VALIANT FUND, 485BPOS, 1996-12-30

VALIANT FUND
485BPOS, 1996-12-30

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<PAGE>

As filed with the Securities and Exchange Commission on December 30, 1996
Securities Act File No. 33-59840
Investment Company Act of 1940 File No. 811-7582

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

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

POST-EFFECTIVE AMENDMENT NO. 5

and

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 6

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

THE VALIANT FUND

(Exact Name of Registrant)

1776 HERITAGE DRIVE
NORTH QUINCY, MA 02171
(Address of Principal Executive Office)
Registrant's Telephone Number (617) 985-0987

Susan M. Beauregard Peter MacDougall, Esq.
1776 Heritage Drive and Ropes & Gray
North Quincy, MA 02171 One International Place
Boston, MA 02110

(Names and Addresses of Agents for Service)
-------------------------------------------

APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: AS SOON AS PRACTICABLE AFTER THIS
REGISTRATION STATEMENT BECOMES EFFECTIVE. IT IS PROPOSED THAT THIS FILING WILL
BECOME EFFECTIVE:

_____ on __________ pursuant to paragraph (a) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of rule 485
__X__ immediately upon filing pursuant to paragraph (b) of rule 485
_____ on __________ pursuant to paragraph (b) of rule 485

THE REGISTRANT HAS PREVIOUSLY ELECTED TO AND HEREBY CONTINUES ITS ELECTION TO
REGISTER AN INDEFINITE NUMBER OF SHARES PURSUANT TO RULE 24F-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940. REGISTRANT FILED ITS RULE 24F-2 NOTICE FOR THE
PERIOD ENDED AUGUST 31, 1996 ON OCTOBER 28, 1996.

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<PAGE>

THE VALIANT FUND
CROSS-REFERENCE SHEET

FORM N-1A
ITEM NO. PROSPECTUS CAPTION
- --------- ------------------

1. . . . . . . . . .Prospectus Cover Page

2. . . . . . . . . .Expense Information

3. . . . . . . . . .Financial Highlights

4(a) . . . . . . . .Prospectus Cover Page; Investment Objectives and Policies;
Organization and Capitalization of the Trust

4(b) and 4(c). . . .Investment Objectives and Policies; Investment Restrictions;
Certain Investment Strategies, Policies and Risk
Considerations

5(a) . . . . . . . .Management of the Portfolios

5(b) . . . . . . . .Management of the Portfolios; Management Fees and Expenses;
Investment Objectives and Policies

5(c)-5(e). . . . . .Management Fees and Other Expenses

5(f) . . . . . . . .Not Applicable

6(a) and 6(b). . . .Organization and Capitalization of the Trust; Management of
the Portfolios

6(c) and 6(d). . . .Not applicable

6(e) . . . . . . . .Cover Page; Organization and Capitalization of the Trust

6(f) and 6(g). . . .Purchases and Redemptions; Distributions and Taxes

7. . . . . . . . . .Purchases and Redemptions

7(a) . . . . . . . .Organization and Capitalization of the Trust

7(b) . . . . . . . .Valuation of Shares

7(c)-7(e). . . . . .Purchases and Redemptions; Organization and Capitalization
of the Trust

7(f) . . . . . . . .Management Fees and Other Expenses

8(a) . . . . . . . .Purchases and Redemptions

8(b) . . . . . . . .Not Applicable

8(c) . . . . . . . .Purchases and Redemptions

8(d) . . . . . . . .Not Applicable

9. . . . . . . . . .Not Applicable
<PAGE>

FORM N-1A
ITEM NO. CAPTION IN STATEMENT OF ADDITIONAL INFORMATION
- ---------

10(a) and 10(b). . .Cover Page

11 . . . . . . . . .Table of Contents

12 . . . . . . . . .Not Applicable

13(a)-13(c). . . . .Investment Policies and Limitations

13(d). . . . . . . .Not Applicable

14(a) and 14(b). . .Trustees and Officers; Investment Advisory Agreements

14(c). . . . . . . .Not applicable

14(c). . . . . . . .Trustees and Officers

15(c). . . . . . . .Not Applicable

16(a) and 16(b). . .Investment Advisory Agreements

16(c)-16(e). . . . .Not Applicable

16(f). . . . . . . .Administration Agreement and Other Contracts

16(g). . . . . . . .Not Applicable

16(h). . . . . . . .Description of the Trust

16(i). . . . . . . .Not Applicable

17(a) and 17(b). . .Not Applicable

17(c). . . . . . . .Portfolio Transactions

17(d). . . . . . . .Not Applicable

17(e). . . . . . . .Not Applicable

18 . . . . . . . . .Description of the Trust

19(a) and 19(b). . .Valuation of Portfolio Securities; Additional Purchase and
Redemption Information

19(c). . . . . . . .Not Applicable

20 . . . . . . . . .Distributions and Taxes

21 . . . . . . . . .Administration Agreement and Other Contracts

22 . . . . . . . . .Performance

23 . . . . . . . . .Financial Statements
<PAGE>

PART A

PROSPECTUSES

THE VALIANT FUND

POST-EFFECTIVE AMENDMENT NO. 5

Prospectuses included in this filing:

- The Valiant Fund Prospectus for Class A and Class B shares of all
Portfolios;

- The Valiant Fund Prospectus for Class C shares of all Portfolios;

- The Valiant Fund Prospectus for Class D shares of all Portfolios.
<PAGE>

THE VALIANT FUND

1776 Heritage Drive
North Quincy, MA 02171

The Valiant Fund (the "Trust") is an open-end investment company comprised of
four separate investment portfolios (the "Portfolios") offering Class A shares,
Class B shares, Class C shares and Class D shares:

U.S. TREASURY MONEY MARKET PORTFOLIO GENERAL MONEY MARKET PORTFOLIO
U.S. TREASURY INCOME PORTFOLIO TAX-EXEMPT MONEY MARKET PORTFOLIO

The Trust offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes of shares are identical, except as to the services
offered to and the expenses borne by each class. Class B shares, Class C shares
and Class D shares each bear certain costs pursuant to their respective
Distribution and Shareholder Servicing Plans adopted in accordance with Rule
12b-1 under the Investment Company Act of 1940 (the "1940 Act"). THIS
PROSPECTUS RELATES ONLY TO THE CLASS A AND CLASS B SHARES.

Each Portfolio is designed exclusively for investment of short-term monies held
in institutional accounts. Shares of the Portfolios may be purchased by banks
and other institutional investors that have entered into service agreements with
Integrity Investments, Inc. (the "Distributor"), 1-800-828-2176.

This Prospectus sets forth concisely the information about the Trust that a
prospective investor ought to know before investing. Please read it carefully
and retain it for future reference. Certain additional information is contained
in a Statement of Additional Information ("SAI") dated December 30, 1996, as
revised from time to time, which has been filed with the Securities and Exchange
Commission, is incorporated herein by reference and is available upon request
and without charge by calling the Distributor at the telephone number shown
above.

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

MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND INVOLVE
INVESTMENT RISKS INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.

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

PROSPECTUS - DECEMBER 30, 1996

1
<PAGE>

CONTENTS

Expense Information. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . 11
Who Should Invest. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Purchases and Redemptions . . . . . . . . . . . . . . . . . . . . . . 13
Management of the Portfolios . . . . . . . . . . . . . . . . . . . . . 15
Management Fees and Other Expenses . . . . . . . . . . . . . . . . . . 15
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 17
Distributions and Taxes. . . . . . . . . . . . . . . . . . . . . . . . 17
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . 19
Organization and Capitalization of the Trust . . . . . . . . . . . . . 19
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 20
Certain Investment Strategies, Policies and Risk Considerations. . . . 20
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

2
<PAGE>

EXPENSE INFORMATION

<TABLE>
<CAPTION>
U.S. Treasury U.S. Treasury General Money Tax-Exempt Money
Money Market Income Market Market
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------

Class A Class B Class A Class B Class A Class B Class A Class B
Shares Shares Shares Shares Shares Shares Shares Shares
------ ------ ------ ------ ------ ------ ------ ------

Shareholder
Transaction
Expenses
- -----------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales None None None None None None None None
Load Imposed on
Purchases

Sales Load
Imposed on
Reinvested
Dividends None None None None None None None None

Maximum Deferred None None None None None None None None
Sales Load

Redemption Fees None None None None None None None None

Annual Fund
Operating
Expenses (as a
percentage of
AVERAGE NET
ASSETS)

Management Fees 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20% 0.20%

12b-1 Fees* 0.00% 0.25% 0.00% 0.25% 0.00% 0.25% 0.00% 0.25%

Other Expenses
(after expense
reimbursement) 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
----- ----- ----- ----- ----- ----- ----- -----

Total Fund
Operating
Expenses (after
expense
reimbursement) 0.20% 0.45% 0.20% 0.45% 0.20% 0.45% 0.20% 0.45%
----- ----- ----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- ----- ----- -----
</TABLE>

- -------------------------
* The Trust has adopted a Distribution and Shareholder Servicing Plan (the
"Plan") for the Class A and Class B shares, but no payments under the Plan have
been authorized or will be made during the current fiscal year for the Class A
shares. Payments under the Plan for Class B shares are authorized at the rate
of 0.25% of the average daily net assets of Class B shares. See "Management
Fees and Other Expenses" for further information on the Plan.

3
<PAGE>

A shares, the Class C and Class D shares to have a higher expense ratio and to
pay lower dividends than the Class B shares, and the Class D shares to have a
higher expense ratio and to pay lower dividends than Class C shares. This
Prospectus describes only the Class A and Class B shares. An investor may
obtain prospectuses relating to the Class C shares and Class D shares,
respectively, by calling the Distributor at 1-800-828-2176.

The purpose of this table is to assist an investor in understanding the various
costs and expenses that the investor will bear directly or indirectly.
Management fees are paid by each Portfolio to Integrity Management & Research,
Inc. (the "Manager") for managing its investments and business affairs. All
operating expenses are paid by each Portfolio and are not charged directly to an
investor's account. There are no sales or redemption fees. However, certain
institutional investors may charge their customers fees in addition to those
described herein. See "Purchases and Redemptions." The Manager has declared
voluntary expense limitations for each Portfolio for the Class A shares of 0.20%
of average daily net assets and for each Portfolio for the Class B shares of
0.45% of average daily net assets. The Manager will voluntarily reimburse any
expenses above these expense limitations Without the effect of the expense
reimbursements: "Other Expenses" and "Total Operating Expenses" for the Class A
shares would be 0.15% and 0.35%, respectively, for the U.S. Treasury Income
Money Market Portfolio and 0.00% and 0.20%, respectively, for each of the other
Portfolios. "Other Expenses" and "Total Operating Expenses" for the Class B
shares would be 0.15% and 0.60%, respectively, for the U.S. Treasury Income
Portfolio and 0.00% and 0.45%, respectively, for each of the other Portfolios.
The expense limitations are voluntary but will remain in effect through the end
of 1997. The expense limitations may be removed at any time thereafter with 90
days' prior notice to existing shareholders. Non-recurring or extraordinary
expenses are generally excluded in the determination of expense ratios of the
Portfolios for purposes of determining any required expense reimbursement.
Quotations of yield for any period when an expense limitation is in effect will
be greater than if the limitation had not been in effect. For more information,
see "Management Fees and Other Expenses," and "Purchases and Redemptions."

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.
<TABLE>
<CAPTION>
Class A Shares Class B Shares

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

<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury Money Market
Portfolio $2 $6 $11 $26 $5 $14 $25 $57

U.S. Treasury Income Portfolio $2 $6 $11 $26 $5 $14 $25 $57

General Money Market Portfolio $2 $6 $11 $26 $5 $14 $25 $57

Tax-Exempt Money Market
Portfolio $2 $6 $11 $26 $5 $14 $25 $57
</TABLE>

THE EXAMPLES ARE BASED ON ASSUMED PERFORMANCE LEVELS AND SHOULD NOT BE
CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

The following information has been audited by Price Waterhouse LLP, independent
accountants, whose report thereon was unqualified. This information is part of
the Trust's financial statements which are included in the Trust's Annual Report
to Shareholders and incorporated by reference in the SAI. As of the date of
this Prospectus, the Tax-Exempt Money Market Portfolio Class B shares and the
U.S. Treasury Income Portfolio Class B shares had not commenced operations. The
following information should be read in conjunction with the financial
statements and notes thereto.

U.S. TREASURY MONEY MARKET PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS A

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94*
------- ------- -------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.053 0.054 0.012
------ ------ ------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.053) (0.054) (0.012)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 5.45% 5.60% 1.19%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $85,260 $30,183 $25
Ratios to average net assets:
Net investment income (A) . . . . . . . . . . . . . . . 5.21% 5.79% 4.06%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20%**
</TABLE>

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

* The Portfolio commenced Class A shares operations on May 17, 1994.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.053 and
0.20%, for the period ended August 31, 1995 were $0.054 and 0.21% and for
the period ended August 31, 1994 were $0.012 and 0.26%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

5
<PAGE>

U.S. TREASURY MONEY MARKET PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS B

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94*
------- ------- --------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.050 0.052 0.011
------ ------ ------
Less Distributions:
Dividends from net investment income. . . . . . . . . . (0.050) (0.052) (0.011)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 5.18% 5.34% 1.12%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $126,327 $76,114 $13,355
Ratios to average net assets:
Net investment income (A) . . . . . . . . . . . . . . . 5.01% 5.41% 3.87%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.45% 0.45% 0.45%**
</TABLE>

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

* The Portfolio commenced Class B shares operations on May 17, 1994.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.050 and
0.45%, for the period ended August 31, 1995 were $0.052 and 0.46% and for
the period ended August 31, 1994 were $0.011 and 0.50%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

6
<PAGE>

U.S. TREASURY INCOME PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS A

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96* 8/31/95* 8/31/94*
------- ------- -------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.004 0.004 0.001
------ ------ ------
Less Distributions:
Dividends from net investment income. . . . . . . . . . (0.004) (0.004) (0.001)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 0.35% 0.39% 0.12%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $25 $25 $25
Ratios to average net assets:
Net investment income (A) . . . . . . . . . . . . . . . 4.15% 4.47% 2.96%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20%**
</TABLE>

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

* The Portfolio operated from December 11, 1995 to January 10, 1996, December
12, 1994 to January 11, 1995 and December 28, 1993 to January 12, 1994.
Operations on Class B shares have not commenced.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.004 and
0.35%, for the period ended August 31, 1995 were $0.004 and 0.29% and for
the period ended August 31, 1994 were $0.001 and 0.22%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

7
<PAGE>

GENERAL MONEY MARKET PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS A

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94*
------- ------- -------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.053 0.056 0.033
------ ------ ------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.053) (0.056) (0.033)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 5.52% 5.81% 3.33%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $334,069 $375,965 $167,016
Ratios to average net assets:
Net investment income (A) . . . . . . . . . . . . . . . 5.36% 5.70% 3.70%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20%**
</TABLE>

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

* The Portfolio commenced Class A shares operations on September 21, 1993.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.053 and
0.20%, for the period ended August 31, 1995 were $0.056 and 0.20% and for
the period ended August 31, 1994 were $0.033 and 0.21%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

8
<PAGE>

GENERAL MONEY MARKET PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS B

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94*
------- ------- -------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.051 0.053 0.009
------ ------ ------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.051) (0.053) (0.009)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 5.26% 5.54% 0.92%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $8,734 $9,461 $9,520
Ratios to average net assets:
Net investment income (A) . . . . . . . . . . . . . . . 5.11% 5.33% 3.99%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.45% 0.45% 0.45%**
</TABLE>

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

* The Portfolio commenced Class B shares operations on May 17, 1994.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.051 and
0.45%, for the period ended August 31, 1995 were $0.053 and 0.45% and for
the period ended August 31, 1994 were $0.009 and 0.46%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

9
<PAGE>

TAX-EXEMPT MONEY MARKET PORTFOLIO

For a share outstanding throughout each period.

<TABLE>
<CAPTION>
CLASS A

YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94*
------- ------- -------

<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.034 0.035 0.021
------ ------ ------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.034) (0.035) (0.021)
------ ------ ------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
------ ------ ------
------ ------ ------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 3.43% 3.67% 2.11%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $279,867 $283,654 $258,130
Ratios to average net assets:
Net investment income(A). . . . . . . . . . . . . . . . 3.34% 3.50% 2.38%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20%**
</TABLE>

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

* The Portfolio commenced Class A shares operations on October 7, 1993.
Class B shares operations have not commenced.
(A) Net investment income per share and the operating expense ratios before
waiver of fees and reimbursement of expenses by the Trustees and the
Manager, respectively, for the period ended August 31, 1996 were $0.034 and
0.20%, for the period ended August 31, 1995 were $0.035 and 0.20% and for
the period ended August 31, 1994 were $0.021 and 0.22%, respectively.
(1) Total returns for periods less than one year are not annualized and had the
Manager and Trustees not reimbursed certain expenses and waived certain
fees, respectively, total returns would have been lower.
** Annualized.

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<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

The investment objective of each Portfolio is to obtain as high a level of
current income as is consistent with the preservation of capital and liquidity.
The Tax-Exempt Money Market Portfolio seeks primarily income exempt from federal
income tax. There is no assurance that a Portfolio will achieve its investment
objective. A Portfolio's investment objective is fundamental and may not be
changed at any time without shareholder approval. Unless otherwise indicated, a
Portfolio's investment policies are not fundamental and may be changed at any
time without shareholder approval. As a matter of non-fundamental policy, the
Portfolios will only purchase securities, in addition to U.S. Government
Obligations (as defined below), that are rated in the highest category by at
least one nationally recognized statistical rating organization ("NRSRO") or, if
unrated, are determined by the sub-adviser to be of equivalent quality. (See
"Management of the Portfolios" for information about the sub-adviser, and see
the Appendix for a description of NRSRO ratings.)

THE U.S. TREASURY MONEY MARKET PORTFOLIO invests all of its assets in securities
issued or guaranteed by the United States Government or its agencies,
authorities or instrumentalities ("U.S. Government Obligations") which are
backed by the full faith and credit of the United States and repurchase
agreements collateralized by such U.S. Government Obligations. Under normal
market conditions, at least 65% of its total assets will be invested in direct
U.S. Treasury obligations and repurchase agreements collateralized by U.S.
Treasury obligations. Income earned from U.S. Government Obligations is
generally exempt from state and local income tax. Income earned from repurchase
agreement transactions generally is not exempt from state and local income tax.
(See "Distributions and Taxes.")

The U.S. Treasury Money Market Portfolio has been rated "AAAm" by Standard &
Poor's Corporation ("S&P") and "Aaa" by Moody's Investors Service, Inc.
("Moody's"). Such quality rating is based on, among other things, an analysis
of the Portfolio's investment strategies, operational policies and management.
S&P and Moody's also may undertake an ongoing analysis and assessment of these
criteria in order to update the Portfolio's rating.

THE U.S. TREASURY INCOME PORTFOLIO invests all of its assets in U.S. Government
Obligations which are backed by the full faith and credit of the United States,
the interest income from which generally will not be subject to state income
tax. (See "Distributions and Taxes.") Under normal market conditions, at least
65% of its total assets will be invested in U.S. Treasury obligations such as
U.S. Treasury bills, notes and bonds.

THE GENERAL MONEY MARKET PORTFOLIO invests in U.S. dollar-denominated short-term
debt securities including:
-- Obligations of domestic and foreign banks or thrift organizations (such as
bankers' acceptances, time deposits and certificates of deposit);

-- Corporate debt obligations, including commercial paper, notes and bonds
with remaining maturities of 397 days or less;

-- U.S. Government Obligations and repurchase agreements backed by U.S.
Government Obligations; and

-- Cash.

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<PAGE>

More than 25% of the value of the total assets of the Portfolio may be invested
in domestic banking industry obligations. The Portfolio may purchase securities
that are subject to restrictions on resale.

THE TAX-EXEMPT MONEY MARKET PORTFOLIO invests in high-quality, short-term,
fixed, variable or floating rate municipal securities and in high-quality, long-
term municipal securities whose features give them interest rates, maturities
and prices similar to short-term instruments ("Municipal Securities").

Municipal Securities are obligations issued by or on behalf of state and local
governments and public authorities (including states, territories and
possessions of the United States, the District of Columbia, cities, counties,
municipalities, municipal agencies and regional districts and their political
subdivisions, agencies, authorities and instrumentalities), the interest from
which, in the opinion of bond counsel for the issuers of the obligations at the
time of their issuance, is exempt from federal income tax.

The Portfolio's investments in Municipal Securities may include tax, revenue and
bond anticipation notes; tax-exempt commercial paper; and general obligation or
revenue bonds (including securities such as municipal lease obligations and
resource recovery bonds). The Portfolio may purchase obligations that are
subject to restrictions on resale. The Portfolio will not invest in Municipal
Securities whose interest is subject to the federal alternative minimum tax
("AMT") for individuals (known as "private activity obligations").

Municipal Securities are issued to raise money for various public purposes,
including general purpose financing for state and local governments as well as
financing for specific projects or public facilities. Municipal Securities may
be backed by the full taxing power of a municipality or by the revenues from a
specific project or the credit of a private organization. Some Municipal
Securities are insured by private insurance companies, while others may be
supported by letters of credit furnished by domestic or foreign banks.

Distributions from the Tax-Exempt Money Market Portfolio will in general be
exempt from regular federal income taxes. As a temporary defensive measure,
when market conditions so warrant, the Tax-Exempt Money Market Portfolio may
invest its assets without limitation in any of the money market instruments
which are permissible investments for the General Money Market Portfolio. To
the extent that the Tax-Exempt Money Market Portfolio earns taxable income from
any of its investments, the income would be distributed as a taxable dividend.

WHO SHOULD INVEST

Each Portfolio is designed exclusively for investment of short-term monies held
by banks and other institutional investors.

The advantages offered by the Portfolios include large scale purchasing power
and diversification, which can help avoid the greater expense of executing a
large number of small transactions. Each Portfolio also makes it possible for
institutional investors to participate in a more diversified portfolio than the
size of their investments might otherwise permit. Also, investment in the
Portfolios can relieve institutions of many management and administrative
burdens usually associated with the direct purchase and sale of money market
instruments, including: selecting portfolio investments, obtaining favorable
terms at which to buy and sell, scheduling and monitoring maturities and
reinvestments, safe-keeping of securities, and portfolio recordkeeping.

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<PAGE>

It should be noted that the Portfolios are not FDIC insured.

PURCHASES AND REDEMPTIONS

PURCHASES

Shares of the Portfolios may be purchased by institutions that have entered into
service agreements with the Distributor and opened accounts with the Trust.
Call 1-800-828-2176 for information. Establishment of an account requires that
certain documents and applications be signed before the investment can be
processed. Fees in addition to those described herein may be charged by some
institutions which establish accounts on behalf of their customers. The
Distributor may receive different compensation for selling Class A and Class B
shares.

The minimum initial investment in each Portfolio is $1,000,000. Institutions
may satisfy the minimum investment by aggregating their fiduciary accounts.
Subsequent investments may be in any amount. If an account balance falls below
$100,000 due to redemption, the Portfolio may close the account. Investors will
be notified if the minimum balance is not being maintained and will be allowed
30 days to make additional investments before the account is closed. Any
involuntary redemptions will be effected at the price at 3:00 p.m. (Eastern
time) for the U.S. Treasury Money Market Portfolio and the General Money Market
Portfolio and at noon (Eastern time) for the U.S. Treasury Income Portfolio and
the Tax-Exempt Money Market Portfolio.

Purchase orders must be transmitted to the Portfolio's transfer agent, State
Street Bank and Trust Company (the "Transfer Agent"). Each Portfolio requires
advance notification of all wire purchases. Purchases may be made only by wire.

A purchase order for shares in the U.S. Treasury Money Market Portfolio or
General Money Market Portfolio received by the Transfer Agent by 3:00 p.m.
(Eastern time), or for shares in the U.S. Treasury Income Portfolio or the Tax-
Exempt Money Market Portfolio received by the Transfer Agent by noon (Eastern
time), on a day the New York Stock Exchange ("NYSE") and both the Boston and New
York Federal Reserve Banks are open ("Business Day") will be executed at the net
asset value per share next determined after receipt of the order and will
receive the dividend declared on the day of purchase, provided that the Trust's
Custodian, State Street Bank and Trust Company, receives the wire by the close
of the Federal Reserve wire system on that Business Day. See "Valuation of
Shares."

Each Portfolio reserves the right to reject any purchase order. Purchase orders
may be refused if, for example, they are of a size that could disrupt management
of a Portfolio. Purchases by exchange are not permitted.

REDEMPTIONS

Shareholders may redeem all or a portion of their shares on any Business Day.
Shares will be redeemed at the net asset value next calculated after the
Transfer Agent has received the redemption request. If an account is closed,
any accrued dividends will be paid within 10 days of the beginning of the
following month.

Shares may be redeemed, and the redemption proceeds wired, on the same day if
telephone redemption instructions are received by the Transfer Agent by 3:00
p.m. (Eastern time) on the day of redemption for the U.S. Treasury Money Market
Portfolio and for the General Money Market Portfolio, or by noon (Eastern

13
<PAGE>

time) on the day of redemption for the U.S. Treasury Income Portfolio and for
the Tax-Exempt Money Market Portfolio. Shares redeemed and wired on the same
day will not receive the dividend declared on the day of redemption. A
shareholder whose redemption instructions are received by the Transfer Agent
after 3:00 p.m. (Eastern time) with respect to the U.S. Treasury Money Market
Portfolio or General Money Market Portfolio or after noon (Eastern time) with
respect to the U.S. Treasury Income Portfolio or the Tax-Exempt Money Market
Portfolio will receive the dividend declared on the day on which the redemption
instructions were received and will receive wired redemption proceeds on the
next Business Day. Shareholders may change the bank account designated to
receive an amount redeemed at any time by sending a letter of instruction with a
signature guarantee to the Transfer Agent, State Street Bank and Trust Company,
at P.O. Box 1978, Boston, Massachusetts 02105.

If making immediate payment of redemption proceeds could adversely affect a
Portfolio, shareholders may be paid up to seven days after receipt of the
redemption request. Also, when the NYSE or either the Boston or New York
Federal Reserve Bank is closed (or when trading is restricted) for any reason
other than its respective customary weekend or holiday closing, or under any
emergency circumstances as determined by the Securities and Exchange Commission
("SEC") to merit such action, redemption or payment may be suspended or
postponed.

Shares also may be redeemed by mail by submitting an order addressed to: The
Valiant Fund, P.O. Box 1978, Boston, Massachusetts 02105. If transactions by
telephone cannot be executed (e.g., during times of unusual market activity),
orders should be placed by mail. In case of suspension of the right of
redemption, a shareholder may either withdraw its request for redemption or
receive payment based on the net asset value next determined after the
termination of the suspension.

The Trust reserves the right to refuse a wire or telephone redemption if the
Manager or the Transfer Agent believes it is advisable to do so. Upon 60 days'
prior notice to existing shareholders, procedures for redeeming shares by wire
or telephone may be modified or terminated at any time by the Trust or the
Transfer Agent.

ADDITIONAL INFORMATION

SHAREHOLDER SERVICES

Shareholders should verify the accuracy of all transactions immediately upon
receipt of their confirmation statements. Neither the Trust nor the Transfer
Agent will be liable for following instructions communicated by telephone that
it reasonably believes to be genuine. The privilege to initiate transactions by
telephone is made available to shareholders automatically. The Trust will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, including: requiring some form of personal
identification prior to acting upon instructions received by telephone,
providing written confirmation of such transactions or tape recording of
telephone instructions. If it does not employ reasonable procedures to confirm
that telephone instructions are genuine, the Trust or the Transfer Agent may be
liable for any losses due to unauthorized or fraudulent instructions.

14
<PAGE>

To allow the Portfolios to be managed effectively, shareholders are urged to
initiate all trades (investments and redemptions of shares) as early in the day
as possible and to notify the Trust by calling the Transfer Agent at least one
day in advance of trades in excess of $10,000,000. In making trade requests,
the name of the shareholder and the account number(s) must be supplied.

STATEMENTS AND REPORTS

Shareholders will receive a monthly statement and a confirmation after every
transaction that affects the share balance or the account registration. A
statement with tax information will be mailed by January 31st following each tax
year and also will be filed with the Internal Revenue Service. At least twice a
year, shareholders will receive the Portfolios' financial statements.

MANAGEMENT OF THE PORTFOLIOS

The overall responsibility for supervision of the affairs of the Trust vests in
the Board of Trustees of the Trust. The Manager is responsible for the
management of the Trust's day-to-day business affairs and has general
responsibility for the management of the investments of the Portfolios. The
Manager, at its expense, has contracted with David L. Babson & Co. Inc. (the
"Sub-Adviser") to manage the investments of the Portfolios subject to the
requirements of the Investment Company Act of 1940, as amended (the "1940 Act").

Richard F. Curcio, who is the Manager's President and Chairman of the Board and
President, Chairman of the Board and a Trustee of the Trust, indirectly owns or
controls all of the outstanding shares of common stock of the Manager. Mr.
Curcio has 17 years of experience in mutual fund industry marketing, sales and
operations. Located at 1800 Second Street, Suite 757, Sarasota, Florida 34236,
the Manager was organized in Florida on September 24, 1992.

The Sub-Adviser, a Massachusetts corporation, is located at One Memorial Drive,
Cambridge, Massachusetts 02142. Founded in 1940, the Sub-Adviser provides
investment advice to individuals, state and local government agencies, pension
and profit sharing plans, trusts, estates, banks and other organizations, and
also serves as the investment adviser to The Babson Funds (a family of mutual
funds). The Sub-Adviser is a subsidiary of Massachusetts Mutual Life Insurance
Company.

The Sub-Adviser is authorized to make investment decisions and engage in
portfolio transactions on behalf of the Trust, subject to such general or
specific instructions as may be given by the Trustees and/or the Manager. The
payment of fees to the Sub-Adviser is the sole responsibility of the Manager.

MANAGEMENT FEES AND OTHER EXPENSES

Under its Management Agreement with the Trust, the Manager performs certain
administrative and management services for the Trust and pays the compensation,
if any, of officers and Trustees who are affiliated with the Manager or the Sub-
Adviser and pays all the Portfolio expenses with the following exceptions: the
fees and expenses of those Trustees who are not "interested persons" of the
Trust; interest on borrowings; taxes; expenses incurred pursuant to the Trust's
distribution and shareholder servicing plans; and such extraordinary
nonrecurring expenses as may arise, including litigation to which the Trust may
be a party.

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<PAGE>

For its services to the Portfolios, the Manager receives fees paid monthly and
computed at an annual rate of 0.20% of the average daily net asset value of each
of the Portfolios. The Manager is solely responsible for the payment of all
fees to the Sub-Adviser.

For its services to the Portfolios, the Sub-Adviser is paid by the Manager a
monthly fee computed at an annual rate based upon the aggregate average daily
net assets of the Trust, as follows: 0.10% of the first $500 million of net
assets and 0.05% of net assets over $500 million. The Sub-Adviser has
voluntarily agreed to reduce its fees from 0.05% to 0.04% of net assets over $2
billion.

ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or the
"Administrator"), 225 Franklin Street, Boston, MA 02110, is the Administrator of
the Trust.

The Administrator assists in each Portfolio's administration and operation,
including providing office space and various services in connection with the
regulatory requirements applicable to each Portfolio. The Administrator may
utilize the resources of its affiliates in performing certain of these
responsibilities, at no additional cost to the Trust. The Administrator's fee
is paid by the Manager.

DISTRIBUTION AND SHAREHOLDER SERVICING PLAN

Integrity Investments, Inc., 1800 Second Street, Suite 757, Sarasota, Florida
34236, is the Trust's Distributor. The Trust has adopted a Distribution and
Shareholder Servicing Plan (the "Plan") which provides for payment of up to
0.35% of each Portfolio's average daily net assets, the purpose of which is to
promote distribution of the Portfolios' shares and to enhance the provision of
shareholder services. No payments under the Plan have been authorized or will
be made for the Class A shares during the year 1997. For the Class B shares,
payments under the Plan are authorized and are being made at the rate of 0.25%
of each Portfolio's average daily net assets for the Class B shares.

Under the Plan, each Portfolio, subject to Trustee authorization, may pay the
Distributor a monthly fee to compensate it for expenses it bears and services it
provides in the distribution of shares and the provision of shareholder support
services. The Plan also provides that certain Service Providers (defined under
the Plan as any broker, dealer, bank or other institution) may receive
compensation for providing continuing personal services to Shareholders as well
as administrative services with respect to shareholder accounts. Such payments
are used to compensate the Distributor and any Service Providers for the
services outlined above.

The Distributor shall determine the amounts to be paid to Service Providers.
Each Service Provider is required to disclose to its clients any compensation
payable to it by the Trust pursuant to the Plan and any other compensation
payable by its clients in connection with the investment of their assets in
Trust shares. The fees payable to the Distributor under the Plan for
advertising, marketing and distributing Class B shares and for payments to
Service Providers are payable without regard to actual expenses incurred by the
Distributor.

The Plan recognizes that the Manager, the Sub-Adviser and the Distributor may
use their fees from each Portfolio or other resources to pay expenses associated
with activities primarily intended to result in the sale of the shares of the
Portfolio. Under its Distribution Agreement with the Trust, the Distributor
bears certain distribution-related expenses of the Portfolios, such as the cost
and expense of printing and distributing copies of prospectuses which are used
in connection with the offering of shares to prospective investors.

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<PAGE>

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT

State Street serves as the Trust's custodian ("Custodian") and holds all
portfolio securities and cash assets of the Trust. It also calculates net asset
value per share and maintains general accounting records for each Portfolio.
The Custodian is authorized to deposit securities in securities depositories or
to use the services of subcustodians. State Street also serves as the Trust's
Transfer Agent and dividend disbursing agent and maintains the Trust's
shareholder records. State Street's fees are paid by the Manager.

VALUATION OF SHARES

All income, expenses (other than expenses incurred by a class pursuant to its
distribution and shareholder servicing plan) and realized and unrealized gains
and losses are allocated to each class proportionately on a daily basis for
purposes of determining the net asset value of each class.

Net asset value per share is determined as of 3:00 p.m. (Eastern time) for the
U.S. Treasury Money Market Portfolio and the General Money Market Portfolio and
as of noon (Eastern time) for the U.S. Treasury Income Portfolio and the Tax-
Exempt Money Market Portfolio. Net asset value per share is determined on each
day the NYSE and the Boston and the New York Federal Reserve Banks are open.
Currently, the days on which the Trust is closed (other than weekends) are New
Year's Day, Martin Luther King, Jr. Day (observed), President's Day (observed),
Good Friday, Memorial Day (observed), Independence Day, Labor Day, Columbus Day
(observed), Veteran's Day, Thanksgiving Day and Christmas Day. Net asset value
per share for purposes of pricing sales and redemptions is calculated by
dividing the value of all securities and other assets belonging to a Portfolio,
less the Portfolio's liabilities, by the number of outstanding shares of that
Portfolio.

The securities owned by each Portfolio are valued based upon the amortized cost
method. Pursuant to this method, a security is valued by reference to a
Portfolio's acquisition cost as adjusted for amortization of premium or
accretion of discount. Although the Trust seeks to maintain the net asset value
per share of each Portfolio at $1.00, there can be no assurance that the net
asset value per share will not vary.

DISTRIBUTIONS AND TAXES

Dividends out of net investment income will be declared daily and paid monthly.
Dividends for the U.S. Treasury Money Market Portfolio and the General Money
Market Portfolio are declared at 3:00 p.m. (Eastern time) to shareholders of
record at that time, and dividends for the U.S. Treasury Income Portfolio and
the Tax-Exempt Money Market Portfolio are declared at noon (Eastern time) to
shareholders of record at that time. Distributions of net long-term capital
gains, if any, for the year are made annually. All income dividends are paid in
cash and will automatically be made by wire to institutional investors, which
may elect to reinvest them in additional shares.

Each Portfolio intends to continue to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"). As regulated investment companies, the Portfolios will not be
subject to federal income taxes on the net investment income and long-term
capital gains that are distributed to shareholders or deemed to have been
distributed to shareholders.

17
<PAGE>

Dividends derived from net investment income for the U.S. Treasury Money Market
Portfolio, U.S. Treasury Income Portfolio and General Money Market Portfolio and
from short-term capital gains, if any, are taxable to each such Portfolio's
shareholders, unless they are exempt from Federal income taxes, as ordinary
income. Distributions are taxable when they are paid, except that distributions
declared in October, November or December and paid in January of the following
year are taxable as if paid on December 31st.

Distributions of tax-exempt income by the Tax-Exempt Money Market Portfolio are
not subject to regular federal income taxes. If the Tax-Exempt Money Market
Portfolio earns federally taxable income from any of its investments, it will be
distributed as a taxable dividend. The Portfolio does not intend to invest in
Municipal Securities whose interest is subject to the federal alternative
minimum tax ("AMT") for individuals (known as "private activity obligations").

Since all investment income is expected to be derived from earned interest, it
is anticipated that no part of any distribution will be eligible for the
dividends received deduction for corporations.

OTHER TAX INFORMATION

The information above is only a summary of some of the tax consequences
generally affecting each Portfolio and its shareholders, and no attempt has been
made to discuss individual tax consequences. In addition to federal tax,
distributions may be subject to state and local taxes. Shareholders should make
their own determination whether a Portfolio is suitable for investment given
their particular situation.

State law varies on whether mutual fund dividends that are derived in whole or
in part from interest on U.S. Government Obligations are exempt from state
income taxation. The Portfolios will provide shareholders annually with
information relating to the composition of their distributions to permit
shareholders to determine whether and to what extent the dividend income they
receive from the Portfolio may be exempt from their state's income tax.
Shareholders should consult their tax adviser as to whether any portion of the
dividends they receive from the Portfolio is exempt from state income taxes and
on any other specific questions concerning state or federal tax treatment.

Annual statements as to the current federal tax status of distributions, if
applicable, are mailed to shareholders by January 31st following each tax year.

When an investor signs its account application, it will be asked to certify that
its taxpayer identification number is correct and that it is not subject to
backup withholding for failing to report income to the Internal Revenue Service
("IRS"). If the investor does not comply with IRS regulations, the IRS can
require each Portfolio to withhold a percentage of distributions.

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<PAGE>

PERFORMANCE INFORMATION

From time to time each Portfolio may advertise its current yield and effective
yield for each class of shares in advertisements or in reports or other
communications with shareholders. A Portfolio's performance may be compared to
other investments or relevant indices.

Both yield figures are based on historical earnings and are not intended to
indicate future performance. Each Portfolio's current yield for a class of
shares refers to the net income generated by an investment in that class over a
seven-day period expressed as an annual percentage rate. In addition to the
current yield, each Portfolio may quote yields in advertising based on any
historical seven-day period. The effective yield assumes that the income earned
from the investment is reinvested. The effective yield will be slightly higher
than the current yield because of the compounding effect on this assumed
reinvestment.

The Tax-Exempt Money Market Portfolio also may quote its tax equivalent yield
and tax equivalent effective yield, which shows the taxable yield or taxable
effective yield an investor would have to earn, before taxes, to equal the
Portfolio's tax-free yield or tax-free effective yield. When a tax equivalent
yield or tax equivalent effective yield is calculated, the yield is increased
using a stated income tax rate. See the SAI for more information concerning
performance calculations.

ORGANIZATION AND CAPITALIZATION OF THE TRUST

The Trust was established as a Massachusetts business trust under the laws of
The Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated
January 29, 1993 (the "Trust Declaration"). A copy of the Trust Declaration is
on file with the Secretary of The Commonwealth of Massachusetts. The Trust, a
diversified, open-end management investment company, is not required to hold
annual meetings of shareholders and does not intend to hold shareholder meetings
unless required by the 1940 Act. Holders of shares representing 10% or more of
the outstanding shares of the Trust may call a meeting for the purpose of voting
on the removal of one or more Trustees. Special meetings may be called for the
purpose of conducting specific items of Trust business.

Shareholders receive one vote for each dollar (or a proportionate fractional
vote for each fraction of a dollar) of net asset value per share owned. The
shares of each Portfolio are classified into four classes. Each Portfolio votes
separately with respect to issues affecting only that Portfolio. Holders of a
particular class of shares have the exclusive right to vote on matters
submitted to shareholders pertaining only to that class. Pursuant to the Trust
Declaration, the Trustees have the authority to create additional Portfolios and
to issue additional classes of shares for each Portfolio of the Trust, subject
to receipt of any required regulatory approval. Shareholders may direct any
questions they may have about the Trust to the Distributor at 1-800-828-2176.

Any person or organization owning 25% or more of the outstanding shares of a
Portfolio may be presumed to "control" (as that term is defined in the 1940 Act)
such Portfolio. As of December 13, 1996 Sun Bank National Association, P.O. Box
105504, Atlanta, GA 30348 owned a controlling interest in the U.S. Treasury
Money Market Portfolio; and First Union National Bank, 401 South Tryon Street,
Charlotte, NC 28288 owned a controlling interest in the General Money Market
Portfolio, U.S. Treasury Income Portfolio and Tax-Exempt Money Market Portfolio.

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<PAGE>

The Trust has adopted a code of ethics which contains a policy on personal
securities transactions by "access persons." That policy complies, in all
material respects, with the recommendations of the Investment Company Institute.

INVESTMENT RESTRICTIONS

The following is a description of certain investment restrictions which are
fundamental and may not be changed with respect to a Portfolio without the
approval of a majority of the outstanding shares of the Portfolio. For a
description of certain other investment restrictions, reference should be made
to the SAI. The restrictions do not apply to U.S. Government Obligations.

1. No Portfolio will invest 25% or more of the value of its total assets in a
particular industry, except that up to 100% of the assets of the General
Money Market Portfolio may be invested in domestic banking industry
obligations.

2. As to 75% of the value of its total assets, a Portfolio will not invest
more than 5% of the value of its total assets in the securities of any one
issuer or acquire more than 10% of the voting securities of any issuer; the
remaining 25% of the assets may be invested in the securities of one or
more issuers without regard to such limitations.

3. Under normal market conditions, at least 80% of the value of the Tax-Exempt
Money Market Portfolio's total assets will be invested in Municipal
Securities.

These limitations apply as of the time of purchase. If through market action
the percentage limitations are exceeded, the Portfolios will not be required to
reduce the amount of their holdings in such investments.

The General Money Market Portfolio operates in accordance with a non-fundamental
operating policy which complies with Rule 2a-7 promulgated under the 1940 Act
and is more restrictive than investment restriction number 2 above. Under Rule
2a-7 the Portfolio may not (with certain exceptions) invest more than 5% of its
total assets in the securities of a single issuer. See "Investment Policies and
Limitations" in the SAI.

CERTAIN INVESTMENT STRATEGIES, POLICIES AND RISK CONSIDERATIONS

QUALITY AND MATURITY

Each Portfolio may purchase only high quality obligations that the Sub-Adviser
believes present minimal credit risks. To be considered high quality, a
security must be a U.S. Government Obligation; or rated in accordance with
applicable rules in one of the two highest rating categories for short-term
obligations by at least two NRSROs (or by one, if only one rating service has
rated the security); or, if unrated, judged to be of equivalent quality by the
Sub-Adviser. As a matter of non-fundamental policy, the Portfolios will only
purchase securities, in addition to U.S. Government Obligations, that are rated
in the highest rating category by at least one NRSRO or, if unrated, are
determined to be of equivalent quality. (See the Appendix for a description of
NRSRO ratings).

Each Portfolio must limit its investments to obligations with remaining
maturities of 397 days or less and must maintain a dollar-weighted average
maturity of 90 days or less.

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<PAGE>

Each Portfolio's ability to achieve its investment objective depends, at least
in part, on the quality and maturity of its investments. The Portfolios invest
in high quality obligations, but an investment in any of the Portfolios involves
risks. Although each Portfolio's policies are designed to maintain a stable net
asset value of $1.00 per share, all money market instruments can change in value
when interest rates or an issuer's creditworthiness changes, or if an issuer or
guarantor of a security fails to pay interest or principal when due. If these
changes in value were substantial, a Portfolio's net asset value could deviate
from $1.00.

Unless otherwise indicated, each Portfolio may invest in the securities and
engage in the transactions described below.

AFFILIATED BANK TRANSACTIONS

Pursuant to an exemptive order from the SEC, each Portfolio may engage in
certain transactions with banks that are, or may be considered to be,
"affiliated persons" of the Portfolio under the 1940 Act. Such transactions may
be entered into only pursuant to procedures established, and periodically
reviewed, by the Board of Trustees. These transactions may include repurchase
agreements with U.S. banks having short-term debt instruments rated high quality
by at least one NRSRO (or if unrated, determined by the Sub-Adviser to be of
comparable quality); purchases, as principal, of short-term obligations of such
banks and their bank holding companies and affiliates; transactions in Municipal
Securities; transactions in bankers' acceptances; and transactions in U.S.
Government Obligations with affiliated banks that are primary dealers in these
securities.

REPURCHASE AGREEMENTS (APPLICABLE TO U.S. TREASURY MONEY MARKET PORTFOLIO,
GENERAL MONEY MARKET PORTFOLIO AND TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

Each Portfolio, except the U.S. Treasury Income Portfolio, may enter into
repurchase agreements that allow the Portfolio to purchase U.S. Government
Obligations, with an agreement that the seller will repurchase the obligation at
an agreed upon price and date. No more than 10% of a Portfolio's net assets
taken at current value will be invested in repurchase agreements extending for
more than seven days. If a seller defaults on the obligation to repurchase,
the Portfolios may incur a loss or other costs.

REVERSE REPURCHASE AGREEMENTS (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND
TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

The General Money Market Portfolio and the Tax-Exempt Money Market Portfolio may
enter into reverse repurchase agreements, which are transactions where a
Portfolio temporarily transfers possession of a portfolio instrument to another
party, such as a bank or broker-dealer, in return for cash. At the same time,
the Portfolio agrees to repurchase the instrument at an agreed upon time and
price, which includes interest. The General Money Market Portfolio expects that
it will engage in reverse repurchase agreements when it is able to invest the
cash so acquired at a rate higher than the cost of the agreement, which would
increase income earned by such Portfolio, or for liquidity purposes. Engaging
in reverse repurchase agreements may involve an element of leverage, and no
Portfolio will purchase a security while borrowings (including reverse
repurchase agreements) representing more than 5% of its total assets are
outstanding. The Tax-Exempt Money Market Portfolio will engage in reverse
repurchase agreements for temporary or emergency purposes only and not for
leverage or investment.

21
<PAGE>

FORWARD COMMITMENTS AND "WHEN-ISSUED" SECURITIES

Each Portfolio may also enter into forward commitment agreements and purchase
"when-issued" securities. Forward commitments are contracts to purchase
securities for a fixed price at a specified future date beyond customary
settlement time with no interest accruing to the Portfolio until the settlement
date. Forward commitments involve a risk of loss if the value of the security
to be purchased declines prior to the settlement date. Municipal Securities are
often issued on a when-issued basis. The yield of such securities is fixed at
the time a commitment to purchase is made, with actual payment and delivery of
the security generally taking place 15 to 45 days later. Under some
circumstances, the purchase of when-issued securities may act to leverage the
Portfolio.

LENDING OF SECURITIES

For the purpose of realizing additional income, the Portfolios may lend
portfolio securities to broker-dealers or financial institutions up to not more
than 10% of their respective total assets taken at current value. While any
such loan is outstanding, each such Portfolio will continue to receive amounts
equal to the interest or dividends paid by the issuer on the securities, as well
as interest (less any rebates to be paid to the borrower) on the investment of
the collateral or fees from the borrower. Each Portfolio will have a right to
call each loan and obtain the securities. Lending portfolio securities involves
certain risks, including possible delays in receiving additional collateral or
in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Loans will be made in accordance with
guidelines established by the Board of Trustees.

LETTERS OF CREDIT

Issuers or financial intermediaries who provide demand features or standby
commitments often support their ability to buy obligations on demand by
obtaining letters of credit ("LOCs") or other guarantees from domestic or
foreign banks. LOCs also may be used as credit supports for Municipal
Securities. The Sub-Adviser may rely upon its evaluation of a bank's credit in
determining whether to purchase an instrument supported by an LOC. In
evaluating a foreign bank's credit, the Sub-Adviser will consider whether
adequate public information about the bank is available and whether the bank may
be subject to unfavorable political or economic developments, currency controls
or other governmental restrictions that might affect the bank's ability to honor
its credit commitment.

ZERO COUPON BONDS

Each Portfolio may purchase zero coupon bonds. Regular interest payments are
not made on zero coupon bonds; instead these bonds are sold at a deep discount
from their face value and are redeemed at face value when they mature. Each
Portfolio will purchase only those zero coupon bonds which have a remaining
maturity of one year or less. As a result, such bonds are expected to pay out a
return on a regular basis as they mature. Because zero coupon bonds do not pay
current income, their prices tend to be more volatile in response to interest
rate changes than bonds which pay interest regularly. In calculating its daily
dividend, a Portfolio takes into account as income a portion of the difference
between a zero coupon bond's purchase price and its face value.

22
<PAGE>

A broker-dealer creates a derivative zero coupon bond by separating the interest
and principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury Securities),
TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury Receipts) are
examples of derivative zero coupon bonds.

The Federal Reserve Bank creates STRIPS (Separate Trading of Registered Interest
and Principal of Securities) by separating the interest and principal components
of an outstanding U.S. Treasury bond and selling them as individual securities.
Bonds issued by the Resolution Funding Corporation and the Financing Corporation
can also be separated in this fashion.

U.S. GOVERNMENT OBLIGATIONS

U.S. Government Obligations are debt obligations issued or guaranteed by the
U.S. Treasury or by an agency or instrumentality of the U.S. Government. Not
all U.S. Government Obligations are backed by the full faith and credit of the
United States. Obligations may be supported only by the agency's right to
borrow money from the U.S. Treasury under certain circumstances or by the credit
of the agency. There is no guarantee that the U.S. Government will support
these types of obligations, and therefore they involve more risk than U.S.
Government Obligations backed by the full faith and credit of the United States.

VARIABLE AND FLOATING RATE INSTRUMENTS

Each Portfolio may purchase variable and floating rate demand instruments and
other securities that possess a floating or variable interest rate adjustment
formula. These instruments permit the Portfolios to demand payment of the
principal balance plus unpaid accrued interest upon a specified number of days'
notice to the issuer or its agent. The demand feature may be backed by a bank
letter of credit or guarantee issued with respect to such instrument.

The Portfolios' Sub-Adviser, on behalf of the Manager, intends to exercise the
demand only (1) to attain a more optimal portfolio structure, (2) upon a default
under the terms of the debt security, (3) as needed to provide liquidity to the
Portfolios, or (4) to maintain the respective quality standard of the
Portfolios' investment portfolio. The Portfolios' Sub-Adviser will determine
which variable or floating rate demand instruments to purchase in accordance
with procedures approved by the Trustees to minimize credit risks.

MUNICIPAL LEASE OBLIGATIONS (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO
ONLY)

Municipal lease obligations are issued by a state and local government or
authority to acquire land and a wide variety of equipment and facilities. These
obligations typically are not fully backed by the municipality's credit, and the
interest payable on these obligations may become taxable if the lease is
assigned. If funds are not appropriated for the following year's lease
payments, a lease may terminate, with the possibility of default on the lease
obligation and significant loss to the Portfolio. Such risk of non-
appropriation is unique to municipal lease obligations. The SEC Staff has taken
the position that open-end investment companies may treat these obligations as
liquid under guidelines established by the Board of Trustees. Determination
concerning the liquidity and proper valuation of these obligations will include:
the frequency of trades and quotes for the obligation, the number of dealers
willing to purchase or sell the security and the number of potential buyers, the
willingness of dealers to make a market in the securities, the nature of the
marketplace trades and the likelihood that its marketability will be maintained
throughout the time the instrument is held by

23
<PAGE>

the Portfolio. The Board will be responsible for determining the credit quality
of any unrated lease obligations held by the Portfolio, on an ongoing basis,
including an assessment of the likelihood that the lease will not be canceled.
The high quality municipal lease obligations in which the Tax-Exempt Money
Market Portfolio intends to invest generally are not expected by the Board to
present liquidity risks. Lease obligations will be valued based on a standard
spread that relates to general obligation securities whose value is determined
using a pricing service. Certificates of participation in municipal lease
obligations or installment sales contracts entitle the holder to a proportionate
interest in the lease-purchase payments made. Certificates of participation
typically are issued by municipalities and by banks and other financial
institutions.

MUNICIPAL SECURITIES (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

Municipal Securities include general obligation securities, which are backed by
the full taxing power of a municipality, or revenue securities, which are backed
by the revenues of a specific tax, project or facility. Resource recovery
bonds, a type of revenue obligation, are used to finance the construction of
waste burning facilities. Such bonds may be subject to special risks because
the project uses technology or an economic plan that is not yet proven, or
requires operating permits from environmental authorities. Industrial
development bonds are a type of revenue bond backed by the credit and security
of a private issuer and may involve greater risk. Tax and revenue anticipation
notes are issued by municipalities in expectation of future tax or other
revenues, and are payable from those specific taxes or revenues. Bond
anticipation notes normally provide interim financing in advance of an issue of
bonds or notes, the proceeds of which are used to repay the anticipation notes.

Although the Tax-Exempt Money Market Portfolio presently does not intend to do
so on a regular basis, it may invest more than 25% of its assets in Municipal
Securities which are related in such a way that an economic, business, or
political development or change affecting one security would likewise affect the
other Municipal Securities. To the extent that the Portfolio's assets are
concentrated in Municipal Securities that are so related, the Portfolio will be
subject to the peculiar risks presented by such Municipal Securities, such as
negative developments in a particular industry or state, to a greater extent
than it would be if the Portfolio's assets were not so concentrated.

RESTRICTED SECURITIES (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND TAX-
EXEMPT MONEY MARKET PORTFOLIO ONLY)

The General Money Market Portfolio and the Tax-Exempt Money Market Portfolio may
purchase securities which cannot be sold to the public without registration
under the Securities Act of 1933 (restricted securities). Unless registered for
sale, these securities can only be sold in privately negotiated transactions or
pursuant to an exemption from registration. Provided that the security has a
demand feature of seven days or less, or a dealer or institutional trading
market exists which in the opinion of the Sub-Adviser, subject to Board
guidelines, affords liquidity, these restricted securities are not treated as
illiquid securities for purposes of each Portfolio's restriction on not
investing more than 10% of its net assets in illiquid securities.

SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS (APPLICABLE TO GENERAL MONEY
MARKET PORTFOLIO ONLY)

The General Money Market Portfolio may invest in U.S. dollar-denominated
obligations of foreign branches of U.S. banks (Eurodollars), U.S. branches and
agencies of foreign banks (Yankee dollars), and foreign branches of foreign
banks. Euro and Yankee dollar investments involve risks that are different from

24
<PAGE>

investments in securities of U.S. banks. These risks may include future
unfavorable political and economic developments, possible withholding taxes,
seizure of foreign deposits, currency controls, interest limitations or other
governmental restrictions which might affect payment of principal or interest.
Additionally, there may be less public information available about foreign banks
and their branches. Foreign branches of foreign banks are not regulated by U.S.
banking authorities, and generally are not bound by accounting, auditing and
financial reporting standards comparable to U.S. banks. Although the Sub-
Adviser carefully considers these factors when making investments, and subject
to its policy on concentration, the Portfolio does not limit the amount of its
assets which can be invested in any one type of instrument or in any foreign
country. The Portfolio will not invest 25% or more of its assets in Euro and
Yankee dollar investments and obligations of foreign branches of foreign banks.

APPENDIX

NRSRO RATINGS

Description of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") commercial paper and bond ratings:

SHORT-TERM DEBT RATINGS

MOODY'S EMPLOYS THREE DESIGNATIONS, ALL JUDGED TO BE INVESTMENT GRADE, TO
INDICATE THE RELATIVE REPAYMENT CAPACITY OF RATED ISSUERS. THE HIGHEST
DESIGNATION IS AS FOLLOWS:

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:

- Leading market positions in well-established industries.
- High rates of return on funds employed.
- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- Broad margins in 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.

S&P SHORT-TERM DEBT RATINGS ARE GRADED INTO FOUR CATEGORIES, RANGING FROM "A"
FOR THE HIGHEST QUALITY OBLIGATIONS TO "D" FOR THE LOWEST. THE HIGHEST RATINGS
IN THE "A" CATEGORY ARE DESCRIBED AS FOLLOWS:

"A"-Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations 1, 2 and 3 to indicate the relative degree of safety.

"A-1"-This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be noted with a plus (+) sign
designation.

25
<PAGE>

MUNICIPAL OBLIGATIONS

Moody's ratings for state and municipal and other short-term obligations will be
designated Moody's Investment Grade ("MIG"). This distinction is in recognition
of the differences between short-term credit risk and long-term risk. Factors
affecting the liquidity of the borrower are uppermost in importance in short-
term borrowing, while various factors of the first importance in short-term
borrowing risk are of lesser importance in the long run. The highest MIG quality
rating is defined as follows:

MIG-1-Notes bearing this designation are of the best quality, enjoying 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.

A short-term rating may also be assigned to an issue having a demand feature.
Such ratings will be designated as VMIG to reflect such characteristics as
payment upon periodic demand rather than fixed maturity dates and payment
relying on external liquidity. Additionally, investors should be alert to the
fact that the source of payment may be limited to the external liquidity with no
or limited legal recourse to the issuer in the event the demand is not met. A
VMIG-1 rating carries the same definition as MIG-1.

S&P'S HIGHEST QUALITY RATING FOR SHORT-TERM STATE AND MUNICIPAL NOTES IS DEFINED
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.

26
<PAGE>

THE VALIANT FUND
1776 Heritage Drive
North Quincy, MA 02171

U.S. TREASURY MONEY MARKET PORTFOLIO GENERAL MONEY MARKET PORTFOLIO
U.S. TREASURY INCOME PORTFOLIO TAX-EXEMPT MONEY MARKET PORTFOLIO

PROSPECTUS - DECEMBER 30, 1996

<PAGE>

CONTENTS

Expense Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . . . . 5
Who Should Invest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Purchases and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . 7
Management of the Portfolios . . . . . . . . . . . . . . . . . . . . . . . . 9
Management Fees and Other Expenses . . . . . . . . . . . . . . . . . . . . . 9
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Distributions and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Organization and Capitalization of the Trust . . . . . . . . . . . . . . . . 13
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Certain Investment Strategies, Policies and Risk Considerations. . . . . . . 14
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

<PAGE>

EXPENSE INFORMATION

U.S. Treasury Money U.S. Treasury General Money Tax-Exempt Money
Market Income Market Market
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
SHAREHOLDER
TRANSACTION EXPENSES

Sales Load Imposed
on Purchases None None None None

Sales Load Imposed
on Reinvested
Dividends None None None None

Deferred Sales Load None None None None

Redemption Fees None None None None

ANNUAL FUND
OPERATING EXPENSES
(AS A PERCENTAGE OF
AVERAGE NET ASSETS)

Management Fees 0.20% 0.20% 0.20% 0.20%

12b-1 Fees* 0.40% 0.40% 0.40% 0.40%

Other Expenses (after
expense reimbursement) 0.00% 0.00% 0.00% 0.00%
----- ----- ----- -----

Total Fund Operating
Expenses (after expense
reimbursement) 0.60% 0.60% 0.60% 0.60%
----- ----- ----- -----
----- ----- ----- -----
</TABLE>
_____________________________________
* The Trust has adopted a Distribution and Shareholder Servicing Plan for the
Class C Shares (the "Plan"). Payments under the Plan are authorized at the rate
of 0.40% of the average daily net assets. See "Management Fees and Other
Expenses" for further information on the Plan.

Four classes of shares of the Trust are being offered by each Portfolio: Class
A, Class B, Class C and Class D shares. The classes are identical, except that
Class B shares, Class C shares and Class D shares are subject to differing
annual distribution and service fees. Class A shares are currently not subject
to an annual distribution and service fee. The Class B, Class C and Class D
shares' distribution and service fees will cause the Class B, Class C and Class
D shares to have a higher expense ratio and to pay lower dividends than Class A
shares, the Class C and Class D shares to have a higher expense ratio and to pay
lower dividends than the Class B shares, and the Class D shares to have a higher
expense ratio and to pay lower dividends than the Class C shares. This
Prospectus describes only the Class C shares. An investor may obtain
prospectuses relating to the Class A and Class B shares and Class D shares,
respectively, by calling the Distributor at 1-800-828-2176.

<PAGE>

The purpose of this table is to assist an investor in understanding the various
costs and expenses that the investor will bear directly or indirectly.
Management fees are paid by each Portfolio to Integrity Management & Research,
Inc. (the "Manager") for managing its investments and business affairs. All
operating expenses are paid by each Portfolio and are not charged directly to an
investor's account. There are no sales or redemption fees. However, certain
institutional investors may charge their customers fees in addition to those
described herein. See "Purchases and Redemptions." The Manager has declared
voluntary expense limitations for each Portfolio for Class C shares of 0.60% of
average daily net assets. The Manager will voluntarily reimburse any expenses
above the expense limitations. Without the effect of the expense
reimbursements: "Other Expenses" and "Total Operating Expenses" would be 0.15%
and 0.75%, respectively, for the U.S. Treasury Income Portfolio and 0.00% and
0.60%, respectively, for each of the other Portfolios. The expense limitations
are voluntary but will remain in effect through the end of 1997. The expense
limitations may be removed at any time thereafter with 90 days' prior notice to
existing shareholders. Non-recurring or extraordinary expenses are generally
excluded in the determination of expense ratios of the Portfolios for purposes
of determining any required expense reimbursement. Quotations of yield for any
period when an expense limitation is in effect will be greater than if the
limitation had not been in effect. For more information, see "Management Fees
and Other Expenses," and "Purchases and Redemptions."

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.

1 Year 3 Years 5 Years 10 Years

U.S. Treasury Money Market Portfolio $6 $19 $34 $75

U.S. Treasury Income Portfolio $6 $19 $34 $75

General Money Market Portfolio $6 $19 $34 $75

Tax-Exempt Money Market Portfolio $6 $19 $34 $75

THE EXAMPLES ARE BASED ON ASSUMED PERFORMANCE LEVELS AND SHOULD NOT BE
CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.

<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

THE GENERAL MONEY MARKET PORTFOLIO invests in U.S. dollar-denominated short-term
debt securities including:

-- Obligations of domestic and foreign banks or thrift organizations (such as
bankers' acceptances, time deposits and certificates of deposit);

-- Corporate debt obligations, including commercial paper, notes and bonds
with remaining maturities of 397 days or less;

-- U.S. Government Obligations and repurchase agreements backed by U.S.
Government Obligations; and

-- Cash.

<PAGE>

WHO SHOULD INVEST

Each Portfolio is designed exclusively for investment of short-term monies held
by banks and other institutional investors.

<PAGE>

It should be noted that the Portfolios are not FDIC insured.

PURCHASES AND REDEMPTIONS

PURCHASES

REDEMPTIONS

<PAGE>

Portfolio. Shares redeemed and wired on the same day will not receive the
dividend declared on the day of redemption. A shareholder whose redemption
instructions are received by the Transfer Agent after 3:00 p.m. (Eastern time)
with respect to the U.S. Treasury Money Market Portfolio or General Money Market
Portfolio or after noon (Eastern time) with respect to the U.S. Treasury Income
Portfolio or the Tax-Exempt Money Market Portfolio will receive the dividend
declared on the day on which the redemption instructions were received and will
receive wired redemption proceeds on the next Business Day. Shareholders may
change the bank account designated to receive an amount redeemed at any time by
sending a letter of instruction with a signature guarantee to the Transfer
Agent, State Street Bank and Trust Company, at P.O. Box 1978, Boston,
Massachusetts 02105.

ADDITIONAL INFORMATION

SHAREHOLDER SERVICES

<PAGE>

STATEMENTS AND REPORTS

MANAGEMENT OF THE PORTFOLIOS

MANAGEMENT FEES AND OTHER EXPENSES

<PAGE>

ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or the
"Administrator"), 225 Franklin Street, Boston, MA 02110, is the Administrator of
the Trust.

DISTRIBUTION AND SHAREHOLDER SERVICING PLAN

Integrity Investments, Inc., 1800 Second Street, Suite 757, Sarasota, Florida
34236, is the Trust's Distributor. The Trust has adopted a Distribution and
Shareholder Servicing Plan for the Class C Shares (the "Plan") which provides
for payment of up to 0.50% of each Portfolio's average daily net assets, the
purpose of which is to promote distribution of the Portfolios' shares and to
enhance the provision of shareholder services. Payments under the Plan are
authorized and will be made at the rate of 0.40% of each Portfolio's average
daily net assets for the Class C shares.

The Distributor shall determine the amounts to be paid to Service Providers.
Each Service Provider is required to disclose to its clients any compensation
payable to it by the Trust pursuant to the Plan and any other compensation
payable by its clients in connection with the investment of their assets in
Trust shares. The fees payable to the Distributor under the Plan for
advertising, marketing and distributing Class C shares and for payments to
Service Providers are payable without regard to actual expenses incurred by the
Distributor.

<PAGE>

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT

VALUATION OF SHARES

DISTRIBUTIONS AND TAXES

Dividends out of net investment income will be declared daily and paid monthly.
Dividends for the U.S. Treasury Money Market Portfolio and the General Money
Market Portfolio are declared at 3:00 p.m. (Eastern time) to shareholders of
record at that time, and dividends for the U.S. Treasury Income Portfolio and
the Tax-Exempt Money Market Portfolio are declared at noon (Eastern time) to
shareholders of record at that time. Distributions of net long-term capital
gains and disposition gain, if any, for the year are made annually. All income
dividends are paid in cash and will automatically be made by wire to
institutional investors, which may elect to reinvest them in additional shares.

<PAGE>

Since all investment income is expected to be derived from earned interest, it
is anticipated that no part of any distribution will be eligible for the
dividends received deduction for corporations.

OTHER TAX INFORMATION

Annual statements as to the current federal tax status of distributions, if
applicable, are mailed to shareholders by January 31st following each tax year.

<PAGE>

PERFORMANCE INFORMATION

ORGANIZATION AND CAPITALIZATION OF THE TRUST

Shareholders receive one vote for each dollar (or a proportionate fractional
vote for each fraction of a dollar) of net asset value per share owned. The
shares of each Portfolio are classified into four classes. Each Portfolio votes
separately with respect to issues affecting only that Portfolio. Holders of a
particular class will have the exclusive right to vote on matters submitted to
shareholders pertaining only to that class. Pursuant to the Trust Declaration,
the Trustees have the authority to create additional Portfolios and to issue
additional classes of shares for each Portfolio of the Trust, subject to receipt
of any required regulatory approval. Shareholders may direct any questions they
may have about the Trust to the Distributor at 1-800-828-2176.

<PAGE>

INVESTMENT RESTRICTIONS

3. Under normal market conditions, at least 80% of the value of the Tax-Exempt
Money Market Portfolio's total assets will be invested in Municipal
Securities.

CERTAIN INVESTMENT STRATEGIES, POLICIES AND RISK CONSIDERATIONS

QUALITY AND MATURITY

Each Portfolio must limit its investments to obligations with remaining
maturities of 397 days or less and must maintain a dollar-weighted average
maturity of 90 days or less.

<PAGE>

Unless otherwise indicated, each Portfolio may invest in the securities and
engage in the transactions described below.

AFFILIATED BANK TRANSACTIONS

REPURCHASE AGREEMENTS (APPLICABLE TO U.S. TREASURY MONEY MARKET PORTFOLIO,
GENERAL MONEY MARKET PORTFOLIO AND TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

REVERSE REPURCHASE AGREEMENTS (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND
TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

<PAGE>

FORWARD COMMITMENTS AND "WHEN-ISSUED" SECURITIES

LENDING OF SECURITIES

LETTERS OF CREDIT

ZERO COUPON BONDS

<PAGE>

U.S. GOVERNMENT OBLIGATIONS

VARIABLE AND FLOATING RATE INSTRUMENTS

MUNICIPAL LEASE OBLIGATIONS (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO
ONLY)

<PAGE>

the Portfolio. The Board will be responsible for determining the credit quality
of any unrated lease obligations held by the Portfolio, on an ongoing basis,
including an assessment of the likelihood that the lease will not be cancelled.
The high quality municipal lease obligations in which the Tax-Exempt Money
Market Portfolio intends to invest generally are not expected by the Board to
present liquidity risks. Lease obligations will be valued based on a standard
spread that relates to general obligation securities whose value is determined
using a pricing service. Certificates of participation in municipal lease
obligations or installment sales contracts entitle the holder to a proportionate
interest in the lease-purchase payments made. Certificates of participation
typically are issued by municipalities and by banks and other financial
institutions.

MUNICIPAL SECURITIES (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

RESTRICTED SECURITIES (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND TAX-
EXEMPT MONEY MARKET PORTFOLIO ONLY)

SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS (APPLICABLE TO GENERAL MONEY
MARKET PORTFOLIO ONLY)

<PAGE>

APPENDIX

NRSRO RATINGS

Description of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") commercial paper and bond ratings:

SHORT-TERM DEBT RATINGS

MOODY'S EMPLOYS THREE DESIGNATIONS, ALL JUDGED TO BE INVESTMENT GRADE, TO
INDICATE THE RELATIVE REPAYMENT CAPACITY OF RATED ISSUERS. THE HIGHEST
DESIGNATION IS AS FOLLOWS:

<PAGE>

MUNICIPAL OBLIGATIONS

S&P'S HIGHEST QUALITY RATING FOR SHORT-TERM STATE AND MUNICIPAL NOTES IS DEFINED
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.

20
<PAGE>

THE VALIANT FUND
1776 Heritage Drive
North Quincy, MA 02171

U.S. TREASURY MONEY MARKET PORTFOLIO GENERAL MONEY MARKET PORTFOLIO
U.S. TREASURY INCOME PORTFOLIO TAX-EXEMPT MONEY MARKET PORTFOLIO

PROSPECTUS - DECEMBER 30, 1996

1
<PAGE>

CONTENTS

Expense Information. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . 5
Investment Objectives and Policies . . . . . . . . . . . . . . . . . . 6
Who Should Invest. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Purchases and Redemptions . . . . . . . . . . . . . . . . . . . . . . 8
Management of the Portfolios . . . . . . . . . . . . . . . . . . . . . 10
Management Fees and Other Expenses . . . . . . . . . . . . . . . . . . 10
Valuation of Shares . . . . . . . . . . . . . . . . . . . . . . . . . 12
Distributions and Taxes. . . . . . . . . . . . . . . . . . . . . . . . 12
Performance Information. . . . . . . . . . . . . . . . . . . . . . . . 14
Organization and Capitalization of the Trust . . . . . . . . . . . . . 14
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 15
Certain Investment Strategies, Policies and Risk Considerations. . . . 15
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

2
<PAGE>

EXPENSE INFORMATION

U.S. Treasury U.S. General Tax-Exempt
Money Treasury Money Money
Market Income Market Market
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- ---------

Shareholder
Transaction Expenses
- --------------------

Sales Load Imposed None None None None
on Purchases

Sales Load Imposed
on Reinvested
Dividends None None None None

Deferred Sales None None None None
Load

Redemption Fees None None None None

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

Management Fees 0.20% 0.20% 0.20% 0.20%

12b-1 Fees* 0.50% 0.50% 0.50% 0.50%

Other Expenses (after
expense reimbursement) 0.00% 0.00% 0.00% 0.00%
------ ------ ------ ------

Total Fund Operating
Expenses (after expense
reimbursement) 0.70% 0.70% 0.70% 0.70%
------ ------ ------ ------
------ ------ ------ ------

_____________________________________
* The Trust has adopted a Distribution and Shareholder Servicing Plan for the
Class D Shares (the "Plan"). Payments under the Plan are authorized at the rate
of 0.50% of the average daily net assets. See "Management Fees and Other
Expenses" for further information on the Plan.

Four classes of shares of the Trust are being offered by each Portfolio: Class
A, Class B, Class C and Class D shares. The classes are identical, except that
Class B shares, Class C shares and Class D shares are subject to differing
annual distribution and service fees. Class A shares are currently not subject
to an annual distribution and service fee. The Class B, Class C and Class D
shares' distribution and service fees will cause the Class B, Class C and Class
D shares to have a higher expense ratio and to pay lower dividends than Class A
shares, the Class C and Class D shares to have a higher expense ratio and to pay
lower dividends than the Class B shares, and the Class D shares to have a higher
expense ratio and to pay lower dividends than the Class C shares. This
Prospectus describes only the Class D shares. An investor may obtain
prospectuses relating to the Class A and Class B shares and Class C shares,
respectively, by calling the Distributor at 1-800-828-2176.

3
<PAGE>

The purpose of this table is to assist an investor in understanding the various
costs and expenses that the investor will bear directly or indirectly.
Management fees are paid by each Portfolio to Integrity Management & Research,
Inc. (the "Manager") for managing its investments and business affairs. All
operating expenses are paid by each Portfolio and are not charged directly to an
investor's account. There are no sales or redemption fees. However, certain
institutional investors may charge their customers fees in addition to those
described herein. See "Purchases and Redemptions." The Manager has declared
voluntary expense limitations for each Portfolio for the Class D shares of 0.70%
of average daily net assets. The Manager will voluntarily reimburse any
expenses above the expense limitations. Without the effect of the expense
reimbursements: "Other Expenses" and "Total Operating Expenses" would be 0.15%
and 0.85%, respectively, for the U.S. Treasury Income Portfolio and 0.00% and
0.70%, respectively, for each of the other Portfolios. The expense limitations
are voluntary but will remain in effect through the end of 1997. The expense
limitations may be removed at any time thereafter with 90 days' prior notice to
existing shareholders. Non-recurring or extraordinary expenses are generally
excluded in the determination of expense ratios of the Portfolios for purposes
of determining any required expense reimbursement. Quotations of yield for any
period when an expense limitation is in effect will be greater than if the
limitation had not been in effect. For more information, see "Management Fees
and Other Expenses," and "Purchases and Redemptions."

EXAMPLE

You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.

1 Year 3 Years 5 Years 10 Years
U.S. Treasury Money
Market Portfolio $7 $22 $39 $87

U.S. Treasury
Income Portfolio $7 $22 $39 $87

General Money Market
Portfolio $7 $22 $39 $87

Tax-Exempt Money
Market Portfolio $7 $22 $39 $87

THE EXAMPLES ARE BASED ON ASSUMED PERFORMANCE LEVELS AND SHOULD NOT BE
CONSIDERED REPRESENTATIONS OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE
GREATER OR LESSER THAN THOSE SHOWN.

4
<PAGE>

FINANCIAL HIGHLIGHTS

The following information has been audited by Price Waterhouse LLP, independent
accountants, whose report thereon was unqualified. This information is part of
the Trust's financial statements which are included in the Trust's Annual Report
to Shareholders and incorporated by reference in the SAI. As of the date of
this Prospectus, the General Money Market Portfolio, U.S. Treasury Income
Portfolio and Tax-Exempt Portfolio had not commenced Class D Shares operations.
The following information should be read in conjunction with the financial
statements and notes thereto.

U.S. TREASURY MONEY MARKET PORTFOLIO

For a share outstanding throughout the period.

CLASS D

PERIOD ENDED
8/31/96*
-------

Net asset value, beginning of period . . . . . . . . . . . . $1.000
------
Income from investment operations:
Net investment income(A). . . . . . . . . . . . . . . . 0.015
------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.015)
------
Net asset value, end of period . . . . . . . . . . . . . . . $1.000
------
------

Total return(1). . . . . . . . . . . . . . . . . . . . . . . 1.55%

Ratios/supplemental data:
Net assets, end of period (000's). . . . . . . . . . . . . . $35,549
Ratios to average net assets:
Net investment income(A). . . . . . . . . . . . . . . . 4.68%**
Operating expenses(A) . . . . . . . . . . . . . . . . . 0.70%**

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

* The Portfolio commenced Class D shares operations on May 1, 1996.

(A) Net investment income per share and the operating expense ratios before
reimbursement of expenses by the Manager, were $0.015 and 0.70%,
respectively.
(1) Total return for period less than one year is not annualized and had the
Manager not reimbursed certain expenses, total return would have been
lower.
** Annualized.

5
<PAGE>

INVESTMENT OBJECTIVES AND POLICIES

THE GENERAL MONEY MARKET PORTFOLIO invests in U.S. dollar-denominated short-term
debt securities including:

- -- Obligations of domestic and foreign banks or thrift organizations (such as
bankers' acceptances, time deposits and certificates of deposit);

- -- Corporate debt obligations, including commercial paper, notes and bonds
with remaining maturities of 397 days or less;

- -- U.S. Government Obligations and repurchase agreements backed by U.S.
Government Obligations; and

- -- Cash.

6
<PAGE>

WHO SHOULD INVEST

Each Portfolio is designed exclusively for investment of short-term monies held
by banks and other institutional investors.

7
<PAGE>

It should be noted that the Portfolios are not FDIC insured.

PURCHASES AND REDEMPTIONS
PURCHASES

REDEMPTIONS

8
<PAGE>

ADDITIONAL INFORMATION

SHAREHOLDER SERVICES

9
<PAGE>

STATEMENTS AND REPORTS

MANAGEMENT OF THE PORTFOLIOS

MANAGEMENT FEES AND OTHER EXPENSES

10
<PAGE>

ADMINISTRATOR. State Street Bank and Trust Company ("State Street" or the
"Administrator"), 225 Franklin Street, Boston, MA 02110, is the Administrator of
the Trust.

DISTRIBUTION AND SHAREHOLDER SERVICING PLAN

Integrity Investments, Inc., 1800 Second Street, Suite 757, Sarasota, Florida
34236, is the Trust's Distributor. The Trust has adopted a Distribution and
Shareholder Servicing Plan for the Class D Shares (the "Plan") which provides
for payment of up to 0.50% of each Portfolio's average daily net assets, the
purpose of which is to promote distribution of the Portfolios' shares and to
enhance the provision of shareholder services. Payments under the Plan are
authorized and will be made at the rate of 0.50% of each Portfolio's average
daily net assets for the Class D shares.

The Distributor shall determine the amounts to be paid to Service Providers.
Each Service Provider is required to disclose to its clients any compensation
payable to it by the Trust pursuant to the Plan and any other compensation
payable by its clients in connection with the investment of their assets in
Trust shares. The fees payable to the Distributor under the Plan for
advertising, marketing and distributing Class D shares and for payments to
Service Providers are payable without regard to actual expenses incurred by the
Distributor.

11
<PAGE>

CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT

VALUATION OF SHARES

DISTRIBUTIONS AND TAXES

Dividends out of net investment income will be declared daily and paid monthly.
Dividends for the U.S. Treasury Money Market Portfolio and the General Money
Market Portfolio are declared at 3:00 p.m. (Eastern time) to shareholders of
record at that time, and dividends for the U.S. Treasury Income Portfolio and
the Tax-Exempt Money Market Portfolio are declared at noon (Eastern time) to
shareholders of record at that time. Distributions of net long-term capital
gains and disposition gain, if any, for the year are made annually. All income
dividends are paid in cash and will automatically be made by wire to
institutional investors, which may elect to reinvest them in additional shares.

12
<PAGE>

Since all investment income is expected to be derived from earned interest, it
is anticipated that no part of any distribution will be eligible for the
dividends received deduction for corporations.

OTHER TAX INFORMATION

Annual statements as to the current federal tax status of distributions, if
applicable, are mailed to shareholders by January 31st following each tax year.

13
<PAGE>

PERFORMANCE INFORMATION

ORGANIZATION AND CAPITALIZATION OF THE TRUST

Shareholders receive one vote for each dollar (or a proportionate fractional
vote for each fraction of a dollar) of net asset value per share owned. The
shares of each Portfolio are classified into four classes. Each Portfolio votes
separately with respect to issues affecting only that Portfolio. Holders of a
particular class will have the exclusive right to vote on matters submitted to
shareholders pertaining only to that class. Pursuant to the Trust Declaration,
the Trustees have the authority to create additional Portfolios and to issue
additional classes of shares for each Portfolio of the Trust, subject to receipt
of any required regulatory approval. Shareholders may direct any questions they
may have about the Trust to the Distributor at 1-800-828-2176.

14
<PAGE>

INVESTMENT RESTRICTIONS

3. Under normal market conditions, at least 80% of the value of the Tax-Exempt
Money Market Portfolio's total assets will be invested in Municipal
Securities.

CERTAIN INVESTMENT STRATEGIES, POLICIES AND RISK CONSIDERATIONS

QUALITY AND MATURITY

Each Portfolio must limit its investments to obligations with remaining
maturities of 397 days or less and must maintain a dollar-weighted average
maturity of 90 days or less.

15
<PAGE>

Unless otherwise indicated, each Portfolio may invest in the securities and
engage in the transactions described below.

AFFILIATED BANK TRANSACTIONS

REPURCHASE AGREEMENTS (APPLICABLE TO U.S. TREASURY MONEY MARKET PORTFOLIO,
GENERAL MONEY MARKET PORTFOLIO AND TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

REVERSE REPURCHASE AGREEMENTS (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND
TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

16
<PAGE>

FORWARD COMMITMENTS AND "WHEN-ISSUED" SECURITIES

LENDING OF SECURITIES

LETTERS OF CREDIT

ZERO COUPON BONDS

17
<PAGE>

U.S. GOVERNMENT OBLIGATIONS

VARIABLE AND FLOATING RATE INSTRUMENTS

MUNICIPAL LEASE OBLIGATIONS (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO
ONLY)

18
<PAGE>

MUNICIPAL SECURITIES (APPLICABLE TO TAX-EXEMPT MONEY MARKET PORTFOLIO ONLY)

RESTRICTED SECURITIES (APPLICABLE TO GENERAL MONEY MARKET PORTFOLIO AND TAX-
EXEMPT MONEY MARKET PORTFOLIO ONLY)

SPECIAL CONSIDERATIONS OF FOREIGN INVESTMENTS (APPLICABLE TO GENERAL MONEY
MARKET PORTFOLIO ONLY)

19
<PAGE>

APPENDIX

NRSRO RATINGS

Description of Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Corporation ("S&P") commercial paper and bond ratings:

SHORT-TERM DEBT RATINGS

MOODY'S EMPLOYS THREE DESIGNATIONS, ALL JUDGED TO BE INVESTMENT GRADE, TO
INDICATE THE RELATIVE REPAYMENT CAPACITY OF RATED ISSUERS. THE HIGHEST
DESIGNATION IS AS FOLLOWS:

20
<PAGE>

MUNICIPAL OBLIGATIONS

S&P'S HIGHEST QUALITY RATING FOR SHORT-TERM STATE AND MUNICIPAL NOTES IS DEFINED
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.

<PAGE>

THE VALIANT FUND

U.S. Treasury Money Market Portfolio
U.S. Treasury Income Portfolio
General Money Market Portfolio
Tax-Exempt Money Market Portfolio

Class A, Class B, Class C and Class D Shares

STATEMENT OF ADDITIONAL INFORMATION

DECEMBER 30, 1996

This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the current Prospectuses for The Valiant Fund: U.S.
Treasury Money Market Portfolio, U.S. Treasury Income Portfolio, General Money
Market Portfolio and Tax-Exempt Money Market Portfolio (dated December 30,
1996). Please retain this SAI for future reference. To obtain additional
copies of this SAI or of the Prospectuses, please call Integrity Investments,
Inc. (the "Distributor") at 1-800-828-2176.

1
<PAGE>

TABLE OF CONTENTS PAGE

Investment Policies and Limitations. . . . . . . . . .3
Portfolio Transactions . . . . . . . . . . . . . . . 13
Valuation of Portfolio Securities. . . . . . . . . . 14
Performance. . . . . . . . . . . . . . . . . . . . . 15
Additional Purchase and Redemption Information . . . 17
Dividends, Capital Gains Distributions and Taxes . . 17
Trustees and Officers. . . . . . . . . . . . . . . . 18
Investment Advisory Agreements . . . . . . . . . . . 20
Administration Agreement and Other Contracts . . . . 20
Description of the Trust . . . . . . . . . . . . . . 22

INVESTMENT ADVISER
Integrity Management & Research, Inc. (the "Manager")

SUB-ADVISER
David L. Babson & Co. Inc. (the "Sub-Adviser")

DISTRIBUTOR
Integrity Investments, Inc. (the "Distributor")

ADMINISTRATOR/CUSTODIAN/TRANSFER AGENT
State Street Bank and Trust Company (the "Administrator," "Custodian" and
"Transfer Agent")

2
<PAGE>

INVESTMENT POLICIES AND LIMITATIONS

The following policies and limitations supplement those set forth in the
Prospectuses. Unless otherwise noted, whenever an investment policy or
limitation states a maximum percentage of a Portfolio's assets that may be
invested in any security or other assets, or sets forth a policy regarding
quality standards, such standard or percentage limitation will be determined
immediately after and as a result of the Portfolio's acquisition of such
security or other asset. Any later increase or decrease resulting from a change
in values, net assets or other circumstances, will not be considered when
determining whether the investment complies with the Portfolio's investment
policies and limitations.

Fundamental policies and investment limitations may not be changed with respect
to any Portfolio without approval by a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940 (the "1940 Act"))
of that Portfolio. The investment policies and limitations described in this
Statement of Additional Information are not fundamental and may be changed
without shareholder approval, except for the investment limitations specifically
identified as fundamental below.

U.S. TREASURY MONEY MARKET PORTFOLIO

THE FOLLOWING ARE THE U.S. TREASURY MONEY MARKET PORTFOLIO'S FUNDAMENTAL
LIMITATIONS. THE PORTFOLIO MAY NOT:

(1) with respect to 75% of the Portfolio's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Portfolio's total assets would be invested in the securities of that
issuer; or (b) the Portfolio would hold more than 10% of the outstanding voting
securities of that issuer;

(2) issue senior securities, except as permitted under the 1940 Act;

(3) borrow money, except that the Portfolio may borrow money for temporary or
emergency purposes (not for leveraging or investment) provided that the amount
does not exceed 33% of the Portfolio's total assets (including the amount
borrowed) less liabilities (other than borrowings). Any borrowings that come to
exceed this amount will be reduced within three days (not including Sundays and
holidays) to the extent necessary to comply with this 33% limitation;

(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the Securities
Act of 1933, as amended ("1933 Act") in the disposition of restricted
securities;

(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities)
if, as a result, more than 25% of the Portfolio's total assets would be invested
in the securities of companies whose principal business activities are in the
same industry;

(6) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);

(7) purchase or sell physical commodities (unless acquired as a result of
ownership of securities or other instruments) or commodity contracts, including
futures contracts;

3
<PAGE>

(8) lend any security or make any other loan if, as a result, more than 10% of
its total assets would be lent to other parties, but this limit does not apply
to purchases of debt securities or to repurchase agreements; or

(9) purchase the securities of other investment companies, except in connection
with a merger, consolidation, reorganization or acquisition of assets or in
accordance with the 1940 Act.

THE FOLLOWING LIMITATIONS OF THE U.S. TREASURY MONEY MARKET PORTFOLIO ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend during the coming year to purchase
the voting securities of any issuer.

(ii) The Portfolio does not currently intend during the coming year to sell
securities short, unless it owns or has the right, without payment of additional
consideration, to obtain securities equivalent in kind and amount to the
securities sold short.

(iii) The Portfolio does not currently intend during the coming year to purchase
securities on margin, except that the Portfolio may obtain such short-term
credits as are necessary for the clearance of transactions.

(iv) The Portfolio may borrow money only from a bank. The Portfolio will not
purchase any security while borrowings representing more than 5% of its total
assets are outstanding.

(v) The Portfolio does not currently intend during the coming year to purchase
any security or enter into a repurchase agreement if, as a result, more than 10%
of its net assets would be invested in repurchase agreements not entitling the
holder to payment of principal and interest within seven days and in securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market.

(vi) The Portfolio does not currently intend during the coming year to make
loans, but this limit does not apply to purchases of debt securities or to
repurchase agreements.

(vii) The Portfolio does not currently intend during the coming year to invest
in oil, gas, or other mineral exploration or development programs or leases.

(viii) The Portfolio does not currently intend during the coming year to
purchase the securities of any issuer if those officers and Trustees of the
Trust and those officers and directors of the Manager or the Sub-Adviser who
individually own more than 1/2 of 1% of the securities of such issuer together
own more than 5% of such issuer's securities.

4
<PAGE>

U.S. TREASURY INCOME PORTFOLIO

THE FOLLOWING ARE THE U.S. TREASURY INCOME PORTFOLIO'S FUNDAMENTAL LIMITATIONS.
THE PORTFOLIO MAY NOT:

(2) issue senior securities, except as permitted under the 1940 Act;

(3) borrow money, except that the Portfolio may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements for any purpose; provided that (i) and (ii) in
combination do not exceed 33% of the Portfolio's total assets (including the
amount borrowed) less liabilities (other than borrowings). Any borrowings that
come to exceed this amount will be reduced within three days (not including
Sundays and holidays) to the extent necessary to comply with this 33%
limitation;

(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the 1933 Act in
the disposition of restricted securities;

(6) purchase or sell real estate, unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);

(7) purchase or sell physical commodities (unless acquired as a result of
ownership of securities or other instruments) or commodity contracts, including
futures contracts;

(9) purchase the securities of other investment companies except in connection
with a merger, consolidation, reorganization or acquisition of assets or in
accordance with the 1940 Act.

THE FOLLOWING LIMITATIONS OF THE U.S. TREASURY INCOME PORTFOLIO ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend during the coming year to purchase
the voting securities of any issuer.

5
<PAGE>

(iv) The Portfolio may borrow money only (a) from a bank or (b) by engaging in
reverse repurchase agreements with any party (reverse repurchase agreements are
treated as borrowings for purposes of fundamental investment limitation (3)).
The Portfolio will not purchase any security while borrowings representing more
than 5% of its total assets are outstanding.

(vi) The Portfolio does not currently intend during the coming year to make
loans, but this limit does not apply to purchases of debt securities or to
repurchase agreements.

(vii) The Portfolio does not currently intend during the coming year to invest
in oil, gas, or other mineral exploration or development programs or leases.

Notwithstanding paragraph (3) and paragraphs (iv) through (vi) above, as a
matter of nonfundamental policy, the Portfolio will not engage in repurchase
agreement or reverse repurchase agreement transactions.

GENERAL MONEY MARKET PORTFOLIO

THE FOLLOWING ARE THE GENERAL MONEY MARKET PORTFOLIO'S FUNDAMENTAL LIMITATIONS.
THE PORTFOLIO MAY NOT:

(2) issue senior securities, except as permitted under the 1940 Act;

6
<PAGE>

(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the 1933 Act in
the disposition of restricted securities;

(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities,
or by domestic issuers which are banks, bank holding companies or similar
banking institutions) if, as a result, more than 25% of the Portfolio's total
assets would be invested in the securities of companies whose principal business
activities are in the same industry;

(7) purchase or sell physical commodities (unless acquired as a result of
ownership of securities or other instruments) or commodity contracts, including
futures contracts;

(9) purchase the securities of other investment companies except in connection
with a merger, consolidation, reorganization or acquisition of assets or in
accordance with the 1940 Act.

As a result of Rule 2a-7 promulgated under the 1940 Act (the "Rule"), the entire
portfolio (except with respect to U.S. Government securities) of the General
Money Market Portfolio is subject to the 5% limitation contained in investment
limitation (1) above. However, in accordance with the Rule, the General Money
Market Portfolio will be able to invest more than 5% (but no more than 25%) of
its total assets in the securities of a single issuer for a period of up to
three business days after the purchase thereof, provided that the Portfolio may
not hold more than one such investment at any one time. The Portfolio operates
in accordance with a non-fundamental operating policy which complies with the
Rule. Investment limitation (1) above would give the Portfolio the ability to
invest, with respect to 25% of the Portfolio's assets, more than 5% of its
assets in any one issuer in the event that the Rule were to be amended in the
future.

THE FOLLOWING LIMITATIONS OF THE GENERAL MONEY MARKET PORTFOLIO ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend during the coming year to purchase
the voting securities of any issuer.

7
<PAGE>

(vi) The Portfolio does not currently intend during the coming year to make
loans, but this limit does not apply to purchases of debt securities or to
repurchase agreements.

(vii) The Portfolio does not currently intend during the coming year to invest
in oil, gas, or other mineral exploration or development programs or leases.

TAX-EXEMPT MONEY MARKET PORTFOLIO

THE FOLLOWING ARE THE TAX-EXEMPT MONEY MARKET PORTFOLIO'S FUNDAMENTAL
LIMITATIONS. THE PORTFOLIO MAY NOT:

(1) with respect to 75% of the Portfolio's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S. Government
or any of its agencies or instrumentalities) if, as a result, (a) more than 5%
of the Portfolio's total assets would be invested in the securities of that
issuer, or (b) the Portfolio would hold more than 10% of the outstanding voting
securities of that issuer;

(2) issue senior securities, except as permitted under the 1940 Act;

(3) borrow money, except that the Portfolio may (i) borrow money for temporary
or emergency purposes (not for leveraging or investment) and (ii) engage in
reverse repurchase agreements; provided that (i) and (ii) in combination do not
exceed 33 % of the Portfolio's total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to exceed this
amount will be reduced within three days (not including Sundays and holidays) to
the extent necessary to comply with this 33 % limitation;

(4) underwrite securities issued by others, except to the extent that the
Portfolio may be considered an underwriter within the meaning of the 1933 Act in
the disposition of restricted securities;

(5) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumentalities,
or tax-exempt obligations issued or guaranteed by a U.S. territory or possession
or a state or local government, or a political subdivision of any of the
foregoing) if, as a result,

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<PAGE>

more than 25% of the Portfolio's total assets would be invested in securities of
companies whose principal business activities are in the same industry;

(6) buy or sell real estate, unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Portfolio from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business);

(7) purchase or sell physical commodities (unless acquired as a result of
ownership of securities or other instruments) or commodity contracts, including
futures contracts;

(9) purchase the securities of other investment companies except in connection
with a merger, consolidation, reorganization or acquisition of assets or in
accordance with the 1940 Act.

THE FOLLOWING LIMITATIONS OF THE TAX-EXEMPT MONEY MARKET PORTFOLIO ARE NOT
FUNDAMENTAL AND MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL.

(i) The Portfolio does not currently intend during the coming year to purchase
the voting securities of any issuer.

(vi) The Portfolio does not currently intend during the coming year to make
loans, but this limit does not apply to purchases of debt securities or to
repurchase agreements.

(vii) The Portfolio does not currently intend during the coming year to invest
in oil, gas, or other mineral exploration or development programs or leases.

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<PAGE>

own more than 1/2 of 1% of the securities of such issuer together own more than
5% of such issuer's securities.

INVESTMENT POLICIES OF THE PORTFOLIOS

DELAYED DELIVERY TRANSACTIONS. Each Portfolio may buy and sell securities on a
delayed delivery or when-issued basis. These transactions involve a commitment
by each Portfolio to purchase or sell specific securities at a predetermined
price and/or yield, with payment and delivery taking place after the customary
settlement period for that type of security (which may be more than seven days
in the future). Typically, no interest accrues to the purchaser until the
security is delivered.

When purchasing securities on a delayed delivery basis, each Portfolio assumes
the rights and risks of ownership, including the risk of price and yield
fluctuations. Because each Portfolio is not required to pay for securities
until the delivery date, these risks are in addition to the risks associated
with the Portfolios' other investments. If each Portfolio remains substantially
fully invested at a time when delayed delivery purchases are outstanding, the
delayed delivery purchases may result in a form of leverage. If the other party
to a delayed delivery transaction fails to deliver or pay for the securities,
each Portfolio could miss a favorable price or yield opportunity, or could
suffer a loss. When delayed delivery purchases are outstanding, each Portfolio
will set aside cash or appropriate liquid assets in a segregated custodial
account to cover its purchase obligations. Each Portfolio may renegotiate
delayed delivery transactions after they are entered into, and may sell
underlying securities before they are delivered, which may result in capital
gains or losses.

VARIABLE AND FLOATING RATE DEMAND OBLIGATIONS are obligations that bear variable
or floating interest rates and carry rights that permit holders to demand
payment of the unpaid principal balance plus accrued interest from the issuers
or certain financial intermediaries. Floating rate securities have interest
rates that change whenever there is a change in a designated base rate while
variable rate instruments provide for a specified periodic adjustment in the
interest rate. These formulas are designed to result in a market value for such
obligations that approximates their par value. A demand instrument with a
conditional demand feature must have received both a short-term and a long-term
high quality rating, or, if unrated, have been determined to be of comparable
quality, and a demand instrument with an unconditional demand feature may be
acquired solely in reliance upon a short-term high quality rating or, if
unrated, upon a finding of comparable short-term quality, pursuant to procedures
adopted by the Trustees.

A variable rate instrument that matures in 397 days or less may be deemed to
have a maturity equal to the period remaining until the next readjustment of the
interest rate. A variable rate instrument that matures in greater than 397 days
but that is subject to a demand feature that is 397 days or less may be deemed
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. A floating rate instrument that is
subject to a demand feature may be deemed to have a maturity equal to the period
remaining until the principal amount may be recovered through demand. Each
Portfolio may purchase a demand instrument with a remaining final maturity in
excess of 397 days only if the demand feature can be exercised on no more than
30 days' notice (a) at any time or (b) at specific intervals not exceeding 397
days.

STANDBY COMMITMENTS are puts that entitle holders to same-day settlement at an
exercise price equal to the amortized cost of the underlying security plus
accrued interest, if any, at the time of exercise. The Tax-Exempt Money Market
Portfolio may acquire standby commitments to enhance the liquidity of portfolio
securities, but only when the issuers of the commitments present minimal risk of
default.

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<PAGE>

Ordinarily, the Tax-Exempt Money Market Portfolio will not transfer a standby
commitment to a third party, although it could sell the underlying Municipal
Security to a third party at any time. Standby commitments will not affect the
dollar-weighted average maturity of the Portfolio, or the valuation of the
securities underlying the commitments. The Portfolio may purchase standby
commitments separate from, or in conjunction with, the purchase of securities
subject to such commitments, in which case, the Portfolio would pay a higher
price for the securities acquired, thus reducing their yield to maturity.

Standby commitments are subject to certain risks, including the ability of
issuers to pay for securities at the time the commitments are exercised. The
fact that standby commitments are not marketable by the Portfolio, and that the
maturities of the underlying securities may be different from those of the
commitments, also present potential risks.

MUNICIPAL LEASE OBLIGATIONS. The Tax-Exempt Money Market Portfolio may invest a
portion of its assets in municipal leases and participation interests therein.
A participation interest gives the Portfolio a specified, undivided interest in
the obligation in proportion to its purchased interest in the total amount of
the obligation. These obligations, which may take the form of a lease, an
installment purchase, or a conditional sales contract, are issued by state and
local governments and authorities to acquire land and a wide variety of
equipment and facilities. Generally, the Portfolio will not hold such
obligations directly as a lessor of the property, but will purchase a
participation interest in a municipal obligation. Such participation interests
may be purchased from a municipality or from a bank or other third party.

Municipal leases frequently have risks distinct from those associated with
general obligation or revenue bonds. Leases, installment purchase, or
conditional sale contracts (which normally provide for title to the leased asset
to pass to the governmental issuer) have evolved as a means for governmental
issuers to acquire property and equipment without meeting their constitutional
and statutory requirements for the issuance of debt. Many leases and contracts
include "non-appropriation clauses" providing that the governmental issuer has
no obligation to make future payments under the lease or contract unless money
is appropriated for such purpose by the appropriate legislative body on a yearly
or other periodic basis. Non-appropriation clauses free the issuer from debt
issuance limitations.

In determining the liquidity of a municipal lease obligation, the Sub-Adviser
will differentiate between simple or direct municipal leases and municipal
lease-backed securities, the latter of which may take the form of a lease-backed
revenue bond, a tax-exempt asset-backed security or any other investment
structure using a municipal lease-purchase agreement as its base. While the
former may present liquidity issues, the latter are based on a well-established
method of securing payment of a municipal lease obligation.

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<PAGE>

MUNICIPAL SECURITIES include general obligation securities, which are backed by
the full taxing power of a municipality, or revenue securities, which are backed
by revenues of a project or facility. Industrial development bonds are a type
of revenue bond backed by the credit and security of a private issuer and may
involve greater risk. Bond anticipation notes normally provide interim
financing in advance of an issue of bonds or notes, the proceeds of which are
used to repay anticipation notes. Tax and revenue anticipation notes are issued
by municipalities in expectation of future tax or other revenues, and are
payable from those specific taxes or revenues. Tax-exempt commercial paper is
issued by municipalities to help finance short-term capital or operating needs.

TAX-EXEMPT MONEY MARKET PORTFOLIO FEDERALLY TAXABLE OBLIGATIONS. The Tax-Exempt
Money Market Portfolio does not intend to invest in securities whose interest is
federally taxable; however, from time to time, the Portfolio may invest a
portion of its assets on a temporary defensive basis in fixed-income obligations
whose interest is subject to federal income tax.

Should the Portfolio invest in taxable obligations, it would purchase securities
which in the judgment of the Sub-Adviser are of high quality. These would
include obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, obligations of domestic banks and repurchase agreements. The
Portfolio will purchase taxable obligations only if they meet its quality
requirements as set forth in the Prospectuses.

Proposals are introduced before Congress from time to time to restrict or
eliminate the federal income tax exemption for interest on Municipal Securities.
If such proposals were enacted, the availability of Municipal Securities and the
value of the Portfolio's holdings would be affected and the Trustees would
reevaluate the Tax-Exempt Money Market Portfolio's investment objective and
policies.

The Tax-Exempt Money Market Portfolio anticipates being as fully invested as
practicable in Municipal Securities. However, as a result of maturities of
portfolio securities, or sales of the Portfolio's shares, or in order to meet
redemption requests, there may be occasions when the Portfolio may hold cash
that is not earning income.

REPURCHASE AGREEMENTS are transactions in which a Portfolio purchases a security
and simultaneously commits to resell that security at an agreed upon price and
date within a number of days (usually not more than seven) from the date of
purchase.

All Portfolios, except the U.S. Treasury Income Portfolio, may enter into a
repurchase agreement with respect to any security in which it is authorized to
invest even though the underlying security matures in more than one year. The
resale price reflects the purchase price plus an agreed upon market rate of
interest which is unrelated to the coupon rate or maturity of the purchased
security. A repurchase agreement involves the obligation of the seller to pay
the agreed upon price. This obligation is in effect secured by the underlying
security having a value at least equal to the amount of the agreed upon resale
price and marked to market daily. A Portfolio will limit repurchase agreements
to those with parties whose creditworthiness has been reviewed and found
satisfactory by the Sub-Adviser.

REVERSE REPURCHASE AGREEMENTS permit each Portfolio, other than the U.S.
Treasury Money Market Portfolio and the U.S. Treasury Income Portfolio, to earn
additional income by selling securities to banks and primary dealers while
agreeing to repurchase them at an agreed upon time and price. Reverse
repurchase agreements involve the sale of securities held by a Portfolio
pursuant to an agreement to repurchase the securities at an agreed-upon price,
date and interest payment. A Portfolio may enter into reverse repurchase
agreements when it is able to purchase other securities which will produce more
income

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<PAGE>

than the cost of the agreement, or for liquidity purposes. When effecting
reverse repurchase transactions, securities which are a permitted investment for
the Portfolio (i.e., obligations of domestic and foreign banks or thrift
organizations, corporate debt obligations, including commercial paper, notes and
bonds with remaining maturities of one year or less and U.S. Government
Obligations with respect to the General Money Market Portfolio and the Tax-
Exempt Money Market Portfolio; and Municipal Securities with respect to the Tax-
Exempt Money Market Portfolio) and are of a dollar amount equal in value to the
securities subject to the agreement will be maintained in a segregated account
with the Portfolio's custodian. Reverse repurchase agreements are considered to
be borrowings and would therefore be subject to a Portfolio's fundamental
borrowing limitation (3). The Tax-Exempt Money Market Portfolio will only
engage in reverse repurchase agreements for temporary or emergency purposes and
not for leverage or investment.

In event of the bankruptcy of the other party to a reverse repurchase agreement
the Portfolio could experience delays in recovering securities. To the extent
that the value of securities may have decreased in the meantime, a Portfolio
could experience a loss. The creditworthiness of the other party to a reverse
repurchase transaction must be reviewed and found satisfactory by the Sub-
Adviser.

RESTRICTED SECURITIES. The General Money Market Portfolio and Tax-Exempt Money
Market Portfolio may purchase restricted securities that are not registered for
sale to the general public, but which provide the Portfolio with the right to
receive payment of principal and interest without penalty on demand (demand
feature) or can be resold to institutional investors. Institutional trading in
restricted securities is relatively new, and the liquidity of the Portfolio's
investments could be impaired if trading does not develop or declines. Provided
that the security has a demand feature or a dealer or institutional trading
market exists, these restricted securities are not treated as illiquid
securities.

PORTFOLIO TRANSACTIONS

The Sub-Adviser makes decisions to buy and sell securities for each Portfolio,
selects broker-dealers and negotiates commission rates. The selection of
broker-dealers is generally made based upon the price, quality of execution
services and/or research provided. Portfolio securities are normally purchased
directly from the issuer or from a market maker for the securities. Since
purchases and sales of portfolio securities by the Portfolios are usually
principal transactions, the Portfolios incur little or no brokerage commissions.
The purchase price paid to dealers serving as market makers may include a spread
between the bid and asked prices. The Portfolios may also purchase securities
from underwriters at prices which include a commission paid by the issuer to the
underwriter.

Each Portfolio requires that investments mature (or are deemed to mature) within
397 days or less. The amortized cost method of valuing portfolio securities
requires that each Portfolio maintain an average weighted portfolio maturity of
90 days or less. Both policies may result in relatively high portfolio
turnover, but since brokerage commissions are not normally paid on money market
instruments, the high rate of portfolio turnover is not expected to have a
material effect on the Portfolios' net income or expenses. Each Portfolio may
seek to profit from short-term trading, and may not always hold portfolio
securities to maturity.

The Sub-Adviser's primary consideration in effecting a security transaction is
to obtain the best net price and the most favorable execution of the order. To
the extent that the executions and prices offered by more than one dealer are
comparable, the Sub-Adviser may, at its discretion, effect transactions with
dealers that furnish statistical, research or other information or services
which are deemed by the Sub-Adviser to be beneficial to the Portfolios'
investment program. Certain research services furnished by dealers may be

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<PAGE>

useful to the Sub-Adviser's clients other than the Portfolios. Similarly, any
research services received by the Sub-Adviser through placement of portfolio
transactions of other clients may be of value to the Sub-Adviser in fulfilling
its obligations to the Portfolios. The Sub-Adviser is of the opinion that the
material received is beneficial in supplementing its research and analysis, and
therefore, may benefit the Portfolios by improving the quality of its investment
advice. The advisory fee paid by the Portfolios is not reduced because of the
receipt of such services.

The Sub-Adviser and its affiliates may manage other investment accounts, some of
which may have objectives similar to that of the Portfolios. It is possible
that at times, identical securities will be acceptable for one or more of such
investment accounts. However, the position of each account in the securities of
the same issue may vary and the length of time that each account may choose to
hold its investment in the securities of the same issue may likewise vary.
Also, the timing and amount of purchase by each account may be determined by its
cash position. If the purchase or sale of securities consistent with the
investment policies of each Portfolio and one or more of these accounts is
considered at or about the same time, transactions in such securities will be
allocated in good faith among the Portfolios and such accounts in a manner
deemed equitable by the Sub-Adviser. The Sub-Adviser may combine such
transactions, in accordance with applicable laws and regulations, in order to
obtain the best net price and most favorable execution. The allocation and
combination of simultaneous securities purchases on behalf of each Portfolio
would be made in the same way that such purchases are allocated among or
combined with those of other such investment accounts. Simultaneous
transactions could adversely affect the ability of each Portfolio to obtain or
dispose of the full amount of security which it seeks to purchase or sell.

VALUATION OF PORTFOLIO SECURITIES

Each Portfolio values its investments on the basis of amortized cost, which
involves valuing an instrument at its cost and thereafter assuming a constant
accretion to maturity of any discount or amortization to maturity of any
premium. The amortized cost value of an instrument may be higher or lower than
the price a Portfolio would receive if it sold the instrument. During periods
of declining interest rates, each Portfolio's yields based on amortized cost may
tend to be higher than a yield based on market prices and estimates of market
prices. A new shareholder in a Portfolio would then be able to obtain a
somewhat higher yield than would result from investment in a fund using solely
market quotations to determine its net asset value per share while existing
shareholders would receive less investment income. In a period of rising
interest rates, the converse would apply. The valuation of a Portfolio's
instruments based upon amortized cost and the maintenance of its net asset value
per share at $1.00 is permitted in accordance with Rule 2a-7 under the 1940 Act.
Each Portfolio must adhere to certain conditions under Rule 2a-7 which are
summarized in the Prospectuses.

The Trustees have established procedures designed to stabilize each Portfolio's
net asset value per share calculated on the basis of amortized cost. The
Trustees review each Portfolio's holdings, at such intervals as they may deem
appropriate, to determine whether net asset value per share calculated by using
available market quotations would deviate from $1.00. The Trustees have agreed
to take such corrective action as they may deem necessary and appropriate, if
any such deviation would result in material dilution or otherwise would be
unfair to shareholders. This may include selling 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 net
asset value per share by using available market quotations.

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<PAGE>

PERFORMANCE

From time to time, each Portfolio of the Trust advertises its yield and
effective yield for each class of shares in advertisements or in reports or
other communications with shareholders and others. Both yield figures are based
on historical earnings and are not intended to indicate future performance.

The standardized annualized seven-day yield for each Portfolio for a class of
shares is computed by: (1) determining the net change exclusive of capital
changes, in the value of a hypothetical pre-existing account in a Portfolio
having a balance of one share of the relevant class at the beginning of a seven-
day period, for which the yield is to be quoted, (2) dividing the net change in
account value by the value of the account at the beginning of the base period to
obtain the base period return, and (3) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of
the account in each Portfolio includes the value of additional shares purchased
with dividends from the original share and dividends declared on both the
original share and any such additional shares, and all fees that are charged by
a Portfolio to all shareholder accounts in proportion to the length of the base
period, other than nonrecurring account and sales charges. For any account fees
that vary with the size of the account, the amount of fees charged would be
computed with respect to the Portfolio's mean (or median) account size. The
capital changes to be excluded from the calculation of the net change in account
value are realized gains and losses from the sale of securities and unrealized
appreciation and depreciation. The yields for each Portfolio for the seven-day
period ended August 31, 1996 were:

Portfolio Yield
--------- -----

U.S. Treasury Money Market Portfolio - Class A 5.10%
U.S. Treasury Money Market Portfolio - Class B 4.85%
U.S. Treasury Money Market Portfolio- Class D 4.61%
General Money Market Portfolio - Class A 5.13%
General Money Market Portfolio - Class B 4.88%
Tax-Exempt Money Market Portfolio - Class A 3.28%

The effective compound yield quotation for each Portfolio and class is computed
by adding 1 to the unannualized base period return (calculated as described
above), raising the sum to a power equal to 365 divided by 7, and subtracting 1
from the result. The effective yields for each Portfolio for the seven-day
period ended August 31, 1996 were:

Portfolio Yield
--------- -----

U.S. Treasury Money Market Portfolio - Class A 5.23%
U.S. Treasury Money Market Portfolio - Class B 4.97%
U.S. Treasury Money Market Portfolio- Class D 4.71%
General Money Market Portfolio - Class A 5.26%
General Money Market Portfolio - Class B 5.00%
Tax-Exempt Money Market Portfolio - Class A 3.34%

In addition to the current yield, the Portfolios may quote yields in advertising
based on any historical seven day period.

Yield information may be useful in reviewing each Portfolio's performance and
for providing a basis for comparison with other investment alternatives. Each
Portfolio's yield will fluctuate, unlike investments which pay a fixed yield for
a stated period of time. Investors should give consideration to the quality and
maturity of portfolio securities of the respective investment companies when
comparing investments.

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<PAGE>

In addition, the Tax-Exempt Money Market Portfolio may calculate a "tax
equivalent yield" and "tax equivalent effective yield" for each class of shares.
The tax equivalent yield shows the taxable yield an investor would have to earn,
before taxes, to equal the class's tax-free yield. The tax equivalent yield for
the class is computed by dividing that portion of the class's yield which is
tax-exempt by one minus a stated income tax rate and adding the product to that
portion, if any, of the class's computed yield that is not tax-exempt. The tax
equivalent yield for the Tax-Exempt Money Market Portfolio Class A shares for
the seven days ended August 31, 1996 was 5.38%. The tax equivalent effective
yield for the class is computed by dividing that portion of the class's
effective yield which is tax-exempt by one minus a stated income tax rate and
adding the product to that portion, if any, of the class's computed effective
yield that is not tax-exempt. The tax equivalent effective yield for the Tax-
Exempt Money Market Portfolio Class A shares for the seven days ended August 31,
1996 was 5.48%. Tax equivalent and tax equivalent effective yields assume the
payment of federal income taxes at a rate of 39% or another applicable stated
rate. Of course, no assurance can be given that any of the classes of shares of
the Tax-Exempt Money Market Portfolio will achieve any specific tax-exempt
yield. While the Portfolio invests principally in obligations the interest from
which is exempt from federal income tax, other income received by the Portfolio
may be taxable.

From time to time, in advertisements or in reports to shareholders, the yields
of the Portfolios, as a measure of their performance, may be quoted and compared
to those of other mutual funds with similar investment objectives and to other
relevant indexes or to rankings prepared by independent services or other
financial or industry publications that monitor the performance of mutual funds.
The Portfolios may compare their performance or the performance of securities in
which they may invest to: IBC/Donoghue's Money Fund Average TM/Total
Institutions Only Average; Government Only Institutions Only; and Tax-Free
Institutions Only, which are average yields of various types of money market
funds that include the effect of compounding distributions. The Portfolios'
yield data may be reported in national financial publications including, but not
limited to, "Money Magazine", "Forbes", "Barron's", "The Wall Street Journal"
and "The New York Times", or in publications of a local or regional nature.

Each Portfolio may also compare its performance to other mutual funds,
especially to those with similar investment objectives. These comparisons may
be based on data published by IBC/Donoghue's Money Fund Report-Registered
Trademark- of Holliston, MA 01746, or by Lipper Analytical Services, Inc.
(Lipper, sometimes referred to as Lipper Analytical Services), an independent
service located in Summit, New Jersey that monitors the performance of mutual
funds. Each Portfolio may compare its performance to the yields or averages of
other money market securities as reported by the Federal Reserve Bulletin, by
TeleRate, a financial information network, or by Salomon Brothers Inc., a
broker-dealer firm; and other fixed-income investments such as Certificates of
Deposit (CDs). The principal value and interest rate of CDs and money market
securities are fixed at the time of purchase whereas each Portfolio's yield will
fluctuate. Unlike some CDs and certain other money market securities, money
market mutual funds, and the Portfolios in particular, are not insured by the
FDIC. Investors should give consideration to the quality and maturity of the
portfolio securities of the respective investment companies when comparing
investment alternatives. The Portfolios may reference the growth and variety of
money market mutual funds and the Manager's or Sub-Adviser's skill and
participation in the industry.

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ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

If the Trustees determine that existing conditions make cash payment
undesirable, redemption payments may be made in whole or in part in securities
or other property, valued for this purpose as they are valued in computing each
Portfolio's net asset value per share. Shareholders receiving securities or
other property on redemption may realize a gain or loss for tax purposes and
will incur any costs of sale, as well as the associated inconveniences.

The Trust is open for business and its net asset value per share is calculated
every day that both the Boston and New York Federal Reserve Banks and the New
York Stock Exchange (NYSE) are open. On any day when either the Boston or New
York Federal Reserve Bank or the NYSE closes early, the right is reserved to
advance the time on that day by which purchase and redemption orders must be
received. To the extent that the Portfolios' securities are traded in other
markets on days when the Boston and New York Federal Reserve Bank or the NYSE is
closed, the Portfolios' net asset value per share may be affected when investors
may not purchase or redeem shares.

DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAXES

DIVIDENDS. Dividends from the Trust will not normally qualify for the
dividends-received deduction available to corporations, since the Portfolios'
income is primarily derived from interest income and short-term capital gains.
Depending upon state law, a portion of each Portfolio's dividends attributable
to interest income derived from U.S. Government Obligations may be exempt from
state and local taxation. The Portfolios will provide information on the
portion of each Portfolio's dividends, if any, that qualifies for this
exemption.

Dividends derived from the Tax-Exempt Money Market Portfolio's tax-exempt income
are not subject to federal income tax, but must be reported to the IRS by
shareholders. Exempt-interest dividends are included in income for purposes of
computing the portion of social security and railroad retirement benefits that
may be subject to federal tax. If the Portfolio earns taxable income or capital
gains from its investments, these amounts will be designated as taxable
distributions. Dividends derived from taxable investment income and short-term
capital gains are taxable as ordinary income.

The Tax-Exempt Money Market Portfolio will send a tax statement showing the
amount of tax-exempt distributions for the previous calendar year by January
31st.

Each Portfolio's distributions are taxable when they are paid, except that
distributions declared in October, November or December and paid in January of
the following year are taxable as if paid on December 31st.

CAPITAL GAINS DISTRIBUTIONS. The Portfolios may distribute short-term capital
gains once a year or more often as necessary to maintain their net asset value
per share at $1.00 or to comply with distribution requirements under federal tax
law. The Portfolios do not anticipate earning long-term capital gains on
securities held.

TAX STATUS OF THE TRUST. Each Portfolio intends to continue to qualify as a
"regulated investment company" under the Internal Revenue Code of 1986, as
amended (the "Code"), so that each Portfolio will not be liable for federal
income or excise taxes on net investment income, net long-term or capital gains
to the extent that these are distributed to shareholders in accordance with
applicable provisions of the Code.

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TRUSTEES AND OFFICERS

The Trustees and executive officers of the Trust are listed below. Each Trustee
that is an "interested person" (as defined by the 1940 Act) by virtue of his
affiliation with the Trust, or the Manager or the Distributor, is indicated by
an asterisk (*).

NAME, ADDRESS AND AGE POSITION(S) HELD WITH REGISTRANT PRINCIPAL OCCUPATION DURING PAST FIVE YEARS

<S> <C> <C>
John S. Culbertson Trustee Retired. Trust Consultant with Fidelity
1995 Lake Marshall Drive Investments Institutional Services Co.
Gibsonia, PA 15044 from 1990 to 1993.
66

Rufus C. Cushman, Jr. Trustee Retired. Money Manager with Fidelity
10 Corn Point Road Management & Research Corp. from
Marblehead, MA 01945 1968 through 1994.
63

Richard F. Curcio* President, Trustee, Founded Integrity Investments, Inc.
1800 Second Street Chairman of the Board (a broker/dealer) and Integrity
Suite 757 of Trustees Management & Research, Inc.(an investment
Sarasota, FL 34236 adviser) in 1992, and is currently
49 President and Director of each. Senior
Vice President/Regional Manager for Fidelity
Institutional Services Company from
1987 to 1992. Associated with Fidelity
Distributors from 1979 to 1992.

H. Willis Day, Jr. Trustee Retired. Former Senior Vice President
35 Beach Avenue of Southeast Bank, FIA, N.A.
Kennebunk Beach, ME 04043
71

Roger F. Dumas Trustee Private investor since 1987.
151 Tremont Street
Boston, MA 02111
61

Kenneth J. Phelps* Trustee President, Principal and Director of Reliance
5545 Cross Gate Court, N.W. Trust Company, Atlanta, GA since 1992.
Atlanta, GA 30327 Chairman, Chief Executive Officer and
55 Director, C&S/Sovran Trust Company, Inc.
from 1987 to 1992.
</TABLE>

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<S> <C> <C>
Susan M. Beauregard Vice President, Operations Manager of Integrity Investments,
1800 Second Street Secretary and Treaurer Inc. since 1993. Account Officer of Fidelity
Suite 757 Investments from 1985 to 1993.
Sarasota, FL 33236
33

Robert Melley Vice President, Senior Vice President of Integrity Investments,
1800 Second Street Assistant Secretary and Inc. since April 1994. Senior Vice President
Suite 757 Assistant Treasurer of Fidelity Distributors, Inc. from
Sarasota, FL 33236 1981 to 1994.
58
</TABLE>

The Trust pays each Trustee who is not affiliated with the Manager or the Sub-
Adviser (the "Independent Trustees") an annual fee of $1,000 plus $1,000 for
each meeting attended and reimburses travel and other expenses incurred in
attending such meetings. The Trust's officers and Trustees who are affiliated
with the Manager or the Sub-Adviser are paid by the Manager. During the fiscal
year ended August 31, 1996, the Trust paid an aggregate of $20,887 to the
Independent Trustees. The following table shows compensation by Trustee for the
fiscal year ended August 31, 1996.

COMPENSATION TABLE

<TABLE>
<CAPTION>
AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL
NAME OF PERSON, COMPENSATION FROM BENEFITS ACCRUED AS BENEFITS UPON
POSITION THE TRUST PART OF FUND EXPENSES RETIREMENT

<S> <C> <C> <C>
John S. Culbertson
Trustee $6,637 None None

Rufus C. Cushman
Trustee $3,000 None None

Richard F. Curcio
President, Trustee,
Chairman of the
Board of Trustees None None None

H. Willis Day, Jr.
Trustee $5,000 None None

Roger F. Dumas
Trustee $5,000 None None

Kenneth J. Phelps**
Trustee $1,250 None None
</TABLE>

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

** During a portion of the fiscal year ended August 31, 1996, Mr. Phelps was
an Independent Trustee.

19
<PAGE>

As of December 13, 1996, the Trustees and officers of the Trust, as a group,
owned less than 1% of the outstanding shares of any class of any Portfolio of
the Trust except that the Trustees and officers of the Trust, as a group, may be
deemed to have beneficially owned 100% of the Class B shares of the Tax-Exempt
Money Market Portfolio, the Class B shares of the U.S. Treasury Income
Portfolio, the Class C and D shares of the General Money Market Portfolio and
Class C of the U.S. Treasury Money Market Portfolio.

INVESTMENT ADVISORY AGREEMENTS

Each Portfolio employs the Manager to furnish investment advisory and other
services to the Portfolio. Under the Management Agreement with each Portfolio,
the Manager is authorized to appoint one or more sub-advisers at the Manager's
expense. David L. Babson & Co. Inc. acts as Sub-Adviser and, subject to the
supervision of the Trustees and of the Manager, directs the investments of each
Portfolio in accordance with its investment objective, policies and limitations.

The Manager pays all the Portfolio expenses with the following exceptions: the
fees and expenses of the Trustees who are not "interested persons" of the Trust;
interest on borrowings; taxes; expenses incurred by Class B, Class C and Class D
shares pursuant to the Distribution and Shareholder Servicing Plans, if any; and
such extraordinary non-recurring expenses as may arise, including litigation to
which the Trust may be party, and any obligation it may have to indemnify its
officers and Trustees with respect to such litigation.

For managing its investment and business affairs, each Portfolio pays to the
Manager the fees set forth in the Prospectuses. The Manager pays the Sub-
Adviser the fee set forth in the Prospectuses.

For the fiscal year ended August 31, 1996, the U.S. Treasury Money Market
Portfolio, the U.S. Treasury Income Portfolio, the General Money Market
Portfolio and the Tax-Exempt Money Market Portfolio paid the Manager $385,690,
$8,578, $958,106 and $572,477, respectively. For the fiscal year ended August
31, 1995, the U.S. Treasury Money Market Portfolio, the U.S. Treasury Income
Portfolio, the General Money Market Portfolio and the Tax-Exempt Money Market
Portfolio paid the Manager $114,123, $14,278, $777,404 and $514,748,
respectively. For the fiscal year ended August 31, 1994, the U.S. Treasury
Money Market Portfolio, the U.S. Treasury Income Portfolio, the General Money
Market Portfolio and the Tax-Exempt Money Market Portfolio paid the Manager
$6,557, $4,977, $208,651and $331,255, respectively.

For the fiscal year ended August 31, 1996, the Sub-Adviser received $145,722,
$6,319, $363,469 and $217,873 for advisory services to the U.S. Treasury Money
Market Portfolio, the U.S. Treasury Income Portfolio, the General Money Market
Portfolio and the Tax-Exempt Money Market Portfolio, respectively. For the
fiscal year ended August 31, 1995, the Sub-Adviser received $47,388, $5,934,
$327,604 and $220,688 for advisory services to the U.S. Treasury Money Market
Portfolio, the U.S. Treasury Income Portfolio, the General Money Market
Portfolio and the Tax-Exempt Money Market Portfolio, respectively. For the
fiscal year ended August 31, 1994, the Sub-Adviser received $3,278, $2,489,
$104,325 and $165,627 for advisory services to the U.S. Treasury Money Market
Portfolio, the U.S. Treasury Income Portfolio, the General Money Market
Portfolio and the Tax-Exempt Money Market Portfolio, respectively

ADMINISTRATION AGREEMENT AND OTHER CONTRACTS

ADMINISTRATOR, CUSTODIAN, TRANSFER AGENT. State Street Bank and Trust Company,
225 Franklin Street, Boston, MA 02110 ("State Street", "Administrator",
"Custodian" or "Transfer Agent") is the administrator, custodian and transfer
agent for each Portfolio under administration, custodian and transfer agency
agreements with respect to each Portfolio.

20
<PAGE>

State Street assists in each Portfolio's administration and operation, including
providing facilities for maintaining each Portfolio's organization, supervising
relations with the custodians, transfer and pricing agents, accountants,
underwriters and other persons dealing with the Portfolio, maintaining (or
providing for the maintenance of) the Trust's records and the registration of
each Portfolio's shares under federal and state law, developing management and
shareholder services for the Portfolios and furnishing reports, evaluations and
analyses on a variety of subjects to the Trustees and calculating the net asset
value per share and dividends of each Portfolio.

State Street takes no part in determining the investment policies of the Trust
or in deciding which securities are purchased or sold by the Trust. The Trust,
however, may invest in obligations of State Street and may purchase or sell
securities from or to State Street.

DISTRIBUTOR. Integrity Investments, Inc. (the "Distributor"), located at 1800
Second Street, Suite 757, Sarasota, Florida 34236, sells shares of each
Portfolio as agent on behalf of the Trust at no additional cost to the Trust.

DISTRIBUTION AND SHAREHOLDER SERVICING PLANS. The Trustees of the Trust have
adopted a Distribution and Shareholder Servicing Plan for the Class A shares and
Class B shares, a Distribution and Shareholder Servicing Plan for the Class C
shares and a Distribution and Shareholder Servicing Plan for the Class D shares
(collectively, the "Plans") of each Portfolio of the Trust pursuant to Rule 12b-
1 (the "Rule") under the 1940 Act. The Rule provides in substance that a mutual
fund may not engage directly or indirectly in financing any activity that is
intended primarily to result in the sale of shares of the fund except pursuant
to a plan adopted by the fund under the Rule. The Trustees have adopted the
Plans to allow each Portfolio to incur certain expenses that might be considered
to constitute direct or indirect payment of distribution expenses. Under the
Plans, each Portfolio, subject to Trustee authorization, may pay the Distributor
a monthly fee to compensate it for expenses it bears and services it provides in
the distribution of shares and the provisions of shareholder support services.
The fees that may be paid by the respective classes of the Portfolios under the
Plans are set forth in the respective Prospectuses. For the fiscal year ended
August 31, 1996 the Class B shares of the U.S. Treasury Money Market Portfolio
and the General Money Market Portfolio paid distribution costs of $287,521 and
$23,561, respectively and the Class D shares of the U.S. Treasury Money Market
Portfolio paid distribution costs of $33,641. For the fiscal year ended August
31, 1995 the Class B shares of the U.S. Treasury Money Market Portfolio and the
General Money Market Portfolio paid distribution costs of $112,468 and $25,267,
respectively. For the fiscal year ended August 31, 1994 the Class B shares of
the U.S. Treasury Money Market Portfolio and the General Money Market Portfolio
paid distribution costs of $8,530 and $5,601, respectively. The Plans also
recognize that the Manager, the Sub-Adviser and the Distributor may each use its
fees and other resources to pay expenses associated with the promotion and
administration of activities primarily intended to result in the sale of shares.
Distribution-related services include, but are not limited to, the following:
advertising the availability of services and products; designing material to
send to customers and developing methods of making such materials accessible to
customers; providing information about the product needs of customers; providing
facilities to solicit sales and to answer questions from prospective and
existing investors about the Portfolios; receiving and answering correspondence
from prospective investors, including requests for sales literature,
prospectuses and statements of additional information; displaying and making
sales literature and prospectuses available on the service organization's
premises; acting as liaison between shareholders and the Portfolios, including
obtaining information from the Portfolios and providing performance and other
information about the Portfolios; and providing additional personal services
and/or shareholder account maintenance services or additional distribution-
related services.

21
<PAGE>

The Plans have been approved by the Trustees. As required by the Rule, the
Trustees considered all pertinent factors relating to the implementation of the
Plans prior to their approval, and have determined that there is a reasonable
likelihood that the Plans will benefit Class A, Class B, Class C and Class D
shares of each Portfolio and its shareholders. To the extent that the Plans
give the Manager and Distributor greater flexibility in connection with the
distribution of shares of the Portfolios, additional sales of the Portfolios'
shares may result.

The Glass-Steagall Act generally prohibits federally and state chartered or
supervised banks from engaging in the business of underwriting, selling or
distributing securities. Although the scope of this prohibition under the
Glass-Steagall Act has not been fully defined, in the opinion of the Trust and
the Manager, it should not prohibit banks from being paid for investment
advisory, shareholder servicing, administrative services and recordkeeping, nor
should it prevent the Manager or the Portfolios from compensating third parties
for performing such functions. If, because of changes in law or regulation, or
because of new interpretations of existing law, a bank or the Trust were
prevented from continuing these arrangements, it is expected that the Trustees
would make other arrangements for these services and that shareholders would not
suffer adverse financial consequences. In addition, state securities laws on
this issue may differ from the interpretations of federal law expressed herein,
and banks and other financial institutions may be required to register as
dealers pursuant to state law.

DESCRIPTION OF THE TRUST

TRUST ORGANIZATION. The U.S. Treasury Money Market Portfolio, U.S. Treasury
Income Portfolio, General Money Market Portfolio and Tax-Exempt Money Market
Portfolio are portfolios of The Valiant Fund, an open-end management investment
company organized on January 29, 1993. There are presently four Portfolios of
the Trust, each of which offers Class A, Class B, Class C and Class D shares.
The Declaration of Trust permits the Trustees to create additional portfolios
and classes.

The assets of the Trust received for the issue or sale of shares of each
Portfolio and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are especially allocated to such Portfolio, and
constitute the underlying assets of such Portfolio. The underlying assets of
each Portfolio are segregated on the books of account, and are to be charged
with the liabilities with respect to such Portfolio and with a share of the
general expenses of the Trust. Expenses with respect to the Trust are to be
allocated in proportion to the asset value of the respective Portfolios except
where allocations of direct expense or class specific expense can otherwise be
fairly made. The officers of the Trust, subject to the general supervision of
the Trustees, have the power to determine which expenses are allocable to a
given Portfolio or class thereof, or which are general or allocable to all of
the Portfolios. In the event of the dissolution or liquidation of the Trust,
shareholders of each class of each Portfolio are entitled to receive the
underlying assets of such class of such Portfolio available for distribution.

SHAREHOLDER AND TRUSTEE LIABILITY. The Trust is an entity of the type commonly
known as a "Massachusetts business trust." Under Massachusetts law,
shareholders of such trust may, under certain circumstances, be held personally
liable for the obligations of the Trust. The Declaration of Trust provides that
the Trust shall not have any claim against shareholders except for the payment
of the purchase price of shares and requires that each agreement, obligation or
instrument entered into or executed by the Trust or the Trustees shall include a
provision limiting the obligations created thereby to the Trust and its assets.
The Declaration of Trust provides for indemnification out of each Portfolio's
property of any shareholders held personally liable for the obligations of the
Portfolio. The Declaration of Trust also provides that each Portfolio shall,
upon request, assume the defense of any claim made against any shareholder for
any act or obligation of the Portfolio and satisfy any judgment thereon. Thus,
the risk of a shareholder incurring

22
<PAGE>

financial loss on account of shareholder liability is limited to circumstances
in which the Portfolio itself would be unable to meet its obligations. The
Trustees believe that, in view of the above, the risk of personal liability to
shareholders is remote.

The Declaration of Trust further provides that the Trustees, if they have
exercised reasonable care, will not be liable for any neglect or wrongdoing, but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.

VOTING RIGHTS. Each Portfolio's capital consists of shares of beneficial
interest. The shares have no preemptive or conversion or exchange rights; the
voting and dividend rights, and the right of redemption are described in the
Prospectuses. Shares are fully paid and nonassessable, except as set forth
under the heading "Shareholder and Trustee Liability" above. Holders of shares
representing 10% or more of the votes represented by all outstanding shares of
the Trust or a Portfolio may, as set forth in the By-Laws, call meetings of the
Trust or a Portfolio or Class for any purpose related to the Trust or a
Portfolio, as the case may be, including, in the case of a meeting of the entire
Trust, the purpose of voting on removal of one or more Trustees. The Trust or
any Portfolio may be terminated upon the sale of its assets to another open-end
management investment company, if approved by vote of the holders of shares
representing a majority of the votes represented by all outstanding shares of
the Trust or the Portfolio. If not so terminated, the Trust and the Portfolios
will continue indefinitely.

PRINCIPAL HOLDERS OF SECURITIES. As of December 13, 1996, to the knowledge of
the Trust's Management, the following persons owned of record or beneficially 5%
or more of the outstanding shares of any class of a Portfolio.

General Money Market Portfolio-Class A: First Union National Bank, 401 South
Tryon Street, Charlotte, NC 28288, 81.25%; State Street Bank and Trust Company,
225 Franklin Street, Boston, MA 02110, 8.40%.

General Money Market Portfolio-Class B: Reliance Trust Company, 3295 Northcrest
Road, Northwest, Atlanta, GA 30340, 100%.

U.S. Treasury Money Market Portfolio-Class A: Citizens Trust Company, 870
Westminister Street, Providence, RI 02903, 12.70%; Fleet Trust Company, One East
Avenue, Rochester, NY 14638, 13.19%; Reliance Trust Company, P.O. Box 48449,
Atlanta, GA 30362, 72.19%.

U.S. Treasury Money Market-Class B: Sun Bank National Association, P.O. Box
105504, Atlanta, GA 30348, 97.91%.

U.S. Treasury Money Market Portfolio-Class D: First Union National Bank, 401
South Tryon Street, Charlotte, NC 28288, 76.54%; Reliance Trust Company, P.O.
Box 48449, Atlanta, GA 30362, 23.46%.

Tax-Exempt Money Market Portfolio-Class A: First Union National Bank, 401 South
Tryon Street, Charlotte, NC 28288, 99.8%.

U.S. Treasury Income Portfolio-Class A: First Union National Bank, 401 South
Tryon Street, Charlotte, NC 28288, 99.53%.

23
<PAGE>

Integrity Investments, Inc., 1800 Second Street, Sarasota, FL 34236, owned 100%
of : the Class C and Class D shares of the General Money Market Portfolio, the
Class B shares of the Tax-Exempt Money Market Portfolio, the Class C shares of
the U.S. Treasury Money Market Portfolio and the Class B shares of the U.S.
Treasury Income Portfolio.

INDEPENDENT ACCOUNTANTS. Price Waterhouse LLP, 160 Federal Street, Boston,
Massachusetts 02110, serves as the Trust's independent accountants providing
services including (1) audit of annual financial statements, (2) assistance and
consultation in connection with SEC filings, and (3) review of the annual
federal income tax returns filed on behalf of the Portfolios.

FINANCIAL STATEMENTS. The Trust's audited financial statements for the fiscal
year ended August 31, 1996, including the notes thereto and the report of Price
Waterhouse LLP thereon are incorporated herein by reference from the Trust's
1996 Annual Report to Shareholders. A copy of the 1996 Annual Report to
Shareholders accompanies the delivery of this SAI.

24
<PAGE>

PART C

THE VALIANT FUND

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS

A. FINANCIAL STATEMENTS INCLUDED IN THIS POST-EFFECTIVE AMENDMENT

Audited financial statements for the period ended
August 31, 1996 as follows:

Portfolio of Investments
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants

B. EXHIBITS

1 Agreement and Declaration of Trust, dated January 29,
1993, as amended was previously filed in Pre-Effective
Amendment No. 2 on July 29, 1993 and is incorporated
herein by reference.

2 Bylaws, dated January 29, 1993, as amended were previously
filed in Post-Effective Amendment No. 1 on December 29,
1993 and are incorporated herein by reference.

3 None

4 None

5(a) Form of Notice with respect to the Management Agreement
was previously filed in Post-Effective Amendment No. 2 on
March 12, 1993 and is incorporated herein by reference.

5(b) Management Agreement between Integrity Management &
Research, Inc. ("Manager") and the Registrant dated
July 29, 1993 was previously filed in Post-Effective
Amendment No. 1 on December 29, 1993 and is incorporated
herein by reference.

5(c) Form of Notice with respect to the Sub-Adviser Agreement
was previously filed in Post-Effective Amendment No. 2 on
March 12, 1993 and is incorporated herein by reference.

<PAGE>

5(d) Form of Sub-Adviser Agreement between the Manager and
David L. Babson & Co. Inc. dated as of June 30, 1995 was
previously filed in Post-Effective Amendment No. 4 on
October 31, 1995 and is incorporated herein by reference.

6(a) Form of Notice with respect to the Distribution Agreement
was previously filed in Post-Effective Amendment No. 2 on
March 12, 1993 and is incorporated herein by reference.

6(b) Distribution Agreement between the Manager, Integrity
Investments, Inc., and the Registrant dated July 29, 1993
was previously filed in Post-Effective Amendment No. 1 on
December 29, 1993 and is incorporated herein by reference.

7 None

8 Custody Contract between State Street Bank and Trust
Company and the Registrant dated September 1, 1994 was
previously filed in Post-Effective Amendment No. 3 on
November 17, 1994 and is incorporated herein by reference.

9(a) Administration Agreement between State Street Bank and
Trust Company, the Manager and the Registrant dated
September 1, 1994 was previously filed in Post-Effective
Amendment No. 3 on November 17, 1994 and is incorporated
herein by reference.

9(b) Transfer Agency and Service Agreement between State Street
Bank and Trust Company, the Manager and the Registrant
dated September 1, 1994 was previously filed in Post-
Effective Amendment No. 3 on November 17, 1994 and is
incorporated herein by reference.

10 Opinion and consent of Counsel was previously filed in
Pre-Effective Amendment No. 1 on June 4, 1993 and is
incorporated herein by reference.

11 Consent of Independent Accountants

12 Financial Statements - See A above.

13 Subscription Agreement dated June 1, 1993 was previously
filed in Pre-Effective Amendment No. 1 on June 14, 1993
and is incorporated herein by reference.

14 None

15(a) Form of Distribution and Shareholder Servicing Plan for
Class D Shares was previously filed in Post-Effective
Amendment No. 4 on October 31, 1995 and is incorporated
herein by reference.

<PAGE>

15(b) Form of Distribution and Shareholder Servicing Plan for
Class C Shares was previously filed in Post-Effective
Amendment No. 4 on October 31, 1995 and is incorporated
herein by reference.

15(c) Form of Amendment No. 2 to the Distribution and
Shareholder Servicing Plan was previously filed in Post-
Effective Amendment No. 4 on October 31, 1995 and is
incorporated herein by reference.

15(d) Amendment No. 1 to the Distribution and Shareholder
Servicing Plan the form of which was previously filed in
Post-Effective Amendment No. 2 on March 12, 1993.

15(e) Distribution and Shareholder Servicing Plan dated July 29,
1993 was previously filed in Post-Effective Amendment
No. 1 on December 29, 1993 and is incorporated herein by
reference.

16 Schedule for Computation of Performance Quotation was
previously filed in Post-Effective Amendment No. 3 on
November 17, 1994 and is incorporated herein by reference.

17 Not Applicable

18 Form of Plan for Multiple Classes of Shares was previously
filed in Post-Effective Amendment No. 4 on October 31,
1995 and is incorporated herein by reference.

19(b) Powers of Attorney, previously filed in Post-Effective
Amendment No. 3 on November 17, 1994 and Post-Effective
Amendment No. 4 on October 31, 1995 are incorporated
herein by reference.

Item 25. PERSONS UNDER COMMON CONTROL WITH REGISTRANT

Registrant is not controlled by or under common control with any person.

Item 26. NUMBER OF HOLDERS OF SECURITIES

Number of Record
Title of Class Holders as of
Shares Beneficial Interest December 13, 1996
-------------------------- -----------------

U.S. Treasury Money Market Portfolio Class A shares 5
U.S. Treasury Money Market Portfolio Class B shares 3
U.S. Treasury Money Market Portfolio Class C shares 1
U.S. Treasury Money Market Portfolio Class D shares 3
U.S. Treasury Income Portfolio Class A shares 2
U.S. Treasury Income Portfolio Class B shares 1
U.S. Treasury Income Portfolio Class C shares 0
U.S. Treasury Income Portfolio Class D shares 0

<PAGE>

Number of Record
Title of Class Holders as of
Shares Beneficial Interest December 13, 1996
-------------------------- -----------------

General Money Market Portfolio Class A shares 11
General Money Market Portfolio Class B shares 2
General Money Market Portfolio Class C shares 1
Tax-Exempt Money Market Portfolio Class A shares 4
Tax-Exempt Money Market Portfolio Class B shares 1

Item 27. INDEMNIFICATION

Article VIII of Registrant's Agreement and Declaration of Trust
provides that each of its Trustees and each Officer (and his heirs,
executors, and administrators) may be indemnified against all
liabilities and expense arising out of the defense or disposition of
any action, suit, or other proceeding in which such person may be or
may have been involved by reason of being or having been such a
Trustee or Officer, except with respect to any matter as to which such
person otherwise would be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such person's office.

Insofar as indemnification for liability arising under the 1933 Act
may be permitted to Trustees, Officers and Controlling Persons of
registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the 1933 Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a
Trustee, Officer or Controlling Person of Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
Trustee, Officer or controlling Person in connection with the
securities being registered, 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 1933 Act and will be governed by the final adjudication of such
issue.

Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS

(a) The description of Integrity Management & Research, Inc. (the
"Manager") under the caption "Management of the Portfolios" in
the Prospectus which is Part A to this Registration Statement is
incorporated herein by reference. The information as to the
officers and directors of the Manager is included in its Form ADV
filed by the Manager with the Securities and Exchange Commission
pursuant to the Investment Advisers Act of 1940, as amended (File
No. 801-42708) and is incorporated herein by reference.

<PAGE>

(b) The description of David L. Babson & Co. Inc. (the "Sub-Adviser")
under the caption "Management of the Portfolios" in the
Prospectus which is Part A to this Registration Statement is
incorporated herein by reference. The information as to the
officers and directors of the Sub-Adviser is included in its Form
ADV filed by the Sub-Adviser with the Securities and Exchange
Commission pursuant to the Investment Advisers Act of 1940, as
amended (File No. 801-24) and is incorporated herein by
reference.

Item 29. PRINCIPAL UNDERWRITERS

(a) Integrity Investments, Inc. (the "Underwriter") does not act as
the principal underwriter of any other investment company.

(b) The following table presents certain information with respect to
each director and officer of the Distributor.

NAME AND PRINCIPAL ADDRESS POSITIONS AND OFFICES POSITIONS AND OFFICES
WITH UNDERWRITER WITH REGISTRANT

Richard Curcio President, Director President, Chairman of
Integrity Investments, Inc. Board of Trustees
1800 Second Street, Suite 757
Sarasota, Florida 34236

Item 30. LOCATION OF ACCOUNTS AND RECORDS

Each account, book or other document required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of
1940 and Rule 31a-1 thereunder is maintained by Registrant at 1776
Heritage Drive, North Quincy, Massachusetts 02171.

Item 31. MANAGEMENT SERVICES

Not applicable

Item 32. UNDERTAKINGS

Not applicable
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for the effectiveness of this amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereto duly authorized, in the City of North Quincy and
Commonwealth of Massachusetts on the 30th day of December 1996.

The Valiant Fund
By: RICHARD F. CURCIO*
----------------------------
Richard F. Curcio, President

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
capacities indicated on the 30th day of December 1996.

SIGNATURE TITLE

SUSAN M. BEAUREGARD Vice President, Treasurer and Secretary
- ------------------------------
Susan M. Beauregard

JOHN S. CULBERTSON* Trustee
- ------------------------------
John S. Culbertson

RICHARD F. CURCIO* Trustee and President
- ------------------------------
Richard F. Curcio

RUFUS C. CUSHMAN, JR.* Trustee
- ------------------------------
Rufus C. Cushman, Jr.

HENRY W. DAY, JR.* Trustee
- ------------------------------
Henry W. Day, Jr.

ROGER F. DUMAS* Trustee
- ------------------------------
Roger F. Dumas

KENNETH J. PHELPS* Trustee
- ------------------------------
Kenneth J. Phelps

*By: SUSAN M. BEAUREGARD
------------------------
Susan M. Beauregard
Attorney-in-Fact

<PAGE>

EXHIBITS
To
The Valiant Fund

Post-Effective Amendment No. 5

Exhibit 11 Consent of Independent Accountants

Exhibit 12 Financial Statements

<PAGE>

EXHIBIT 11

CONSENT OF INDEPENDENT ACCOUNTANTS

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of the Post-Effective
Amendment No. 5 to the registration statement on Form N-1A (the "Registration
Statement) of our report dated October 16, 1996, relating to the financial
statements and financial highlights appearing in the August 31, 1996 Annual
Report to Shareholders of The Valiant Fund, which is also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Highlights" in the Prospectuses and under the
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information.

PRICE WATERHOUSE LLP
Price Waterhouse LLP
Boston, Massachusetts
December 26, 1996

<PAGE>

EXHIBIT 12

FINANCIAL STATEMENTS

<PAGE>

THE VALIANT FUND
U.S. TREASURY MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

U.S. TREASURY BILLS (A) - 27.4%

$ 10,000,000 5.050%, 10/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,955,200
3,000,000 5.080%, 10/17/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,980,527
3,000,000 5.090%, 11/07/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,971,581
7,000,000 5.118%, 11/07/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,933,330
4,000,000 5.060%, 11/14/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,958,395
5,000,000 5.230%, 12/12/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,925,908
7,000,000 5.080%, 01/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,871,589
5,000,000 5.100%, 01/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,907,917
5,000,000 5.245%, 01/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,905,299
4,000,000 5.300%, 01/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,923,444
10,000,000 5.125%, 02/06/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,775,069
6,000,000 5.185%, 02/06/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,863,462
--------------
TOTAL U.S. TREASURY BILLS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,971,721
--------------

REPURCHASE AGREEMENTS - 72.6%

61,000,000 First Boston Corp.
5.250%, 09/03/96, Dated 08/30/96, Repurchase Price $61,035,583
(Collateralized by U.S. Treasury Note, 6.875%, due 05/15/06;
total par value $62,465,000; valued at $63,811,108). . . . . . . . . . . . . . . . . 61,000,000
1,408,000 Goldman, Sachs & Co., Inc.
5.200%, 09/03/96, Dated 08/30/96, Repurchase Price $l,408,814
(Collateralized by U.S. Treasury Note, 6.25%, due 06/30/98;
total par value $1,421,000; valued at $1,436,622). . . . . . . . . . . . . . . . . . 1,408,000
57,000,000 J.P. Morgan & Co., Inc.
5.220%, 09/03/96, Dated 08/30/96, Repurchase Price $57,033,060
(Collateralized by U.S. Treasury Bill, due 01/09/97;
total par value $59,274,000; valued at $58,141,867). . . . . . . . . . . . . . . . . 57,000,000
61,000,000 Morgan Stanley Group, Inc.
5.230%, 09/03/96, Dated 08/30/96, Repurchase Price $61,035,448
(Collateralized by U.S. Treasury Note, 7.875%, due 11/15/04;
total par value $57,645,000; valued at $62,711,847). . . . . . . . . . . . . . . . . 61,000,000
--------------

TOTAL REPURCHASE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180,408,000
--------------

TOTAL INVESTMENTS - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 248,379,721
(Cost $248,379,721) + --------------
--------------
</TABLE>
- ---------------
(A) Rate represents annualized yield to maturity at date of purchase
(unaudited).
+ Aggregate cost for Federal tax purposes.

SEE NOTES TO FINANCIAL STATEMENTS.

1
<PAGE>

THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

COMMERCIAL PAPER (A) - 68.5%

AUTO PARTS - 2.9%

$ 10,000,000 TRW, Inc
5.300%, 09/20/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,972,028
--------------

COMMUNICATIONS - 5.2%

18,000,000 American Telephone & Telegraph Co
5.250%, 09/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,994,750
--------------

Consumer Cyclicals - 6.3%

21,600,000 Toys "R" Us, Inc.
5.280%, 09/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,593,664
--------------

DRUGS & HEALTH CARE - 7.3%

25,000,000 Abbott Laboratories
5.250%, 09/05/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,985,417
--------------

ELECTRONICS - 7.1%

24,400,000 Motorola, Inc.
5.270%, 09/05/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,385,712
--------------

FINANCIAL SERVICES - 5.5%

14,000,000 Ford Motor Credit Co.
5.220%, 09/05/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,991,880

5,000,000 J.P. Morgan & Co., Inc.
4.950%, 09/06/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,996,562
--------------
18,988,442
--------------

FOOD PRODUCTS - 18.8%

General Mills, Inc.
10,000,000 5.260%, 09/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,997,078
7,000,000 5.270%, 09/23/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,977,456
--------------
16,974,534
--------------

10,000,000 H.J. Heinz, Co.
5.270%, 09/27/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,961,939

18,000,000 PepsiCo, Inc.
5.260%, 09/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,994,740
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

2
<PAGE>

THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

COMMERCIAL PAPER (A) (CONTINUED)

FOOD PRODUCTS - (CONTINUED)
Sara Lee Corp.
$ 10,000,000 5.200%, 09/06/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,992,778
10,000,000 5.240%, 09/11/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,985,444
--------------
19,978,222
--------------
64,909,435
--------------

INSURANCE - 5.5%

19,000,000 AIG Funding, Inc.
5.220%, 09/26/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,931,125
--------------

LEISURE TIME - 5.2%

18,000,000 Disney Walt Co.
5.240%, 09/03/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,994,760
--------------

REAL ESTATE - 3.3%

11,310,000 PHH Corp.
5.300%, 09/10/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,295,014
--------------

UTILITIES - 1.4%

5,000,000 Pacificorp
5.310%, 10/28/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,957,963
--------------

TOTAL COMMERCIAL PAPER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 236,008,310
--------------

U.S. TREASURY BILLS (A) - 7.3%

10,000,000 5.100%, 01/09/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,815,833
9,000,000 4.835%, 02/06/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,809,018
4,000,000 5.115%, 03/06/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,894,290
1,000,000 5.400%, 08/21/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946,900
1,000,000 5.460%, 08/21/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 946,310
1,000,000 5.540%, 08/21/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 945,523
--------------

TOTAL U.S. TREASURY BILLS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,357,874
--------------

BANKERS' ACCEPTANCE NOTICES (A) - 5.0%

Bank of New York
4,000,000 5.240%, 11/06/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,961,573
1,548,504 5.330%, 02/11/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,511,134
--------------
5,472,707
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

3
<PAGE>

THE VALIANT FUND
GENERAL MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

BANKERS' ACCEPTANCE NOTICES (A) (CONTINUED)

Republic National Bank of NY
$ 2,700,000 5.240%, 09/19/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,692,926
3,100,000 5.210%, 10/11/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,082,055
3,592,198 5.280%, 12/09/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,540,039
2,324,694 5.260%, 12/20/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,287,331
--------------
11,602,351
--------------

TOTAL BANKERS' ACCEPTANCE NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 17,075,058
--------------

REPURCHASE AGREEMENTS - 19.2%

23,108,000 First Boston Corp.
5.250%, 09/03/96, Dated 08/30/96, Repurchase Price $23,121,480
(Collateralized by U.S. Treasury Note, 6.875%, due 05/15/06;
total par value $23,200,000; valued at $23,699,955). . . . . . . . . . . . . . . . . 23,108,000
10,000,000 Goldman, Sachs & Co., Inc.
5.200%, 09/03/96, Dated 08/30/96, Repurchase Price $10,005,778
(Collateralized by U.S. Treasury Note, 6.25%, due 06/30/98;
total par value $10,090,000; valued at $10,200,928). . . . . . . . . . . . . . . . . 10,000,000
15,000,000 J.P. Morgan & Co., Inc.
5.220%, 09/03/96, Dated 08/30/96, Repurchase Price $15,008,700
(Collateralized by U.S. Treasury Bill, due 07/24/97;
total par value $16,104,000; valued at $15,301,860). . . . . . . . . . . . . . . . . 15,000,000
18,000,000 Morgan Stanley Group, Inc.
5.230%, 09/03/96, Dated 08/30/96, Repurchase Price $18,010,460
(Collateralized by U.S. Treasury Note, 6.375%, due 06/30/97;
total par value $18,115,000; valued at $18,393,378). . . . . . . . . . . . . . . . . 18,000,000
--------------

TOTAL REPURCHASE AGREEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,108,000
--------------

TOTAL INVESTMENTS - 100.0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 344,549,242
(Cost $344,549,242) + --------------
--------------
</TABLE>
- ---------------
(A) Rate represents annualized yield to maturity at date of purchase
(unaudited).
+ Aggregate cost for Federal tax purposes.

SEE NOTES TO FINANCIAL STATEMENTS.

4
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

MUNICIPAL BONDS AND NOTES - 100.0%

ALABAMA - 2.3%

$ 300,000 Columbia Alabama IDB
Alabama Power Company Project, Series A
3.750%, 05/01/22 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 300,000
3,600,000 Mobile Alabama IDB
Alabama Power Company Project
3.750%, 06/01/15 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600,000
2,500,000 Montgomery Alabama
General Electric, Series 90
3.350%, 09/10/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
--------------
6,400,000
--------------

ALASKA - 3.9%

5,000,000 Alaska Housing Finance Corp.
Series C
3.550%, 06/01/26 ++
SBPA: Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
3,300,000 Valdez Marine Terminal
Exxon Project
3.750%, 10/01/25 ++ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,300,000
3,000,000 Valdez Marine Terminal
Mobil Project
3.500%, 11/01/03 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
--------------
11,300,000
--------------
ARIZONA - 0.9%

2,500,000S Salt River Project Agricultural Improvement & Power District
3.650%, 12/12/96
LINE: Union Bank Switzerland, First Interstate Bank Arizona. . . . . . . . . . . . . 2,500,000
--------------

CALIFORNIA - 2.8%

4,900,000 California State RANS
4.500%, 06/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,922,919
3,000,000 Los Angeles County TRANS
4.500%, 06/30/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,013,768
--------------
7,936,687
--------------

COLORADO - 6.5%

6,000,000 Colorado Health Facilities
Sisters of Charity Health Care
3.400%, 05/15/25 ++
LOC: Toronto Dominion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000
2,500,000 Colorado TRANS Series A
4.500%, 06/27/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,512,817
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

5
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

COLORADO - (CONTINUED)

$ 4,900,000 Regional Transportation District
Passenger Fare Revenue, Series 86A
3.350%, 06/01/99 ++
LOC: Credit Local de France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,900,000
5,000,000 University of Colorado University Revenues
Enterprise Systems, Series A
3.350%, 06/01/20 ++
SBPA: Morgan Guaranty Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
--------------
18,412,817
--------------

CONNECTICUT - 2.5%

3,000,000 Connecticut State Housing Finance Authority
Series A3
3.600%, 04/10/97 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
4,200,000 Connecticut State Special Assessment
Unemployment Compensation, Series C, FGIC Insured
3.900%, 07/01/97 *
SBPA: FGIC Securities Purchase, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000
--------------
7,200,000
--------------

FLORIDA - 4.8%

1,000,000 Dade County IDA
Florida Power & Light
3.850%, 06/01/21 ++ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
7,100,000 Dade County Water & Sewer Revenue Systems
3.350%, 10/05/22
SBPA: Commerzbank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100,000
3,000,000 Jacksonville Florida
Series A
3.625%, 10/09/96
LINE: Morgan Guaranty Trust, Credit Suisse . . . . . . . . . . . . . . . . . . . . . 3,000,000
2,400,000 Orlando Waste Water Systems Revenue
3.600%, 09/09/96
LINE: Union Bank Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
--------------
13,500,000
--------------

GEORGIA - 5.3%

2,400,000 Burke County Development Authority, PCR
Georgia Power Project, Series 3
3.850%, 07/01/24 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
1,900,000 Burke County Development Authority, PCR
Georgia Power Project, Series 5
3.700%, 07/01/24 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,900,000
3,800,000 De Kalb Private Hospital Authority
Egelston Childrens Hospital, Series A
3.350%, 03/01/24 ++
LOC: Trust Company Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,800,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

6
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

GEORGIA - (CONTINUED)

$ 7,000,000 De Kalb Private Hospital Authority
(Egelston Childrens Hospital), Series B
3.350%, 03/01/24 ++
LOC: Trust Company Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,000,000
--------------
15,100,000
--------------
HAWAII - 0.8%

2,400,000 Hawaii Department of Budget & Finance
Kaiser Permanente
3.650%, 03/03/97 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400,000
--------------

ILLINOIS - 1.1%

3,100,000 Chicago GO
Tender Notes, Series A
3.650%, 10/31/96
LOC: Morgan Guaranty Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,100,000
--------------

KANSAS - 2.6%

7,500,000 Kansas Department of Transportation Highway Revenue
Series B
3.350%, 09/01/14 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,500,000
--------------

KENTUCKY - 1.8%

2,135,000 Jefferson County, PCR
Louisville Gas & Electric Company, Series A
3.500%, 09/09/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,135,000
2,900,000 Trimble County, PCR
Louisville Gas & Electric Company
3.650%, 09/20/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,900,000
--------------
5,035,000
--------------

MASSACHUSETTS - 2.0%

4,000,000 Massachusetts Bay Transportation Authority
84A
3.050%, 09/01/96 *
LOC: State Street Bank & Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000
1,800,000 Massachusetts Bay Transportation Authority
84A
3.625%, 03/03/97 *
LOC: State Street Bank & Trust Co. . . . . . . . . . . . . . . . . . . . . . . . . . 1,800,000
--------------
5,800,000
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

7
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

MICHIGAN - 2.6%

$ 2,500,000 Michigan Municipal Bond Authority Revenue
Series A
4.500%, 07/03/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,512,054
5,000,000 Michigan State GO
4.000%, 09/30/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,001,531
--------------
7,513,585
--------------

MINNESOTA - 3.4%

1,500,000 Becker Minnesota, PCR
Northern States Power
3.600%, 12/16/96 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000
3,000,000 Rochester Health Care Facilities
Mayo Foundation/Medical Center, Series F
3.450%, 09/11/96
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
1,000,000 Rochester Health Care Facilities
Mayo Foundation/Medical Center, Series F
3.650%, 10/22/96
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
4,200,000 University of Minnesota Revenues, Series 85 G
3.750%, 02/01/97 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000
--------------
9,700,000
--------------

MISSISSIPPI - 3.1%

5,400,000 Jackson County Port Facility
Chevron USA Project
3.750%, 06/01/23 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400,000
3,400,000 Jackson County, PCR
Chevron, USA Project
3.800%, 12/01/16 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400,000
--------------
8,800,000
--------------

MISSOURI - 1.7%

4,900,000 Missouri State Health & Educational Facility, Barnes Hospital
3.400%, 12/01/15 ++
LOC: Morgan Guaranty Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,900,000
--------------

NEVADA - 2.2%

6,100,000 Clark County Airport Improvement Authority Revenue
3.350%, 07/01/25 ++
LOC: Toronto Dominion Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,100,000
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

8
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

NEW MEXICO - 2.3%

$ 4,900,000 Albuquerque Airport Authority Revenue, AMBAC
3.350%, 07/01/14 ++
LOC: Canadian Imperial Bank of Commerce. . . . . . . . . . . . . . . . . . . . . . . $ 4,900,000
1,500,000 Hurley, PCR
British Petroleum
3.850%, 12/01/15 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000
--------------
6,400,000
--------------

NEW YORK - 1.1%

3,000,000 New York City Municipal Water Finance Authority
FGIC Insured 3.800%, 06/15/23 ++
LIQ: FGIC Securities Purchase, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
--------------

NORTH CAROLINA - 4.9%

1,500,000 Charlotte Airport Revenue (MBIA) 93A
3.350%, 07/01/16 ++
SBPA: Commerzbank AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500,000
3,400,000 Raleigh Durham Airport Authority
American Airlines B1
3.850%, 11/01/15 ++
LOC: Royal Bank of Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,400,000
2,700,000 Raleigh Durham Airport Authority
American Airlines, Series A
3.850%, 11/01/05 ++
LOC: Royal Bank of Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,700,000
6,200,000 Winston Salem Water & Sewer System
3.350%, 06/01/14 ++
SPBA: Wachovia Bank of N.C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,200,000
--------------
13,800,000
--------------

OREGON - 1.7%

4,800,000 Clackamas County Hospital Facility
Kaiser Permanente
3.400%, 10/01/96 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800,000
--------------

SOUTH CAROLINA - 0.7%

2,000,000 South Carolina Public Service Authority
3.600%, 10/07/96
LINE: NationsBank, N.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000
--------------

TENNESSEE - 5.2%

6,600,000 Memphis Tennessee GO
Series A
3.450%, 08/01/03 ++
SBPA: Westdeutsche Landesbank GZ . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

9
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

TENNESSEE - (CONTINUED)

$3,400,000 Metro Nashville/Davidson County Airport Authority
American Airlines Series A
3.700%, 10/01/12 ++
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,400,000
4,800,000 Metropolitan Nashville/Davidson County Health
Health & Education Facility Board Revenue Vanderbilt University
3.500%, 01/15/97 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800,000
--------------
14,800,000
--------------

TEXAS - 8.9%

2,800,000 City of Houston Water & Sewer
3.550%, 10/22/96
LOC: Swiss Bank Corp., Westdeutsche Landesbank GZ. . . . . . . . . . . . . . . . . . 2,800,000
1,300,000 Harris County Texas GO
3.600%, 12/16/96
LINE: Union Bank Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000
1,400,000 Harris County Texas Health Facilities
St. Lukes Episcopal Hospital
3.750%, 02/15/16 ++
LINE: Morgan Guaranty Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400,000
300,000 Harris County Texas IDC
Exxon Project 1984, Series A
3.750%, 03/01/24 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
4,200,000 Harris County Texas Toll Road
3.450%, 08/01/20 ++
LINE: Morgan Guaranty Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200,000
5,560,000 Lower Colorado River Authority Texas Revenue
Refunding Junior Lien 3rd Supply Series
3.350%, 01/01/13 ++
SBPA: Bayerische Landesbank GZ . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,560,000
1,300,000 North Central Texas Health Facilities
Presbyterian Medical Center, Series C, MBIA Insured
3.700%, 12/01/15 ++
SBPA: Nations Bank of Texas. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000
6,900,000 Port Arthur Texas Navigation District PCR
Texaco, Inc. Project
3.850%, 10/01/24 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,900,000
500,000 San Antonio Texas Water Systems
Series 95
3.500%, 09/11/96
LINE: Westdeutsche Landesbank GZ . . . . . . . . . . . . . . . . . . . . . . . . . . 499,962
900,000 Texas State Water Development Board
3.850%, 03/01/15 ++
LOC: Canadian Imperial Bank of Commerce. . . . . . . . . . . . . . . . . . . . . . . 900,000
--------------
25,159,962
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

10
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

UTAH - 7.0%

$ 2,000,000 Emery County Utah, PCR
Pacificorp Project
3.500%, 07/01/15 ++
LOC: Credit Suisse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,000,000
1,200,000 Emery County Utah, PCR
Pacificorp, AMBAC
3.800%, 11/01/24 ++
LINE: Bank of Nova Scotia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200,000
5,000,000 Intermountain Power Agency
Power Supply Revenue, Series 85E
3.350%, 09/15/96 *
LOC: Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000,000
3,200,000 Intermountain Power Agency
Power Supply Revenue, Series 85F
3.350%, 09/15/96 *
LOC: Swiss Bank Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,200,000
2,500,000 Intermountain Power Agency
Power Supply Revenue, Series 85F
3.930%, 06/16/97 *
LOC: Morgan Guaranty Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
5,900,000 Salt Lake County, PCR
British Petroleum Project
3.850%, 02/01/08 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,900,000
--------------
19,800,000
--------------

VERMONT - 1.7%

1,700,000 Vermont Education & Health Buildings Finance Agency
Middlebury College
3.700%, 05/01/97 * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
3,000,000 Vermont GO RANS
Series I
3.250%, 09/06/96
LINE: Toronto Dominion Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
--------------
4,700,000
--------------

VIRGINIA - 0.6%

1,700,000 Peninsula Ports Authority Virginia Revenue, Shell
3.800%, 12/01/05 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
--------------

WASHINGTON - 9.9%

3,000,000 Port Anacortes IDC
Texaco Project
3.650%, 09/05/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
6,000,000 Seattle Municipal Light & Power Revenue
3.700%, 02/06/97
SBPA: Morgan Guaranty Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

11
<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 1)
- --------- --------------
<S> <C>

WASHINGTON - (CONTINUED)

$ 4,300,000 Seattle Municipal Light & Power Revenue
3.500%, 11/01/18 ++
LINE: Morgan Guaranty Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,300,000
3,500,000 Seattle Washington Water System Revenue
3.500%, 09/01/25 ++
LOC: Bayerische Landesbank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500,000
3,600,000 Washington State GO
Series 96B
3.500%, 06/01/20 ++
SBPA: Landesbank Hessen-Thueringen GZ. . . . . . . . . . . . . . . . . . . . . . . . 3,600,000
7,600,000 Washington State Public Power Supply
3.500%, 07/01/17 ++
LINE: Bank of America. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,600,000
--------------
28,000,000
--------------

WISCONSIN - 4.8%

6,400,000 Oak Creek Wisconsin, PCR
Wisconsin Electric Power Company
3.550%, 08/01/16 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,400,000
3,000,000 Sheboygan Wisconsin, PCR
Wisconsin Electric Power Company
3.450%, 09/01/15 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000,000
4,100,000 Sheboygan Wisconsin, PCR
Wisconsin Power & Light
3.300%, 08/01/14 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,100,000
--------------
13,500,000
--------------

WYOMING - 0.9%

1,000,000 Lincoln County, PCR
Exxon Project, Series A
3.800%, 11/01/14 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000
1,700,000 Uinta County Wyoming, PCR
Chevron '92
3.800%, 12/01/22 ++. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,700,000
--------------
2,700,000
--------------

Total Investments - 100.0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 283,558,051
(Cost $283,558,051) + --------------
--------------
</TABLE>
- ---------------
+ Aggregate cost for Federal tax purposes.
++ Variable rate demand notes are payable upon not more than one, seven or
thirty business days' notice. The interest rate shown reflects the rate
currently in effect.
* Put bonds and notes mature within one year due to demand features. The
interest rate shown reflects the rate currently in effect.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

THE VALIANT FUND
TAX-EXEMPT MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS - (CONTINUED)
AUGUST 31, 1996

GLOSSARY OF TERMS

AMBAC = American Municipal Bond Assurance Corp.
FGIC = Financial Guaranty Insurance Corp.
GO = General Obligations
IDA = Industrial Development Authority
IDB = Industrial Development Bond
IDC = Industrial Development Corp.
LIQ = Liquidity
LINE = Bank Line of Credit Issued
LOC = Letter of Credit
MBIA = Municipal Bond Insurance Association
PCR = Pollution Control Revenue
RANS = Revenue Anticipation Notes
SBPA = Standby Purchase Agreement
TRANS = Tax and Revenue Anticipation Notes

SEE NOTES TO FINANCIAL STATEMENTS.

13
<PAGE>

THE VALIANT FUND
STATEMENTS OF ASSETS AND LIABILITIES
AUGUST 31, 1996
<TABLE>
<CAPTION>

U.S. TREASURY U.S. TREASURY GENERAL TAX-EXEMPT
MONEY MARKET INCOME MONEY MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>

ASSETS:
Investments (Note 1):
Investments at value . . . . . . . . . . $ 67,971,721 $ -- $ 278,441,242 $ 283,558,051
Repurchase agreements. . . . . . . . . . 180,408,000 -- 66,108,000 --
------------- ------------- ------------- -------------
Total investments at value. . . . . . 248,379,721 -- 344,549,242 283,558,051
Cash . . . . . . . . . . . . . . . . . . . 577 25,160 519 13,229
Interest receivable. . . . . . . . . . . . 52,453 -- 19,209 1,350,385
Deferred organization expense (Note 1) . . 13,576 12,440 10,305 10,538
------------- ------------- ------------- -------------
Total Assets. . . . . . . . . . . . . 248,446,327 37,600 344,579,275 284,932,203
------------- ------------- ------------- -------------

LIABILITIES:
Dividends payable. . . . . . . . . . . . . 1,199,059 -- 1,695,222 805,369
Payable for investments purchased. . . . . -- -- -- 4,200,487
Advisory fee payable (Note 2). . . . . . . 48,894 -- 68,437 48,706
Distribution fee payable (Note 2). . . . . 48,885 -- 1,869 --
Payable to Adviser . . . . . . . . . . . . 13,576 12,378 10,305 10,538
------------- ------------- ------------- -------------
Total Liabilities . . . . . . . . . . 1,310,414 12,378 1,775,833 5,065,100
------------- ------------- ------------- -------------
NET ASSETS . . . . . . . . . . . . . . . . . $247,135,913 $25,222 $342,803,442 $279,867,103
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------

NET ASSETS CONSIST OF:
Paid-in capital (Note 4) . . . . . . . . . $247,148,045 $25,215 $343,078,004 $279,980,063
Accumulated net realized gain (loss) on
investments sold . . . . . . . . . . . . (12,132) 7 (274,562) (112,960)
------------- ------------- ------------- -------------
Total Net Assets. . . . . . . . . . . $247,135,913 $25,222 $342,803,442 $279,867,103
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------

SHARES OF BENEFICIAL INTEREST OUTSTANDING:
Class A. . . . . . . . . . . . . . . . . . 85,263,898 25,215 334,337,397 279,980,063
Class B. . . . . . . . . . . . . . . . . . 126,334,979 -- 8,740,607 --
Class C. . . . . . . . . . . . . . . . . . -- -- -- --
Class D. . . . . . . . . . . . . . . . . . 35,549,168 -- -- --

NET ASSET VALUE,
All Shares - offering and redemption
price per share
(Net Assets/Shares Outstanding). . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

THE VALIANT FUND
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>

U.S. TREASURY U.S. TREASURY GENERAL TAX-EXEMPT
MONEY MARKET INCOME MONEY MARKET MONEY MARKET
PORTFOLIO * PORTFOLIO ** PORTFOLIO PORTFOLIO
-------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>

INVESTMENT INCOME:
Interest (Note 1). . . . . . . . . . . . . $ 10,481,337 $ 187,705 $ 26,635,341 $ 10,121,298
------------- ------------- ------------- -------------

EXPENSES:
Investment advisory fee (Note 2) . . . . . 385,690 8,578 958,106 572,477
Distribution fee, Class B (Note 2) . . . . 287,521 -- 23,561 --
Distribution fee, Class D (Note 2 ). . . . 33,641 -- -- --
Trustee fees (Note 2). . . . . . . . . . . 3,170 62 11,917 5,738
Amortization of organization costs (Note 1) 5,033 6,220 5,033 5,033
Miscellaneous expense. . . . . . . . . . . -- -- -- 149
Expenses borne by the Investment Adviser (Note 2) (8,203) (6,282) (16,950) (10,771)
------------- ------------- ------------- -------------
Total Expenses . . . . . . . . . . . . . 706,852 8,578 981,667 572,626
------------- ------------- ------------- -------------

NET INVESTMENT INCOME. . . . . . . . . . . . 9,774,485 179,127 25,653,674 9,548,672
------------- ------------- ------------- -------------

REALIZED LOSS ON
INVESTMENTS SOLD (NOTE 1). . . . . . . . . (10,545) -- (184,202) (4,894)
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS . . . . . . . . $ 9,763,940 $ 179,127 $ 25,469,472 $ 9,543,778
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>

- ---------------
* The Portfolio commenced Class D shares operations on May 1, 1996.
** The Portfolio had investment operations from December 11, 1995
to January 10, 1996.

SEE NOTES TO FINANCIAL STATEMENTS.

<PAGE>

THE VALIANT FUND
STATEMENTS OF CHANGES IN NET ASSETS
AUGUST 31, 1996

U.S. TREASURY U.S. TREASURY
MONEY MARKET PORTFOLIO INCOME PORTFOLIO

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/96 * 8/31/95 8/31/96 ** 8/31/95 ***
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>

NET ASSETS AT BEGINNING OF PERIOD. . . . . . $ 106,296,537 $ 13,379,771 $ 25,133 $ 25,027
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income. . . . . . . . . . . 9,774,485 3,133,405 179,127 320,092
Net realized gain (loss) on investments
sold . . . . . . . . . . . . . . . . . . (10,545) (1,015) -- 12
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations . . . . . . . . . . . 9,763,940 3,132,390 179,127 320,104
------------- ------------- ------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A . . . . . . . . . . . . . . . . (3,702,775) (698,636) (179,127) (320,092)
Class B . . . . . . . . . . . . . . . . (5,756,290) (2,434,769) -- --
Class D . . . . . . . . . . . . . . . . (315,420) -- -- --
------------- ------------- ------------- -------------
Net decrease from distributions. . . . . . (9,774,485) (3,133,405) (179,127) (320,092)
------------- ------------- ------------- -------------

SHARE TRANSACTIONS (AT $1.00 PER SHARE):
CLASS A:
Net proceeds from sales of shares. . . . 293,279,024 140,567,044 93,740,874 117,990,836
Issued to shareholders in reinvestment
of dividends . . . . . . . . . . . . . 1,365 1,392 89 94
Cost of shares repurchased . . . . . . . (238,199,277) (110,410,948) (93,740,874) (117,990,836)
------------- ------------- ------------- -------------
Net Class A share transactions . . . . 55,081,112 30,157,488 89 94
------------- ------------- ------------- -------------
CLASS B:
Net proceeds from sales of shares. . . . 555,303,801 256,091,467 -- --
Cost of shares repurchased . . . . . . . (505,084,160) (193,331,174) -- --
------------- ------------- ------------- -------------
Net Class B share transactions . . . . . 50,219,641 62,760,293 -- --
------------- ------------- ------------- -------------
CLASS D:
Net proceeds from sales of shares. . . . 49,343,549 -- -- --
Cost of shares repurchased . . . . . . . (13,794,381) -- -- --
------------- ------------- ------------- -------------
Net Class D share transactions . . . . . 35,549,168 -- -- --
------------- ------------- ------------- -------------
Net increase from share transactions . 140,849,921 92,917,781 89 94
------------- ------------- ------------- -------------
Net increase in net assets . . . . . 140,839,376 92,916,766 89 106
------------- ------------- ------------- -------------

NET ASSETS AT END OF PERIOD. . . . . . . . . $ 247,135,913 $ 106,296,537 $ 25,222 $ 25,133
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
- ---------------
* The Portfolio commenced Class D shares operations on May 1, 1996.
** The Portfolio operated from December 11, 1995 - January 10, 1996.
*** The Portfolio operated from December 12, 1994 - January 11, 1995.

SEE NOTES TO FINANCIAL STATEMENTS.

16
<PAGE>

THE VALIANT FUND
STATEMENTS OF CHANGES IN NET ASSETS - (CONTINUED)
AUGUST 31, 1996
<TABLE>
<CAPTION>
GENERAL MONEY TAX-EXEMPT
MARKET PORTFOLIO MONEY MARKET PORTFOLIO

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
8/31/96 8/31/95 8/31/96 8/31/95
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>

NET ASSETS AT BEGINNING OF PERIOD. . . . . . $ 385,426,702 $ 176,536,072 $ 283,653,602 $ 258,081,069
--------------- --------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS. . . . . .
RESULTING FROM OPERATIONS: . . . . . . . . .
Net investment income. . . . . . . . . . . 25,653,674 22,098,898 9,548,672 9,010,805
Net realized loss on investments sold. . . (184,202) (36,946) (4,894) (58,890)
--------------- --------------- ------------- -------------
Net increase in net assets resulting
from operations. . . . . . . . . . . . 25,469,472 22,061,952 9,543,778 8,951,915
--------------- --------------- ------------- -------------

DISTRIBUTIONS TO SHAREHOLDERS FROM:. . . . .
Net investment income
Class A . . . . . . . . . . . . . . . (25,172,442) (21,559,888) (9,548,672) (9,010,805)
Class B . . . . . . . . . . . . . . . (481,232) (539,010) -- --
--------------- --------------- ------------- -------------
Net decrease from distributions. . . . . . (25,653,674) (22,098,898) (9,548,672) (9,010,805)
--------------- --------------- ------------- -------------

SHARE TRANSACTIONS (AT $1.00 PER SHARE):. .
CLASS A: . . . . . . . . . . . . . . . .
Net proceeds from sales of shares. . . . 1,937,503,266 1,526,314,105 452,820,528 521,178,341
Issued to shareholders in reinvestment
of dividends . . . . . . . . . . . . 1,317,345 35,794 856 831
Cost of shares repurchased . . . . . . . (1,980,536,000) (1,317,365,165) (456,602,989) (495,547,749)
--------------- --------------- ------------- -------------
Net Class A share transactions . . . . (41,715,389) 208,984,734 (3,781,605) 25,631,423
--------------- --------------- ------------- -------------
CLASS B: . . . . . . . . . . . . . . . . .
Net proceeds from sales of shares. . . . 11,688,082 16,080,852 -- --
Cost of shares repurchased . . . . . . . (12,411,751) (16,138,010) -- --
--------------- --------------- ------------- -------------
Net Class B share transactions . . . . (723,669) (57,158) -- --
--------------- --------------- ------------- -------------
Net increase (decrease) from share
transactions . . . . . . . . . . . . (42,439,058) 208,927,576 (3,781,605) 25,631,423
--------------- --------------- ------------- -------------
Net increase (decrease) in
net assets . . . . . . . . . . (42,623,260) 208,890,630 (3,786,499) 25,572,533
--------------- --------------- ------------- -------------

NET ASSETS AT END OF PERIOD. . . . . . . . . $ 342,803,442 $ 385,426,702 $279,867,103 $283,653,602
--------------- --------------- ------------- -------------
--------------- --------------- ------------- -------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS.

17
<PAGE>

THE VALIANT FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS A
YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94 (1)
--------- --------- ----------
<S> <C> <C> <C>

Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (2). . . . . . . . . . . . . . . . . . . 0.053 0.054 0.012
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.053) (0.054) (0.012)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $1.000 $1.000 $1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 5.45% 5.60% 1.19%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $ 85,260 $ 30,183 $ 25
Ratios to average net assets:
Net investment income (2). . . . . . . . . . . . . . . . . . . 5.21% 5.79% 4.06% (b)
Operating expenses (2) . . . . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20% (b)

U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS B
YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94 (1)
--------- --------- ----------
<S> <C> <C> <C>

Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (3). . . . . . . . . . . . . . . . . . . 0.050 0.052 0.011
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.050) (0.052) (0.011)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 5.18% 5.34% 1.12%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $ 126,327 $ 76,114 $ 13,355
Ratios to average net assets:. . . . . . . . . . . . . . . . . .
Net investment income (3). . . . . . . . . . . . . . . . . . . 5.01% 5.41% 3.87% (b)
Operating expenses (3) . . . . . . . . . . . . . . . . . . . . 0.45% 0.45% 0.45% (b)
</TABLE>
- ---------------

(1) The Portfolio commenced Class A and Class B shares operations on May 17,
1994.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.053 and 0.20%,
for the period ended August 31, 1995 were $0.054 and 0.21% and for the period
ended August 31, 1994 were $0.012 and 0.26%.
(3) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.050 and 0.45%, for
the period ended August 31, 1995 were $0.052 and 0.46% and for the period
ended August 31, 1994 were $0.011 and 0.50%.
(a) Total returns for periods less than one year are not annualized and had
the Investment Adviser and Trustees not reimbursed and waived certain
expenses, respectively, total returns would have been lower.

(b) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

18
<PAGE>

THE VALIANT FUND
FINANCIAL HIGHLIGHTS - (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
U.S. TREASURY MONEY
MARKET PORTFOLIO - CLASS D
PERIOD ENDED
8/31/96(1)
---------
<S> <C>
Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000
---------
Income from Investment Operations:
Net investment income (5). . . . . . . . . . . . . . . . . . . 0.015
---------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.015)
---------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000
---------
---------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 1.55%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $ 35,549
Ratios to average net assets:
Net investment income (5). . . . . . . . . . . . . . . . . . . 4.68% (b)
Operating expenses (5) . . . . . . . . . . . . . . . . . . . . 0.70% (b)

U.S. TREASURY
INCOME PORTFOLIO - CLASS A
PERIOD ENDED PERIOD ENDED PERIOD ENDED
8/31/96 (2) 8/31/95 (3) 8/31/94 (4)
--------- --------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (6). . . . . . . . . . . . . . . . . . . 0.004 0.004 0.001
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.004) (0.004) (0.001)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 0.35% 0.39% 0.12%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $ 25 $ 25 $ 25
Ratios to average net assets:
Net investment income (6). . . . . . . . . . . . . . . . . . . 4.15% 4.47% 2.96% (b)
Operating expenses (6) . . . . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20% (b)
</TABLE>
- ---------------
(1) The Portfolio commenced Class D shares operations on May 1, 1996.
(2) The Portfolio operated from December 11, 1995 to January 10, 1996.
(3) The Portfolio operated from December 12, 1994 to January 11, 1995.
(4) The Portfolio operated from December 28, 1993 to January 12, 1994.

(5) Net investment income per share and the operating expense ratios before
reimbursement of fees by the Investment Adviser were $0.015 and 0.70%.
(6) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.004 and 0.35%,
for the period ended August 31, 1995 were $0.004 and 0.29% and for the period
ended August 31, 1994 were $0.001 and 0.22%.
(a) Total returns for periods less than one year are not annualized and had
the Investment Adviser and Trustees not reimbursed and waived certain
expenses, respectively, total returns would have been lower.
(b) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

19
<PAGE>

THE VALIANT FUND
FINANCIAL HIGHLIGHTS - (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
GENERAL MONEY
MARKET PORTFOLIO - CLASS A
YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94 (1)
--------- --------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (2). . . . . . . . . . . . . . . . . . . 0.053 0.056 0.033
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.053) (0.056) (0.033)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 5.52% 5.81% 3.33%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $334,069 $375,965 $167,016
Ratios to average net assets:
Net investment income (2). . . . . . . . . . . . . . . . . . . 5.36% 5.70% 3.70% (b)
Operating expenses (2) . . . . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20% (b)

GENERAL MONEY
MARKET PORTFOLIO - CLASS B
YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94 (1)
--------- --------- ----------
<S> <C> <C> <C>

Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (3). . . . . . . . . . . . . . . . . . . 0.051 0.053 0.009
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.051) (0.053) (0.009)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 5.26% 5.54% 0.92%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $ 8,734 $ 9,461 $ 9,520
Ratios to average net assets:
Net investment income (3). . . . . . . . . . . . . . . . . . . 5.11% 5.33% 3.99% (b)
Operating expenses (3) . . . . . . . . . . . . . . . . . . . . 0.45% 0.45% 0.45% (b)
</TABLE>

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

(1) The Portfolio commenced Class A and Class B shares operations on
September 21, 1993 and May 17, 1994, respectively.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.053 and 0.20%, for
the period ended August 31, 1995 were $0.056 and 0.20% and for the period
ended August 31, 1994 were $0.033 and 0.21%.
(3) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.051 and 0.45%, for
the period ended August 31, 1995 were $0.053 and 0.45% and for the period
ended August 31, 1994 were $0.009 and 0.46%.
(a) Total returns for periods less than one year are not annualized and had
the Investment Adviser and Trustees not reimbursed and waived certain
expenses, respectively, total returns would have been lower.
(b) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

20
<PAGE>

THE VALIANT FUND
FINANCIAL HIGHLIGHTS - (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD

<TABLE>
<CAPTION>
TAX-EXEMPT MONEY
MARKET PORTFOLIO - CLASS A
YEAR ENDED YEAR ENDED PERIOD ENDED
8/31/96 8/31/95 8/31/94 (1)
--------- --------- ----------
<S> <C> <C> <C>

Net Asset Value, Beginning of period . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
Income from Investment Operations:
Net investment income (2). . . . . . . . . . . . . . . . . . . 0.034 0.035 0.021
--------- --------- ----------
Less Distributions:
Dividends from net investment income . . . . . . . . . . . . . (0.034) (0.035) (0.021)
--------- --------- ----------
Net Asset Value, End of period . . . . . . . . . . . . . . . . . $ 1.000 $ 1.000 $ 1.000
--------- --------- ----------
--------- --------- ----------

Total Return (a) . . . . . . . . . . . . . . . . . . . . . . . . 3.43% 3.67% 2.11%

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . . . $279,867 $283,654 $258,130
Ratios to average net assets:
Net investment income (2). . . . . . . . . . . . . . . . . . . 3.34% 3.50% 2.38% (b)
Operating expenses (2) . . . . . . . . . . . . . . . . . . . . 0.20% 0.20% 0.20% (b)
</TABLE>
- ---------------------
(1) The Portfolio commenced operations on October 7, 1993.
(2) Net investment income per share and the operating expense ratios before
waiver and reimbursement of fees by the Trustees and the Investment Adviser,
respectively, for the period ended August 31, 1996 were $0.034 and 0.20%, for
the period ended August 31, 1995 were $0.035 and 0.20% and for the period
ended August 31, 1994 were $0.021 and 0.22%.
(a) Total returns for periods less than one year are not annualized and had
the Investment Adviser and Trustees not reimbursed and waived certain
expenses, respectively, total returns would have been lower.
(b) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS.

21
<PAGE>

THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
AUGUST 31, 1996

The Valiant Fund (the "Trust") was organized as a Massachusetts business
trust on January 29, 1993 and is registered under the Investment Company Act of
1940 as amended, as an open end management investment company. The Trust offers
four managed investment portfolios. The accompanying financial statements and
financial highlights are those of the U.S. Treasury Money Market, the U.S.
Treasury Income, the General Money Market and the Tax-Exempt Money Market
Portfolios (individually, a "Portfolio", collectively, the "Portfolios"). The
Trust is authorized to offer four classes of shares: Class A, Class B, Class C
and Class D. U.S. Treasury Money Market Class A, B and D, U.S. Treasury Income
Class A, General Money Market Class A and B and Tax-Exempt Money Market Class A
are currently active.

1. SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.

The following is a summary of significant accounting policies which are
consistently followed by the Trust in the preparation of its financial
statements.

PORTFOLIO VALUATIONS: Securities in the Portfolios are valued utilizing
the amortized cost method permitted in accordance with Rule 2a-7 under the
Investment Company Act of 1940. This method involves valuing a portfolio
security initially at its cost and thereafter assuming a constant amortization
to maturity of any discount or premium.

SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Net realized gains and losses on investments sold
are recorded on the identified cost basis. Interest income is recorded on the
accrual basis. Interest income consists of market discount earned (including
both original issue and market discount), less amortization of any market
premium.

DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: It is the policy of the
Portfolios to declare dividends daily from net investment income and to pay such
dividends monthly. Net realized capital gains, if any, are distributed at least
annually.

Income and capital gains to be distributed are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.

FEDERAL TAXES: The Trust treats each Portfolio as a separate entity for
Federal income tax purposes. Each Portfolio intends to continue to qualify each
year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended. By so qualifying, no Portfolio will be
subject to Federal income taxes to the extent that it distributes all of its
taxable or tax-exempt income, if any, for its tax year ending August 31. In
addition, by distributing during each calendar year substantially all of its net
investment income and capital gains, if any, no Portfolio will be subject to
Federal excise tax. Therefore, no Federal income tax provision is required. As
of August 31, 1996, the U.S. Treasury Money Market Portfolio, the General Money
Market Portfolio and the Tax-Exempt Money Market Portfolio have capital loss
carryovers of $396, $55,073 and $53,266, respectively, which will expire on
August 31, 2003 and $2,385, $30,898 and $54,800, respectively, which will expire
on August 31, 2004. As of August 31, 1996, the U.S. Treasury Money Market
Portfolio, the General Money Market Portfolio and the Tax-Exempt Money Market
Portfolio have elected for federal income tax purposes to defer to its fiscal
year ending August 31, 1997, $9,351, $188,591 and $4,895, respectively, of
losses recognized during the period November 1, 1995 to August 31, 1996. During
the fiscal year ended August 31, 1996, 100% of the Tax-Exempt Money Market
Portfolio's distributions paid to the shareholders were tax-exempt.

REPURCHASE AGREEMENTS: Each Portfolio, except the U.S. Treasury Income
Portfolio, may engage in repurchase agreement transactions. Under the terms of
a typical repurchase agreement, the Portfolio takes possession of an underlying
debt obligation subject to an obligation of the seller to repurchase, and the
Portfolio to resell, the obligation at an agreed upon price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. It is the Portfolio's policy to maintain
collateral that is at least equal at all times to the total amount of the
repurchase obligations including interest.

22
<PAGE>

THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
AUGUST 31, 1996

1. SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

In the event of a counterparty default, the Portfolio has the right to use the
collateral to offset losses incurred. There is potential loss to the Portfolio
in the event the Portfolio is delayed or prevented from exercising its rights to
dispose of the collateral securities, including the risk of a possible decline
in the market value of the underlying securities during the period while the
Portfolio seeks to assert its rights. The Portfolio's sub-adviser, David L.
Babson & Co. Inc., acting under the supervision of the Trust's Board of
Trustees, reviews the value of collateral and the creditworthiness of those
banks and dealers with which the Portfolio enters into repurchase agreements to
evaluate potential risks.

EXPENSES AND ALLOCATIONS: Expenses directly attributable to a Portfolio
are charged to the Portfolio, while expenses which are attributable to more than
one Portfolio of the Trust are allocated among the respective Portfolios. Each
share class bears its pro-rata portion of expenses attributable to its series,
except that each class separately bears its' own distribution fees.

Income, Portfolio level expenses, and realized and unrealized gains and
losses are allocated to each class of shares on a daily basis based on each
class' portion of net assets.

ORGANIZATION COSTS: The Trust bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities laws. All such costs
are being amortized using the straight line method over a period of five years
from commencement of each Portfolio's operations. In the event that any of the
initial shares of a Portfolio are redeemed before such organization expenses are
fully amortized, the related Portfolio will be reimbursed by the shareholder
redeeming such shares for any unamortized organization costs in the same
proportion as the number of initial shares being redeemed bears to the number of
initial shares outstanding at the time of redemption.

2. INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND OTHER FEES

Integrity Management & Research, Inc. (the "Investment Adviser" or the
"Manager"), a wholly-owned subsidiary of Integrity Investments, Inc., serves as
the Investment Adviser to the Trust. State Street Bank and Trust Company serves
as the Trust's administrator, custodian and transfer agent. Integrity
Investments, Inc. (the "Distributor") acts as exclusive distributor of the
Trust's shares.

The Trust pays the Investment Adviser a fee, computed daily and paid
monthly, at the annual rate of 0.20% of the average daily net assets of the
Trust. Under its Management Agreement with the Trust, the Manager performs
certain administrative and management services for the Trust and pays the
compensation, if any, of officers and Trustees who are affiliated with the
Manager or the Sub-Adviser and pays all the Portfolio expenses with the
following exceptions: the fees and expenses of those Trustees who are not
"interested persons" (as defined in the Investment Company Act of 1940) of the
Trust; interest on borrowings; taxes; expenses incurred by Class B, Class C and
Class D shares pursuant to the Distribution and Shareholder Servicing Plans; and
such extraordinary non-recurring expenses as may arise. From time to time the
Investment Adviser may waive all or a portion of the fees payable to it by a
Portfolio, either voluntarily or pursuant to applicable statutory expense
limitations. As such, the Investment Adviser has agreed to reimburse the
Portfolios for expenses exceeding 0.20% of average daily net assets for Class A
shares, 0.45% of the average daily net assets for Class B shares, 0.60% of
average daily net assets for Class C shares and 0.70% of average daily net
assets for Class D shares. The expense limitations are voluntary and were in
effect through August 31, 1996. The expense limitations may be removed at any
time thereafter with 90 days' prior notice to existing shareholders.

For the year ended August 31, 1996 the Investment Adviser reimbursed the
Trust as follows:

PORTFOLIO REIMBURSEMENT
- --------------------------------------------------------------------------------
U.S. Treasury Money Market $ 8,203
U.S. Treasury Income 6,282
General Money Market 16,950
Tax-Exempt Money Market 10,771

23
<PAGE>

THE VALIANT FUND
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
AUGUST 31, 1996

2. INVESTMENT ADVISORY, ADMINISTRATION, DISTRIBUTION AND OTHER FEES -
(CONTINUED)

The Investment Adviser has entered into an investment sub-advisory
agreement with David L. Babson & Co., Inc. ("Babson") pursuant to which the
Investment Adviser pays fees to Babson, computed daily and paid monthly, at the
annual rate of 0.10% of the first $500 million of the aggregate average daily
net assets of the Portfolios and 0.05% of average daily net assets in excess
thereof. Fees related to these services are borne directly by the Investment
Adviser.

The Trust has adopted a distribution plan for the Class A and Class B
shares, a distribution plan for the Class C shares and a distribution plan for
the Class D shares (together, the "Plans") pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Plans provide for payments to the
Distributor of up to 0.35% of the average net assets of the Class B shares, up
to 0.50% of the average net assets of the Class C shares and up to 0.50% of the
average net assets of the Class D shares. Payments under the Plans have been
authorized at the rate of 0.25% of each Portfolio's average daily net assets for
the Class B shares, 0.40% of each Portfolio's average daily net assets for the
Class C shares and 0.50% of each Portfolio's average daily net assets for the
Class D shares for the year ended August 31, 1996. No payments have been
authorized for the Class A shares.

Certain directors and officers of the Investment Adviser are also Trustees
and officers of the Trust.

Trustees who are not "interested persons" of the Trust receive an annual
$1,000 retainer and $1,000 per Trustee meeting attended and are entitled to be
reimbursed for out-of-pocket expenses incurred in attending such meetings.

3. SHARES OF BENEFICIAL INTEREST

The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of no par value shares of beneficial interest in the
Portfolios. Shareholders are entitled to one vote for each dollar (or
proportional fractional vote for each fraction of a dollar) of net asset value
per share owned. Each Portfolio votes separately with respect to issues
affecting only that Portfolio. Shareholders of a particular class have the
exclusive right to vote on matters pertaining only to that class. Pursuant to
the Declaration of Trust, the Trustees have the authority to create additional
Portfolios and to issue additional classes of shares for each Portfolio of the
Trust.
At August 31, 1996 Integrity Investments, Inc. owned 100% of the
outstanding shares of the U. S. Treasury Income Portfolio and certain
institutional shareholders were record owners of more than 10% of the total
outstanding shares of the following Portfolios:

NAME OF PORTFOLIO NUMBER OF PERCENTAGE OF
SHAREHOLDERS SHARES OWNED
- --------------------------------------------------------------------------------
U.S. Treasury Money Market 2 80.6%
General Money Market 1 88.7%
Tax-Exempt Money Market 1 99.9%

24
<PAGE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Trustees and Shareholders
of The Valiant Fund

In our opinion, the accompanying statements of assets and liabilities, including
the portfolios of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of U.S. Treasury Money Market
Portfolio, U.S. Treasury Income Portfolio, General Money Market Portfolio and
Tax-Exempt Money Market Portfolio (each a portfolio of The Valiant Fund) at
August 31, 1996, the results of each of their operations, the changes in each of
their net assets, and the financial highlights for the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of The Valiant Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 1996 by correspondence with the custodian and brokers, and the application
of alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.

Price Waterhouse LLP
Boston, Massachusetts
October 16, 1996