has failed to
certify to the Portfolio that such shareholder is not subject to backup
withholding.

Each Portfolio will provide a statement annually to shareholders as to the
federal tax status of distributions paid (or deemed to be paid) by the Portfolio
during the year, including the amount of dividends eligible for the corporate
dividends-received deduction.

SALE OR EXCHANGE OF PORTFOLIO SHARES

S-46
<PAGE>

shareholder realizes a loss on the sale, exchange or redemption of a Share held
for six months or less and has previously received a capital gains distribution
with respect to the Share (or any undistributed net capital gains of a Portfolio
with respect to such Share are included in determining the shareholder's
long-term capital gains), the shareholder must treat the loss as a long-term
capital loss to the extent of the amount of the prior capital gains distribution
(or any undistributed net capital gains of a Portfolio that have been included
in determining such shareholder's long-term capital gains). In addition, any
loss realized on a sale or other disposition of Shares will be disallowed to the
extent an investor repurchases (or enters into a contract or option to
repurchase) Shares within a period of 61 days (beginning 30 days before and
ending 30 days after the disposition of the Shares). This loss disallowance
rule will apply to Shares received through the reinvestment of dividends during
the 61-day period.

FEDERAL EXCISE TAX

If a Portfolio fails to distribute in a calendar year at least 98% of its
ordinary income for the year and 98% of its capital gain net income (the excess
of short and long term capital gains over short and long term capital losses)
for the one-year period ending October 31 of that year (and any retained amount
from the prior calendar year), the Portfolio will be subject to a nondeductible
4% Federal excise tax on the undistributed amounts. Each Portfolio intends to
make sufficient distributions to avoid imposition of this tax, or to retain, at
most its net capital gains and pay tax thereon.

STATE AND LOCAL TAXES

A Portfolio is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Depending upon state and
local law, distributions by the Portfolios to shareholders and the ownership of
Shares may be subject to state and local taxes. Shareholders are urged to
consult their tax advisors as to the consequences of these and other state and
local tax rules affecting an investment in the Portfolios.

ADDITIONAL TAX INFORMATION CONCERNING THE WEST VIRGINIA TAX-EXEMPT INCOME
PORTFOLIO

The Portfolio intends to qualify to pay "exempt interest dividends" to its
shareholders by satisfying the Code's requirement that at the close of each
quarter of its taxable year at least 50% of the value of its total assets
consist of obligations the interest on which is exempt from federal income tax.
As long as this and certain other requirements are met, dividends derived from
the Portfolio's net tax-exempt interest income will be "exempt interest
dividends" that are excluded from your gross income for federal income tax
purposes. Exempt interest dividends may, however, have collateral federal
income tax consequences, including alternative minimum tax consequences, as
discussed below.

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<PAGE>

The percentage of income that constitutes "exempt-interest dividends" will be
determined for each year for the Portfolio and will be applied uniformly to all
dividends declared with respect to the Portfolio during that year. This
percentage may differ from the actual percentage for any particular day.

Exempt-interest dividends may be subject to the alternative minimum tax imposed
by Section 55 of the Code (the "Alternative Minimum Tax"). The Alternative
Minimum Tax is imposed at a rate of up to 28% in the case of non-corporate
taxpayers and at the rate of 20% in the case of corporate taxpayers, to the
extent it exceeds the taxpayer's regular tax liability. The Alternative Minimum
Tax may be affected by the receipt of exempt-interest dividends in two
circumstances. First, exempt-interest dividends derived from certain "private
activity bonds" issued after August 7, 1986, will generally be an item of tax
preference and therefore potentially subject to the Alternative Minimum Tax.
The Portfolio intends, when possible, to avoid investing in private activity
bonds. Second, in the case of exempt-interest dividends received by corporate
shareholders, all exempt-interest dividends, regardless of when the bonds from
which they are derived were issued or whether they are derived from private
activity bonds, will be included in the corporation's "adjusted current
earnings," as defined in Section 56(g) of the Code, in calculating the
corporation's alternative minimum taxable income for purposes of determining the
Alternative Minimum Tax.

Interest on indebtedness incurred or continued by shareholders to purchase or
carry Shares of the Portfolio will not be deductible for federal income tax
purposes. The deduction otherwise allowable to property and casualty insurance
companies for "losses incurred" will be reduced by an amount equal to a portion
of exempt-interest dividends received or accrued during any taxable year.
Foreign corporations engaged in a trade or business in the United States will be
subject to a "branch profits tax" on their "dividend equivalent amount" for the
taxable year, which will include exempt-interest dividends. Certain Subchapter
S corporations may also be subject to taxes on their "passive investment
income," which could include exempt-interest dividends. Up to 85% of the Social
Security benefits or railroad retirement benefits received by an individual
during any taxable year will be included in the gross income of such individual
if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.

Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
Shares. "Substantial user" is defined generally as including a "non-exempt
person" who regularly uses in trade or business a part of such a facility.

Current federal law limits the types and volume of bonds qualifying for the
federal income tax exemption of interest, which may have an effect on the
ability of the Portfolio to purchase sufficient amounts of tax-exempt securities
to satisfy the Code's requirements for the payment of exempt interest dividends.

S-48
<PAGE>

Issuers of bonds purchased by the Portfolio (or the beneficiary of such bonds)
may have made certain representations or covenants in connection with the
issuance of such bonds to satisfy certain requirements of the Code that must be
satisfied subsequent to the issuance of such bonds. Investors should be aware
that exempt-interest dividends derived from such bonds may become subject to
federal income taxation retroactively to the date thereof if such
representations are determined to have been inaccurate or if the issuer of such
bonds (or the beneficiary of such bonds) fails to comply with such covenants.

The Portfolio may not be a suitable investment for tax-exempt shareholders and
plans because such shareholders and plans would not gain any additional benefit
from the receipt of exempt-interest dividends.

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser or Sub-Adviser is responsible for
placing the orders to execute transactions for a Portfolio. In placing orders,
it is the policy of the Trust to seek to obtain the best net results taking into
account such factors as price (including the applicable dealer spread), the
size, type and difficulty of the transaction involved, the firm's general
execution and operational facilities, and the firm's risk in positioning the
securities involved. While the Adviser generally seeks reasonably competitive
spreads or commissions, the Trust will not necessarily be paying the lowest
spread or commission available.

The money market securities in which the Portfolios invest are traded primarily
in the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
or Sub-Adviser will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market securities are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost
of executing portfolio securities transactions of the Trust will primarily
consist of dealer spreads and underwriting commissions.

TRADING PRACTICES AND BROKERAGE

The Adviser or Sub-Adviser selects brokers or dealers to execute transactions
for the purchase or sale of portfolio securities on the basis of its judgment of
their professional capability to provide the service. The primary consideration
is to have brokers or dealers execute transactions at best price and execution.
Best price and execution refers to many factors, including the price paid or
received for a security, the commission charged, the promptness and reliability
of execution, the

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<PAGE>

confidentiality and placement accorded the order and other factors affecting the
overall benefit obtained by the account on the transaction. The Trust's
determination of what are reasonably competitive rates is based upon the
professional knowledge of its trading department as to rates
paid and charged for similar transactions throughout the securities industry.
In some instances, the Trust pays a minimal share transaction cost when the
transaction presents no difficulty. Some trades are made on a net basis where
the Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is
a spread (the difference between the buy and sell price), which is the
equivalent of a commission.

The Trust may allocate, out of all commission business generated by all of the
funds and accounts under management by the Adviser, brokerage business to
brokers or dealers who provide brokerage and research services. These research
services include: advice, either directly or through publications or writings,
as to the value of securities, the advisability of investing in, purchasing or
selling securities, and the availability of securities or purchasers or sellers
of securities; furnishing of analyses and reports concerning issuers, securities
or industries; providing information on economic factors and trends, assisting
in determining portfolio strategy, providing computer software used in security
analyses, and providing portfolio performance evaluation and technical market
analyses. Such services are used by the Adviser in connection with its
investment decision-making process with respect to one or more funds and
accounts managed by it, and may not be used exclusively with respect to the fund
or account generating the brokerage.

As provided in the Securities Exchange Act of 1934, as amended, higher
commissions may be paid to broker/dealers who provide brokerage and research
services than to broker/dealers who do not provide such services if such
higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed
to broker/dealers who provide such brokerage and research services, the Trust
believes that the commissions paid to such broker/dealers are not, in
general, higher than commissions that would be paid to broker/dealers not
providing such services and that such commissions are reasonable in relation
to the value of the brokerage and research services provided. In addition,
portfolio transactions which generate commissions or their equivalent are
directed to broker/dealers who provide daily portfolio pricing services to
the Trust. Subject to best price and execution, commissions used for pricing
may or may not be generated by the funds receiving the pricing service.

The Adviser may place a combined order for two or more accounts or funds engaged
in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in
a manner deemed equitable to each account or fund. It is believed that the
ability of the accounts to participate in volume transactions will generally be
beneficial to the accounts and funds. Although it is recognized that, in some
cases, the joint execution of orders could adversely affect the price or volume
of the security that a particular account or trust may

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<PAGE>

obtain, it is the opinion of the Adviser and the Trust's Board of Trustees that
the advantages of combined orders outweigh the possible disadvantages of
separate transactions.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Portfolio
may place orders with broker/dealers which have agreed to defray certain Trust
expenses such as custodian fees, and may, at the request of the Distributor,
give consideration to sales of shares of the Trust as a factor in the selection
of brokers and dealers to execute Trust portfolio transactions.

It is expected that the Trust may execute brokerage or other agency transactions
through the Distributor or a registered broker/dealer affiliate of the Adviser
for a commission in conformity with the 1940 Act, the Securities Exchange Act of
1934 and rules promulgated by the SEC. Under these provisions, the Distributor
or an affiliate of the Adviser is permitted to receive and retain compensation
for effecting portfolio transactions for the Trust on an exchange if a written
contract is in effect between the Distributor and the Trust expressly permitting
the Distributor or an affiliate of the Adviser to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor or affiliate of the Adviser by the Trust for exchange transactions
not exceed "usual and customary" brokerage commissions. The rules define "usual
and customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." In addition, the Trust may direct commission business to one
or more designated broker/dealers in connection with such broker/dealer's
provision of services to the Trust or payment of certain Trust expenses (e.g.,
custody, pricing and professional fees). The Trustees, including those who are
not "interested persons" of the Trust, have adopted procedures for evaluating
the reasonableness of commissions paid to the Distributor and will review these
procedures periodically.

For the fiscal years ended January 31, 1998 and January 31, 1999, the Portfolios
paid the following brokerage commissions with respect to portfolio transactions:

- -----------------------------------------------------------------------------------------------------------------------------------
Total Brokerage
% of Total Commissions Paid
Brokerage to SIDC in
Total $ Amount of Commission % of Total Connection with Total $ Amount
Total $ Amount of Brokerage Paid to Brokerage Repurchase of Brokerage
Brokerage Commissions Paid Affiliated Commission Paid to Agreement Commission Paid
Commissions paid to Affiliates Brokers Affiliated Brokers Transaction for Research
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity
Income $95,883 $_____ N/A $_____ 0% _____ 0% _____ $645 _____ $68,795 _____
Portfolio

Capital
Appreciation 395,913 _____ 33,061 _____ 8.35% _____ 10.47% _____ 1,658 _____ 198,300 _____
Portfolio

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Government
Portfolio 1,936 _____ N/A _____ 0% _____ 0% _____ 766 _____ 1,936 _____

West
Virginia N/A _____ N/A _____ N/A _____ N/A _____ N/A _____ N/A _____
Portfolio

Prime
Obligations N/A _____ N/A _____ N/A _____ N/A _____ N/A _____ N/A _____
Portfolio
</TABLE>

For the fiscal year ended January 31, 1997, the Portfolios paid the following
brokerage commissions with respect to portfolio transactions:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total $ Amount
Total $ Amount of of Brokerage
Brokerage Commission
Commission Paid Paid to Affiliates
Portfolio 1997 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Equity Income Portfolio $67,698 $19,110
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio 218,593 51,252
- --------------------------------------------------------------------------------
Government Portfolio N/A N/A
- --------------------------------------------------------------------------------
West Virginia Portfolio N/A N/A
- --------------------------------------------------------------------------------
Prime Obligations Portfolio N/A N/A
- --------------------------------------------------------------------------------
</TABLE>

"Regular brokers or dealers" of the Trust are the ten brokers or dealers
that, during the most recent fiscal year, (i) received the greatest dollar
amounts of brokerage commissions from the Trust's portfolio transactions,
(ii) engaged as principal in the largest dollar amounts of portfolio
transactions of the Trust, or (iii) sold the largest dollar amount of the
Trust's shares. As of January 31, 1999, the following Portfolios held securities
of the Trust's "regular brokers or dealers" as follows:

- --------------------------------------------------------------------------------------------------------------------
Dollar Amount
at FYE
Portfolio Name of Broker/Dealer Type of Security Held
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government Portfolio................... Lehman Brothers -- --
- --------------------------------------------------------------------------------------------------------------------
West Virginia Portfolio............... N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio................ J.P. Morgan Common Stock $______
A.G. Edwards & Sons Common Stock $______
American Express Common Stock $______
Lehman Brothers Repurchase Agreement $______
- --------------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio......... NationsBanc Common Stock $______
Merrill Lynch, Pierce,
Fenner & Smith Common Stock $______
American Express Common Stock $______
- --------------------------------------------------------------------------------------------------------------------

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<PAGE>

- --------------------------------------------------------------------------------------------------------------------
Prime Obligations Portfolio............ Goldman Sachs Mortgage Backed $______
Chase Manhattan N.A. Certificate of Deposit $______
Swiss Bank Certificate of Deposit $______
Morgan Guaranty Bank Note $______
J.P. Morgan Repurchase Agreement $______
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the Board of Trustees to issue an unlimited
number of shares of the Portfolios, and to divide or redivide any unissued
shares of the Trust into one or more additional series.

Shares have no subscription or preemptive rights and only such conversion or
exchange rights as the Board of Trustees may grant in its discretion. When
issued for payment as described in the Prospectus and this Statement of
Additional Information, the Trust's shares will be fully paid and
non-assessable, subject only to the possibility of shareholder liability
described in the following section. All consideration received by the Trust for
shares of any additional series and all assets in which such consideration is
invested would belong to that series and would be subject to the liabilities
related thereto. In the event of a liquidation or dissolution of the Trust,
shareholders of a Portfolio are entitled to receive the assets available for
distribution belonging to that Portfolio, and a proportionate distribution,
based upon the relative asset values of the respective Portfolios, of any
general assets not belonging to any particular Portfolio which are available for
distribution. Certificates representing shares will not be issued.

SHAREHOLDER LIABILITY

LIMITATION OF TRUSTEES' LIABILITY

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<PAGE>

Declaration of Trust also provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with actual or threatened litigation in which they may be involved because of
their offices with the Trust unless it is determined in the manner provided in
the Declaration of Trust that they have not acted in good faith in the
reasonable belief that their actions were in the best interests of the Trust.
However, nothing in the Declaration of Trust shall protect or indemnify a
Trustee against any liability for his willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties.

5% AND 25% SHAREHOLDERS

As of ____________, 1999, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% and
25% or more of the shares of the Portfolios. Persons who owned of record or
beneficially more than 25% of a Portfolio's outstanding shares may be deemed to
control that Portfolio within the meaning of the Act. The Trust believes that
most of the shares referred to below were held by the below persons in account
for their fiduciary, agency or custodial customers.

CAPITAL APPRECIATION PORTFOLIO -- Class A: Kaw & Co., Attn: Securities Cage,
P.O. Box 1793, Charleston, WV 25326-1793, ______%.

GOVERNMENT PORTFOLIO -- Class A: Kaw & Co., Attn: Securities Cage, P.O. Box
1793, Charleston, WV 25326-1793, ______%.

GOVERNMENT PORTFOLIO--Class B: Donald P. Krisher Jr. & C. Ann Krisher, c/o
Susan Singletary, One Valley Bank, P.O. Box 1793, Charleston, WV 25326-1793,
___%; Claudia L. & Jack L. Workman, FBO Workman Developments Inc. MPP, c/o Susan
Singletary, One Valley Bank, P.O. Box 1793, Charleston, WV 25326-1793, ___%; One
Valley Bank NA TR, Daily Valuation Retirement Accounts, P.O. Box 1793,
Charleston, WV 25326-1793, ____%. SEI Trust Company Cust. IRA a/c Valerie D.
Fabry, RR 3 Box 59F, Morgantown, WV 26505-9508, ____%.

WEST VIRGINIA PORTFOLIO -- Class A: Kaw & Co., Attn: Securities Cage, P.O. Box
1793, Charleston, WV 25326-1793, ____%.

WEST VIRGINIA PORTFOLIO -- Class B: Willam A. Rice Jr. & Ellen Crites Rice, c/o
One Valley Bank, attn: Teresa Lightner, P.O. Box 1793, Charleston, WV
25326-1793, ____%.

EQUITY INCOME PORTFOLIO -- Class A: Kaw & Co., Attn: Securities Cage, P.O. Box
1793, Charleston, WV 25326-1793, _____%.

EQUITY INCOME PORTFOLIO -- Class B: Donaldson Lufkin & Jenrette, Mutual Fund,
One Perishing Plaza, Jersey City, NJ 07399-0001, ____%.

PRIME OBLIGATIONS PORTFOLIO -- Class A: Kaw & Co., Attn: Securities Cage, P.O.
Box 1793,

S-54
<PAGE>

Charleston, WV 25326-1793, _____%.

PRIME OBLIGATIONS PORTFOLIO -- Class B: One Valley Bank, Gain Accounts, Attn:
P. Taylor, P.O. Box 1793, Charleston, WV 25326-1793, ____%; TSF Limited
Liability Company, DBA Tom Seely Furniture, P.O. Box 70, Berkely Springs, WV
25411-0070, ____%; One Valley Bank NA, Daily Valuation Retirement Accounts, P.O.
Box 1793, Charleston, WV 25326-1793, ____%.

EXPERTS

The financial statements incorporated by reference into Statement of Additional
Information have been incorporated by reference in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

FINANCIAL STATEMENTS

The audited financial statements of the Portfolios for the fiscal year ended
January 31, 1999, and the Report of Independent Accountants of
PricewaterhouseCoopers LLP dated ___________, 1999, relating to the financial
statements, including the financial highlights of the Portfolios are
incorporated herein by reference.

S-55
<PAGE>

APPENDIX

DESCRIPTION OF RATINGS

The following descriptions are summaries of published ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A-2 Capacity for timely payment on issues with this designation is
satisfactory and the obligation is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories.

- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structure with moderate reliance
on debt and ample asset protection.
- Broad margins in earnings coverage of fixed financial charges
and high internal cash generation.
- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

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

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

S-56
<PAGE>

than the strongest issues.

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

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

The rating TBW-1 by Thomson BankWatch ("Thomson") indicates a very high
likelihood that principal and interest will be paid on a timely basis.

DESCRIPTION OF MUNICIPAL NOTE RATINGS

Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection form established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so
large as in the preceding group.

An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in 3 years or less will likely receive a note
rating. Notes maturing beyond 3 years will most likely receive a long-term debt
rating. The following criteria will be used in making that assessment:

- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).

- Source of Payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).

S&P note rating symbols are as follows:

SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics
will be given a plus(+) designation.

SP-2 Satisfactory capacity to pay principal and interest.

S-57
<PAGE>

DESCRIPTION OF CORPORATE BOND RATINGS

Bonds rated AAA have the highest rating S&P assigns to a debt obligation.
Such a rating indicates an extremely strong capacity to pay principal and
interest. Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree. 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. 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 debt in this category than
in higher rated categories. Debt rated BB and B is regarded as having
predominantly speculative characteristics with respect to capacity to pay
interest and repay principal. BB indicates the least degree of speculation
and C the highest degree of speculation. While such debt will likely have
some quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. Debt rated BB
has less near-term vulnerability to default than other speculative grade
debt. However, it faces major ongoing uncertainties or exposure to adverse
business, financial, or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating
category is also used for debt subordinated to senior debt that is assigned
an actual or implied BBB- rating. Debt rate B has greater vulnerability to
default but presently has the capacity to meet interest payments and
principal repayments. Adverse business, financial, or economic conditions
would likely impair capacity or willingness to pay interest and repay
principal. The B rating category also is used for debt subordinated to
senior debt that is assigned an actual or implied BB or BB- rating.

Bonds which are rated Aaa by Moody's are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large, or an exceptionally
stable, margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, 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. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

S-58
<PAGE>

Bonds which are rated Baa are considered as medium-grade obligations (i.e., they
are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated Ba are
judged to have speculative elements; their future cannot be considered as
well-assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future. Uncertainty of position characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.

Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.

When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.

Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.

Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.

Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions,
sensitive to but slight market

S-59
<PAGE>

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

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

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. Bonds rated BB are considered speculative. The obligor's
ability to pay interest and repay principal may be affected over time by
adverse economic changes. However, business and financial alternatives can
be identified which could assist the obligor in satisfying its debt service
requirements. Bonds rated B are considered highly speculative. While bonds
in this class are currently meeting debt service requirements, the
probability of continued timely payment of principal and interest reflects
the obligor's limited margin of safety and the need for reasonable business
and economic activity throughout the life of the issue.

Bonds rated Duff-1 are judged by Duff to be of the highest credit qualify with
negligible risk factors; only slightly more than U.S. Treasury debt. Bonds
rated Duff-2, 3 and 4 are judged by Duff to be of high credit quality with
strong protection factors. Risk is modest but may vary slightly from time to
time because of economic conditions.

Bonds rated BBB+, BBB, or BBB- are considered below average protection factors
but still considered sufficient for prudent investment. Considerable BBB
variability in risk during economic cycles. Bonds rated BB+, BB or BB- are
considered below investment grade but deemed likely to meet obligations when
due. Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or down
frequently within this category.

Bonds rated B+, B or B- are considered below investment grade and possessing
risk that obligations will not be met when due. Financial protection factors
will fluctuate widely according to economic cycles, industry conditions and/or
company fortunes. Potential exists for

S-60
<PAGE>

frequent changes in the rating within this category or into a higher or lower
rating grade.

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

Bonds rated BBB are obligations for which there is currently a low expectation
of investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
other categories. Bonds rated BB are obligations for which there is a
possibility of investment risk developing. Capacity for timely repayment of
principal and interest exists, but is susceptible over time to adverse changes
in business, economic or financial conditions. Bonds rated B are obligations
for which investment risk exists. Timely repayment of principal and interest is
not sufficiently protected against adverse changes in business, economic or
financial conditions.

Bonds rated AAA by Thomson BankWatch indicate that the ability to repay
principal and interest on a timely basis is very high. Bonds rated AA indicate a
superior ability to repay principal and interest on a timely basis, with limited
incremental risk compared to issues rated in the highest category. Bonds rated
A indicate the ability to repay principal and interest is strong. Issues rated
A could be more vulnerable to adverse developments (both internal and external)
than obligations with higher ratings.

Bonds rated BBB indicate an acceptable capacity to repay principal and interest.
Issues rated "BBB" are, however, more vulnerable to adverse developments (both
internal and external) than obligations with higher ratings.

While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there are
significant uncertainties that could affect the ability to adequately service
debt obligations. Issues rated B show a higher degree of uncertainty and
therefore greater likelihood of default than higher-rated issues. Adverse
developments could well negatively affect the payment of interest and principal
on a timely basis.

S-61
<PAGE>

THE ARBOR FUND

Institutional Shares and Class A Shares

PROSPECTUS
MAY 31, 1999

GOLDEN OAK GROWTH PORTFOLIO
GOLDEN OAK VALUE PORTFOLIO
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO

INVESTMENT ADVISER
CITIZENS BANK

INVESTMENT SUB-ADVISERS
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
GOLDEN OAK GROWTH PORTFOLIO
SYSTEMATIC FINANCIAL MANAGEMENT, L.P.
GOLDEN OAK VALUE PORTFOLIO
WELLINGTON MANAGEMENT COMPANY LLP
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY PORTFOLIO
SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

Page 1 of 39
<PAGE>

HOW TO READ THIS PROSPECTUS

The Golden Oak Family of Funds is a mutual fund family that offers different
classes of shares in separate investment portfolios (Portfolios). The
Portfolios have individual investment goals and strategies. This prospectus
gives you important information about the Institutional Shares and Class A
Shares of the Portfolios that you should know before investing. Please read
this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT THE PORTFOLIOS. FOR MORE DETAILED INFORMATION
ABOUT EACH PORTFOLIO, PLEASE SEE:

PAGE
GOLDEN OAK GROWTH PORTFOLIO XXX
GOLDEN OAK VALUE PORTFOLIO XXX
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO XXX
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO XXX
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO XXX
MORE INFORMATION ABOUT RISK XXX
EACH PORTFOLIO'S OTHER INVESTMENTS XXX
THE INVESTMENT ADVISER, SUB-ADVISERS
AND PORTFOLIO MANAGERS XXX
PURCHASING, SELLING AND EXCHANGING PORTFOLIO SHARES XXX
DIVIDENDS, DISTRIBUTIONS AND TAXES XXX
FINANCIAL HIGHLIGHTS XXX
HOW TO OBTAIN MORE INFORMATION ABOUT THE
GOLDEN OAK FAMILY OF FUNDS Back Cover

Page 2 of 39
<PAGE>

INTRODUCTION

Each Portfolio is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

Each Portfolio has its own investment goal and strategies for reaching that
goal. The investment managers invest Portfolio assets in a way that they
believe will help each Portfolio achieve its goal. Still, investing in each
Portfolio involves risk and there is no guarantee that a Portfolio will achieve
its goal. An investment manager's judgments about the markets, the economy, or
companies may not anticipate actual market movements, economic conditions or
company performance, and these judgments may affect the return on your
investment. In fact, no matter how good a job an investment manager does, you
could lose money on your investment in the Portfolio, just as you could with
other investments. A Portfolio share is not a bank deposit and it is not
insured or guaranteed by the FDIC or any government agency.

The value of your investment in a Portfolio (other than the Golden Oak Prime
Obligation Money Market Portfolio) is based on the market value of the
securities the Portfolio holds. These prices change daily due to economic and
other events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Portfolio owns and the markets in which they trade.
The effect on a Portfolio of a change in the value of a single security will
depend on how widely the Portfolio diversifies its holdings.

THE GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO TRIES TO
MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, BUT THERE IS NO GUARANTEE
THAT THE PORTFOLIO WILL ACHIEVE THIS GOAL.

Page 3 of 39
<PAGE>

GOLDEN OAK GROWTH PORTFOLIO

PORTFOLIO SUMMARY

Investment Goal Total return

Investment Focus Large capitalization U.S. common
stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in common stocks of
established U.S. companies that
demonstrate positive sustainable
earnings growth

Investor Profile Investors who seek total return and
are willing to bear the risk of
investing in equity securities

INVESTMENT STRATEGY OF THE GOLDEN OAK GROWTH PORTFOLIO

The Portfolio invests primarily (at least 65% of its assets) in common stocks of
established U.S. companies with large market capitalizations (in the upper 90%
of the Frank Russell 1000 Growth Index). The Adviser has engaged
Nicholas-Applegate Capital Management as sub-adviser (Sub-Adviser) to manage the
Portfolio on a day-to-day basis. In choosing investments for the Portfolio, the
Sub-Adviser focuses on a "bottom-up" analysis that evaluates the financial
condition and competitiveness of individual companies. It uses a blend of
computer-intensive systematic disciplines and traditional fundamental research
to uncover signs of "change at the margin," positive business developments which
are not yet fully reflected in a company's stock price. The Sub-Adviser
searches for successful, improving companies that are managing change
advantageously and poised to exceed expectations.

The Sub-Adviser may sell a stock if the reason for its original purchase changes
(i.e., earnings deceleration, negative changes in expectations, decline in
fundamental quality) or a better stock is identified. Due to its investment
strategy, the Portfolio may buy and sell securities frequently. This may result
in higher transaction costs and additional capital gains tax liabilities.

PRINCIPAL RISKS OF INVESTING IN THE GOLDEN OAK GROWTH PORTFOLIO

Since it purchases equity securities, the Portfolio is subject to the risk that
stock prices will fall over short or extended periods of time. Historically,
the equity markets have moved in cycles, and the value of the Portfolio's equity
securities may fluctuate drastically from day-to-day. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer
a decline in response. These factors contribute to price volatility, which is
the principal risk of investing in the Portfolio.

Page 4 of 39
<PAGE>

The Portfolio is also subject to the risk that its market segment, large
capitalization growth stocks, may underperform other equity market segments or
the equity markets as a whole.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Portfolio's Institutional
Shares from year to year.*

<TABLE>
<S> <C>
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE RUSSELL 1000 GROWTH INDEX.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Growth Portfolio X.XX% X.XX% X.XX%*
Russell 1000 Growth Index X.XX% X.XX% X.XX%**
* Since 2/1/93
** Since 1/31/93

<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Growth Portfolio X.XX% X.XX% X.XX%*
Russell 1000 Growth Index X.XX% X.XX% X.XX%**
* Since 6/18/93
** Since 6/30/93
</TABLE>

Page 5 of 39
<PAGE>

WHAT IS AN INDEX?

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES THAT YOU MAY PAY IF YOU BUY AND HOLD PORTFOLIO
SHARES.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS A SHARES
SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None 5.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None
EXCHANGE FEE None None
MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------------------------
* This sales charge varies depending upon how much you invest. See "Purchasing Portfolio Shares."

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<CAPTION>
INSTITUTIONAL SHARES CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

* THE PORTFOLIO'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST
RECENT FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A
SPECIFIED LEVEL. THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT
ANY TIME. WITH THESE FEE WAIVERS, THE PORTFOLIO'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

GOLDEN OAK GROWTH PORTFOLIO -INSTITUTIONAL SHARES ____%
GOLDEN OAK GROWTH PORTFOLIO -CLASS A SHARES ____%

Page 6 of 39
<PAGE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISERS"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Shares $____ $____ $____ $____
Class A Shares $____ $____ $____ $____
</TABLE>

Page 7 of 39
<PAGE>

GOLDEN OAK VALUE PORTFOLIO

PORTFOLIO SUMMARY

Investment Goal Long-term capital appreciation

Investment Focus Medium to large capitalization U.S.
common stocks

Share Price Volatility Medium

Principal Investment Strategy Investing in common stocks which are
undervalued relative to a company's
earnings

Investor Profile Investors who seek long term capital
appreciation and who are willing to
bear the risks of investing in equity
securities

INVESTMENT STRATEGY OF THE GOLDEN OAK VALUE PORTFOLIO

The Portfolio invests primarily (at least 65% of its assets) in common stocks of
established U.S. companies with medium to large market capitalizations (in
excess of $3 billion). The Adviser has engaged Systematic Financial Management,
LP as sub-adviser (Sub-Adviser) to manage the Portfolio on a day-to-day basis.
In choosing investments for the Portfolio, the Sub-Adviser invests in companies
which it believes are undervalued relative to a company's historic and expected
earnings. The Sub-Adviser makes investments in these companies based on its
fundamental research and analysis of various characteristics, including
financial statements, sales and expense trends, earnings estimates, market
position of the company and industry outlook. The Sub-Adviser also looks for
"catalysts" which could positively or negatively affect prices of current and
potential Portfolio companies.

PRINCIPAL RISKS OF INVESTING IN THE GOLDEN OAK VALUE PORTFOLIO

The medium capitalization companies the Portfolio invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these medium-sized companies may have limited product
lines, markets and financial resources, and may depend on a relatively small
management group. Therefore, medium capitalization stocks may be more volatile
than those of larger companies.

Page 8 of 39
<PAGE>

The Portfolio is also subject to the risk that its market segment, medium to
large capitalization value stocks, may underperform other equity market segments
or the equity markets as a whole.

PERFORMANCE INFORMATION

The periods prior to June 23, 1997, when the Portfolio began operating,
represent the performance of the Adviser's similarly managed predecessor common
trust fund. This past performance has been adjusted to reflect current expenses
for the Institutional Shares of the Portfolio. The Adviser's common trust fund
was not a registered mutual fund so it was not subject to the same investment
and tax restrictions as the Portfolio. If it had been, the common trust fund's
performance might have been lower.

This bar chart shows changes in the performance of the Portfolio's Institutional
Shares from year to year.*

<TABLE>
<S> <C>
1989 X.XX
1990 X.XX
1991 X.XX
1992 X.XX
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE RUSSELL 1000 VALUE INDEX.

Page 9 of 39
<PAGE>

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Golden Oak Value Portfolio X.XX% X.XX% X.XX% X.XX%*
Russell 1000 Value Index X.XX% X.XX% X.XX% X.XX%**

* Since 7/1/85
** Since 6/30/85

<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
Golden Oak Value Portfolio X.XX% X.XX%*
Russell 1000 Value Index X.XX% X.XX%**

* Since 6/23/97
** Since 6/30/97
</TABLE>

WHAT IS AN INDEX?

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES THAT YOU MAY PAY IF YOU BUY AND HOLD PORTFOLIO
SHARES.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS A
SHARES SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None 5.75%
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None
EXCHANGE FEE None None
MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------------------------
* This sales charge varies depending upon how much you invest. See "Purchasing Portfolio Shares."
</TABLE>

Page 10 of 39
<PAGE>

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS A
SHARES SHARES
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .74% .74%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

GOLDEN OAK VALUE PORTFOLIO -INSTITUTIONAL SHARES ____%
GOLDEN OAK VALUE PORTFOLIO -CLASS A SHARES ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISERS"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Shares $____ $____ $____ $____
Class A Shares $____ $____ $____ $____
</TABLE>

Page 11 of 39
<PAGE>

GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO

PORTFOLIO SUMMARY

Investment Goal Current income consistent with limited
price volatility

Investment Focus Fixed income obligations of the U.S.
Treasury, U.S. government agencies and
U.S. corporations

Share Price Volatility Low

Principal Investment Strategy Investing in a portfolio of U.S.
government and corporate fixed income
securities to attempt to maximize
return while limiting risk

Investor Profile Conservative investors who want to
receive income with limited risk of
share price volatility

INVESTMENT STRATEGY OF THE GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO

The Portfolio primarily invests (at least 65% of its assets) in fixed income
obligations issued by the U.S. Treasury and U.S. government agencies, including
mortgage backed securities rated in one of the top two ratings categories, and
in U.S. corporate debt rated in one of the top three ratings categories. In
selecting investments for the Portfolio, the Adviser analyzes current market
conditions and anticipated changes in bond prices to attempt to provide the
highest level of income and capital appreciation, consistent with keeping a low
level of share price fluctuation. The Adviser actively manages the maturity of
the Portfolio and purchases securities which will, on average, mature in three
to ten years. Under normal circumstances, the Adviser anticipates that the
Portfolio's dollar-weighted average maturity will be approximately nine years;
however, the Adviser may vary this average maturity substantially in
anticipation of a change in the interest rate environment. Securities will be
considered for sale in the event of or in anticipation of a credit downgrade; in
order to change the duration or sector weighting of the Portfolio; or, to
realize an aberration in a security's market valuation.

PRINCIPAL RISKS OF INVESTING IN THE GOLDEN OAK INTERMEDIATE-TERM INCOME
PORTFOLIO

The prices the Portfolio's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers. Generally, the Portfolio's
fixed income securities will decrease in value if interest rates rise and vice
versa, and the volatility of lower rated securities is even greater than that of
higher rated securities. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.

Page 12 of 39
<PAGE>

The Portfolio is also subject to the risk that its investment strategy which
focuses on U.S. government and U.S. corporate fixed income securities with
intermediate maturities, may perform differently than other mutual funds which
focus on fixed income securities with longer maturities or invest in other asset
classes.

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Portfolio's Institutional
Shares from year to year.*

<TABLE>
<S> <C>
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN BROTHERS INTERMEDIATE
GOVERNMENT/CORPORATE INDEX.

Page 13 of 39
<PAGE>

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Intermediate-Term Income Portfolio X.XX% X.XX% X.XX%*

Lehman Brothers Intermediate Government/Corporate Index X.XX% X.XX% X.XX%**

* Since 2/1/93
** Since 1/31/93

<CAPTION>
CLASS A SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Intermediate Term Income Portfolio X.XX% X.XX% X.XX%*

Lehman Brothers Intermediate Government/Corporate Index X.XX% X.XX% X.XX%**

* Since 6/18/93
** Since 6/30/93
</TABLE>

WHAT IS AN INDEX?

An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment adviser
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The Lehman Brothers Intermediate
Government/Corporate Bond Index is a widely-recognized, market value-weighted
(higher market value bonds have more influence than lower market value bonds)
index of U.S. Treasury securities, U.S. government agency obligations, corporate
debt backed by the U. S. government, fixed-rate nonconvertible corporate debt
securities, Yankee bonds and nonconvertible debt securities issued by or
guaranteed by foreign governments and agencies. All securities in the index are
rated investment grade (BBB) or higher, with maturities of 1 to 10 years.

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES THAT YOU MAY PAY IF YOU BUY AND HOLD PORTFOLIO
SHARES.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None 4.50%
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None
EXCHANGE FEE None None
MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------------------------
* This sales charge varies depending upon how much you invest. See "Purchasing Portfolio Shares."
</TABLE>

Page 14 of 39
<PAGE>

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES CLASS A SHARE
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .50% .50%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO -INSTITUTIONAL SHARES ____%
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO -CLASS A SHARES ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISER"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Shares $____ $____ $____ $____
Class A Shares $____ $____ $____ $____
</TABLE>

Page 15 of 39
<PAGE>

GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO

PORTFOLIO SUMMARY

Investment Goal Current income exempt from both
federal and Michigan state income
taxes, consistent with preservation of
capital

Investment Focus Tax-free Michigan municipal securities

Share Price Volatility Medium

Principal Investment Strategy Invests in municipal obligations which
pay interest that is exempt from both
federal and Michigan state income tax

Investor Profile Conservative taxable investors who
want to receive current income exempt
from federal and Michigan state income
tax and are willing to bear the
moderate risk of investing in a
portfolio of intermediate-term
securities affected by changes in
economic conditions and governmental
policies within Michigan

INVESTMENT STRATEGY OF THE GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO

The Portfolio invests substantially all of its assets (at least 80%) in
municipal securities that generate income exempt from federal and Michigan state
income taxes. These securities include securities of municipal issuers located
in Michigan, the District of Columbia, Puerto Rico and other U.S. territories
and possessions. The Portfolio will invest most of its assets in securities
that are not subject to federal taxes, including the alternative minimum tax,
but it can purchase a limited amount of taxable securities. The Portfolio's
Adviser will purchase investment grade municipal securities and attempt to
maintain an average weighted portfolio maturity of three to ten years. The
maximum maturity for any individual security is thirty years. In selecting
securities for the Portfolio, the Adviser will consider each security's yield
and total return potential relative to other available municipal securities.
Securities will be considered for sale in the event of or in anticipation of a
credit downgrade; in order to change the duration or sector weighting of the
Portfolio; or, to realize an aberration in a security's market valuation.

PRINCIPAL RISKS OF INVESTING IN THE GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO

The prices the Portfolio's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers,

Page 16 of 39
<PAGE>

including governments. Generally, the Portfolio's fixed income securities will
decrease in value if interest rates rise and vice versa, and the volatility of
lower rated securities is even greater than that of higher rated securities.
Also, longer-term securities are generally more volatile, so the average
maturity or duration of these securities affects risk.

The Portfolio's concentration of investments in securities of issuers located in
a Michigan subjects the Portfolio to economic conditions and government policies
within that state. As a result, the Portfolio will be more susceptible to
factors which adversely affect issuers of Michigan obligations than a mutual
fund which does not have as great a concentration in Michigan municipal
obligations.

The Portfolio is also subject to the risk that its market segment, Michigan
municipal debt securities, may underperform other fixed income market segments
or the fixed income markets as a whole.

PERFORMANCE INFORMATION

The periods prior to June 25, 1997, when the Portfolio began operating,
represent the performance of the Adviser's similarly managed predecessor common
trust fund. This past performance has been adjusted to reflect current expenses
for the Institutional Shares of the Portfolio. The Adviser's common trust fund
was not a registered mutual fund so it was not subject to the same investment
and tax restrictions as the Portfolio. If it had been, the common trust fund's
performance might have been lower.

This bar chart shows changes in the performance of the Portfolio's Institutional
Shares from year to year.*

<TABLE>
<S> <C>
1989 X.XX
1990 X.XX
1991 X.XX
1992 X.XX
1993 X.XX
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

Page 17 of 39
<PAGE>

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)

</TABLE>

* The performance information shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

THIS TABLE COMPARES THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998 TO THOSE OF THE LEHMAN 3-10 YEAR MUNI BLENDED INDEX.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Golden Oak Michigan Tax Free Bond Portfolio X.XX% X.XX% X.XX% X.XX%*

Lehman 3-10 Year Muni Blended Index X.XX% X.XX% X.XX% X.XX%**

* Since 7/1/87
** Since 6/30/87

<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
- --------------------------------------------------------------------------------
<S> <C> <C>
Golden Oak Michigan Tax Free Bond Portfolio X.XX% X.XX%*
Lehman 3-10 Year Muni Blended Index X.XX% X.XX%**

* Since 6/23/97
** Since 6/30/97
</TABLE>

WHAT IS AN INDEX?

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES THAT YOU MAY PAY IF BUY AND HOLD PORTFOLIO SHARES.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Page 18 of 39

<PAGE>

MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------------------------
* This sales charge varies depending upon how much you invest. See "Purchasing Portfolio Shares."
</TABLE>

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO -INSTITUTIONAL SHARES ____%
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO -CLASS A SHARES ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISERS"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Shares $____ $____ $____ $____
Class A Shares $____ $____ $____ $____

</TABLE>

Page 19 of 39
<PAGE>

GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO

PORTFOLIO SUMMARY

Investment Goal Preserve principal value and maintain a
high degree of liquidity while providing
current income

Investment Focus Money market instruments

Share Price Volatility Very low

Principal Investment Strategy Investing in a broad range of short-term
high quality U.S. dollar-denominated
debt securities

Investor Profile Conservative investors who want to
receive current income through a liquid
investment

INVESTMENT STRATEGY OF THE GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO

Page 20 of 39
<PAGE>

PRINCIPAL RISKS OF INVESTING IN THE GOLDEN OAK PRIME OBLIGATION MONEY MARKET
PORTFOLIO

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Portfolio's Institutional
Shares from year to year.*

<TABLE>
<S> <C>
1994 X.XX
1995 X.XX
1996 X.XX
1997 X.XX
1998 X.XX

BEST QUARTER WORST QUARTER

X.XX% X.XX%
(X/X/XX) (X/X/XX)
</TABLE>

* The performance shown above is based on a calendar year.
The Fund's performance from 1/1/99 to 3/31/99 was XX.XX%.

Call 1-800-808-4920 for the Fund's most current 7-day yield.

Page 21 of 39
<PAGE>

THIS TABLE SHOWS THE PORTFOLIO'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS
ENDING DECEMBER 31, 1998.

<TABLE>
<CAPTION>
INSTITUTIONAL SHARES 1 YEAR 5 YEARS SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Prime Obligation Money Market Portfolio X.XX% X.XX% X.XX%*

* Since 2/1/93

<CAPTION>
CLASS A SHARES 1 YEAR SINCE INCEPTION
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Golden Oak Prime Obligation Money Market Portfolio X.XX% X.XX%

* Since 1/20/94
</TABLE>

Page 22 of 39
<PAGE>

PORTFOLIO FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES THAT YOU MAY PAY IF YOU BUY AND HOLD PORTFOLIO
SHARES.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES CLASS A SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON PURCHASES (AS A PERCENTAGE OF OFFERING PRICE) None None
MAXIMUM DEFERRED SALES CHARGE (LOAD) (AS A PERCENTAGE OF NET ASSET VALUE) None None
MAXIMUM SALES CHARGE (LOAD) IMPOSED ON REINVESTED DIVIDENDS AND OTHER DISTRIBUTIONS None None
(AS A PERCENTAGE OF OFFERING PRICE)
REDEMPTION FEE (AS A PERCENTAGE OF AMOUNT REDEEMED, IF APPLICABLE) None None
EXCHANGE FEE None None
MAXIMUM ACCOUNT FEE None None
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

ANNUAL PORTFOLIO OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)*

<TABLE>
<CAPTION>
INSTITUTIONAL
SHARES CLASS A SHARE
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Advisory Fees .30% .30%
Distribution and Service (12b-1) Fees None .25%
Other Expenses .XX% .XX%
- --------------------------------------------------------------------------------
Total Annual Portfolio Operating Expenses X.XX% X.XX%
</TABLE>

GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO -INSTITUTIONAL SHARES ____%
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO -CLASS A SHARES ____%

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER AND SUB-ADVISERS"
AND "DISTRIBUTION OF PORTFOLIO SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Portfolio with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Portfolio for the time periods indicated and that
you sell your shares at the end of the period.

Page 23 of 39
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Institutional Shares $____ $____ $____ $____
Class A Shares $____ $____ $____ $____
</TABLE>

Page 24 of 39
<PAGE>

MORE INFORMATION ABOUT RISK

EQUITY RISK - Equity securities include GOLDEN OAK GROWTH PORTFOLIO
public and privately issued equity
securities, common and preferred stocks, GOLDEN OAK VALUE PORTFOLIO
warrants, rights to subscribe to common
stock and convertible securities, as well
as instruments that attempt to track the
price movement of equity indices.
Investments in equity securities and equity
derivatives in general are subject to
market risks that may cause their prices to
fluctuate over time. The value of
securities convertible into equity
securities, such as warrants or convertible
debt, is also affected by prevailing
interest rates, the credit quality of the
issuer and any call provision. Fluctuations
in the value of equity securities in which
a mutual fund invests will cause a fund's
net asset value to fluctuate. An
investment in a portfolio of equity
securities may be more suitable for
long-term investors who can bear the risk
of these share price fluctuations.

FIXED INCOME RISK - The market value of Golden Oak Intermediate-Term
fixed income investments change in response Income Portfolio
to interest rate changes and other factors.
During periods of falling interest rates, Golden Oak Michigan Tax Free
the values of outstanding fixed income Bond Portfolio
securities generally rise. Moreover, while
securities with longer maturities tend to
produce higher yields, the prices of longer
maturity securities are also subject to
greater market fluctuations as a result of
changes in interest rates. In addition to
these fundamental risks, different types of
fixed income securities may be subject to
the following additional risks:

CALL RISK - During periods of falling Golden Oak Intermediate-Term
interest rates, certain debt Income Portfolio
obligations with high interest rates
may be prepaid (or "called") by the Golden Oak Michigan Tax Free
issuer prior to maturity. This may Bond Portfolio
cause a Portfolio's average weighted
maturity to fluctuate, and may require
a Portfolio to invest the resulting
proceeds at lower interest rates.

CREDIT RISK - The possibility that an Golden Oak Intermediate-Term
issuer will be unable to make timely Income Portfolio
payments of either principal or
interest. Golden Oak Michigan Tax Free
Bond Portfolio

Page 25 of 39

<PAGE>

EVENT RISK - Securities may suffer Golden Oak Intermediate-Term
declines in credit quality and market Income Portfolio
value due to issuer restructurings or
other factors. This risk should be Golden Oak Michigan Tax Free
reduced because of a Portfolio's Bond Portfolio
multiple holdings.

MUNICIPAL ISSUER RISK - There may be Golden Oak Michigan Tax Free
economic or political changes that impact Bond Portfolio
the ability of municipal issuers to repay
principal and to make interest payments on
municipal securities. Changes to the
financial condition or credit rating of
municipal issuers may also adversely affect
the value of the Fund's municipal
securities. Constitutional or legislative
limits on borrowing by municipal issuers
may result in reduced supplies of municipal
securities. Moreover, certain municipal
securities are backed only by a municipal
issuer's ability to levy and collect taxes.
In addition, the Portfolio's concentration
of investments in issuers located in a
single state makes the Portfolio more
susceptible to adverse political or
economic developments affecting that state.
The Portfolio also may be riskier than
mutual funds that buy securities of issuers
in numerous states.

YEAR 2000 RISK - The Portfolios depend on All Portfolios
the smooth functioning of computer systems
in almost every aspect of their business.
Like other mutual funds, businesses and
individuals around the world, the
Portfolios could be adversely affected if
the computer systems used by its service
providers do not properly process dates on
and after January 1, 2000, and distinguish
between the year 2000 and the year 1900.
The Portfolios have asked their service
providers whether they expect to have their
computer systems adjusted for the year 2000
transition, and is seeking assurances from
each service provider that they are
devoting significant resources to prevent
material adverse consequences to the
Portfolios. While it is likely that such
assurances will be obtained, the Portfolios
and their shareholders may experience
losses if these assurances prove to be
incorrect, or as a result of year 2000
computer difficulties experienced by
issuers of portfolio securities or third
parties, such as custodians, banks,
broker-dealers or others with which the
Portfolios do business.

Page 26 of 39
<PAGE>

EACH PORTFOLIO'S OTHER INVESTMENTS

This prospectus describes the Portfolios' primary strategies, and the Portfolios
will normally invest in the types of securities described in this prospectus.
However, in addition to the investments and strategies described in this
prospectus, each Portfolio also may invest in other securities, use other
strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in our Statement of Additional Information. Of course, the Fund cannot
guarantee that any Portfolio will achieve its investment goal.

The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, each Portfolio may invest up to
100% of its assets in cash or money market instruments that would not ordinarily
be consistent with a Portfolio's objectives (other than the Golden Oak Prime
Obligation Money Market Fund). A Portfolio will do so only if the Adviser or
Sub-Adviser believes that the risk of loss outweighs the opportunity for capital
gains or higher income.

INVESTMENT ADVISER

The Investment Adviser makes investment decisions for each of the Portfolios,
other than the Portfolios which utilize a sub-adviser, and continuously reviews,
supervises and administers the Portfolios' respective investment programs. The
Investment Adviser oversees the Sub-Advisers to ensure compliance with the
sub-advised Funds' investment policies and guidelines, and monitors each
Sub-Adviser's adherence to its investment style. The Board of Trustees of The
Arbor Fund supervises the Adviser and Sub-Advisers and establishes policies that
the Adviser and Sub-Advisers must follow in their management activities.

Citizen Bank serves as the Adviser to the Portfolios. Citizens Bank has managed
bank common funds, pension plan assets and personal trust assets since 1927. As
of January 1, 1999, Citizens Bank had approximately $3.2 billion in assets under
management. For the fiscal year ended January 31, 1999, Citizens Bank received
advisory fees as a percentage of average daily net assets of:

<TABLE>
<S> <C>
GOLDEN OAK GROWTH PORTFOLIO [VAR:Advisor1.Portfolio1.Fees] %
GOLDEN OAK VALUE PORTFOLIO [VAR:Advisor1.Portfolio2.Fees] %
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO [VAR:Advisor1.Portfolio3.Fees] %
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO [VAR:Advisor1.Portfolio4.Fees] %
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO [VAR:Advisor1.Portfolio5.Fees] %
</TABLE>

Nicholas-Applegate Capital Management (Nicholas-Applegate) manages the Golden
Oak Growth Portfolio on a day-to-day basis. Nicholas-Applegate selects, buys
and sells securities for the Portfolio under the supervision of the Adviser and
the Board of Trustees. For the fiscal year ended January 31, 1999,
Nicholas-Applegate received sub-advisory fees as a percentage of average
daily net assets of:

<TABLE>
<S> <C>
GOLDEN OAK GROWTH PORTFOLIO [VAR:Sub-Advisor1.Portfolio1.Fees] %
</TABLE>

Systematic Financial Management, L.P. (Systematic) manages the Golden Oak Value
Portfolio on a day-to-day basis. Systematic selects, buys and sells securities
for the Portfolio under the supervision of the Adviser and the Board of
Trustees. For the fiscal year ended January 31, 1999, Systematic received
sub-advisory fees as a percentage of average daily net assets of:

<TABLE>
<S> <C>
GOLDEN OAK VALUE PORTFOLIO [VAR:Sub-Advisor2.Portfolio2.Fees] %
</TABLE>

Page 27 of 39
<PAGE>

Wellington Management Company, LLP (WMC) manages the Golden Oak Prime Obligation
Money Market Portfolio on a day-to-day basis. WMC selects, buys and sells
securities for the Portfolio under the supervision of the Adviser and the Board
of Trustees. WMC and its predecessor organizations have provided investment
services to investment companies, employee benefit plans, endowments,
foundations, and other institutions and individuals since 1993. For the
fiscal year ended January 31, 1999, WMC received sub-advisory fees as a
percentage of average daily net assets of:

<TABLE>
<S> <C>
GOLDEN OAK PRIME OBLIGATION [VAR:Sub-Advisor3.Portfolio5.Fees] %
MONEY MARKET PORTFOLIO
</TABLE>

PORTFOLIO MANAGERS

Christopher W. Wheeler serves as Vice President and Trust Officer of Citizens
Bank. He has managed the Golden Oak Intermediate-Term Income Portfolio since
February, 1996. He has managed the Adviser's fixed income Portfolios and trust
accounts since 1993.

Richard C. Cross serves as Vice President and Trust Officer of Citizens Bank.
He has managed the Golden Oak Michigan Tax Free Bond Portfolio since October,
1997. He has more than 17 years of investment experience. Prior to joining
Citizens Bank, Mr. Cross had significant experience in managing fixed income
investments.

Larry Speidell, CFA and Partner, serves as the director of Nicholas-Applegate's
global/systematic portfolio management and research group. Portfolios are
managed by a team with lead portfolio managers having full discretion over final
buy and sell decisions. Mr. Speidell has over 25 years of investment
experience. Prior to joining Nicholas-Appelgate in 1994, Mr. Speidell was with
Batterymarch Financial Management and Putnam Management Company.

John Kane, Partner, Portfolio Manager, U.S. Systematic is a lead portfolio
manager for the Golden Oak Growth Portfolio. He has more than 25 years of
investment experience. Before joining Nicholas-Applegate in 1994, Mr. Kane was
with ARCO Investment Management Company and General Electric Company.

Gyanendra Kumar Joshi serves as Senior Managing Director of Systematic. He has
managed the Golden Oak Value Portfolio since June, 1997. He has more than 26
years of investment experience. Prior to joining Systematic, Mr. Joshi served
as Managing Director of Mitchell Hutchins Institutional Investors.

Kevin McCreesh, CFA serves as Managing Director and Senior Portfolio Manager of
Systematic Investment Management. Mr. McCreesh co-manages the Golden Oak Value
Portfolio with Mr. Joshi and has been part of the investment team with Mr. Joshi
since 1990 at Systematic and at Mitchell Hutchins Institutional Investors.

Page 28 of 39
<PAGE>

PURCHASING, SELLING AND EXCHANGING PORTFOLIO SHARES

This section tells you how to buy, sell (sometimes called "redeem") and exchange
Institutional Shares and Class A Shares of the Portfolios.

The classes have different expenses and other characteristics.

INSTITUTIONAL SHARES
- No sales charge
- No 12b-1 fees or shareholder fees
- $1,000,000 minimum initial investment

CLASS A SHARES
- Front-end sales charge
- 12b-1 fees
- $1,000 minimum initial investment

For some investors the minimum initial investment may be lower.

Institutional Shares are for financial institutions investing for their own or
their customers' accounts. For information on how to open an account and set up
procedures for placing transactions call 1-800-808-4920.

Class A Shares are for individual and institutional investors.

HOW TO PURCHASE PORTFOLIO SHARES

You may purchase shares directly by:
- - Mail (Class A only)
- - Telephone
- - Wire
- - Direct Deposit, or
- - Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-808-4920, or complete and
send in the enclosed application. Unless you arrange to pay by wire or through
direct deposit or ACH, write your check, payable in U.S. dollars, to "Golden Oak
Family of Funds" and include the name of the appropriate Portfolio(s) on the
check. You cannot purchase Institutional Shares by check. A Portfolio cannot
accept third-party checks, credit cards, credit card checks or cash.

Page 29 of 39
<PAGE>

GENERAL INFORMATION

You may purchase shares on any day that the New York Stock Exchange and, for the
Golden Oak Prime Obligation Money Market Portfolio, the Federal Reserve are open
for business (a Business Day). Shares cannot be purchased by Federal Reserve
Wire on days when either the New York Stock Exchange or the Federal Reserve is
closed.

A Portfolio may reject any purchase order if it determines that accepting the
order would not be in the best interests of the Portfolio or its shareholders.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after a Portfolio receives your purchase order plus, in
the case of Class A Shares, the applicable front-end sales charge.

Each Portfolio (except the Golden Oak Prime Obligation Money Market), calculates
its NAV once each Business Day at the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern time). So,
for you to receive the current Business Day's NAV, generally a Portfolio must
receive your purchase order before 4:00 p.m. Eastern time.

The Golden Oak Prime Obligation Money Market Portfolio calculates its NAV once
each Business Day at 12:00 noon Eastern time. So, for you to be eligible to
receive dividends declared on the day you submit your purchase order, generally
the Portfolio must receive your order before 12:00 noon Eastern time and federal
funds (readily available funds) before 12:00 noon Eastern time.

HOW WE CALCULATE NAV

NAV for one Portfolio share is the value of that share's portion of all of the
net assets in the Portfolio.

In calculating NAV, a Portfolio generally values its investment portfolio at
market price (except the Golden Oak Prime Obligation Money Market Portfolio).
If market prices are unavailable or a Portfolio thinks that they are unreliable,
fair value prices may be determined in good faith using methods approved by the
Board of Trustees.

In calculating NAV for the Golden Oak Prime Obligation Money Market Portfolio,
we generally value the Portfolio's investment portfolio using the amortized cost
valuation method, which is described in detail in our Statement of Additional
Information. If this method is determined to be unreliable during certain
market conditions or for other reasons, the Portfolio may value its securities
at market price or fair value prices may be determined in good faith using
methods approved by the Board of Trustees.

Page 30 of 39
<PAGE>

MINIMUM PURCHASES

To purchase shares for the first time, you must invest in any Portfolio at
least:

<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Institutional Shares $1,000,000
Class A Shares $1,000 ($500 minimum for an IRA)
</TABLE>

Your subsequent investments in Class A Shares of any Portfolio must be made in
amounts of at least $50. There is no minimum for subsequent investments in
Institutional Shares.

A Fund may accept investments of smaller amounts for either class of shares at
it discretion.

SYSTEMATIC INVESTMENT PLAN (CLASS A ONLY)

If you have a checking or savings account with a bank, you may purchase Class A
shares automatically through regular deductions by ACH from your account in
amounts of at least $50 per month.

SALES CHARGES

FRONT-END SALES CHARGES - CLASS A SHARES

The offering price of Class A Shares is the NAV next calculated after a
Portfolio receives your request, plus the front-end sales load.

The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment:

<TABLE>
<CAPTION>
YOUR SALES CHARGE AS YOUR SALES CHARGE AS
IF YOUR INVESTMENT IS: A PERCENTAGE OF A PERCENTAGE OF YOUR
OFFERING PRICE NET INVESTMENT
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Growth Portfolio Less than $50,000 5.75% 6.10%
$50,000 but less than $99,999 4.50% 4.71%
Golden Oak Value Portfolio $100,000 but less than $249,999 3.50% 3.63%
$250,000 but less than $499,999 2.60% 2.67%
$500,000 but less than $999,999 2.00% 2.04%
$1,000,000 and over 0.00% 0.00%
- ------------------------------------------------------------------------------------------------------------------------------
Golden Oak Intermediate-Term Income Less than $100,000 4.50% 4.71%
Portfolio $100,000 but less than $249,000 3.50% 3.63%
$250,000 but less than $499,999 2.60% 2.67%
Golden Oak Michigan Tax Free Bond $500,000 but less than $999,999 2.00% 2.04%
Portfolio $1,000,000 and over 0.00% 0.00%
</TABLE>

There is no sales charge imposed on shares of the Golden Oak Prime Obligation
Money Market Portfolio.

Page 31 of 39
<PAGE>

WAIVER OF FRONT-END SALES CHARGE -CLASS A SHARES

No sales charge is imposed on shares of a Portfolio:
- - issued in plans of reorganization, such as mergers involving the Portfolios;
- - sold to dealers or brokers that have a sales agreement with the Distributor,
for their own account or for retirement plans for their employees or sold to
employees (and their spouses) of dealers or brokers that certify to the
Distributor at the time of purchase that such purchase is for their own
account (or for the benefit of such employees' minor children);
- - purchased in aggregate amounts of $1 million or more by tax exempt
organizations enumerated in Section 501(c) of the Code or employee benefit
plans created under Sections 401 or 457 of the Code;
- - sold to Trustees and officers of The Arbor Fund and employees of the Adviser
and its affiliates;
- - sold to agency, custody and fiduciary accounts of the Adviser and its
affiliates; or
- - purchased in connection with any asset allocation plan established by the
Adviser.

REDUCED SALES CHARGES --CLASS A SHARES

RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate, this
right allows you to add the value of the Class A Shares you already own to the
amount that you are currently purchasing. The Portfolio will combine the value
of your current purchases with the current value of any Class A Shares you
purchased previously for (i) your account, (ii) your spouse's account, (iii) a
joint account with your spouse, or (iv) your minor children's trust or custodial
accounts. A fiduciary purchasing shares for the same fiduciary account, trust
or estate may also use this right of accumulation. The Portfolio will only
consider the value of Class A Shares purchased previously that were sold subject
to a sales charge. TO BE ENTITLED TO A REDUCED SALES CHARGE BASED ON SHARES
ALREADY OWNED, YOU MUST ASK US FOR THE REDUCTION AT THE TIME OF PURCHASE. You
must provide the Portfolio with your account number(s) and, if applicable, the
account numbers for your spouse and/or children (and provide the children's
ages). The Portfolio may amend or terminate this right of accumulation at any
time.

LETTER OF INTENT. You may purchase Class A Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase
Class A Shares of a Portfolio over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. The Portfolio
will only consider the value of Class A Shares sold subject to a sales charge.
As a result, Class A Shares purchased with dividends or distributions will not
be included in the calculation. To be entitled to a reduced sales charge based
on shares you intend to purchase over the 13-month period, you must send the
Portfolio a Letter of Intent. In calculating the total amount of purchases you
may include in your letter purchases made up to 90 days before the date of the
Letter. The 13-month period begins on the date of the first purchase, including
those purchases made in the 90-day period before the date of the Letter. Please
note that the purchase price of these prior purchases will not be adjusted.

You are not legally bound by the terms of your Letter of Intent to purchase the
amount of your shares stated in the Letter. The Letter does, however, authorize
the Portfolio to hold in escrow 5.0% of the total amount you intend to purchase.
If you do not complete the total intended purchase at the end of the 13-month
period, the Portfolio's transfer agent will redeem the necessary portion of the
escrowed shares to make up the difference between the reduced rate sales

Page 32 of 39
<PAGE>

charge (based on the amount you intended to purchase) and the sales charge
that would normally apply (based on the actual amount you purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the appropriate
sales charge rate, the Portfolio will combine same day purchases of Class A
Shares (that are subject to a sales charge) made by you, your spouse and your
minor children (under age 21). This combination also applies to Class A Shares
you purchase with a Letter of Intent.

GENERAL INFORMATION ABOUT SALES CHARGES

Your securities dealer is paid a commission when you buy your shares and is paid
a servicing fee as long as you hold your shares. Your securities dealer or
servicing agent may receive different levels of compensation depending on which
Class of shares you buy.

From time to time, some financial institutions, including brokerage firms
affiliated with the Adviser, may be reallowed up to the entire sales charge.
Firms that receive a reallowance of the entire sales charge may be considered
underwriters for the purpose of federal securities law.

The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling shares of the Portfolios.

HOW TO SELL YOUR PORTFOLIO SHARES

Holders of Institutional Shares may sell shares by following procedures
established when they opened their account or accounts. If you have questions,
call 1-800-808-4920.

If you own your shares through an account with a broker or other institution,
contact that broker or institution to sell your shares.

If you own your shares directly, you may sell your shares on any Business Day by
contacting a Portfolio directly by mail or telephone at 1-800-808-4920.

If you would like to sell $50,000 or more of your shares, or would like the
proceeds sent to a third-party or an address other than your own, please notify
the Portfolio in writing and include a signature guarantee by a bank or other
financial institution (a notarized signature is not sufficient).

SYSTEMATIC WITHDRAWAL PLAN (CLASS A ONLY)

If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Portfolio. The
proceeds of each withdrawal will be mailed to you by check or, if you have a
checking or savings account with a bank, electronically transferred to your
account.

Page 33 of 39
<PAGE>

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within 7 days after we receive your
request. Your proceeds can be wired to your bank account (subject to a $10 fee)
or sent to you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR
THROUGH ACH, REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 DAYS FROM YOUR DATE OF PURCHASE).

REDEMPTIONS IN KIND

INVOLUNTARY REDEMPTIONS OF YOUR SHARES

If your account balance drops below the required minimum, the Portfolio may
redeem your shares. The account balance minimums are:

<TABLE>
<CAPTION>
CLASS DOLLAR AMOUNT
<S> <C>
Institutional Shares $1,000,000
Class A Shares $1,000
</TABLE>

But, a Portfolio will always give you at least 60 days' written notice to give
you time to add to your account and avoid the involuntary redemption of your
shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

HOW TO EXCHANGE YOUR SHARES

You may exchange your shares on any Business Day by contacting us directly by
mail or telephone.

You may also exchange shares through your financial institution by mail or
telephone.

IF YOU RECENTLY PURCHASED SHARES BY CHECK OR THROUGH ACH, YOU MAY NOT BE ABLE TO
EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO 15 DAYS
FROM YOUR DATE OF PURCHASE). This exchange privilege may be changed or canceled
at any time upon 60 days' notice.

Page 34 of 39
<PAGE>

CLASS A SHARES

You may exchange Class A Shares of any Portfolio for Class A Shares of any other
Portfolio. If you exchange shares that you purchased without a sales charge or
with a lower sales charge into a Portfolio with a sales charge or with a higher
sales charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If you
exchange shares into a Portfolio with the same, lower or no sales charge there
is no incremental sales charge for the exchange.

AUTOMATIC EXCHANGE OF YOUR SHARES

If your account balance for Institutional Shares drops below $1,000,000 because
of redemptions, your shares will be automatically exchanged for Class A Shares.
You will not be charged the applicable Class A sales charge for an automatic
exchange. But, a Portfolio will always give you at least 30 days' written
notice to give you time to add to your account and avoid the automatic exchange
of your shares.

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Portfolio shares over the telephone is
extremely convenient, but not without risk. Although the Portfolio has certain
safeguards and procedures to confirm the identity of callers and the
authenticity of instructions, the Portfolio is not responsible for any losses or
costs incurred by following telephone instructions we reasonably believe to be
genuine. If you or your financial institution transact with the Portfolio over
the telephone, you will generally bear the risk of any loss.

Page 35 of 39
<PAGE>

DISTRIBUTION OF PORTFOLIO SHARES

Each Portfolio has adopted a distribution plan that allows the Portfolio to pay
distribution and service fees for the sale and distribution of Class A Shares,
and for services provided to Class A shareholders. Because these fees are paid
out of a Portfolio's assets continuously, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.

Distribution fees, as a percentage of average daily net assets are 0.25% for
Class A Shares.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Portfolio distributes its income as follows:

Golden Oak Growth Portfolio Quarterly
Golden Oak Value Portfolio Quarterly
Golden Oak Intermediate-Term Income Portfolio Monthly
Golden Oak Michigan Tax Free Bond Portfolio Monthly
Golden Oak Prime Obligation Money Market Portfolio Monthly

Each Portfolio makes distributions of capital gains, if any, at least annually.
If you own Portfolio shares on a Portfolio's record date, you will be entitled
to receive the distribution.

You will receive dividends and distributions in the form of additional Portfolio
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify the Portfolio in writing prior to the date of the distribution.
Your election will be effective for dividends and distributions paid after the
Portfolio receives your written notice. To cancel your election, simply send
the Portfolio written notice.

Taxes

PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax
issues that affect the Funds and their shareholders. This summary is based on
current tax laws, which may change.

The Golden Oak Michigan Tax Free Bond Portfolio intends to distribute income
that is exempt from both federal taxes and Michigan state taxes. The Portfolio
may invest a portion of its assets in securities that generate taxable income
for federal or state income taxes. Any capital gains distributed by the
Portfolio may be taxable.

MORE INFORMATION ABOUT TAXES IS IN THE STATEMENT OF ADDITIONAL INFORMATION.

Page 36 of 39
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Institutional
Shares and Class A Shares of each Portfolio. This information is intended to
help you understand each Portfolio's financial performance for the past five
years, or, if shorter, the period of the Portfolio's operations. Some of this
information reflects financial information for a single Portfolio share. The
total returns in the tables represent the rate that you would have earned (or
lost) on an investment in a Portfolio, assuming you reinvested all of your
dividends and distributions. This information has been audited by
PriceWaterhouseCoopers LLP, independent public accountants. Their report, along
with each Portfolio's financial statements, appears in the annual report that
accompanies our Statement of Additional Information. You can obtain the annual
report, which contains more performance information, at no charge by calling
1-800-545-6331.

Page 37 of 39
<PAGE>

THE ARBOR FUND
GOLDEN OAK FAMILY OF FUNDS

INVESTMENT ADVISER

Citizens Bank
328 S. Saginaw Street
Flint, Michigan 48502

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, DC 20036

More information about the Golden Oak Family of Funds is available without
charge through the following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated May 31, 1999, includes detailed information about the Golden Oak
Family of Funds. The SAI is on file with the SEC and is incorporated by
reference into this prospectus. This means that the SAI, for legal purposes, is
a part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

BY TELEPHONE: Call 1-800-808-4920

Page 38 of 39
<PAGE>

BY MAIL: Write to us
Golden Oak Family of Funds
c/o The Arbor Fund
P.O. Box 419947
Kansas City, Missouri 64141-6947

BY E-MAIL: [VAR:Fund.EmailAddress]]

BY INTERNET: [VAR:Fund.InternetAddress]]

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-annual
reports, as well as other information about The Arbor Fund, from the SEC's
website ("http://www.sec.gov"). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009. The Arbor Fund's Investment Company Act
registration number is 811-7102.

Page 39 of 39

<PAGE>

GOLDEN OAK FAMILY OF FUNDS

TRUST:

THE ARBOR FUND

PORTFOLIOS:

GOLDEN OAK GROWTH PORTFOLIO
GOLDEN OAK VALUE PORTFOLIO
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO
GOLDEN OAK PRIME OBLIGATION MONEY MARKET PORTFOLIO

INVESTMENT ADVISER:

CITIZENS BANK

This STATEMENT OF ADDITIONAL INFORMATION is not a prospectus. It is intended to
provide additional information regarding the activities and operations of the
following Portfolios of the Trust: Golden Oak Growth, Golden Oak Value, Golden
Oak Intermediate-Term Income, Golden Oak Michigan Tax Free Bond and Golden Oak
Prime Obligation Money Market Portfolios. This Statement of Additional
Information should be read in conjunction with the Prospectus dated
May 31, 1999. A Prospectus may be obtained by calling 1-800-545-6331.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S> <C>
THE PORTFOLIOS AND THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
INVESTMENT OBJECTIVES AND POLICES. . . . . . . . . . . . . . . . . . . . . . . . S-__
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . S-__
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE ADVISER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE SUB-ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE ADMINISTRATOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
THE CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
LEGAL COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . S-__
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . S-__
PERFORMANCE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__

<PAGE>

COMPUTATION OF YIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
CALCULATION OF TOTAL RETURN. . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . S-__
LETTER OF INTENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . S-__
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
TRADING PRACTICES AND BROKERAGE. . . . . . . . . . . . . . . . . . . . . . . . . S-__
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
SHAREHOLDER LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
LIMITATION OF TRUSTEES' LIABILITY. . . . . . . . . . . . . . . . . . . . . . . . S-__
5% AND 25% SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-__
DESCRIPTION OF RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
</TABLE>

May 31, 1999
[GOK-F-014-01]

<PAGE>

THE PORTFOLIOS AND THE TRUST

The "Golden Oak Family of Funds" is a name under which a number of mutual
fund investment portfolios with differing objectives and policies are offered
to investors. Five of these portfolios were established by The Arbor Fund
(the "Trust"), an open-end management investment company established under
Massachusetts law as a Massachusetts business trust under a Declaration of
Trust dated July 24, 1992. The Declaration of Trust permits the Trust to
offer separate series of shares of beneficial interest ("shares") and
different classes of shares of each portfolio. Shareholders may purchase
shares through two separate classes (Institutional and Class A) which provide
for variations in distribution costs, voting rights and dividends. Except
for differences between Institutional and Class A shares pertaining to
distribution fees, each share of each portfolio represents an equal
proportionate interest in that portfolio. See "Description of Shares." This
Statement of Additional Information relates to the Institutional and Class A
shares of the Golden Oak Growth (formerly, the Golden Oak Diversified Growth
Portfolio) (the "Growth Portfolio"), Golden Oak Value (the "Value
Portfolio"), Golden Oak Intermediate-Term Income (the "Intermediate-Term Income
Portfolio"), Golden Oak Michigan Tax Free Bond ( the "Michigan Portfolio")
and Golden Oak Prime Obligation Money Market (the "Prime Obligation
Portfolio") Portfolios ( each a "Portfolio" and collectively, the "Portfolios")
of the Trust.

The Trust pays its expenses, including fees of its service providers, audit and
legal expenses, expenses of preparing prospectuses, proxy solicitation material
and reports to shareholders, costs of custodial services and registering the
shares under federal and state securities laws, pricing, insurance expenses,
litigation and other extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.

INVESTMENT OBJECTIVES AND POLICIES

The investment objectives are fundamental policies of the Portfolios.
Fundamental policies cannot be changed with respect to a Portfolio without the
consent of the holders of a majority of the Portfolio's outstanding shares.

THE GROWTH PORTFOLIO -- The investment objective of the Growth Portfolio is to
provide total return. There is no assurance that the Portfolio will achieve its
investment objective.

Under normal conditions, the Portfolio expects to be fully invested in common
stocks (and will be at least 75% invested in common stocks) listed on registered
exchanges in the United States or actively traded in the over-the-counter market
as further described below. In addition to investing in common stocks, the
Portfolio may invest in warrants and rights to purchase common stocks, United
States dollar denominated securities of foreign issuers traded in the United
States (including sponsored American Depositary Receipts traded on registered
exchanges or listed on NASDAQ), repurchase agreements, covered call options and
money market instruments of the type described below. The

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Portfolio may invest up to 10% of its net assets in American Depositary
Receipts, including American Depositary Shares and New York Shares. The
Portfolio may also write covered call options and engage in related closing
purchase transactions provided that the aggregate value of such options does not
exceed 10% of the Portfolio's net assets as of the time such options are entered
into by the Portfolio. Nicholas-Applegate Capital Management (the
"Sub-Adviser") will engage in such transactions only as hedging transactions and
not for speculative purposes.

The common stocks and other equity securities purchased by the Portfolio will be
those of companies which, in the Sub-Adviser's opinion, have accelerating
earnings growth, rising analyst estimates of earnings growth, strong fundamental
quality and positive price behavior. However, there is no assurance that the
Sub-Adviser will be able to accurately predict the stages of a business cycle.
In addition, the Portfolio invests primarily in equity securities that fluctuate
in value; therefore, the Portfolio's shares will fluctuate in value.

The Portfolio may invest up to 15% of its net assets in illiquid securities,
including restricted securities other than Section 4(2) commercial paper
("Illiquid Securities"). Restricted securities, including Rule 144A securities
and Section 4(2) commercial paper, that meet the criteria established by the
Board of Trustees of the Trust will be considered liquid.

For temporary defensive purposes during periods when the Portfolio's Sub-Adviser
determines that market conditions warrant, the Portfolio may invest up to 100%
of its assets in money market instruments (consisting of securities issued or
guaranteed as to principal and interest by the United States government, its
agencies or instrumentalities, repurchase agreements collateralized by United
States Government securities and entered into with financial institutions the
Sub-Adviser deems creditworthy, certificates of deposit, time deposits and
bankers' acceptances issued by banks or savings and loan associations having net
assets of at least $1.0 billion as shown on their most recent public financial
statements, and deemed by the Adviser or Sub-Adviser to present minimal credit
risk, and commercial paper rated in the two highest short-term rating categories
(collectively, "Money Market Instruments")), and may hold a portion of its
assets in cash. To the extent the Portfolio is engaged in defensive investing,
the Portfolio will not be pursuing its investment objective.

The Portfolio reserves the right to engage in securities lending but has no
present intention to do so. For the fiscal year ended January 31, 1999, the
Portfolio's annual turnover rate was approximately ---%. Such a turnover rate
may result in higher transaction costs and may result in additional taxes for
shareholders.

THE VALUE PORTFOLIO -- The investment objective of the Value Portfolio is to
seek long-term capital appreciation. There is no assurance that the Portfolio
will achieve its investment objective.

The Portfolio attempts to achieve its investment objective by investing
primarily in common stocks, warrants, rights to purchase common stocks,
preferred stocks and securities convertible into common stocks (together,
"equity securities"). The Portfolio will be as fully invested as

<PAGE>

practicable in equity securities and will focus on equity securities which are
undervalued relative to a company's earnings. Systematic Financial Management,
L.P. (the "Sub-Adviser") will invest in equity securities of companies based on
an analysis of various fundamental characteristics, including balance sheet
items, underlying sales and expense trends, earnings estimates, market position
of the company and industry outlook. The Portfolio may also invest in American
Depositary Receipts and enter into repurchase agreements. Although it has no
present intention to do so, the Portfolio reserves the ability to write and
purchase options for hedging purposes. Although the Portfolio intends to be as
fully invested as practicable in equity securities, the Portfolio may invest in
up to 15% of its assets in the money market instruments described below.

The Portfolio may invest up to 15% of its net assets in Illiquid Securities.

THE INTERMEDIATE-TERM INCOME PORTFOLIO -- The investment objective of the
Intermediate-Term Income Portfolio is current income consistent with limited
price volatility. The Portfolio will seek to limit price volatility by
maintaining an average weighted maturity of three to ten years. There is no
assurance that the Portfolio will achieve its investment objective.

Under normal circumstances, at least 80% of the Portfolio's assets will be
invested in the following United States dollar denominated obligations: (i)
bills, notes receipts and bonds issued by United States Treasury and STRIPs of
such obligations that are transferable through the Federal Book -Entry System
("US Treasury Obligations"); (ii) obligations issued or guaranteed as to
principal and interest by the United States Government, its agencies or
instrumentalities; (iii) corporate bonds and debentures rated A or better by
Standard & Poor's Corporation ("S&P") or A or better by Moody's Investors
Service ("Moody's") or of comparable quality at the time of purchase as
determined by the Adviser; (iv) commercial paper rated A-1 or better by Moody's
or P-1 or better by S&P or of comparable quality at the time of purchase as
determined by the Adviser; (v) short-term bank obligations consisting of
certificates of deposit, time deposits, and bankers' acceptances of U.S.
commercial banks or savings and loan institutions with assets of at least $1.0
billion as shown on their most recent public financial statements, that the
Adviser deems to be comparable in quality to corporate obligations in which the
Portfolio may invest; and (vi) repurchase agreements involving any of the above
securities.

The remaining 20% of the Portfolio's assets may be invested in: (i) debt
securities issued or guaranteed by the government of Canada or its provincial or
local governments; (ii) debt securities issued or guaranteed by foreign
governments, their political subdivisions, agencies or instrumentalities and
debt securities of supranational entities; (iii) mortgage-backed securities and
asset-backed securities rated in one of the top two categories by S&P or
Moody's; (iv) receipts evidencing separately traded interest and principal
component parts of United States Government obligations ("STRIPS"); (v) taxable
municipal securities rated A or better by S&P or Moody's or of comparable
quality at the time of purchase as determined by the Adviser; (vi) corporate
bonds and debentures rated BBB by S&P or Moody's or of comparable quality at the
time of purchase as determined by the Adviser; and (vii) repurchase agreements
involving such

<PAGE>

securities. The Portfolio will limit its purchase of corporate securities
rated BBB by S&P or Moody's (or of comparable quality) to 10% of its total
assets. The Portfolio may invest in futures and options for hedging purposes,
and will limit the outstanding obligations to purchase securities under
futures contracts to not more than 20% of the Portfolio's total assets. In
the event a security owned by the Portfolio is downgraded below these ratings
categories, the Adviser will review the quality and credit-worthiness of such
security and take action, if any, that it deems appropriate.

The Portfolio expects to maintain an average weighted remaining maturity of
three to ten years, although there are no restrictions on the maturity of any
single instrument.

The Portfolio may invest up to 15% of its net assets in Illiquid Securities.

The Portfolio may enter into forward commitments or purchase securities on a
when-issued basis where such purchases are for investment and not for
speculative purposes. In addition, the Portfolio may engage in securities
lending.

THE MICHIGAN PORTFOLIO -- The investment objective of the Michigan Portfolio is
current income exempt from federal and Michigan income taxes consistent with
preservation of capital. There is no assurance that the Portfolio will achieve
its investment objective.

The Portfolio will invest primarily in obligations issued by or on behalf of the
states, territories or possessions of the United States or the District of
Columbia or their political subdivisions, agencies or instrumentalities, the
interest of which, in the opinion of counsel for the issuer, is exempt from
federal income tax (collectively, "Municipal Securities"). It is a fundamental
policy of the Portfolio that at least 80% of its net assets will be invested in
municipal securities the interest on which is exempt from federal income tax and
not subject to taxation as a preference item for purposes of the alternative
minimum tax. Under normal circumstances, at least 65% of the Portfolio will be
invested in municipal bonds and, except where acceptable securities are
unavailable as determined by the Adviser, at least 80% of the Portfolio's assets
will be invested in Municipal Securities, the interest of which, in the opinion
of bond counsel to the issuer, is exempt from Michigan income tax ("Michigan
Municipal Securities"). The Adviser expects to be fully invested in Municipal
Securities. The Portfolio will purchase Municipal Securities that meet the
following criteria: (i) municipal bonds rated in one of the three highest rating
categories; (ii) municipal notes rated in one of the two highest rating
categories; (iii) commercial paper rated in one of the two highest short term
rating categories; or (iv) any of the foregoing that are not rated but are
determined by the Adviser to be of comparable quality at the time of investment.
The Portfolio may also invest up to 5% of its net assets in securities of
closed-end investment companies traded on a national securities exchange.

The Portfolio expects to maintain an average weighted remaining maturity of
three to ten years. The maximum maturity for any individual security is thirty
years.

<PAGE>

The Portfolio may invest up to 15% of its net assets in Illiquid Securities.

The Portfolio is a non-diversified investment company which means that more than
5% of its assets may be invested in one or more issuers, although the Adviser
does not intend to invest more than 10% of the Portfolio's assets in any one
issuer. Since a relatively high percentage of assets of the Portfolio may be
invested in the obligations of a limited number of issuers, the value of shares
of the Portfolio may be more susceptible to any single economic, political or
regulatory occurrence than the shares of a diversified investment company would
be. The Portfolio intends to satisfy the diversification requirements necessary
to qualify as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code").

THE PRIME OBLIGATION PORTFOLIO -- The investment objective of the Prime
Obligation Portfolio is to preserve principal value and maintain a high degree
of liquidity while providing current income. It is also a fundamental policy of
the Portfolio to use its best efforts to maintain a constant net asset value of
$1.00 per share. There is no assurance that the Portfolio will achieve its
investment objective or that it will be able to maintain a constant net asset
value of $1.00 per share on a continuous basis.

The Portfolio intends to comply with regulations of the Securities and Exchange
Commission applicable to money market funds using the amortized cost method for
calculating net asset value. These regulations impose certain quality, maturity
and diversification restraints on Portfolio investments. Under these
regulations, the Portfolio will invest in only United States dollar denominated
securities, will maintain an average maturity on a dollar-weighted basis of 90
days or less, and will acquire only "eligible securities" that present minimal
credit risks and have a maturity of 397 days or less. For a further discussion
of these rules, see "Description of Permitted Investments."

The Portfolio intends to invest exclusively in: (i) bills, notes, receipts and
bonds issued by the United States Treasury and STRIPs of such obligations that
are transferable through the Federal Book-Entry System ("U.S. Treasury
Obligations"); (ii) obligations issued or guaranteed as to principal and
interest by the agencies or instrumentalities of the United States Government;
(iii) commercial paper of United States or foreign issuers, including
asset-backed securities rated in the two highest short-term rating categories at
the time of investment or, if not rated, as determined by Wellington Management
Company, LLP (the "Sub-Adviser") to be of comparable quality; (iv) obligations
of U.S. commercial banks, U.S. savings and loan institutions and U.S. and London
branches of foreign banks that have total assets of $1 billion or more as shown
on their most recently published financial statements (the Portfolio may not
invest more than 25% of its total assets in obligations issued by foreign
branches of U.S. banks and London branches of foreign banks); (v) U.S. dollar
denominated obligations of foreign governments including

<PAGE>

Canadian and Provincial Government and Crown Agency obligations; (vi) short-term
corporate obligations of United States and foreign issuers with commercial paper
that meet the above ratings or, if not rated, determined by the Sub-Adviser to
be of comparable quality; (vii) repurchase agreements involving any of the
foregoing obligations; (viii) short-term obligations issued by state and local
governmental issuers, which are rated, at the time of investment, by at least
two nationally recognized statistical ratings organizations ("NRSROs") in one of
the two highest municipal bond rating categories, and carry yields that are
competitive with those of other types of money market instruments of comparable
quality and security that meet the above ratings or, if not rated, determined by
the Sub-Adviser to be of comparable quality; (ix) obligations of supranational
entities satisfying the credit standards described above or, if not rated,
determined by the Portfolio's Sub-Adviser to be of comparable quality; and (x)
to the extent permitted by applicable law, shares of other investment companies.

The Portfolio may invest up to 10% of its net assets in Illiquid Securities.

The Portfolio reserves the right to engage in securities lending but has no
present intention to do so. The Portfolio may also engage in forward commitments
or purchase securities on a when-issued basis.

RISK FACTORS

The market value of the Intermediate-Term Income and Michigan Portfolios' fixed
income investments will change in response to interest rate changes and other
factors and the impact of such changes will depend, in part, upon the ratings
and maturities of a Portfolio's investments. During periods of falling interest
rates, the values of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities with longer maturity
tend to produce higher yields, the price of longer maturity securities are also
subject to greater market fluctuations as a result of changes in interest rates.
Bonds rated BBB by S&P or Moody's are to be considered as investment medium
grade obligations. Such debt rated BBB has an adequate capacity to pay interest
and repay principal although it is more vulnerable to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories. Such securities are considered to have speculative characteristics.
In the event any security is downgraded below the applicable rating category set
forth in this Prospectus, the Adviser and/or Sub-Adviser will review the
security and determine whether to retain or dispose of it.

Changes by recognized agencies in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and principal also affect
the value of these investments. Changes in the value of portfolio securities
will not affect cash income derived from these securities but will affect a
Portfolio's net asset value. Zero coupon securities may be more subject to price
volatility than securities that pay coupon interest.

In general, mortgage-backed securities are subject to prepayment of the
underlying mortgages.

<PAGE>

During periods of a decline in interest rates, prepayment of mortgages
underlying these securities can be expected to accelerate. When the
mortgage-backed securities held by a Portfolio are prepaid, the Portfolio may
reinvest the proceeds in securities, the yield of which reflects prevailing
interest rates. Thus, mortgage-backed securities may not be an effective means
of locking in long-term interest rates for a Portfolio.

Investments in securities of foreign issuers may subject a Portfolio to
different risks than those attendant to investments in securities of United
States issuers, such as differences in accounting, auditing and financial
reporting standards, the possibility of expropriation or confiscatory taxation,
and political instability. There may be less publicly available information
with regard to foreign issuers, than domestic issuers.

The Michigan Portfolio currently contemplates that it will not invest more than
25% of its total assets (at market value at the time of purchase) in Municipal
Securities, the interest of which is paid from venues or projects with similar
characteristics. See also "Description of Permitted Investments -- Special
Factors Relating to Michigan Municipal Securities."

DESCRIPTION OF PERMITTED INVESTMENTS

AMERICAN DEPOSITARY RECEIPTS ("ADRS")

ADRs are securities, typically issued by a U.S. financial institution (a
"depositary"), that evidence ownership interests in a security or a pool of
securities issued by a foreign issuer and deposited with the depositary. ADRs
may be available through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the security underlying the
receipt and a depositary, whereas an unsponsored facility may be established by
a depositary without participation by the issuer of the underlying security.
Holders of unsponsored depositary receipts generally bear all the costs of the
unsponsored facility. The depositary of an unsponsored facility frequently is
under no obligation to distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the holders of the
receipts, voting rights with respect to the deposited securities.

ASSET-BACKED SECURITIES

Asset-backed securities are secured by non-mortgage assets such as company
receivables, truck and auto loans, leases and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets.
Such securities also may be debt instruments, which are also known as
collateralized obligations and are generally issued as the debt of a special
purpose entity, such as a trust, organized solely for the purpose of owning such
assets and issuing such debt.

Asset-backed securities are not issued or guaranteed by the United States
Government or its

<PAGE>

agencies or instrumentalities; however, the payment of principal and interest on
such obligations may be guaranteed up to certain amounts and for a certain
period by a letter of credit issued by a financial institution (such as a bank
or insurance company) unaffiliated with the issuers of such securities. The
purchase of asset-backed securities raises risk considerations peculiar to the
financing of the instruments underlying such securities. For example, there is
a risk that another party could acquire an interest in the obligations superior
to that of the holders of the asset-backed securities. There also is the
possibility that recoveries on repossessed collateral may not, in some cases, be
available to support payments on those securities. Asset-backed securities
entail prepayment risk, which may vary depending on the type of asset, but is
generally less than the prepayment risk associated with mortgage-backed
securities. In addition, credit card receivables are unsecured obligations of
the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANKERS' ACCEPTANCES

BANK OBLIGATIONS

The Trust is not prohibited from investing in obligations of banks which are
clients of SEI Investments Company ("SEI"). However, the purchase of shares of
the Trust by them or by their customers will not be a consideration in
determining which bank obligations the Trust will purchase. The Trust will not
purchase obligations of the Adviser or Sub-Adviser.

CERTIFICATES OF DEPOSIT

Certificates of deposit are interest bearing instruments with a specific
maturity. They are issued by banks and savings and loan institutions in
exchange for the deposit of funds and normally can be traded in the secondary
market prior to maturity. Certificates of deposit with penalties for early
withdrawal will be considered illiquid.

COMMERCIAL PAPER

CONVERTIBLE SECURITIES

<PAGE>

While convertible securities generally offer lower yields than nonconvertible
debt securities of similar quality, their prices may reflect changes in the
value of the underlying common stock. Convertible securities entail less credit
risk than the issuer's common stock.

EQUITY SECURITIES

Investments in common stocks are subject to market risks which may cause their
prices to fluctuate over time. Changes in the value of portfolio securities
will not necessarily affect cash income derived from these securities but will
affect a Portfolio's net asset value.

FIXED INCOME SECURITIES

Fixed income securities are debt obligations issued by corporations,
municipalities and other borrowers. The market value of fixed income
investments will change in response to interest rate changes and other
factors. During periods of falling interest rates, the values of outstanding
fixed income securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. Moreover,
while securities with longer maturities tend to produce higher yields, the
prices of longer maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates. Changes by recognized
agencies in the rating of any fixed income security and in the ability of an
issuer to make payments of interest and principal will also affect the value
of these investments. Changes in the value of portfolio securities will not
affect cash income derived from these securities but will affect a
Portfolio's net asset value.

FOREIGN SECURITIES

The Growth, Value, Intermediate-Term Income and Prime Obligation Portfolios
may invest in U.S. dollar denominated obligations or securities of foreign
issuers. Permissible investments may consist of obligations of foreign
branches of U.S. banks and of foreign banks, including European Certificates
of Deposit, European Time Deposits, Canadian Time Deposits and Yankee
Certificates of Deposits, and investments in Canadian Commercial Paper and
other short-term corporate obligations, foreign securities and Europaper. In
addition, the Growth, Intermediate-Term Income and Value Portfolios may
invest in American Depositary Receipts. These instruments may subject the
Portfolio to investment risks that differ in some respects from those related
to investments in obligations of U.S. domestic issuers. In addition to the
risks described in the Prospectus, foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar
securities or obligations. Foreign branches of U.S. banks and foreign banks
may be subject to less stringent reserve requirements than those applicable
to domestic branches of U.S. banks.

<PAGE>

Investments in foreign securities usually will involve currencies of foreign
countries. Moreover, a Portfolio may temporarily hold funds in bank deposits in
foreign currencies during the completion of investment programs and the value of
these assets for the Portfolio as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations and the Portfolio may incur costs in connection
with conversions between various currencies. Although a Portfolio values its
assets daily in terms of U.S. dollars, it does not intend to convert its
holdings of foreign currencies, if any, into U.S. dollars on a daily basis. It
may do so from time to time and investors should be aware of the costs of
currency conversion. Although foreign exchange dealers do not charge a fee for
conversion, they do realize a profit based on the difference (the "spread")
between the prices at which they are buying and selling various currencies.
Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate
while offering a lesser rate of exchange should the Portfolio desire to resell
that currency to the dealer. Each Portfolio will conduct its foreign currency
exchange transactions, if any, either on a spot (I.E., cash) basis at the spot
rate prevailing in the foreign currency exchange market or through forward
foreign currency exchange contracts.

FUTURES CONTRACTS AND OPTIONS

The Intermediate-Term Income and Michigan Portfolios may invest in futures
contracts and options. Although futures contracts by their terms call for
actual delivery or acceptance of the underlying securities, in most cases,
the contracts are closed out before the settlement date without the making or
taking of delivery. Closing out an open futures position is done by taking
an opposite position ("buying a contract which has previously been "sold" or
"selling" a contract previously "purchased") in an identical contract to
terminate the position. Brokerage commissions are incurred when a futures
contract is bought or sold.

Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit
is intended to assure completion of the contract (delivery or acceptance of
the underlying security) if it is not terminated prior to the specified
delivery date. Minimal initial margin requirements are established by the
futures exchange and may be changed. Brokers may establish deposit
requirements which are higher than the exchange minimums. Deposit
requirements on futures contracts customarily range upward from less than 5%
of the value of the contract being traded.

After a futures contract position is opened, the value of the contract is marked
to market daily. If the futures contract price changes to the extent that the
margin on deposit does not satisfy the required margin, payment of additional
"variation" margin will be required. Conversely, change in the contract value
may reduce the required margin, resulting in a repayment of excess margin to the

<PAGE>

contract holder. Variation margin payments are made to and from the futures
broker for as long as the contract remains open. The Portfolios expect to earn
interest income on their margin deposits.

Traders in futures contracts and related options may be broadly classified as
either "hedgers" or "speculators." Hedgers use the futures markets primarily to
offset unfavorable changes in the value of securities otherwise held or expected
to be acquired for investment purposes. Speculators are less inclined to own
the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The Portfolios intend to use futures
contracts and related options only for bona fide hedging purposes.

A Portfolio may enter into futures contracts and options on futures contracts
traded on an exchange regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions are not for "bona
fide hedging purposes," the aggregate initial margin and premiums on such
positions (excluding the amount by which such options are in the money) do not
exceed 5% of a Portfolio's net assets. A Portfolio will only sell futures
contracts to protect securities it owns against price declines or purchase
contracts to protect against an increase in the price of securities it intends
to purchase. As evidence of this hedging interest, the Portfolios expect that
approximately 75% of their futures contract purchases will be "completed," that
is, equivalent amounts of related securities will have been purchased or are
being purchased by the Portfolios upon sale of open futures contracts.

Although techniques other than the sale and purchase of futures contracts and
options on futures contracts could be used to control the Portfolios' exposure
to market fluctuations, the use of futures contracts may be a more effective
means of hedging this exposure. While the Portfolios will incur commission
expenses in both opening and closing out futures positions, these costs are
lower than transaction costs incurred in the purchase and sale of the underlying
securities. A Portfolio's obligations under any futures contract or related
option will be "covered" by high quality, liquid securities or cash held in a
segregated account or by holding, or having the right to acquire without
additional cost, the underlying asset.

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

<PAGE>

The Portfolios will minimize the risk that they will be unable to close out a
futures contract by only entering into futures which are traded on national
futures exchanges and for which there appears to be a liquid secondary market.

The risk of loss in trading futures contracts in some strategies can be
substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to a Portfolio. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit if the contract were closed
out. Thus, a purchase or sale of a futures contract may result in losses in
excess of the amount invested in the contract. However, because the futures
strategies of the Portfolio are engaged in only for hedging purposes, the
Adviser or Sub-Adviser does not believe that the Portfolios would be subject to
the risks of loss frequently associated with futures transactions. The
Portfolios presumably would have sustained comparable losses if, instead of the
futures contract, it had invested in the underlying financial instrument and
sold it after the decline. The risk of loss from the purchase of options is
less as compared with the purchase or sale of futures contracts because the
maximum amount at risk is the premium paid for the option.

Utilization of futures transactions by the Portfolios does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the securities being hedged. It is also possible
that a Portfolio could both lose money on futures contracts and experience a
decline in value of its securities. There is also the risk of loss by the
Portfolio of margin deposits in the event of the bankruptcy of a broker with
whom the Portfolio has an open position in a futures contract or related option.

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

ILLIQUID SECURITIES

Illiquid securities are securities that cannot be disposed of within seven
business days at approximately the value at which they are being carried on a
Portfolio's books. An illiquid

<PAGE>

security includes a demand instrument with a demand notice period exceeding
seven days, where there is no secondary market for such security, and repurchase
agreements with durations over seven days in length.

INVESTMENT COMPANIES

The Portfolios may invest in securities of other investment companies as
permitted by the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations thereunder. As discussed in the Prospectus,
the Michigan Portfolio may invest up to 5% of its net assets in securities of
closed-end investment companies traded on national securities exchanges.
These investment companies typically incur fees that are separate from those
fees incurred directly by the Portfolios. A Portfolio's purchase of such
investment company securities results in a layering of expenses, such that
shareholders would indirectly bear a proportionate share of the operating
expenses of such investment companies, including advisory fees.

MORTGAGE-BACKED SECURITIES

The Prime Obligation and Intermediate-Term Income Portfolios may invest in
securities issued by U.S. Government agencies or instrumentalities such as
the Government National Mortgage Association ("GNMA"), a wholly-owned U.S.
Government corporation which guarantees the timely payment of principal and
interest. Other governmental issuers of mortgage-backed securities include
the Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"). Obligations of FNMA and FHLMC are not backed
by the full faith and credit of the United States Government. The market
value and interest yield of these instruments can vary due to market interest
rate fluctuations and early prepayments of underlying mortgages. These
securities represent ownership in a pool of federally insured mortgage loans.
Mortgage-backed certificates consist of underlying mortgages with a maximum
maturity of 30 years. However, due to scheduled and unscheduled principal
payments, mortgage-backed certificates have a shorter average maturity and,
therefore, less principal volatility than a comparable 30-year bond. Since
prepayment rates vary widely, it is not possible to accurately predict the
average maturity of a particular mortgage-backed security. The scheduled
monthly interest and principal payments relating to mortgages in the pool
will be "passed through" to investors. Mortgage-backed securities differ
from conventional bonds in that principal is paid back to the certificate
holders over the life of the loan rather than at maturity. As a result,
there will be monthly scheduled payments of principal and interest. In
addition, there may be unscheduled principal payments representing
prepayments on the underlying mortgages. Although mortgage-backed
certificates may offer yields higher than those available from other types of
U.S. Government securities, mortgage-backed certificates may be less
effective than other types of securities as a means of "locking in" attractiv
long-term rates because of the prepayment feature. For instance, when
interest rates decline, the value of a mortgage-backed certificate likely
will not rise as much as comparable debt securities due to the prepayment
feature. In addition, these

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prepayments can cause the price of a mortgage-backed certificate originally
purchased at a premium to decline in price to its par value, which may result in
a loss.

The Intermediate-Term Income Portfolio may invest in mortgage-backed
securities and asset-backed securities. The principal types of
mortgage-backed securities are collateralized mortgage obligations ("CMOs"),
real estate mortgage investment conduits ("REMICs"), and interest only and
principal only stripped securities ("IOs" and "POs") which are rated in one
of the two top categories by S&P or Moody's. The mortgages backing these
securities include conventional thirty-year fixed rate mortgages, graduated
payment mortgages and adjustable rate mortgages. These mortgages may be
supported by various types of insurance, may be backed by GNMA certificates
or other mortgage pass-throughs issued or guaranteed by the United States
Government, its agencies or instrumentalities. However, the guarantees do
not extend to the mortgage-backed securities' yield or value, which are
likely to vary inversely with fluctuations in interest rates. These
certificates are in most cases "pass through" instruments, through which,
except for IOs and POs, the holder receives a share of all interest and
principal payments from the mortgages underlying the certificate; in the case
of IOs, the holder receives a share only of interest payments, and for POs, a
share only of principal payments. Because the prepayment characteristics of
the underlying mortgages vary, it is not possible to predict accurately the
average life or realized yield of a particular issue of pass-through
certificates. When the mortgage obligations are prepaid, the Portfolio
reinvests the prepaid amounts in securities, the yield of which reflect
interest rates prevailing at the time. Moreover, prepayments that underlie
securities purchased at a premium could result in capital losses. During
periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. Such acceleration
can be expected to reduce the final yield realized by holders of IO
securities, perhaps to a negative value. Deceleration of prepayments will
reduce somewhat the final yield realized by holders of PO securities.

Investors purchasing such CMOs in the shortest maturities receive or are
credited with their pro rata portion of the scheduled payments of interest
and principal on the underlying mortgages plus all unscheduled prepayments of
principal up to a predetermined portion of the total CMO obligation. Until
that portion of such CMO obligation is repaid, investors in the longer
maturities receive interest only. Accordingly, the CMOs in the longer
maturity series are less likely than other mortgage pass-throughs to be
prepaid prior to their stated maturity. Although some of the mortgages
underlying CMOs may be supported by various types of insurance, and some CMOs
may be backed by GNMA certificates or other mortgage pass-throughs issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, the
CMOs themselves are not generally guaranteed.

REMICs, which were authorized under the Tax Reform Act of 1986, are private
entities formed for the purpose of holding a fixed pool of mortgages secured
by an interest in real property. REMICs are similar to CMOs in that they
issue multiple classes of securities.

In addition to mortgage-backed securities, the Intermediate-Term Income
Portfolio may invest in securities secured by asset backed securities
including company receivables, truck

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and auto loans, leases, and credit card receivables. These issues may be traded
over-the-counter and typically have a short-intermediate maturity structure
depending on the paydown characteristics of the underlying financial assets
which are passed through to the security holder.

MUNICIPAL SECURITIES

Municipal notes in which the Michigan Portfolio may invest, include, but are
not limited to, general obligation notes, tax anticipation notes (notes sold
to finance working capital needs of the issuer in anticipation of receiving
taxes on a future date), revenue anticipation notes (notes sold to provide
needed cash prior to receipt of expected non-tax revenues from a specific
source), bond anticipation notes, certificates of indebtedness, demand notes
and construction loan notes.

The Adviser may purchase industrial development and pollution control bonds if
the interest paid is exempt from federal income tax. These bonds are issued by
or on behalf of public authorities to raise money to finance various
privately-operated facilities for business and manufacturing, housing, sports,
and pollution control. These bonds are also used to finance public facilities
such as airports, mass transit systems, ports, and parking. The payment of the
principal and interest on such bonds is dependent solely on the ability of the
facility's user to meet its financial obligations and the pledge, if any, of
real and personal property so financed as security for such payment.

Tax-exempt commercial paper in which the Michigan Portfolio may invest will
be limited to investments in obligations which are rated at least A-2 by S&P
or Prime-2 by Moody's at the time of investment or which are of equivalent
quality as determined by the Adviser.

Other types of tax-exempt instruments which are permissible investments for
the Michigan Portfolio include floating rate notes. Investments in such
floating rate instruments will normally involve industrial development or
revenue bonds which provide that the rate of interest is set as a specific
percentage of a designated base rate (such as the prime rate) at a major
commercial bank, and that the Portfolio can demand payment of the obligation
at all times or at stipulated dates on short notice (not to exceed 30 days)
at par plus accrued interest. The Portfolio may use the longer of the period
required before the Portfolio is entitled to prepayment under such
obligations or the period remaining until the next interest rate adjustment
date for purposes of determining the maturity. Such obligations are
frequently secured by letters of credit or other credit support arrangements
provided by banks. The quality of the underlying credit or of the bank, as
the case may be, must in the Adviser's opinion be equivalent to the long-term
bond or commercial paper ratings stated above. The Adviser will monitor the
earning power, cash flow and liquidity ratios of the issuers of such
instruments and the ability of an issuer of a demand instrument to pay
principal and interest on demand. The Adviser may purchase other types of
tax-exempt instruments as long as they are of a quality equivalent to the
bond or commercial paper ratings stated above.

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The Adviser has the authority to purchase securities at a price which would
result in a yield to maturity lower than that generally offered by the seller
at the time of purchase when they can simultaneously acquire the right to
sell the securities back to the seller, the issuer, or a third party (the
"writer") at an agreed-upon price at any time during a stated period or on a
certain date. Such a right is generally denoted as a "standby commitment" or
a "put." The purpose of engaging in transactions involving puts is to
maintain flexibility and liquidity to permit the Michigan Portfolio to meet
redemptions and remain as fully invested as possible in municipal securities.
The Portfolio reserves the right to engage in put transactions. The right to
put the securities depends on the writer's ability to pay for the securities
at the time the put is exercised. The Portfolio would limit its put
transactions to institutions which the Adviser believes present minimum
credit risks, and the Adviser would use its best efforts to initially
determine and continue to monitor the financial strength of the sellers of
the options by evaluating their financial statements and such other
information as is available in the marketplace. It may, however be difficult
to monitor the financial strength of the writers because adequate current
financial information may not be available. In the event that any writer is
unable to honor a put for financial reasons, the Portfolio would be general
creditor (i.e., on a parity with all other unsecured creditors) of the
writer. Furthermore, particular provisions of the contract between the
Portfolio and the writer may excuse the writer from repurchasing the
securities; for example, a change in the published rating of the underlying
municipal securities or any similar event that has an adverse effect on the
issuer's credit or a provision in the contract that the put will not be
exercised except in certain special cases, for example, to maintain portfolio
liquidity. The Portfolio could, however, at any time sell the underlying
portfolio security in the open market or wait until the portfolio security
matures, at which time it should realize the full par value of the security.

The municipal securities purchased subject to a put, may be sold to third
persons at any time, even though the put is outstanding, but the put itself,
unless it is an integral part of the security as originally issued, may not be
marketable or otherwise assignable. Therefore, the put would have value only to
the Portfolio. Sale of the securities to third parties or lapse of time with
the put unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, the Portfolio could seek to negotiate terms for
the extension of such an option. If such a renewal cannot be negotiated on
terms satisfactory to the Portfolio, the Portfolio could, of course, sell the
portfolio security. The maturity of the underlying security will generally be
different from that of the put. There will be no limit to the percentage of
portfolio securities that the Portfolio may purchase subject to a put but the
amount paid directly or indirectly for puts which are not integral parts of the
security as originally issued held in the Portfolio will not exceed 1/2 of 1% of
the value of the total assets of such Portfolio calculated immediately after any
such put is acquired. For the purpose of determining the "maturity" of
securities purchased subject to an option to put, and for the purpose of
determining the dollar-weighted average maturity of the Portfolio including such
securities the Trust will consider "maturity" to be the first date on which it
has the right to demand payment from the writer of the put although the final
maturity of the security is later than such date.

<PAGE>

SPECIAL FACTORS RELATING TO MICHIGAN MUNICIPAL SECURITIES--Because the Michigan
Portfolio invests primarily in Michigan Municipal Securities, the Portfolio is
more susceptible to factors adversely affecting issuers of Michigan Municipal
Securities than a mutual fund that does not invest as heavily in such
securities. Investors should consider carefully the special risks inherent in
the Portfolio's investment in Michigan Municipal Securities.

Investors should be aware that the economy of the State of Michigan has, in the
past, proven to be cyclical, due primarily to the fact that the leading sector
of the State's economy is the manufacturing of durable goods.

The State's economy could be affected adversely by changes in the auto industry,
notably consolidation and plant closings resulting from competitive pressures
and over-capacity. Such actions could adversely affect State revenues and the
financial impact on the local units of government in the areas in which plants
are closed could be more severe.

The principal revenues sources for the State's General Fund are taxes from
sales, personal income, single business, and excise taxes. Under the State
Constitution, expenditures from the General Fund are not permitted to exceed
available revenues. The principal expenditures from the General Fund are
directed towards education, public protection, mental and public health, and
social services.

The Michigan Constitution of 1963 limits the amount of total revenues of the
State raised from taxes and certain other sources to a level for each fiscal
year equal to a percentage of the State's personal income for the prior calendar
year or average of the prior three calendar years, whichever is greater, and
this fixed percentage equals the percentage of the 1978-79 fiscal year state
government revenues to total calendar 1977 State personal income (which was
9.49%). In the event that the State's total revenues exceed the limit by
1 percent or more, the Michigan Constitution of 1963 requires that the excess be
refunded to taxpayers. Any excess of less than 1% may be transferred to the
Budget Stabilization Fund.

There can be no assurance that any financial difficulties the State may
experience will not adversely affect the market value or marketability of the
Michigan Municipal Securities in the Portfolio or the ability of the respective
obligors to pay interest on or principal of the Michigan Municipal Securities in
the Portfolio, particularly in view of the dependency of local governments and
other authorities upon State aid and reimbursement programs and, in the case of
bonds issued by the State Building Authority, the dependency of the State
Building Authority on the receipt of rental payments from the State to meet debt
service requirements upon such bonds.

The Michigan Portfolio may contain general obligation bonds of local units of
government pledging the full faith and credit of the local unit which are
payable from the levy of ad valorem taxes on taxable property within the
jurisdiction of the local unit. Challenges to the ability of

<PAGE>

local units to levy such taxes could have an adverse impact on the ad valorem
tax bases of such units which could adversely affect their ability to raise
funds for operation and debt service requirements.

SHORT-TERM OBLIGATIONS OF STATE AND LOCAL GOVERNMENTAL ISSUERS -- The Prime
Obligation Portfolio may, when deemed appropriate by its Sub-Adviser in light
of the Portfolio's investment objective, invest in high quality, short-term
obligations issued by state and local governmental issuers which, as a result
of the Tax Reform Act of 1986, carry yields that are competitive with those
of other types of money market instruments of comparable quality.

OPTIONS

The Growth, Michigan and Intermediate-Term Income Portfolios may write call
options on a covered basis only. The Michigan and the Intermediate-Term
Income Portfolios may also enter into bond futures contracts and options on
such contracts. Neither Portfolio will engage in option writing strategies
for speculative purposes. The Value Portfolio may write and sell both call
options and put options, provided that the aggregate value of such options
does not exceed 15% of the Portfolio's net assets as of the time such options
are entered into by the Portfolio.

A put option gives the purchaser of the option, upon payment of a premium, the
right to sell, and the writer the obligation to buy, the underlying security,
commodity, index, currency or other instrument at the exercise price. For
instance, a Portfolio's purchase of a put option on a security might be designed
to protect its holdings in the underlying instrument (or, in some cases, a
similar instrument) against a substantial decline in the market value by giving
the Portfolio the right to sell such instrument at the option exercise price. A
call option, upon payment of a premium, gives the purchaser of the option the
right to buy, and the seller the obligation to sell, the underlying instrument
at the exercise price. A Portfolio's purchase of a call option on a security,
financial future, index, currency or other instrument might be intended to
protect the Portfolio against an increase in the price of the underlying
instrument that it intends to purchase in the future by fixing the price at
which it may purchase such instrument. An American style put or call option may
be exercised at any time during the option period while a European style put or
call option may be exercised only upon expiration or during a fixed period prior
thereto. A Portfolio is authorized to purchase and sell exchange listed options
and over-the-counter options ("OTC options"). Exchange listed options are
issued by a regulated intermediary such as the Options Clearing Corporation
("OCC"), which guarantees the performance of the obligations of the parties to
such options. The discussion below uses the OCC as an example, but is also
applicable to other financial intermediaries.

With certain exceptions, OCC issued and exchange listed options generally settle
by physical delivery of the underlying security or currency, although in the
future cash settlement may

<PAGE>

become available. Index options and Eurodollar instruments are cash settled for
the net amount, if any, by which the option is "in-the-money" (i.e., where the
value of the underlying instrument exceeds, in the case of a call option, or is
less than, in the case of a put option, the exercise price of the option) at the
time the option is exercised. Frequently, rather than taking or making delivery
of the underlying instrument through the process of exercising the option,
listed options are closed by entering into offsetting purchase or sale
transactions that do not result in ownership of the new option.

A Portfolio's ability to close out its position as a purchaser or seller of an
OCC or exchange listed put or call option is dependent, in part, upon the
liquidity of the option market. Among the possible reasons for the absence of a
liquid option market on an exchange are: (i) insufficient trading interest in
certain options; (ii) restrictions on transactions imposed by an exchange; (iii)
trading halts, suspensions or other restrictions imposed with respect to
particular classes or series of options or underlying securities including
reaching daily price limits; (iv) interruption of the normal operations of the
OCC or an exchange; (v) inadequacy of the facilities of an exchange or OCC to
handle current trading volume; or (vi) a decision by one or more exchanges to
discontinue the trading of options (or a particular class or series of options),
in which event the relevant market for that option on that exchange would cease
to exist, although outstanding options on that exchange would generally continue
to be exercisable in accordance with their terms.

The hours of trading for listed options may not coincide with the hours during
which the underlying financial instruments are traded. To the extent that the
option markets close before the markets for the underlying financial
instruments, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the option markets.

OTC options are purchased from or sold to securities dealers, financial
institutions or other parties ("Counterparties") through direct bilateral
agreement with the Counterparty. In contrast to exchange listed options, which
generally have standardized terms and performance mechanics, all the terms of an
OTC option, including such terms as method of settlement, term, exercise price,
premium, guarantees and security, are set by negotiation of the parties. A
Portfolio will only sell OTC options (other than OTC currency options) that are
subject to a buy-back provision permitting the Portfolio to require the
Counterparty to sell the option back to the Portfolio at a formula price within
seven days. Each Portfolio expects generally to enter into OTC options that
have cash settlement provisions, although it is not required to do so.

Unless the parties provide for it, there is no central clearing or guaranty
function in an OTC option. As a result, if the Counterparty fails to make or
take delivery of the security, currency or other instrument underlying an OTC
option it has entered into with a Portfolio or fails to make a cash settlement
payment due in accordance with the terms of that option, a Portfolio will lose
any premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Adviser or Sub-Adviser must assess the
creditworthiness of each such Counterparty or any

<PAGE>

guarantor or credit enhancement of the Counterparty's credit to determine the
likelihood that the terms of the OTC option will be satisfied.

COVERED CALL WRITING--The Growth Portfolio may write covered call options on
its securities provided the aggregate value of such options does not exceed
10% of the Portfolio's net assets as of the time such options are entered
into by the Portfolio. The advantage to the Portfolio of writing covered
calls is that the Portfolio receives a premium which is additional income.
However, if the security rises in value, the Portfolio may not fully
participate in the market appreciation.

In covered call options written by a Portfolio, the Portfolio will own the
underlying security subject to a call option at all times during the option
period. Unless a closing purchase transaction is effected, the Portfolio would
be required to continue to hold a security which it might otherwise wish to
sell, or deliver a security it would want to hold. Options written by the
Portfolio will normally have expiration dates between one and nine months from
the date written. The exercise price of a call option may be below, equal to or
above the current market value of the underlying security at the time the option
is written.

RECEIPTS

REPURCHASE AGREEMENTS

Repurchase agreements are arrangements by which a Portfolio obtains a security
and simultaneously commits to return the security to the seller at an agreed
upon price on an agreed upon date within a number of days from the date of
purchase. A Portfolio will have actual or constructive possession of the
security as collateral for the repurchase agreement. Collateral must be
maintained at a value at least equal to 102% of the purchase price. A Portfolio
bears a risk of loss in the event the other party defaults on its obligations
and a Portfolio is delayed or prevented from exercising its right to dispose of
the collateral securities or if a Portfolio realizes a loss on the sale of the
collateral. A Portfolio will enter into repurchase agreements on behalf of a
Portfolio only with financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940 Act.

RESTRAINTS ON INVESTMENTS BY MONEY MARKET FUNDS

<PAGE>

RESTRICTED SECURITIES

The Prime Obligation Portfolio and the Value Portfolio may invest in
restricted securities that are securities in which the Trust may otherwise
invest as provided in the Prospectus and this Statement of Additional
Information. Restricted securities are securities that may not be sold
freely to the public absent registration under the Securities Act of 1933, as
amended (the "Act"), or an exemption from registration. The Prime Obligation
Portfolio and the Value Portfolio may invest up to 10% and 15%, respectively,
of their net assets in illiquid securities, including restricted securities.
Each Portfolio may invest in Section 4(2) commercial paper. Section 4(2)
commercial paper is issued in reliance on an exemption from registration
under Section 4(2) of the Act and is generally sold to institutional
investors who purchase for investment. Any resale of such commercial paper
must be in an exempt transaction, usually to an institutional investor
through the issuer or investment dealers who make a market in such commercial
paper. The Trust believes that Section 4(2) commercial paper is liquid to
the extent it meets the criteria established by the Board of Trustees of the
Trust. The Trust intends to treat such commercial paper as liquid and not
subject to the investment limitations applicable to illiquid securities or
restricted securities.

SECURITIES LENDING

The Portfolios may lend securities pursuant to agreements requiring that the
loans be continuously secured by cash, securities of the United States
Government or its agencies, or any combination of cash and such securities, as
collateral equal to 102% of the market value at all times of the securities
lent. Such loans will not be made if, as a result, the aggregate amount of all
outstanding securities loans for the Portfolio exceed one-third of the value of
a Portfolio's total assets taken at fair market value (including any collateral
received in connection with such loans). A Portfolio will continue to receive
interest on the securities lent while simultaneously earning interest on the
investment of the cash collateral in U.S. government securities.

<PAGE>

However, a Portfolio will normally pay lending fees to such broker-dealers and
related expenses from the interest earned on invested collateral. There may be
risks of delay in receiving additional collateral or risks of delay in recovery
of the securities or even loss of rights in the collateral should the borrower
of the securities fail financially. However, loans are made only to borrowers
deemed by the Adviser or Sub-Adviser to be of good standing and when, in the
judgment of the Adviser or Sub-Adviser, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Any loan may
be terminated by either party upon reasonable notice to the other party. The
Portfolios may use the Distributor or a broker/dealer affiliate of the Adviser
or Sub-Adviser as a broker in these transactions.

SECURITIES OF FOREIGN ISSUERS

SEPARATELY TRADED INTEREST AND PRINCIPAL SECURITIES ("STRIPS")

The Prime Obligation, Intermediate-Term Income and Value Portfolios may
invest in ("STRIPS"), which are component parts of U.S. Treasury Securities
traded through the Federal Book-Entry System. The Adviser will only purchase
STRIPS that it determines are liquid or, if illiquid, do not violate a
Portfolio's investment policy concerning investments in illiquid securities.
Consistent with Rule 2a-7 adopted under the 1940 Act, the Adviser or
Sub-Adviser will only purchase STRIPS for the Prime Obligation Portfolio that
have a remaining maturity of 397 days or less; therefore, the Portfolio
currently may only purchase interest component parts of U.S. Treasury
Securities. The Adviser or Sub-Adviser of a Portfolio will monitor the level
of such holdings to avoid the risk of impairing shareholders' redemption
rights and of deviations in the value of shares of the Prime Obligation
Portfolio.

TIME DEPOSITS

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Time deposits are non-negotiable receipts issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, they earn a specified rate of
interest over a definite period of time; however, they cannot be traded in the
secondary market. Time deposits with a withdrawal penalty or that mature in
more than seven days are considered to be illiquid securities.

U.S. GOVERNMENT AGENCY SECURITIES

Certain of the investments of all of the Portfolios may include U.S. Government
Agency Securities. Agencies of the United States Government which issue
obligations consist of, among others, the Export Import Bank of the United
States, Farmers Home Administration, Federal Farm Credit Bank, Federal Housing
Administration, Government National Mortgage Association, Maritime
Administration, Small Business Administration, and the Tennessee Valley
Authority. Obligations of instrumentalities of the United States Government
include securities issued by, among others, Federal Home Loan Banks, Federal
Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, Federal Land
Banks, Fannie Mae and the United States Postal Service. Some of these
securities are supported by the full faith and credit of the United States
Treasury. Others are supported by the right of the issuer to borrow from the
Treasury and still others are supported only by the credit of the
instrumentality.

Guarantees of principal by agencies or instrumentalities of the United States
Government may be a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might not be a market and
thus no means of realizing the value of the obligation prior to maturity.

U.S. TREASURY OBLIGATIONS

VARIABLE AMOUNT MASTER DEMAND NOTES

The Prime Obligation, Intermediate-Term Income and Michigan Portfolios may
invest in variable amount master demand notes which may or may not be backed
by bank letters of credit. These notes permit the investment of fluctuating
amounts at varying market rates of interest pursuant to direct arrangements
between the Trust, as lender, and the borrower. Such notes provide that the
interest rate on the amount outstanding varies on a daily, weekly or monthly
basis depending upon a stated short-term interest rate index. Both the
lender and the borrower have the right to reduce the amount of outstanding
indebtedness at any time. There is no secondary market for the notes. It is
not generally contemplated that such instruments will be traded. The Adviser
or Sub-Adviser will monitor on an ongoing basis the earning power, cash flow
and liquidity ratio of the

<PAGE>

issuers of such instruments and will similarly monitor the ability of an issuer
of a demand instrument to pay principal and interest on demand.

VARIABLE AND FLOATING RATE INSTRUMENTS

Certain obligations may carry variable or floating rates of interest, and may
involve a conditional or unconditional demand feature. Such instruments bear
interest at rates which are not fixed, but which vary with changes in specified
market rates or indices. The interest rates on these securities may be reset
daily, weekly, quarterly or some other reset period, and may have a floor or
ceiling on interest rate changes. There is a risk that the current interest
rate on such obligations may not accurately reflect existing market interest
rates. A demand instrument with a demand notice exceeding seven days may be
considered illiquid if there is no secondary market for such security.

WARRANTS

Warrants are instruments giving holders the right, but not the obligation, to
buy equity or fixed income securities of a company at a given price during a
specified period.

WHEN-ISSUED SECURITIES

The Prime Obligation, Intermediate-Term Income and Michigan Portfolios may
invest in when-issued securities.

These securities involve the purchase of debt obligations on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of commitment to purchase. The Portfolios will only make
commitments to purchase obligations on a when-issued basis with the intention of
actually acquiring the securities, but may sell them before the settlement date.
The when-issued securities are subject to market fluctuation, and no interest
accrues on the security to the purchaser during this period. The payment
obligation and the interest rate that will be received on the securities are
each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case
there could be an unrealized loss at the time of delivery.

Segregated accounts will be established with the Custodian, and the Portfolios
will maintain liquid assets in an amount at least equal in value to the
Portfolios' commitments to purchase when-issued securities. If the value of
these assets declines, the Portfolios will place additional liquid assets in the
account on a daily basis so that the value of the assets in the account is equal
to the amount of such commitments.

ZERO COUPON, PAY-IN-KIND AND DEFERRED PAYMENT SECURITIES

<PAGE>

Zero coupon securities are securities that are sold at a discount to par value
and securities on which interest payments are not made during the life of the
security. Upon maturity, the holder is entitled to receive the par value of the
security. While interest payments are not made on such securities, holders of
such securities are deemed to have received "phantom income" annually. Because
a Portfolio will distribute its "phantom income" to shareholders, to the extent
that shareholders elect to receive dividends in cash rather than reinvesting
such dividends in additional shares, a Portfolio will have fewer assets with
which to purchase income producing securities. Alternatively, shareholders may
have to redeem shares to pay tax on this "phantom income." In either case, a
Portfolio may have to dispose of its fund securities under disadvantageous
circumstances to generate cash, or may have to leverage itself by borrowing cash
to satisfy distribution requirements. A Portfolio accrues income with respect
to the securities prior to the receipt of cash payments. Pay-in-kind securities
are securities that have interest payable by delivery of additional securities.
Upon maturity, the holder is entitled to receive the aggregate par value of the
securities. Deferred payment securities are securities that remain zero coupon
securities until a predetermined date, at which time the stated coupon rate
becomes effective and interest becomes payable at regular intervals. Zero
coupon, pay-in-kind and deferred payment securities may be subject to greater
fluctuation in value and lesser liquidity in the event of adverse market
conditions than comparably rated securities paying cash interest at regular
interest payment periods.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following policies are fundamental and may not be changed without the
consent of a majority of a Portfolio's outstanding shares, except for the
limitations provided in paragraphs 6 and 8 below, which are non-fundamental
policies only for the Value Portfolio. The term "a majority of a Portfolio's
outstanding shares" means the vote of (i) 67% or more of the Portfolio's
shares present at a meeting if more than 50% of the outstanding shares of the
Portfolio are present or represented by proxy, or (ii) more than 50% of the
Portfolio's shares, whichever is less.

A Portfolio may not:

1. Purchase securities of any issuer (except securities issued or guaranteed
by the United States Government, its agencies or instrumentalities and
repurchase agreements involving such securities) if, as a result, more than
5% of the total assets of the Portfolio would be invested in the securities
of such issuer. This restriction applies to 75% of a Portfolio's assets.
This limitation does not apply to the Michigan Portfolio. As a money
market fund, the Prime Obligation Portfolio is subject to additional
diversification requirements.

2. Purchase any securities which would cause more than 25% of the total assets
of the

<PAGE>

Portfolio to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to (a) investments in the
obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities and repurchase agreements involving such
securities, (b) investments in tax-exempt securities issued by governments
or political subdivisions of government or (c) obligations issued by
domestic branches of United States banks or United States branches of
foreign banks subject to the same regulations as United States banks. For
purposes of this limitation (i) utility companies will be divided according
to their services, for example, gas, gas transmission, electric and
telephone will each be considered a separate industry; (ii) financial
service companies will be classified according to the end users of their
services, for example, automobile finance, bank finance and diversified
finance will each be considered a separate industry; (iii) supranational
entities will be considered to be a separate industry; and (iv) loan
participations are considered to be issued by both the issuing bank and the
underlying corporate borrower.

3. Make loans, except that a Portfolio may (i) purchase or hold debt
instruments in accordance with its investment objective and policies; (ii)
enter into repurchase agreements; and (iii) engage in securities lending.

4. Acquire more than 10% of the voting securities of any one issuer.

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

6. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of total assets. Any borrowing
will be done from a bank and to the extent that such borrowing exceeds 5%
of the value of the Portfolio's assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall
below 300%, the Portfolio shall, within three days thereafter or such
longer period as the Securities and Exchange Commission (the "SEC") may
prescribe by rules and regulations, reduce the amount of its borrowings to
such an extent that the asset coverage of such borrowings shall be at least
300%. This borrowing provision is included solely to facilitate the
orderly sale of portfolio securities to accommodate heavy redemption
requests if they should occur and is not for investment purposes. All
borrowings in excess of 5% of a Portfolio's total assets will be repaid
before making additional investments and any interest paid on such
borrowings will reduce income.

7. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings permitted by (3) above in aggregate amounts not to exceed 10% of
total assets taken at current value at the time of the incurrence of such
loan, except as permitted with respect to securities lending.

8. Purchase or sell real estate, real estate limited partnership interests,
commodities or

<PAGE>

commodities contracts. However, subject to their permitted investments,
any Portfolio may invest in companies which invest in real estate
commodities or commodities contracts and may invest in financial futures
contracts and related options.

9. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits
as necessary for the clearance of security transactions.

10. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter under federal securities laws in selling a portfolio
security.

11. Purchase securities of other investment companies except as permitted by
the 1940 Act and the rules and regulations thereunder. The Prime
Obligation Portfolio will invest in the shares of another money market
fund only if (i) such other money market fund is subject to Rule 2a-7
under the 1940 Act; (ii) such other money market fund has investment
criteria equal to or higher than those of such Portfolio; and (iii) the
Trust's Board of Trustees monitors the activities of such other money
market fund. The Portfolios are prohibited from acquiring the securities
of other investment companies if, as a result of such acquisition, any
such Portfolio owns more than 3% of the total voting stock of the company;
securities issued by any one investment company represent more than 5% of
the total Portfolios assets; or securities (other than treasury stock)
issued by all investment companies represent more than 10% of the total
assets of the Portfolios.

12. Issue senior securities (as defined in the 1940 Act), except in connection
with permitted borrowings as described above or as permitted by rule,
regulation or order of the SEC.

NON-FUNDAMENTAL POLICIES

The following investment limitations of the Portfolios are non-fundamental
and may be changed by the Trust's Board of Trustees without shareholder
approval. No Portfolio may invest in illiquid securities in an amount
exceeding, in the aggregate, 15% of a portfolio's net assets (10% for the
Prime Obligation Portfolio).

No Portfolio may invest in interests in oil, gas or other mineral exploration or
development programs and oil, gas or mineral leases.

THE ADVISER

<PAGE>

Citizens Bank (the "Adviser") serves as investment adviser to the Portfolios
pursuant to an investment advisory agreement (the "Advisory Agreement") with the
Trust. Under the Advisory Agreement, the Adviser is responsible for the
investment decisions for each Portfolio, and continuously reviews, supervises
and administers each Portfolio's investment program. The Advisory Agreement
also provides that the Adviser shall not be protected against any liability to
the Trust or its shareholders by reason of willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from reckless
disregard of its obligations or duties thereunder.

The Trust and the Adviser have employed Wellington Management Company, LLP as
the investment sub-adviser to the Prime Obligation Portfolio, Systematic
Financial Management, L.P. as the investment sub-adviser to the Value Portfolio
and Nicholas-Applegate Capital Management as the investment sub-adviser to the
Growth Portfolio on a day-to-day basis, in each case subject to the supervision
of the Adviser and the Trustees. In conjunction with the Adviser, each
investment sub-adviser makes the investment decisions for the assets of the
Portfolio and continuously reviews, supervises and administers the Portfolio's
investment program. See "The Sub-Advisers."

The Adviser, 328 S. Saginaw Street, Flint, Michigan 48502, was incorporated in
1871 in the state of Michigan. Citizens Bank is a wholly-owned subsidiary of
Citizens Banking Corporation. Citizens Banking Corporation is an interstate bank
holding company with over $__ billion in assets and ___ banking offices in
Michigan and Illinois. As of January 31, 1999, the Adviser's total assets under
management were $___ billion. The Adviser has managed bank common funds,
pension plan assets and personal trust assets since 1927. The Adviser's sole
experience as an investment adviser to investment companies is as investment
adviser to the Trust.

For its services, the Adviser is entitled to a fee, which is calculated daily
and paid monthly, at an annual rate based on the average daily net assets of
each Portfolio as follows: Growth Portfolio, .34%; Value Portfolio, .29% on
the first $50 million, .39% on the next $50 million, and .34% on any amount
above $100 million; Intermediate-Term Income Portfolio, .50%; Michigan
Portfolio, .50%; and Prime Obligation Portfolio, .225% on the first $500
million, and .28% in excess of $500 million. Any sub-advisory fees paid by a
Portfolio to a sub-adviser reduces the amount of the appropriate advisory fee
payable to the Adviser. The Adviser has voluntarily agreed to waive a portion
of its fees in order to limit the total operating expenses of Institutional
and Class A shares of the Growth, Value, Intermediate-Term Income, Michigan
and Prime Obligation Portfolios (exclusive of distribution expenses charged
to Class A shares) to not more than 1.10%, 1.10%, .65%, .65% and .40%,
respectively, of each Portfolio's average daily net assets. The Adviser
reserves the right, in its sole discretion, to terminate this voluntary fee
waiver at any time. For the fiscal year ended January 31, 1999, the Growth,
Value, Intermediate-Term Income, Michigan Tax Free Bond and Prime Obligation
Portfolios paid the Adviser an advisory fee of .__%, .__%, .__%, .__% and
.__% respectively, of each Portfolio's average daily net assets.

The Glass-Steagall Act restricts the securities activities of banks such as the
Adviser, but federal regulatory authorities permit such banks to provide
investment advisory and other services to

<PAGE>

mutual funds. Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other investment advisory
arrangements.

The Adviser will not be required to bear expenses of any Portfolio of the Trust
to an extent which would result in a Portfolio's inability to qualify as a
"regulated investment company" (a "RIC") under provisions of the Internal
Revenue Code of 1986, as amended (the "Code").

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Portfolios paid the following advisory fees:

<TABLE>
<CAPTION>
FEES PAID (000) FEE WAIVERS(000)
--------------- ----------------
PORTFOLIO 1997 1998 1999 1997 1998 1999
- ---------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Golden Oak Growth Portfolio $207 $121 $__ $ 3 $ 1 $__
Golden Oak Value Portfolio * $ 45 $__ * $ 5 $__
Golden Oak Intermediate-Term Income Portfolio $372 $425 $__ $167 $189 $__
Golden Oak Michigan Tax Free Bond Portfolio * $168 $__ * $ 84 $__
Golden Oak Prime Obligation Money Market Portfolio $ 40 $ 34 $__ $468 $277 $__
</TABLE>

- -----------------------
* Not in operation during such period.

THE SUB-ADVISERS

Wellington Management Company, LLP (a "Sub-Adviser" or "WMC") serves as the
investment sub-adviser for the Prime Obligation Portfolio, Systematic Financial
Management, L.P. (a "Sub-Adviser" or "Systematic Financial") serves as
investment sub-adviser for the Value Portfolio and Nicholas-Applegate Capital
Management (a "Sub-Adviser" or "Nicholas-Applegate") serves as investment
sub-adviser for the Growth Portfolio pursuant to sub-advisory agreements (each,
a "Sub-Advisory Agreement") with the Trust and/or the Adviser. Under each
Sub-Advisory Agreement, the Sub-Adviser manages the investments of the
appropriate Portfolio, selects investments, and places all orders for purchases
and sales of the Portfolio's securities, subject to the general supervision of
the Trustees of the Trust and the Adviser.

WELLINGTON MANAGEMENT COMPANY, LLP

<PAGE>

WMC is a professional investment counseling firm which provides investment
services to investment companies, employee benefit plans, endowments,
foundations, and other institutions and individuals. As of February 28, 1999,
WMC had discretionary management authority with respect to approximately $207
billion of assets. WMC and its predecessor organizations have provided
investment advisory services to investment companies since 1928 and to
investment counseling clients since 1960. Wellington Management Company, LLP, 75
State Street, Boston, MA 02109, is a Massachusetts limited liability
partnership, of which the following persons are managing partners: Robert W.
Doran, Duncan M. McFarland and John R. Ryan.

For the services provided and expenses incurred pursuant to the Sub-Advisory
Agreement, WMC is entitled to receive a fee, computed daily and paid monthly, at
the annual rate of .075% of the first $500 million of "managed assets" (defined
below) and .02% of "managed assets" in excess of $500 million. "Managed assets"
are all of the money market fund assets that WMC manages for the Trust including
assets of funds other than the Prime Obligation Portfolio. The fee paid by the
Portfolio is based on its proportionate share of "managed assets". For the
fiscal year ended January 31, 1998 the Portfolio paid WMC an advisory fee, as a
percentage of average daily net assets, of .075%.

For the fiscal year ended January 31, 1999 the Portfolio paid WMC an advisory
fee, as a percentage of average daily net assets, of .___%.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, Wellington Management received the following sub-advisory fees from the
Portfolio:

<TABLE>
<CAPTION>
FEES PAID (000) FEE WAIVERS(000)
--------------- ----------------
PORTFOLIO 1997 1998 1999 1997 1998 1999
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Golden Oak Prime Obligation $127 $104 $___ $ 0 $ 0 $___
Money Market Portfolio
</TABLE>

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT

Nicholas-Applegate serves as the investment sub-adviser for the Growth
Portfolio. Nicholas-Applegate has operated as a registered investment adviser
providing investment advisory services for a wide variety of clients including
employee benefit plans, university endowments, foundations, public retirement
systems and unions, other institutional investors and individuals since 1984
and, since April 1987, investment companies. As of January 31, 1999,
Nicholas-Applegate had discretionary management authority with respect to
approximately $___ billion of assets. Nicholas-Applegate is controlled by its
general partner, Nicholas-Applegate Capital Management Holdings, L.P., a
California limited partnership, which is controlled by a corporation which, in
turn, is controlled by a corporation controlled by Arthur E. Nicholas. The
principal business address of Nicholas-Applegate is 600 West Broadway, 29th
Floor, San Diego, California 92101.

<PAGE>

For the services provided and the expenses incurred pursuant to the Sub-Advisory
Agreement, Nicholas-Applegate is entitled to receive from the Portfolio a fee,
calculated daily and paid monthly, at an annual rate of .40% of the average
daily net assets of the Portfolio. For the fiscal year ended January 31, 1999,
the Portfolio paid the Sub-Adviser an advisory fee of .___% of its average daily
net assets.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, Nicholas-Applegate received the following sub-advisory fees from the
Portfolio*:

<TABLE>
<CAPTION>
FEES PAID (000) FEE WAIVERS(000)
--------------- ----------------
PORTFOLIO 1997 1998 1999 1997 1998 1999
- --------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Golden Oak Growth Portfolio $132 $144 $___ $ 0 $ 0 $___
</TABLE>

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

* Prior to August 1997, the Adviser paid sub-advisory fees to
Nicholas-Applegate.

SYSTEMATIC FINANCIAL MANAGEMENT, L.P.

Systematic Financial serves as the investment sub-adviser for the Value
Portfolio. Systematic Financial was established in 1982 and has managed
portfolios on a discretionary basis since inception. Systematic Financial's
clients include foundations, pension funds, public retirement systems and
Taft-Hartley plans as well as other institutional investors and individuals.
Systematic Financial's value strategy, which was originally developed by our
Chief Investment Officer, has been employed since the early 1980's. Systematic
Financial is a Delaware limited partnership. The principal business address of
Systematic Financial Management, L.P. is 300 Frank W. Burr Blvd. Glenpointe
East, 7th Floor Teaneck, NJ 07666.

For the services provided and the expenses incurred pursuant to the Sub-Advisory
Agreement, Systematic Financial is entitled to receive from the Portfolio a fee,
calculated daily and paid monthly, at an annual rate of .45% of the first $50
million, .35% of the next $50 million and .40% of any amount above $100 million
of the average daily net assets of the Portfolio. For the fiscal year ended
January 31, 1999, the Portfolio paid the Sub-Adviser an advisory fee of .__% of
its average daily net assets.

For the fiscal years ended January 31, 1998 and January 31, 1999, Systematic
Financial received the following sub-advisory fees from the Portfolio:

<TABLE>
<CAPTION>
PORTFOLIO FEES PAID (000) FEE WAIVERS(000)
- --------- --------------- ----------------
Portfolio 1998 1999 1998 1999
- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Golden Oak Value Portfolio $ 78 $___ $ 0 $___
</TABLE>

THE ADMINISTRATOR

<PAGE>

SEI Investments Mutual Funds Services (the "Administrator") serves as
administrator to the Portfolios pursuant to an administration agreement (the
"Administration Agreement") with the Trust. The Administration Agreement
provides that the Administrator shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with the
matters to which the Administration Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Administrator in the performance of its duties or from reckless disregard by it
of its duties and obligations thereunder.

For its services, the Administrator is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .20% of the average daily net
assets of the Growth, Value, Intermediate-Term Income, Michigan and Prime
Obligation Portfolios. The Value Portfolio and the Michigan Portfolio are also
subject to a minimum fee of $50,000.

For the fiscal year ended January 31, 1999, each Portfolio paid the
Administrator an administration fee (shown as a percentage of average daily net
assets) of .__%.

The Administration Agreement shall remain in effect with respect to the Golden
Oak Family of Funds until January 31, 1998, and thereafter shall continue in
effect for successive two-year periods subject to annual review by the Trustees.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Administrator received the following fees:

<PAGE>

Golden Oak Value Portfolio * $ 35 $__ * $ 26 $__
Golden Oak Intermediate-Term $215 $246 $__ $ 0 $ 0 $__
Income Portfolio
Golden Oak Michigan Tax Free * $101 $__ * $ 0 $__
Bond Portfolio
Golden Oak Prime Obligation $339 $270 $__ $ 0 $ 7 $__
Money Market Portfolio
</TABLE>

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

* Not in operation during such period.

THE DISTRIBUTOR

SEI Investments Distribution Co. (the "Distributor" or "SIDC"), a
wholly-owned subsidiary of SEI Investments, and the Trust are parties to a
distribution agreement (the "Distribution Agreement"), which applies to both
Institutional and Class A shares of the Portfolios. The Distribution
Agreement shall be reviewed and ratified at least annually (i) by the Trust's
Trustees or by the vote of a majority of the outstanding shares of the Trust,
and (ii) by the vote of a majority of the Trustees of the Trust who are not
parties to the Distribution Agreement or interested persons (as defined in
the 1940 Act) of any party to the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement will terminate in the event of any assignment, as defined in the
1940 Act, and is terminable with respect to a particular Portfolio on not
less than 60 days' notice by the Trust's Trustees, by vote of a majority of
the outstanding shares of such Portfolio or by the Distributor. The
Distributor will receive no compensation for distribution of Institutional
shares. Class A has a distribution plan (the "Class A Distribution Plan").

CLASS A DISTRIBUTION PLAN

The Distribution Agreement and the Class A Distribution Plan adopted by the
Class A shareholders provides that the Class A shares of each Portfolio will pay
the Distributor a fee of .25% of the average daily net assets which the
Distributor can use to compensate/broker dealers and service providers,
including the Adviser and its affiliates which provide administrative and/or
distribution services to the Class A shareholders or their customers who
beneficially own Class A shares. The Class A Plan is characterized as a
compensation plan since the distribution fee will be paid to the Distributor
without regard to the distribution or shareholder service expenses incurred by
the Distributor or the amount or payments made to financial institutions and
intermediaries. The Trust intends to operate the Class A Plan in accordance
with its terms and with the NASD rules concerning sales charges.

The Distribution Agreement is renewable annually and may be terminated by the
Distributor, the Qualified Trustees (defined below), or by a majority vote of
the outstanding securities of the Trust upon not more than 60 days' written
notice by either party.

The Trust has adopted the Class A Distribution Plan in accordance with the
provisions of Rule 12b-1 under the 1940 Act which regulates circumstances under
which an investment company may directly or indirectly bear expenses relating to
the distribution of its shares. Continuance of the Class A Distribution Plan
must be approved annually by a majority of the Trustees of the

<PAGE>

Trust and by a majority of the Trustees who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
such Class A Distribution Plan or any agreements related to it ("Qualified
Trustees"). The Class A Distribution Plan requires that quarterly written
reports of amounts spent under the Class A Distribution Plan and the purposes of
such expenditures be furnished to and reviewed by the Trustees. The Class A
Distribution Plan may not be amended to increase materially the amount which may
be spent thereunder without approval by a majority of the outstanding shares of
the Trust. All material amendments of the Plan will require approval by a
majority of the Trustees of the Trust and of the Qualified Trustees.

For the fiscal years ended January 31, 1997, January 31, 1998 and January 31,
1999, the Portfolios paid the following distribution fees:

<TABLE>
<CAPTION>
DISTRIBUTION FEES PAID
----------------------
PORTFOLIO 1997 1998 1999
- --------- ---- ---- ----
<S> <C> <C> <C>
Golden Oak Growth Portfolio $515 $669 $___
Golden Oak Value Portfolio * $ 38 $___
Golden Oak Intermediate-Term Income $310 $183 $___
Portfolio
Golden Oak Michigan Tax Free Bond * $ 57 $___
Portfolio
Golden Oak Prime Obligation Money $168,512 $101,244 $___
Market Portfolio
</TABLE>

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

* Not in operation during such period.

THE TRANSFER AGENT

DST Systems, Inc., 1004 Baltimore Street, Kansas City, Missouri 64105 (the
"Transfer Agent"), serves as the transfer agent and dividend disbursing agent
for the Portfolios under a transfer agency agreement with the Trust.

THE CUSTODIAN

First Union National Bank, Broad and Chestnut Streets, P.O. Box 7618,
Philadelphia, Pennsylvania 19101 (the "Custodian") acts as custodian of the
Trust. The Custodian holds cash, securities and other assets of the Trust as
required by the 1940 Act.

LEGAL COUNSEL AND INDEPENDENT ACCOUNTANTS

Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Miller, Canfield,
Paddock and Stone, P.L.C. serves as counsel to the Trust with respect to
Michigan state issues. PricewaterhouseCoopers LLP serves as the independent
accountants of the Trust.

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have

<PAGE>

held other positions with the named companies during that period. Unless
otherwise noted, the business address of each Trustee and each Executive
Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select
Funds, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Fund, Inc., Oak Associates Funds, The Parkstone Group of Funds, The PBHG
Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series Fund, Inc., The
Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Liquid Asset Trust, SEI Tax
Exempt Trust, STI Classic Funds, STI Classic Variable Trust and TIP Funds,
each of which is an open-end management investment company managed by SEI
Investments Mutual Funds Services or its affiliates and, except for PBHG
Advisor Funds, Inc., distributed by SEI Investments Distribution Co.

<PAGE>

Funds and Oak Associates Funds.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42) -- Trustee** -- Chief Executive
Officer, Newfound Consultants Inc. since April 1997. General Partner, Teton
Partners, L.P., June 1991- December 1996; Chief Financial Officer, Noble
Partners, L.P., March 1991-December 1996; Treasurer and Clerk, Peak Asset
Management, Inc., since 1991; Trustee, Navigator Securities Lending Trust,
since 1995. Trustee of The Advisors' Inner Circle Fund, The Expedition
Funds, Oak Associates Funds, SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Institutional International
Trust, and SEI Tax Exempt Trust.

<PAGE>

JOSEPH M. O'DONNELL (DOB 11/13/54) -- Vice President and Assistant Secretary
- -- Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services,
Inc., 1993-1997. Staff Counsel and Secretary, Provident Mutual Family of
Funds, 1990-1993.

- ------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested"
persons of the Fund as that term is defined in the 1940 Act.

**Messrs. Cooney, Patterson, Peters, Storey and Sullivan serve as members of the
Audit Committee of the Fund.

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees. For
the fiscal year ended January 31, 1998, the trust paid the unaffiliated Trustees
aggregate fees of $_____.

COMPENSATION TABLE

<PAGE>

<TABLE>
<CAPTION>
TOTAL COMPENSATION
PENSION OR FROM REGISTRANT AND
RETIREMENT ESTIMATED FUND COMPLEX PAID TO
AGGREGATE BENEFITS ACCRUED ANNUAL TRUSTEES FOR THE
NAME OF PERSON, POSITION COMPENSATION AS PART OF FUND BENEFITS UPON FISCAL YEAR ENDED
- ------------------------ FROM REGISTRANT EXPENSES RETIREMENT JANUARY 31, 1999 (1)
--------------- -------- ---------- --------------------
<S> <C> <C> <C> <C>
John T. Cooney, Trustee $______ N/A N/A $______
**Frank E. Morris, Trustee $______ N/A N/A $______
Robert Patterson, Trustee $______ N/A N/A $______
Eugene B. Peters, Trustee $______ N/A N/A $______
James M. Storey, Trustee $______ N/A N/A $______
William M. Doran, Trustee* $0 N/A N/A $0
Robert A. Nesher, Trustee* $0 N/A N/A $0
</TABLE>

- ------------------------------
(1) Total Compensation for service on one board.
* A Trustee who is an "interested person" as defined by the 1940 Act.
** Retired 12/31/98.

COMPUTATION OF YIELD

From time to time, each Portfolio may advertise yield and/or total return.
These figures will be based on historical earnings and are not intended to
indicate future performance.

The "yield" of the Portfolios refers to the income generated by an investment in
a Portfolio over a seven-day or 30-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that seven-day or 30-day period is
assumed to be generated each seven-day or 30-day period over a year and is shown
as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in a
Portfolio is assumed to be reinvested. The "effective yield" will be slightly
higher than the "yield" because of the compounding effect of this assumed
reinvestment.

The current yield of the Prime Obligation Portfolio will be calculated daily
based upon the seven days ending on the date of calculation ("base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account
having a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts, and
dividing such net change by the value of the account at the beginning of the
same period to obtain the base period return and multiplying the result by
(365/7). Realized and unrealized gains and losses are not included in the
calculation of the yield. The effective compound yield of the Portfolio is
determined by computing the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one share at
the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and

<PAGE>

dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return, and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula: Effective
Yield = (Base Period Return + 1) 365/7) - 1. The current and the effective
yields reflect the reinvestment of net income earned daily on portfolio assets.

The yield of the Portfolio fluctuates, and the annualization of a week's
dividend is not a representation by the Trust as to what an investment in the
Portfolio will actually yield in the future. Actual yields will depend on such
variables as asset quality, average asset maturity, the type of instruments the
Portfolio invests in, changes in interest rates on money market instruments,
changes in the expenses of the Portfolio and other factors.

For the 7-day period ended January 31, 1999, the Prime Obligation Portfolio's
yield was ____% for Institutional and ____% for Class A and the effective
yield was ____% for Institutional and ____% for Class A.

The yield of a non-Money Market Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified 30-day period. The
yield is calculated by assuming that the income generated by the investment
during that period generated each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula: Yield = 2[((a-b)/cd) + 1)(6)-1], where a = dividends
and interest earned during the period; b = expenses accrued for the period (net
of reimbursement); c = the current daily number of shares outstanding during the
period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.

The Michigan Portfolio may also advertise a "tax-equivalent yield," which is
a calculated by determining the rate of return that would have to be achieved
on a fully taxable instrument to produce the after-tax equivalent of the
Portfolio's yield, assuming certain tax brackets for a shareholder. The
tax-equivalent yield of the Portfolio will be calculated by adding (a) the
portion of the Portfolio's yield that is non-tax-exempt and (b) the result
obtained by dividing the portion of the Portfolio's yield that is tax-exempt
by the difference of one minus a stated income tax rate.

For the 30-day period ended January 31, 1999, the Portfolios' yields and
tax-equivalent yields were as follows:

<TABLE>
<CAPTION>
YIELDS TAX-EQUIVALENT YIELDS
------ ---------------------
PORTFOLIO INSTITUTIONAL CLASS A INSTITUTIONAL CLASS A
- ---------
<S> <C> <C> <C> <C>
Golden Oak Growth Portfolio ____% ____% ____% ____%

Golden Oak Value Portfolio ____% ____% ____% ____%

Golden Oak Intermediate ____% ____% ____% ____%
Term Income Portfolio

<PAGE>

Golden Oak Michigan Tax ____% ____% ____% ____%
Free Bond Portfolio
</TABLE>

The Portfolios may, from time to time, compare their performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for administrative and management costs.

CALCULATION OF TOTAL RETURN

From time to time, each Portfolio, other than the Prime Obligation Portfolio,
may advertise total return. The total return of a Portfolio refers to the
average compounded rate of return to a hypothetical investment for designated
time periods (including but not limited to, the period from which the
Portfolio commenced operations through the specified date), assuming that the
entire investment is redeemed at the end of each period. In particular,
total return will be calculated according to the following formula: P (1 +
T)(n) = ERV, where P = a hypothetical initial payment of $1,000; T = average
annual total return; n = number of years; and ERV = ending redeemable value
of a hypothetical $1,000 payment made at the beginning of the designated time
period as of the end of such period.

Based on the foregoing, the average annual total return for the Portfolios from
inception through January 31, 1999 and for the one, five and ten year periods
ended January 31, 1999 were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------
PORTFOLIO CLASS ONE YEAR FIVE YEAR TEN YEAR SINCE INCEPTION**
- --------- ----- -------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C>
Golden Oak Growth Portfolio Institutional ____% ____% N/A ____%
Class A (without load) ____% ____% N/A ____%
Class A (with load) ____% ____% N/A ____%
Golden Oak Value Portfolio Institutional ____% N/A * ____%
Class A (without load) ____% N/A * ____%
Class A (with load) ____% N/A * ____%
Golden Oak Intermediate- Institutional ____% ____% N/A ____%
Term Income Portfolio Class A (without load) ____% ____% N/A ____%
Class A (with load) ____% ____% N/A ____%
Golden Oak Michigan Tax Institutional ____% N/A * ____%
Free Bond Portfolio Class A (without load) ____% N/A * ____%
Class A (with load) ____% N/A * ____%
</TABLE>

* Not in operation during such period.

** Intermediate-Term Income and Growth Portfolios Institutional commenced
operations February 1, 1993. Golden Oak Prime Obligation Money Market
Portfolio Class A commenced operations January 20, 1994. Golden Oak
Intermediate-Term Income and Growth Portfolios Class B commenced operations
June 18, 1993. Golden Oak Michigan Tax Free Bond Portfolio and Golden Oak
Value Portfolio commenced operations June 23, 1997.

<PAGE>

PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions may be made through the Distributor on a day on which
the New York Stock Exchange is open for business. Shares of the Portfolios are
offered on a continuous basis. Currently, the holidays observed by the Trust
and the New York Stock Exchange are as follows: New Year's Day, Presidents' Day,
Martin Luther King Jr. Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.

It is currently the Trust's policy to pay for the redemptions in cash. The
Trust retains the right, however, to alter this policy to provide for
redemptions in whole or in part by a distribution in-kind of securities held by
the Portfolios in lieu of cash. Shareholders may incur brokerage charges on the
sale of any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
Portfolios of the Trust during any 90-day period of up to the lesser of $250,000
or 1% of the Trust's net assets.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of
disposal or valuation of a Portfolio's securities is not reasonably
practicable, or for such other periods as the SEC has by order permitted.
The Trust also reserves the right to suspend sales of shares of a Portfolio
for any period during which the New York Stock Exchange, the Adviser, the
applicable Sub-Adviser, the Administrator and/or the Custodian are not open
for business.

LETTER OF INTENT

Reduced sales charges are also applicable to the aggregate amount of purchases
made by any such purchaser previously enumerated within a 13-month period
pursuant to a written Letter of Intent provided to the Trust's transfer agent,
that does not legally bind the signer to purchase any set number of shares and
provides for the holding in escrow by the Administrator of 5% of the amount
purchased until such purchase is completed within the 13-month period. A Letter
of Intent may be dated to include shares purchased up to 90 days prior to the
date the Letter of Intent is signed. The 13-month period begins on the date of
the earliest purchase. If the intended investment is not completed, the
Administrator will surrender an appropriate number of the escrowed shares for
redemption in order to recover the difference between the sales charge on the
shares purchased at the reduced rate and the sales charge otherwise applicable
to the total shares purchased.

DETERMINATION OF NET ASSET VALUE

The net asset value per share of the Prime Obligation Portfolio is calculated
separately for each class of the Portfolio by adding the value of securities
and other

<PAGE>

assets, subtracting liabilities attributable to that class and dividing by the
number of outstanding shares of that class. Securities will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, it may result in periods
during which a security's value, as determined by this method, is higher or
lower than the price the Portfolio would receive if it sold the instrument.
During periods of declining interest rates, the daily yield of the Portfolio may
tend to be higher than a like computation made by a company with identical
investments utilizing a method of valuation based upon market prices and
estimates of market prices for all of its portfolio securities. Thus, if the
use of amortized cost by the Portfolio resulted in a lower aggregate portfolio
value on a particular day, a prospective investor in the Portfolio would be able
to obtain a somewhat higher yield than would result from investment in a company
utilizing solely market values, and existing investors in the Portfolio would
experience a lower yield. The converse would apply in a period of rising
interest rates.

The Portfolio's use of amortized cost and the maintenance of the Portfolio's net
asset value at $1.00 are permitted by Rule 2a-7 promulgated under the 1940 Act,
provided that certain conditions are met. The regulations also require the
Trustees to establish procedures that are reasonably designed to stabilize the
net asset value per share at $1.00 for the Portfolio. Such procedures include
the determination of the extent of deviation, if any, of the Portfolio's current
net asset value per share calculated using available market quotations from the
Portfolio's amortized cost price per share at such intervals as the Trustees
deem appropriate and reasonable in light of market conditions and periodic
reviews of the amount of the deviation and the methods used to calculate such
deviation. In the event that such deviation exceeds 1/2 of 1%, the Trustees are
required to consider promptly what action, if any, should be initiated, and, if
the Trustees believe that the extent of any deviation may result in material
dilution or other unfair results to shareholders, the Trustees are required to
take such corrective action as they deem appropriate to eliminate or reduce such
dilution or unfair results to the extent reasonably practicable. Such actions
may include the sale of portfolio instruments prior to maturity to realize
capital gains or losses or to shorten average portfolio maturity; withholding
dividends; redeeming shares in kind; or establishing a net asset value per share
by using available market quotations. In addition, if the Portfolio incurs a
significant loss or liability, the Trustees have the authority to reduce pro
rata the number of shares of the Portfolio in each shareholder's account and to
offset each shareholder's pro rata portion of such loss or liability from the
shareholder's accrued but unpaid dividends or from future dividends while each
other Portfolio must annually distribute at least 90% of its investment company
taxable income.

The securities of the Intermediate-Term Income, Michigan, Growth and Value
Portfolios are valued by the Administrator pursuant to valuations provided by
an independent pricing service. The pricing service relies primarily on
prices of actual market transactions as well as trader quotations. However,
the

<PAGE>

service may also use a matrix system to determine valuations of fixed income
securities, which system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

TAXES

FEDERAL INCOME TAX TREATMENT OF DIVIDENDS AND DISTRIBUTIONS

The following general discussion of certain federal income tax consequences
is based on the Code and the regulations issued thereunder as in effect on
the date of this Statement of Additional Information. New legislation, as
well as administrative changes or court decisions, may significantly change
the conclusions expressed herein, and may have a retroactive effect with
respect to the transactions contemplated herein.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

Each Portfolio intends to qualify and elect to be treated as a RIC as defined
under Subchapter M of the Code. By following such a policy, each Portfolio
expects to eliminate or reduce to a nominal amount the federal taxes to which
they may be subject.

In order to qualify as a RIC, a Portfolio must distribute at least 90% of its
net investment income (that generally includes dividends, taxable interest,
and the excess of net short-term capital gains over net long-term capital
losses less operating expenses) and at least 90% of its net tax exempt
interest income, for each tax year, if any, to its shareholders and also must
meet several additional requirements. Included among these requirements are
the following: (i) at least 90% of the Portfolio's gross income each taxable
year must be derived from dividends, interest, payments with respect to
securities loans, and gains from the sale or other disposition of stock or
securities, or certain other income; (ii) at the close of each quarter of the
Portfolio's taxable year, at least 50% of the value of its total assets must
be represented by cash and cash items, U.S. Government securities, securities
of other RICs and other securities, with such other securities limited, in
respect to any one issuer, to an amount that does not exceed 5% of the value
of the Portfolio's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of the Portfolio's taxable year, not more than

<PAGE>

25% of the value of its assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer or of
two or more issuers which the Portfolio controls and which are engaged in the
same, similar or related trades or businesses.

The Prime Obligation, Intermediate-Term Income and Value Portfolios may make
investments in securities (such as STRIPS) that bear "original issue
discount" or "acquisition discount" (collectively, "OID Securities"). The
holder of such securities is deemed to have received interest income even
though no cash payments have been received. Accordingly, OID Securities may
not produce sufficient current cash receipts to match the amount of
distributable net investment income the Portfolios must distribute to satisfy
the Distribution Requirement. In some cases, the Portfolios may have to
borrow money or dispose of other investments in order to make sufficient cash
distributions to satisfy the Distribution Requirement.

PORTFOLIO DISTRIBUTIONS

Distributions of investment company taxable income will be taxable to
shareholders as ordinary income, regardless of whether such distributions are
paid in cash or are reinvested in additional Shares, to the extent of a
Portfolio's earnings and profits. Each Portfolio anticipates that it will
distribute substantially all of its investment company taxable income for each
taxable year.

<PAGE>

Income Portfolio, Michigan Portfolio or Prime Obligation Portfolio
distribution will qualify for the corporate dividends-received deduction.
Conversely, distributions from the Growth Portfolio and the Value Portfolio
generally will qualify for the corporate dividends-received deduction.

Ordinarily, investors should include all dividends as income in the year of
payment. However, dividends declared payable to shareholders of record in
October, November, or December of one year, but paid in January of the following
year, will be deemed for tax purposes to have been received by the shareholder
and paid by the Portfolio in the year in which the dividends were declared.

SALE OR EXCHANGE OF PORTFOLIO SHARES

Generally, gain or loss on the sale or exchange of a Portfolio Share will be
capital gain or loss that will be long-term if the Share has been held for more
than twelve months and otherwise will be short-term. For individuals, long-term
capital gains are currently taxed at a maximum rate of 20% and short-term
capital gains are currently taxed at ordinary income tax rates. However, if a
shareholder realizes a loss on the sale, exchange or redemption of a Share held
for six months or less and has previously received a capital gains distribution
with respect to the Share (or any undistributed net capital gains of a Portfolio
with respect to such Share are included in determining the shareholder's
long-term capital gains), the shareholder must treat the loss as a long-term
capital loss to the extent of the amount of the prior capital gains distribution
(or any undistributed net capital gains of a Portfolio that have been included
in determining such shareholder's long-term capital gains). In addition, any
loss realized on a sale or other disposition of Shares will be disallowed to the
extent an investor repurchases (or enters into a contract or option to
repurchase) Shares within a period of 61 days (beginning 30 days before and
ending 30 days after the disposition of the Shares). This loss disallowance
rule will apply to Shares received through the reinvestment of dividends during
the 61-day period.

FEDERAL EXCISE TAX

If a Portfolio fails to distribute in a calendar year at least 98% of its
ordinary income for the year

<PAGE>

and 98% of its capital gain net income (the excess of short and long term
capital gains over short and long term capital losses) for the one-year period
ending October 31 of that year (and any retained amount from the prior calendar
year), the Portfolio will be subject to a nondeductible 4% Federal excise tax on
the undistributed amounts. Each Portfolio intends to make sufficient
distributions to avoid imposition of this tax, or to retain, at most its net
capital gains and pay tax thereon.

STATE AND LOCAL TAXES

ADDITIONAL TAX INFORMATION CONCERNING THE MICHIGAN PORTFOLIO

The Portfolio intends to qualify to pay "exempt interest dividends" to its
shareholders by satisfying the Code=s requirement that at the close of each
quarter of its taxable year at least 50% of the value of its total assets
consist of obligations the interest on which is exempt from federal income tax.
As long as this and certain other requirements are met, dividends derived from
the Portfolio's net tax-exempt interest income will be "exempt interest
dividends" that are excluded from your gross income for federal income tax
purposes. Exempt interest dividends may, however, have collateral federal
income tax consequences, including alternative minimum tax consequences, as
discussed below.

<PAGE>

derived were issued or whether they are derived from private activity bonds,
will be included in the corporation's "adjusted current earnings," as defined in
Section 56(g) of the Code, in calculating the corporation's alternative minimum
taxable income for purposes of determining the Alternative Minimum Tax.

PORTFOLIO TRANSACTIONS

<PAGE>

The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Adviser and/or Sub-Adviser(s) is responsible
for placing the orders to execute transactions for the Portfolios. In placing
orders, it is the policy of the Trust to seek to obtain the best net results
taking into account such factors as price (including the applicable dealer
spread), the size, type and difficulty of the transaction involved, the firm's
general execution and operational facilities, and the firm's risk in positioning
the securities involved. While the Adviser and/or Sub-Adviser(s) generally seek
reasonably competitive spreads or commissions, the Trust will not necessarily be
paying the lowest spread or commission available if the difference is reasonably
justified by other aspects of the portfolio execution securities offered.

The money market securities in which the Portfolios invest are traded primarily
in the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
and/or Sub-Adviser(s) will deal directly with the dealers who make a market in
the securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. Money market securities are generally traded on a net basis and do
not normally involve either brokerage commissions or transfer taxes. The cost
of executing portfolio securities transactions of the Trust will primarily
consist of dealer spreads and underwriting commissions.

<TABLE>
<CAPTION>
DOLLAR AMOUNT OF LOAD
RETAINED BY THE
DOLLAR AMOUNT OF LOAD ADMINISTRATOR
--------------------- -------------
PORTFOLIO/CLASS 1997 1998 1999 1997 1998 1999
- --------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Golden Oak Growth Portfolio -- $116 $363 $___ $ 0 $ 0 $___
Class A
Golden Oak Value Portfolio -- * 4,885 $___ * 0 $___
Class A
Golden Oak Intermediate-Term 191 6,800 $___ $ 0 0 $___
Income Portfolio --Class A
Golden Oak Michigan Tax Free * 16,945 $___ * 0 $___
Bond Portfolio --Class A
Golden Oak Prime Obligation N/A N/A N/A N/A N/A N/A
Money Market Portfolio --
Class A
</TABLE>

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

* Not in operation during such period.

TRADING PRACTICES AND BROKERAGE

The Adviser and/or Sub-Adviser(s) select brokers or dealers to execute
transactions for the purchase or sale of portfolio securities on the basis of
its judgment of their professional capability to provide the service. The
primary consideration is to have brokers or dealers execute transactions at best
price and execution. Best price and execution refers to many factors, including
the price paid or received for a security, the commission charged, the
promptness and reliability of execution, the confidentiality and placement
accorded the order and other factors affecting the overall benefit

<PAGE>

obtained by the account on the transaction. The Adviser's and/or a
Sub-Adviser's determination of what are reasonably competitive rates is based
upon the professional knowledge of its trading department as to rates paid and
charged for similar transactions throughout the securities industry. In some
instances, the Adviser and/or a Sub-Adviser pays a minimal share transaction
cost when the transaction presents no difficulty. Some trades are made on a net
basis where the Adviser and/or a Sub-Adviser either buys securities directly
from the dealer or sells them to the dealer. In these instances, there is no
direct commission charged but there is a spread (the difference between the buy
and sell price) which is the equivalent of a commission.

The Adviser and/or Sub-Adviser(s) may allocate out of all commission business
generated by all of the funds and accounts under management by the Adviser
and/or Sub-Adviser(s), brokerage business to brokers or dealers who provide
brokerage and research services. These research services include advice, either
directly or through publications or writings, as to the value of securities, the
advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing of
analyses and reports concerning issuers, securities or industries; providing
information on economic factors and trends, assisting in determining portfolio
strategy, providing computer software used in security analyses, and providing
portfolio performance evaluation and technical market analyses. Such services
are used by the Adviser and/or Sub-Adviser(s) in connection with its investment
decision-making process with respect to one or more funds and accounts managed
by it, and may not be used exclusively with respect to the fund or account
generating the brokerage.

As provided in the Securities Exchange Act of 1934, as amended (the "1934 Act"),
higher commissions may be paid to broker/dealers who provide brokerage and
research services than to broker/dealers who do not provide such services if
such higher commissions are deemed reasonable in relation to the value of the
brokerage and research services provided. Although transactions are directed to
broker/dealers who provide such brokerage and research services, the Adviser
and/or Sub-Adviser(s) believes that the commissions paid to such broker/dealers
are not, in general, higher than commissions that would be paid to
broker/dealers not providing such services and that such commissions are
reasonable in relation to the value of the brokerage and research services
provided. In addition, portfolio transactions which generate commissions or
their equivalent are directed to broker/dealers who provide daily portfolio
pricing services to the Adviser and/or Sub-Adviser(s). Subject to best price
and execution, commissions used for pricing may or may not be generated by the
funds receiving the pricing service.

For the fiscal years ended January 31, 1998 and January 31, 1999, the Portfolios
paid the following brokerage commissions with respect to portfolio transactions:

<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL BROKERAGE
% OF TOTAL COMMISSIONS PAID
BROKERAGE % OF TOTAL TO SIDC IN
TOTAL $ AMOUNT COMMISSIONS BROKERAGE CONNECTION WITH TOTAL $ AMOUNT
TOTAL $ AMOUNT OF BROKERAGE PAID TO TRANSACTIONS REPURCHASE OF BROKERAGE
OF BROKERAGE COMMISSION PAID AFFILIATED EFFECTED THROUGH AGREEMENT COMMISSIONS PAID
COMMISSIONS PAID TO AFFILIATES BROKERS AFFILIATED BROKERS TRANSACTIONS FOR RESEARCH
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999 1998 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Golden Oak $98,901 $______ $0 $__ 0% ___% 0% ___% $985 $__ $17,844 $______
Growth Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Golden Oak N/A $______ 0 $__ 0% ___% 0% ___% 2,854 $__ 0 $______
Intermediate-
Term Income
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Golden Oak N/A $______ 0 $__ 0% ___% 0% ___% N/A $__ 0 $______
Michigan Tax
Free Bond
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Golden Oak N/A $______ 0 $__ 0% ___% 0% ___% N/A $__ 0 $______
Prime Obligation
Money Market
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
Golden Oak $39,007 $______ 0 $__ 0% ___% 0% ___% N/A $__ $36,715 $______
Value
Portfolio
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

* Had not commenced operations as of the end of the fiscal year.

For the fiscal year ended January 31, 1997, the Portfolios paid the following
brokerage commissions with respect to portfolio transactions:

Golden Oak
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
TOTAL $ AMOUNT TOTAL $ AMOUNT OF
OF BROKERAGE BROKERAGE COMMISSION
COMMISSION PAID PAID TO AFFILIATES
PORTFOLIO 1997 1997
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Golden Oak Growth Portfolio $81,924 $0
- ------------------------------------------------------------------------------------------
Golden Oak Intermediate-Term Income Portfolio 0 0
- ------------------------------------------------------------------------------------------
Golden Oak Michigan Tax Free Bond Portfolio * *
- ------------------------------------------------------------------------------------------
Golden Oak Prime Obligation Money Market Portfolio 0 0
- ------------------------------------------------------------------------------------------
Golden Oak Value Portfolio * *
- ------------------------------------------------------------------------------------------
</TABLE>

* Had not commenced operations as of the end of the fiscal year.

The Adviser and/or Sub-Adviser(s) may place a combined order for two or more
accounts or funds engaged in the purchase or sale of the same security if, in
its judgment, joint execution is in the best interest of each participant and
will result in best price and execution. Transactions involving commingled
orders are allocated in a manner deemed equitable to each account or fund. It
is believed that the ability of the accounts to participate in volume
transactions will generally be beneficial to the accounts and funds. Although
it is recognized that, in some cases, the joint execution of orders could
adversely affect the price or volume of the security that a particular account
or trust may obtain, it is the opinion of the Adviser and/ or Sub-Adviser(s) and
the Trust's Board of Directors that the advantages of combined orders outweigh
the possible disadvantages of separate transactions.

<PAGE>

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Adviser
and/or Sub-Adviser(s) may give consideration to sales of shares of the Adviser
and/or Sub-Adviser(s) as a factor in the selection of brokers and dealers to
execute portfolio transactions for such Portfolio.

It is expected that the Adviser and/or Sub-Adviser(s) may execute brokerage or
other agency transactions through the Distributor or an affiliate of the
Adviser, both of which are registered broker-dealers, for a commission in
conformity with the 1940 Act, the 1934 Act and the rules promulgated thereunder
by the SEC. Under these provisions, the Distributor or an affiliate of the
Adviser is permitted to receive and retain compensation for effecting portfolio
transactions for a Portfolio on an exchange if a written contract is in effect
between the Distributor and the Trust expressly permitting the Distributor or an
affiliate of the Adviser to receive and retain such compensation. These rules
further require that commissions paid to the Distributor by a Portfolio for
exchange transactions not exceed "usual and customary" brokerage commissions.
The rules define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the
Adviser and/or Sub-Adviser(s) may direct commission business to one or more
designated broker/dealers in connection with such broker/ dealer's provision of
services to a Portfolio or payment of certain Portfolio expenses (e.g., custody,
pricing and professional fees). The Trustees, including those who are not
"interested persons" of the Trust, have adopted procedures for evaluating the
reasonableness of commissions paid to the Distributor and will review these
procedures periodically.

The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act) which the Trust has acquired
during its most recent fiscal year. As of January 31, 1999, the following
Portfolios held securities of the Trust's "regular brokers or dealers" as
follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
PORTFOLIO NAME OF BROKER/DEALER TYPE OF SECURITY HELD DOLLAR AMOUNT AT FYE
- --------- --------------------- --------------------- --------------------
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Golden Oak Growth Portfolio State Street Bank & Trust Co. Common Stock $_______
- ---------------------------------------------------------------------------------------------------------------------
Golden Oak Michigan Tax Free N/A N/A N/A
Bond Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Golden Oak Value Portfolio Chase Manhattan Bank Common Stock $_______
Mellon Bank, N.A. Common Stock $_______
CitiCorp Securities Markets, Inc. Common Stock $_______
Morgan Stanley
Dean Witter & Co. Common Stock $_______
- ---------------------------------------------------------------------------------------------------------------------

<PAGE>

- ---------------------------------------------------------------------------------------------------------------------
Golden Oak Intermediate-Term American Express Credit Corp. Corporate Obligation $_______
Income Portfolio Associated Corporation of NC Corporate Obligation $_______
Dresdner Government Securities Repurchase Agreement $_______
Lehman Bros. Corporate Obligation $_______
- ---------------------------------------------------------------------------------------------------------------------
Golden Oak Prime Nations Banc Commercial Paper $_______
Obligation Money Bear Sterns Security Corp. Commercial Paper $_______
Market Portfolio General Electric Capital Corp. Commercial Paper $_______
Merrill Lynch, Pierce,
Fenner & Smith Commercial Paper $_______
Prudential Funding Commercial Paper $_______
Chase Manhattan Certificate of Deposit $_______
Swiss Bank Certificate of Deposit $_______
Bank of America Corporate Bond $_______
Bank of Boston Bank Note $_______
Morgan Guaranty Bank Note $_______
- ---------------------------------------------------------------------------------------------------------------------
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DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of the Portfolios each of which represents an equal proportionate
interest in that Portfolio with each other share. Shares are entitled upon
liquidation to a pro rata share in the net assets of the Portfolios.
Shareholders have no preemptive rights. The Declaration of Trust provides that
the Trustees of the Trust may create additional series of shares. All
consideration received by the Trust for shares of any additional series and all
assets in which such consideration is invested would belong to that series and
would be subject to the liabilities related thereto. Share certificates
representing shares will not be issued.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. Even if, however, the Trust were held to be a partnership, the
possibility of its shareholders incurring financial loss for that reason appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholder held personally liable for the obligations of the Trust.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for his or
her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees

<PAGE>

or investment advisers, shall not be liable for any neglect or wrongdoing of any
such person. The Declaration of Trust also provides that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with actual or threatened litigation in which they may be involved
because of their offices with the Trust unless it is determined in the manner
provided in the Declaration of Trust that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the
Trust. However, nothing in the Declaration of Trust shall protect or indemnify
a Trustee against any liability for his willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties.

5% SHAREHOLDERS

As of __________, 1999, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% and
25% or more of the shares of the Portfolios. Persons who owned of record or
beneficially more than 25% of a Fund's outstanding shares may be deemed to
control the Fund within the meaning of the Act. The Trust believes that most of
the shares referred to below were held by the below persons in account for their
fiduciary, agency or custodial customers.

Golden Oak Prime Obligation Money Market Portfolio--Institutional: Citizens
Bank, c/o Trust Operations 332021, 101 N. Washington Ave., Saginaw, MI
48607-1206, ______%.

Golden Oak Prime Obligation Money Market Portfolio--Class A: Hungry Howies
Distributing Inc., Madison Heights, MI 48071-0310, _____%; Robert B. Mackey,
Tr., Robert B. Mackey Revoc. Trust, 6166 Eastknoll Dr., Grand Blanc, MI
48439-5001, _____%; Bruce B. Mackey Tr., Bruce B. Mackey Trust, 3365 Associates
Dr., Burton, MI 48529-1301, _____%.

Golden Oak Michigan Tax Free Bond Portfolio--Institutional: Citizens Bank, c/o
Trust Operations 332021, 101 N. Washington Ave., Saginaw, MI 48607-1206, _____%.

Golden Oak Michigan Tax Free Bond Portfolio--Class A: Dana A. Czmer, FBO the
Dana A. Czmer Trust, 532 Ashwood, Flushing, MI 48433-1329, ____%; Matthew C.
Czmer & Julie A. Czmer, 6585 Cardinal Ridge Court, Orchard Lake, MI 48324-3414,
____%; SEI Trust Corporation, FBO Citizens Bank, attn: Mutual Fund
Administrator, One Freedom Valley Dr., Oaks, PA 19456, _____%; John W. Ennest,
The John W. Ennest Trust, 5412 Pepper Mill, Grand Blanc, MI 48439, ____%.

Golden Oak Intermediate-Term Income Portfolio--Institutional: Citizens Bank, c/o
Trust Operations 332021, 101 N. Washington Ave., Saginaw, MI 48607-1206, _____%.

Golden Oak Intermediate-Term Income Portfolio--Class A: Reggie L. Hockin & Lucy
D. Hockin, 1151 Westwood Dr., Flint, MI 48532-2676, _____%; SEI Trust
Corporation, FBO Citizens Bank, attn: Mutual Fund Administrator, One Freedom
Valley Dr., Oaks, PA 19456, _____%; John W. Ennest, The John W. Ennest Trust,
5412 Pepper Mill, Grand Blanc, MI 48439,

<PAGE>

_____%; Kathleen Kool & Neil K. Kool, 2550 Balveat Dr., Lima, OH 45808-4019,
____%; Bruce H. & Elizabeth A. Schwartz, FBO Bruce & Elizabeth Schwartz, 16053
Pretty Lake Dr., Mecosta, MI 49332-9617,
____%.

Golden Oak Growth Portfolio--Institutional: Citizens Bank, c/o Trust Operations
332021, 101 N. Washington Ave., Saginaw, MI 48607-1206, _____%.

Golden Oak Growth Portfolio--Class A: Everen Clearing Corp. Cust. FBO Barbara L.
Isetts/IRA, 4705 North Mackinaw, Pinconning, MI 48650-8431, ____%; Nicholas J.
Cilfone & Elizabeth A. Cilfone, 4810 Arboretum, Saginaw, MI 48603, ____%; James
N. Johnson Cons, Lindsay S. Johnson, 5410 Stoney Hill Ct., Grand Blanc, MI
48439-1912, ____%; SEI Trust Corporation, FBO Citizens Bank, attn: Mutual Fund
Administrator, One Freedom Valley Dr., Oaks, PA 19456, ____%; SEI Trust Company
Cust. IRA a/c David H. Buick, 3008 Gehring Dr., Flint, MI 48506-2262, ____%,
John W. Ennest, The John W. Ennest Trust, 5412 Pepper Mill, Grand Blanc, MI
48439, ____%.

Golden Oak Value Portfolio--Institutional: Citizens Bank, c/o Trust Operations
332021, 101 N. Washington Ave., Saginaw, MI 48607-1206, ____%.

Golden Oak Value Portfolio--Class-A: Susan K. Crowder & Lawrence J. Crowder Jt.
Ten, 702 Locust Drive, Davison, MI 48423-1955, ____%; Amy Dorr Cust. Nicole
Edgerston Unif. Gift Min. Act,--MI, 1109 Turrill Rd., Lapeer, MI 48446-3720,
____%; John W. Ennest, The John W. Ennest Trust, 5412 Pepper Mill, Grand Blanc,
MI 48439, ____%; Timothy J. Mohr, 369A Sound beach Ave., Old Greenwich, CT
06870-2222, ____%; Donaldson Lufkin Jenrette, Securities Corporation Inc., P.O.
Box 2052, Jersey City, NJ 07303-2052, ____%; Donaldson Lufkin Jenrette,
Securities Corporation Inc., P.O. Box 2052, Jersey City, NJ 07303-2052, ____%;
Donaldson Lufkin Jenrette, Securities Corporation Inc., P.O. Box 2052, Jersey
City, NJ 07303-2052, ____%; Donaldson Lufkin Jenrette, Securities Corporation
Inc., P.O. Box 2052, Jersey City, NJ 07303-2052, ____%; SEI Trust Corporation,
FBO Citizens Bank, attn: Mutual Fund Administrator, One Freedom Valley Dr.,
Oaks, PA 19456, _____%.

EXPERTS

FINANCIAL STATEMENTS

The audited financial statements of the Portfolios for the fiscal year ended
January 31, 1998, and

<PAGE>

the Report of Independent Accountants of PricewaterhouseCoopers LLP dated March
13, 1998, relating to the financial statements, including the financial
highlights of the Portfolios are incorporated herein by reference.

APPENDIX

DESCRIPTION OF RATINGS

The following descriptions are summaries of published ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance on
debt and ample asset protection.

- Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.

- Well-established access to a range of financial markets and
assured sources of alternate liquidity.

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

<PAGE>

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

The rating TBW-1 by Thomson BankWatch ("Thomson") indicates a very high
likelihood that principal and interest will be paid on a timely basis.

DESCRIPTION OF MUNICIPAL NOTE RATINGS

Moody's highest rating for state and municipal and other short-term notes is
MIG-1 and VMIG-1. Short-term municipal securities rated MIG-1 or VMIG-1 are of
the best quality. They have strong protection from established cash flows of
funds for their servicing or from established and broad-based access to the
market for refinancing or both. Short-term municipal securities rated MIG-2 or
VMIG-2 are of high quality. Margins of protection are ample although not so
large as in the preceding group.

- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).

- Source of Payment (the more dependent the issue is on the market for
its refinancing, the more likely it will be treated as a note).

S&P note rating symbols are as follows:

SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.

SP-2 Satisfactory capacity to pay principal and interest.

DESCRIPTION OF CORPORATE BOND RATINGS

<PAGE>

Bonds rated AAA have the highest rating S&P assigns to a debt obligation. Such
a rating indicates an extremely strong capacity to pay principal and interest.
Bonds rated AA also qualify as high-quality debt obligations. Capacity to pay
principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree. 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. 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 debt in this category than in higher rated categories. Debt
rated BB and B is regarded as having predominantly speculative characteristics
with respect to capacity to pay interest and repay principal. BB indicates the
least degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other speculative
grade debt. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions that could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating. Debt rate B has greater
vulnerability to default but presently has the capacity to meet interest
payments and principal repayments. Adverse business, financial, or economic
conditions would likely impair capacity or willingness to pay interest and repay
principal. The B rating catgory also is used for debt subordinated to senior
debt that is assigned an actual or implied BB or BB- rating.

Bonds which are rated Aaa by Moody's 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. Bonds rated Aa by
Moody's are judged by Moody's to be of high quality by all standards. Together
with bonds rated Aaa, 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. Bonds which
are rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.

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

<PAGE>

speculative elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very moderate and
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class. Bonds which are
rated B generally lack characteristics of the desirable investment. Assurance
of interest and principal payments or of maintenance of other terms of the
contract over any long period of time may be small.

Bonds rated AAA by Fitch are judged by Fitch to be strictly high grade, broadly
marketable, suitable for investment by trustees and fiduciary institutions
liable to but slight market fluctuation other than through changes in the money
rate. The prime feature of an AAA bond is a showing of earnings several times
or many times interest requirements, with such stability of applicable earnings
that safety is beyond reasonable question whatever changes occur in conditions.
Bonds rated AA by Fitch are judged by Fitch to be of safety virtually beyond
question and are readily salable, whose merits are not unlike those of the AAA
class, but whose

<PAGE>

margin of safety is less strikingly broad. The issue may be the obligation of a
small company, strongly secured but influenced as to rating by the lesser
financial power of the enterprise and more local type market.

However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements. Bonds rated B
are considered highly speculative. While bonds in this class are currently
meeting debt service requirements, the probability of continued timely payment
of principal and interest reflects the obligor's limited margin of safety and
the need for reasonable business and economic activity throughout the life of
the issue.

<PAGE>

Capacity for timely repayment of principal and interest is substantial. Adverse
changes in business, economic or financial conditions may increase investment
risk albeit not very significantly. Bonds rated A are obligations for which
there is a low expectation of investment risk. Capacity for timely repayment of
principal and interest is strong, although adverse changes in business, economic
or financial conditions may lead to increased investment risk.

Bonds rated AAA by Thomson BankWatch indicate that the ability to repay
principal and interest on a timely basis is very high. Bonds rated AA indicate
a superior ability to repay principal and interest on a timely basis, with
limited incremental risk compared to issues rated in the highest category.
Bonds rated A indicate the ability to repay principal and interest is strong.
Issues rated A could be more vulnerable to adverse developments (both internal
and external) than obligations with higher ratings.

<PAGE>

PART C: OTHER INFORMATION
POST-EFFECTIVE AMENDMENT NO. 23

ITEM 23. EXHIBITS:

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(a) Registrant's Agreement and Declaration of Trust(1), originally filed with the
Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on August 11, 1992, is incorporated herein by
reference as exhibit 1 to Post-Effective Amendment No. 17 filed with the Securities
and Exchange Commission on April 2, 1997.

(b) Registrant's By-Laws are incorporated herein by reference to Post-Effective
Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No.
33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

(d)(1) Investment Advisory Agreement between the Registrant and Citizens Commercial and
Savings Bank with respect to the Golden Oak Diversified Growth Portfolio, the
Golden Oak Intermediate-Term Income Portfolio, Golden Oak Michigan Tax Free Bond
Portfolio and Golden Oak Prime Obligation Money Market Portfolio, originally filed
as exhibit 5(b) with Pre-Effective Amendment No. 2 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on January 13, 1993, is incorporated herein by reference as exhibit 5(a)
to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.

(d)(2) Investment Sub-Advisory Agreement by and among Registrant, Citizens Commercial and
Savings Bank and Wellington Management Company, LLP with respect to the Golden Oak
Prime Obligation Money Market Portfolio, originally filed as exhibit 5(c), is
incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) filed with the Securities
and Exchange Commission on January 13, 1993.

(d)(3) Investment Advisory Agreement between the Registrant and One Valley Bank, National
Association with respect to the OVB Portfolios, originally filed as exhibit 5(h)
with Post-Effective Amendment No. 6 to Registrant's Registration Statement on Form
N-1A (File No. 33-50718) with the Securities and Exchange Commission on September
23, 1993, is incorporated herein by reference as exhibit 5(d) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2,
1997.

(d)(4) Investment Sub-Advisory Agreement by and among the Registrant, One Valley Bank,
National Association, and Wellington Management Company, LLP with respect to the
OVB Prime Obligations Portfolio, originally filed as exhibit 5(i) with
Post-Effective Amendment No. 6 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718) with the Securities and Exchange Commission on September 23,
1993, is incorporated herein by reference as exhibit 5(e) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2,
1997.

(d)(5) Investment Advisory Agreement between the Registrant and Capitoline Investment
Services, Incorporated with respect to the U.S. Government Securities Money Fund,
originally filed as exhibit 5(j), with Post-Effective Amendment No. 9 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on June 2, 1994, is incorporated herein by
reference as exhibit 5(f) to Post-Effective Amendment No. 17 filed with the
Securities and Exchange Commission on April 2, 1997.
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2
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(d)(6) Schedule B to Investment Advisory Agreement between the Registrant and Citizens
Commercial & Savings Bank with respect to Golden Oak Growth and Income Portfolio,
originally filed as exhibit 5(l) with Post-Effective Amendment No. 10 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed with the
Securities and Exchange Commission on September 30, 1994 is incorporated herein by
reference as exhibit 5(g) to Post-Effective Amendment No. 18 filed with the
Securities and Exchange Commission on May 30, 1997.

(d)(7) Schedule to the Investment Advisory Agreement between Registrant and Capitoline
Investment Services Incorporated with respect to the Prime Obligations Fund,
originally filed as exhibit 5(q) with Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on August 11, 1995, is incorporated herein by
reference as exhibit 5(h) to Post-Effective Amendment No. 17 filed with the
Securities and Exchange Commission on April 2, 1997.

(d)(8) Investment Sub-Advisory Agreement by and among the Registrant and Citizens Bank and
Nicholas-Applegate Capital Management with respect to the Golden Oak Diversified
Growth Portfolio, originally filed as exhibit 5(u), is incorporated herein by
reference to Post-Effective Amendment No. 14 to Registrant's Registration Statement
on Form N-1A (File No. 33-50718) filed with the Securities and Exchange Commission
on March 29, 1996.

(d)(9) Investment Advisory Agreement between the Registrant and One Valley Bank, National
Association with respect to the OVB Equity Income Portfolio, is incorporated herein
by reference to Post-Effective Amendment No. 16 to the Registrant's Registration
Statement on Form N-1A (File No. 33-50718) filed with the Securities and Exchange
Commission on February 28, 1997.

(d)(10) Investment Sub-Advisory Agreement by and among the Registrant, Citizens Bank and
Systematic Financial Management, L.P. with respect to the Golden Oak Value
Portfolio is incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with
the Securities and Exchange Commission on March 30, 1998.

(d)(11) Amendment to Investment Sub-Advisory Agreement between Citizens Bank and Nicholas -
Applegate Capital Management is incorporated herein by reference to Post-Effective
Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No.
33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

(d)(12) Schedule A to the Investment Advisory Agreement between Registrant and Citizens
Bank is filed herewith.

(d)(13) Amendment to the Investment Sub-Advisory Agreement by and between Citizens Bank
and Systematic Financial Management, L.P. is filed herewith.

(d)(14) Amended Schedule A dated February 22, 1999 to the Investment Advisory Agreement
between Registrant and Citizens Bank is filed herewith.

(e)(1) Distribution Agreement between Registrant and SEI Financial Services Company,
originally filed with Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on October 14, 1992, is incorporated herein by reference as exhibit 6(a)
to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.

(e)(2) Transfer Agent Agreement between Registrant and SEI Financial Management
Corporation is incorporated herein by reference to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed with the
Securities and Exchange Commission on January 13, 1993.

(e)(3) Transfer Agent Agreement between Registrant and Crestar Bank is incorporated herein
by reference to Post-Effective Amendment No. 12 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) filed with the Securities and Exchange
Commission on May 31, 1995.
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3
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(e)(4) Transfer Agent Agreement between Registrant and Supervised Service Company is
incorporated herein by reference to Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) filed with the Securities
and Exchange Commission on May 31, 1995.

(e)(5) Amendment to Transfer Agent Agreement between Registrant and Crestar Bank dated
August 1, 1994 is incorporated herein by reference to Post-Effective Amendment No.
20 to Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed
with the Securities and Exchange Commission on March 30, 1998.

(e)(6) Amended and restated Schedule A, relating to The Golden Oak Family of Funds, to the
Distribution Plan is filed herewith.

(f) Not Applicable.

(g)(1) Custodian Agreement between Registrant and CoreStates Bank N.A., originally filed
with Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form
N-1A (File No. 33-50718) with the Securities and Exchange Commission on October 14,
1992, is incorporated herein by reference as exhibit 8(a) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2,
1997.

(g)(2) Custodian Agreement between Registrant and Crestar Bank, originally filed with
Post-Effective Amendment No. 9 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718) filed with the Securities and Exchange Commission on June 2,
1994, is incorporated herein by reference as exhibit 8(b) to Post-Effective
Amendment No. 18 filed with the Securities and Exchange Commission on May 30, 1997.

(g)(3) Amendment to Custodian Agreement between Registrant and Crestar Bank dated August
1, 1994 is incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with
the Securities and Exchange Commission on March 30, 1998.

(h)(1) Administration Agreement between Registrant and SEI Financial Management
Corporation with Schedule dated January 28, 1993 for the Golden Oak Portfolios and
forms of Schedule for the California Tax Exempt Portfolio and Institutional Tax
Free Portfolio, originally filed as exhibit 5(a), is incorporated herein by
reference to Post-Effective Amendment No. 4 to Registrant's Registration Statement
on Form N-1A (File No. 33-50718) filed with the Securities and Exchange Commission
on July 29, 1993.

(h)(2) Schedule, relating to the OVB Prime Obligations, OVB Capital Appreciation, OVB
Emerging Growth, OVB Government Securities and OVB West Virginia Tax-Exempt Income
Portfolios (the "OVB Portfolios"), to Administration Agreement by and between the
Registrant and SEI Financial Management Corporation dated as of January 28, 1993 is
incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities
and Exchange Commission on March 30, 1998.

(h)(3) Schedule relating to U.S. Government Securities Money Fund, to Administration
Agreement by and between Registrant and SEI Financial Management Corporation is
incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities
and Exchange Commission on March 30, 1998.

(h)(4) Schedule dated May 19, 1997, relating to the Golden Oak Portfolios, to
Administration Agreement by and between Registrant and SEI Fund Resources is
incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities
and Exchange Commission on March 30, 1998.
</TABLE>

4
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(h)(5) Administration Agreement between Registrant and SEI Financial Corporation with
Schedule dated January 28, 1993 as amended and restated on May 17, 1994 for Golden
Oak Portfolios, the Prudential Portfolios and the OVB Portfolios, originally filed
as exhibit 5(o) with Post-Effective Amendment No. 12 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on May 31, 1995, is incorporated herein by reference as exhibit 9(e) to
Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission
on April 2, 1997.

(h)(6) Administration Agreement between Registrant and SEI Financial Management
Corporation with Schedule dated August 1, 1994, originally filed as exhibit 5(p)
with Post-Effective Amendment No. 12 to Registrant's Registration Statement on Form
N-1A (File No. 33-50718) with the Securities and Exchange Commission on May 31,
1995, is incorporated herein by reference as exhibit 9(f) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2,
1997.

(h)(7) Schedule relating to the Prime Obligations Fund, to Administration Agreement by and
between Registrant and SEI Financial Management Corporation, originally filed as
exhibit 5(p) with Post-Effective Amendment No. 13 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on August 11, 1995, is incorporated herein by reference as exhibit 9(g)
to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.

(h)(8) Consent to Assignment and Assumption of Administration Agreement between the
Registrant and SEI Financial Management Corporation, dated January 28, 1993, to SEI
Fund Resources is incorporated herein by reference as exhibit 9(h) to
Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission
on April 2, 1997.

(h)(9) Consent to Assignment and Assumption of Administration Agreement between the
Registrant and SEI Financial Management Corporation, dated June 1, 1996, to SEI
Fund Resources is incorporated herein by reference to Post-Effective Amendment No.
20 to Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed
with the Securities and Exchange Commission on March 30, 1998.

(h)(10) Schedule dated November 23, 1998 to the Administration Agreement, relating to the
OVB Family of Funds, between the Registrant and SEI Financial Management
Corporation is filed herewith.

(h)(11) Schedule dated February 22, 1999 to the Administration Agreement, relating to The
Golden Oak Family of Funds, between the Registrant and SEI Fund Resources is filed
herewith.

(i) Opinion and Consent of Counsel, originally filed with Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on January 13, 1993, is incorporated herein by
reference as exhibit 10 to Post-Effective Amendment No. 17 filed with the
Securities and Exchange Commission on April 2, 1997.

(j) Not Applicable.

(k) Not Applicable.

(l) Not Applicable.

(m)(1) Registrant's Distribution Plan with respect to the Class B shares of the Golden Oak
Portfolios (except Golden Oak Growth and Income Portfolio), originally filed with
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718) with the Securities and Exchange Commission on October 14,
1992, is incorporated herein by reference as exhibit 15(a) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2,
1997.
</TABLE>

5
<PAGE>
<TABLE>
<S> <C>
(m)(2) Registrant's Distribution Plan with respect to the Class B shares of the OVB
Portfolios, originally filed with Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) with the Securities and
Exchange Commission on September 23, 1993, is incorporated herein by reference as
exhibit 15(b) to Post-Effective Amendment No. 17 filed with the Securities and
Exchange Commission on April 2, 1997.

(m)(3) Registrant's Distribution Plan with respect to the Class B Shares of the Golden Oak
Growth and Income Portfolio is incorporated herein by reference to Post-Effective
Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No.
33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

(m)(4) Rule 18f-3 Multi-Class Plan, originally filed with Post-Effective Amendment No. 12
to Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on May 31, 1995, is incorporated herein by
reference as exhibit 15(d) to Post-Effective Amendment No. 17 filed with the
Securities and Exchange Commission on April 2, 1997.

(n) To be filed by Amendment.

(o) Not Applicable.

(p) Powers of Attorney for John T. Cooney, William M. Doran, Frank E. Morris, Mark E.
Nagle, Robert A. Nesher, Robert A. Patterson, Eugene B. Peters and James M. Storey
are incorporated herein by reference to Post-Effective Amendment No. 22 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with
the Securities and Exchange Commission on December 30, 1998.
</TABLE>

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

See the Prospectuses and the Statement of Additional Information regarding
the Trust's control relationships. The Administrator is a subsidiary of SEI
Investments Company which also controls the distributor of the Registrant, SEI
Investments Distribution Co., and other corporations engaged in providing
various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.

ITEM 25. INDEMNIFICATION:

Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1 to
the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to trustees, directors, officers and controlling
persons of the Registrant by the Registrant pursuant to the Declaration of Trust
or otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.

6
<PAGE>
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:

Other business, profession, vocation or employment of a substantial nature
in which each director or principal officer of the Adviser is or has been, at
any time during the last two fiscal years, engaged for his or her own account or
in the capacity of director, officer, employee, partner or trustee are as
follows:

<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- --------------------------------- ------------------------------------------ ---------------------------------
<S> <C> <C>
CITIZENS BANK
Victor E. George Victor George Oldsmobile, Inc. Chairman
Chairman Citizens Banking Corporation Director
Charles R. Weeks Citizens Banking Corporation Chairman
James L. Wolohan Wolohan Lumber Co. Chairman, President & CEO
Edward P. Abbott Abbott's Meat, Inc. President & CEO
Director Citizens Banking Corporation Director
John W. Ennest Citizens Banking Corporation Vice Chairman, CFO and
Director Treasurer
George H. Kossaras Spring's Drug Store, Inc. President & CEO
Director Citizens Banking Corporation Director
Gerald Schreiber Royalite Co. Vice President
Director
William C. Shedd Winegarden, Shedd, Haley, Attorney & Partner
Director Lindholm & Robertson Director
Citizens Banking Corporation
Joseph G. Shomsky Massachusetts Mutual Insurance Insurance
Director Company
James E. Truesdell The Austin Group President & Secretary
Director Citizens Banking Corporation Director
Robert J. Vitito Citizens Banking Corporation President, CEO
President & Chairman
of the Board
Kendall B. Williams The Williams Firm, Inc. Attorney at Law
Director Citizens Banking Corporation Director
Ada C. Washington Community Volunteer
Director
Gary P. Drainville Citizens Banking Corporation Executive Vice President
Executive Vice President
Wayne G. Schaeffer Citizens Banking Corporation Executive Vice President
Senior Executive Vice President
Chief Financial Officer and
Director
Chief Operating Officer
</TABLE>

7
<PAGE>

<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- --------------------------------- ------------------------------------------ ---------------------------------
<S> <C> <C>
Dana A. Czmer
Senior Vice President and Trust
Officer
Thomas W. Gallagher Citizens Banking Corporation Senior Vice President,
General Counsel, Secretary
Gary O. Clark Citizens Banking Corporation Executive Vice President
CEO, Director Citizens Bank Illinois, N.A. President
Edward P. Majask
Senior Vice President and Senior
Investment Officer
Richard J. Mitsdarfer Citizens Banking Corporation Senior Vice President &
Senior Vice President and General General Auditor
Auditor
Edward H. Newman Citizens Banking Corporation Vice President & Assistant
Senior Vice President, Cashier & Secretary
Secretary
Thomas C. Shafer
Senior Vice President
Lawrence G. Southwell
Senior Vice President
Richard T. Albee
Senior Vice President
Marilyn K. Allor
Senior Vice President
Daniel E. Bekemeier
Senior Vice President &
Controller
Dennis R. Johnston
Senior Vice President
Vicent V. Maysura
Senior Vice President
James M. VanTiflin
Director
Joseph F. Smith Citizens Bank--Sturgis
Community President & Director
Richard J. DeVries Citizens Bank--Ypsilanti
Community President & Director
Nicholas J. Cilfone Citizens Banking Corporation Senior Vice President
Hugo E. Braun, Jr. Braun Kendrick Finbeiner, P.L.C. Attorney at Law
Joseph P. Day Bauner Engineering & Sales, Inc. President
Richard J. Dolinski Dolinski Associates, Inc. President
James M. Franklin Worthington Steel Company Vice President & General Manager
Frank Kern, III Maxitrol Company President
Philip G. Miller Miller Tool & Die Co. President
Richard N. Robb Dentist
ONE VALLEY BANK, NATIONAL ASSOCIATION:
</TABLE>

8
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- --------------------------------- ------------------------------------------ ---------------------------------
<S> <C> <C>
J. Holmes Morrison One Valley Bancorp President & Chief Executive
Chairman of the Board Officer
Phyllis H. Arnold One Valley Bancorp Director
Director, President & Chief One Valley Bancorp Executive Vice President
Executive Officer
Charles M. Avampato Clay Foundation, Inc. President
Director One Valley Bancorp Director
Robert F. Baronner One Valley Bancorp Chairman of the Board
Director of Directors
Herald R. Baughman
Senior Vice President
Gary L. Brown Parkerburg Region
Region President
James K. Brown Jackson & Kelly Attorney, Partner
Director One Valley Bancorp Director
Lloyd P. Calvert
Senior Vice President
John T. Chambers Ravenswood Land Co. and Mt. Alpha President
Director Development Co. Director
One Valley Bancorp
Nelle Ratrie Chilton Dickinson Fuel Co. Director
Director Terra Co., Inc. Director
Terra Care, Inc. Director
Terra Salis, Inc. Director
TerraSod, Inc. Director
One Valley Bancorp Director
Anthony N. Ciliberti
General Auditor
Bernice J. Deem
Senior Vice President
Ray Marshall Evans, Jr. Chesapeake Mining Co. & Hubbard Properties President
Director Geary Securities Vice President
Jane Fleming
Senior Vice President
Brian Fox
Senior Vice President
Robert F. Goldsmith Cascades Coal Sales, Inc. President
Director Sentry Resource Associates, Inc. Executive Vice President
Phillip H. Goodwin CAMCARE President
Director Director
One Valley Bancorp
O. Nelson Jones Madison Coal & Supply Company President
Director Amherst Industries, Inc. Vice President
</TABLE>

9
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- --------------------------------- ------------------------------------------ ---------------------------------
<S> <C> <C>
William M. Kidd
Senior Vice President
Carl E. Little Vice Chairman (retired)
Director
David E. Lowe Intelos President
William A. Rice, Jr. Airgas Direct President
Director Industrial
Steven M. Rubin
Director
Edward H. Maier General Corporation President
Director One Valley Bancorp Director
Roger D. Mooney
Senior Vice President
John F. Mork President
Director
Harold E. Neely
Senior Vice President
Robert O. Orders, Sr. Orders Construction Company Chief Executive Officer
Director One Valley Bancorp Director
John L. D. Payne Payne-Gallatin Mining Co. President
Director One Valley Bancorp Director
Angus E. Peyton Brown & Peyton Attorney & Partner
Director One Valley Bancorp Director
Director
Brent D. Robinson One Valley Bancorp, President & CEO Senior Vice President
One Valley Bank of Boston
K. Richard C. Sinclair Jefferds Corporation President
Director
James C. Smith O.V. Smith & Sons of Big President
Director Chimney, Inc. Vice President
Michael W. Stajduhar
Senior Vice President
James R. Thomas II Chairman (retired)
Director
J. Randy Valentine
Senior Vice President
Dr. Edwin H. Welch University of Charleston President
Director One Valley Bank, N.A.
John Henry Wick III Dickinson Fuel Co., Inc. Vice President
Director
Thomas D. Wilkerson Northwestern Mutual Life Insurance Senior Agent
Director Company
James D. Williams
Director
James A. Winter
Senior Vice President
Jack B. Young
Senior Vice President
John F. Ziebold
Senior Vice President
</TABLE>

10
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION CONNECTION WITH
WITH INVESTMENT ADVISER NAME OF OTHER COMPANY OTHER COMPANY
- --------------------------------- ------------------------------------------ ---------------------------------
<S> <C> <C>
Robert K. Welty
Senior Vice President
John O'Donovan
Senior Vice President
John A. Derito
Senior Vice President
Michael H. Spangler
Senior Vice President
CRESTAR ASSET MANAGEMENT COMPANY:
- ---------------------------------
Thomas Dean Hogan Crestar Bank Group Executive Vice
Chairman and Director President--Trust
Ben L. Jones First Fidelity Bancorp Chief Investment Officer
President, Director
Linda Flory Rigsby Crestar Financial Corporation and its Senior Vice President,
Secretary, Treasurer subsidiary Crestar Bank Corporate Secretary and
Deputy General Counsel
Robert F. Norfleet, Jr. Crestar Bank Director of Client Relations;
Director Prior thereto Corporate
Executive Vice President
</TABLE>

The list required by this Item 26. of officers and partners of Wellington
Management Company, LLP together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and partners during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by Wellington Management Company, LLP
pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-15908).

The list required by this Item 26. of officers and partners of
Nicholas-Applegate Capital Management, together with information as to any other
business, profession, vocation or employment of a substantial nature engaged in
by such officers and partners during the past two years, is incorporated by
reference to Schedules A and D of Form ADV, filed by Nicholas-Applegate Capital
Management pursuant to the Investment Advisers Act of 1940 (SEC File No.
801-21442).

The list required by this Item 26. of officers and partners of Systematic
Financial Management, L.P. together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and partners during the past two years, is incorporated by reference to
Schedules A and D of Form ADV, filed by Systematic Financial Management, L.P.
pursuant to the Investment Advisers Act of 1940 (SEC File No. 801-48908).

To the Registrant's knowledge, none of the directors or officers of PIMC,
except as set forth in the filings referred to below, is, or has been at any
time during the Registrant's past two fiscal years, engaged in any other
business, profession, vocation or employment of a substantial nature, except
that certain directors and officers and certain executives of PIMC also hold
various positions with, and engage in business for, PNC Bank Corp., which
indirectly owns all the outstanding stock of PIMC, or other subsidiaries of PNC
Bank Corp. Set forth in the filings referred to below are the names and
principal businesses of the directors and certain executives of PIMC who are
engaged in any other business, profession, vocation or employment of a
substantial nature.

The information required by this Item 26 with respect to each director,
officer and partner of PIMC is incorporated by reference to Schedules A and D of
Form ADV, filed by PNC Institutional Management Corporation pursuant to the
Investment Advisers Act of 1940 (SEC File No. 801-13304).

11
<PAGE>
ITEM 27. PRINCIPAL UNDERWRITERS:

(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.

Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:

<TABLE>
<S> <C>
SEI Daily Income Trust.................................. July 15, 1982
SEI Liquid Asset Trust.................................. November 29, 1982
SEI Tax Exempt Trust.................................... December 3, 1982
SEI Index Funds......................................... July 10, 1985
SEI Institutional Managed Trust......................... January 22, 1987
SEI Institutional International Trust................... August 30, 1988
The Advisors' Inner Circle Fund......................... November 14, 1991
The Pillar Funds........................................ February 28, 1992
CUFUND.................................................. May 1, 1992
STI Classic Funds....................................... May 29, 1992
First American Funds, Inc............................... November 1, 1992
First American Investment Funds, Inc.................... November 1, 1992
Boston 1784 Funds-Registered Trademark-................. June 1, 1993
The PBHG Funds, Inc..................................... July 16, 1993
Morgan Grenfell Investment Trust........................ January 3, 1994
The Achievement Funds Trust............................. December 27, 1994
Bishop Street Funds..................................... January 27, 1995
CrestFunds, Inc......................................... March 1, 1995
STI Classic Variable Trust.............................. August 18, 1995
ARK Funds............................................... November 1, 1995
Huntington Funds........................................ January 11, 1996
SEI Asset Allocation Trust.............................. April 1, 1996
TIP Funds............................................... April 28, 1996
SEI Institutional Investments Trust..................... June 14, 1996
First American Strategy Funds, Inc...................... October 1, 1996
HighMark Funds.......................................... February 15, 1997
Armada Funds............................................ March 8, 1997
PBHG Insurance Series Funds, Inc........................ April 1, 1997
The Expedition Funds.................................... June 9, 1997
Alpha Select Funds...................................... January 1, 1998
Oak Associates Funds.................................... February 27, 1998
The Nevis Fund, Inc..................................... June 29, 1998
The Parkstone Group of Funds............................ September 14, 1998
</TABLE>

The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").

(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456

12
<PAGE>

<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------- ------------------------------------- --------------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of --
Directors
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Vice President and Assistant
Counsel Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President and Assistant
Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President and Assistant
Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President and Assistant
Secretary
Jeff Jacobs Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
</TABLE>

13
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- -------------------------------------- ------------------------------------- --------------------------------
<S> <C> <C>
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President Controller and Chief Financial
Officer
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President and Assistant
Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President and Assistant
Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President and Assistant
Secretary
Lydia J. Striegel Vice President & Assistant Secretary Vice President and Assistant
Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:

Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodians:

First Union National Bank
Broad and Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101

Crestar Bank
919 East Main Street
Richmond, VA 23219

(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5);

14
<PAGE>
(6); (8); (9); (10); (11); and 31a-1(f), the required books and records
are maintained at the offices of Registrant's Administrator:

SEI Investment Mutual Funds Resources
Oaks, PA 19456

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the principal offices of
the Registrant's Advisers:

<TABLE>
<S> <C>
GOLDEN OAK PORTFOLIOS................................ Citizens Bank
One Citizens Banking Plaza
Flint, MI 48502

Wellington Management Company, LLP
75 State Street
Boston, MA 02109

Systematic Financial Management,
L.P.
300 Frank W. Burr Blvd.
Glenpointe East, 7th Floor
Teaneck, NJ 07666

Nicholas-Applegate Capital
Management
600 West Broadway
29th Floor
San Diego, CA 92101

OVB PORTFOLIOS....................................... One Valley Bank, National
Association
One Valley Square
Charleston, WV 25301

Wellington Management Company, LLP
75 State Street
Boston, MA 02109

U.S. GOVERNMENT SECURITIES MONEY AND PRIME Crestar Asset Management Company
OBLIGATIONS FUNDS.................................... 919 East Main Street
Richmond, VA 23219
</TABLE>

ITEM 29. MANAGEMENT SERVICES:

None.

ITEM 30. UNDERTAKINGS:

Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.

Registrant undertakes to hold a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.

15
<PAGE>
Registrant undertakes to furnish each prospective person to whom a
prospectus will be delivered with a copy of the Registrant's latest annual
report to shareholders, when such annual report is issued containing information
called for by Item 5A of Form N-1A, upon request and without charge.

NOTICE

A copy of the Agreement and Declaration of Trust for The Arbor Fund is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Registration Statement has been executed on behalf of
the Trust by an officer of the Trust as an officer and by its Trustees as
trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
Shareholders individually but are binding only upon the assets and property of
the Trust.

16
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 23 to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Oaks, Commonwealth of Pennsylvania on
the 1st day of April, 1999.

<TABLE>
<S> <C> <C>
THE ARBOR FUND

By: /s/ MARK E. NAGLE
-----------------------------------------
Mark E. Nagle
PRESIDENT
</TABLE>

Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity and on the dates indicated.

SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
* Trustee
- ------------------------------ April 1, 1999
John T. Cooney

* Trustee
- ------------------------------ April 1, 1999
William M. Doran

* Trustee
- ------------------------------ April 1, 1999
Robert A. Nesher

* Trustee
- ------------------------------ April 1, 1999
Robert A. Patterson

* Trustee
- ------------------------------ April 1, 1999
Eugene B. Peters

* Trustee
- ------------------------------ April 1, 1999
James M. Storey

Trustee
- ------------------------------ April 1, 1999
George J. Sullivan

/s/ MARK E. NAGLE President, Controller &
- ------------------------------ Chief Financial Officer April 1, 1999
Mark E. Nagle

<TABLE>
<S> <C> <C> <C>
*By: /s/ MARK E. NAGLE
-------------------------
Mark E. Nagle
ATTORNEY IN FACT
</TABLE>

17
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>

EX-99.A Registrant's Agreement and Declaration of Trust, originally filed with the Registrant's Registration
Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange Commission on August 11,
1992, is incorporated herein by reference as exhibit 1 to Post-Effective Amendment No. 17 filed with
the Securities and Exchange Commission on April 2, 1997.

EX-99.B Registrant's By-Laws are incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities and
Exchange Commission on March 30, 1998.

EX-99.C Not Applicable.

EX-99.D1 Investment Advisory Agreement between the Registrant and Citizens Commercial and Savings Bank with
respect to the Golden Oak Diversified Growth Portfolio, the Golden Oak Intermediate-Term Income
Portfolio, Golden Oak Michigan Tax Free Bond Portfolio and Golden Oak Prime Obligation Money Market
Portfolio, originally filed as exhibit 5(b) with Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange Commission
on January 13, 1993, is incorporated herein by reference as exhibit 5(a) to Post-Effective Amendment
No. 17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.D2 Investment Sub-Advisory Agreement by and among Registrant, Citizens Commercial and Savings Bank and
Wellington Management Company, LLP with respect to the Golden Oak Prime Obligation Money Market
Portfolio, originally filed as exhibit 5(c), is incorporated herein by reference to Pre-Effective
Amendment No. 2 to Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed with
the Securities and Exchange Commission on January 13, 1993.

EX-99.D3 Investment Advisory Agreement between the Registrant and One Valley Bank, National Association with
respect to the OVB Portfolios, originally filed as exhibit 5(h) with Post-Effective Amendment No. 6
to Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the Securities and
Exchange Commission on September 23, 1993, is incorporated herein by reference as exhibit 5(d) to
Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.D4 Investment Sub-Advisory Agreement by and among the Registrant, One Valley Bank, National Association,
and Wellington Management Company, LLP with respect to the OVB Prime Obligations Portfolio originally
filed as exhibit 5(i) with Post-Effective Amendment No. 6 to Registrant's Registration Statement on
Form N-1A (File No. 33-50718) with the Securities and Exchange Commission on September 23, 1993, is
incorporated herein by reference as exhibit 5(e) to Post-Effective Amendment No. 17 filed with the
Securities and Exchange Commission on April 2, 1997.

EX-99.D5 Investment Advisory Agreement between the Registrant and Capitoline Investment Services, Incorporated
with respect to the U.S. Government Securities Money Fund, originally filed as exhibit 5(j) with
Post-Effective Amendment No. 9 to Registrant's Registration Statement on Form N-1A (File No.
33-50718) with the Securities and Exchange Commission on June 2, 1994, is incorporated herein by
reference as exhibit 5(f) to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
EX-99.D6 Schedule B to Investment Advisory Agreement between the Registrant and Citizens Commercial & Savings
Bank with respect to Golden Oak Growth and Income Portfolio, originally filed as exhibit 5(l) with
Post-Effective Amendment No. 10 to Registrant's Registration Statement on Form N-1A (File No.
33-50718) filed with the Securities and Exchange Commission on September 30, 1994 is incorporated
herein by reference as exhibit 5(g) to Post-Effective Amendment No. 18 filed with the Securities and
Exchange Commission on May 30, 1997.

EX-99.D7 Schedule to the Investment Advisory Agreement between Registrant and Capitoline Investment Services
Incorporated with respect to the Prime Obligations Fund, originally filed as exhibit 5(q) with
Post-Effective Amendment No. 13 to Registrant's Registration Statement on Form N-1A (File No.
33-50718) with the Securities and Exchange Commission on August 11, 1995, is incorporated herein by
reference as exhibit 5(h) to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.

EX-99.D8 Investment Sub-Advisory Agreement by and among the Registrant and Citizens Bank and
Nicholas-Applegate Capital Management with respect to the Golden Oak Diversified Growth Portfolio,
originally filed as exhibit 5(u), is incorporated herein by reference to Post-Effective Amendment No.
14 to Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed with the Securities
and Exchange Commission on March 29, 1996.

EX-99.D9 Investment Advisory Agreement between the Registrant and One Valley Bank, National Association with
respect to the OVB Equity Income Portfolio, is incorporated herein by reference to Post-Effective
Amendment No. 16 to the Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed
with the Securities and Exchange Commission on February 28, 1997.

EX-99.D10 Investment Sub-Advisory Agreement by and among the Registrant, Citizens Bank and Systematic Financial
Management, L.P. with respect to the Golden Oak Value Portfolio is incorporated herein by reference
to Post-Effective Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No.
33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

EX-99.D11 Amendment to Investment Sub-Advisory Agreement between Citizens Bank and Nicholas-Applegate
Capital Management is incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities and
Exchange Commission on March 30, 1998.

EX-99.D12 Schedule A to the Investment Advisory Agreement between Registrant and Citizens Bank is filed
herewith.

EX-99.D13 Amendment to the Investment Sub-Advisory Agreement by and between Citizens Bank and Systematic
Financial Management, L.P. is filed herewith.

EX-99.D14 Amended Schedule A dated February 22, 1999 to the Investment Advisory Agreement between Registrant
and Citizens Bank is filed herewith.

EX-99.E1 Distribution Agreement between Registrant and SEI Financial Services Company, originally filed with
Pre-Effective Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No. 33-50718)
with the Securities and Exchange Commission on October 14, 1992, is incorporated herein by reference
as exhibit 6(a) to Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission
on April 2, 1997.

EX-99.E2 Transfer Agent Agreement between Registrant and SEI Financial Management Corporation is incorporated
herein by reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement on Form
N-1A (File No. 33-50718) filed with the Securities and Exchange Commission on January 13, 1993.

EX-99.E3 Transfer Agent Agreement between Registrant and Crestar Bank is incorporated herein by reference to
Post-Effective Amendment No. 12 to Registrant's Registration Statement on Form N-1A (File No.
33-50718) filed with the Securities and Exchange Commission on May 31, 1995.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
EX-99.E4 Transfer Agent Agreement between Registrant and Supervised Service Company is incorporated herein by
reference to Post-Effective Amendment No. 12 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718) filed with the Securities and Exchange Commission on May 31, 1995.

EX-99.E5 Amendment to Transfer Agreement between Registrant and Crestar Bank dated August 1, 1994 is
incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718), filed with the Securities and Exchange Commission on
March 30, 1998.

EX-99.E6 Amended and Restated Schedule A, relating to The Golden Oak Family of Funds, to the Distribution
Plan is filed herewith.

EX-99.F Not Applicable.

EX-99.G1 Custodian Agreement between Registrant and CoreStates Bank N.A., originally filed with Pre-Effective
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the
Securities and Exchange Commission on October 14, 1992, is incorporated herein by reference as
exhibit 8(a) to Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission on
April 2, 1997.

EX-99.G2 Custodian Agreement between Registrant and Crestar Bank, originally filed with Post-Effective
Amendment No. 9 to Registrant's Registration Statement on Form N-1A (File No. 33-50718) filed with
the Securities and Exchange Commission on June 2, 1994, is incorporated herein by reference as
exhibit 8(b) to Post-Effective Amendment No. 18 filed with the Securities and Exchange Commission on
May 30, 1997.

EX-99.G3 Amendment to Custodian Agreement between Registrant and Crestar Bank dated August 1, 1994 is
incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718), filed with the Securities and Exchange Commission on
March 30, 1998.

EX-99.H1 Administration Agreement between Registrant and SEI Financial Management Corporation with Schedule
dated January 28, 1993 for the Golden Oak Portfolios and forms of Schedule for the California Tax
Exempt Portfolio and Institutional Tax Free Portfolio, originally filed as exhibit 5(a), is
incorporated herein by reference to Post-Effective Amendment No. 4 to Registrant's Registration
Statement on Form N-1A (File No. 33-50718) filed with the Securities and Exchange Commission on July
29, 1993.

EX-99.H2 Schedule, relating to the OVB Prime Obligations, OVB Capital Appreciation, OVB Emerging Growth, OVB
Government Securities and OVB West Virginia Tax-Exempt Income Portfolios (the OVB Portfolios), to
Administration Agreement by and between the Registrant and SEI Financial Management Corporation dated
as of January 28, 1993 is incorporated herein by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities and
Exchange Commission on March 30, 1998.

EX-99.H3 Schedule relating to U.S. Government Securities Money Fund,to Administration Agreement by and between
Registrant and SEI Financial Management Corporation is incorporated herein by reference to
Post-Effective Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No.
33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

EX-99.H4 Schedule dated May 19, 1997, relating to The Golden Oak Portfolios, to Administration Agreement by
and between Registrant and SEI Fund Resources is incorporated herein by reference to Post-Effective
Amendment No. 20 to Registrant's Registration Statement on Form N-1A (File No. 33-50718), filed with
the Securities and Exchange Commission on March 30, 1998.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
EX-99.H5 Administration Agreement between Registrant and SEI Financial Corporation with Schedule dated January
28, 1993 as amended and restated on May 17, 1994 for Golden Oak Portfolios, the Prudential Portfolios
and the OVB Portfolios originally filed as exhibit 5(o) with Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on May 31, 1995 is incorporated herein by reference as exhibit 9(e) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.H6 Administration Agreement between Registrant and SEI Financial Management Corporation with Schedule
dated August 1, 1994 originally filed as exhibit 5(p) with Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange
Commission on May 31, 1995 is incorporated herein by reference as exhibit 9(f) to Post-Effective
Amendment No. 17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.H7 Schedule relating to the Prime Obligations Fund, to Administration Agreement by and between
Registrant and SEI Financial Management Corporation originally filed as exhibit 5(p) with
Post-Effective Amendment No. 13 to Registrant's Registration Statement on Form N-1A (File No.
33-50718) with the Securities and Exchange Commission on August 11, 1995 is incorporated herein by
reference as exhibit 9(g) to Post-Effective Amendment No. 17 filed with the Securities and Exchange
Commission on April 2, 1997.

EX-99.H8 Consent to Assignment and Assumption of Administration Agreement between the Registrant and SEI
Financial Management Corporation, dated January 28, 1993, to SEI Fund Resources is incorporated
herein by reference as exhibit 9(h) to Post-Effective Amendment No. 17 filed with the Securities and
Exchange Commission on April 2, 1997.

EX-99.H9 Consent to Assignment and Assumption of Administration Agreement between the Registrant and SEI
Financial Management Corporation, dated June 1, 1996, to SEI Fund Resources is incorporated herein by
reference to Post-Effective Amendment No. 20 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718), filed with the Securities and Exchange Commission on March 30, 1998.

EX-99.H10 Schedule dated November 23, 1998 to the Administration Agreement, relating to the OVB Family of
Funds, between the Registrant and SEI Financial Management Corporation is filed herewith.

EX-99.H11 Schedule dated February 22, 1999 to the Administration Agreement, relating to The Golden Oak Family
of Funds, between the Registrant and SEI Fund Resources is filed herewith.

EX-99.I Opinion and Consent of Counsel originally filed with Pre-Effective Amendment No. 2 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange Commission
on January 13, 1993 is incorporated herein by reference as exhibit 10 to Post-Effective Amendment No.
17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.J Not Applicable.

EX-99.K Not Applicable.

EX-99.L Not Applicable.

EX-99.M1 Registrant's Distribution Plan with respect to the Class B shares of the Golden Oak Portfolios
(except Golden Oak Growth and Income Portfolio) originally filed with Pre-Effective Amendment No. 1
to Registrant's Registration Statement on Form N-1A (File No. 33-50718) with the Securities and
Exchange Commission on October 14, 1992 is incorporated herein by reference as exhibit 15(a) to
Post-Effective Amendment No. 17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.M2 Registrant's Distribution Plan with respect to the Class B shares of the OVB Portfolios originally
filed with Post-Effective Amendment No. 6 to Registrant's Registration Statement on Form N-1A (File
No. 33-50718) with the Securities and Exchange Commission on September 23, 1993 incorporated herein
by reference as exhibit 15(b) to Post-Effective Amendment No. 17 filed with the Securities and
Exchange Commission on April 2, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- -----------
<S> <C>
EX-99.M3 Registrant's Distribution Plan with respect to the Class B Shares of the Golden Oak Growth and Income
Portfolio is incorporated herein by reference to Post-Effective Amendment No. 20 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718), filed with the Securities and Exchange
Commission on March 30, 1998.

EX-99.M4 Rule 18f-3 Multi-Class Plan originally filed with Post-Effective Amendment No. 12 to Registrant's
Registration Statement on Form N-1A (File No. 33-50718) with the Securities and Exchange Commission
on May 31, 1995 is incorporated herein by reference as exhibit 15(d) to Post-Effective Amendment No.
17 filed with the Securities and Exchange Commission on April 2, 1997.

EX-99.N To be filed by Amendment.

EX-99.O Not Applicable.

EX-99.P Powers of Attorney for John T. Cooney, William M. Doran, Frank E. Morris, Mark E. Nagle, Robert A.
Nesher, Robert A. Patterson, Eugene B. Peters and James M. Storey are incorporated herein by
reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement on Form N-1A
(File No. 33-50718), filed with the Securities and Exchange Commission on December 30, 1998.
</TABLE>

<PAGE>

SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN

THE ARBOR FUND

AND

CITIZENS COMMECIAL & SAVINGS BANK

Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:

Portfolio Fee (in basis points)
<S> <C>
Diversified Growth Portfolio 74

Intermediate-Term Income Portfolio 50

Michigan Tax Free Bond Portfolio 50

Prime Obligation Money Market Fund 30
</TABLE>

<PAGE>

AMENDMENT DATED AUGUST 11, 1997
TO THE ARBOR FUND
INVESTMENT SUB-ADVISORY
AGREEMENT DATED JUNE 23, 1997
BY AND BETWEEN
CITIZENS BANK
AND
SYSTEMATIC FINANCIAL MANAGEMENT, L.P.

THIS AMENDMENT will join The Arbor Fund (the "Trust") as a party to the
Investment Sub-Advisory Agreement dated June 23, 1997 by and between Citizens
Bank and Systematic Financial Management, L.P. (the "Agreement").

FURTHER, Section 6 of the Agreement shall be replaced in its entirety with the
following:

6. COMPENSATION. For the to be provided by the Sub-Adviser pursuant to
this Agreement, the Trust will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a
sub-advisory fee at an annual rate of .45% on the first $50 million of
the Fund's average daily net assets; .35% on the next $50 million of
the Fund's average daily net assets and .40% on the Fund's average
daily net assets thereafter. This fee will be computed daily and paid
to the Sub-Adviser monthly.

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of
the date first above written.

CITIZENS BANK
BY: /s/ Dana A. Czmer
NAME: Dana A. Czmer
TITLE: SVP & Trust Officer

SYSTEMATIC FINANCIAL MANAGEMENT, L.P.
BY: /s/ Charles J. Mohr
NAME: Charles J. Mohr
TITLE: Chief Executive Officer

THE ARBOR FUND
BY: /s/ Barbara A. Nugent
NAME: Barbara A. Nugent
TITLE: VP & Asst. Secretary

<PAGE>

AMENDED SCHEDULE A
DATED FEBRUARY 22, 1999 TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE ARBOR FUND
AND
CITIZENS BANK

Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:

Portfolio Fee
- --------- ---

Growth Portfolio .34%

Intermediate-Term Income Portfolio .50%

Michigan Tax Free Bond Portfolio .50%

Prime Obligation Money Market Portfolio .225% on the first $500 million of
the average daily net assets; and
.28% on average daily net assets
in excess of $500 million

Value Portfolio .29% on the first $50 million;
.39% on the next $50 million; and
.34% on any amount above $100
million of average daily net
assets thereafter

Tax-Managed Equity Portfolio .34%

<PAGE>
THE ARBOR FUND

AMENDED AND RESTATED
SCHEDULE A
DATED FEBRUARY 22, 1999
TO DISTRIBUTION PLAN

Subject to any limitations imposed by Rule 2830(d) of the NASD's Conduct
Rules, the Distributor shall receive Rule 12b-1 fees, which shall be paid on a
monthly basis. These fees will be calculated based on the annual rate set forth
below, as applied to the average daily net assets of the respective Portfolios.

Portfolio Class of Shares Fees
- --------- --------------- ----
Growth Portfolio A .25%
Value Portfolio A .25%
Intermediate-Term Income Portfolio A .25%
Michigan Tax Free Bond Portfolio A .25%
Prime Obligation Money Market Portfolio A .25%
Tax-Managed Equity Portfolio A .25%

<PAGE>

OVB PRIME OBLIGATIONS PORTFOLIO
OVB CAPITAL APPRECIATION PORTFOLIO
OVB EMERGING GROWTH PORTFOLIO
OVB GOVERNMENT SECURITIES PORTFOLIO
OVB WEST VIRGINIA TAX-EXEMPT INCOME PORTFOLIO
OVB EQUITY INCOME PORTFOLIO

SCHEDULE DATED NOVEMBER 23, 1998
TO ADMINISTRATION AGREEMENT
DATED JANUARY 28, 1993
AS AMENDED AND RESTATED MAY 17, 1994
BETWEEN
THE ARBOR FUND
AND
SEI FINANCIAL MANAGEMENT CORPORATION

Fees: Pursuant to Article 6, Section A, the Trust shall pay the
Administrator compensation for services rendered to the OVB Prime
Obligations Portfolio, OVB Capital Appreciation Portfolio, OVB
Emerging Growth Portfolio, OVB Government Securities Portfolio, OVB
West Virginia Tax-Exempt Income Portfolio and OVB Equity Income
Portfolio (the "OVB Portfolios") at an annual rate of: (i) .20% of
the average daily net assets of OVB Portfolios' assets up to
$500 million; (ii) .18% of the average daily net assets of OVB
Portfolios' assets from $500 million to $750 million; (iii) .16% of
the average daily net assets of OVB Portfolios' assets from
$750 million to $1 billion; and (iv) .15% of the average daily net
assets of OVB Portfolios' assets above $1 billion, which is
calculated daily and paid monthly. There is a minimum annual
administration fee of $75,000 per each OVB Portfolio.

Term: Pursuant to Article 9, the term of this Agreement shall commence on
November 23, 1998 and shall remain in effect for 5 years ("Renewal
Term"). This Agreement shall continue in effect for successive
periods of 2 years after the Renewal Term, unless terminated by
either party on not less than 90 days prior written notice to the
other party. In the event of a material breach of this Agreement
by either party, the non-breaching party shall notify the breaching
party in writing of such breach and upon receipt of such notice,
the breaching party shall have 45 days to remedy the breach or the
non-breaching party may immediately terminate this Agreement.

<PAGE>
GOLDEN OAK GROWTH PORTFOLIO
GOLDEN OAK MICHIGAN TAX FREE BOND PORTFOLIO
GOLDEN OAK PRIME OBLIGATION MONEY MARKET FUND PORTFOLIO
GOLDEN OAK INTERMEDIATE-TERM INCOME PORTFOLIO
GOLDEN OAK VALUE PORTFOLIO
GOLDEN OAK TAX-MANAGED EQUITY PORTFOLIO

SCHEDULE DATED FEBRUARY 22, 1999
TO THE ADMINISTRATION AGREEMENT
DATED JANUARY 28, 1993
AS AMENDED AND RESTATED MAY 17, 1994
BETWEEN
THE ARBOR FUND
AND
SEI FUND RESOURCES

Fees: Pursuant to Article 6, Section A, the Trust shall pay the
Administrator compensation for services rendered to the Golden Oak
Growth Portfolio (formerly the Golden Oak Diversified Growth
Portfolio), Golden Oak Michigan Tax Free Bond Portfolio, Golden Oak
Prime Obligation Money Market Fund Portfolio, Golden Oak
Intermediate-Term Income Portfolio, Golden Oak Value Portfolio
(formerly the Golden Oak Growth and Income Portfolio) and Golden Oak
Tax-Managed Equity Portfolio (the "Portfolios") at an annual rate of
.20% of the average daily net assets of each Portfolio, which is
calculated daily and paid monthly. There is a minimum annual
administration fee of $50,000 for each of the Golden Oak Michigan Tax
Free Bond Portfolio and the Golden Oak Value Portfolio and any other
new Golden Oak portfolios which the Trust may register.

Term: Pursuant to Article 9, the term of this Agreement shall commence on
May 19, 1997 and shall remain in effect for 5 years ("Initial Term").
This Agreement shall continue in effect for successive periods of 3
years after the Initial Term, unless terminated by either party on not
less than 90 days prior written notice to the other party. In the
event of a material breach of this Agreement by either party, the
non-breaching party shall notify the breaching party in writing of
such breach and upon receipt of such notice, the breaching party shall
have 45 days to remedy the breach or the non-breaching party may
immediately terminate this Agreement.